EXHIBIT 10.6
SUBLEASE AGREEMENT
Effective as of October 23, 1998, Sun Microsystems, Inc., a Delaware
corporation ("Sublessor"), and Sigma Designs, Inc., a California corporation
("Sublessee") agree that subject to the terms and conditions set forth below,
Sublessee shall sublease from Sublessor approximately 24,933 rentable square
feet ("Premises") consisting of the entire building located at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇. The Premises are more particularly shown on
Exhibit A attached hereto. Sublessee agrees to accept the premises in their
"AS IS" condition, except for latent defects in the Premises.
TERM: The term of this sublease shall be for the period commencing March 15,
1999, and terminating September 30, 2002. Sublessee shall have access to the
Premises for fit-out as of February 15, 1999.
SUBLESSEE COMPLIANCE WITH MASTER LEASE: Except as otherwise specifically set
forth in this Sublease, Sublessee shall comply with all of the provisions of
the lease between Sublessor and Greenback Associates ("Lessor") (herein, the
"Master Lease") the terms of which are incorporated herein by reference, with
references therein to Lessee being read as Sublessee and reference therein to
Lessor being read as Sublessor, provided however, Sublessor shall not be
required hereby to perform the obligations of Landlord under the Master
Lease, Sublessor's only obligation is to make timely demand upon Landlord for
Landlord to perform the covenants and promises of Landlord under the Master
Lease. Sublessee acknowledges receipt of a copy of the Master Lease.
Sublessee shall avoid any acts or failures to act which, if attributed to
Sublessor, would cause a default under the Master Lease. To the extent the
Master Lease requires Sublessor to obtain Lessor's consent or approval to an
action which Sublessee proposes. Sublessee shall obtain Lessor's and
Sublessor's prior consent or approval. Sublessor will not reasonably withhold
consent and will act in good faith in considering Sublessee's requests.
Sublessor will reasonably cooperate with Sublessee in requests to obtain
Lessor consent.
Notwithstanding the above to the contrary, paragraphs l.B., 2, 3, 5, 15, 16,
17, 24, 25 and 29 of Addendum I to the Master Lease are excluded from the
obligations of Sublessee hereunder.
RENT: Commencing March 15, 1999, Sublessee shall pay to Sublessor in advance
on or before the first day of each month, triple net monthly rent in the
amount of $27,426.30 beginning March 15, 1999 through December 31, 2000. From
January 1, 2001, through September 30, 2002, the triple net monthly rent
shall be $29,919.6 ADDITIONAL RENTAL (OPERATING EXPENSES): Sublessee shall be
responsible for all operating expenses and taxes, insurance, common area
expenses and any other pass throughs from Lessor, payable monthly.
Sublessee's proportionate share of the Premises is 100%.
SECURITY DEPOSIT: Sublessee shall pay to Sublessor in advance a security
deposit in the amount of $54,852.60, equal to two (2) times base rent,
payable upon execution of the Sublease Agreement. In addition to other
assurances provided hereunder, Sublessee agrees to provide Sublessor with
additional protection or collateral in the event of a default during the
Sublease Term in the form of an Irrevocable Standby Letter of Credit ("LOC")
with Silicon Valley Bank ("Bank") according to the following terms and
conditions:
(a) Bank/Lender: Silicon Valley Bank.
(b) Letter of Credit Form: Irrevocable Standby Letter of Credit form of Bank.
(c) Term: Annual and annually renewable for the Sublease Term (i.e., 3-1/2
years).
(d) Amount: The principal amount of the Letter of Credit shall be $109,705.00,
representing four (4) months initial Base Rent. The amount shall remain
constant for the Sublease Term.
(e) Beneficiary: The Beneficiary shall be Sublessor.
(f) Customer: The Customer shall be Sublessee or designee of Sublessee.
(g) Terms and Conditions of LOC: Standard form conditions required by Bank.
(h) Payment On Demand: In the event of default by Sublessee, Bank shall pay
Sublessor upon presentation of a written demand describing the default and
signed by a Corporate Officer of Sublessor.
(i) Late Charge: Sublessor may include a demand for payment of a Late Charge
to Bank if Sublessee is delinquent in any payment due under the Sublease.
(j) Failure of Bank to Renew LOC: In the event in any year(s), the Bank fails
to renew the LOC, then Sublessee shall within thirty (30) days knowledge
of such disapproval, either replace the LOC with cash collateral in the
amount of $109,705.00 or present to Sublessor an alternative form of
collateral which alternative form may be acceptable or not by Sublessor
in its sole discretion. Should Sublessee fail to replace the LOC as
provided herein within thirty (30) days' knowledge of such disapproval,
such failure by Sublessee shall be treated as a default of this Sublease
entitling Sublessor to all of its legal remedies hereunder, at law and in
equity.
(k) Default: If Sublessee is in default of any monetary term of the Sublease
for ten (10) days, on the eleventh (11th) day Sublessor may make a demand
upon the Bank for immediate cure pursuant to payment from Bank to
Sublessor under the terms of the LOC.
Sublessee shall cause to be delivered to Sublessor upon execution of this
Sublease an Irrevocable Standby Letter of Credit with Bank as described
hereinabove. If Sublessee fails to pay Rent or any other sum when due under
this Sublease or fails to meet any other obligation under this Sublease, and
such failure, with the passing of time or the giving of notice or both, would
constitute an event of default under this Sublease, then Sublessor shall have
the right to draw immediately on said Letter of Credit in an amount which
Sublessor deems necessary to cure any such failure, and thereafter to apply
all or part of any amounts so drawn to cure such default.
USE: Premises may be used Sublessee for general office and any other use
permitted by CCR's and local ordinances.
ALTERATIONS: Except as otherwise provided herein. Sublessee accepts the
Premises in its present condition. Sublessee may, at its own expense, make
any alterations or improvements in and to the Premises which Sublessee may
deem necessary or suitable. Such alterations or improvements shall be made in
a good and workmanlike manner, without impairing the structural soundness of
the Premises. All such alterations or improvements shall be made at
Sublessee's sole cost, and only after obtaining the prior written consent of
Sublessor which consents shall not be unreasonably withheld or delayed.
INSURANCE: The Sublessee shall carry property, commercial liability and such
other policies of insurance to protect against loss by reason of injury to
persons and damage to property directly or indirectly arising out of
Sublessee's occupancy of the Premises as are required under terms of the
Master Lease. A certificate of such insurance shall be furnished to
Sublessor. The certificate shall name Sublessor and Lessor as additional
insured and shall provide that the insurer shall provide Sublessor and Lessor
with 30 days written notice of any cancellation or reduction of insurance
coverage. The limits of liability for commercial liability insurance
requirements contained herein shall not be less than $2,000,000 single limit.
Except as otherwise provided herein, Sublessor shall have no responsibility
for the contents of the Premises, including Sublessee's personal property,
and shall have no responsibility to provide insurance for said contents. Both
Sublessee and Sublessor waive the right of recovery and the right to
subrogation against each other in the event of a loss which occurs during the
term of this Sublease.
INDEMNIFICATION: Sublessee assumes all the risk in connection with its use of
the Premises and shall indemnify Lessor and Sublessor for costs, damages,
loss, liability or expense actually incurred, including attorneys fees,
damages for injury to or death of persons and loss of or damage to property
caused by or arising out Sublessee's use or occupancy of the Premises, except
to the extent that any such harm, claim, liability, injury or damage to any
person or property is caused by the negligence or willful misconduct of
Sublessor, its agents, servants, or employees from which conduct Sublessor
shall indemnify, hold harmless and defend Sublessee.
ASSIGNMENT: This Sublease shall not be assigned or transferred without the
prior written consent of Sublessor. Any assignment or transfer in
contradiction of this paragraph shall be void.
DEFAULT AND TERMINATION: If Sublessee defaults in its obligation under this
Sublease, and such default continues for a period of ten days after written
notice has been delivered to Sublessee, Sublessor may, at its option,
terminate the Sublease. If the default cannot be remedied within ten (10)
days by use of reasonable diligence by Sublessee, additional time may be
granted by Sublessor. Upon termination of this Sublease due to default by
Sublessee, Sublessee shall immediately surrender the Premises to Sublessor,
in good order and condition, reasonable wear and tear excepted. Any unpaid
rent or other sums due Sublessor shall draw interest at the rate of 10% per
annum from the date due until paid.
NOTICE: Notice under this Sublease shall be given by certified United
States Mail, or by an overnight delivery service, addressed to
Sublessee at the Premises.
Notice to Sublessor shall be given at: With a Copy to:
Sun Microsystems, Inc. Sun Microsystems, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇-▇▇▇▇▇▇-▇▇▇ MS- PALO ▇-▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Lease Administration Attn: General Counsel
FLOOR PLAN: A Floor/Furniture Plan of the Premises is attached hereto as
Exhibit B.
CONSENT BY LESSOR: The written consent of Lessor to this Sublease, in
compliance with the terms of the Master Lease, is set forth below. This
Sublease Agreement shall be of no force or effect unless consented to by
Lessor after execution hereof.
SUBLESSORS COMPLIANCE WITH MASTER LEASE: Sublessor represents to Sublessee
that to the best of Sublessor's knowledge that Sublessor is not in
default under its obligations to be performed under the Master Lease by
Sublessor and that Sublessor has complied with all provisions of the
Master Lease between Master Lessor and Sublessor as of the Effective Date
and that such representation will be true and correct as of the
Commencement Date of this Sublease.
REAL ESTATE BROKERS AND COMMISSION: Sublessor agrees to pay a Real Estate
Commission to LaSalle Partners, which company has represented Sublessor as
its real estate agent in this transaction, and to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, which
individual broker has represented Sublessee in this transaction as its real
estate agent. Sublessor and Sublessee agree that they have had no prior
dealings with any other real estate agents. The parties agree that the
Sublease Commission will be split 50/50 between LaSalle Partners and ▇▇▇▇▇
▇▇▇▇▇▇▇▇ and that the Commission shall be paid by Sublessor Vi upon sublease
execution and the remaining '/2 upon occupancy by Sublessee. The amount of
the Commission shall be based upon the sum of seven (7%) percent of the total
Subrent proceeds for the first twelve (12) months of the Sublease Term, plus
six (6%) of the total Subtenant Proceeds for months 13 thru 36 of the
Sublease Term, plus five (5%) percent of the total Subrent Proceeds for
months 37 thru 42 and the end of the Sublease Term.
OTHER AGREEMENTS: Sublessor agrees to leave in place for Sublessee's benefit
and use the following improvements:
(1) Cat 5 Data Cable;
(2) Twisted Pair Voice Cable;
(3) Phone Patch Panels;
(4) Modular Data ▇▇▇▇ Panels;
(5) Evacuation Wall Plans (fire exit instructions)
ENTIRE AGREEMENT: This Sublease contains the entire agreement between the
parties hereto with respect to the subject matter hereof. Both parties
acknowledge and agree that no statement representation or warranty not
contained herein shall be binding upon the parties. No modification,
supplement or amendment to or of any term or provision of this Sublease shall
be binding unless in writing and signed by the parties hereto.
SUBLESSOR: SUBLESSEE:
Sun Microsystems, Inc. Sigma Designs, Inc.
By: By: /s/ ▇▇▇▇▇ ▇▇▇▇
Name: Name: ▇▇▇▇▇ ▇▇▇▇
Title: Title: President
Date: Date:
CONSENT
The undersigned hereby consents to the foregoing Sublease and agrees to
recognize Sigma Designs, Inc. as its subtenant under the terms of the
foregoing Sublease between Landlord's tenant. Sun Microsystems, and Sigma
Designs, Inc.
LESSOR:
▇▇▇▇▇▇▇ Properties, LP
By:__________________
Name:_____________________
Title:______________________
Date:_____________________
BROKER:
BROKER:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LaSalle Partners
Name:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Title: Real Estate Broker Date:_____________
Title:
Date:
We each represent that our respective companies are currently licensed to
perform real estate agency related services for a commission under the
laws, rules and regulations of the State of California.
EXHIBIT A
(See Attached Site Plan)
EXHIBIT B
(See Attached Furniture/Floor Plan)
