1
EXHIBIT 10.23
TENTH AMENDMENT TO LEASE
THIS TENTH AMENDMENT TO LEASE (this "Amendment"), made and entered into
as of the __28th__ day of ____February_, 2000, by and between NATIONAL OFFICE
PARTNERS LIMITED PARTNERSHIP, a Delaware limited partnership, as landlord
("Landlord"), and FIRSTWAVE TECHNOLOGIES, INC., a Georgia corporation, as tenant
("Tenant")
WITNESSETH THAT:
WHEREAS, Atlanta Overlook Associates #3 ("Original Landlord") and ▇▇▇▇▇
Control Systems, Inc. ("Original Tenant") entered into that certain Office
Building Lease Agreement (the "Lease"), dated January 30, 1988, for certain
premises (the "Premises") in the building located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (the "Building");
WHEREAS, Original Landlord and Original Tenant entered into that
certain First Amendment of Lease dated as of December 27, 1988 (the "First
Amendment");
WHEREAS, State of California Public Employees Retirement System
("Calpers"), successor-in-interest to Original Landlord, and Original Tenant
entered into that certain Second Amendment of Lease dated as of October 2, 1989
(the "Second Amendment");
WHEREAS, CALPERS and Original Tenant entered into that certain Third
Amendment of Lease dated as of March 10, 1993 (the "Third Amendment");
WHEREAS, CALPERS and Original Tenant entered into that certain Fourth
Amendment of Lease dated as of June 24, 1993 (the "Fourth Amendment");
WHEREAS, CALPERS and Original Tenant entered into that certain Fifth
Amendment of Lease dated as of March 22, 1994 (the "Fifth Amendment");
WHEREAS, CALPERS and Original Tenant entered into that certain Sixth
Amendment of Lease dated as of September 22, 1994 (the "Sixth Amendment");
WHEREAS, Original Tenant changed its name to ▇▇▇▇▇ International, Inc.
and ▇▇▇▇▇ International, Inc. ("▇▇▇▇▇ International") assumed the obligations of
Original Tenant under the Lease, as amended;
46
2
WHEREAS, CALPERS and ▇▇▇▇▇ International entered into that certain
Seventh Amendment of Lease dated as of January 20, 1998 (the "Seventh
Amendment");
WHEREAS, ▇▇▇▇▇ International changed its name to "Firstwave
Technologies, Inc." and Tenant assumed the obligations of ▇▇▇▇▇ International
under the Lease, as amended;
WHEREAS, CALPERS and Tenant entered into that certain Eighth Amendment
of Lease dated as of May 8, 1998 (the "Eighth Amendment");
WHEREAS, Landlord, as successor-in-interest to CALPERS, and Tenant
entered into that certain Ninth Amendment of Lease dated as of February 3, 2000
(the "Ninth Amendment");
WHEREAS, the Lease, as modified by the First Amendment, Second
Amendment, Third Amendment, Fourth Amendment, Fifth Amendment, Sixth Amendment,
Seventh Amendment, Eighth Amendment, and Ninth Amendment are sometimes
collectively referred to herein as the "Lease"; and
WHEREAS, Landlord and Tenant desire extend the term of the Lease, amend
certain other terms and conditions of the Lease, and evidence their agreements
and other matters by means of this Amendment.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the Lease is hereby amended and
the parties hereto do hereby agree as follows:
1. Renewal Term. The term of the Lease is hereby extended for a period of
five (5) years commencing on November 1, 2000 (the "Effective Date")
and expiring on October 31, 2005 (the "Renewal Term").
2. Base Rent. Effective on the Effective Date and continuing during the
Renewal Term, Base Rent for the Premises shall be as follows:
Year of Base Rent per Annual Monthly
Term Square Foot Base Rent Base Rent
------- ------------- --------- ----------
11/01/00 - 10/31/01 $23.00 $579,968.00 $48,330.67
Commencing on November 1, 2001, and on each anniversary of the
Effective Date thereafter during the Renewal Term, Base Rent shall
increase as follows:
[(Current Base Rent on a per rentable square foot basis) -
(the Initial Operating Costs, calculated with respect to
calendar year 2001, on a per rentable square foot basis)] x
1.025 + Initial Operating Costs on a per rentable square foot
basis
By way of example only, if the Initial Operating Costs are determined
to be $8.00 per rentable square foot, then Base Rent commencing on
November 1, 2001 shall be ($23.00 - $8.00) x 1.025 + $8.00 = $23.38 per
rentable square foot.
If the Initial Operating Costs are not known as of November 1, 2001,
then the Base Rent adjustment shall be calculated as soon as
practicable and shall be retroactive back to November 1, 2001.
47
3
On or before January 15 of each calendar year after the calendar year
in which this Lease is executed (or as soon thereafter as practical),
Landlord shall provide Tenant with the projected Operating Costs for
such current calendar year, and Tenant shall thereafter pay the Initial
Operating Costs for operating the Property and Building in excess of
the Initial Operating Costs. Such projected Operating Costs in excess
of the Initial Operating Costs shall be payable in advance on a monthly
basis by paying one-twelfth (1/12th) of such amount during each month
of such respective calendar year. If Landlord has not furnished Tenant
with such comparison by January 15, Tenant shall continue to pay on the
basis of the prior year's estimate until the month after such
comparison is given. Landlord shall, within one hundred twenty (120)
days (or as soon thereafter as practical) after each calendar year
during the Term provide Tenant an unaudited statement of such year's
actual Operating Costs. If actual Operating Costs are greater than
projected Operating Costs, Tenant shall pay Landlord, within thirty
(30) days of such statement's receipt, Tenant's Share of the difference
thereof. If such year's projected Operating Costs are greater than the
actual Operating Costs, Landlord shall credit Tenant, within thirty
(30) days of such statement issuance, Tenant's Share of the difference
between projected Operating Costs and actual Operating Costs.
If this Lease commences at any time other than the first (1st) day of a
calendar year or terminated at any time other than the last day of a
calendar year the amount of Operating Costs due from Tenant shall be
proportionately adjusted based on that portion of the year that this
Lease was in effect.
3. Additional Rent. During the Renewal Term, Tenant shall pay, in
accordance with the terms of Paragraph 5 and Exhibit "B" of the Seventh
Amendment, Tenant's Share of increases in Operating Costs, except the
Initial Operating Costs shall mean Operating Costs for the Building for
calendar year 2001.
4. Notices. Section 1.5 of the Lease regarding the address of Landlord
shall be amended to provide that the address of Landlord is, and all
notices to Landlord shall be sent to:
National Office Partners Limited Partnership
c/▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
5. Termination Option. Notwithstanding anything to the contrary contained
in the Lease, in the event that Landlord is unable to reasonably
accommodate Tenant's expansion needs, or if the Termination Standard
(as that term is defined below) is met and provided Tenant is not in
default hereunder, Tenant shall have the option to terminate the Lease,
effective on April 30, 2003 (the "Termination Date") by providing
Landlord with written notice of such Termination Option election (the
"Termination Notice"). Such Termination Notice shall be effective only
if it is given to Landlord by July 31, 2002 (the "Termination Notice
Deadline"); accordingly, if Tenant has not given its Termination Notice
to Landlord prior to the Termination Notice Deadline, this Termination
Option shall expire and be of no further force or effect, and Tenant
shall have no right or option to terminate the Lease pursuant to
48
4
this paragraph at any time after the Termination Notice Deadline. The
"Termination Standard" shall mean that Tenant satisfies two (2) out of
the following three (3) requirements as of the date of Tenant's
Termination Notice: (i) Tenant's shareholder's equity (as determined in
accordance with generally accepted accounting principles ("GAAP")
consistently applied) is $5,000,000 or less, (ii) Tenant's quick ratio
(i.e. Tenant's current assets divided by Tenant's current liabilities)
is less than 1.5, as determined by GAAP, and (iii) Tenant's cash, cash
equivalents and investment securities are less than $2,000,000. As a
condition precedent to any termination of the Lease pursuant to the
provisions of this paragraph, Tenant must have delivered to Landlord,
together with its Termination Notice, written certification executed by
Tenant that it satisfies the Termination Standard and supporting
documentation evidencing Tenant's compliance, as well as an amount as a
termination fee equal to the unamortized portion (amortized at eleven
percent (11%) per annum) of any tenant improvement allowance paid by
Landlord to Tenant under this Amendment. It is hereby acknowledged that
any such amount required to be paid by Tenant in connection with such
early termination is not a penalty but a reasonable pre-estimate of the
damages which would be incurred by Landlord as a result of such early
termination of the Lease (which damages are impossible to calculate
more precisely) and, in that regard, constitutes liquidated damages
with respect to such loss. Tenant shall continue to be liable for its
obligations under the Lease up to and through the Termination Date
including, without limitation, additional rental that accrues pursuant
to the terms of the Lease, with all of such obligations surviving the
early termination of the Lease. The rights granted to Tenant under this
paragraph are personal to Tenant, and in the event of any assignment of
the Lease or sublease by Tenant, this Termination Option shall
thenceforth be void and of no further force or effect.
6. Reduction Option. Provided that Tenant is not in default hereunder,
Tenant shall have a one-time option (the "Reduction Option") to reduce
the size of the Premises by excluding therefrom a portion equal to
approximately 12,237 rentable square feet as shown on Exhibit "A"
attached hereto (the "Excluded Space"). Such Reduction Option shall be
subject to the following terms and conditions:
a. The Reduction Option shall be effective as of April 30,
2003 (the "Reduction Date"), and Tenant shall exercise the
Reduction Option by providing Landlord with written notice
(the "Reduction Notice") thereof on or before July 31, 2002
(the "Reduction Notice Deadline"), including specificity as to
square footage and location of the Excluded Space. Such
Reduction Notice shall be effective only if it is given to
Landlord by the Reduction Notice Deadline; accordingly, if
Tenant has not given its Reduction Notice to Landlord prior to
the Reduction Notice Deadline, this Reduction Option shall
expire and be of no further force or effect, and Tenant shall
have no right or option to reduce the size of the Premises
pursuant to this paragraph at any time after the Reduction
Notice Deadline. If Tenant fails to timely exercise the
Reduction Option, it shall lapse unexercised and Tenant shall
have no further right to reduce the size of the Premises
pursuant hereto.
b. Within thirty (30) days after Tenant's exercise of the
Reduction Option hereunder, Landlord and Tenant agree to enter
into an amendment to the Lease to
49
5
document such exercise, which amendment, in addition to the
matters outlined above, shall adjust the area of the Premises
and all other provisions of the Lease which are affected by a
reduction in the size of the Premises.
c. Should Tenant fail to enter into an amendment, as set forth
above, Landlord may at its option treat such failure as a
failure to properly exercise Tenant's Reduction Option and the
Reduction Option shall be void and of no further force and
effect.
d. As a condition precedent to Tenant's exercise of its
Reduction Option, Tenant must have delivered to Landlord,
together with the Reduction Notice, an amount equal to the
unamortized portion of any tenant improvement allowance
(amortized at eleven percent (11%) per annum). It is hereby
acknowledged that any such amount required to be paid by
Tenant in connection with such reduction of the Premises is
not a penalty but a reasonable pre-estimate of the damages
which would be incurred by Landlord as a result of such
reduction of the Premises (which damages are impossible to
calculate more precisely) and, in that regard, constitutes
liquidated damages with respect to such loss.
e. Tenant shall also be responsible for all costs and expenses
incurred by Landlord for any necessary construction,
(including, without limitation, constructing a demising wall,
electricity and plumbing) as a result of the separation of the
Excluded Space from the Premises and Tenant shall be
responsible for correcting any code violations within the
Premises solely caused by the separation of the Excluded Space
from the Premises. To the extent that additional common
corridors are required due to the separation of the Excluded
Space from the Premises, Landlord and Tenant will share
equally in the cost of constructing such common corridors.
f. If Tenant elects to exercise the Reduction Option, Tenant
agrees that it shall not lease any space in any other building
in Atlanta, Georgia without first providing Landlord with the
right to lease to Tenant similar space on the terms and
conditions of a new lease at another building.
g. The rights granted to Tenant under this paragraph are
personal to Tenant, and in the event of any assignment of the
Lease or sublease by Tenant, this Reduction Option shall
thenceforth be void and of no further force or effect. In the
event that Tenant exercises this Reduction Option, the Right
of First Offer (as defined below) of Tenant as set forth
hereinbelow shall be void immediately upon the delivery of the
Reduction Notice from Tenant to Landlord.
7. Right of First Offer.
a. So long as no event of default on the part of Tenant then
exists, and subject to any current right to an expansion
option, renewal option, first right to lease or other such
right granted to a tenant of the Building prior to the date
this Amendment
50
6
is executed, and so long as there is no sublease of any
portion of the Premises or any assignment of the Lease,
Landlord shall not at any time lease all or any portion of the
space located on the eleventh (11th) floor of the Building as
it becomes available (the "Offer Space"), as more particularly
described on Exhibit A, without first giving notice to tenant
of the proposed lease with a bona fide prospect for such space
(the "Availability Notice"). Such notice shall contain all of
the material, economic terms of the proposed lease. Tenant
must elect to lease the Offer Space within ten (10) days of
the notice from Landlord, by giving notice to Landlord of
Tenant's notice. If Landlord does not receive such notice from
Tenant within said ten (10) days, Tenant shall be deemed to
have elected not to lease the space in question, Tenant shall
have no further rights to said space, and Landlord shall be
free to lease the space to another party.
(b) Tenant shall have the right to lease the Offer
Space offered at the then prevailing market base rental rate
and leasehold improvement allowance as determined by landlord
in is sole, good faith judgment, and indicated by Landlord in
the Availability Notice. If Tenant elects to exercise this
right to lease, Tenant shall deliver notice of such exercise
to Landlord. Upon such notice by Tenant, Tenant shall be bound
to lease said portion of said floor on the same terms and
conditions as under the Lease, but at the rental rate and
other terms as set forth in the Availability Notice.
8. Tenant Improvement Allowance. Landlord shall provide to Tenant an
improvement allowance up to $6.00 per rentable square foot of the
Premises (the "Allowance") to be used towards refurbishment work in the
Premises. Landlord agrees that it shall refurbish the Premises at
Landlord's sole cost and expense (subject to reimbursement from, but
not to exceed, the Allowance), in a good and workmanlike manner
substantially in accordance with construction drawings and plans to be
mutually agreed upon by Landlord and Tenant. Otherwise, Tenant hereby
accepts the Premises "AS IS" (except as otherwise provided herein).
Except for the Allowance, Tenant shall be responsible for all costs and
expenses of refurbishing the Premises (including, without limitation, a
five percent (5%) construction management fee payable to Landlord
calculated on all costs and expenses of construction).
9. Extension Option. So long as the Lease is in full force and effect and
Tenant is not in default thereunder, Tenant shall have the option (the
"Extension Option") to extend the term for the entire Premises for an
additional period of five (5) years (the "Extension Period") subject to
the following terms and conditions:
a. Tenant shall not have the right to assign the Extension
Option to any sublessee or assignee of the Premises, nor may
such sublessee or assignee exercise or enjoy the benefit of
such Extension Option.
b. Tenant shall have given Landlord written notice of its
exercise of the Extension Option on or before nine (9) months
prior to the expiration of the Renewal Term.
51
7
c. The Extension Option shall only be applicable to the entire
Premises, as it may have expanded or contracted from time to
time pursuant to the terms of the Lease.
d. The terms and conditions of the Lease, as amended from time
to time, shall remain in full force and effect during any
Extension Period except that the term "Base Rent" shall be
modified to mean the rent charged at the Prevailing Market
Rate (as hereinafter defined).
e. "Prevailing Market Rate" shall mean the then prevailing
market rate for rent for leases in similar quality buildings
in the market for space comparable to the Premises taking into
account such factors offered to third party tenants for
comparable space as the base services year for pass-through
expenses, the value of the tenant improvements already in
place in the Premises at the commencement of the Extension
Period, rent concessions, tenant improvement allowances, lease
commissions saved or incurred, and moving allowances.
f. Within thirty (30) days after the establishment of the
Prevailing Market Rate, Landlord and Tenant agree to enter
into an amendment to the Lease to evidence the exercise of the
Extension Option. If Landlord and Tenant are unable to agree
upon the Prevailing Market Rate within such 30-day period,
then Tenant's exercise of this Extension Option shall be void
and the Lease shall expire at the end of the Renewal Term.
10. Parking. Landlord shall provide Tenant with four (4) unreserved parking
spaces per 1,000 usable square feet of the Premises at no charge during
the Renewal Term. Landlord shall provide Tenant with eight (8) reserved
parking spaces in the Overlook III parking facility at no charge during
the Renewal Term. Tenant shall have the right to park in the Building
parking facilities in common with other tenants of the Building. Tenant
agrees not to overburden the parking facilities and agrees to cooperate
with Landlord and other tenants in use of the parking facilities.
Landlord reserves the right in its absolute discretion to determine
whether the parking facilities are becoming overburdened and to
allocate and assign parking spaces among Tenant and other tenants, and
to reconfigure the parking area and modify the existing ingress to and
egress from the parking area as Landlord shall deem appropriate.
11. Deletions and Modifications. Sections 49, 50, 51, 53 and 57 of the
Lease; Section 307 of the First Amendment; Sections 6, 8 and 10 of the
Fourth Amendment; Section 3 of the Fifth Amendment; Sections 4 and 5 of
the Sixth Amendment; and Sections 5 and 7 of the Seventh Amendment
shall each be deleted in its entirety. Section 7 of the Fourth
Amendment shall be modified by deleting the phrase "in excess of
thirty-five thousand (35,000)" and inserting in lieu thereof the phrase
"the entire 10th floor consisting of twenty-five thousand two hundred
sixteen (25,216)".
12. Brokers. Landlord and Tenant hereby represent and warrant to the other
that neither it nor
52
8
its officers or agents nor anyone acting on its behalf has dealt with
any real estate broker other than Hines Properties, Inc. who
represented Landlord and CB ▇▇▇▇▇▇▇ ▇▇▇▇▇ who represented Tenant in the
negotiating or making of this Amendment, and Landlord and Tenant hereby
agree to indemnify and hold the other party, its agents, employees,
partners, directors, shareholders and independent contractors harmless
from all liabilities, costs, demands, judgments, settlements, claims,
and losses, including reasonable attorneys' fees and costs, incurred by
such party in conjunction with any such claim or claims of any other
broker or brokers claiming to have interested the Tenant in the
Building or Premises or claiming to have caused Tenant to enter into
this Amendment, except as disclosed hereinabove.
13. Tenant hereby agrees that there are, as of the date hereof, regardless
of the giving of notice and the passage of time, or both, no defaults
or breaches on the part of Landlord or Tenant under the Lease.
14. All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Lease.
15. This Amendment represents the entire agreement between the parties
hereto. Landlord and Tenant agree that there are no collateral or oral
agreements or understandings between them with respect to the Premises
or the Building. This Amendment supersedes all prior negotiations,
agreements, letters or other statements with respect to this
modification of the Lease.
EXCEPT AS expressly amended and modified hereby, the Lease shall
otherwise remain in full force and effect, the parties hereto hereby ratifying
and confirming the same. To the extent of any inconsistency between the Lease
and this Amendment, the terms of this Amendment shall control.
53
9
IN WITNESS WHEREOF, the undersigned parties have duly executed this
Amendment as of the day and year first above written.
LANDLORD:
NATIONAL OFFICE PARTNERS LIMITED PARTNERSHIP,
a Delaware limited partnership
By: ▇▇▇▇▇ National Office Partners Limited
Partnership, a Texas limited partnership
general partner
By: Hines Fund Management, L.L.C., a Delaware
limited liability company, its general
partner
By: ▇▇▇▇▇ Interests Limited Partnership,
a Delaware limited partnership its
sole member
By: ▇▇▇▇▇ Holdings, Inc., a Texas
corporation, its general partner
By:
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Vice President
Date Executed by Landlord:
-----------------------------------
TENANT:
FIRSTWAVE TECHNOLOGIES, INC.,
a Georgia corporation
By:
-----------------------------------------------------
Name:
---------------------------------------------------
Its:
---------------------------------------------------
(CORPORATE SEAL)
Date Executed by Tenant:
--------------------------------
Tenant Tax Identification Number:
----------------------
54
10
EXHIBIT "A"
EXCLUDED SPACE
55
11
EXHIBIT 13
56
