California-Los Gatos-750 University Avenue Sublease - HI/FN Inc. and Netflix.com Inc.
This Sublease (Sublease) is made this 4th day of January, 1999 by and between
HI/FN, Inc., a Delaware corporation ("Sublandlord") and NETFLIX.COM, Inc. a
California corporation ("Subtenant").
RECITALS
A. Sublandlord, as Tenant, is leasing from 750 University, a Limited Liability
Corporation (Landlord) those certain premises located at 750 University
Avenue, Los Gatos, California (Premises) pursuant to that certain lease
dated November 13, 1997 (Master Lease). Subtenant acknowledges having
received and reviewed a copy of the Master Lease.
B. Sublandlord desires to lease to Subtenant and Subtenant desires to lease
from Sublandlord a portion of the Premises consisting of approximately
eleven thousand eight hundred and fourteen (11,814) rentable square feet,
located on the ground floor (the Sublease Premises") as shown on Exhibit E
attached hereto, on the terms and conditions set forth in this Sublease.
NOW, THEREFORE, the parties hereto agree as follows:
1. PREMISES.
Sublandlord leases to Subtenant and Subtenant hires from Sublandlord the
Sublease Premises, together with the appurtenances thereto.
2. INCORPORATION OF MASTER LEASE.
This Sublease is subject to all of the terms and conditions of the Master
Lease and Subtenant hereby accepts, assumes and agrees to perform during
the term of this Sublease all of the obligations of Sublandlord as Tenant
under the Master Lease to the extent applicable to the Sublease Premises
and all of the terms and conditions of this Sublease. The terms and
conditions of the Master Lease are incorporated in this Sublease, except
that (i) unless stated to the contrary below, each reference in the
incorporated paragraphs to "Lease" shall be deemed a reference to this
"Sublease", each reference to the "Landlord" shall be deemed a reference to
the "Sublandlord", each reference to the "Tenant" shall be deemed a
reference to the "Subtenant", each reference to the "Premises" shall be
deemed a reference to the "Sublease Premises", each reference to the "Term"
shall be deemed a reference to the "Sublease Term", each reference to the
"Rent" shall be deemed a reference to the "Rent" as described in Section 6
of this Sublease, and (ii) the following terms and conditions of the Master
Lease shall be excluded or modified as follows: the first and second
sentences of the first paragraph of the recitals, Paragraphs 1, 2, 3, 4, 5,
7, 8, 9, and 11 of the Summary of Lease, and Paragraphs 2, 3, 4, 5, the
last sentence of the third paragraph of Paragraph 8, the last sentence of
the first
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paragraph of Paragraph 9, the fourth sentence of the third paragraph of
Paragraph 11, the last sentence of the first paragraph and the entire last
paragraph of 12, 13, the last sentence of the last paragraph of Paragraph
15, 22, the first sentence of Paragraph 27, the second and third sentences
of the second paragraph of Paragraph 29, 37, 47, the entire second
paragraph of Paragraph 49, 51, 52, 54, 55, 56, 57, and the Lease Guaranty,
Exhibits A, C, C-1 and D of the Master Lease are not incorporated herein,
and each reference to Landlord in Sections 15, 16, 21, 30, 35 and 36 shall
be deemed to refer to Landlord only and not to Sublandlord.
Subtenant shall not commit or permit to be committed on the Sublease
Premises any act or omission which shall violate any term or condition of
the Master Lease incorporated herein or modified hereby. In the event of
the termination for any reason of Sublandlord's interest as Tenant under
the Master Lease, then this Sublease shall terminate therewith without any
liability of Sublandlord to Subtenant; except that if this Sublease
terminates as a result of a default of one of the parties hereto, whether
under this Sublease, the Master Lease, or both, the defaulting party shall
be liable to the non-defaulting party for all damages suffered by the non-
defaulting party resulting from such termination.
3. SUBLANDLORD'S OBLIGATIONS.
Sublandlord agrees that Subtenant shall be entitled to receive all services
and repairs to be provided by Landlord to Sublandlord as tenant under the
Master Lease with respect to the Sublease Premises. Sublandlord covenants
and agrees with Subtenant that Sublandlord shall perform all other
obligations of Tenant pursuant to the Master Lease to the extent that
failure to perform the same would adversely affect Subtenant's use or
occupancy of the Sublease Premises. Sublandlord also agrees that
Sublandlord will act as a conduit to transmit any instructions or requests
by Subtenant to Landlord.
4. TERM.
The term of this Sublease shall be for a period of twenty-four (24) months
commencing on the date that is the later of (i) February 1, 1999 or (ii)
the date Sublandlord delivers to Subtenant possession of the Sublease
Premises in broom clean condition with all approvals and permits from the
appropriate governmental authorities required for the legal occupancy of
the Sublease Premises for Sublessee's intended use (the "Commencement
Date") and ending on January 31, 2001 (the "Sublease Term,") In the event
Sublandlord is unable to deliver possession of the Sublease Premises at the
commencement of the Sublease Term, with the voice and data wiring referred
to in. Exhibit G installed by Sublandlord, Sublandlord shall not be liable
for any damage caused thereby, nor shall this Sublease be void or voidable
nor shall the term hereof be extended by such delay; provided, however,
that Subtenant shall not be liable for rent until such time as Sublandlord
offers to deliver possession of the Sublease Premises to Subtenant.
Notwithstanding anything to the contrary herein, if the Commencement Date
has not occurred prior to March 1, 1999, then, in addition to Subtenant's
other rights and remedies. Subtenant may terminate the Sublease by written
notice to Sublandlord,
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whereupon any monies previously paid by Subtenant to Sublandlord shall be
reimbursed to Subtenant.
5. USE.
Subtenant shall use the Sublease Premises for general office and research
and development and for no other purpose.
6. RENTAL.
(a) Subtenant shall pay to Sublandlord as rent for the Sublease Premises,
in advance, on the first day of each calendar month during the
Sublease Term, without deduction, offset, prior written notice or
demand; in lawful money of the United States, the sum of Thirty-six
Thousand Six Hundred Twenty-three and 40/100ths Dollars ($36,623.40)
(see Rent Schedule, "Exhibit F"). If the Commencement Date is not the
first day of the month, a prorated monthly installment shall be paid
at the then current rate for the fractional month during which the
Sublease commences.
(b) Except as provided in subparagraph (a) above, on or before the
Commencement Date, Subtenant shall pay Sublandlord the sum of Thirty-
six Thousand Six Hundred Twenty-three and 40/100ths Dollars
($36,623.40) as rent for the first month of the Sublease Term.
(c) Concurrently with Subtenant's execution of this Sublease, Subtenant
shall deposit with Sublandlord the sum of Seventy-three Thousand Two
Hundred Forty-six and 80/100ths Dollars ($73,246.80) as a non-interest
bearing security deposit for Subtenant's performance under this
Sublease. Within thirty (30) days after Subtenant has vacated the
Sublease Premises at the expiration or earlier termination of the
Sublease Term, the amount paid as security deposit shall be returned
to Subtenant after first deducting any sums that are needed by
Sublandlord to cure defaults of Subtenant under this Sublease or
compensate Landlord for damages for which Subtenant is liable pursuant
to this Sublease.
7. SURRENDER AT END OF TERM.
Subtenant agrees to surrender the Sublease Premises on expiration or
earlier termination of the Sublease Term, in the same condition and repair
as received on the Commencement Date, acts of God, condemnation, casualty,
hazardous materials not released by Subtenant, and reasonable wear and tear
excepted. In addition, on or prior to the expiration or earlier termination
of this Sublease, at Sublandlord's option, Subtenant shall remove, at
Subtenant's sole cost and expense, all telephone, other communication,
computer and any other cabling and wiring or any sort installed in the
space above the suspended ceiling of the Sublease Premises or anywhere else
in the Sublease Premises and shall promptly repair any damage to the
suspended ceiling, lights, light fixtures, walls and any other part of the
Sublease Premises resulting from such removal.
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8. LANDLORD'S WRITTEN CONSENT.
This Sublease is conditioned upon and effective only upon obtaining the
written consent of Landlord. Sublandlord shall use reasonable efforts to
obtain Landlord's consent as soon as possible. If, however, Landlord's
consent has not been obtained by February 1, 1999, then Subtenant shall
have the right to terminate this Sublease, in which event Sublandlord shall
promptly refund to Subtenant all amounts theretofore paid by Subtenant
hereunder.
9. NOTICES.
All notices and demands of any kind given by Sublandlord or Subtenant
hereunder shall be in writing and sent by the United States mail, postage
prepaid, by overnight courier or by personal delivery. All such notices and
demands shall be addressed to Sublandlord or Subtenant, as the case may be,
at the addresses set forth below their respective signatures or at such
other addresses as they may designate from time to time, and shall be
effective upon receipt.
10. INSURANCE.
Insurance requirements pertaining to Sublandlord as Tenant under Paragraph
11 of the Master Lease shall also apply to Subtenant.
11. BROKER.
Sublandlord and Subtenant represent and warrant to each other that, with
the exception of Mike Filice of CPS, the Commercial Property Services
Company, and Bob Shepherd of Colliers International, no brokers were
involved in connection with the negotiation or consummation of this
Sublease. Each party agrees to indemnify the other, and hold it harmless,
from and against any and all claims, damages, losses, expenses and
liabilities (including reasonable attorney's fees) incurred by said party
as a result of a breach of this representation and warranty by the other
party. Sublandlord shall pay all commissions due and owing to CPS and
Colliers International arising out of and in connection with the Sublease.
12. SIGNAGE.
Sublandlord shall use reasonable efforts to provide Subtenant with Project
directory signage reasonably satisfactory to Subtenant.
13. SUBLANDLORD'S COVENANTS.
Sublandlord shall (i) keep the Master Lease in effect; (ii) not modify,
amend or waive any provisions thereof or make any election, exercise any
option, right or remedy, or grant any consent or approval thereunder
without, in each instance, Subtenant's prior written
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consent; (iii) pay the rent due and perform all of Sublandlord's other
obligations under the Master Lease, except to the extent that Subtenant is
obligated to perform such other obligations under the Sublease; (iv) not
take any action or omit to take any action that could cause or constitute a
breach of the Master Lease or otherwise give rise to a right of Landlord to
terminate the Master Lease or declare any provision thereof to have become
ineffective; (v) enforce performance of all obligations of Landlord under
the Master Lease; and (vi) immediately send Subtenant copies of any notices
received by Sublandlord from Landlord that could affect Subtenant's use of
the Sublease Premises or rights under the Sublease, including, without
limitation, any notices of default under the Master Lease. In enforcing
performance of all such obligations of Landlord, Sublandlord shall, upon
Subtenant's written request, immediately notify Landlord of its
nonperformance under the Master Lease and request that Landlord perform its
obligations under the Master Lease.
14. SUBLANDLORD'S REPRESENTATIONS AND WARRANTIES.
(a) As an inducement to Subtenant to enter into this Sublease, Sublandlord
represents and warrants that (i) the form of the Master Lease as
Exhibit "A" is true, correct and complete and has not been modified in
any respect; and (ii) to the best of Sublandlord's knowledge, both the
Master Lease is in full force and effect, and there exists no default
or event of default under the Master Lease by either Landlord or
Sublandlord, nor has there occurred any event which, with the giving
of notice or the passage of time or both, could constitute such a
default or event of default.
(b) In addition, Sublandlord warrants and represents that, as of the
Commencement Date, (i) the Sublease Premises will comply with all
applicable laws, rules, regulations, codes, ordinances, underwriters'
requirements, covenants, conditions, and restrictions, (ii) the
Sublease Premises will be in good and clean operating condition and
repair, and (iii) the electrical, mechanical, HVAC, plumbing, sewer,
elevator and other systems serving the Sublease Premises will be in
good operating condition and repair. Sublandlord shall, promptly after
receipt of notice from Subtenant, remedy or cause to be remedied any
non-compliance with such warranty at Sublandlord's sole cost and
expense.
15. ADDITIONAL RENT.
This is a full-service gross sublease. Subtenant's only obligation with
regard to the repair and maintenance of the Sublease Premises shall be to
keep the Sublease Premises in a clean and sanitary condition. Sublandlord
shall, at Sublandlord's sole cost, maintain the Sublease Premises and all
systems serving the Sublease Premises in good working condition and repair
throughout the Sublease Term. Subtenant's base rent constitutes the entire
consideration payable by Subtenant. Under no circumstances shall Subtenant
be obligated to pay any items of additional rent required to be paid under
the Master Lease, including, without limitation, Direct Expenses, rent
escalation charges, common area
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maintenance charges, real estate taxes, or insurance charges (as defined in
Paragraphs 4 and 5 of the Master Lease).
16. ABATEMENT OF RENT.
Subtenant shall be entitled to, and benefit from, any rental abatement
granted Sublandlord under the Master Lease, but only to the extent that
such abatement relates to the Sublease Premises.
17. WAIVER OF SUBROGATION.
Notwithstanding anything to the contrary contained in the Sublease or the
Master Lease, the parties hereto, including Landlord by reason of its
consent hereto, each release the others and their respective agents,
employees, successors, assignees and subtenants from all liability for
injury or damage to any property to the extent specified in Paragraph 11 of
the Master Lease.
18. INDEMNITY.
Except to the extent caused by any default of Subtenant, its agents,
employees, contractors or invitees, Sublandlord shall indemnify, defend
with counsel reasonably acceptable to Subtenant, and hold Subtenant
harmless from and against any and all losses, costs, claims, liabilities
and damages (including, without limitation, reasonable attorneys' and
experts' fees) caused by or arising in connection with (i) a breach of
Sublandlord's obligations under the Sublease; (ii) a breach of
Sublandlord's obligations under the Master Lease, unless cause by
Subtenant's breach of its parallel obligations under the Sublease; or (iii)
the negligence or willful misconduct of Sublandlord, its employees,
contractors, agents or invitees.
19. APPROVALS.
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Whenever the Sublease requires an approval, consent, designation,
determination, selection or judgment by either Sublandlord or Subtenant,
such approval, consent, designation, determination, selection or judgment
and any conditions imposed thereby shall be reasonable and shall not be
unreasonably withheld or delayed and, in exercising any right or remedy
hereunder, each party shall at all times act reasonably and in good faith.
20. REASONABLE EXPENDITURES.
Any expenditure by a party permitted or required under the Sublease, for
which such party is entitled to demand and does demand reimbursement from
the other party, shall be limited to the fair market value of the goods and
services involved, shall be reasonably incurred, and shall be substantiated
by documentary evidence available for inspection and review by the other
party or its representative during normal business hours.
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IN WITNESS WHEREOF, Sublandlord and Subtenant have executed this Sublease
as of the date first set forth above.
SUBLANDLORD: SUBTENANT:
HI/FN, INC., NETFLIX.COM. INC.,
a Delaware corporation a California corporation
By: /s/ R. J. Farnham By: /s/ Reed Hastings
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Name: R. J. Farnham Name: Reed Hastings
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Its: President Its: President
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Date: 1-6-99 Date: 3 JAN 98
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By: /s/ William R. Walker By: /s/ Marc Randolph
------------------------------- --------------------------------
Name: William R. Walker Name: Marc Randolph
----------------------------- ------------------------------
Its: Secretary Its: Secretary
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Date: JAN 6 1999 Date: 5 Jan 98
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LANDLORD'S CONSENT TO SUBLEASE
THIS CONSENT (Consent) is given by 750 University, a Limited Liability
Corporation (Landlord) to that certain Sublease dated January 4, 1999, (the
Sublease) by and between HI/FN, Inc., a Delaware corporation ("Sublandlord") and
NETFLIX.COM, Inc, a California corporation ("Subtenant"), subject to the
following terms and conditions:
1. All capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Sublease.
2. Landlord is not a party to the Sublease and has no obligations or duties to
Subtenant or Sublandlord under the Sublease and any provisions therein
purporting to obligate and/or bind Landlord or limit Landlord's rights
under the Master Lease in any way are deemed null and void. Notwithstanding
any provision to the contrary in the Sublease, Subtenant shall have no
greater rights than Sublandlord has as Tenant under the Master Lease.
3. This Consent shall only apply to this Sublease and shall not be deemed to
be a consent to any other or further sublease or a waiver of any of the
provisions of the Master Lease.
4. By consenting to the Sublease, Landlord waives none of its rights against
the Sublandlord as Tenant under the Master Lease. The Sublease is and shall
remain at all times subject to and subordinate in all respects to the
Lease.
5. This Consent shall not modify or amend or be deemed to modify or amend the
Master Lease in any way, or to impose on Landlord any obligation to provide
notice to, or obtain consent from, Subtenant with respect to amendments,
defaults, waivers or any other matters pertaining to the Master Lease or to
the Premises covered by the Master Lease. Any waiver by Landlord of its
rights shall be made only in writing and signed by Landlord.
6. Upon the expiration or earlier termination of the Master Lease, the
Sublease shall automatically and without notice or demand, terminate and
Subtenant agrees promptly to surrender the Sublease Premises to Landlord
upon such termination without compensation from Landlord.
7. This Consent shall not be effective until receipt by Landlord of a
counterpart or counterparts of this Consent duly executed by Sublandlord
and Subtenant, each acknowledging its agreement to the terms and conditions
specified in this Consent.
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8. Notwithstanding anything to the contrary herein, Landlord specifically
agrees to paragraph 17 of the Sublease entitled "Waiver of Subrogation."
LANDLORD
750 University, a Limited Liability Corporation
By: /s/ Birk S. McCandless By: /s/ Barry McCarthy
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Name: Birk S. McCandless Name: _____________________________
---------------------------------
Its: President Its: Secretary
Date: 1/11/99 Date: _____________________________
---------------------------------
EACH OF THE UNDERSIGNED HEREBY ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE
TERMS AND CONDITIONS SPECIFIED IN THE FOREGOING CONSENT AND AGREES TO ALL SUCH
TERMS AND CONDITIONS.
SUBLANDLORD SUBTENANT
HI/FN, INC., NETFLIX.COM. INC.,
a Delaware corporation a California corporation
By: /s/ R.J. Farnham By: /s/ Reed Hastings
----------------------------------- -------------------------------
Name: R.J. Farnham Name: Reed Hastings
--------------------------------- -----------------------------
Its: President Its: President
---------------------------------- ------------------------------
Date: 1-6-99 Date: 3 JAN 98
--------------------------------- -----------------------------
By: /s/ William R. Walker By: /s/ Marc Randolph
----------------------------------- -------------------------------
Name: William R. Walker Name: Marc Randolph
--------------------------------- -----------------------------
Its: Secretary Its: Secretary
---------------------------------- ------------------------------
Date: JAN 9 1999 Date: 5 Jan 98
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