EXHIBIT 10.15
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Exhibit 10.15
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE dated this 2nd day of December, 1988 is made
by and between CORPORATE PLAZA, PHASE 1, a California general partnership
("Landlord") and CONNER PERIPHERALS, a California corporation ("Tenant").
R E C I T A L S
A. Tenant currently leases from Landlord approximately one hundred eighty
thousand (180,000) square feet of space located at 3061 and 3081 Zanker Road,
San Jose, California ("Premises") pursuant to that certain lease dated August
19, 1988 ("Lease"). The Premises consist of two (2) separate buildings, one
consisting of approximately sixty-four thousand (64,000) square feet ("Building
1") and the other consisting of approximately one hundred sixteen (116,000)
square feet ("Building 2").
B. Pursuant to the Lease Landlord's Prime Contractor, as defined in
Exhibit C of the lease, was to be responsible for constructing certain
improvements to the interior of Building 1 ("Building 1 Interior Improvements").
C. Landlord and Tenant have agreed to allow Tenant's Prime Contractor, as
defined in Exhibit C to the Lease, to construct the Building 1 Interior
Improvements.
NOW, THEREFORE, the parties hereto agree to amend the Lease as follows:
1. Exhibits C, C-3 (including Exhibits C-3.1 and C-3.2) and C-4 are hereby
deleted in their entirety and replaced with the Exhibit C, C-3 and C-4 attached
hereto.
2. All other terms, covenants and conditions of the Lease shall remain in
full force and effect except as specifically modified herein.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
set forth below their signatures.
Landlord: Tenant
CORPORATE PLAZA, PHASE 1, a CONNER PERIPHERALS, a
California general partnership California corporation
By: McCandless Development Corpo-
ration, a California corporation
By:______________________________ By:_____________________________
Birk S. McCandless, (Signature)
President
________________________________
(Printed Name)
________________________________
(Title)
_________________________________ ________________________________
(Date) (Date)
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EXHIBIT C
GENERAL CONDITIONS REGARDING
BUILDING IMPROVEMENTS
Landlord and Tenant agree that the following terms are hereby added to the
Lease:
1. Definitions: As used herein and in the Lease, the following terms
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shall have the following meanings:
A. Shell Improvements: Tenant acknowledges having reviewed the
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drawings listed in Exhibit C-1 and the improvements constructed or to be the
constructed in accordance therewith, and Tenant hereby approves thereof and
acknowledges that some improvements depicted on the plans have not actually been
constructed.
Landlord specifically agrees to complete, install, or repair at
its cost and expense, (independent of the Interior Improvement Allowance
provided below) those items set forth in Exhibit C-2 attached hereto in the
manner described therein. Landlord shall have no obligation to construct
improvements other than those in place upon execution of the Lease and the
improvements described in Exhibit C-2 ("Shell Improvements"). In the event the
City of San Jose requires additional improvements or changes to the Shell
Improvements to obtain a building permit to construct the Interior Improvements
(as specified below) all costs associated therewith shall be paid from the
Interior Improvement Allowance or directly by Tenant.
B. Interior Improvements: The term "Interior Improvements" shall
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mean those improvements to be constructed in Building 1 in accordance with
Exhibit C-3 ("Building 1 Interior Improvements") and those improvements to be
constructed in Building 2 in accordance with Exhibit C-4 ("Building 2 Interior
Improvements"). The responsibilities for the construction thereof are more
specifically described in Exhibits C-3 and C-4 attached hereto.
C. Interior Improvement Costs: The term "Interior Improvement
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Costs" shall mean the following: (i) the total amount due pursuant to the
general construction contract entered into by Tenant for the construction of the
Building 1 Interior Improvements, (ii) the total amount due pursuant to the
general construction contract entered into by Tenant for Building 2 to construct
the Building 2 Interior Improvements; (iii) the cost of all governmental
approvals required as a condition to the Interior Improvements (including all
construction taxes imposed by the City of San Jose) in connection with the
issuance of a building permit for the Interior Improvements, even if based in
part on the value of the Shell Improvements; (iv) all utility connection or use
fees; (v) fees or architects or engineers for services rendered in connection
with the design and construction of the Interior Improvements. The parties
acknowledge that the City of San Jose imposes certain taxes as a condition to
the issuance of building permits in certain circumstances, including the
"Building and Structure Construction Tax" imposed by Chapter 4.46 of the City of
San Jose Municipal Code (the "BSC Tax") and the "Commercial-
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Residential-Mobile Home Park Building Tax" imposed by Chapter 4.47 of the City
of San Jose Municipal Code (the "CRM Tax"). The parties further acknowledge
that the rate for these two taxes is higher for a structure designed or intended
to be used for "commercial purposes" than for a structure designed or intended
to be used for "industrial purposes". Landlord has paid a BSC Tax for the shell
of the Building based upon the rate imposed for buildings intended to be used
for "industrial purposes". However, the parties acknowledge and agree that (i)
an additional BSC Tax will be due for the shell of the building and an
additional BSC Tax shall be due upon the issuance of a building permit for all
Interior Improvements, if the City of San Jose determines that the Building is
intended for "industrial purposes", (ii) a BSC Tax, and a CRM Tax based on the
value of the Interior Improvements, and an additional BSC Tax and a CRM Tax
based on the value of the shell will be due if the City of San Jose determines
that the Building is intended for "commercial purposes," and (iii) any of such
taxes that must be paid in order to obtain building permits for the Interior
Improvements shall be "Interior Improvement Costs."
D. Landlord's Interior Improvement Allowance: The term "Interior
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Improvement Allowance" shall mean the maximum amount Landlord is required to
spend toward the payment of the Interior Improvement Costs, which amount is
equal to the product obtained by multiplying (i) Twenty-Five and 00/100 Dollars
($25.00) per square foot by (ii) one hundred eighty thousand (180,000) square
feet, for a total of Four Million Five Hundred Thousand Dollars ($4,500,000).
The Interior Improvement Allowance shall be allocated to each Building as
follows:
Building 1 - 64,000 square feet: $1,600,000.
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"Building 1 Interior Improvements Allowance"
Building 2 - 116,000 square feet: $2,900,000.
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"Building 2 Interior Improvements Allowance"
The portion of the Interior Improvement Allowance allocated to
each Building must be expended only in the Building to which such portion is
allocated.
E. Prime Contractor: The term "Tenant's Prime Contractor" shall
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mean such general contractor as is selected by Tenant for the Interior
Improvements.
2. Ownership of the Interior Improvements: Except as otherwise provided
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in the Lease, all of the Interior Improvements which are constructed with funds
of Landlord (including out of the Interior Improvement Allowance) shall become
the property of Landlord upon installation and shall not be removed or altered
by Tenant. Any part of the Interior Improvements which are constructed by
Landlord with funds of Tenant shall become the property of Tenant upon
installation and Tenant shall have the right to the extent permitted by
applicable tax laws, to depreciate and claim and collect investment tax credits
in such improvements; provided, however, that (i) Tenant shall not remove or
alter such improvements during the term of the
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Lease; (ii) such improvements shall be surrendered to Landlord, and title to
such improvements shall vest in Landlord, at the expiration or earlier
termination of the Lease Term; and (iii) in no event shall Landlord have any
obligation to pay Tenant for the cost or value of such improvements.
3. Under no circumstances shall Tenant be entitled to receive any
interest or credit on the Interior Improvement Allowance (or any portion thereof
remaining from time to time). The Interior Improvement Allowance shall only be
used for the payment of costs incurred in installing the Interior Improvements.
Tenant shall be entitled to no rent reduction, credit, rebate or other
consideration at any time in the event the Interior Improvement Allowance
remains unused for any reason whatsoever.
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BUILDING 1
INTERIOR IMPROVEMENTS
AGREEMENT
EXHIBIT C-3 BUILDING 1
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Tenant shall cause the Interior Improvements for Building 1 ("Building 1
Interior Improvements") to be constructed by Tenant's Prime Contractor. Tenant
shall also hire the architect and all other consultants necessary to construct
the Building 1 Interior Improvements.
Landlord shall have the right to reasonably approve Tenant's Prime
Contractor, primarily based on the financial strength and ability to perform the
work required. Landlord shall also have the right to reasonably approve the
plans and specifications for the Building 1 Interior Improvements (and changes
thereto).
1. Timing:
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Prior to the date construction of the Building 1 Interior Improvements
commences Tenant shall notify Landlord of its intention to commence
construction, shall submit plans and specifications, and notify Landlord of the
name and other reasonable information regarding Tenant's Prime Contractor.
Landlord shall respond within 10 days approving the same or stating specific
reasons for denial.
2. Building 1 Interior Improvement Allowance:
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A. The Building 1 Interior Improvement Allowance totaling
$1,600,000 ($25.00/SF) shall be funded jointly to Tenant and Tenant's Prime
Contractor as construction proceeds ("Funding"). The amount of Building 1
Interior Improvement Allowance Landlord is obligated to fund at any time is
Limited to the square footage improved at such time. For example, if
construction commences for less than the full building only a prorata portion of
the Building 1 Interior Improvement Allowance will be funded by Landlord based
on the number of square feet to be improved (i.e., if 32,000 square feet is
improved, a maximum of $800,000 will be funded).
In the event Building 1 is improved in phases and unexpended Interior
Improvement Allowance dollars remain unused upon full initial build-out of
Building 1, Landlord will fund the remaining Allowance to Tenant within (30)
days of completion of the final initial Interior Improvements, as a credit
against any other Interior Improvements paid by Tenant in Building 1.
B. Funding will occur no more often than twice per month and no
sooner than (5) days after receipt of request by Landlord from Tenant. In the
event funding is requested more often than twice per month, an additional fee of
$500.00 will be due from Tenant to Landlord. Funding must be supported by
invoice from Tenant's Prime Contractor and is subject to Landlord's lender
inspecting the job, reviewing, and approving the invoice and work in place. If
Landlord's lender ("Union Bank") does not approve the amount of any requested
funding, Landlord will be obligated to fund only the amount approved by
Landlord's lender. Funding
will occur only for work-in-place less a 10% retention on all work until 30 days
after filing of the notice of completion or the receipt of a lien free
endorsement reasonably acceptable to Landlord's lender. Landlord and Tenant
agree that Landlord will not be obligated to fund any portion of the Building 1
Interior Improvement Allowance in excess of the amount disbursed by Union Bank
pursuant to that certain Building Loan Agreement between Landlord and Union Bank
dated September 21, 1988 ("BlA") attached hereto as Exhibit D. Tenant agrees to
comply (and Tenant shall ensure that Tenant's Prime Contractor shall comply)
with any and all requirements of Union Bank which are conditions precedent to
the disbursement of funds under the BLA.
C. Subject to the limitations and conditions of the BLA, the
determination of the amount to fund will be based on work in place for general
utility interior improvements which may be of use to a subsequent user of
Building 1 (e.g., non-load bearing permanent partitions; windows, wall and floor
coverings; standard HVAC equipment and wiring; standard electrical distribution
facilities and wiring; standard lighting and utility fixtures or otherwise
approved by Landlord), the cost of which does not exceed the Building 1 Interior
Improvement Allowance.
D. All Interior Improvements not to be paid from the Interior
Improvement Allowance shall be invoiced from Tenant's Prime Contractor directly
to Tenant and shall not be funded by Landlord or Landlord's lender from the
Building 1 Interior Improvement Allowance provided further that Tenant shall be
responsible for the timely payment of all costs for such improvements in excess
of any single installment and in excess of the aggregate amount which shall
become payable by Landlord pursuant to the foregoing provision.
3. Commencement of Rent/Expenses:
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The Building 1 Base Rent, Tenant's obligation to pay for all expenses
relating to Building 1 and Tenant's obligation to pay all real property taxes on
the Property shall commence in any event on December 1, 1988 as provided in the
Lease notwithstanding the status of the construction of any or all of the
Building 1 Interior Improvements.
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BUILDING 2
INTERIOR IMPROVEMENTS
AGREEMENT
EXHIBIT C-4 BUILDING 2
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Tenant shall cause the Interior Improvements for Building 2 ("Building 2
Interior Improvements") to be constructed by Tenant's Prime Contractor. Tenant
shall also hire the architect and all other consultants necessary to construct
the Building 2 Interior Improvements.
Landlord shall have the right to reasonably approve Tenant's Prime
Contractor, primarily based on the financial strength and ability to perform the
work required. Landlord shall also have the right to reasonably approve the
plans and specifications (and changes thereto) to ensure the Building 2 Interior
Improvements are similar in quality and nature to the Building 1 Interior
Improvements.
1. Timing:
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Although the rent commences November 1, 1989 for Building 2, tenant
may cause the Building 2 Interior Improvements to be constructed any time prior
to November 1, 1989 without affecting the rent commencement date. Prior to the
date construction of the Building 2 Interior Improvements commences Tenant shall
notify Landlord of its intention to commence construction, shall submit plans
and specifications, and notify Landlord of the name and other reasonable
information regarding Tenant's Prime Contractor. Landlord shall respond within
10 days approving the same or stating specific reasons for denial.
2. Building 2 Interior Improvement Allowance:
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A. The Building 2 Interior Improvement Allowance totaling
$2,900,000 ($25.00/SF) shall be funded jointly to Tenant and Tenant's Prime
Contractor as construction proceeds ("Funding"). The amount of Building 2
Interior Improvement Allowance Landlord is obligated to fund at any time is
limited to the square footage improved at such time. For example, if
construction commences for less than the full building only a prorata portion of
the Building 2 Interior Improvement Allowance will be funded by Landlord based
on the number of square feet to be improved (i.e., if 58,000 square feet is
improved, a maximum of $1,450,000 will be funded).
In the event Building 2 is improved in phases and unexpended Interior
Improvement Allowance dollars remain unused upon full initial build-out of
Building 2, Landlord will fund the remaining Allowance to Tenant within (30)
days of completion of the final initial Interior Improvements, as a credit
against any other Interior Improvements paid by Tenant in Building 2.
B. Funding will occur no more often than twice per calendar month
and no sooner than (5) days after Landlord's receipt of Tenant's request. If
Tenant requests a second Funding in any calendar month, an fee of $500.00 will
be due from Tenant to Landlord. Funding must be supported by invoice from
Tenant's Prime Contractor and is subject to
Landlord's lender inspecting the job, reviewing, and approving the invoice and
work in place. If Landlord's lender ("Union Bank") does not approve the amount
of any requested funding, Landlord will be obligated to fund only the amount
approved by Landlord's lender. Funding will occur only for work-in-place less a
10% retention. The retention will be released on the earlier to occur of (i) 30
days after filing of the notice of completion; or (ii) the receipt of a lien
free endorsement reasonably acceptable to Landlord's lender. Landlord and
Tenant agree that Landlord will not be obligated to fund any portion of the
Building 2 Interior Improvement Allowance in excess of the amount disbursed by
Union Bank pursuant to that certain Building Loan Agreement between Landlord and
Union Bank dated September 21, 1988 attached hereto as Exhibit D ("BLA").
Tenant agrees to comply (and Tenant shall ensure that Tenant's Prime Contractor
shall comply) with any and all requirements of Union Bank which are conditions
precedent to the disbursement of funds under the BLA.
C. Subject to the limitations and conditions of the BLA, the
determination of the amount to fund will be based on work in place for general
utility interior improvements which may be of use to a subsequent user of
Building 2 (e.g., non-load bearing permanent partitions; windows, wall and floor
coverings; standard HVAC equipment and wiring; standard electrical distribution
facilities and wiring; standard lighting and utility fixtures or otherwise
approved by Landlord), the cost of which does not exceed the Building 2 Interior
Improvement Allowance.
D. All Interior Improvements not to be paid from the Interior
Improvement Allowance shall be invoiced from Tenant's Prime Contractor directly
to Tenant and shall not be funded by Landlord or Landlord's lender from the
Building 2 Interior Improvement Allowance provided further that Tenant shall be
responsible for the timely payment of all costs for such improvements in excess
of any single installment and in excess of the aggregate amount which shall
become payable by Landlord pursuant to the foregoing provision.
3. Commencement of Rent/Expenses:
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The Building 2 Base Rent shall commence in any event on November 1,
1989 as provided in the Lease notwithstanding the status of the construction of
any or all of the Building 2 Interior Improvements.
In the event Tenant occupies any portion of Building 2 prior to
November 1, 1989, Building 2 Base Rent shall not commence on such earlier date
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(it shall commence on November 1, 1989 as provided above). However, in such
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event, Tenant shall be responsible for a prorata share (based on the number of
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square feet occupied) of all other expenses as more particularly set forth in
the Lease.
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SECOND AMENDMENT TO LEASE
This Second Amendment to Lease ("Second Amendment") is made this 8th day of
June, 1990, by and between CONNER PERIPHERALS, a California corporation
("Tenant"), and FRED N. SAHADI ("Landlord").
RECITALS
A. On August 19, 1988, Landlord's predecessor in interest, Corporate
Plaza, Phase 1, a California general partnership, and Tenant entered into a
certain build-to-suit lease (the "Original Lease") providing for the use and
occupancy by Tenant of certain real property and improvements to be constructed
thereon by Landlord commonly known as 3061 and 3081 Zanker Road, San Jose,
California, as more particularly described in the Original Lease (the
"Property"). The Original Lease has since been amended by that certain First
Amendment to Lease dated December 5, 1988 (collectively, the "Lease"). All
capitalized terms used herein and not otherwise defined herein shall have the
defined meanings ascribed to such terms in the Lease.
B. On May 27, 1989, Landlord and Tenant entered into another build-
to-suit lease ("Original Building 6 Lease") providing for the use and occupancy
by Tenant of certain real property and improvements to be constructed thereon by
Landlord. The original Building 6 Lease has since been amended by that certain
letter agreement dated May 28, 1989 (collectively, the "Building 6 Lease").
C. Concurrently with the execution of the Original Building 6 Lease,
Landlord and Tenant entered into a certain Option to Lease Expansion Space
("Original Option Agreement") whereby Tenant was granted an option to lease
another building ("Building 7") to be constructed by Landlord on a portion of
the land described therein (the "Option"). The Original Option
Agreement has since been amended by that certain letter agreement dated May 28,
1989 (collectively the "Option Agreement"). On or about June 1, 1990, Tenant
gave, and Landlord received, written notice of its exercise of the Option as
described in the Option Agreement ("Notice"), subject to certain modifications
described in the Notice.
D. Concurrently with the execution of this Second Amendment, Landlord
and Tenant have entered into another build-to-suit lease ("Building 7 Lease")
pursuant to which Landlord agreed to construct, and Tenant agreed to use and
occupy, Building 7.
E. In consideration of Landlord's agreement to incorporate into the
Building 7 Lease the modifications to the terms of the Option Agreement set
forth in the Notice, Tenant has agreed to modify the terms of the Building 6
Lease and the Lease.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth below, Landlord and Tenant hereby agree to amend the Lease as follows:
1. Term. Section 1.1 of the Lease is hereby
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deleted in its entirety and the following is substituted in place thereof:
1.1 Term. The initial term of this Lease shall
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be for thirteen (13) years and six (6) months ("Initial Term")
and shall commence on December 1, 1988 ("Commencement Date")
and shall continue, unless sooner terminated pursuant to the
provisions hereof, until 5:00 P.M. on May 31, 2002
("Expiration Date"), subject to the terms of Section 1.2
below ("Lease Term").
2. Extension of Term. Section 1.2 of the Lease is hereby deleted in its
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entirety and the following is substituted in place thereof:
1.2 Extension of Term. If Tenant shall not be in default
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hereunder at the end of the Initial Term or at the time Tenant
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exercises its options to extend the Lease Term as provided
below, Tenant shall have the options (each an "Extension
Option" or collectively, the "Extension Options") to extend
the Initial Term for two (2) consecutive five (5) year terms
(each an "Extension Term" or collectively, the "Extension
Terms"). All terms and conditions of this Lease shall apply
during the Extension Terms, except that Base Rent for the
Extension Terms shall be determined in accordance with Section
3.2 below (and Tenant shall have no further right to extend
the Lease Term beyond the Extension Terms referred to above).
The foregoing Extension Options shall be exercised by written
notice given by Tenant to Landlord not earlier than eighteen
(18) months nor later than twelve (12) months prior to the
expiration of the Initial Term or the first Extension Term, as
the case may be. Time is of the essence.
Upon any Transfer (defined in Section 14.1.A below) or
Affiliate Transfer (defined in Section 14.1.D below) of this
Lease, the Building 6 Lease or the Building 7 Lease, all
unexercised Extension Options hereunder shall become void and
of no further force and effect, unless said Transfer or
Affiliate Transfer is made pursuant to the conditions,
standards and limitations set forth in Section 14.1 of this
Lease.
Tenant shall only be entitled to exercise the Extension
Options if exercised simultaneously with the identical
extension options provided for in the Building 6 Lease and the
Building 7 Lease.
Upon any extension of the Lease Term, as provided in this
Section 1.2, the term "Lease Term" as used herein shall
thereafter include the applicable Extension Term, and the
Expiration Date shall be the expiration date of the applicable
Extension Term, unless sooner terminated.
3. Base Rent Adjustment. Section 3.1.3 of the Lease is hereby deleted in
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its entirety and the following is substituted in place thereof:
3.1.3 Base Rent Adjustment. For purposes of this Section
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3.1.3, the aggregate amount of the Building 1 Base Rent and
the Building 2 Base Rent calculated pursuant to Sections 3.1.1
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and 3.1.2 above shall be referred to as the "Original Base Rent".
Effective as of (i) June 1, 1991, December 1, 1993, June 1, 1996,
December 1, 1998 and June 1, 2001 during the Initial Term, (ii)
December 1, 2003 and June 1, 2006 if the Extension Option for the
First Extension Term is exercised, and (ii) December 1, 2008 and June
1, 2011, if the Extension Option for the second Extension Term is
exercised, Base Rent shall be adjusted as follows:
ADJUSTED = [1 + (.04 x n) ] x ORIGINAL or I* x ORIGINAL
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BASE RENT 12 BASE RENT I BASE RENT
whichever shall be the greater amount, where
n = 31 for the first Base Rent Adjustment, 61 for the second Base
Rent Adjustment, 91 for the third Base Rent Adjustment, 121
for the fourth Base Rent Adjustment, and 151 for the fifth
Base Rent Adjustment during the Initial Term;
n = 181 for the sixth Base Rent Adjustment, and 211 for the
seventh Base Rent Adjustment, if the Extension Option for the
first Extension Term is exercised;
n = 241 for the eighth Base Rent Adjustment, and 271 for the ninth
Base Rent Adjustment, if the Extension Option for the second
Extension Term is exercised;
I = The Consumer Price Index (All Items Seasonally Adjusted, San
Francisco-Oakland) for All Urban Consumers as published by the
Bureau of Labor Statistics of the U.S. Department of Labor for
the month of December, 1988, and
I* = The Consumer Price Index (All Items Seasonally Adjusted, San
Francisco-Oakland) for All Urban Consumers as published by the
Bureau of Labor Statistics of the U.S. Department of Labor for
the most recent month preceding the month in which the
adjustment is effective for which said index shall be
published;
provided, however, that Adjusted Base Rent shall not be
greater than
[I = (.08 n)] x ORIGINAL BASE RENT
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12
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4. Option Period Rent. Section 3.2 is hereby deleted in its entirety and
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the following is substituted in place thereof:
3.2 Option Period Rent.
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3.2.1 Determination by Negotiation. If Tenant should
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exercise the Extension Options pursuant to Section 1.2 hereof,
rent payable for use and occupancy of Building 1 and Building
2 shall be adjusted to ninety-five percent (95%) of the fair
market rent for Building 1 and Building 2 as of June 1, 2002
or June 1, 2007, as the case may be ("Option Rent"),
determined by negotiation of Landlord and Tenant, provided
that, if within fifteen (15) days following exercise of the
applicable Extension Option, Landlord and Tenant shall not
have reached agreement as to the Option Rent, the Option Rent
shall be determined by appraisal as hereinafter provided. If
Landlord and Tenant shall reach agreement on the Option Rent
within fifteen (15) days following exercise of the applicable
Extension Option, they shall immediately execute an amendment
to this Lease setting forth the Option Rent. In no event shall
the annual Base Rent for either Extension Term be less than
the annual Base Rent which would have been in effect in the
Lease year in which the applicable Extension Term commences.
3.2.2 Determination by Appraisal. If Landlord and
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Tenant shall be unable to agree on the Option Rent within
fifteen (15) days following exercise of the applicable
Extension Option, then within ten (10) days thereafter, each
party shall, by notice given to the other party, appoint a
real estate appraiser having at least five (5) years' full-
time commercial appraisal experience in San Jose, California
to determine fair market rent for Building 1 and Building 2
for the applicable Extension Term. If a party does not appoint
an appraiser within ten (10) days after the other party has
given notice of the name of such party's appraiser, the single
appraiser appointed shall be the sole appraiser and shall set
the Option Rent. If two appraisers are appointed by the
parties as hereinabove provided, they shall meet promptly and
attempt to set the fair market rent for the applicable
Extension Term. If they are unable to agree within thirty (30)
days after the second appraiser has been appointed, they shall
attempt to select a third appraiser meeting the qualifications
hereinabove specified within ten (10) days after the last day
the two appraisers are given to set the Option Rent. Each of
the parties shall bear one-half (1/2) the cost of
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appointing the third appraiser and one-half (1/2) of the third
appraiser's fee. The third appraiser, however selected, shall
be a person who has not previously acted in any capacity for
either Landlord or Tenant. Within thirty (30) days after the
selection of the third appraiser, the majority of the
appraisers shall set the fair market rental value.
In setting the Option Rent, the appraisers shall
consider the use to which Building 1 and Building 2 are
restricted under this Lease and shall not consider the highest
and best use for Building 1 and Building 2 without regard to
the restriction on use of Building 1 and Building 2 contained
in this Lease. In establishing the fair market rental value,
the appraiser or appraisers shall consider all market
conditions having an effect on such value (including, without
limitation, rental rates for comparable space with comparable
tenant improvements and any adjustments to rent based upon
direct costs (operating expenses) and taxes, financing
charges, and/or cost of living or other rental adjustments;
the relative strength of the tenants, and the size, location
and quality of the buildings). Within thirty (30) days after
the selection of the third appraiser, a majority of the
appraisers shall set the Option Rent.
If a majority of the appraisers are unable to set the
Option Rent within said period, the three appraisals shall be
added together and their total divided by three; the resulting
quotient shall be the Option Rent. If, however, the low
appraisal or the high appraisal is more than ten percent (10%)
lower or higher than the middle appraisal, the low appraisal
or the high appraisal or both shall be disregarded. If only
one appraisal is disregarded, the remaining two appraisals
shall be added together and their total divided by two; the
resulting quotient shall be the Option Rent. If both the low
appraisal and the high appraisal are disregarded as
hereinabove provided, the middle appraisal shall be the Option
Rent.
After the Option Rent has been set, the appraisers
shall immediately notify Landlord and Tenant of the amount
thereof. Once Tenant delivers notice of its exercise of the
applicable option to extend the lease Term, Tenant may not
withdraw such exercise and, subject to the terms of Section
1.2 and this Section 3.2, such notice shall operate to extend
the Lease Term.
3.2.3 Determination by Arbitration. If the two
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appraiser appointed by Landlord and Tenant pursuant to
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Section 3.2.2 above are unable to agree on the third
appraiser, either party to this Lease, by giving ten (10)
days' notice to the other party, may apply to the American
Arbitration Association for the purpose of determining the
Option Rent, in which case the parties agree that the decision
of the American Arbitration Association setting the Option
Rent shall be binding.
3.2.4 Adjustment of Option Rent. Option Rent for
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each Extension Term shall be adjusted in accordance with
Section 3.1.3 hereof, with "Original Base Rent" being read to
refer to "Option Rent."
5. Effect of Amendment. Except as modified by the terms hereof, the
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terms and provisions of the Lease shall remain unmodified and continue in full
force and effect. In the event of any conflict between the terms of this Second
Amendment and the terms of the Lease, the terms and provisions of this Second
Amendment shall prevail.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the date first set forth above.
LANDLORD
/s/ Fred N. Sahadi
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FRED N. SAHADI
TENANT:
CONNER PERIPHERALS, a
California corporation
By: /s/ Carl W. Neun
-------------------------------------
CARL W. NEUN
Senior Vice President
And Chief Financial Officer
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THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE (the "Third Amendment") is dated May 18,
1994 for reference purposes only and is made by and between FRED SAHADI
("Landlord"), successor in interest to Corporate Plaza, Phase I, a California
general partnership, and CONNER PERIPHERALS, INC. ("Tenant"), a Delaware
corporation.
RECITALS
A. Tenant currently leases from Landlord property commonly known as
3061 and 3081 Zanker Road, San Jose, California (the "Property") pursuant to
that certain lease dated August 19, 1988 between Corporate Plaza, Phase I, as
landlord, and Tenant (the "Original Lease"), as amended by ** that certain First
Amendment to Lease dated December 2, 1988 ("First Amendment") and that certain
Second Amendment to Lease dated June 8, 1990 ("Second Amendment"). The Original
Lease, as amended by the First Amendment and the Second Amendment, is referred
to herein as "the Lease."
B. The Property consists of a 9.76-acre parcel of land on which there
are situated two separate research and development buildings, one consisting of
approximately sixty-four thousand (64,000) square feet ("Building 1") and the
other consisting of approximately one hundred sixteen thousand (116,000) square
feet ("Building 2") and two auxiliary buildings which house certain mechanical
equipment and contain approximately thirty-nine hundred (3,900) square feet.
C. Landlord and Tenant acknowledge that contemporaneous herewith the
Building 6 Lease and the Building 7 Lease referred to in the Second Amendment
are being terminated and a certain Agreement and Estoppel Certificate of even
date herewith is being delivered by Tenant in favor of Landlord's first mortgage
lender. The parties now desire to further amend the Lease as more particularly
set forth herein.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, LANDLORD AND TENANT HEREBY AGREE
THAT THE LEASE IS AMENDED AS HEREINAFTER PROVIDED.
1. Definitions: All capitalized terms that are not otherwise defined
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herein shall have the meanings set forth in the Lease.
2. Building 6 & 7 Lease: The references to the Building 6 Lease and
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the Building 7 Lease in the second grammatical paragraph of Section 1.2 of the
Lease are deleted. The third grammatical paragraph of Section 1.2 is deleted in
its entirety.
**letter agreement dated August 18, 1988.
3. Exercise of First Extension Option: Tenant hereby irrevocable
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exercises the first of the two Extension Options provided for in Section 1.2 of
the Lease. Landlord accepts said exercise of the first Extension Option and
waives the requirement that the first Extension Option be exercised not earlier
than eighteen (18) months prior to the expiration of the Initial Term.
4. Deletion of Section 3.1.3: From and after December 1, 1993, Section
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3.1.3 of the Lease (including without limitation Sections 3.1.3.1 and 3.1.3.2 of
the Original Lease) shall be null and void and of no further force or effect.
5. Base Rent: The following provisions are added to Section 3.1 of the
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Lease:
"3.1.4 Rent Beginning December 1, 1993: Beginning December 1, 1993
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and continuing through November 30, 1996, rent payable by Tenant for use and
occupancy of the Property shall be two hundred twenty-nine thousand four hundred
and 49/100 dollars ($229,400.49) per month."
"3.1.5 Rent Beginning December 1, 1996: Beginning December 1, 1996
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and continuing through May 31, 2002, rent payable by Tenant for use and
occupancy of the Property shall be two hundred twenty-four thousand and 49/100
dollars ($224,000.49) per month."
6. Rent for Extension Terms: Section 3.2 of the Lease is hereby deleted
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in its entirety and the following substituted in place thereof.
"3.2 Rent For Extension Terms:
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3.2.1 Rent Beginning June 1, 2002: Beginning June 1, 2002, rent
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payable by Tenant for use and occupancy of the Property shall be two hundred
sixteen thousand dollars ($216,000) per month or ninety-five percent (95%) of
the monthly fair market rent for Buildings 1 and 2 as of June 1, 2002
(determined as hereinafter provided), whichever shall be the greater amount.
Said rent shall be adjusted as of December 1, 2004 in accordance with the
provisions of Section 3.2.4 hereof and, as so adjusted, shall continue in effect
through May 31, 2007.
3.2.2 Rent Beginning June 1, 2007: If tenant should exercise the
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second Extension Option, beginning June 1, 2007, monthly rent payable by Tenant
for use and occupancy of the Property shall be equal to:
(1) Rent payable for May 2007 x 1.10 or rent payable for May
2007 x I*/I, whichever shall be the greater amount, but in
no event more than rent payable for May 2007 x 1.20, where
I = the Consumer Price Index (All Items Seasonally Adjusted, San
Francisco-Oakland-San Jose) for All Urban Consumers as
published by the U.S. Department of Labor for November 2004
(or the most
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recent month preceding November 2004 for which said index shall be published)
and
I*= the Consumer Price Index (All Items Seasonally Adjusted, San
Francisco-Oakland-San Jose) for All Urban Consumers as
published by the U.S. Department of Labor for May 2007 (or
the most recent month preceding June 2007 for which said
index shall be published).
or
(2) ninety-five percent (95%) of the monthly fair market rent
for Buildings 1 and 2 as of June 1, 2007 (determined as
hereinafter provided),
whichever shall be the greater amount.
Said rent shall be adjusted as of December 1, 2009 in accordance with the
provisions of Section 3.2.4 hereof and, as so adjusted, shall continue in effect
through May 31, 2012.
3.2.3 Determination Of Fair Market Rent:
---------------------------------
3.2.3.1 First Extension Term. Landlord shall notify Tenant on
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or before June 1, 2001 of Landlord's estimate of the monthly fair market rent
for Buildings 1 and 2 as of June 1, 2002. If, within fifteen (15) days after
such notice of Landlord's estimate of the monthly fair market rent for the
Buildings 1 and 2, Landlord and Tenant shall not have reached agreement as to
the monthly fair market rent for the Buildings 1 and 2 as of June 1, 2002, the
monthly fair market rent shall be determined by appraisal or by arbitration as
hereinafter provided.
3.2.3.2 Second Extension Term. If Tenant should exercise the
---------------------
second Extension Option, Landlord shall, within fifteen (15) days after Tenant's
notice of exercise of the second Extension Option, notify Tenant of Landlord's
estimate of the monthly fair market rent for the Buildings 1 and 2 as of June 1,
2007. If, within fifteen (15) days after such notice of Landlord's estimate of
the monthly fair market rent for the Buildings 1 and 2, Landlord and Tenant
shall not have reached agreement as to the monthly fair market rent for the
Buildings 1 and 2 as of June 1, 2007, the monthly fair market rent shall be
determined by appraisal or by arbitration as hereinafter provided.
3.2.3.3 Determination By Appraisal. If Landlord and Tenant
--------------------------
should fail within the period provided to agree on the monthly fair market rent
for Buildings 1 and 2 as of the date specified in Section 3.2.2.1 or the date
specified in Section 3.2.3.2, as the case may be, then within ten (10) days
after the expiration of the applicable period, each party shall, by notice given
to the other party, appoint a real estate appraiser having at least five years'
full time commercial real estate appraisal experience in San Jose, California to
determine monthly
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fair market rent for Buildings 1 and 2 as of the applicable date. If a party
does not appoint an appraiser within ten (10) days after the other party has
given notice of the name of such party's appraiser, the single appraiser
appointed shall be the sole appraiser and shall determine the monthly fair
market rent for Buildings 1 and 2 as of the applicable date. If two appraisers
are appointed by the parties as hereinabove provided, they shall meet promptly
and attempt to determine the monthly fair market rent for Buildings 1 and 2 as
of the applicable date. If they fail to agree within thirty (30) days after the
second appraiser has been appointed, they shall attempt to select a third
appraiser meeting the qualifications hereinabove specified within ten (10) days
after the last day the two appraisers are given to determine the monthly fair
market rent for Buildings 1 and 2 as of the applicable date. Each of the
parties shall bear one-half (1/2) the cost of appointing the third appraiser and
one-half (1/2) the third appraiser's fee. The third appraiser, however
selected, shall be a person who has not previously acted in any capacity for
either Landlord or Tenant. Within thirty (30) days after the selection of the
third appraiser, a majority of the appraisers shall determine the monthly fair
market rent for Buildings 1 and 2 as of the applicable date.
In determining the monthly fair market rent for the Buildings 1 and 2,
the appraisers shall consider the uses to which Buildings 1 and 2 is restricted
under this Lease and shall not consider the highest and best use for Buildings 1
and 2 without regard to the restriction on use of Buildings 1 and 2 contained in
this Lease. In determining the monthly fair market rent for Buildings 1 and 2,
the appraiser or appraisers shall consider all market conditions having an
effect on rental value (including, without limitation, rental rates for
comparable space with comparable tenant improvements and any adjustments to rent
based upon direct costs (operating expenses) and taxes, financing charges,
and/or cost of living or other rental adjustments, the relative strength of the
tenants, and the size, location and quality of the buildings).
If a majority of the appraisers should fail, within said thirty (30)
day period, to determine the monthly fair market rent for Buildings 1 and 2 as
of the applicable date, the three appraisals shall be added together and their
total divided by three (3); the resulting quotient shall be deemed to be the
monthly fair market rent for Buildings 1 and 2 as of the applicable date. If,
however, the low appraisal is more than ten percent (10%) lower or the high
appraisal is more than ten percent (10%) higher than the middle appraisal, the
low appraisal or the high appraisal or both shall be disregarded as appropriate.
If only one appraisal is disregarded pursuant to the foregoing provision, the
two remaining appraisals shall be added together and their total divided by two
(2); the resulting quotient shall be the monthly fair market rent for Buildings
1 and 2 as of the applicable date. If both the low appraisal and the high
appraisal are disregarded as hereinabove provided, the middle appraisal shall be
the monthly fair market rent for Buildings 1 and 2 as of the applicable date.
After the monthly fair market rent for Buildings 1 and 2 as of the
applicable date has been determined, the appraisers shall immediately notify
Landlord and Tenant in writing of the amount thereof, and monthly rent for the
Extension Term shall be determined as
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provided in Section 3.2.1 or Section 3.2.2 hereof, as appropriate.
Once Tenant gives notice of its exercise of the second Extension
Option, Tenant may not withdraw such exercise and, subject to the provisions of
Section 1.2 hereof, such notice shall operate to extend the Lease Term.
3.2.3.4 Determination By Arbitration: If the two appraisers appointed
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by Landlord and Tenant pursuant to Section 3.2.3.3 hereof should fail to agree
on the third appraiser within the allotted time, either party to this Lease may,
by demand upon the other party in the manner specified in Section 16.3 hereof
for giving notices hereunder, require that the monthly fair market rent for
Buildings 1 and 2 as of the applicable date be determined by arbitration in San
Francisco, California in accordance with the commercial arbitration rules of the
American Arbitration Association, in which case the parties agree that the
decision of the arbitrators setting the monthly fair market rent for Buildings 1
and 2 as of the applicable date shall be binding and conclusive upon the
parties. After the monthly fair market rent for Buildings 1 and 2 as of the
applicable date has been so determined, rent for the Extension Term shall be
determined as provided in Section 3.2.1 or Section 3.2.2, as appropriate.
3.2.4 Rent Adjustment: Rent payable under the Lease for use and
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occupancy of the Property during the Extension Terms shall be adjusted as of
December 1, 2004 (the "First Adjustment Date") and, if Tenant should exercise
the second Extension Option, as of December 1, 2009 (the "Second Adjustment
Date") in accordance with the following formula:
Adjusted Rent = Rent x 1.10 or Rent x I*/I,
whichever shall be the greater amount, where
Rent = rent payable immediately prior to the adjustment;
I = the Consumer Price Index (All Items Seasonally Adjusted, San
Francisco-Oakland-San Jose) for All Urban Consumers as
published by the U.S. Department of Labor for May 2002 in
the case of the First Adjustment Date and May 2007 in the
case of the Second Adjustment Date; and
I*= the Consumer Price Index (All Items Seasonally Adjusted, San
Francisco-Oakland-San Jose) for All Urban Consumers as
published by the U.S. Department of Labor for the most
recent month preceding the month in which the adjustment is
effective for which said index shall be published; provided,
however, that Adjusted Rent shall not be greater than
Rent x 1.20.
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3.2.4.1 Provisional Adjustment: Until such time as the index
----------------------
required for any adjustment of rent (or determination of rent pursuant to
Section 3.2.2 hereof) has been published, rent shall be adjusted (or determined)
provisionally using Landlord's estimate of the required index. In the event the
provisionally adjusted (or determined) rent is greater than the rent determined
by the required index as actually published, Tenant shall be entitled to a
credit against rent next falling due hereunder in the amount by which payments
actually paid by Tenant, if any, on account or rent as provisionally adjusted
(or determined) exceed the rent actually due hereunder. In the event the
provisionally adjusted (or determined) rent is less than the rent determined by
the required index as actually published, Tenant shall pay to Landlord within
fifteen (15) days after receipt of Landlord's statement thereof, the amount by
which the rent theretofore payable hereunder exceeds the provisionally adjusted
(or determined) rent actually paid by Tenant on account thereof.
3.2.4.2 Change of Index: If the Consumer Price Index should be
---------------
modified or discontinued during the Lease term, the most nearly comparable
official price index of the United States Government (as determined by Landlord
in Landlord's reasonable discretion) shall be used for computing rent
adjustments hereunder and determining rent pursuant to Section 3.2.2 hereof."
7. Use. The first sentence of Section 4.1 of the Lease is amended to
---
read:
"Tenant may use the Property throughout the term of this Lease for
office, research and development, manufacturing, marketing and other related
legal uses and for no other purpose."
8. Trade Fixtures and Leasehold Improvements. The following sentence is
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added to Section 5.2 of the Lease following the last sentence thereof:
"In the event that Tenant makes such request and Landlord has been
provided with the plans and specifications and all other reasonably relevant
information regarding such alteration, Landlord shall inform Tenant within
thirty (30) days after receipt of such information whether or not Landlord will
require the removal of the alteration in question."
The parties acknowledge that certain alterations have been made by the
Tenant without the Landlord's consent, which Tenant represents are shown by
cross-hatching on Exhibit A hereto (which so-marked alterations are referred to
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herein as the "Unapproved Alterations"). Landlord hereby approves the
Unapproved Alterations, but Landlord hereby notifies Tenant that Landlord will
require that the Unapproved Alterations be removed upon the expiration of the
Lease Term. Notwithstanding the foregoing, nothing contained in this paragraph
shall limit or otherwise modify Tenant's obligations under the Original Lease.
Contemporaneously herewith, Tenant has delivered to Landlord all building
permits in Tenant's possession for the Unapproved Alterations; provided,
however, that to the extent Tenant has not obtained building permits for the
Unapproved Alterations, Tenant shall make application to the
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appropriate governmental authority for such permits and shall, at its sole cost
and expense, take all action necessary to obtain such permits within one hundred
twenty (120) days of the date hereof.
9. Earthquake Insurance: The second sentence of Section 9.2 of the Lease
--------------------
is amended to read:
"The cost (or portion thereof as described below) of all Landlord's
Insurance, plus any charges for deferred payment of premiums and the amount of
any deductible incurred upon any covered loss, shall be Reimbursable Expenses to
be paid by Tenant to Landlord as provided in Section 16.26 hereof; provided,
however, that earthquake insurance shall not be required and the cost of
earthquake insurance shall not be a Reimbursable Expense to the extent that such
cost exceeds a commercially reasonable rate, unless an institutional Lender
holding a loan that is secured by a first deed of trust or mortgage encumbering
all or any part of the Property requires that earthquake insurance be
maintained, and it is the general policy of such Lender to require that
earthquake insurance be maintained on substantially similar properties
encumbered by such Lender in the same or comparable seismic zones as the
Property in California, then in that event earthquake insurance shall be
required and the cost thereof shall be a Reimbursable Expense or in the event
that Tenant elects to carry the earthquake insurance directly, Tenant shall pay
the entire cost thereof even if it exceeds a commercially reasonable rate."
Notwithstanding the foregoing, Tenant agrees that so long as the
Lender that holds the loan secured by a first deed of trust against the Property
as of the execution and delivery of this Third Amendment requires that
earthquake insurance be maintained on the Property, Tenant is required to
provide such insurance (if available) and the cost thereof (if available) is a
Reimbursable Expense.
10. Damage to Property. The following provision is added to Article XI of
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the Lease:
"11.4 Option to terminate in Event of Uninsured Loss: Tenant shall
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have the option, which must be exercised, if at all, by written notice to
Landlord and any lender encumbering the Property within thirty (30) days after
the date of any casualty loss described in this Section 11.4, to terminate this
Lease if: (i) the improvements which are part of the Property are damaged by any
of the perils specified below in this Section 11.4 and the cost to restore such
improvements to their condition immediately prior to such damage exceeds seven
and one-half percent (7 l/2%) of the full replacement cost of all improvements
within the Property, including Tenant 's Leasehold Improvements, and (ii) the
insurance proceeds, if any, made available to Tenant to restore the damage to
the Property, exclusive of Leasehold Improvements, pursuant to Articles IX and
XI of the Lease plus any deductible amounts under such policies are not
sufficient to pay substantially all such costs of restoration; and (iii) any
insufficiency of insurance proceeds, if any, under clause (ii) above is not
caused by a default by Tenant of any of its obligations pursuant to Article IX
of this Lease. The perils which are the subject of the preceding sentence are
as shown in the attached Schedule 1, paragraphs 1, 2 and 3; provided,
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however, that the perils shown on paragraphs 4 and 5 of Schedule 1 shall also be
subject to the preceding sentence if and to the extent that Tenant is not
required, pursuant to the Lease, as amended hereby, to carry flood or earthquake
insurance, respectively, or the cost of flood or earthquake insurance,
respectively, is not a Reimbursable Expense pursuant to Article IX of the Lease,
as amended hereby. Notwithstanding the foregoing, Tenant may not terminate this
Lease pursuant to this Section 11.4 if (i) any of the conditions in the clauses
(i) through (iii) above do not exist or (ii) Landlord (or any Lender which shall
have the right but not the obligation so to do) agrees in writing to pay the
reasonable amount, as estimated by a recognized construction estimator selected
by Tenant, by which restoration costs, less any available insurance proceeds,
exceed the seven and one-half percent (7 1/2%) threshold amount referenced first
above in this Section. Any such amount paid by Landlord or Lender shall be
deposited prior to the commencement of any construction in an account mutually
acceptable to Landlord, Lender and Tenant and shall be disbursed during the
course of any reconstruction work pursuant to normal construction lending
practices."
11. Assignment and Subletting: Section 14.1 of the Lease is amended as
-------------------------
follows:
A. The third sentence of paragraph A is amended to read:
"Any transfer which may be approved by Landlord shall not be effective
until Tenant has paid all such costs and fees to Landlord and delivered to
Landlord an executed counterpart of the document evidencing the Transfer which
(i) is in form approved by Landlord, (ii) contains the same terms and conditions
as stated in Tenant's notice given to Landlord pursuant to paragraph B below,
and (iii) in the case of an assignment of the Lease, contains the agreement of
the proposed transferee to assume all obligations of Tenant arising after the
effective date of such Transfer, described in this sentence, under or with
respect to the Lease and to remain jointly and severally liable therefor with
Tenant."
B. The words, "fair market value," are substituted for "book value"
in the last sentence of subparagraph (2) of paragraph c.
C. The first sentence of paragraph D is amended to read:
"Tenant may, without Landlord's prior written consent, (i) assign or
otherwise transfer its interest in this Lease or in the Property to, (ii) sublet
all or any part of the Property to or allow it to be sublet, occupied or used by
or (iii) transfer any right appurtenant to this Lease or the Property to (a) any
affiliate of Tenant, (b) a successor corporation related to Tenant by merger,
consolidation, reorganization or government action or (c) a purchaser of
substantially all of the assets of Tenant, any such transfer being referred to
herein as an "Affiliate Transfer."
12. No Barriers: During the term of the Lease, at any time that Tenant is
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an occupant of the Property and also the owner or occupant of any part of the
property bounded by North
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First Street and Montague Expressway sharing a common boundary with the Property
("Parcel 2"), the following shall apply:
A. Tenant shall have the right to remove all or any part of the
existing chain link fence along the common boundary between the Property and
Parcel 2 as of the date of this Third Amendment to provide unimpeded vehicular
and pedestrian access between the Property and Parcel 2.
B. Tenant shall have the right to install private underground
utility lines connecting Building 1 and/or Building 2 to buildings constructed
on Parcel 2 to provide telecommunications connections between improvements on
both parcels. If Tenant does install such underground lines, it shall do so at
its sole cost and in compliance with all laws, shall repair all damage to the
Property caused by such installation, and upon the expiration or earlier
termination of the Term shall pull all wires from such lines and properly close
or "cap" such lines in accordance with customary practice incident to the
abandonment of underground utility lines.
C. The rights granted to Tenant in this paragraph 12 are contractual
and are not intended, nor shall they be deemed, to create any easement express
or implied in favor of Tenant, the Property or Parcel 2.
13. Termination of Rights to Additional Parking Area. Contemporaneous
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with the execution of this Third Amendment, Landlord is conveying to Tenant
Parcel 2 together with the Additional Parking Area, whereupon (i) Landlord shall
have no further right, title or interest in the Additional Parking Area, (ii)
Section 2.3, the last sentence of Section 4.2 and the parenthetical phrase in
line 4 of Section 12.2 of the Lease shall be deleted in their entirety, and
(iii) all of Tenant's rights in the Additional Parking Area pursuant to the
Lease or pursuant to the parking easement agreement referenced in Section 2.3 of
the Lease, shall terminate. Tenant acknowledges that the parking that will
remain as part of the Property after said conveyance will be adequate for
Tenant's needs and will meet all requirements under the Lease between Landlord
and Tenant. Landlord also agrees that Tenant shall have the right at any time
upon not less than thirty (30) days prior notice to Landlord to pave and stripe
for parking that portion of the southwest corner of the Property that is
presently unpaved, provided that such paving and striping shall be done at
Tenant's sole cost and expense, shall be done in accordance with all applicable
governmental regulations and requirements of the Lease for the construction of
alterations and shall be consistent in design and quality to the other parking
areas on the Property.
14. Approvals by Landlord. Landlord shall not unreasonably withhold
---------------------
Landlord's approval of or consent to those matters which require Landlord's
approval set forth in the following provisions of the Lease: (i) approval of
outside storage areas provided for in Section 4.5; (ii) approval of Signs as
provided in Section 4.6; (iii) approval of HVAC maintenance contractors and
window washing contractor, and approval of repair or replacement work, all as
provided for in Section 6.1; (iv) approval of outside trash enclosure areas, as
9
provided in Section 7.1; (v) approval of the deductible under any of Landlord's
Insurance, as provided in Section 9.2.
15. Status of Lease. Tenant and Landlord each agree that as of execution
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and delivery of this Third Amendment there are no uncured defaults on the part
of either Landlord or Tenant under the Lease, as amended by this Third
Amendment. Notwithstanding the foregoing, the parties acknowledge that (i)
nothing herein shall be deemed to modify Tenant's obligation to carry earthquake
insurance to the extent required by the Lease, as amended hereby, and Landlord
is not hereby waiving any obligation Tenant may have to carry earthquake
insurance and (ii) a dispute exists between them as to responsibility for
payment of certain late charges and interest related to Real Property Taxes paid
in connection with the fiscal year 1990-91 (the "Late Charge Dispute").
Tenant's position is described in that certain letter dated July 30, 1993 to
Landlord, and Landlord denies that Landlord owes any amount to Tenant for the
matters stated in that letter. The parties reserve their respective rights and
defenses with respect to the Late Charge Dispute. However, Tenant agrees as
follows with respect to the Late Charge Dispute: (i) any liability that Landlord
may have pursuant to such claim by Tenant shall be restricted to the payment of
damages only and shall be a personal obligation of Fred Sahadi; and (ii) no
transferee of the interest of Fred Sahadi in all or any part of the Property
(including any Lender) shall have any liability for such matter, and Tenant
acknowledges that it has no claim or right on account thereof to exercise any
rights or remedies under the Lease, as amended hereby (including, without
limitation, any rights of offset or recoupment), and (iii) any determination
adverse to Fred Sahadi concerning the Late Charge Dispute shall in no way affect
Tenant's obligations under the Lease as amended by this Third Amendment.
Nothing contained in this paragraph 15 shall be deemed an admission of liability
on behalf of Fred Sahadi who denies liability and reserves all rights and
defenses concerning such claim against him by Tenant.
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16. Effect of Third Amendment. In the event of any conflict or
-------------------------
inconsistency between this Third Amendment and the Lease, the terms of this
Third Amendment shall prevail. Except as modified by this Third Amendment, the
Lease shall continue in full force and effect in accordance with its terms. The
term "Lease," as used in the Lease, shall mean and refer to the Lease, as
amended by this Third Amendment.
Landlord:
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/s/ FRED SAHADI
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FRED SAHADI
Tenant:
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CONNER PERIPHERALS, INC.,
a Delaware corporation
By: /s/ MARLA ANN STARK
-------------------
Helen Sahadi hereby consents
to the above.
/s/ HELEN SAHADI
--------------------------------
Helen Sahadi
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SCHEDULE 1
1. Nuclear reaction or nuclear radiation or radioactive contamination;
provided that such exclusion shall not inlude radioactive contamination,
including resultant radiation damage from a material used or stored or from
processes conducted on the Premises, if at the time of such loss there is
neither a nuclear reactor capable of sustaining nuclear fission in a self-
supporting chain reaction nor any new or used nuclear fuel on the Premises.
2. (a) Hostile or warlike action in time of peace or war, including action in
hindering, combating or defending against an actual impending or expected
attack.
(b) Any weapon of war employing atomic fission or radioactive force whether
in time of peace or war.
(c) Insurrection, rebellion, revolution, civil war, usurped power, or
action taken by governmental authority in hindering, combating or defending
against such an occurrence; seizure or destruction under quarantine or custom
regulations; confiscation by order of any government or public authority, or
risks of contraband or illegal transportation of trade.
3. Any fraudulent or dishonest act or acts committed alone or in collusion
with others:
(a) by any proprietor, partner, director, trustee, officer or employee of
the Landlord; or
(b) by any proprietor, partner, director, trustee, or officer of any
proprietorship, partnership, corporation or association (other than a common
carrier) engaged by the landlord to render any service or perform any act in
connection with the Property.
Notwithstanding anything to the contrary contained in this paragraph 3, this
paragraph 3 shall not apply in any way to any acts or omissions of Tenant (or
any partner, director, trustee, officer or employee of the Tenant), whether or
not committed in collusion with or under the engagement of Landlord, nor shall
it in any way limit, diminish or modify the insurance coverage or proceeds which
would otherwise be available to Tenant or Lender.
4. Flood water, waves, tide or tidal water, the release of water, the rising,
overflowing or breaking of boundaries of natural or man-made bodies of water, or
the spray from any of the foregoing, except for any resulting damage by fire or
explosion;
5. Any natural or man-made earth movement including, but not limited to
earthquake, landslide, or subsidence, except for any resulting damage by fire,
explosion or sprinkler leakage.
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[Attached are maps of the floor plans for the first and second floors of
Buildings 4 and 5.]
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