Exhibit 10.18
AMENDMENT NO. 2 TO LEASE AGREEMENT
AGREEMENT, made as of December 23, 1997, between ND PROPERTIES, INC.
("Landlord") and NETWORK MANAGEMENT SERVICES, INC. ("Tenant").
A. Landlord and Tenant entered into a written Lease Agreement dated March
12, 1997 ("Initial Lease"), relating to the premises ("Initial Premises")
consisting of approximately 1,390 rentable square feet on the seventh floor of
the building commonly known as 0000 Xxxxxxx Xxxxxxxxx, Xxxxxx Xxxxxx, Xxxxxxxxx
(the "Project"). The Initial Premises, as amended by any additions or deletions
from time to time pursuant to a written agreement signed by the parties, are
sometimes referred to herein collectively as the "Premises."
B. The Initial Lease has not previously been amended or modified, except by
Amendment No. 1 to Lease Agreement dated October 1, 1997 ("Amendment No. 1"),
which, among other matters, expanded the Premises to include the Temporary
Space, consisting of approximately 2,783 rentable square feet on the ninth floor
of the Project, for the Temporary Space Term. The Initial Lease and Amendment
No. 1 are sometimes referred to herein collectively as the "Lease."
C. Landlord and Tenant desire to expand the Premises and to amend the Lease
as provided in this Amendment.
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
expressly acknowledged, Landlord and Tenant agree as follows:
1. Effect. The Lease is hereby amended to the extent necessary to give
effect to this Amendment, and the terms of this Amendment shall supersede any
contrary terms in the Lease. All references in the Lease to "this Lease" shall
be deemed to refer to the Lease as amended by this Amendment. In all other
respects, the terms and conditions of the Lease shall remain unmodified and in
effect. Unless otherwise defined herein, capitalized terms shall have the same
meaning as provided in the Lease.
2. Premises. As of the Delivery Date (as defined below), the Premises shall
be amended and expanded by adding to the Initial Premises approximately 7,440
rentable square feet on the fifth floor of the Project as shown on the attached
Exhibit 1 ("Space A"), so that the Premises shall thereafter consist of
approximately 8,830 rentable square feet on the fifth and seventh floors of the
Project. Except as expressly provided otherwise in this Amendment or in the
Lease, Space A shall be added to and become part of the Premises on all of the
terms and conditions of the Lease, and any reference in the Lease to the
Premises shall thereafter be deemed to refer to and include Space A.
3. Space A Term.
A. Space A shall be added to the Premises effective on March 1, 1998
("Delivery Date"). If Landlord has not Substantially Completed (as defined in
the attached Exhibit 2)
Landlord's Work (as defined in the attached Exhibit 2) in Space A pursuant to
the attached Exhibit 2 by March 1, 1998, other than for delays caused by Tenant
Delay (as defined in the attached Exhibit 2), the Delivery Date for purposes of
this Amendment (and Tenant's obligation to pay Rent for Space A) shall be
postponed until Landlord's Work is Substantially Completed in Space A, Landlord
shall not be liable for any such delay, the Lease shall not be impaired, and the
Space A Term shall be extended as necessary to end sixty (60) full calendar
months after the first day of the calendar month immediately succeeding the
calendar month in which the Delivery Date occurs (but the Term of the Lease with
respect to the Initial Premises shall not be extended or affected thereby). If
Landlord permits Tenant to take possession of Space A before the Delivery Date
for purposes of occupancy, all of the terms of the Lease and this Amendment
shall apply to and control such occupancy, including the obligation to pay Rent
on a prorated daily basis.
B. Subject to adjustment as provided in Section 3A of this Amendment,
Tenant shall lease Space A for a term of sixty (60) months ("Space A Term")
beginning on the Delivery Date and ending on February 28, 2003, unless sooner
terminated under the terms of the Lease. Landlord and Tenant acknowledge that
the Space A Term extends beyond the end of the Term of the Lease with respect to
the Initial Premises. Upon expiration or termination of the Term of the Lease
with respect to the Initial Premises, Tenant shall completely vacate and
surrender possession of the Initial Premises to Landlord in the condition as
provided in the Lease, ordinary wear and tear excepted; the Initial Premises
shall be deleted from the Lease; and the Lease shall continue in effect as to
Space A for the remaining Space A Term (which thereafter shall be deemed the
Term of the Lease).
4. Rent.
A. Commencing on the Delivery Date and continuing during the Space A Term,
Tenant shall pay Base Rent for Space A at an annual rate per rentable square
foot and payable in monthly installments as follows:
Annual Rate Monthly
Period Per Square Foot Installment
------ --------------- -----------
Months 1-12 $15.00 $9,300.00
Months 13-24 $15.25 $9,455.00
Months 25-36 $15.50 $9,610.00
Months 37-48 $15.75 $9,765.00
Months 49-60 $16.00 $9,920.00
If the Delivery Date is postponed as provided in Section 3 of this Amendment and
is not the first day of a calendar month, the Base Rent for any initial partial
month shall be prorated daily at the rate provided for Month I above, and the
first full calendar month after the Delivery Date shall be deemed Month I for
purposes of the above schedule.
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B. Commencing on the Delivery Date and continuing during the Space A Term:
(1) Tenant's Proportionate Share of Operating Costs shall be increased to
reflect the number of rentable square feet In Space A; and (2) Tenant shall pay
Operating Cost Rent for Space A at the same rate per rentable square foot as
then payable for the Initial Premises and subject to the same adjustments as
provided in the Lease.
C. Rent for Space A shall be paid in advance at the same time and in the
same manner as provided in the Lease for payment of Rent for the Initial
Premises. If the Delivery Date is not the first day of a calendar month, the
Base Rent and Operating Cost Rent for Space A for such partial month shall be
prorated daily and paid in advance.
5. Leasehold Improvements. Landlord shall construct leasehold improvements
in Space A as provided in the attached Exhibit 2. In all other respects, Tenant
agrees to accept Space A in its present condition, "as is," with no obligation
for Landlord to do or pay for any leasehold improvements or plans.
6. Additional Security Deposit. In addition to the Security Deposit
previously paid with respect to the Initial Premises, Tenant shall pay to
Landlord an Additional Security Deposit with respect to Space A in the amount of
$17,211.20, payable upon execution of this Amendment by Tenant. The check for
the Additional Security Deposit shall be deposited upon execution of this Lease
by Landlord and shall be held and administered during the Space A Term as
provided in Section 17 of the Lease.
7. Temporary Space. Tenant shall continue to lease the Temporary Space on
the terms and conditions set forth in Amendment No. 1 until the earlier of (the
"Space A Termination Date"): (A) the date Tenant completely vacates and
surrenders the Temporary Space to Landlord, or (B) the date that is thirty (30)
days after the Delivery Date for Space A. The Temporary Space Term shall
terminate as of the Space A Termination Date, and Tenant shall completely vacate
and surrender the Temporary Space to Landlord as provided in Amendment No. 1.
Rent for Space A for any partial month shall be prorated on a daily basis and
paid or refunded between the parties within thirty (30) days after the Space A
Termination Date.
8. Brokers. Landlord and Tenant each represents that it has not engaged or
dealt with any real estate broker, agent or finder with respect to this
Amendment, except for CB Commercial Real Estate Group, Inc. (whose commission,
if any, shall be paid by Landlord pursuant to a separate written agreement).
Landlord and Tenant shall indemnify and hold each other harmless from all
claims, , liability or expense (including reasonable attorneys fees) in
connection with any claim for broker's, finder's or other fees or commissions as
a result of such party's actions or alleged actions.
9. Tenant's Representations. Tenant hereby represents to Landlord that
there has been no assignment of the Lease and no sublease of all or any portion
of the Premises, there are
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no existing defenses or offsets which Tenant has against enforcement of the
Lease, and Landlord and Tenant are not in default under the Lease.
10. Entire Agreement. The Lease, including, without limitation, this
Amendment and all exhibits which are attached hereto and hereby incorporated by
reference, constitutes the entire agreement between Landlord and Tenant with
respect to the subject matter hereof. Tenant acknowledges that it has not been
induced to enter into this Amendment by any agreements or representations which
are not set forth in this Amendment. This Amendment shall not be effective until
execution and delivery by both Landlord and Tenant.
By signing this Amendment, the parties agree to the above terms.
LANDLORD: TENANT:
ND PROPERTIES, INC. NETWORK MANAGEMENT SERVICES, INC.
By /s/ Xxxx X. Xxxx By /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxx Name: Xxxxx X. Xxxxxxxx
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Title: Asst. Sec. Title: Chief Financial Officer
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EXHIBIT 2
TO AMENDMENT NO. 2
LEASEHOLD IMPROVEMENTS
(ALLOWANCE)
1. Tenant Finish Allowance and Costs. Landlord shall provide an allowance
("Tenant Finish Allowance") not to exceed $5.00 per rentable square foot in
Space A (total $37,200.00 based on 7,440 rentable square feet) or the actual
cost of such improvements, whichever is less, to be applied to the total cost of
constructing Tenant's leasehold improvements in Space A (*Tenant Finish Costs*),
including, without limitation: space planning and design fees; architectural and
engineering fees; required building permits; actual cost of labor, materials,
equipment and services; actual cost of Tenant signage; and the costs of
removing, modifying, relocating or making additions to any existing improvements
to accommodate Tenant's space plan. Tenant Finish Costs shall exclude expenses
in connection with services provided by Tenant or Tenant's employees; telephone,
communications and computer equipment and wiring; and personal property items
such as decorations, art work, furniture, equipment, or trade fixtures not
permanently attached to Space A.
2. Plans. Tenant shall promptly devote such time in consultation with
Landlord and the architect ("Architect") designated by Landlord as necessary to
finalize an initial plan ("Initial Plan") for Tenant's leasehold improvements in
Space A (or, if the Initial Plan has been completed and approved by Landlord and
Tenant, such plan is attached hereto as Exhibit 2-1). If not included in the
Initial Plan and if necessary for the performance of Landlord's Work (as
hereafter defined), Landlord shall cause to be prepared final architectural and
engineering plans, specifications and working drawings for Tenant's leasehold
improvements in Space A ("Architectural Plans") based on the Initial Plan.
Tenant shall, within five (5) business days after written request, furnish to
Landlord such information as necessary to enable the Architect to prepare the
Initial Plan and any necessary Architectural Plans. The information to be
furnished by Tenant shall include, without limitation:
(a) Any requirements of the Tenant which are in excess of or otherwise vary
in any respect from Building standard items, and all critical dimensions.
(b) Special loading, such as the location of and requirements for file
cabinets or special equipment.
(c) Openings in the walls or floors.
(d) Special heating, ventilating, air conditioning, electrical, sprinkler,
lighting, security system, or plumbing work.
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(e) Location and dimensions of telephone equipment areas, and location of
telephone and electrical outlets, switches and lights.
(f) Partitions - locations and type, including doors and hardware, windows,
glass partitions and special framing or support.
(g) Special cabinet work and other millwork items.
(h) Variations to standard ceiling heights.
(i) Location and color selection of painted areas.
(j) Location and selection of floor covering and wall coverings.
(k) Location and type of any kitchen equipment.
(l) Such additional information as reasonably specified by Landlord.
Within five (5) business days after the completed Architectural Plans have been
submitted to Tenant, Tenant shall provide Landlord with Tenant's written
approval of such Architectural Plans (or Tenant's disapproval with a written
explanation of any changes required therein) and shall redeliver the
Architectural Plans to Landlord for Landlord's final approval. If Landlord or
Tenant do not approve any of the Architectural Plans, the parties shall promptly
revise such plans and resubmit such plans until the same are approved by
Landlord and Tenant. Unless otherwise specified in the Architectural Plans,
Landlord's Work shall be constructed with Building standard materials (or
comparable substitute materials designated by Landlord) in amount, type and
quality; and Tenant shall promptly make any necessary selections of such
materials. If final Architectural Plans are included in the Initial Plan or are
unnecessary to perform the work, the term "Architectural Plans" as used herein
shall mean the Initial Plan and any supplemental plans and specifications
approved by Landlord and Tenant. All costs and expenses relating to the
preparation or review of the Initial Plan and the Architectural Plans, and any
changes thereto or revisions thereof, shall be included in the Tenant Finish
Costs and shall be paid as provided in Section 3 of this Exhibit.
All plans and specifications for any work in Space A or the Project
(whether Landlord's Work or any work performed by Tenant as hereafter provided)
shall be subject to Landlord's prior written approval. Landlord may withhold its
approval of any plans or specifications if, in Landlord's reasonable opinion,
the work would: involve a structural revision to the Project; adversely affect
the market value or appearance of the Project; violate Landlord's criteria for
those portions of the Space which are visible from the common areas or from the
exterior of the Project; adversely affect the strength, structural integrity or
safety of the Project; adversely affect the proper functioning and efficiency of
the systems of the Project; violate any requirements of applicable law or of any
holder of a mortgage on or insurer of the Project (or require Landlord to
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perform any work or incur any expense in connection therewith); adversely affect
any other rentable space in the Project or increase the expense of operating the
Project; not be in keeping with the character of the Project; or involve a
substantial risk of delaying the performance of Landlord's Work due to
unavailability or shortages of labor or materials, extra lead or performance
time or other requirements for the work. The foregoing reasons are not
exclusive, and Landlord may reasonably withhold its approval for other similar
or dissimilar reasons. Landlord may disapprove any plans in part, reserve
approval of any items pending its review and approval of other plans, and
reasonably condition its approval upon Tenant making revisions to the plans or
supplying additional information. Any review or approval of any plans or work by
Landlord is solely for its benefit, and without any representation, warranty or
liability to Tenant or any other person with respect to the adequacy,
correctness or sufficiency thereof, the fitness for any purpose, compliance with
applicable legal requirements or otherwise.
3. Payment. Landlord shall pay an amount not to exceed the Tenant Finish
Allowance toward the Tenant Finish Costs for Landlord's Work, and Tenant shall
pay for all Tenant Finish Costs in excess of the Tenant Finish Allowance
("Excess Costs") as Additional Rent as hereafter provided. Before commencing
Landlord's Work, Landlord shall provide to Tenant a written proposal ("Tenant
Cost Proposal") for the total Tenant Finish Costs for Landlord's Work (other
than services or materials separately contracted for by Tenant). If the Tenant
Cost Proposal is more than the Tenant Finish Allowance, Landlord and Tenant will
either: (a) approve in writing the Tenant Cost Proposal and the amount of any
Excess Costs; or (b) revise Landlord's Work as necessary to reduce the Tenant
Cost Proposal to no more than the Tenant Finish Allowance plus such amount of
Excess Costs as may be approved by Landlord and Tenant. Tenant shall give
immediate attention to the Tenant Cost Proposal, and respond to any requests
from Landlord within five (5) business days. Within five (5) business days after
submission to it of the final Tenant Cost Proposal and Architectural Plans,
Tenant shall authorize Landlord in writing to proceed with Landlord's Work, and,
if the estimated Excess Costs after crediting the Tenant Finish Allowance exceed
$37,200.00, Tenant also shall pay to Landlord one-half (1/2) of the estimated
amount of the Excess Costs that exceed $37,200.00 (or shall provide security
satisfactory to Landlord for payment of such Excess Costs). No work shall be
commenced until Tenant has complied with the requirements of this Section. Once
the final Tenant Cost Proposal and Architectural Plans have been approved by
Landlord and Tenant, Landlord's Work and the Tenant Cost Proposal shall not be
changed except by written change order approved by Landlord and Tenant or as
otherwise provided in this Exhibit; and in any such case, Landlord shall deliver
to Tenant a revised Tenant Cost Proposal indicating the revised total for Excess
Costs, if any. Within five (5) business days after submission to Tenant of the
revised Tenant Cost Proposal, Tenant shall authorize Landlord in writing to
proceed with Landlord's Work as so revised and, if the total estimated Excess
Costs after crediting the Tenant Finish Allowance exceed an aggregate amount of
$37,200.00, Tenant shall pay to Landlord one-half (1/2) of any additional
estimated amount of Excess Costs that exceed a total of $37,200.00 (or shall
provide security satisfactory to Landlord for payment of such Excess Costs); and
Landlord shall not be required to proceed further with the work until Tenant has
complied with the requirements of this Section. Any unpaid balance of Excess
Costs shall be paid to Landlord by
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Tenant within thirty (30) days of Landlord's statement following Substantial
Completion (as defined below) of Landlord's Work.
4. Landlord's Work. As Landlord's Work, Landlord shall cause its contractor
to construct leasehold improvements in Space A substantially in accordance with
the Initial Plan and any Architectural Plans approved by Tenant and Landlord as
provided in Section 2 of this Exhibit. In all other respects, Tenant agrees to
accept Space A in its present condition, "as is," with no obligation for
Landlord to do or pay for any improvements or plans. Any work required by Tenant
in addition to Landlord's Work shall be constructed at Tenant's expense pursuant
to Section 6 of this Exhibit or after the Delivery Date pursuant to Section 5 of
the Lease.
Promptly after compliance with Sections 2 and 3 of this Exhibit, Landlord
shall obtain a building permit and, subject to the other terms and conditions of
this Exhibit and the Lease, shall proceed diligently to cause Landlord's Work to
be Substantially Completed before the scheduled Delivery Date, it being
expressly understood that all work to be done in Space A shall be subject to
approval by Landlord and that no work shall be undertaken in Space A until such
approval is given in writing. Tenant acknowledges that the work will be
performed during Tenant's occupancy of the Initial Premises and normal business
hours; and, to the extent applicable to work in the Initial Premises, Landlord
and Tenant shall cooperate to reasonably minimize any interference with the
performance of the work and Tenant's use of the Initial Premises.
For purposes of this Exhibit, "Substantial Completion" or "Substantially
Completed" means: (i) completion of Landlord's Work except for minor finishing
and punchlist activity which does not materially interfere with Tenant's use and
occupancy of Space A; and (ii) issuance of any necessary municipal certificate
of occupancy. Within thirty (30) days after the Delivery Date, the parties shall
inspect Space A, have all systems demonstrated, and prepare a punchlist of
incomplete or defective details of construction. Landlord will use reasonable
diligence to promptly complete the punchlist items after Tenant provides the
punchlist to Landlord. Upon notice from Landlord that Landlord's Work is
complete, Tenant agrees to confirm acceptance of Space A in written form
reasonably acceptable to Landlord. A certificate signed by the Architect that
Landlord's Work has been Substantially Completed or finally completed shall be
conclusive and binding on the parties.
5. Delivery Date. The Delivery Date shall not occur and Tenant's obligation
to pay Rent for Space A shall not commence until Landlord has Substantially
Completed all of Landlord's Work; provided, however, that if Landlord is delayed
in Substantial Completion of Landlord's Work as a result of any one or more of
the following ("Tenant Delay"):
(a) Tenant's failure to devote the time or furnish all or any of the
information or approvals required under Section 2 of this Exhibit in
connection with the Initial Plan or the Architectural Plans for Landlord's
Work, or to furnish the approvals or make the payments within the time
periods specified in Section 3 of this Exhibit; or
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(b) Tenant's request for materials, finishes or installations other than
Building standard items to the extent the same actually delays the
Substantial Completion of Landlord's Work; or
(c) Any other act or omission by Tenant or its employees, contractors, or
agents to the extent the same actually delays the Substantial Completion of
Landlord's Work;
then and in any such event, Landlord shall cause the Architect to certify the
date on which Landlord's Work would have been completed but for any Tenant
Delay, and the Delivery Date and Tenant's obligation to pay Rent for Space A
shall occur and commence as of such date, and shall not otherwise be affected or
deferred on account of such delay. Additionally, Tenant shall indemnify Landlord
against any additional cost in completing Landlord's Work and other damages to
Landlord caused by any Tenant Delay.
6. Access By Tenant Prior To Delivery Date. Landlord, in Landlord's
discretion, may permit Tenant and Tenant's agents to enter Space A prior to the
Delivery Date upon reasonable notice during business hours to make Space A ready
for Tenant's use and occupancy. Any such permission shall constitute a license
only, and such license shall be conditioned upon: (a) Tenant working in harmony
and not interfering with Landlord and Landlord's agents, contractors, workers,
and suppliers in doing Landlord's Work, if any, or with other work in the
Project, other tenants and occupants of the Project, or the general operation of
the Project; (b) Tenant obtaining Landlord's prior written approval of the
proposed contractors; and (c) Tenant depositing with Landlord in advance of any
work, in form and substance reasonably satisfactory to Landlord, (i) security
reasonably satisfactory to Landlord for the lien-free completion thereof, (fi)
plans and specifications for such work, (iii) any necessary permits or licenses,
and (iv) certificates of insurance (with coverages and amounts satisfactory to
Landlord and naming Landlord and its management company and mortgagee as
additional insureds) and instruments of indemnification as Landlord may
reasonably require against claims and liabilities which may arise out of such
entry or work. Such pre-term access shall be subject to scheduling by Landlord.
Landlord shall have the right to withdraw such license upon twenty-four (24)
hours' written notice to Tenant for reasonable cause. Tenant agrees that
Landlord shall not be liable in any way for any injury, loss or damage which may
occur to any of Tenant's property placed or installations made in Space A prior
to the Delivery Date, the same being at Tenant's sole risk; and Tenant agrees to
indemnify, defend and save harmless Landlord from all liabilities, costs,
damages, fees and expenses arising out of or connected with the activities of
Tenant or its agents, contractors, suppliers or workmen in or about Space A or
the Project. Any entry or work by or on behalf of Tenant under this Section
shall be subject to all of the terms and conditions of the Lease, including
without limitation Section 5 thereof. If such entry or work causes extra costs
to Landlord or extraordinary use of Project services, Tenant shall reimburse
Landlord for such extra costs or extraordinary services within thirty (30) days
after Landlord's statement.
7. Telephones/Wiring. Tenant shall at its expense install and maintain all
telephone and communications wiring and equipment from the service access point
in the Project to and
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within Space A, and arrange directly with the telephone company and suppliers of
its choice for all service and connections. The installation of all telephone,
communications, computer, security, and other wiring and equipment shall be
subject to Landlord's prior written consent as provided in this Exhibit or in
Section 5 of the Lease.
8. Miscellaneous. This Exhibit shall be incorporated into and considered as
a part of the attached Amendment No. 2. Unless otherwise indicated herein,
capitalized terms used in this Exhibit shall have the meanings assigned to them,
in the Lease or the attached Amendment No. 2. The terms and provisions of this
Exhibit are intended to supplement and are specifically subject to all the terms
and provisions of the Lease and the attached Amendment No. 2. This Exhibit may
not be amended or modified except in a writing signed by Landlord and Tenant. In
no event shall any rights of Tenant hereunder be transferable or assignable to
any party except to a permitted assignee of all of Tenant's rights under the
Lease. All sums due hereunder from Tenant shall be deemed Additional Rent for
purposes of the Lease, and upon any default hereunder, Landlord shall have all
of the rights and remedies provided for in the Lease as well as all remedies
otherwise available to Landlord, including, without limitation, the right to
suspend work hereunder or to withhold delivery of possession of Space A until
any such default is cured. Whenever the consent or approval of Landlord or
Tenant is required herein, the same shall not be unreasonably withheld or
delayed. This Exhibit shall not create a contractual relationship of any kind
between any persons other than Landlord and Tenant.
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