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FOSTER CITY, CA-The Data-retrieval technology company Inktomi Corp. says it has terminated its lease of the 381,000-sf Parkside Towers office development here and exercised a purchase option on the synthetic lease for its Bayside corporate headquarters in order to sell the facility.

As a result of these transactions, Inktomi says it will cease to have a long-term lease obligation of $315 million (estimated on June 30, 2002) and quarterly cash payments of approximately $5 million for the Parkside facility. “The impact of these transactions is expected to be cash neutral following the sale of the Bayside facility, expected by approximately year end,” according to a company statement.

The company’s share price is trading at $0.46 per share Friday afternoon, up a penny on the day. The company’s share price hit a 52-week low of $0.33 on Aug. 20. In January of this year, its share price was nearly $8.

Parkside Towers is a newly constructed unoccupied office complex. Inktomi, which began leasing the building in Janaury, is paying approximately $54 million to building owner Equity Office Properties Trust as a lease termination settlement. Approximately $40.6 million of the $54 million total is comprised of new cash, of which $19.1 million will be paid in the current quarter. Inktomi expects to pay the remaining $21.5 million by approximately year end.

With regard to its Bayside headquarters, Inktomi says it paid approximately $114 million of long term restricted cash to Deutsche Bank and its affiliates, the holders of the synthetic lease. Approximately $5.6 million of additional long-term restricted cash became unrestricted as a result of this transaction. The restricted cash was used as collateral against the synthetic lease and was not available for use by the company. In an August filing with the SEC, Inktomi revealed that it had been in violation of the Bayside synthetic lease agreement and would likely have to purchase the facility at the end of that month.

Proceeds from the future sale of the property are currently expected to be anywhere from $37.5 million to $55 million. If Inktomi is unable to sell Bayside by approximately year end, Equity Office Properties Trust has agreed, at the election of Inktomi, to buy Bayside for approximately $37.5 million. These proceeds would be reduced by any amount of the $21.5 million still owed to Equity Office as part of the Parkside lease termination. Inktomi says it will remain at Bayside as a long-term tenant.

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