Exhibit 10.2

 

THIRD AMENDMENT TO LEASE

 

THIS THIRD AMENDMENT TO LEASE is dated for reference purposes only as March 17,
2004, and is part of that Lease dated September 27, 1999 together with the
Summary of Basic Lease Terms, the First Addendum To Lease, the Acceptance
Agreement, the First Amendment to Lease dated May 2, 2001, and Second Amendment
to Lease dated September 26, 2001, thereto (collectively, the “Lease”) by and
between AMB PROPERTY, L.P., a Delaware limited partnership (“Landlord”), and
SONICWALL, INC., a California corporation (“Tenant”), and is made with reference
to the following facts:

 

A. The Premises currently leased by Tenant pursuant to the Lease consists of
32,256 rentable square feet commonly known as 1160 Bordeaux Drive, Sunnyvale,
12,584 rentable square feet commonly known as 155 B-2 Moffett Park Drive,
Sunnyvale, and 41,472 rentable square feet commonly known as 1143 Borregas
Avenue, Sunnyvale, California for a total of 86,312 square feet.

 

B. The Lease Term for said Premises currently expires on September 30, 2004.

 

C. Tenant and Landlord wish to amend the Lease on the Terms and Conditions set
forth in this Third Amendment to Lease.

 

NOW, THEREFORE, Landlord and Tenant hereby agree that the Lease Terms are
amended as follows:

 

1. Lease Term: The Lease Term is extended to and including September 30, 2009.
Article 1.3 is hereby amended such that the Lease Term shall end September 30,
2009.

 

2. Base Monthly Rent: Commencing October 1, 2004, Base Monthly Rent shall be as
follows, and Article 1.4 is hereby amended to so provide:

 

October 1, 2004 through and including September 30, 2007:    Tenant pays Operating Expenses only.
October 1, 2007 through and including September 30, 2009:    $43,156.00 per
month – Base Monthly Rent plus Operating Expenses

 

3. Security Deposit: The Security Deposit shall be decreased, and Article 1.7 is
hereby amended to provide for a decrease of $104,437.02 leaving a total security
deposit in the amount of $43,156.00. The sum of $104,437.02 shall not be
refunded to Tenant but shall be credited by Landlord towards Tenant’s Base
Monthly Rent and Operating Expenses beginning October 2004.

 

4. Option to Extend Lease Term: Landlord hereby grants to Tenant one option to
extend the Lease Term for a five (5) year term commencing when the prior term
expires, under the following terms and conditions:

 

A. Exercise Dates: Tenant must give Landlord notice in writing of its exercise
of the option in question no earlier than one hundred eighty (180) days before
the date the Lease Term would end but for said exercise (the “Earliest Exercise
Date”) and no later than one hundred twenty (120) days before the date the Lease
Term would end but for said exercise (the “Last Exercise Date”).

 

B. Conditions to Exercise of Option: Tenant’s rights to extend is conditioned
upon and subject to each of the following:

 

(1) In order to exercise its option to extend, Tenant must give written notice
of such election to Landlord and Landlord must receive same by the Last Exercise
Date, but not prior to the Earliest Exercise Date. If property notification of
the exercise of an option is not given and/or received, such option shall
automatically expire. Failure to exercise an option terminates that option and
all subsequent options. Tenant acknowledges that because of the importance of
Landlord of knowing no later than the Last Exercise Date whether or not Tenant
will exercise the option, the failure of Tenant to notify Landlord by the Last
Exercise Date will conclusively be presumed an election by Tenant not to
exercise the option.

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(2) Tenant shall have no right to exercise an option (i) if Tenant is in Default
beyond any cure period provided in the Lease (if applicable) either on the date
of exercise of the option or on the date on which the Lease would terminate
absent exercise of the option or (ii) in the event that Landlord has given to
Tenant three (3) or more notices of separate Defaults during the 12 month period
immediately preceding the exercise of the option, whether or not the Defaults
are cured. The period of time within which an option may be exercised shall not
be extended or enlarged by reason of Tenant’s inability to exercise an option
because of the provisions of this Paragraph.

 

C. Creation of Extended Term: Upon the timely exercise of the option to extend
and the commencement of the extended Term, all references in the Lease to the
Term shall be considered to mean the Term as extended by the exercise of the
option, which shall be referred to herein as the “Extended Term”.

 

D. Options Personal: The option is personal to the Tenant, and cannot be
assigned to or exercised by anyone other than the Tenant. The option can only be
exercised at a time when the Tenant is in full possession of the Premises and
does not have any intent of thereafter assigning or subletting.

 

E. The Base Monthly Rent for the Option Period shall be ninety-five percent
(95%) of the then fair market monthly rent determined as of the commencement of
the option period in question based upon like buildings with like improvements
in the area. The Option Period shall contain no free rent and the Premises shall
be taken “as-is”. If the parties are unable to agree upon the fair market
monthly rent for the Premises for the option period in question at least
seventy-five (75) days prior to the commencement of the option period in
question, then the fair market monthly rent shall be determined by appraisal
conducted pursuant to subparagraph F.

 

F. In the event it becomes necessary to determine by appraisal the fair market
rent of the Premises for the purpose of establishing the Base Monthly Rent
during the Option Period, then such fair market monthly rent shall be determined
by three (3) real estate appraisers, all of whom shall be members of the
American Institute of Real Estate Appraisers with not less than five (5) years
experience appraising real property (other than residential or agricultural
property) located in Santa Clara County, California, in accordance with the
following procedures:

 

(1) The party demanding an appraisal (the “Notifying Party”) shall notify the
other party (the “Non-Notifying Party”) thereof by delivering a written demand
for appraisal, which demand, to be effective, must give the name, address, and
qualifications of an appraiser selected by the Notifying Party. Within ten (10)
days of receipt of said demand, the Non-Notifying Party shall select its
appraiser and notify the Notifying Party, in writing, of the name, address, and
qualifications of an appraiser selected by it. Failure by the Non-Notifying
Party to select a qualified appraiser within said ten (10) day period shall be
deemed a waiver of its right to select a second appraiser on its own behalf and
the Notifying Party shall select a second appraiser on behalf of the
Non-Notifying Party within five (5) days after the expiration of said ten (10)
day period. Within ten (10) days from the date the second appraiser shall have
been appointed, the two (2) appraisers so selected shall appoint a third
appraiser. If the two appraisers fail to select a third qualified appraiser, the
third appraiser shall be selected by the American Arbitrations Association or if
it shall refuse to perform this function, then at the request of either Landlord
or Tenant, such third appraiser shall be promptly appointed by the then
Presiding Judge of the Superior Court of the State of California for the County
of Santa Clara.

 

(2) The three (3) appraisers so selected shall meet in San Jose, California, not
later than twenty (20) days following the selection of the third appraiser. At
said meeting the appraisers so selected shall attempt to determine the fair
market monthly rent of the Premises for the option period in question (including
the timing and amount of periodic increases).

 

(3) If the appraisers so selected are unable to complete their determinations in
one meeting, they may continue to consult at such times as they deem necessary
for a fifteen (15) day period from the date of the first meeting, in an attempt
to have at least two (2) of them agree. If, at the initial meeting or at any
time during said fifteen (15) day period, two (2) or more of the appraisers so
selected agree on the fair market rent of the Leased Premises, such agreement
shall be determinative and binding on the parties hereto, and the agreeing
appraisers shall, in simple letter form executed by the agreeing appraisers,
forthwith notify both Landlord and Tenant of the amount set by such agreement.

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(4) If two (2) or more appraisers do not so agree within said fifteen (15) day
period, then each appraiser shall, within five (5) days after the expiration of
said fifteen (15) day period, submit his independent appraisal in simple letter
form to Landlord and Tenant stating his determination of the fair market rent of
the Premises for the option period in question. The parties shall then determine
the fair market rent for the Premises by determining the average of the fair
market rent set by each of the appraisers. However, if the lowest appraisal is
less than eighty-five percent (85%) of the middle appraisal then such lowest
appraisal shall be disregarded and/or if the highest appraisal is greater than
one hundred fifteen percent (115%) of the middle appraisal then such highest
appraisal shall be disregarded. If the fair market rent set by any appraisal is
so disregarded, then the average shall be determined by computing the average
set by the other appraisals that have not been disregarded.

 

(5) Nothing contained herein shall prevent Landlord and Tenant from jointly
selecting a single appraiser to determine the fair market rent of the Premises,
in which event the determination of such appraisal shall be conclusively deemed
the fair market rent of the Premises.

 

(6) Each party shall bear the fees and expenses of the appraiser selected by or
for it, and the fees and expenses of the third appraiser (or the joint appraiser
if one joint appraiser is used) shall be borne fifty percent (50%) by Landlord
and fifty percent (50%) by Tenant.

 

5. Retained Real Estate Brokers: Tenant is represented by Craig Leiker of Wayne
Mascia Associates and Landlord is represented by Orchard Commercial, Inc. for
this Lease Amendment. If any other Retained Real Estate Brokers are mentioned in
the Lease, they are not involved in this Amendment.

 

6. Tenant Improvements: Landlord is not required to make Tenant Improvements as
part of this Lease Renewal. Tenant is also not required to make Tenant
Improvements as part of this Lease Renewal. Tenant’s planned improvements (if
any) will be submitted to Landlord for approval subject to the requirements of
this Lease. Landlord’s approval may not be unreasonably withheld, conditioned or
delayed.

 

Should Tenant require “Temporary Space” for their improvements (ie. space to
accommodate employees while tenant improvements are being constructed) the
Landlord will make available up to 20,000 vacant square feet of Temporary Space
at either 1169 Borregas Avenue, 1195 Borregas Avenue, 155 C-1 Moffett Park Drive
or 155A Moffett Park Drive or some combination thereof at Landlord’s option.
Tenant shall notify Landlord of the requirement to temporarily use the space
before May 1, 2004 or such right shall forever lapse. The temporary use of the
space shall include Free Base Monthly Rent and Operating Expenses through July
31, 2004. From August 1, 2004, Base Monthly Rent shall be $0.50 NNN on a
month-to-month basis and Tenant shall pay Operating Expenses. During all use of
Temporary Space, Tenant shall maintain insurance on such space as required under
this Lease, Tenant shall have all indemnity duties set forth in this Lease, and
Tenant shall execute with Landlord a Temporary Use Agreement reasonably
requested by Landlord, provided, same shall not change any of the agreements
made herein. Tenant’s rights to use Temporary Space shall not extend further
than September 30, 2004, and on or before such date, Tenant shall vacate the
said premises, return them to Landlord in the same condition in which they were
received, reasonable wear and tear incurred in spite of the use of commercially
reasonable maintenance practices and efforts, excepted, and remove all of
Tenant’s property. Landlord may access Tenant’s Security Deposit to remedy any
breaches of these agreements.

 

7. Condition of Premises: Tenant accepts the Premises for the extended term in
their “as-is” condition, with all latent and patent faults, without warranty or
obligation on the part of Landlord to provide or pay for any interior
improvements or tenant improvement allowances. Upon timely exercise of the
option to extend, Tenant shall take the Premises for the Extended Term on the
same basis. However, Landlord shall provide the Premises to Tenant on the date
of execution of this Amendment with all electrical, plumbing, HVAC, and roof
systems in good working condition.

 

8. Continuing Obligation: Except as expressly set forth in this Amendment, all
terms and conditions of the Lease remain in full force and effect, and all terms
and conditions of the Lease are incorporated herein as though set forth at
length.

 

9. Effect of Amendment: This Amendment modifies the Lease. In the event of any
conflict or discrepancy between the Lease and/or any other previous documents
between the parties and the provisions of this Amendment, then the provisions of
this Amendment shall control. Except as modified herein, the Lease shall remain
in full force and effect.

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10. Authority: Each individual executing this Amendment on behalf of Tenant
represents and warrants that he or she is duly authorized to and does execute
and deliver this Amendment pursuant to express authority from Tenant pursuant to
and in accordance with the By-Laws and the other organic documents of the Tenant
corporation.

 

11. Entire Agreement: The Lease, as modified by this Amendment, constitutes and
contains the entire agreement between the parties, and there are no binding
agreements or representations between the parties except as expressed herein.
Tenant acknowledges that neither Landlord nor Landlord’s Agents have made any
legally binding representations or warranties as to any matter except for such
matters binding representations or warranties as to any matter except for such
matters which are expressly set forth herein, including any representations or
warranties relating to the condition of the Premises or the improvements thereto
or the suitability of the Premises or the Project for Tenant’s business.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Third Amendment to be
effective as of the date first set forth above.

 

LANDLORD:   TENANT: AMB PROPERTY, L.P.   SONICWALL, INC.

a Delaware limited partnership

 

a California corporation

By:

 

AMB Property Corporation

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By:

 

/s/ Matthew Medeiros

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    a Maryland corporation, its general partner      

Matthew Medeiros, President and CEO

            [Print Name and Title]

By:

 

/s/ John L. Rossi

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By:

 

/s/ Kathleen M. Fisher

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    John L. Rossi      

Kathleen M. Fisher, VP & CFO

Its:

 

Senior Vice President

      [Print Name and Title]

Date:

 

April 28, 2004

 

Date:

 

April 20, 2004