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EXHIBIT 10.17
LEASE AMENDMENT
THIS LEASE AMENDMENT (this "Amendment") is entered into as of this 10th
day of March, 1997, by and between SOUTH ▇▇▇▇▇▇▇▇ INVESTMENTS, a California
general partnership, ("Landlord"), and TEGAL CORPORATION, a Delaware corporation
("Tenant").
RECITALS
A. On or about August 15, 1986, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., dba Landbank
Investments as predecessor-in-interest to Landlord ("Landbank") and Tenant
entered into that certain Lease (the "Original Lease"), whereby Landlord leased
to Tenant and Tenant leased from Landlord that certain premises commonly known
as ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. (the "Premises"), as more specifically described in
the Original Lease.
B. The Original Lease was amended by that certain Amendment dated as of
August 31, 1987, by and between Landlord, as successor-in-interest to Landbank,
and Tenant (the "First Amendment").
C. The Original Lease was further amended by that letter amendment
dated as of September 11, 1987, by and between Landlord and Tenant (the "Second
Amendment").
D. The Original Lease was further amended by that certain Amendment
dated as of December 17, 1987, by and between Landlord and Tenant (the "Third
Amendment").
E. The Original Lease was further amended by that letter amendment
dated as of January 15, 1988, by and between Landlord and Tenant (the "Fourth
Amendment").
F. The Original Lease was further amended by that certain Amendment
dated as of March 8, 1988, by and between Landlord and Tenant (the "Fifth
Amendment). The Original Lease together with the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment, and the Fifth Amendment
are collectively referred to herein as the "Lease."
G. Landlord and Tenant desire to amend the Lease as provided in this
Amendment.
NOW THEREFORE, for good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Term.
Section 2 of the Original Lease is hereby modified to extend the end of
the term to March 9, 2004 (the "Extended Expiration Date").
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SECTION 2. Rent.
(a) Section 5 of the Original Lease hereby modified to provide that
commencing with the Effective Date of this Amendment, Tenant agrees to pay to
Landlord at such place as Landlord may from time to time designate without
deduction, offset, abatement, prior notice or demand, and Landlord agrees to
accept as Basic Rent for the leased Premises:
Period Monthly Rent Annual Rent
------ ------------ -----------
March 10, 1997, through March 9, 1998 $ 102,000 $1,224,000
March 10, 1998, through March 9, 1999 $ 102,000 $1,224,000
March 10, 1999, through March 9, 2000 $ 126,000 $1,512,000
March 10, 2000, through March 9, 2001: $ 126,000 $1,512,000
(b) Commencing on March 10, 2001 (the "Initial Adjustment Date"), and
thereafter on the anniversary date thereof (each an "Adjustment Date"), the
Basic Rent shall be increased in an amount equal to the greater of (i) one
percent (1%) of the Basic Rent payable for the month immediately preceding such
Adjustment Date; or (ii) an amount calculated by multiplying the Basic Rent for
the month immediately preceding the Adjustment Date, by a fraction, the
numerator of which shall be the Index (as hereinafter defined), published
nearest but prior to the Adjustment Date, and the denominator of which shall be
(A) as to the adjustment occurring on the Initial Adjustment Date, the Index
published nearest but prior to the commencement of the twelve (12) month period
immediately preceding the Initial Adjustment Date, and (B) as to each adjustment
occurring after the Initial Adjustment Date, the Index published nearest but
prior to the commencement of the twelve (12) month period immediately preceding
such Adjustment Period, provided however that the annual adjustment due to an
increase in the Index shall not exceed six percent (6%) of the Basic Rent
payable for the month immediately preceding such adjustment Date.
(c) The term Index as used in this Amendment shall mean Consumer Price
Index, All Urban Consumers, All Items, San Francisco-Oakland-San ▇▇▇▇ (1982-84
equals 100), or the successor of such index, published by the Bureau of Labor
Statistics of the United States Department of Labor. If the Bureau of Labor
Statistics revises the Index, the parties agree that the Bureau of Labor
Statistics shall be the sole judge of the comparability of successive indexes.
If that agency, however, fails to supply indexes that it deems comparable, or if
no succeeding index is published, the parties shall then negotiate to determine
an appropriate alternative published price index. If they are unable to agree on
an alternative index within thirty (30) days after the request to do so is made
by one party to the other, then either party may request that each appoint a
person, within fifteen (15) days after the request, to select an alternative
published price index. The two persons so appointed, within fifteen (15) days
after the later of them is appointed, shall appoint a third person to act with
them in the selection of an alternative price index. If Landlord or Tenant fails
to appoint one of the first two, then the person appointed by the other party
shall determine the alternative published price index. If the two persons
appointed fail to appoint a third, upon the request of either Landlord or
Tenant, the vacancy shall be filled by an impartial person appointed by the
presiding judge of the court of general jurisdiction for the county in which the
Premises are located, with that judge acting in the judge's individual rather
than judicial capacity. If any appointee declines or is unable to serve, the
appointee shall be replaced by another person appointed in the same manner.
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Within thirty (30) days after the appointment process is completed, and on the
basis of all pertinent facts, the appointees, by majority vote, shall select an
alternative published price index and advise Landlord and Tenant in writing of
the selection. All fees and expenses incurred in the appointment of the persons
shall be shared equally by Landlord and Tenant.
SECTION 3. Condition.
Tenant shall continue its tenancy of the Premises, on an "as-is" basis,
without any allowance for retrofitting or tenant improvements. Nothing contained
in the foregoing sentence shall be deemed to relieve Landlord of its ongoing
maintenance obligations under the Lease.
SECTI0N 4. Removal of Alterations.
(a) Upon written request by Tenant therefor, such request to be made
within six months of the Effective Date, Landlord shall notify Tenant as to
which of the tenant improvements specifically identified in such request and
installed by Tenant after the original build-out of the Premises (other than
such improvements identified on Exhibit "M" to the Lease), Landlord shall
require Tenant to remove following the termination of the Lease.
(b) From and after the Effective Date, as and when Tenant requests the
right to make alterations to the Premises (the "Requested Alterations"),
Landlord shall identify, within ten (10) business days after the receipt by
Landlord of Tenant's request and plans describing such Requested Alterations
(collectively an "Alteration Request"), which of the Requested Alterations shall
be required to be removed at the termination of the Lease, provided that
Tenant's request specifically requests Landlord to so identify which of the
Requested Alterations Landlord desires to have removed at the termination of the
Lease. In the event that Landlord fails to respond, within ten (10) business
days after the receipt by Landlord of an Alteration Request, Tenant shall notify
Landlord in writing of Landlord's failure to so respond (the "Second Notice")
and if Landlord fails thereafter to respond within five (5) business days after
receiving the Second Notice, Landlord shall be deemed to have waived its right
to require Tenant to remove the Requested Alterations. It is expressly agreed
that a request by Landlord for additional information shall be deemed a
"response" for purposes of this Section 4.
SECTION 5. Insurance.
From and after February 1, 1998, Section 12.c of the Lease shall be
deemed deleted. Except as provided in this Section 5, Tenant shall not be
relieved from obtaining and maintaining at Tenant's sole cost and expense the
various policies of insurance required to be obtained and maintained by Tenant
pursuant to Section 12 of the Lease.
SECTION 6. Motorola Guarantee.
The guarantee of the Lease (the "Guaranty") by Motorola Inc., a
Delaware corporation ("Motorola"), shall remain in full force and effect until
January 31, 1998, after which it shall terminate and be of no further force or
effect. As of February 1, 1998, any obligations or liabilities of Motorola under
the Guaranty, the Lease or this Amendment shall cease. This Amendment shall be
conditioned
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upon the consent by Motorola hereto. Landlord shall provide to Motorola on or
before the execution of this Amendment, a letter in the form attached hereto and
incorporated herein as Exhibit A.
SECTION 7. Repair and Maintenance.
The second sentence of Section 9.A. of the Original Lease is hereby
deleted and replaced with the following:
"Landlord may engage contractors of its choice to perform the
obligations required of it by this Section, and the necessity of any
expenditure to perform such obligations shall be at the reasonable
discretion of Landlord."
SECTION 8. Lease Termination.
Notwithstanding anything else contained herein to the contrary, Tenant
shall have the right to terminate the Lease as to the whole Premises effective
March 10, 2001, which right shall be exercisable by delivery of written notice
of such election to Landlord no later than March 10, 2000. Thereafter, Tenant
shall have the right to terminate the Lease as to the whole Premises on each
anniversary thereafter, provided that Tenant provides Landlord notice of such
election no later than fifteen months prior to such anniversary.
SECTION 9. Option to Extend.
Landlord grants to Tenant the option to extend the term of this Lease
(the "Option") for one (1) period of five (5) years, commencing on the day
immediately following the Extended Expiration Date, upon each and all of the
following terms and conditions:
(a) Tenant shall give to Landlord written notice of the exercise
of the Option no earlier than twenty-four (24) months prior to
the Extended Expiration Date, and no later than twelve (12)
months prior to the Extended Expiration Date, time being of
the essence. If said notification of the exercise of said
option is not so given then the Option shall automatically
expire.
(b) At the time the notification of exercise of the Option is
given and on the Extended Expiration Date, Tenant shall not be
in material default under any of Tenant's material obligations
under the Lease and no event shall have occurred which with
the giving of notice or the passage of time would constitute a
material default on the part of Tenant under the Lease;
(c) The Basic Rent for each year of the Option Term shall be
determined in accordance with Section 2(b) hereof,
(d) All of the terms and conditions of the Lease shall remain the
same, except that Tenant's right to terminate the Lease
pursuant to Section 8 hereof, shall terminate, and be of no
further force or effect.
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SECTION 10. Assignment and Subletting.
(a) The third sentence of Section 14.A.(1) of the Original Lease is
hereby deleted and replaced with the following:
"If Landlord falls to respond in writing to Tenant's request for
Landlord's consent to a Transfer within ten (10) business days after
receipt of such request, then Landlord shall be deemed to have
consented to such Transfer."
(b) The first sentence of Section 14.A.(2) of the Original Lease is
hereby deleted and replaced with the following:
"Tenant shall give Landlord prior written notice of any desired
Transfer and of the proposed terms of such Transfer including but not
limited to (i) the name and legal composition of the proposed
transferee; (ii) a current financial statement of the transferee,
and/or its parent, covering the preceding three (3) years, and (if
readily available) an audited financial statement of the transferee for
a period ending not more than one year prior to the proposed effective
date of the transfer, all of which statements shall be prepared in
accordance with generally accepted accounting principles; (iii) the
nature of the proposed transferee's business to be carried on in the
Premises; (iv) a description of all consideration to be given on
account of the Transfer; and (v) such other information as may be
reasonably requested by Landlord."
SECTION 11. Deleted Provisions.
Sections 29, 30, 31, and 36 are hereby deleted in their entirety.
SECTION 12. Brokers.
(a) Tenant represents and warrants to Landlord that no real estate
broker, agent or finder negotiated or was instrumental in negotiating or
representing Tenant in the negotiation of this Amendment or the consummation
hereof except for Meridian Commercial, Inc ("Broker"). Tenant shall be
responsible for the payment of the commission or fee, if any, owed to Broker
pursuant to a separate fee agreement between Broker and Tenant. Tenant shall pay
the commission or fee of any other broker, agent or finder, including but not
limited to, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇, acting for or on behalf of, or
claiming to act for or on behalf of, Tenant or claiming any commissions or fees
on the basis of contacts or dealings with Tenant and not disclosed herein by
Tenant and Tenant shall indemnify and hold Landlord harmless from and against
any claims made by any such broker, agent or finder of Tenant and any and all
costs and damages suffered by Landlord as a consequence thereof, including
without limitation attorneys' fees.
(b) Landlord represents and warrants to Tenant that no real estate
broker, agent or finder negotiated or was instrumental in negotiating or
representing Landlord in the negotiation of this Amendment or the consummation
hereof. Landlord shall pay the commission or fee of any broker, agent or finder
acting for or on behalf of, or claiming to act for or on behalf of, Landlord or
claiming
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any commissions or fees on the basis of contacts or dealings with Landlord and
not disclosed herein by Landlord and Landlord shall indemnify and hold Tenant
harmless from and against any claims made by any such broker, agent or finder of
Landlord and any and all costs and damages suffered by Tenant as a consequence
thereof, including without limitation attorneys' fees.
SECTION 13. Conditions Precedent.
This Amendment shall be conditioned upon the following conditions
precedent:
(a) Approval of this Amendment by Landlord's lender;
(b) Consent to this Amendment by Motorola; and
(c) Approval of this Amendment by Tenant's Board of Directors and the
provision to Landlord of a certified resolution of Tenant's Board of Directors
evidencing such approval.
SECTION 14. No Other Modifications.
Except as otherwise modified herein, all terms and conditions of the
Lease shall be unmodified and remain in full force and effect.
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SECTION 15. Conflicts.
In the event there shall be any conflict between the provisions of the
Lease and its Exhibit and this Amendment, the provisions of the Amendment shall
control.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
LANDLORD:
SOUTH ▇▇▇▇▇▇▇▇ INVESTMENTS,
a California general partnership
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇, its General Partner
TENANT.
TEGAL CORPORATION,
a Delaware Corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇, its Vice President of Finance
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇, its Chairman, President and CEO
MOTOROLA, INC. hereby consents to this Amendment.
MOTOROLA, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
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EXHIBIT A
SOUTH ▇▇▇▇▇▇▇▇ INVESTMENTS
P.O. 1433
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
January 27, 1997
Motorola, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
& Corporate Director of Business Development
Gentlemen:
Reference is made to the Lease (the "Lease"), dated as of August 15,
1986, between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., doing business as Landbank Investments
("Landbank"), as Landlord, and Tegal Corporation, as Tenant, under which the
Landlord leased to Tenant the premises commonly known as ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Whereas, Motorola, Inc. ("Motorola") has guaranteed the performance of
Tegal Corporation under the Lease; and
Whereas, South ▇▇▇▇▇▇▇▇ Investments, as successor-in-interest to
Landbank and as the present Landlord under the Lease, and Tegal Corporation
intend to amend the Lease and extend its term (the "Amendment"); and
Whereas, Motorola has requested certain assurances about the status of
the Lease and Motorola's guarantee after the effective date of the amendment.
NOW, THEREFORE, South ▇▇▇▇▇▇▇▇ Investments represents to Motorola as
follows:
1. The Lease is presently in full force and effect as amended August
31, 1987, September 11, 1987, December 17, 1987, January 15, 1988, and March 8,
1988.
2. Tegal Corporation is not in default in the payment of rent and, to
the best of Landlord's knowledge, without investigation or inquiry, in the
performance of its other obligations, or otherwise, under the Lease.
3 . To the best of Landlord's knowledge, without investigation or
inquiry, no event has occurred or presently exists which would give South
▇▇▇▇▇▇▇▇ Investments the right to proceed against or call upon Motorola to
perform or fulfill its guarantee of the Lease (the "Guaranty").
4. To the best of Landlord's knowledge, South ▇▇▇▇▇▇▇▇ Investments is
not in default
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Motorola, Inc.
January 27, 1997
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in the performance of any of its obligations under the Lease.
5. The Guaranty shall terminate and be of no further force or effect as
of 12:00 p.m. midnight, January 31, 1998. and at that time, all obligations and
liabilities of Motorola under the Guaranty and the Lease shall cease,
notwithstanding that the term of the Lease has been extended to January 31, 2004
by agreement between Tegal Corporation and South ▇▇▇▇▇▇▇▇ Investments.
6. A true and correct copy of the Amendment is attached hereto and
incorporated herein as Exhibit A. It Is not Landlord's present understanding or
intent that the Amendment (i) imposes any additional obligations which will be
covered by the Guaranty, or (ii) increases the liability of Motorola in any
respect under the Guaranty.
Sincerely,
SOUTH ▇▇▇▇▇▇▇▇ INVESTMENTS,
a California general partnership
By:
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▇▇▇▇ ▇▇▇▇▇▇▇
General Partner
cc: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.