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Exhibit 10.23
FIRST AMENDMENT TO LEASE
AND EXPANSION AGREEMENT
This First Amendment to Lease and Expansion Agreement (the "First
Amendment") is made as of this 29th day of July, 1998 by and between TIAA
Realty, Inc., (the "Landlord") a Delaware corporation and Implant Sciences
Corporation (the "Tenant").
WHEREAS, Landlord (as successor Landlord to Teachers Insurance and
Annuity Association of America) and Tenant, respectively, are the Landlord and
Tenant under a certain Lease Agreement dated as of September 29, 1995 (said
Lease Agreement is hereafter the "Lease") pursuant to which the Tenant has
leased from Landlord 16,743 rentable square feet of space (the "Original
Premises") in the building known as Building I located at 000 Xxxxxxx Xxxx,
Xxxxxxxxx, XX (the "Building");
WHEREAS, the three-year Initial Term of the Lease is scheduled to
expire on November 30,1999;
WHEREAS, subject to entering into this First Amendment, Landlord and
Tenant have agreed to (a) extend the 3-year Initial Term by an additional period
of 6 months (the "Six Month Extension") beginning on December 1, 1999 and
expiring on May 31, 2000 and (b) expand the Premises demised under the Lease
beginning on the 1st Amendment Commencement Date (as said term is hereafter
defined) by the addition of the 5,249 rentable square feet of Space marked on
Exhibit A to this First Amendment (the "1st Amendment Space") to the Premises
for the balance of the Term of this Lease all as hereinafter set forth;
WHEREAS, the parties have agreed that as of the 1st Amendment
Commencement Date the 1st Amendment Space shall be added to the Premises demised
under the Lease and thereafter the Premises demised under the Lease shall be
comprised of the 1st Amendment Space (5,249 rentable square feet) and the
Original Premises (16,743 rentable square feet) for an aggregate of 21,992
rentable square feet for the balance of the Term of this Lease;
WHEREAS, Landlord and Tenant have agreed to enter into this First
Amendment to reflect the foregoing and to otherwise modify and amend the Lease
reflecting the Six Month Extension of the Initial Term, the increase in the size
of the Premises demised under the Lease as a result of the addition of the 1st
Amendment Space to the Premises and to otherwise modify and amend the Lease, as
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Landlord and the Tenant hereby agree as follows:
1. Six Month Extension of Initial Term. Effective as of the date of
this First Amendment, the Three (3) Year Initial Term is hereby extended to
include the period beginning on December 1, 1999 through and including May 31,
2000 (the "Six Month Extension"), such
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extension to be upon the same terms and conditions as are set forth in the Lease
except as modified by this First Amendment. Basic Rent payable with respect to
the "Original Premises" during the Six Month Extension shall be in the annual
amount of $142,315.50 payable in equal monthly installments of $11,859.63. Basic
Rent payable for and with respect to the 1st Amendment Space during the "Six
Month Extension" shall be as set forth in Paragraph 2(a)(ii) of this First
Amendment.
2. Changes in Basic Lease Provisions. Effective as of the 1st Amendment
Commencement Date (as hereafter defined), the Lease shall be deemed amended in
the following respects:
(a) Basic Rent per annum payable under this Lease as set forth
in Section 1.2 of the Lease shall be increased and adjusted by the 1st
Expansion Rent (as said term is hereafter defined) for and with respect
to Tenant's use and occupancy of the 1st Amendment Space. As used
herein, the term "1st Expansion Rent" shall mean:
(i) $49,865.50 per annum payable in equal monthly
installments of $4,155.46 for the period beginning on the 1st
Amendment Commencement Date through and including the last day
of the twelfth full calendar month immediately following the
1st Amendment Commencement Date (pro rated on a daily basis
for any partial calendar month in which the 1st Amendment
Commencement Date shall fall); and
(ii) $52,490.00 per annum payable in equal monthly
installments of $4,374.17 for the period beginning on the day
immediately following the period described in (i) above
through the last day of the Initial Term of this Lease (as
extended by Paragraph 1 of this First Amendment to include the
Six Month Extension) on May 31, 2000;
The 1st Expansion Rent is payable for and with respect to the 1st
Amendment Space for the remainder of the Initial Term. In the event
that Tenant shall exercise the Option to Extend set forth in Paragraph
5 of this First Amendment (which amends Section 14.28 of the Lease),
the Basic Rent payable with respect to the 1st Amendment Space and the
Original Premises during the extension of the Initial Term contemplated
by Paragraph 5 of this First Amendment shall be the Fair Market Rental
Value as determined pursuant to Section 14.28 of the Lease as amended
by Paragraph 5 of this First Amendment.
The Tenant's obligation to pay the 1st Expansion Rent shall commence on
the 1st Amendment Commencement Date (pro rated on a daily basis as set
forth in Section l(a)(i) for any partial month in which the 1st
Amendment Commencement Date shall fall) and shall continue for the
balance of the Initial Term (as extended by Paragraph 1 of tills First
Amendment to include the Six Month Extension). In addition to the 1st
Expansion Rent, Tenant shall continue to pay Basic Rent allocable to
the Original Premises in the amounts and during the times specified in
Section 1.2 of the Lease as modified by Paragraph 1 of this First
Amendment;
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(b) The definition of the term "Premises Rentable Area" set
forth in Section 1.2 of the Lease shall be deemed increased and
adjusted by the 5,249 rentable square feet contained in the 1st
Amendment Space. Accordingly, from and after the 1st Amendment
Commencement Date and thereafter for the remainder of the Term of this
Lease, the "Premises" demised under the Lease as amended by this First
Amendment shall contain 21,992 rentable square feet comprised of (1)
the 1st Amendment Space (5,249 rsf) plus (ii) the Original Premises
(16,743 rsf);
(c) The definitions of the terms "Building Escalation Factor"
and "Property Escalation Factor" shall each be amended as follows:
Building Escalation Factor 27.49%
Property Escalation Factor 13.77%
Nothing contained herein shall be deemed or construed to limit or
release Tenant from its obligations with respect to Escalation Charges
allocable to the Original Premises before and after the 1st Amendment
Commencement Date.
(d) The definition of the term "Premises" shall be deemed
amended by adding the space marked on Exhibit A to this First Amendment
as the 1st Amendment Space to the Premises for all purposes under the
Lease;
(e) The provisions of Article IV of the Lease shall not apply
to the 1st Amendment Space and Landlord's sole obligation with respect
to improvements in and to the 1st Amendment Space shall be as provided
in Paragraph 3 of this First Amendment;
(f) Tenant shall be solely responsible for the cost of all
electricity used and consumed in the Premises, it being agreed and
understood that the Basic Rent, including the 1st Expansion Rent, is
net of Escalation Charges and costs of electricity used in the
Premises, which electricity charges will be separately metered and
billed to Tenant by the applicable utility. Upon completion of
Landlord's Work (as hereafter defined) there shall be an electric meter
which measures electricity used and consumed in the 1st Amendment Space
(whether through Tenant's existing meter located in the Original
Premises or via a new meter). Tenant shall arrange with the applicable
utility company to have the electric meter placed in Tenant's name and
billed separately to Tenant.
(g) The definition of the term Initial Public Liability
Insurance set forth in Section 1.3 shall be amended to be:
$1,000,000.00 (per occurrence) primary liability with $3,000,000.00
(per occurrence) in excess liability coverage for property damage,
bodily injury or death.
3. Improvements. Annexed to this First Amendment as Exhibit B is a
description of certain improvements to be made by Landlord in the 1st Amendment
Space and the Original
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Premises. Landlord and Tenant each hereby approve the matters described in
Exhibit B to this First Amendment.
Upon execution and delivery of this First Amendment by both Landlord
and Tenant, Landlord shall, at Landlord's sole cost and expense, commence to
perform the work and improvements described in Exhibit B to this First Amendment
using building standard materials and work ("Landlord's Work"), which work shall
be performed in the time and manner hereinafter set forth. To the extent
necessary for the prompt and efficient completion of Landlord's Work, Tenant
hereby grants Landlord the right of access to, upon, over and through the
Original Premises in order for Landlord to perform Landlord's Work. Such access
may be made at any time and from time to time in Landlord's discretion provided
that Landlord shall give Tenant advance oral or written notice of the days and
times Landlord shall require access to the Original Premises for the purposes
stated herein. Tenant here by acknowledges that work of the type and scope of
Landlord's Work may result in temporary shut-down of work and electrical service
and other services in the Original Premises. In exercising Landlord's right to
access the Original Premises and to perform Landlord's Work under this Xxxxxxxxx
0, Xxxxxxxx shall use good faith efforts to avoid unreasonable interference with
Tenant's use of the Original Premises. Landlord shall provide Tenant with
advance notice of the shut down, if any, of services or utilities in connection
with performing Landlord's Work and shall use good faith efforts to promptly
reinstate any service so curtailed or suspended.
Tenant hereby acknowledges that it has inspected the 1st Amendment
Space and the common areas of the Building and, except for the Landlord's Work,
has agreed to lease the 1st Amendment space in its current "as is, where is"
condition with all faults and without representation or warranty by Landlord of
any kind. Prior to Tenant taking occupancy of the Premises, Tenant shall provide
Landlord with a punch-list detailing (a) those aspects of Landlord's Work which
are not then completed and (b) any defects in workmanship or materials with
respect to Landlord's Work. The Landlord's Work shall be deemed approved by
Tenant when Tenant commences occupancy of the 1st Amendment Space for the
Permitted Use, except for items which are then not completed or do not conform
to specifications described in Exhibit B to this First Amendment and as to which
Tenant shall have given Landlord written notice prior to the date which is 30
days after the date Tenant shall occupy the 1st Amendment Space for the
Permitted Uses.
As used in this First Amendment, the term "1st Amendment Commencement
Date" shall mean that date upon which (a) AT/Comm Inc. shall have vacated the
1st Amendment Space and (b) Landlord's Work has been substantially completed as
set forth in a written notice from Landlord to Tenant.
As used herein, the term "Total Cost of Landlord's Work" shall mean the
aggregate cost including, without limitation, if performing all of Landlord's
Work, of all permits, governmental approvals, demolition work, labor, materials,
work and improvements necessary to complete Landlord's Work in order to prepare
the 1st Amendment Space for Tenant's use and occupancy pursuant to Exhibit B.
Architectural and engineering fees sustained or incurred by Landlord in
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connection with the planning and design of Landlord's Work shall be included in
the Total Cost of Landlord's Work.
In the event that Tenant shall request (by written notice to Landlord)
and Landlord shall approve (by written notice to Tenant) any changes to Exhibit
B and if Landlord determines that such changes will result in an increase in the
Total Cost of Landlord's Work, Tenant shall reimburse Landlord for such increase
in the Total Cost of Landlord's Work as additional rent under this Lease
("Tenant's Contribution"). Landlord shall advise Tenant (in writing) of the
amount of increase in the Total Cost of Landlord's Work resulting from any
requested change in Exhibit B at the time Landlord shall grant its consent to
the making of such changes and such additional cost (as set forth in such
written notice from Landlord) shall be deemed a portion of the Total Cost of
Landlord's Work for purposes of determining the Tenant's Contribution as set
forth above. Tenant shall pay Landlord the Tenant's Contribution as an
additional charge under the Lease within ten (10) days after written demand.
4. Brokerage. Tenant hereby warrants and represents to Landlord that
Tenant has dealt with no broker in connection with the consummation of this
First Amendment other than Leggat XxXxxx Properties Management, L.P. and Avalon
Partners and in the event of any brokerage claims against Landlord predicated
upon prior dealings with the Tenant, Tenant agrees to defend same and to
indemnify Landlord against any such claims except for any claims by Leggat
XxXxxx Properties Management, L.P. which shall be paid by Landlord. Tenant shall
be responsible for any and all commissions due and owing to Avalon Partners.
Landlord hereby warrants and represents that Landlord has dealt with no
broker in connection with the consummation of the matters set forth in this
First Amendment other than Leggat XxXxxx Properties Management, L.P. and Avalon
Partners. Landlord shall indemnify, defend and hold Tenant harmless from and
against any claims for brokerage commissions predicted upon prior dealings with
Landlord, except that Tenant shall be responsible for any commissions due and
owing to Avalon Partners.
5. Option to Extend. Effective as of the date of this First Amendment,
Section 14.28 of the Lease shall be deleted from the Lease in its entirety and
the following new Section 14.28 shall be inserted in its place and stead, it
being agreed and understood that Tenant shall not have the right to exercise the
option contained in Section 14.28 of the Lease but Tenant shall (subject to the
terms and limitations hereafter set forth) have one three year option to extend
the Term of this Lease beginning on June 1, 2000 upon and subject to the
following terms and conditions:
"14.28. OPTION TO EXTEND. Tenant shall have the right and option (the
"Option"), which said option and right shall not be severed from this
Lease or separately assigned, mortgaged or transferred, to extend the
Term of this Lease for one (1) additional consecutive period of Three
(3) years beginning on June 1, 2000 and expiring on May 31, 2003
(hereinafter referred to as the "Extension Period"), provided that (a)
Tenant shall give Landlord notice of Tenant's intention to exercise
such option ("Notice of Intention") not sooner than June 1, 1999 and
not later than July 15, 1999 (b) no Default of Tenant shall exist at
the time of giving the Notice of Intention or on the Revocation Date
(as
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hereafter defined) or on the date of commencement of the Extension
Period, (c) the Original Tenant named herein is itself occupying the
entire Premises both at the time of giving the applicable notice and at
the time of commencement of the Extension Period and (d) Tenant shall
fail to give Landlord a Revocation Notice (as hereafter defined) on or
before August 31, 1999 (the "Revocation Date"), time being of the
essence of all of the foregoing provisions. Except for the amount of
Basic Rent (which is to be determined as hereinafter provided), all the
terms, covenants, conditions, provisions and agreements in the Lease
contained shall be applicable to the additional period through which
the term shall be extended as aforesaid, except that there shall be no
further options to extend the Term of the Lease nor shall Landlord be
obligated to make or pay for any improvements to the Premises nor pay
any inducement payments of any kind or nature. If Tenant shall give
Landlord a Notice of Intention in the manner and within the time period
provided aforesaid and shall thereafter fail to give Landlord a
Revocation Notice in the time and manner set forth herein, the Term of
the Lease shall be extended to include the Extension Period without the
requirement of any further attention on the part of either Landlord or
Tenant. Landlord hereby reserves the right, exercisable by Landlord in
its sole discretion, to waive (in writing) any condition precedent set
forth in clauses (a), (b), (c) or (d) above.
If Tenant shall fail to give Landlord a timely Notice of Intention,
Tenant shall have no right to extend the Term of the Lease, time being
of the essence of the foregoing provisions. Any termination of this
Lease shall terminate the rights hereby granted Tenant.
The Basic Rent per annum payable during the Extension Period shall be
the Fair Market Rental Value (as said term is hereinafter defined) as
of commencement of the Extension Period but in no event less than the
Basic Rent per annum plus Escalation Charges payable for and with
respect to the 12 calendar month period immediately preceding the
Extension Period. "Fair Market Rental Value" shall be computed as of
the beginning of the Extension Period at the then current annual rental
charges, including provisions for subsequent increases and other
adjustments, for the Premises as determined by Landlord in its
discretion.
Landlord shall initially designate ("Landlord's Designation") the Fair
Market Rental Value for and with respect to the Extension Period by
written notice to Tenant within Thirty (30) days after Landlord's
receipt of Tenant's Notice of Intention. If Tenant does not wish to
accept Landlord's Designation of the Fair Market Rental Value, Tenant's
sole and exclusive remedy shall be the right, by written notice
("Revocation Notice") given to Landlord on or before the date which is
the first to occur of (i) that date which is thirty (30) days after
Tenant has been notified of Landlord's Designation or (ii) the
Revocation Date, to cancel and revoke Tenant's Notice of Intention as
to the Extension Period and the exercise of the Option with respect to
the Extension Period and thereupon the Term of this Lease shall expire
and come to an end without extension as of May 31, 2000 and Tenant
shall have no further options to Extend the term.
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If Tenant shall fail to give Landlord a Revocation Notice within the
time and manner herein provided, time being of the essence, Tenant
shall be deemed to have accepted the Base Rent as set forth in
Landlord's Designation and such Basic Rent shall be deemed to be the
Basic Rent per annum payable under this Lease during the Extension
Period and this Lease shall be deemed to be extended to include the
Extension Period at the Basic Rent per annum set forth in Landlord's
Designation. It is agreed and understood that time is of the essence in
connection with each and every provision of this Section 14.28."
6. Deletion of the Right of First Offer. Effective as of the date of
the First Amendment, Section 14.27 of the Lease entitled "Right of First Offer"
shall be deleted from the Lease in its entirety and Landlord hereby grants
Tenant the following new Right of First Offer:
In the event that during the Initial Term, all of the space shown on
Exhibit C to this First Amendment as the "First Offer Space" shall at
one point in time become "available for leasing," (as said term is
hereafter defined), Landlord shall by written notice to Tenant first
offer (the "Offer") to lease all of the First Offer Space to Tenant
upon terms and conditions designated and specified by Landlord in the
Offer. If (a) within ten (10) days after Landlord provides the Offer to
Tenant, Tenant does not unconditionally accept the Offer as to all of
such space upon the terms and conditions described in the Offer in
writing and concurrently deposit one month's advanced rent and one
month's security deposit with Landlord or (b) if Tenant accepts the
Offer as aforesaid but does not for any reason execute and deliver to
Landlord a final fully executed Amendment to this Lease Agreement in
form and substance satisfactory to Landlord and Tenant within 14 days
after acceptance of the Offer as aforesaid, Landlord shall be free to
rent all or any part of such space to any party upon such terms and
conditions as Landlord may, in its sole discretion elect, and Tenant's
Right of First Offer shall terminate as to all of the space described
in such Offer. As used herein, the term "available for leasing" shall
mean that such First Offer Space is to become vacant with the present
occupant thereof having no further options to extend its lease or
without any renewal or extension agreement reached and entered into
between Landlord and such existing occupant, it being agreed and
understood that Landlord need not provide Tenant with an Offer
hereunder if Landlord and such existing occupant have or may in the
future enter into an arrangement to extend or renew its occupancy of
the First Offer Space. Landlord has advised Tenant that, for purposes
of this paragraph, the tenant known as A/T Comm, Inc. is about to enter
into a leasing arrangement with Landlord for the First Offer Space and
A/T Comm, Inc. (its successors, sublessees or assigns) shall be deemed
the "existing occupant" for purposes of this paragraph.
7. Notices. Effective as of the date of this First Amendment, the
"Landlord's Original Address" set forth in Section 1.2 of the Lease is hereby
amended to be:
TIAA Realty, Inc.
c/o Leggat XxXxxx Properties Management, L.P.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
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Further, Section 14.12 is also hereby amended by deleting the second full
Paragraph of Section 14.12 from the Lease in its entirety and inserting the
following new Paragraph in its place and stead:
"If intended for Landlord, addressed to Landlord at Landlord's Original
Address as set forth in Section 1.2 with a copy to:
Xx. Xxxxxxxx X. Xxxxxxxx, Director, Asset Management
Teachers Insurance and Annuity Association of America,
as Asset Manager on behalf of TIAA Realty, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Mortgage and Real Estate Department
(or to such other address as may from time to time
hereafter be designated by Landlord by like notice)."
8. Security. Simultaneously with the execution and delivery of this
First Amendment by Tenant, Tenant shall deposit the amount of $4,155.46 with
Landlord, which amount shall be held by Landlord and combined with the amount of
$5,503.76 previously deposited with Landlord's predecessor in interest and such
combined amount of $9,659.22 shall be held by Landlord as a Security Deposit
pursuant to Section 14.17 of the Lease for the balance of the Term of this Lease
as if it were initially deposited with Landlord as a Security Deposit pursuant
to the provisions of the Lease.
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9. Generally. Except as modified herein, all of the terms, covenants,
provisions and conditions contained in the Lease remain in full force and effect
and are hereby ratified and affirmed.
WITNESS our hands and seals on the day and year first above written.
LANDLORD: TENANT:
TIAA Realty, Inc., a Delaware Implant Sciences Corporation
corporation, as Landlord
By: Teachers Insurance and
Annuity Association of America, By: /s/ X.X. Xxxxxx
a New York corporation ------------------------------
Its: Authorized Representative Its: President
By: /s/ Xxxxxxxx X. Xxxxxxxx
----------------------------
Xxxxxxxx X. Xxxxxxxx
Its: Director
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Exhibit A
Floor Plans
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Exhibit B
Landlord's Work shall be as follows:
8. Construct a demising wall between the 1st Amendment Space and AT/Comm,
Inc. in the location shown on Exhibit A of this First Amendment.
9. Construct two (2) openings from the Original Premises to the 1st
Amendment Space in locations mutually acceptable to both the Landlord
and Tenant.
10. Perform work necessary to provide for separate HVAC service to the 1st
Amendment Space to that Tenant's HVAC system shall service only the
Premises.
11. Perform work necessary to provide for separate electrical service to
the 1st Amendment Space so that Tenant's electrical service shall
service only the Premises.
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Exhibit C
Floor Plan
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