<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________________
FORM 10-Q
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended December 25, 1993.
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
Commission file number 1-8703
WESTERN DIGITAL CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 95-2647125
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8105 Irvine Center Drive
Irvine, California 92718
------------------------ -----
(Address of principal executive offices) (Zip Code)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE (714) 932-5000
N/A
---
Former name, former address and former fiscal year if changed since last report.
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
Number of shares outstanding of Common Stock, as of January 20, 1994
is 36,354,156.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE-MONTH PERIOD ENDED
-------------------------------------
DECEMBER 25, DECEMBER 26,
1993 1992
------------ ------------
<S> <C> <C>
Revenues, net . . . . . . . . . . . . . . . . . . . . . . $371,072 $343,475
Costs and expenses:
Cost of revenues . . . . . . . . . . . . . . . . . . . 298,251 284,889
Research and development . . . . . . . . . . . . . . . 30,073 24,718
Selling, general and administrative . . . . . . . . . 26,406 22,079
-------- --------
Total costs and expenses . . . . . . . . . . . . 354,730 331,686
-------- --------
Operating income . . . . . . . . . . . . . . . . . . . . 16,342 11,789
Net interest expense . . . . . . . . . . . . . . . . . . 2,551 4,109
-------- --------
Income before income taxes . . . . . . . . . . . . . . . 13,791 7,680
Provision for income taxes . . . . . . . . . . . . . . . 1,304 768
-------- --------
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 12,487 $ 6,912
======== ========
Earnings per common and common
equivalent share (Note 2):
Primary . . . . . . . . . . . . . . . . . . $ .32 $ .22
======== ========
Fully diluted . . . . . . . . . . . . . . . $ .32 $ .21
======== ========
Common and common equivalent shares used
in computing per share amounts:
Primary . . . . . . . . . . . . . . . . . . 38,673 31,835
======== ========
Fully diluted . . . . . . . . . . . . . . . 39,117 32,383
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX-MONTH PERIOD ENDED
-------------------------------------
DECEMBER 25, DECEMBER 26,
1993 1992
------------ ------------
<S> <C> <C>
Revenues, net . . . . . . . . . . . . . . . . . . . . . . $656,570 $614,616
Costs and expenses:
Cost of revenues . . . . . . . . . . . . . . . . . . . 537,330 505,656
Research and development . . . . . . . . . . . . . . . 56,425 46,870
Selling, general and administrative . . . . . . . . . 48,518 41,762
-------- --------
Total costs and expenses . . . . . . . . . . . . 642,273 594,288
-------- --------
Operating income . . . . . . . . . . . . . . . . . . . . 14,297 20,328
Net interest expense . . . . . . . . . . . . . . . . . . 5,604 8,017
-------- --------
Income before income taxes . . . . . . . . . . . . . . . 8,693 12,311
Provision for income taxes . . . . . . . . . . . . . . . 1,304 1,231
-------- --------
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 7,389 $ 11,080
======== ========
Earnings per common and common equivalent
share (Note 2):
Primary . . . . . . . . . . . . . . . . . . . . $ .20 $ .36
======== ========
Fully diluted . . . . . . . . . . . . . . . . . $ .19 $ .34
======== ========
Common and common equivalent shares used
in computing per share amounts:
Primary . . . . . . . . . . . . . . . . . . . . 37,020 31,211
======== ========
Fully diluted . . . . . . . . . . . . . . . . . 38,984 32,350
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
WESTERN DIGITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 25, JUNE 30,
1993 1993
------------ --------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 84,846 $ 33,837
Accounts receivable, less allowance for doubtful
accounts of $10,701 and $9,340 . . . . . . . . . . . . . 177,210 159,478
Inventories (Notes 3 and 4) . . . . . . . . . . . . . . . . 87,418 112,516
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 12,127 12,626
-------- --------
Total current assets . . . . . . . . . . . . . . . . . 361,601 318,457
Property and equipment, at cost, less accumulated
depreciation and amortization (Note 4) . . . . . . . . . . . 84,540 181,030
Intangible and other assets, net (Note 4) . . . . . . . . . . . 36,983 31,684
-------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . $483,124 $531,171
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . $136,084 $128,538
Accrued expenses (Note 4) . . . . . . . . . . . . . . . . 98,947 54,911
Current portion of long-term debt (Notes 4 and 5) . . . . 12,707 23,460
-------- -------
Total current liabilities . . . . . . . . . . . . . 247,738 206,909
Long-term debt, less current portion (Notes 4 and 5) . . . . 85,332 182,561
Deferred income taxes . . . . . . . . . . . . . . . . . . . . 9,622 10,751
Commitments and contingent liabilities
Shareholders' equity:
Preferred stock, $.10 par value;
Authorized: 5,000 shares
Outstanding: None . . . . . . . . . . . . . . . . . -- --
Common stock, $.10 par value;
Authorized: 95,000 shares
Outstanding: 35,848 shares at
December 25 and 35,338 shares
at June 30 . . . . . . . . . . . . . . . . . . . . . 3,585 3,534
Additional paid-in capital . . . . . . . . . . . . . . . . 202,320 200,278
Accumulated deficit . . . . . . . . . . . . . . . . . . . (65,473) (72,862)
-------- --------
Total shareholders' equity . . . . . . . . . . . . . 140,432 130,950
-------- --------
Total liabilities and shareholders' equity . . . . . $483,124 $531,171
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTH PERIOD ENDED
-------------------------------------
DECEMBER 25, DECEMBER 26,
1993 1992
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 7,389 $ 11,080
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation and amortization . . . . . . . . . . . . 26,382 26,255
Changes in current assets and liabilities, net of
effects from the sale of facility (Note 4):
Accounts receivable . . . . . . . . . . . . . . . (17,732) (32,867)
Inventories . . . . . . . . . . . . . . . . . . . 15,950 9,234
Prepaid expenses . . . . . . . . . . . . . . . . (1,340) (1,478)
Accounts payable and accrued expenses . . . . . . 32,397 19,579
Other assets . . . . . . . . . . . . . . . . . . . . . (505) (174)
Deferred income taxes . . . . . . . . . . . . . . . . (1,129) (43)
--------- --------
Net cash provided by operating activities . . . . 61,412 31,586
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net . . . . . . . . . . . . . . . . . (9,131) (19,591)
Proceeds from the sale of facility (Note 4) . . . . . . . . 103,942 --
--------- --------
Net cash provided by (used for) investing
activities . . . . . . . . . . . . . . . . . . . 94,811 (19,591)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt . . . . . . . . . . . . . . . . . . . (107,307) (13,260)
Exercise of stock options and warrants . . . . . . . . . . 2,093 773
--------- --------
Net cash used for financing activities . . . . . . . . (105,214) (12,487)
--------- --------
Net increase (decrease) in cash and cash
equivalents . . . . . . . . . . . . . . . . . . . 51,009 (492)
Cash and cash equivalents, beginning of period . . . . 33,837 33,815
--------- --------
Cash and cash equivalents, end of period . . . . . . . $ 84,846 $ 33,323
========= ========
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . $ 5,619 $ 7,356
Income taxes . . . . . . . . . . . . . . . . . . . . . 310 628
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accounting policies followed by the Company are set forth in Note
1 of Notes to Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the year ended June 30, 1993.
Quarterly information is reported on a 13 week fiscal period which
ends the last Saturday of the quarter.
2. Primary earnings per share amounts are based upon the weighted average
number of shares and dilutive common stock equivalents calculated
using the average price of the Company's common stock for each period
presented. Fully diluted earnings per share additionally reflect
dilutive shares assumed to be issued upon conversion of the Company's
convertible debentures.
3. Inventories comprised the following:
<TABLE>
<CAPTION>
December 25, June 30,
1993 1993
------------ --------
(in thousands)
<S> <C> <C>
Finished goods . . . . . . . . . $29,800 $ 43,634
Work in process . . . . . . . . . 30,385 44,087
Raw materials and component parts . 27,233 24,795
------- --------
$87,418 $112,516
======= ========
</TABLE>
4. In December 1993, the Company sold its Irvine, California silicon
wafer fabrication facility and certain tangible assets to the
Semiconductor Products Sector of Motorola, Inc. ("Motorola") for
approximately $110.6 million ($103.9 million in cash and a $6.7
million note payable over a 60-day period after closing) plus certain
other considerations, including the assumption by Motorola of
equipment leases and certain other liabilities associated with the
facility. Approximately $95.0 million of the proceeds from the sale
were used to reduce bank indebtedness. Concurrent with the sale, the
Company entered into a supply contract with Motorola under which
Motorola will supply silicon wafers to Western Digital for at least
two years.
The gain on the sale of the facility, which has been reduced to
provide for certain additional costs necessary to conform the
Company's operations to an environment without in-house wafer
fabrication facilities, is not material to the financial position of
the Company and is being deferred and amortized over the life of the
supply contract with Motorola.
5. In January 1994, the Company entered into a $75.0 million accounts
receivable facility with certain financial institutions. The facility
consists of a $50.0 million three-year arrangement at Eurodollar or
reference rates of the participating banks and a $25.0 million
one-year committed arrangement at a rate approximating commercial
paper rates. This new facility is intended to serve as a source of
working capital as may be needed from time to time and replaces a
credit facility secured by substantially all of the Company's assets,
the remaining borrowings under which were repaid on December 31, 1993.
6. In the opinion of management, all adjustments necessary to fairly
state the results of operations for the three and six months ended
December 25, 1993 and December 26, 1992 have been made. All such
adjustments are of a normal recurring nature. Certain information and
footnote disclosures normally included in the financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. These consolidated
financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in
the Company's Annual Report.
6
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLAR AMOUNTS IN MILLIONS)
RESULTS OF OPERATIONS
Net income for the second quarter of 1994 was $12.5 million, compared with a
net loss of $5.1 million in the first quarter of fiscal 1994 and net income of
$6.9 million in the corresponding quarter of the prior year. Net income for
the six months ended December 25, 1993 was $7.4 million versus $11.1 million
for the same period of the prior year. Revenue for the three month period ended
December 25, 1993 increased to $371.1 million from $285.5 million in the first
quarter of 1994, and from $343.5 million in the second quarter of 1993.
Gross margins for the second quarter of 1994 improved approximately three
percentage points to 19.6% from 16.3% in the immediately preceding quarter
primarily as a result of a 40% increase in disk drive unit shipments which
reduced per unit product costs and a favorable product mix in the Company's
disk drive business. For the six months ended December 25, 1993, the Company
increased its revenue and gross profit margins to $656.6 million and 18.2%,
respectively, reflecting the significant increase in the volume of drives
shipped and lower component costs in both the disk drive and microcomputer
products ("MCP") businesses.
Revenue for disk drive products totaled $332.8 million in the second quarter of
1994, an increase of $90.5 million or 37% from the first quarter of 1994. This
increase reflects a 40% increase in unit shipments combined with an abatement
in the pricing pressures experienced in the immediately preceding quarter.
Revenue for drive products for the three and six months ended December 25, 1993
increased $34.5 million or 12% and $52.0 million or 10%, respectively, as
compared to the corresponding periods of 1993. These increases were the result
of a 38% and 32% increase in the volume of drives shipped over the
corresponding three and six month periods, respectively, of the prior year and
a shift in the mix to higher-capacity drives.
Revenue for MCP totaled $38.3 million in the second quarter of 1994, a decrease
of $4.9 million or 11% from the first quarter of 1994, reflecting decreases
across all product lines. Revenue for MCP for the three and six months ended
December 25, 1993 decreased $7.0 million or 15% and $10.1 million or 11%,
respectively, as compared to the corresponding periods of the prior year. The
decline in revenue for both periods was the result of decreases in systems
solutions and imaging product revenue which was partially offset by increases
in storage controller product revenue.
Disk drive gross margin for the current quarter increased approximately four
percentage points to 18.3% from 13.9% in the immediately preceding quarter
primarily as a result of increased unit shipments which reduced per unit
product costs and a favorable product mix and was relatively flat as compared
to the second quarter of the prior year. Disk drive gross margin for the six
months ended December 25, 1993 decreased approximately three percentage points
from 19.4% in the corresponding period of the prior year due to the pricing
pressures experienced in the first half of the current fiscal year.
MCP gross margin for the second quarter of 1994 increased approximately two
percentage points to 31.2% from 29.6% in the immediately preceding quarter as a
result of lower component costs. MCP gross margin for the three and six month
periods for the current fiscal year increased approximately 29 and 22
percentage points, respectively, from 1.8% and 8.2% in the three and six month
periods of the prior year. These increases in MCP gross margin were primarily
the result of continued improvements in manufacturing efficiencies which
reduced product costs.
7
<PAGE> 8
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLAR AMOUNTS IN MILLIONS)
Research and development expense ("R&D") for the second quarter of 1994
increased approximately $3.7 million or 14% as compared to the first quarter of
1994 as a result of continued increases in new product introduction expenses.
R&D expense for the three and six months ended December 25, 1993 increased $5.4
million or 22% and $9.6 million or 20%, respectively, as compared to the
corresponding periods of the prior year. These increases were primarily
attributable to planned expenditures to support new product introductions for
the current fiscal year.
Selling, general and administrative ("SG&A") expense for the three months ended
December 25, 1993 increased $4.3 million or 19% from the preceding quarter and
$4.3 million or 20% from the same period a year ago as a result of increased
selling and marketing expenses. As compared to the first six months of 1993,
SG&A expense increased $6.8 million or 16% primarily as a result of increases
in selling expenses and increased reserves for bad debt expense in support of
the higher revenues.
Net interest expense decreased $.5 million in the second quarter of 1994 as
compared with the prior quarter due to reductions in outstanding debt. Net
interest expense decreased $1.6 million from the second quarter of 1993 and
$2.4 million from the first six months of 1993, primarily due to lower interest
rates and significantly lower levels of debt outstanding during 1994 as
compared to the prior periods.
FINANCIAL CONDITION
Cash and cash equivalents increased to $84.8 million at December 25, 1993 as
compared to $33.8 million at June 30, 1993. This $51.0 million increase in
cash and cash equivalents resulted primarily from increased cash flows from
operations, which totalled $61.4 million for the six months ended December 25,
1993. Cash flows from operations, along with approximately $95.0 million of
proceeds from the sale of the Company's wafer fabrication facility (see Note 4)
were used to reduce long-term debt by $107.3 million and to fund capital
expenditures of $9.1 million. Capital expenditures were incurred primarily for
increased disk drive manufacturing and wafer testing capacity.
In January 1994, the Company entered into a $75.0 million accounts receivable
facility with certain financial institutions. The facility consists of a $50.0
million three-year arrangement at Eurodollar or reference rates of the
participating banks and a $25.0 million one-year committed arrangement at a
rate approximating commercial paper rates. This new facility is intended to
serve as a source of working capital as may be needed from time to time and
replaces a credit facility secured by substantially all of the Company's
assets, the remaining borrowings under which were repaid on December 31, 1993.
Notwithstanding the improvements in financial position realized over the past
six months, the ability of the Company to sustain its improved working capital
management and to continue operating profitably is dependent upon a
number of factors including competitive conditions in the marketplace, general
economic conditions, the efficiency of the Company's manufacturing operations
and the timely development and introduction of new products which address
market needs.
8
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 1. Legal Procedings
The Company was sued on September 17, 1991, in the United States
District Court for the Central District of California by Amstrad
plc, a British computer maker. The suit alleged that disk drives
furnished to Amstrad in 1988 and 1989 were defective. Amstrad
claimed damages of approximately $3.0 million for asserted losses
in out-of-pocket expenses, $38.0 million in lost profits and
$100.0 million for injury to Amstrad's reputation and loss of
goodwill. The Company filed a counterclaim against Amstrad. This
federal action was dismissed without prejudice and Amstrad has
filed a similar complaint in Orange County, California Superior
Court but raised the claim for damages to $186.0 million. The
Company again filed a counterclaim for $3.0 million in actual
damages plus exemplary damages in an unspecified amount and
intends to vigorously defend itself against the Amstrad claims.
ITEM 4. Submission of Matters to Vote of Security Holders
The annual meeting of shareholders was held on November 18, 1993.
The shareholders approved the following proposal:
<TABLE>
<CAPTION>
Number of Votes
-------------------------
For Against*
---------- ---------
<S> <C> <C> <C>
1. To approve the Western Digital Corporation 1993
Employee Stock Purchase Plan under which
employees may purchase shares of the Company's
common stock pursuant to the provisions of the
regulations relating to Section 423 of the Internal
Revenue Code. 23,193,359 4,116,135
</TABLE>
* includes abstentions
At the annual meeting of shareholders the entire slate of
director nominees was elected, with each nominee receiving at
least 27,090,977 votes in favor of election.
ITEM 5. Other Information
The Company currently has a cross-license with IBM Corporation
("IBM") which became effective January 1, 1990. Pursuant to this
agreement, the Company has licensed IBM under certain Western
Digital patents for the life of such patents, and has obtained
from IBM a patent license which expires December 31, 1994 covering
certain Western Digital products. Although the license granted to
Western Digital extends to certain components within Western
Digital disk drives, disk drives as such are not expressly
covered. In calendar 1993, IBM initiated further discussions with
the Company for the purpose of determining whether the Company's
disk drives are covered by specified IBM patents. The Company is
currently reviewing these patents. Based on its prior dealings
with IBM, the Company expects to work toward a supplemental
agreement with IBM which will address the disk drive issues and
extend the term of the license, with the goal of reaching
agreement prior to the expiration of the term of the current
license agreement. This supplemental agreement, if finalized, may
involve payment of higher royalties to IBM than are presently
paid. No assurance can be given that such an agreement can be
reached upon terms acceptable to the Company. Failure to reach an
acceptable agreement could have a material adverse impact on the
Company's business.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6. Exhibits and reports on Form 8-K.
(a) Exhibits:
10.17.1 Manufacturing Building lease between Wan Tien
Realty Pte LTD and Western Digital (Singapore)
Pte Ltd dated as of November 9, 1993.
(b) Reports on Form 8-K:
On January 5, 1994 the Company filed a Current Report
on Form 8-K with the Securities and Exchange
Commission reporting the sale of its Irvine,
California silicon wafer fabrication facility to the
Semiconductor Products Sector of Motorola, Inc. for
approximately $110.6 million ($103.9 million in cash
and a $6.7 million note payable over the 60-day
period after closing).
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTERN DIGITAL CORPORATION
-------------------------------------------
Registrant
/s/Scott Mercer
-------------------------------------------
D. Scott Mercer
Executive Vice President,
Chief Financial and Administrative Officer
Date: January 24, 1994
11
<PAGE> 1
Exhibit 10.17.1
Western Digital (Singapore) Pte Ltd
36 Robinson Road #18-01
City House
Singapore 0106
Dear Sirs
750B CHAI CHEE ROAD
2ND, 4TH AND 5TH STOREY
CHAI CHEE INDUSTRIAL PARK
1. We refer to the Sub-lease Agreement dated this 9th day of
November 1993 between WAN TIEN REALTY (PTE) LTD as Sub-lessor and
WESTERN DIGITAL (SINGAPORE) PTE LTD as Sub-lessee for the above mentioned
premises.
2. Further to the clauses referred to in the above mentioned Sub-lease
Agreement, we confirm the following:
(a) In addition to the rent payable, all direct operating costs for
the supply of air-conditioning to the demised premises are
payable by the Sub-lessee to the Sub-lessor as apportioned by
the Sub-lessor.
(b) Without prejudice to the provisions of Clause 2(a) of the
Sub-lease Agreement, the Sub-lessor has agreed, strictly as an
indulgence, to allow the Sub-lessee to pay the annual rent in
advance and clear of all deductions by monthly payments
respectively on the 1st day of each month with effect from the
1st day of September 1993. The Sub-lessor reserves the right
to withdraw this indulgence at any time and revert to strict
adherence to the terms of the Sub-lease Agreement.
<PAGE> 2
Western Digital (Singapore) Pte Ltd
Page 2
3. In addition, the following terms and conditions imposed by the Housing &
Development Board (hereinafter referred to as "the HDB") shall apply :
(a) The Sub-lessee shall not assign, sublet or part with or share
the possession of the sublet premises or any part thereof or
permit any other party or person by way of a license
or otherwise to occupy the sublet premises or any part thereof
at any time during the subletting terms.
(b) The Sub-lessee shall permit the HDB and/or the Sub-lessor or
their respective servants or agents with or without workmen,
tools and equipment during the subletting term at all
reasonable times to enter upon the sublet premises and every
part thereof to examine the state and condition of the same
and of defects decays and wants of reparation and of all
breaches of covenants there found.
(c) The Sub-lessee shall not cause or do or suffer to be
done any act or thing which may as between the Sub-lessor and
the HDB constitute or cause a breach by the Sub-lessor of any
of the terms, covenants, conditions or stipulations on the part
of the Sub-lessor to be observed or performed by virtue of the
lease or sublease between the Sub-lessor and the HDB herein
before mentioned but shall do or permit to be done any act or
thing to comply with or to prevent a breach of any of such
terms, covenants, conditions or stipulations with no liability
on the part of the HDB for any inconvenience, loss, damages,
costs, expenses or compensation whatsoever in the event that
the HDB or its servants or authorized agents with or without
workman, tools and equipment should enter upon the Sub-lessor's
premises or the sublet premises to do any act or thing which
the HDB is entitled to do by virtue of the said lease or
sublease or of any laws, by-laws, rules or regulations.
(d) The Sub-lessor shall for the purpose of the Sub-clause (c)
aforesaid acquaint the Sub-lessee with the terms, covenants,
conditions and stipulations of the lease or sublease between
the Sub-lessor and the HDB and any variations or amendments
thereto.
<PAGE> 3
Western Digital (Singapore) Pte Ltd
Page 3
(e) In the event that the HDB at any time before the expiry of the
subletting term gives three (3) months' notice in writing
requiring that this subletting be terminated or becomes entitled
to and re-enters the Sub-lessor's premises or any part thereof
in the name of the whole the subletting term shall upon the
expiry of the said notice or upon the said re-entry absolutely
determine without prejudice to any rights and/or remedies which
have accrued to either party against the other under this
Agreement and without the HDB being liable for any inconvenience,
loss, damages, compensation, costs or expenses whatsoever.
4. Please confirm your acceptance of the above by signing and
returning the duplicate of this letter.
Dated this 9th day of November 1993.
Yours faithfully,
TAN AH BAH
for and on behalf of
WAN TIEN REALTY (PTE) LTD
acting under a Power of Attorney
dated 6th day of August 1992
________________________________________________________________
A C K N O W L E D G E M E N T
I/We, Yew Ah Ming, for and on behalf of WESTERN DIGITAL
(SINGAPORE) PTE LTD, hereby unconditionally confirm my/our acceptance
of the above.
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November 9, 1993 _______________________________
AUTHORIZED SIGNATORY/IES
COMPANY STAMP
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<PAGE> 4
DATED THIS 9TH DAY OF NOVEMBER 1993
BETWEEN
WAN TIEN REALTY (PTE) LTD
AND
WESTERN DIGITAL (SINGAPORE) PTE LTD
(2ND, 4TH & 5TH STOREY)
****************************************
SUB - LEASE
****************************************
<PAGE> 5
THIS Sub-lease is made the 9th day of November One
thousand nine hundred and ninety-three between WAN TIEN REALTY (PTE) LTD, a
company incorporated in the Republic of Singapore and its registered office at
68 Orchard Road, Singapura Singapore (hereinafter referred to as "the
Sub-lessor") of the one part and WESTERN DIGITAL (SINGAPORE) PTE LTD, a company
incorporated in the Republic of Singapore and having its registered office at
36 Robinson Road #18-01, City House, Singapore 0106 Parties
(hereinafter referred to as "the Sub-lessee") of the other part.
WITNESSETH as follows:
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1. IN CONSIDERATION of the rents and the Sub-lessee's covenants Demise
hereinafter reserved and contained the Sub-lessor hereby demises unto
the Sub-lessee ALL THAT premises more particularly described in the
First Schedule hereto (hereinafter called "the Demised Premises")
being a part of the Industrial Park known as "CHAI CHEE INDUSTRIAL
PARK", Chai Chee Road, Singapore (hereinafter called "the Industrial
Park") Together with (but to the exclusion of all other liberties
easements rights or advantages):
(a) The right for the Sub-lessee and others duly
authorized by the Sub-lessee of ingress and egress to
and from the Demised Premises in over and along all
the usual entrances landings lifts and passage ways
leading thereto in common with the Sub-lessor and all
others so authorized by the Sub-lessor and all other
persons entitled thereto, such rights being only so
far as is necessary and as the Sub-lessor can lawfully
grant.
(b) The right to the free and uninterrupted use of all
electric, telephone and other pipes, wires and cables
upon through or under adjacent premises in the
Industrial Park all such rights to be so far as is
necessary for the enjoyment of the Demised Premises
and in common with the Sub-lessor and all others so
authorized by the Sub-lessor and all other persons
entitled thereto.
(c) The right for the Sub-lessee and all others authorized
by the Sub-lessee to the use and benefit of the
air-conditioning
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system installed in the Industrial Park in common with
the Sub-lessor and all others so authorized by the
Sub-lessor and all other persons entitled thereto
(d) The right for the Sub-lessee and others authorized by
the Sub-lessee to the use of such sufficient toilet
facilities in the Industrial Park as shall be provided
by the Sub-lessor but such use shall be in common with
the Sub-lessor and all others so authorized by the
Sub-lessor and all other persons entitled thereto.
EXCEPTING AND RESERVING unto the Sub-lessor the free Annual
uninterrupted use of all gas water and other pipes, electric telephone Rent
and other wires conduits flues and drains in through or under the
Demised Premises TO HOLD the Demised Premises unto the Sub-Lessee for
the term of two ( 2 ) years from the 1st day of September 1993
(hereinafter called the 'Date of Commencement') YIELDING AND PAYING
THEREFOR during the term hereby created the rent calculated at the
rate specified in the Second Schedule hereto, and the rent shall be
paid in advance and clear of all deductions by three-monthly payments
respectively on the 1st day of January, April July and October in each
year (hereinafter called the "Payment Dates") Provided that on or
before the Date of Commencement the Sub-lessee shall pay to the
Sub-lessor the rent calculated from the Date of Commencement up to the
day immediately before the next Payment Date and thereafter the rent
shall be paid on the Payment Dates.
2. The Sub-lessee hereby covenants with the Sub-lessor as Sub-lessee's
follows: Covenants
(a) To pay the said rent on the Payment Dates and in the Rent
manner aforesaid.
(b) To pay to the Sub-lessor on or before the execution Deposit
of this Sub-lease the sum of Dollars Five Hundred
Seventy-One Thousand Three Hundred and Sixty-Eight
Only
($571,368.00)
equivalent to three (3) months' rent to be held by the
Sub-lessor as security for the due observance and
performance by the Sub-lessee of all and singular the
several covenants conditions
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<PAGE> 7
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stipulations and agreements on the part of the
Sub-lessee herein contained, which sum shall be
maintained at this figure during the term hereby
created and shall not be deemed to be or treated as
payment of the rent and the same shall be refunded to
the Sub-lessee without interest on the expiration of
the term hereby created less such sum as may be due to
the Sub-lessor.
Provided that in lieu of payment of the said sum of
Dollars, the Sub-lessee may obtain and deliver to the
Sub-lessor a guarantee in writing or an irrevocable
letter of credit issued by a bank acceptable to the
Sub-Lessor undertaking to pay the said sum on demand
by the Sub-lessor which guarantee or irrevocable
letter of credit shall be on terms and conditions
acceptable to the Sub-lessor.
(c) To pay to HDB all Sub-letting fees and impositions Sub-letting
whatsoever which are now or which at any time Fees
hereafter during the term hereby created may be
imposed or charged in respect of the Sub-letting of
the Demised Premises to the Sub-lessee.
(d)(i) During the term hereby created to pay any increase of Property
property tax or other imposition of a like nature by Tax and
whatever name called whether by way of an increase in Other Taxes
the rate of tax or imposition or an increase in the
annual value not being the first increase in the
annual value brought about by the erection and
construction of the Industrial Park over and above the
amount of such property tax or imposition levied or
imposed as at the Date of Commencement where such
increase is due or attributable to an increase in the
rate of property tax payable or an increase in the
annual value aforesaid and to pay any new imposition
(including surcharge on property tax) by whatever name
called which may hereafter be levied or imposed on the
Demised Premises. In the event of the Demised
Premises not being separately assessed but the
Industrial Park being assessed as a whole then for the
purpose of ascertaining the additional or other amount
payable by the Sub-lessee under this Clause any such
increase in property tax or outgoing or any new
imposition shall be
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<PAGE> 8
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apportioned and the Sub-lessee shall pay such
proportion thereof as the floor area of the Demised
Premises bears to the total area of the rentable floor
space in the Industrial Park.
(d)(ii) It is hereby agreed that the rent and other sums
payable by the Sub-lessee under this Sub-lease
(hereinafter collectively called the Agreed Sum)
shall, as between the Sub-lessor and the Sub-lessee,
be exclusive of any applicable goods and services tax,
imposition, duty and levy whatsoever (hereinafter
collectively called Taxes) which may from time to time
be imposed or charged before, on or after the
commencement of this Sub-lease (including any
subsequent revisions thereto) by any government,
quasi-government, statutory or tax authority
(hereinafter called the Authorities ) on or calculated
by reference to the amount of the Agreed Sum (or any
part thereof) and the Sub-lessee shall pay all such
Taxes or reimburse the Sub-lessor for the payment of
such Taxes, as the case may be, in such manner and
within such period as to comply or enable the
Sub-lessor to comply with any applicable orders or
directives of the Authorities and the relevant laws
and regulations.
If the Sub-lessor or the Sub-lessee (or any person on
their behalf) is required by law to make any deduction
or withholding or to make any payment, on account of
such Taxes, from or calculated by reference to the
Agreed Sum (or any part thereof):
(aa) the Sub-lessee shall pay, without requiring
any notice from the Sub-lessor all such Taxes
for its own account (if the liability to pay
is imposed on the Sub-lessee), or on behalf
of and in the name of the Sub-lessor (if the
liability to pay is imposed on the Sub-
lessor) on receipt of written notice from the
Sub-lessor, and without prejudice to the
foregoing, if the law requires the Sub-lessor
to collect and to account for such Taxes, the
Sub-lessee shall pay such Taxes to the
Sub-lessor (which shall be in addition to the
Sub-lessee's liability to pay the Agreed Sum)
on receipt of written notice from the
Sub-lessor; and
(bb) the sum payable by the Sub-lessee in respect
of which the relevant deduction, withholding
or payment is required on account such Taxes,
shall be increased to the extent necessary to
ensure that after the making of the aforesaid
deduction, withholding or payment, the Sub-
lessor or any person or persons to whom such
sum is to be paid, receives on due date and
retains (free from any liability in respect
of any such deduction, withholding or Taxes)
a net sum equal to what would have been
received and retained had no such deduction,
withholding or payment been required or made.
The rights of the Sub-lessor under this clause shall
be in addition and without prejudice to any other
rights or powers of the Sub-lessor under any
applicable order or directive of the Authorities
or any relevant law or regulation, to recover
from the Sub-lessee the amount of such Taxes
which may be or is to be paid or borne by the
Sub-lessor.
The Sub-lessee shall indemnify and hold harmless the
Sub-lessor from any losses, damages, claims, demands,
proceedings, actions, costs, expenses, interests and
penalties suffered or incurred by the Sub-lessor
arising from any claim, demand, proceeding or action
that may be made or instituted by the Authorities in
respect of such Taxes and resulting from any failure
or delay on the part of the Sub-lessee in the payment
and discharge of any such Taxes.
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(e) To pay all stamp duty and all the Sub-lessor's legal Legal and
costs charges and expenses of and incidental to the Other
preparation completion stamping and registration of Costs
this Sub-lease and or any surrender or other
termination thereof otherwise then by affluxion of
time and in case of default by the Sub-lessee in
performing or observing any covenants herein contained
or implied the Sub-lessee shall pay to the Sub-lessor
all legal and other costs, charges and expenses for
which the Sub-lessor shall become liable in
consequence of or in connection with any default
within seven (7) days of the Sub-lessor requesting him
so to do.
(f) To pay all rates charges and the like (including PUB and
taxes) for services supplied and metered separately to Other
the Demised Premises and charged by the Public Charges
Utilities Board or other authority(ies) or undertaking
and in the event of such services not being supplied
and metered separately to the Demised Premises to pay
to the Sub-lessor a proportionate part of the cost
thereof, such cost to be calculated by the Sub-lessor
and notified to the Sub-lessee in writing and such
notification shall be accepted by the Sub-lessee as
final and conclusive as to the amount thereof and in
the event of the Public Utilities Board or other
authority(ies) or undertaking responsible for the
supply of services supplied and used in the Industrial
Park increasing the charges therefore the Sub-lessee
shall pay to the Sub-lessor a proportionate part of
such increased costs as calculated by the Sub-lessor
and notified to the Sub-lessee in writing which
notification shall be accepted by the Sub-lessee as
final and conclusive as to the amount thereof.
Subject to the approval of HDB, the Sub-lessor may
cause to be installed in the Industrial Park at the
expense of the Sub-lessee separate meters to measure
the consumption of the
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<PAGE> 10
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said services by the Sub-lessee. Provided Always that
nothing herein shall render it obligatory on the part
of the Sub-lessor to supply or cause to be supplied
such services to the Demised Premises, unless
expressly agreed to by the Sub-lessor.
(g) Subject to all approvals being obtained by the Electrical
Sub-lessee from the HDB and the relevant authorities, and Other
to install at the Sub-lessee's own cost and expense Appliances
all electrical or other appliances including
telephones and teleprinters (as the Sub-lessee may
require) in such a manner that the wires shall not run
across the floor or ceiling or along the walls of the
Demised Premises so as to be visible in the Demised
Premises but shall be concealed in metal conduits and
if running along the floor shall be concealed in the
ducts in the underfloor trunking.
(h) Without prejudice to Clause 2(n) hereof to give notice Notice of
forthwith to the Sub-lessor of any damage that may Damage
occur to the Demised Premises and of any accident to
or defect in the water pipes gas pipes electrical
wiring air-conditioning ducts or any other fittings
and/or fixtures therein.
(i) Subject to the prior written consent of the Sub-lessor Internal
and to all approvals being obtained by the Sub-lessee Fittings
from the relevant authorities to carry out within the and Works
Demised Premises at the Sub-lessee's own cost and
expense all fittings and works which are not provided
by the Sub-lessor including all or any of the
following as may be necessary:
(i) partitioning within the Demised Premises;
(ii) installation of all necessary
air-conditioning distribution ducts
connecting the same to the main
air-conditioning ducts of the Industrial
Park;
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<PAGE> 11
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(iii) installation of all necessary electrical
wiring conduits fittings and fixtures;
(iv) provision of interior plaster or other
materials or rendering on walls floors and
ceiling; and
(v) where water or gas is to be supplied to the
Demised Premises, installation water and
other pipes apparatus fittings fixtures and
all necessary plumbing.
All debris and waste materials of whatever nature
resulting from the aforesaid works shall be disposed
by the Sub-lessee in a manner prescribed by the
Sub-lessor failing which the Sub-lessor reserves the
right (without being under any obligation to do so) to
dispose of the same and all costs and expenses
incurred by the Sub-lessor in this respect shall be
paid by the Sub-lessee to the Sub-lessor within seven
(7) days of the Sub-lessor notifying the Sub-lessee
of the amount thereof.
(j) To use for carrying out the works referred to in Installa-
Clause 2(i) above materials of such standards as to tions and
type quality and size as the Sub-lessor shall Partitions
determine and cause such partitions installations and
other works to be carried out in the Demised Premises
in accordance with plans and specifications that shall
have received the prior written approval of the
Sub-lessor and the relevant authorities. Such works
shall only be effected by a contractor approved by the
Sub-lessor and in accordance with approved plans and
specifications under the supervision of an architect
or engineer approved by the Sub-lessor and the
completion thereof shall be subject to approval by the
Sub-lessor and the Sub-lessee shall not make any
additions, alterations or renovations to the said
works except with the prior approval in writing of the
Sub-lessor.
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<PAGE> 12
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(k) Not to make or permit to be made any works alterations Alterations
in or additions to the Demised Premises or any part and
thereof or the fixtures and fittings therein without Additions
having first obtained the written consent of the
Sub-lessor and the relevant authorities and in the
event of such consent being given to carry out at the
Sub-lessee's own cost and expense such alterations or
additions with such materials and in such manner and
at such time(s) as shall be designated by the
Sub-lessor.
(l) The fees of any architect engineer or other consultant Fees of
employed by the Sub-lessor for the purpose of Architects
considering and approving any plans specifications Engineers
materials and all works carried out by the Sub-lessee etc.
and all other costs, charges and expenses incurred by
the Sub-lessor in connection therewith shall be a debt
due from the Sub-lessee to the Sub-lessor and shall be
paid by the Sub-lessee to the Sub-lessor within seven
(7) days of the Sub-lessor notifying the Sub-lessee of
the amount thereof. No delay in carrying out and
completing all or any of the said works (including
installations of telephones and teleprinters) in at or
about the Demised Premises, whether caused by any
governmental and/or statutory authorities or
otherwise, shall be a ground for postponing the
commencement of the term hereby created or relieve in
any way the Sub-lessee from the performance and
observance of the covenants conditions and
stipulations herein contained and on his part to be
performed and observed.
(m) Not to use or permit the Demised Premises for purposes Permitted
other than for the manufacture and assembly of Use of
computer peripherals and related activities. Demised
Premises
(n) To permit the Sub-lessor and its agents with or Access to
without workmen and others and with or without Demised
appliances and/or materials from time to time at all Premises
reasonable times to enter upon the Demised Premises or
any part thereof and to view, inspect and test the
condition thereof, or make such
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investigations as the Sub-lessor may deem necessary,
and to do such works and things as may be required for
any repairs rectifications alterations or improvements
to the Demised Premises or any part or parts of the
Industrial Park, and forthwith to repair amend and
make good in proper and workmanlike manner any defects
for which the Sub-lessee is liable and of which a
written notice shall be given to the Sub-lessee or
left on the Demised Premises and to pay the
Sub-lessor's cost of survey or otherwise in respect of
the preparation of any such notice and if the
Sub-lessee shall not within such period of time as
required by the Sub-lessor proceed diligently with the
execution of such repairs rectifications or works then
the Sub-lessor may enter upon the Demised Premises and
execute such repairs rectifications or works and the
cost thereof shall be a debt due from the Sub-lessee
to the Sub-lessor and shall be paid by the Sub-lessee
to the Sub-lessor within seven (7) days of the
Sub-lessor notifying the Sub-lessee of the amount
thereof.
(o) At all times to keep the interior of the Demised Tenantable
Premises the flooring and interior plaster and other Repair
surface materials or rendering on walls and ceilings
and fixtures thereon and therein including doors
windows glass locks fastening electric wires and
installations and fittings for light and power in a
clean and good state of tenantable repair and
decorative order and condition (fair wear and tear
excepted) and to replace or repair any part of the
Demised Premises and the fixtures and fittings therein
which shall be broken or damaged and further if any
damage is caused to the Sub-lessor or to any person
whomsoever directly or indirectly through the said
damaged condition of any part of the interior of the
Demised Premises the flooring and interior plaster and
other surface materials or rendering on walls and
ceilings and fixtures thereon and therein including
doors windows glass locks fastenings electric wires
and installation and fittings for light and power the
Sub-lessee shall be wholly responsible
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therefore and shall fully indemnify the Sub-lessor
against all claims demands actions and legal
proceedings whatsoever.
(p) To keep the Demised Premises and every part thereof Cleaning of
clean and in the fullest possible hygienic condition Demised
and to keep all pipes drains basins sinks and water Premises
closets if any in the Demised Premises clean and
unlocked. Any cleaners employed by the Sub-lessee for
the purposes hereof shall be at the sole expense and
responsibility of the Sub-lessee and shall be subject
to the prior written approval of the Sub-lessor. In
addition all debris and waste materials of whatever
nature shall be disposed of by the Sub-lessee, daily,
in a manner prescribed by the Sub-lessor failing which
the Sub-lessor reserves the right (without being under
any obligation to do so) to dispose of the same and
all costs and expenses incurred by the Sub-lessor in
this respect shall be paid by the Sub-lessee to the
Sub-lessor within seven (7) days of the Sub-lessor
notifying the Sub-lessee of the amount thereof.
(q)(i) Not to affix erect attach paint or exhibit or permit Signs,
or suffer so to be upon any part of the exterior of Unsightly
the Demised Premises any placard poster notice Objects
advertisement name or sign or television or wireless
mast or aerial whatsoever save and except such as
shall have been previously approved in writing by the
Sub-lessor.
(ii) To keep the windows of the Demised Premises closed at
all times so as to maintain an efficient
air-conditioning system and not to erect or install
thereon or on any glass panel any sign, device,
furnishing ornament or object which is visible from
outside the Demised Premises and which, in the opinion
of the Sub-lessor, is incongruous or unsightly or may
detract from the general appearance of the building.
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(r) Not to use or permit the Demised Premises to be used Noise/
for any unlawful or immoral purpose and not to do or Nuisance
permit to be done any act or thing which in the
opinion of the Sub-lessor may become a nuisance
disturbance or cause or likely to cause damage to the
Sub-lessor or its Sub-lessees or other persons
occupying or using the Industrial Park or any part
thereof.
(s) Not to obstruct litter or make untidy any parts of the Obstruction
Industrial Park. and
Littering
(t) Not to block up darken or obstruct any of the windows Obstruction
or light belonging to the Demised Premises or to any of Light
part of the Industrial Park.
(u) Not to place or take into the passenger lifts any Use of
baggage furniture parcels sacks bags heavy articles or Lifts
other goods or merchandise without the prior approval
of the Sub-lessor save only such light articles as
brief-cases, attache cases and handbags.
(v) To use the service lift(s) provided for the Industrial
Park in a manner prescribed by the Sub-lessor.
(w) At all times during the term hereby created to comply Compliance
with promptly and at the Sub-lessee's expense all such with
requirements as may be imposed on the occupier of the Statutes,
Demised Premises by any statute now or hereafter in By-Laws
force and any bye-laws orders rules regulations etc.
requirements and notices thereunder and to indemnify
and keep the Sub-lessor fully indemnified against all
costs claims liabilities fines or other expenses
whatsoever which may fall upon the Sub-lessor by
reason of any non-compliance thereof. In addition and
without prejudice to the foregoing if the Sub-lessee
is a sole proprietorship or partnership the Sub-lessee
shall submit to the Sub-lessor evidence of his/their
registration with the Registrar of Business Names or
any subsequent renewal thereof.
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(x) Not to bring or allow to be brought on to the Demised Machinery
Premises or any part of the Industrial Park used in
common with the Sub-lessor and other Sub-lessees any
machines or machinery save and except typewriters and
such equipment as are required for the business of the
Sub-lessee subject to the other provisions herein
contained.
(y) Subject to Clause 4(j) hereof not to load or permit or Excess Load
suffer to be loaded on any part of the floors of the
Demised Premises to a weight greater than as specified
in the Third Schedule hereto except otherwise approved
in writing by the Sub-lessor and shall when required
by the Sub-lessor distribute any load on any part of
the floor of the Demised Premises in accordance with
the directions and requirements of the Sub-lessor and
in the interpretation and application of the
provisions of this Clause the decision of the surveyor
architect or engineer of the Sub-lessor shall be final
and binding on the Sub-lessee.
(z) Not without the prior written consent of the Food and
Sub-lessor to permit any vendors of food or drink or Drink
the servants or agents of such vendors to bring on to
the Demised Premises or any part thereof or on to the
Industrial Park or any part thereof food or drink for
the consumption by the occupiers of the Demised
Premises save and except contractors who have been
given the right by the Sub-lessor to provide food and
drink service for the occupiers of the Industrial
Park.
(aa) Not to store in or bring upon any part of the Demised Prohibited
Premises or the Industrial Park any arms ammunition or Uses
unlawful goods or any explosive, toxic or combustible
substance or any substance of a dangerous nature or to
use the Demised Premises or any part thereof for the
storage or cooking of food or to permit or suffer
anyone to sleep or reside therein or to permit any
auction sale to take place therein or thereat.
(ab) Not to do or permit or suffer to be done anything Avoidance of
whereby the policy or policies of insurance against Insurance
damage or loss by fire or other risks on the Policy and
Industrial Park or any part thereof may be rendered Additional
void or voidable or whereby the rate of premium Premium
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thereon may be increased and to make good all damage
suffered by the Sub-lessor and to repay to the
Sub-lessor all sums paid by way of increased premium
and all expenses incurred by the Sub-lessor in or
about the renewal of such policy or policies rendered
necessary by the breach or non-observance of this
covenant without prejudice to any other rights of the
Sub-lessor.
(ac) Not to assign sublet license or in any way dispose of Subletting
or part with possession of the Demised Premises or any and
part thereof or either by way of Sub-letting sharing Assignment
or other means whereby any company person or persons
not a party to this Sub-lease obtains the use or
possession of the Demised Premises or any part
thereof irrespective of whether or not any rental or
other consideration is given for such use or
possession and in the event of such transfer or
sharing this Sub-lease shall at the option of the
Sub-lessor forthwith be determined and the Sub-lessee
shall forthwith surrender the Demised Premises to the
Sub-lessor with vacant possession. For the purposes
hereof any amalgamation and/or reconstruction effected
by the Sub-lessee (if a company) shall be deemed an
assignment of this Sub-lease.
(ad) That the Sub-lessee shall indemnify and keep Indemnity
indemnified the Sub-lessor in full from and against:
(i) all claims demands actions suits proceedings
orders damages costs losses and expenses of
any nature whatsoever which the Sub-lessor
may suffer or incur in connection with loss
of life, personal injury and/or damage to
property arising from or out of any
occurrences in, upon or at the Demised
Premises or the use of the Demised Premises
or any part thereof by the Sub-lessee;
(ii) all loss and damage to the Demised Premises
the Industrial Park and to all property
therein caused directly or indirectly by the
Sub-lessee and in particular but without
limiting the generality of the foregoing
caused directly or indirectly by the use or
misuse, waste or abuse of water gas or
electricity or faulty fittings or fixtures of
the Sub-lessee.
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(ae) To observe and perform and to cause all his Rules and
employees independent contractors agents Regulations
invitees and licensees to observe and perform
all the rules and regulations made by the
Sub-lessor under Clause 4(1) hereof for the
proper management of the Industrial Park and
notified in writing by the Sub-lessor to the
Sub-lessee from time to time.
Provided Always that the Sub-lessor shall
not be liable to the Sub-lessee in any way
for violation of the rules and regulations by
any persons including other Sub-lessees of
the Industrial Park or the employees
independent contractors agents visitors
invitees or licensees thereof.
(af) Subject to Clause 2(ai) hereof, not to remove Prohibition
at or prior to the expiration or sooner Against
determination of the term hereby created Removal
unless required by the Sub-lessor any
electrical wiring installation or fixtures
air-conditioning ducts conduits water and
other pipes ceilings partitions and flooring
installed or fixed by the Sub-lessee in at or
about the Demised Premises.
(ag) Immediately upon the expiration or sooner Yielding up
determination of the term hereby created to of Premises
yield up to the Sub-lessor the Demised
Premises with the fixtures and fittings
thereto (including such Sub-lessee's fixtures
as are required by the Sub-lessor pursuant to
the foregoing) in good clean tidy and
tenantable repair and condition (fair wear
and tear only excepted).
(ah) In addition to the foregoing and immediately Restoration
prior to the expiration or sooner
determination of the term hereby created and
as instructed by the Sub-lessor to restore
the Demised Premises to its original state
and condition to the satisfaction of the
Sub-lessor and if the Sub-lessee shall fail
to restore the Demised Premises as aforesaid
the Sub-lessor may restore the same and
recover from the Sub-lessee the costs of such
restoration together with all rent and other
amounts which the
</TABLE>
<PAGE> 19
<TABLE>
<S> <C>
Sub-lessor would have been entitled to
receive from the Sub-lessee had the period
within which such restoration is effected by
the Sub-lessor been added to the term hereby
created provided that such period to be added
by the Sub-lessor shall not exceed fifteen
(15) days.
(ai) In complying with Clause 2(ah) hereof and if Removal of
so required by the Sub-lessor, the Sub-lessee Internal
shall remove all such internal partitions Fittings
and/or fixtures and installations of the and Works
Sub-lessee or any part thereof as are not
required by the Sub-lessor pursuant to Clause
2(af) hereof from all portions of the Demised
Premises vacated by the Sub-lessee
immediately upon or prior to the expiration
or sooner determination of the term hereby
created and in default thereof the Sub-lessor
may remove and dispose of the same. All
damage done to the Demised Premises by such
removal shall be made good by the Sub-lessee
immediately upon or prior to the expiration
or sooner determination of the term hereby
created and if the Sub-lessee fails to do so
the Sub-lessor may make good all such damage.
All costs incurred by the Sub-lessor in such
removal or disposal or in making good such
damage shall be a debt due from the
Sub-lessee to the Sub-lessor and shall be
paid by the Sub-lessee to the Sub-lessor
within seven (7) days of the Sub-lessor
notifying the Sub-lessee of the amount
hereof.
(aj) Not to use the Demised Premises for Tin Smelting
tin-smelting or the production of tin by
other processes including electrolysis.
(ak) Not to utilize the Demised Premises before Approval
obtaining clearance on the use of the Demised from
Premises from the Pollution Control Pollution
Department. Control
Department
(al) Not to utilize the Demised Premises before Approval
submitting details of trade affluent from
discharge to the Sewerage Department for Sewerage
consideration. Department
</TABLE>
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<PAGE> 20
<TABLE>
<S> <C>
3. The Sub-lessor hereby covenants with the Sub-lessee as Sub-Lessor's
follows: Covenants
(a) To pay all rates taxes and assessments imposed upon or Payment of
in respect of the Industrial Park or any part thereof Rates,
save and except those which the Sub-lessee has Taxes etc.
covenanted to pay.
(b) That the Sub-lessee duly paying the rent hereby Quiet
reserved and observing and performing the several Enjoyment
covenants and obligations herein before contained
shall peaceably hold and enjoy the Demised Premises
during the term hereby created without any disturbance
by the Sub-lessor or any person lawfully claiming
under or in trust for the Sub-lessor.
(c) So far as practicable but subject always to Clause 4 Air-
hereof to provide: Conditioning
Electricity
(i) Air-conditioning services; and Water
(ii) Electricity for the lighting of the passages
corridors toilets and other parts of the
Industrial Park used by the Sub-lessee in
common with others;
(iii) Water for the common toilets (except those
within the Demised Premises) in the
Industrial Park.
(d) To keep the roof main drains and pipes all external Common Areas
walls and all common areas of the Industrial Park
including the entrances corridors passages stairways
landings car-park lifts common toilets clean and in
good repair including repainting and redecorating of
the same or any part thereof at such times and in
such manner as the Sub-lessor in its absolute
discretion may consider necessary. Provided Always
that the Sub-lessor shall not be liable for any loss
or injury sustained by the Sub-lessee through the
neglect default negligence or misconduct of the
Sub-lessor's cleaning contractors agents servants
and/or licensees.
(e) To keep the lifts staircases landings and such common Lighting
parts as aforesaid well and sufficiently cleaned and and
lighted and to keep the lifts in proper working order Watchmen
and
</TABLE>
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<PAGE> 21
<TABLE>
<S> <C>
to employ a watchman or watchmen for the protection at
night of the Industrial Park (but not so as to render
the Sub-lessor liable for any loss sustained by the
Sub-lessee through the neglect default negligence or
misconduct of such watchman or watchmen).
(f) At all times throughout the term hereby created to Insurance
insure and keep insured the Industrial Park (excluding
the Sub-lessee's fittings and fixtures) against loss
or damage by fire.
4. PROVIDED ALWAYS and it is hereby agreed and declared as
follows:
(a) If the rent hereby reserved or any part thereof shall Re-entry of
at any time be unpaid for fourteen (14) days after Sub-lessor
becoming payable (whether any formal or legal demand
therefore shall have been made or not) or if any
covenant on the Sub-lessee's part herein contained
shall not be performed or observed or if the
Sub-lessee being a company shall be struck off the
Register of Companies or shall go into liquidation
whether voluntary (except for the purpose of
amalgamation or reconstruction) or compulsory or a
receiver shall be appointed of its undertaking,
property or assets or any part thereof, or being a
sole proprietorship or partnership shall fail to renew
its Certificate of registration, or being an
individual shall have a receiving order or an
adjudicating order made against him or if the
Sub-lessee shall make any assignment for the benefit
of his creditors or enter into an agreement or make
any arrangement with his creditors for liquidation of
his debts by composition or otherwise or suffer any
distress or execution to be levied on his goods
property or assets then and in any one of the said
cases it shall be lawful for the Sub-lessor at any
time thereafter to re-enter upon the Demised Premises
or any part thereof in the name of the whole and
thereupon the term hereby
</TABLE>
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<PAGE> 22
<TABLE>
<S> <C>
created shall forthwith and absolutely cease and
determine but without prejudice at any time to any
right of action of the Sub-lessor in respect of unpaid
rent or any antecedent breach of the Sub-lessee's
covenants herein contained.
(b) In addition and without prejudice to any other right Interest
power or remedy of the Sub-lessor if the rent hereby on Arrears
reserved or any other moneys payable by the Sub-lessee
to the Sub-lessor thereunder or any part thereof shall
at any time remain unpaid for fourteen (14) days after
the same shall have become due (whether any formal or
legal demand therefor shall have been made or not)
then the Sub-lessee shall pay to the Sub-lessor
interest thereon calculated from the date on which
such moneys fall due for payment to the date on which
such moneys are paid to or recovered in full by the
Sub-lessor as the case may be. The Sub-lessor shall
be entitled to recover such interest from the
Sub-lessee as if such interest were rent in arrears.
Such interest shall be calculated from day to day;
(i) at the rate of twelve per centum (12%)per
annum, or
(ii) at the rate per annum of three per centum
(3%) over and above the prime interest rate
for the time being prescribed by The
Development Bank of Singapore Limited,
whichever is the greater.
(c) In the event of the Demised Premises or any part Untenanti-
thereof or the Industrial Park or any part thereof at bility
any time during the term hereby created being so
damaged or destroyed by fire act of God or other cause
beyond the control of the Sub-lessor as to render the
Demised Premises unfit for use or access thereto
impossible for a period of more than one (1) month
(except where such damage or destruction has been
caused by the default or negligence of the Sub-lessee
or his servants or agents) the rent hereby covenanted
to be paid or a fair
</TABLE>
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<PAGE> 23
<TABLE>
<S> <C>
proportion thereof according to the nature and extent
of the damage sustained shall be suspended until the
Demised Premises shall again be rendered fit for
occupation and use or until access thereto may be
obtained as the case may be, and any dispute
concerning this Clause shall be referred to
arbitration in accordance with the Arbitration Act
(Cap 10).
(d) If the unfitness of the Demised Premises or the Holding Over
inaccessibility thereto as aforesaid shall continue
for a period of more than three (3) months either the
Sub-lessor or the Sub-lessee shall be at liberty by
notice in writing to determine the term hereby created
and upon such notice being given the term hereby
granted shall absolutely cease and determine but
without prejudice to any right of action of the
Sub-lessor or the Sub-lessee in respect of any
antecedent breach of this Sub-lease by the Sub-lessee
or the Sub-lessor as the case may be.
(e) Notwithstanding anything herein contained the Sub-lessor
Sub-lessor shall be under no liability either to the Not Liable
Sub-lessee or to others who may be permitted to enter
or use the Industrial Park or any part thereof for
accidents happenings or injuries sustained or for loss
of or damage to property goods or chattels in the
Industrial Park or in any part thereof whether arising
from the negligence of the Sub-lessor or that of any
servant or agent of the Sub-lessor or otherwise.
(f) Notwithstanding anything herein contained the No Claim by
Sub-lessor shall not be liable to the Sub-lessee nor Sub-lessee
shall the Sub-lessee have any claim against the
Sub-lessor in respect of:
(i) any interruption in any of the services
herein mentioned by reason of necessary
repair or maintenance of any installations or
apparatus or damage thereto or destruction
thereof by fire water riot act of God or
other cause beyond the Sub-lessor's control
or by reason of mechanical or other defect
</TABLE>
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<PAGE> 24
<TABLE>
<S> <C>
or breakdown or other inclement conditions or
unavoidable shortage of manpower fuel
materials electricity or water or labor
disputes;
(ii) any act omission default misconduct or
negligence of any porter attendant or other
servant or employee of the Sub-lessor in or
about the performance or purported
performance of any duty relating to the
provision of the said services or any of
them;
(iii) any damage injury or loss arising out of
leakage of the piping wiring and sprinkler
system in the Demised Premises or the
Industrial Park and/or out of any defect in
the structure of the Demised Premises or the
Industrial Park.
(g) Subject to the approval of HDB, the Sub-lessor shall Option to
at the written request of the Sub-lessee made not less Renew
than six (6) months before the expiration of the term
hereby created and if there shall not at the time of
such request be any existing breach or non-observance
of any of the covenants on the part of the Sub-lessee
herein contained and at the Sub-lessee's expense grant
to the Sub-lessee a further term of the Demised
Premises the Sub-lease for which must be signed by the
Sub-lessee at a date not less than one (1) month
before the expiration of the term hereby created. The
renewed term shall be for a period of two (2) years
commencing from the date immediately following the
expiration of the term hereby created at a revised
rent, and upon terms and conditions as shall be
imposed by the Sub-lessor. Provided Always that
within two (2) weeks of the receipt of the
Sub-lessor's notification of the revised rent, terms
and conditions, the Sub-lessee shall in writing inform
the Sub-lessor whether the revised rent, terms and
conditions are acceptable or otherwise. In the event
that the revised rent, terms and conditions are not
acceptable to the Sub-lessee and/or if the Sub-lessee
shall fail to sign the Sub-lease for the renewed term
by the date stipulated above then this option shall
lapse and the Sub-lessor shall be free of all
obligations whatsoever to grant to the Sub-lessee any
further term.
</TABLE>
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<PAGE> 25
<TABLE>
<S> <C>
(h) The Sub-lessor shall be entitled to close the outer Outer Doors
doors of the Industrial Park and keep the same closed of Building
and locked after the hour of 12 midnight and before
the hour of 6 a.m. on Mondays to Saturdays except on
Sundays and gazetted Public Holidays when the
Sub-lessor may keep the outer doors closed all day.
The Sub-lessee will not without obtaining special
permission from the Sub-lessor enter the Demised
Premises on Sundays or gazetted Public Holidays or
before 6 a.m. or after 12 midnight on Mondays to
Saturdays.
(i) All loading and unloading carried out by the Loading and
Sub-lessee shall only be effected at such location(s) Unloading
and at such times as the Sub-lessor may from time to
time prescribe.
(j) The Sub-lessor shall in all cases retain and have the Weights and
power to prescribe the weight and proper position of Stresses
all iron or steel safes and other heavy equipment
articles or goods whatsoever and any or all damage
caused to the Industrial Park or any part thereof or
to the common areas by the Sub-lessee or anyone on
his behalf by taking in or putting out a safe
furniture goods or other articles or during the time
such are in the Industrial Park shall be made good by
the Sub-lessee or by the Sub-lessor at the sole
expense of the Sub-lessee. The Sub-lessee shall pay
to the Sub-lessor the amount of such damage made good
by the Sub-lessor within seven (7) days of the
Sub-lessor notifying the Sub-lessee of the amount
thereof.
(k) No consent or waiver expressed or implied by the Waiver of Defaults
Sub-lessor to or of any breach of any covenant
condition or duty of the Sub-lessee shall be construed
as a consent or waiver to or of any other breach of
the same or any other covenant condition or duty and
shall not prejudice in any way the rights powers and
remedies of the Sub-lessor herein contained. Any
acceptance of rent hereby reserved by the Sub-lessor
shall not be deemed to operate
</TABLE>
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<PAGE> 26
<TABLE>
<S> <C>
as a waiver by the Sub-lessor of any right to proceed
against the Sub-lessee in respect of a breach by the
Sub-lessee of any of his obligations hereunder.
(l) The Sub-lessor shall have the right at any time and Sub-lessor's
from time to time to make add to amend cancel or Right to
suspend any rules and regulations in respect of the make Rules
Industrial Park as in the judgment of the Sub-lessor and
may from time to time be required for the management Regulations
safety care or cleanliness of the Industrial Park or
for the preservation of good order therein or for the
convenience of Sub-lessees and all such rules and
regulations shall bind the Sub-lessee upon and from
the date on which notice in writing thereof is given
to him by the Sub-lessor. If there shall be any
inconsistency between the provisions of this Sub-lease
and the provisions of such rules and regulations then
the provisions of this Sub-lease shall prevail.
(m) Any notice or other documents or writing required to Service of
be served delivered or given hereunder shall be Notice
sufficiently served if left addressed to the
Sub-lessee on the Demised Premises or sent to the
Sub-lessee by registered post addressed to the
Sub-lessee's registered office in Singapore or left at
his last known address in Singapore and any notice
document or writing to the Sub-lessor shall be
sufficiently served if sent by registered post to the
Sub-lessor's registered office in Singapore.
(n) The covenants provisions terms and agreements herein Exclusion of
cover and comprise the whole of the agreement between Implied
the parties thereto or their appointed agents and the Terms etc.
parties hereto expressly agree and declare that no
further or other covenants agreements provisions or
terms whether in respect of the Demised Premises or
otherwise shall be deemed to be implied herein or to
arise between the parties hereto by way of collateral
or other
</TABLE>
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<PAGE> 27
<TABLE>
<S> <C>
agreement by reason of any promise representation
warranty or undertaking given or made by either party
hereto to the other on or prior to the execution
hereof and the existence of any such implication or
collateral or other agreement is hereby negatived.
(o) In the event that pursuant to HDB's condition for its HDB's Notice
consent to this Sub-lease of the Demised Premises to of
the Sub-lessee, HDB gives 3 months' notice in writing Termination
requiring this Sub-lease and the term hereby created
to be terminated, the term hereby created shall upon
the expiry of HDB's notice absolute cease and
determine, without prejudice to any rights of action
of the Sub-lessor in respect of unpaid rent or any
antecedent breach of the Sub-lessee's covenants herein
contained, but without the Sub-lessor being liable for
any inconvenience, loss, damages, compensation, costs
or expenses whatsoever in respect of such termination.
5. (a) The headings and marginal notes appearing in this Marginal
Sub-lease are inserted only as a matter of convenience Notes
and in no way define limit construe or describe the
scope or intent of the section or clauses of this
Sub-lease nor in any way affect this Sub-lease.
(b) In the interpretation of this Sub-lease except to the Interpre-
extent that such interpretation shall be excluded by tation
or be repugnant to the context when used herein:
(i) "the Sub-lessor" shall include its successors
in title assigns employees agents
representatives person or company for the
time being entitled to the reversion
immediately expectant on the term hereby
created and where the context so admits the
Sub-lessor's employees agents and
representatives.
(ii) "person" shall be deemed to include a
corporation.
</TABLE>
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<PAGE> 28
<TABLE>
<S> <C>
(iii) "restoration" used in the context hereof
shall mean the restoration of the Demised
Premises to its original state and condition
including:
(a) the making good of any damage or
disfigurement caused to walls doors
windows or any part of the Demised
Premises;
(b) the washing down of the whole of the
interior of the Demised Premises;
(c) the painting with two coats of oil
paint or emulsion paint or other
appropriate treatment of all of the
internal parts of the Demised
Premises previously so treated
respectively;
(d) the re-polishing of all the internal
parts previously polished;
(e) the graining and varnishing of all
the internal parts previously grained
and varnished;
(f) the replacing of all floor tiles
which in the opinion of the
Sub-lessor are worn or damaged and in
need of replacement;
(g) the removal and clearance of all
waste rubbish and other unwanted
material from the Demised Premises;
(h) the surrender of all keys giving
access to all parts of the Demised
Premises held by the Sub-lessee or
any of the Sub-lessee's employees or
agents irrespective of whether or not
the same have been supplied by the
Sub-lessor.
(iv) "the Sub-lessee" shall include if the
Sub-lessee is an individual, his personal
representative and permitted assigns, or if
the Sub-lessee is a company, its permitted
assigns and successors in title and in either
case where the context 50 admits the
Sub-lessee's employees agents licensees
invitees visitors independent contractors and
servants.
</TABLE>
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<PAGE> 29
<TABLE>
<S> <C>
(v) "HDB" shall mean the Housing and Development
Board.
(vi) words importing the singular or plural number
shall be deemed to include the plural or
singular number respectively and words
importing the masculine gender only shall
include the feminine or neuter gender as the
case may require, and
(vii) where two or more persons are included in the
term "the Sub-lessee" all covenants,
agreements, terms, conditions and
restrictions shall be binding on them jointly
and each of them severally and shall also be
binding on their personal representatives and
permitted assigns respectively jointly and
severally.
</TABLE>
IN WITNESS WHEREOF the parties hereto have executed
this Sub-lease the day and year first above written.
THE FIRST SCHEDULE ABOVE REFERRED TO
ALL THAT premises estimated to contain an area of
approximately 10,024.0 square meters on the building known as 750B Chai Chee
Road, 2nd, 4th and 5th Storey erected on the land marked on the Government
Resurvey Map as Mukim 27 Lot 3997 pt comprised in the District of Bedok
Singapore as outlined in red on the plan annexed hereto.
THE SECOND SCHEDULE ABOVE REFERRED TO
The rent of the Demised Premises shall be as follows:
Dollars Nineteen ($19.00) per square meter per month.
THE THIRD SCHEDULE ABOVE REFERRED TO
Allowable live
Storey load (KN/m2)
------ ------------
Second 10
Fourth 10
-25-
<PAGE> 30
SIGNED SEALED AND DELIVERED by the )
Sub-lessor by its Attorney TAN AH BAH )
acting under a Power of Attorney )
dated the 6th day of August 1992 )
(a copy of which was deposited in )
the Registry, Supreme Court, Singapore )
on the 2nd day of September 1992 )
registered as No. 4214 of 1992) )
in the presence of: )
SIGNED SEALED AND DELIVERED by )
)
)
(the Sub-lessee) )
in the presence of: )
OR
THE COMMON SEAL of WESTERN DIGITAL )
(SINGAPORE) PTE LTD )
)
(the Sub-lessee) )
was hereunto affixed in the presence of: )
- Director
- Director
OR
SIGNED SEALED AND DELIVERED by the )
Sub-lessee by its Attorney )
)
acting under a Power of Attorney )
dated the ___ day of __________ 19__ )
(a copy of which was deposited in )
the Registry, Supreme Court, Singapore )
on the ___ day of _____________ 19___ and )
registered as No. ______ of 19__) )
in the presence of: )
-26-
<PAGE> 31
Figure 1
Figure 2
Figure 3
<PAGE> 32
APPENDIX - FLOOR PLANS
Figure 1 * Second Story Floor Plan -
750B Chai Chee Road
Chai Chee Industrial Park
Figure 2 * Fourth Story Floor Plan -
750B Chai Chee Road
Chai Chee Industrial Park
Figure 3 * Fifth Story Floor Plan -
750B Chai Chee Road
Chai Chee Industrial Park
