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EXHIBIT
10.17
SIXTH MODIFICATION AND
RATIFICATION OF LEASE
THIS SIXTH MODIFICATION AND
RATIFICATION OF LEASE (this “Modification”) is made and
entered into effective the 19 th day of May 2003, by and
between ST. PAUL PROPERTIES, INC., a Delaware corporation
(“Landlord”), and THE TRIZZETTO GROUP, INC., a Delaware
corporation (“Tenant”).
WITNESSETH:
WHEREAS, Landlord and Tenant
entered into that certain Office Lease dated as of April 26, 1999,
as amended by that certain Lease commencement letter signed by
Landlord on September 9, 1999, and by Tenant on September 7, 1999,
by that certain First Modification and Ratification of Lease
entered into effective November 1, 1999, by that certain Second
Modification and Ratification of Lease entered into effective
December 27, 1999, by that certain Third Modification and
Ratification of Lease entered into effective January 15, 2000, by
that certain Fourth Modification and Ratification of Lease entered
into October 15, 2000, and by certain of that Fifth Modification
and Ratification of Lease entered into effective October 31, 2002
(hereafter collectively the “Lease”), for the rental of
certain commercial real property located in the Building known as
Atrium I, 6061 S. Willow Drive, Englewood, Colorado, and more
particularly described in the Lease as Suites 310 and 300,
containing collectively approximately 47,385 rentable square feet
(the “Premises” and “Expansion Premises”
respectively, which may be collectively referred to herein as the
“Premises”) and Suite 233, containing approximately
4,805 rentable square feet (the “Second Expansion
Premises”); and
WHEREAS, Tenant desires to
extend the term of the Lease for a period of thirty-nine (39)
months, from April 30, 2006, to and including July 31, 2009, on the
terms and conditions set forth in greater detail in this
Modification; and
WHEREAS, Tenant desires to
expand the Premises beginning on or about to August 1, 2003,
through the addition of the following suites in the Building: Suite
250, containing approximately 4,454 rentable square feet; Suite
235, containing approximately 4,773 rentable square feet; and,
Suite 217, containing approximately 2,753 rentable square feet, and
including the elimination of the adjacent common area corridor,
containing approximately 1,097 rentable square feet (hereafter
collectively the “Third Expansion Premises”) as
depicted in Exhibit A-3 attached hereto and incorporated by
reference; and
WHEREAS, Tenant desires to
further expand the Premises beginning on or about August 1, 2003,
through the addition of the following suites in the Building: Suite
230 containing approximately 2,297 rentable square feet; and, Suite
260, containing approximately 2,327 rentable square feet (hereafter
collectively referred to as the “Fourth Expansion
Premises”), as depicted in greater detail in Exhibit
A-3 attached hereto and incorporated by reference;
and
WHEREAS, Landlord is willing
to modify the Lease to accommodate such desires, subject to the
terms and conditions of this Modification and Landlord and Tenant
desire to amend the Lease to reflect the extension of the Lease
Term, the addition of the Third Expansion Premises and the Fourth
Expansion Premises, and the increase in Base Rent payable under the
Lease.
NOW, THEREFORE, in
consideration of the foregoing, the agreements of the parties, and
other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as
follows:
1. Definitions . All
capitalized terms used herein not otherwise defined in this
Modification shall have the meanings given them in the
Lease.
2. Incorporation of
Recitals . The foregoing recitals are incorporated herein and
made a part hereof as if set forth in their entirety.
3. Additional Premises
. Effective on the earlier of August 1, 2003, or three (3) days
after substantial completion of the tenant improvements to be made
within the Third Expansion Premises (“Third Expansion
Premises Commencement Date”), Landlord shall lease to Tenant
and tenant shall lease from Landlord the Third Expansion Premises.
Further, effective on August 1, 2003 (the “Fourth Expansion
Premises Commencement Date”), Landlord shall lease to Tenant
and Tenant shall lease from Landlord the Fourth Expansion Premises.
In addition the identification of the Lease Premises in Section
1.03(B) of the Lease is hereby further amended by adding
immediately after description of the Second Expansion Premises the
following:
THIRD EXPANSION
PREMISES:
The following portions of the
second floor of the Building outlined on Exhibit A-3 : Suite
250, containing approximately 4,454 rentable square feet; Suite
235, containing approximately 4,773 rentable square feet; Suite
217, containing approximately 2,753 rentable square feet; and
including the elimination of the common area corridor adjacent to
the foregoing spaces, containing approximately 1,097 rentable
square feet .
FOURTH EXPANSION
PREMISES:
The following portions of the
second floor of the Building outlined on Exhibit A-3 : Suite
230 containing approximately 2,297 rentable square feet; and, Suite
260, containing approximately 2,327 rentable square
feet.
4. Third Expansion
Premises Commencement Date and Fourth Expansion Premises
Commencement Date. Section 1.03(D) of the Lease is hereby
amended by adding immediately after the description of commencement
date of the Lease the following:
The Third Expansion Premises
Commencement Date shall be August 1, 2003. The foregoing
notwithstanding, in the event that the tenant improvements made
within the Third Expansion Premises as set forth in Exhibit
B-3 attached to
2
the Sixth Modification and
Ratification of Lease are substantially complete prior to Agust 1,
2003, and Landlord has obtained a certificate of occupancy for the
Third Expansion Premises prior August 1, 2003, Landlord shall allow
Tenant to take early occupancy of the Third Expansion Premises,
subject to all terms and conditions under the Lease, with the
exception of Tenant’s obligation for the payment of Base Rent
from the date of such early occupancy until the Third Expansion
Premises Commencement Date.
The Fourth Expansion Premises
Commencement Date shall be August 1, 2003.
5. Temporary Premises
. Upon mutual execution and delivery of this Modification and
expiring on September 30, 2003, Landlord shall permit Tenant to
occupy up to, but not exceeding, 4,000 rentable square feet in the
existing Suite 105, as shown on Exhibit A-4 attached to this
Modification and incorporated by reference (the “Temporary
Premises”), subject to all of the terms and conditions of the
Lease, with the exception of the obligation to pay for Base Rent
for the Temporary Premises. Tenant shall be responsible for the
payment of all other costs and obligations under the Lease arising
as a result of its occupancy and use of the Temporary Premises,
including but not limited to the payment of Operating Expenses.
Tenant shall occupy the Temporary Premises in their current
“as-is” condition and repair. Landlord reserves the
right to show Suite 105 to other prospective tenants upon
twenty-four (24) hours advance notice to Tenant. Tenant shall have
the right to terminate its occupancy of the Temporary Premises
prior to September 30, 2003, upon seven (7) days prior written
notice to Landlord. In the event that Tenant fails to vacate the
Temporary Premises on September 30, 2003, or earlier termination of
the Lease, Landlord shall be entitled to exercise all remedies
available to Landlord under the Lease in the event of a breach of
the Lease, and Tenant shall be responsible for the payment of Base
Rent to Landlord for the Temporary Premises in the amount of one
and one-half (1 1
/ 2 ) times the Base Rent
otherwise payable by Tenant for the Premises, and shall also be
liable for all damages suffered by Landlord as a result of
Tenant’s failure to vacate the Temporary
Premises.
6. Termination Date.
Section 1.03(F) of the Lease is hereby amended in its entirety by
replacing the existing Termination Date of the Lease of April 30,
2006 with the following:
The Termination Date of the
Lease for the Premises, Expansion Premises, Second Expansion
Premises, Third Expansion Premises and fourth Expansion Premises,
shall be July 31, 2009 (seventy-two (72) months following the Third
Expansion Premises Commencement Date), unless sooner terminated as
provided in this Lease, or as otherwise extended as provided in
Exhibit B-3 to the Sixth Modification and Ratification of
Lease.
7. Tenant’s
Proportionate Share. Section 1.03(J) of the Lease is amended
effective on the Third Expansion Premises Commencement Date by
adding immediately after the description of the Tenant’s
Proportionate Share under the Lease for the Premises the
following:
Tenant’s Proportionate
Share for the Third Expansion Premises shall be 9.79%.
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Tenant’s Proportionate
Share for the Fourth Expansion Premises shall be 3.46%.
Tenant’s Proportionate
Share for the Temporary Premises shall be 2.99%.
8. Security Deposit.
Section 1.03 (K) of the Lease is hereby amended by increasing the
security deposit under the Lease in the additional amount of
Twenty-Three Thousand Six Hundred Sixteen and 08/100 US Dollars
($23,616.08), for a total security deposit of One Hundred Forty
Thousand Four Hundred Sixty-Two and 02/100 and US Dollars
($140,462.02), which additional amount shall be payable to Landlord
upon execution of this Modification.
9. Parking Spaces.
Effective on the Third Expansion Premises Commencement Date,
Section 1.03 (O) of the Lease is deleted in its entirety, as
amended, and is replaced with the following:
Commencing on the Third
Expansion Premises Commencement Date, and in connection with its
occupancy of the premises, Expansion Premises, Second Expansion
Premises, Third Expansion Premises and Fourth Expansion Premises,
Tenant shall be entitled to the non-exclusive use of a maximum of
two hundred and thirty (230) parking spaces in the Building parking
areas at no charge during the Term of the Lease expiring on July
31, 2009. Landlord reserves the right to strictly enforce the
number of parking spaces utilized by Tenant during the term of this
Lease based upon a parking ratio 3.3 parking spaces per 1,000
rentable square feet. Landlord further reserves the right to assign
and reassign (with the exception of Tenant’s reserved parking
spaces described below), from time to time on a non-discriminatory
basis, particular parking spaces for use by persons selected by
Landlord, and to issue and implement non-discriminatory rules and
regulations with respect to Parking spaces for the Building,
provided that Tenant’s rights to the number of parking spaces
designated herein are preserved. Within the foregoing parking
allowance, Tenant shall be entitled to the use of total of ten (10)
covered reserved parking spaces in those areas designated by
Landlord for such spaces as of the date of this Modification, at no
charge during the initial Term of the Lease.
10. Operating Expenses
. Section 2.02 of the Lease, as previously amended, shall be
further amended effective on the date of this Modification by
deleting the first sentence thereof in its entirety, and replacing
it with the following:
In the event Landlord’s
operating expenses for the Building shall, in any calendar year
during the Term, exceed the sum of those expenses accrued during
the base year for the Premises, Expansion Premises, Second
Expansion Premises, Third Expansion Premises or Forth Expansion
Premises, respectively (“Excess Expenses”) Tenant shall
pay as additional rent Tenant’s Proportionate Share of Excess
Expenses. The base year for the Premises, Expansion Premises,
Second Expansion Premises, Third Expansion Premises and Forth
Expansion Premises shall be determined in accordance with the
following schedule:
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Identification of
Premises
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Rentable Square
Feet
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Lease
Period
|
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Base Year
|
| Premises |
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23,610 |
|
11/8/99-11/30//04 |
|
1999 |
| Premises |
|
23,610 |
|
12/1/04-4/30/06 |
|
2000 |
| Expansion Premises |
|
23,775 |
|
5/1/00-4/30/06 |
|
2000 |
| Premises & Expansion Premises |
|
47,385 |
|
5/1/06-7/31/06 |
|
2003 |
| Second Expansion Premises |
|
4,805 |
|
11/1/02-7/31/09 |
|
2003 |
| Third Expansion Premises |
|
13,077 |
|
8/1/03-7/31/09 |
|
2003 |
| Fourth Expansion Premises |
|
4,624 |
|
8/1/03-7/31/09 |
|
2003 |
11. Base Rent .
Section 1.03 (H) of the Lease entitled Base Rent, and Section 1.03
(I) of the Lease entitled Monthly Installment of Base Rent, are
hereby amended by adding the following:
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(a) |
Premises and Expansion Premises Base Rent. |
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Period
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Rentable
Square Feet
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Lease
Rate
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Annual
Payment
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Monthly
Payment
|
| (6/1/03-4/30/06) |
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47,385 |
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$19.50/rsf/year |
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$924,007.50 |
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$77,000.63 |
| (5/1/06-7/31/09) |
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47,385 |
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$18.50/rsf/year |
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$876,622.50 |
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$73,051.88 |
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(c) |
Second Expansion Premises Base Rent . In addition to the
Base Rent payable with respect to the Premises and the Expansion
Premises, Tenant shall also pay Base Rent for the Second Expansion
Premises, payable monthly in advance, without demand, deduction or
set-off, in accordance with the following schedule: |
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Period
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Rentable
Square Feet
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Lease
Rate
|
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Annual
Payment
|
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Monthly
Payment
|
| (5/1/03-4/30/06) |
|
4,805 |
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$17.25/rsf/year |
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$82,886.25 |
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$6,907.19 |
| (5/1/06-7/31/09) |
|
4,805 |
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$18.50/rsf/year |
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$88,892.50 |
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$7,407.71 |
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(d) |
Third Expansion Premises Base Rent . In addition to the
Base Rent payable with respect to the Premises and the Expansion
Premises, the Expansion Premises, and the Second Expansion
Premises, beginning on the Third Expansion Premises Commencement
Date Tenant shall also pay Base Rent for the Third |
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Expansion Premises, payable
monthly in advance without demand, deduction or set-off, in
accordance with the following schedule:
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Period
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Rentable
Square Feet
|
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Lease
Rate
|
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Annual
Payment
|
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Monthly
Payment
|
| (8/1/03-4/30/04) |
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13,077 |
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$14.50/rsf/year |
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$189,616.50 |
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$15,801.38 |
| (5/1/04-4/30/05) |
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13,077 |
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$14.79/rsf/year |
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$193,408.83 |
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$16,117.40 |
| (5/1/05-4/30/06) |
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13,077 |
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$15.09/rsf/year |
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$197,331.93 |
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$16,444.33 |
| (5/1/06-4/30/07) |
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13,077 |
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$15.39/rsf/year |
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$201,255.03 |
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$16,771.25 |
| (5/1/07-4/30/08) |
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13,077 |
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$15.70/rsf/year |
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$205,308.90 |
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$17,109.08 |
| (5/1/08-7/31/09) |
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13,077 |
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$16.01/rsf/year |
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$209,362.77 |
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$17,446.90 |
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(e) |
Fourth Expansion Premises Base Rent. In addition to the
Base Rent payable with respect to the Premises, the Expansion
Premises, the Expansion Premises, the Second Expansion Premises,
and the Third Expansion Premises, beginning on the Fourth Expansion
Premises Commencement Date Tenant shall also pay Base Rent for the
Fourth Expansion Premises, payable monthly in advance, without
demand, deduction or set-off, in accordance with the following
schedule: |
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Period
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Rentable
Square Feet
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Lease
Rate
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Annual
Payment
|
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Monthly
Payment
|
| (8/1/03-4/30/04) |
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4,624 |
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$14.50/rsf/year |
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$67,048.00 |
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$5,587.33 |
| (5/1/04-4/30/05) |
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4,624 |
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$14.79/rsf/year |
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$68,388.96 |
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$5,699.08 |
| (5/1/05-4/30/06) |
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4,624 |
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$15.09/rsf/year |
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$69,776.16 |
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$5,814.68 |
| (5/1/06-4/30/07) |
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4,624 |
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$15.39/rsf/year |
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$71,163.36 |
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$5,930.28 |
| (5/1/07-4/30/08) |
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4,624 |
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$15.70/rsf/year |
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$72,596.80 |
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$6,049.73 |
| (5/1/08-7/31/09) |
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4,624 |
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$16.01/rsf/year |
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$74,030.24 |
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$6,169.19 |
12. Base Rent
Abatement. The foregoing notwithstanding, and provided that no
default (or no event which, with the passage of time or the giving
of notice or both, would constitute an event of default under the
Lease) shall have occurred under the Lease beyond any applicable
period of notice and cure, Base Rent shall be abated as follows:
(i) for the Third Expansion Premises Base Rent shall be abated for
a period of three (3) months following the Third Expansion Premises
Commencement Date for a total Base Rent abatement for the Third
Expansion Premises of Forty-Seven Thousand Four Hundred Four and
13/100 US Dollars ($47,404.13); and (ii) for the Fourth Expansion
Premises, Base Rent shall be abated for a period
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of three (3) months following the Fourth
Expansion Premises Commencement Date for a total Base Rent
abatement for the Fourth Expansion Premises of Sixteen Thousand
Seven Hundred Sixty-Two and No/100 US Dollars ($16,762.00). In the
event of any default by Tenant, the entire amount of Base Rent
which was otherwise abated, as set forth above, shall be
immediately due and payable.
13. Termination Option
. Paragraph 10 in the Fifth Modification and Ratification of Lease
shall be deleted in its entirely. Tenant shall no longer have a
termination option under the terms of the Lease
14. Tenant
Improvements . Landlords agrees to provide Tenant with an
allowance for construction by Tenant of certain tenant improvements
to be incorporated into the Premises, in the amount of Seven
Hundred Nine Thousand One Hundred Thirty-Four and No/100 US Dollars
($709,134.00) (the “Construction Credit”) (which
Construction Credit is calculated based upon $6.00 per rentable
square foot of Suite 300, and $24.00 per rentable square foot for
the Third Expansion Premises and the Fourth Expansion Premises),
which Construction Credit may be used by Tenant in the manner set
forth in Exhibit B-3 , attached to this Modification and
incorporated by reference. Landlord shall be paid a construction
management supervisory fee out of the Construction Credit equal to
one percent (1%) of the hard construction costs of the tenant
improvements to be constructed by Tenant, specifically excluding
architectural fees, project management fees, permitting, cabling,
furniture, fixtures and equipment, which construction management
supervisory fee shall not exceed in amount Seven Thousand and
No/100 US Dollars ($7,000.00). Landlord’s construction
management fee shall be invoiced by and paid to Landlord based upon
the invoices submitted by Tenant for reimbursement from Landlord
and shall be paid out of the Construction Credit. In the event that
Tenant does not use the entire Construction Credit for completion
of the improvements to the Premises, the Second Expansion Premises,
Third Expansion Premises or the Fourth Expansion Premises, Tenant
may apply the unused remainder of the Construction Credit (but in
no event exceeding twenty-five percent (25%) of the total
Construction Credit) for the payment of Base Rent and other charges
next coming due under the Lease, on an amortized basis over the
remaining Term of the Lease. Any portion of the Construction Credit
not used or committed by Tenant to be applied to Base Rent or other
charges coming due under the Lease (in the manner set forth in the
foregoing sentence) within eighteen (18) months following the Third
Expansion premises Commencement Date shall revert back to Landlord.
Landlord, at its option (which option must be exercised, if at all,
at the time that Landlord grants its written approval to
Tenant’s proposed final construction Plans in the manner
described in Exhibit B-3 ) may require Tenant to remove any
physical additions and/or repair any alterations made pursuant to
this paragraph or Exhibit B-3 , including but not limited to
low voltage communications and data cabling, in order to restore
the subject portion of the leased premises to the condition
existing at the time prior to the commencement of such work, all
costs of removal and/or alterations to be done by Tenant. In
addition, Tenant shall have the right, at Tenant’s sole cost
and expense to remove and relocate from Suite 100 in the Building
the following equipment and personal property of Landlord: the UPS
unit; two (2) 10-ton Liebert computer room cooling units; and, the
raised computer room flooring (“Landlord’s
Equipment”). Such removal and relocation of Landlords’s
Equipment shall be subject to Landlord’s prior written
approval as to the methods and specifications for removal and
relocation, which approval shall not be reasonably withheld. In the
event that Tenant’s elects
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to relocate Landlord’s Equipment
as provided in this paragraph, Tenant shall be responsible, at
Tenant’s sole cost and expense, for all costs of restoration
and repair of those portions of the Building affected by such
removal and relocation. In addition, in the event that Tenant
elects to relocate Landlord’s Equipment, Tenant agrees to
take and use such equipment in its current “as-is”
condition and repair, and Tenant shall be solely responsible for
all costs of maintaining, repairing and replacing Landlord’s
Equipment during the Term of the Lease.
15. Roof Space .
Landlord shall make available to Tenant, free of charged during the
primary Term, as it may be extended, a portion of the roof of the
Building, and associated Building chases, for Tenant’s use
for the installation, operation, repair and maintenance of one
satellite dish antenna, which usage shall be subject to the terms
and conditions of the Satellite Dish License attached to
this Modification and made a part hereof.
16. Extension Option .
The Extension Option contained in Paragraph 1 of the Addendum to
Lease is hereby deleted in its entirety, and is replaced with the
following:
Provided no event of default
(or no event which, with the passage of time or the giving of
notice or both, would constitute an event of default under the
Lease) has occurred and is continuing beyond any applicable period
of notice and cure, and provided Tenant has not assigned the Lease
or sublet all or any portion of the Premises, Tenant shall have one
option to extend the term of this Lease for all of the Premises,
Expansion Premises, Second Expansion Premises, Third Expansion
Premises and Fourth Expansion Premises (but not separate part
thereof) for an additional five (5) year term by giving the
Landlord written notice at least eight (8) months, but no more than
twelve (12) months, prior to the expiration of the then current
term of this Lease. Upon the giving of such notice, this Lease
shall be considered as extended for such option term upon the same
terms, conditions and covenants as are contained in this Lease
except that there shall be no additional extension options, and
except that charges for parking and for after hours HVAC shall be
calculated at the rates than being charged by Landlord to other
tenants in the Building for such services and except that the base
rent shall be calculated by multiplying the number of rentable
square feet of the Premises by the
then-fair-market-base-rental-value, which
then-fair-market-base-rental-value shall be determined in the
manner set forth below.
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(a) |
Landlord and Tenant will have thirty (30) days after Landlord
receives the Tenant’s notice of its intent to exercise any
extension within which to agree on the
then-fair-market-base-rental-value of the Premises. If they agree
on the fair market base rent for the subject option period within
thirty (30) days, they will amend this lease by stating the new
base rent for the option period. |
| |
(b) |
If Landlord and Tenant are unable to agree on the
then-fair-market-base-rental-value of the Premises for the option
period within thirty (30) days, then the base rent for the option
period will be the then-fair-market-base-rental-value of the
Premises as determined in accordance with subparagraph d
below. |
8
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(c) |
The “then-fair-market-rental-value of the Premises”
means what a landlord under no compulsion to Lease the Premises and
a tenant under no compulsion to lease the Premises would determine
as rents (including initial monthly rent and rental increases) for
the option period, as of the commencement of the option period and
determined according to recent market lease transactions in
comparable buildings located in the market area of the Premises,
taking into consideration the uses permitted under this Lease, the
quality, size, design and location of the Premises, the
credit-worthiness of the Tenant, allowances for rental abatement,
moving and tenant finish, if any, and any other factor reasonably
related to the determination of rental values. |
| |
(d) |
If Landlord and Tenant are unable to agree upon the then fair
market base rental value of the Premises, within fifteen (15) days
after the expiration of the thirty (30) day period set forth in
subparagraph a. above, Landlord and Tenant will each appoint a
commercial real estate broker with at least ten (10) years’
full-time commercial experience in the area in which the Premises
are located to determine the then-fair market rental value of the
Premises. If either Landlord or Tenant does not app |
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