First Amendment dated March 22, 2019 to Lease Agreement by and between Phoenixville Pike Owner LLC, and the Registrant
Exhibit 10.17
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this “Amendment”) is made as of the 22 day of March, 2019 (the “Effective Date”), by and between 3222 PHOENIXVILLE PIKE OWNER LLC, a Delaware limited liability company (“Landlord”) and NEURONETICS, INC., a Delaware corporation (“Tenant”).
Statement of Facts
By Lease dated January 3, 2013 (the “Original Lease”), Landlord’s predecessor, Exeter 3222 Phoenixville, L.P. (the “Original Landlord”), leased to Tenant and Tenant hired from the Original Landlord, the premises described in the Lease as Suite 300 consisting of approximately 32,485 rentable square feet (the “Original Premises”), in the building known as and by the street address 3222 Phoenixville Pike, Malvern, Pennsylvania (the “Building”). The Original Lease has been supplemented by a Commencement Date Memorandum dated as of December 17, 2013, which together with the Original Lease is herein collectively referred to as the “Lease”.
Landlord has succeeded to the interest of the Original Landlord in and to the Lease.
The Term of the Lease is currently scheduled to expire on February 28, 2021.
Landlord and Tenant now desire to amend the Lease to provide for:
(i) | the extension of the term of the Lease; and |
(ii) | the leasing by and to Tenant of additional premises in the Building consisting of approximately 9,966 rentable square feet. |
TERMS
NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant, intending to be legally bound, covenant and agree as follows:
| (b) | As used in this Amendment, the following terms shall have the following meanings: |
| (i) | “Additional Rent” shall mean Annual Operating Expenses and any other amounts payable by Tenant to Landlord under the Lease. |
| (ii) | “Combined Premises” shall mean both the Original Premises and Expansion Premises (as defined hereunder), which together shall be deemed to consist of 42,451 rentable square feet. |
| (iii) | “Existing Expiration Date” shall mean February 28, 2021. |
| (iv) | “Expansion Premises” shall mean a portion of the Building, which the parties agree shall be deemed to consist of 9,966 rentable square feet, as approximately shown on Exhibit A attached hereto. |
| (v) | “Expansion Premises Commencement Date” shall mean the earliest to occur of: (a) the date the Tenant’s Work in the Expansion Premises is Substantially Completed (as defined below); (b) the date that Tenant occupies all or any part of the Expansion Premises for the conduct of its business; (c) the date that is six (6) months after the Effective Date; or (d) the date that is one hundred twenty (120) days after the Expansion Premises Delivery Date. |
| (vi) | “Expansion Premises Delivery Date” shall mean the date that Landlord’s Work in the Expansion Premises is Substantially Completed. From and after the Expansion Premises Commencement Date, references in the Lease and this Amendment to the “Premises” shall be deemed to refer to the Combined Premises, i.e., both the Original Premises and the Expansion Premises. |
| (vii) | “Expansion Premises Rent Commencement Date” shall mean January 1, 2020. |
| (viii) | “Extended Term” shall mean the period of seven (7) years from the Extended Term Commencement Date to the Extended Term Expiration Date, both dates inclusive. |
| (ix) | “Extended Term Commencement Date” shall mean March 1, 2021. |
| (x) | “Extended Term Expiration Date” shall mean February 29, 2028. |
| (xi) | “Improvement Allowance” shall mean $872,100.00. |
| (xii) | “Existing Security Deposit” shall mean the Security Deposit under the Existing Lease. |
| (xiii) | “Landlord’s Work” shall have the meaning provided in Exhibit B attached hereto. |
| (xiv) | “Substantially Completed” shall have the meaning provided in the Rider to the Original Lease, except that references therein to |
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| “Tenant Improvements” shall be deemed to refer to “Landlord’s Work” or “Tenant’s Work”, as applicable. |
| (a) | Extended Term. The Term of the Lease is hereby extended for the Extended Term and shall expire on the Extended Term Expiration Date unless sooner terminated. References in the Lease to the Expiration Date, including specifically Section 1(e) of the Original Lease, shall be deemed to refer to the Extended Term Expiration Date and references to the “term” or “Term” of the Lease shall be deemed to refer to such “term” or “Term” as hereby extended. |
| (b) | Additional Premises. Landlord hereby leases to Tenant and Tenant hereby hires from Landlord the Expansion Premises for a term commencing on the Expansion Premises Delivery Date and expiring on the Extended Term Expiration Date or such earlier date as the Term of the Lease may terminate or expire. Promptly after the Expansion Premises Commencement Date, Landlord and Tenant shall confirm the Expansion Premises Commencement Date by the execution of the Confirmation of Lease Term attached hereto as Exhibit C. Tenant agrees to accept possession of the Expansion Premises in its “as-is” condition as of the Effective Date subject only to the performance of Landlord’s Work. Landlord shall perform Landlord’s Work at its sole cost or expense and covenants to use commercially reasonable efforts to Substantially Complete Landlord’s Work with respect to the Expansion Premises within ninety (90) days of the Effective Date, subject to Tenant Delay and forces beyond the reasonable control of Landlord. |
| (c) | Minimum Annual Rent and Additional Rent. |
| (i) | Minimum Annual Rent. |
Beginning | Ending | Rent PSF | Minimum Annual Rent | Monthly |
March 1, 2021 | February 28, 2022 | $15.25 | $495,396.25 | $41,283.02 |
March 1, 2022 | February 28, 2023 | $15.63 | $507,781.16 | $42,315.10 |
March 1, 2023 | February 29, 2024 | $16.02 | $520,475.69 | $43,372.97 |
March 1, 2024 | February 28, 2025 | $16.42 | $533,487.58 | $44,457.30 |
March 1, 2025 | February 28, 2026 | $16.83 | $546,824.77 | $45,568.73 |
March 1, 2026 | February 28, 2027 | $17.25 | $560,495.39 | $46,707.95 |
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March 1, 2027 | February 29, 2028 | $17.69 | $574,507.77 | $47,875.65 |
Beginning | Ending | Rent PSF | Minimum Annual Rent | Monthly |
Expansion Premises Rent Commencement Date | December 31, 2020 | $10.25 | $102,151.50 | $8,512.63 |
January 1, 2021 | December 31, 2021 | $10.51 | $104,705.29 | $8,725.44 |
January 1, 2022 | December 31, 2022 | $10.77 | $107,322.92 | $8,943.58 |
January 1, 2023 | December 31, 2023 | $11.04 | $110,005.99 | $9,167.17 |
January 1, 2024 | December 31, 2024 | $11.31 | $112,756.14 | $9,396.35 |
January 1, 2025 | December 31, 2025 | $11.60 | $115,575.05 | $9,631.25 |
January 1, 2026 | December 31, 2026 | $11.89 | $118,464.42 | $9,872.04 |
January 1, 2027 | December 31, 2027 | $12.18 | $121,426.03 | $10,118.84 |
January 1, 2028 | February 29, 2028 | $12.49 | $124,461.68 | $10,371.81 |
| (ii) | Additional Rent. |
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“Tenant’s Share” as defined in Section 1(h) of the Lease shall be 21.26%.
| (d) | Utilities. Utilities for the Combined Premises shall be provided and paid for by Tenant as provided in Article 7 of the Lease |
| (e) | Security Deposit. Landlord acknowledges receipt of Tenant’s Existing Security Deposit from Original Landlord in the form of a letter of credit. During the Extended Term, Landlord shall continue to hold and/or apply the Existing Security Deposit as security for Tenant’s obligations under the Lease, as hereby amended, in accordance with the terms of the Lease. |
| (f) | Renewal Option. Article 29 of the Lease is hereby deleted in its entirety and the provisions attached to this Agreement as Exhibit D substituted in lieu thereof. All references in the Lease to the Second Renewal Term are also hereby deleted. |
| (g) | Termination Option. Article 30 of the Lease is hereby deleted in its entirety. |
| (h) | Parking Spaces. Effective as of the Expansion Premises Commencement Date, Paragraph 11 of Exhibit B to the Lease (Building Rules) is modified to provide that from and after the Expansion Premises Commencement Date, Tenant, at its sole risk and responsibility, shall have the right to use two hundred ten (210) of the parking spaces in the parking areas of the Property shown on Exhibit G to the Lease, on the terms and conditions set forth in said Paragraph 11. |
| (i) | “As-is”; Improvement Allowance. Except as provided below, Tenant agrees to accept the Expansion Premises on the Expansion Premises Delivery Date in its “as-is” condition of the Effective Date provided Landlord’s Work with respect to the Expansion Premises is substantially completed as of the Expansion Premises Delivery Date. |
| (i) | Working Drawings. Tenant shall provide to Landlord for its approval final working drawings, prepared by an architect chosen by Tenant and approved by Landlord, such approval not to be unreasonably withheld, conditioned or delayed, of all improvements that Tenant proposes to install to prepare the Expansion Premises for Tenant’s occupancy (herein, “Tenant’s Work”); which working drawings shall include the partition layout, ceiling plan, electrical outlets and switches, telephone outlets, drawings for any modifications to the mechanical and plumbing systems of the Building, and detailed plans and specifications for the construction of such improvements in accordance with all applicable Laws. All of Tenant’s Work shall be performed on and subject to all applicable |
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| terms and conditions of the Lease, including without limitation, Articles 12 and 13 thereof. |
| (ii) | Landlord’s Approval; Performance of Work. If any of Tenant’s Work will affect the Building’s structure or the Building’s Systems, then the working drawings pertaining thereto must be approved by the Building’s engineer of record. Landlord’s approval of such working drawings shall not be unreasonably withheld, provided that (1) they comply with all Laws, (2) the improvements depicted thereon do not adversely affect (in the reasonable discretion of Landlord) the Building’s structure or the Building’s Systems (including the Building’s restrooms or mechanical rooms), the exterior appearance of the Building, or the appearance of the Building’s common areas or elevator lobby areas and (3) such working drawings are sufficiently detailed to allow construction of the improvements in a good and workmanlike manner. As used herein, “Working Drawings” means the final working drawings approved by Landlord, as amended from time to time by any approved changes thereto, and “Tenant’s Work” means all improvements to be constructed in accordance with and as indicated on the Working Drawings, together with any work required by governmental authorities to be made to other areas of the Building as a result of the improvements indicated by the Working Drawings. Landlord’s approval of the Working Drawings shall not be a representation or warranty of Landlord that such drawings are adequate for any use or comply with any Law, but shall merely be the consent of Landlord thereto. |
| (iii) | Change Orders. Tenant may initiate changes in Tenant’s Work. Each such change must receive the prior written approval of Landlord, such approval not to be unreasonably withheld or delayed on the terms and conditions set forth above; however, if such requested change would adversely affect (in the reasonable discretion of Landlord) (1) the Building’s structure or the Building’s Systems (including the Building’s restrooms or mechanical rooms), (2) the exterior appearance of the Building, or (3) the appearance of the Building’s common areas or elevator lobby areas, Landlord may withhold its consent in its sole and absolute discretion. Tenant shall, upon completion of Tenant’s Work, cause to be prepared and delivered to Landlord an accurate architectural “as-built” plan of Tenant’s Work as constructed. |
| (iv) | Cost of the Work. The entire cost of performing Tenant’s Work (including design of and space planning for Tenant’s Work and preparation of the Working Drawings and the final “as-built” plan of Tenant’s Work, costs of construction labor and materials, electrical usage during construction, janitorial services, general |
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| tenant signage, related taxes and insurance costs, licenses, permits, certifications, surveys and other approvals required by Law, shall be paid by Tenant (herein, the “Cost of the Work”) subject to Landlord’s agreement to make the ImprovementAllowance available to Tenant as hereinafter provided. |
| (v) | Improvement Allowance. Landlord shall provide the Improvement Allowance to Tenant to be applied toward the Cost of the Work. Up to $87,210.00 of the Improvement Allowance may also be applied to the cost of permitting, space planning and construction drawings, or otherwise revised plans, comprising part of the Cost of the Work. Upon entering into contracts and/or subcontracts for the Tenant’s Work, Tenant shall provide copies thereof to Landlord and submit such contracts and subcontracts to Landlord together with Tenant’s architect’s certification of the total Cost of the Work (herein, the “Total Work Cost”) and a time line of the projected dates that each installment of the Total Work Cost will need to be disbursed by either Tenant or Landlord. In the event the Total Work Cost exceeds the Improvement Allowance, the excess is herein called the “Excess Work Cost”. After the end of each calendar month during the progress of Tenant’s Work after Tenant has expended the Excess Work Cost, Tenant shall submit to Landlord a requisition (herein, a “Requisition”) containing (i) a certificate from Tenant and the architect indicating the amount of the Improvement Allowance being requested by Tenant and indicating that the portion of Tenant’s Work which is the subject of such Requisition has been Substantially Completed in accordance with the Working Drawings approved by Landlord and in accordance with the terms of the Lease, as amended by this Amendment, (ii) a certificate from the architect as to the Total Work Cost and the amount of the Excess Work Cost previously paid by Tenant, (iii) paid and receipted invoice(s) from the contractor(s) and subcontractor(s) for the Excess Work Cost (to the extent not previously provided) and the portion of the Tenant’s Work which is the subject of such requisition, and (iv) partial lien waivers from the contractors and subcontractors for the Excess Work Cost (to the extent not previously provided) and the portion of the Tenant’s Work which is the subject of such Requisition. Within thirty (30) days of receipt of such Requisition, provided Tenant is not then an Event of Default by Tenant under the Lease which remains uncured, Landlord shall pay to Tenant the unexpended portion of the Improvement Allowance applicable to such Requisition to the extent in compliance with the foregoing (herein, an “Installment Payment”). Notwithstanding the foregoing, Landlord shall not be required to pay any Installment Payment to Tenant more than once in each calendar month and ten percent (10%) of such Installment Payment shall be retained by Landlord (unless the Requisition already accounted for such |
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| retainage) and paid upon Tenant’s taking possession of the Expansion Premises for the conduct of its business and Landlord’s receipt of a final Requisition including (A) a certificate from Tenant and the architect that all of Tenant’s Work has been Substantially Completed in accordance with the Working Drawings approved by Landlord and in accordance with the terms of the Lease, as amended by this Amendment, (B) final paid invoices from all of the contractor(s) responsible for the construction of any of Tenant’s Work (including the Excess Work Costs), (C) final lien waivers from all contractors and subcontractors responsible for the construction of Tenant’s Work indicating all such contractors and subcontractors have been paid in full, and (D) a final certificate of occupancy or other certificate of compliance issued by the local municipality with respect to the Tenant’s Work. |
| (vi) | Tenant shall (A) engage a general contractor who shall be subject to Landlord’s prior approval, such approval not to be unreasonably withheld, conditioned or delayed, to perform Tenant’ Work, (B) perform all Tenant’s Work in a good and workmanlike manner in accordance with all applicable Laws, including without limitation, the Americans with Disabilities Act and all similar state and local accessibility laws, and on and subject to all terms, covenants and conditions of the Lease, including without limitation, obtaining Landlord’s approval thereof; and (C) shall remove all debris, refuse and rubbish generated by Tenant’s Work at appropriate intervals. Tenant, at its sole cost and expense, shall be solely responsible for safeguarding and protecting any and all of its furniture, fixtures, property, equipment or systems in the Original Premises or Expansion Premises that may be located in areas where Tenant’s Work is being performed or is susceptible to damage by virtue of being exposed to the activities being performed as part of Tenant’s Work. |
| (vii) | Any portion of the Improvement Allowance that is not expended or applied towards Tenant’s Work on or before June 30, 2020 shall be deemed forfeited by Tenant and shall not be applied to Rent. |
| (j) | Payments. The following provision is hereby added to the Lease as the last sentence of Article 5 thereof. |
“All payments of Minimum Annual Rent and Additional Rent shall be paid when due without demand at (i) the office of 3222 Phoenixville Pike Owner LLC c/o Goldman Sachs, BLDGID HMO001, PO BOX 6180, Hicksville, NY ###-###-####, (ii) by wire transfer to Bank of America, ABA Number: 026009593, Account Name: 3222 Phoenixville Pike Owner LLC-Property Depository, Account Number: 1257180236, or (iii) or at such other place as Landlord may from time to time direct in writing. All checks shall be made payable to USRPI REIT, INC.
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Minimum Annual Rent and Additional Rent maybe referred to herein collectively as “Rent” or “rent.”
“CONFESSION OF JUDGMENT FOR POSSESSION. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT OR UPON THE EXPIRATION OR TERMINATION OF THE TERM OF THIS LEASE, AND AFTER A FURTHER 5 DAY PRIOR WRITTEN NOTICE TO TENANT OF LANDLORD’S INTENT TO EXERCISE ITS RIGHT PURSUANT TO THIS SECTION 22(b)(vi), FOR THE PURPOSE OF OBTAINING POSSESSION OF THE PREMISES, TENANT HEREBY AUTHORIZES AND EMPOWERS THE PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF RECORD IN THE COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE, AS ATTORNEY FOR TENANT AND ALL PERSONS CLAIMING UNDER OR THROUGH TENANT, TO APPEAR FOR AND CONFESS JUDGMENT AGAINST TENANT FOR POSSESSION OF THE PREMISES, AND AGAINST ALL PERSONS CLAIMING UNDER OR THROUGH TENANT, IN FAVOR OF LANDLORD, FOR RECOVERY BY LANDLORD OF POSSESSION THEREOF, FOR WHICH THIS AGREEMENT OR A COPY HEREOF VERIFIED BY AFFIDAVIT, SHALL BE A SUFFICIENT WARRANT; AND THEREUPON A WRIT OF POSSESSION MAY IMMEDIATELY ISSUE FOR POSSESSION OF THE PREMISES, WITHOUT ANY PRIOR WRIT OR PROCEEDING WHATSOEVER AND WITHOUT ANY STAY OF EXECUTION. IF FOR ANY REASON AFTER SUCH ACTION HAS BEEN COMMENCED THE SAME SHALL BE TERMINATED AND THE POSSESSION OF THE PREMISES REMAINS IN OR IS RESTORED TO TENANT, LANDLORD SHALL HAVE THE RIGHT UPON THE OCCURRENCE OF ANY SUBSEQUENT EVENT OF DEFAULT TO CONFESS JUDGMENT IN ONE OR MORE FURTHER ACTIONS IN THE MANNER AND FORM SET FORTH ABOVE TO RECOVER POSSESSION OF SAID PREMISES FOR SUCH SUBSEQUENT DEFAULT. TENANT WAIVES ALL PROCEDURAL ERRORS IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT. NO SUCH TERMINATION OF THIS LEASE, NOR TAKING, NOR RECOVERING POSSESSION OF THE PREMISES SHALL DEPRIVE LANDLORD OF ANY REMEDIES OR ACTION AGAINST TENANT FOR FIXED BASIC RENT, ADDITIONAL RENT OR FOR OTHER SUMS DUE HEREUNDER OR FOR DAMAGES DUE OR TO BECOME DUE FOR THE BREACH OF ANY CONDITION OR COVENANT HEREIN CONTAINED, NOR SHALL THE BRINGING OF ANY SUCH ACTION FOR RENT AND/OR OTHER SUMS DUE HEREUNDER, OR BREACH OF COVENANT OR CONDITION NOR THE RESORT TO ANY OTHER REMEDY HEREIN PROVIDED FOR THE RECOVERY OF RENT AND/OR OTHER SUMS DUE HEREUNDER OR
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DAMAGES FOR SUCH BREACH BE CONSTRUED AS A WAIVER OF THE RIGHT TO INSIST UPON THE FORFEITURE AND TO OBTAIN POSSESSION IN THE MANNER HEREIN PROVIDED. TO THE EXTENT PERMITTED BY LAW, TENANT HEREBY WAIVES THE DUTIES IMPOSED BY 50 PA.C.S.A. SECTION 5601.3 IN CONNECTION WITH ANY EXERCISE OF THE FOREGOING RIGHTS AND POWERS. TENANT HEREBY ACKNOWLEDGES AND AGREES THAT IT IS TENANT’S REASONABLE EXPECTATION THAT LANDLORD WILL EXERCISE THE RIGHTS AND REMEDIES GRANTED TO LANDLORD UNDER THIS SECTION 22(b)(v) AND ELSEWHERE IN THIS LEASE.”
“To Landlord: | 3222 Phoenixville Pike Owner LLC |
With a copy to:
3222 Phoenixville Pike Owner LLC
c/o Goldman Sachs Realty Management, LLC
2001 Donald Ross Avenue, Suite 2800
Dallas, TX 75201
Attn: General Counsel
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IN WITNESS WHEREOF, the duly authorized officers or representatives of Landlord and Tenant have executed this Amendment to Lease under seal as of the day and year first hereinabove written.
WITNESSED/ ATTESTED BY:
| LANDLORD 3222 PHOENIXVILLE PIKE OWNER LLC By: Goldman Sachs Realty Management, LLC, as asset manager By: /s/ Dirk Degenaars Name: Dirk Degenaars Title: Authorized Signatory |
| TENANT NEURONETICS, INC. By: /s/ Daniel Guthrie Name: Daniel Guthrie Title: Chief Commercial Officer |
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