<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 4, 1999
REGISTRATION NO. 333-73295
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
SILKNET SOFTWARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7372 02-0478949
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
-------------------------
SILKNET SOFTWARE, INC.
50 PHILLIPPE COTE STREET
MANCHESTER, NEW HAMPSHIRE 03101 (603) 625-0070
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-------------------------
JAMES C. WOOD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
SILKNET SOFTWARE, INC.
50 PHILLIPPE COTE STREET
MANCHESTER, NEW HAMPSHIRE 03101
(603) 625-0070
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
JOHN HESSION, ESQ. PATRICK J. RONDEAU, ESQ.
BRIAN D. GOLDSTEIN, ESQ. HALE AND DORR LLP
TESTA, HURWITZ & THIBEAULT, LLP 60 STATE STREET
125 HIGH STREET BOSTON, MASSACHUSETTS 02109
BOSTON, MASSACHUSETTS 02110 (617) 526-6000
(617) 248-7000
</TABLE>
-------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ---------------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
-------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 1 has been filed for the sole purpose of filing
additional exhibits to the Registration Statement.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses (other than underwriting discounts and commissions)
payable in connection with the sale of the common stock offered hereby are as
follows:
<TABLE>
<S> <C>
SEC registration fee........................................ $ 9,591
NASD filing fee............................................. 3,950
Nasdaq National Market listing fee.......................... *
Printing and engraving expenses............................. *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue Sky fees and expenses (including legal fees)........... *
Transfer agent and registrar fees and expenses.............. *
Miscellaneous............................................... *
--------
Total............................................. $ *
========
</TABLE>
- ---------------
* To be filed by Amendment.
Silknet will bear all expenses shown above.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law and Silknet's Certificate of
Incorporation and By-Laws provide for indemnification of Silknet's directors and
officers for liabilities and expenses that they may incur in such capacities. In
general, directors and officers are indemnified with respect to actions taken in
good faith in a manner reasonably believed to be in, or not opposed to, the best
interests of Silknet and, with respect to any criminal action or proceeding,
actions that the indemnitee had no reasonable cause to believe were unlawful.
Reference is made to Silknet's Certificate of Incorporation and By-Laws filed as
Exhibits 3.01 and 3.02 hereto, respectively.
The Underwriting Agreement provides that the Underwriters are obligated,
under certain circumstances, to indemnify directors, officers and controlling
persons of Silknet against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). Reference is made to
the form of Underwriting Agreement filed as Exhibit 1.01 hereto.
In addition, Silknet has an existing directors and officers liability
insurance policy.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In the three years preceding the filing of this registration statement,
Silknet has issued the following securities that were not registered under the
Securities Act:
(a) Issuances of Capital Stock.
In October 1996, Silknet issued and sold an aggregate of 2,900 shares of
common stock for services valued at $2,900.
In October 1996, Silknet issued and sold an aggregate of 2,364,584 shares
of its Series A Preferred Stock for an aggregate of $2,270,000.
II-1
<PAGE> 4
In June 1997, Silknet issued and sold an aggregate of 2,500,000 shares of
its Series B Preferred Stock for an aggregate of $5,000,000.
In May 1998, Silknet issued and sold an aggregate of 3,081,657 shares of
its Series C Preferred Stock for an aggregate of $10,779,989.74. In June 1998,
Silknet sold an additional 7,500 shares of Series C Preferred Stock for an
aggregate purchase price of $26,235.88.
In February 1999, Silknet issued and sold an aggregate of 1,205,913 shares
of its Series D Preferred Stock for an aggregate purchase price of
$8,832,238.26.
Each share of Silknet's Series A, Series B, Series C and Series D Preferred
Stock will automatically convert into one share of common stock upon the closing
of this offering.
(b) Issuances of Notes and Warrants
In May 1996, Silknet issued one note in the principal amount of $125,000
and a warrant to purchase an aggregate of 125,000 shares of common stock at an
exercise price of $1.00 per share. In July 1996, Silknet issued an additional
note in the principal amount of $125,000 and a warrant to purchase an aggregate
of 125,000 shares of common stock at an exercise price of $1.00 per share.
In June 1997 Silknet issued six warrants to purchase an aggregate of
500,000 shares of common stock at an exercise price of $2.20 per share.
(c) Exercises of Stock Options
From January 1996 to January 1999, Silknet issued 178,795 shares of common
stock at exercise prices ranging from $1.00 to $1.75 for an aggregate purchase
price of $179,467 pursuant to exercise of employee options.
No underwriters were involved in the foregoing sales of securities. Such
sales were made in reliance upon an exemption from the registration provisions
of the Securities Act set forth in Section 4(2) thereof relative to sales by an
issuer not involving any public offering or the rules and regulations
thereunder, or, in the case of the exercise of options to purchase common stock,
Rule 701 under the Securities Act. All of the foregoing securities are deemed
restricted securities for purposes of the Securities Act.
II-2
<PAGE> 5
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<C> <S>
1.01* Form of Underwriting Agreement.
3.01+ Certificate of Incorporation of Silknet.
3.02+ By-laws of Silknet.
4.01* Specimen Certificate for shares of Silknet's Common Stock.
4.02+ Description of Capital Stock (contained in the Certificate
of Incorporation filed as Exhibit 3.01).
4.03+ Form of Warrant Agreement dated as of May 17, 1996 between
Silknet and Zero Stage Capital V, L.P.
4.04+ Form of Warrant Agreement dated as of June 11, 1997 between
Silknet and certain investors.
5.01* Legal Opinion of Testa, Hurwitz & Thibeault, LLP.
10.01**+ Employee Stock Option Plan.
10.02**+ 1999 Stock Option and Incentive Plan.
10.03**+ 1999 Non-Employee Director Stock Option Plan.
10.04**+ 1999 Employee Stock Purchase Plan.
10.05+ Registration Rights Provisions contained in the Series C
Preferred Stock Purchase Agreement dated as of May 12, 1998
between Silknet and the purchasers named therein.
10.06+ Registration Rights Provisions contained in the Series D
Preferred Stock Purchase Agreement dated as of February 26,
1999 between Silknet and the purchasers named therein.
10.07 Lease Agreement between Silknet and 1848 Associates dated
December 30, 1996, as amended December 15, 1997, November 1,
1998 and January 1, 1999.
10.08+ Loan and Modification Agreement dated March 2, 1999 by and
between Silknet and Silicon Valley Bank.
10.09+ Loan and Security Agreement dated March 5, 1997 by and
between Silknet and Silicon Valley Bank, as amended pursuant
to a Loan Modification Agreement dated December 1, 1997.
16.01 Letter from KPMG Peat Marwick dated March 3, 1999.
21.01+ Subsidiaries.
23.01* Consent of Testa, Hurwitz & Thibeault, LLP (contained in
Exhibit 5.01).
23.02+ Consent of PricewaterhouseCoopers LLP.
24.01+ Power of Attorney (contained on page II-5).
27.01+ Financial Data Schedule.
</TABLE>
- ---------------
* To be filed by amendment.
** Indicates a management contract or any compensatory plan, contract or
arrangement.
+ Previously filed.
II-3
<PAGE> 6
(b) FINANCIAL STATEMENT SCHEDULES.
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes (1) to provide to the
underwriters at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser; (2) that for
purposes of determining any liability under the Securities Act, the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the time it was
declared effective; and (3) that for the purpose of determining any liability
under the Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment to the Registration Statement (File
No. 333-73295) to be signed on its behalf by the undersigned, thereunto duly
authorized, in Manchester, New Hampshire on
March 4, 1999.
SILKNET SOFTWARE, INC.
By: /s/ JAMES C. WOOD
------------------------------------
James C. Wood
President, Chief Executive Officer
and
Chairman of the Board
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
--------- -------- ----
<S> <C> <C>
* President, Chief Executive Officer and March 4, 1999
- ------------------------------------------ Chairman of the Board (Principal
James C. Wood Executive Officer)
* Vice President, Chief Financial March 4, 1999
- ------------------------------------------ Officer, Treasurer and Secretary
Patrick J. Scannell, Jr. (Principal Financial and Accounting
Officer)
* Director March 4, 1999
- ------------------------------------------
Stanley Fung
* Director March 4, 1999
- ------------------------------------------
Guy Bradley
* Director March 4, 1999
- ------------------------------------------
John Doggett
* Director March 4, 1999
- ------------------------------------------
Joo Hock Chua
* Director March 4, 1999
- ------------------------------------------
Andrew Goldfarb
*By: /s/ JAMES C. WOOD
------------------------------------
James C. Wood
as Attorney-in-Fact
</TABLE>
II-5
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<C> <S>
1.01* Form of Underwriting Agreement.
3.01+ Certificate of Incorporation of Silknet.
3.02+ By-laws of Silknet.
4.01* Specimen Certificate for shares of Silknet's Common Stock.
4.02+ Description of Capital Stock (contained in the Certificate
of Incorporation filed as Exhibit 3.01).
4.03+ Form of Warrant Agreement dated as of May 17, 1996 between
Silknet and Zero Stage Capital V, L.P.
4.04+ Form of Warrant Agreement dated as of June 11, 1997 between
Silknet and certain investors.
5.01* Legal Opinion of Testa, Hurwitz & Thibeault, LLP.
10.01**+ Employee Stock Option Plan.
10.02**+ 1999 Stock Option and Incentive Plan.
10.03**+ 1999 Non-Employee Director Stock Option Plan.
10.04**+ 1999 Employee Stock Purchase Plan.
10.05+ Registration Rights Provisions contained in the Series C
Preferred Stock Purchase Agreement dated as of May 12, 1998
between the Company and the purchasers named therein.
10.06+ Registration Rights Provisions contained in the Series D
Preferred Stock Purchase Agreement dated as of February 26,
1999 between Silknet and the purchasers named therein.
10.07 Lease Agreement between Silknet and 1848 Associates dated
December 30, 1996, as amended December 15, 1997, November 1,
1998 and January 1, 1999.
10.08+ Loan and Modification Agreement dated March 2, 1999 by and
between Silknet and Silicon Valley Bank.
10.09+ Loan and Security Agreement dated March 5, 1997 by and
between Silknet and Silicon Valley Bank, as amended pursuant
to a Loan Modification Agreement dated December 1, 1997.
16.01 Letter from KPMG Peat Marwick dated March 3, 1999.
21.01+ Subsidiaries
23.01* Consent of Testa, Hurwitz & Thibeault, LLP (contained in
Exhibit 5.01).
23.02+ Consent of PricewaterhouseCoopers LLP.
24.01+ Power of Attorney (contained on page II-5).
27.01+ Financial Data Schedule.
</TABLE>
- ---------------
* To be filed by amendment.
** Indicates a management contract or any compensatory plan, contract or
arrangement.
+ Previously filed.
<PAGE> 1
EXHIBIT 10.07
THIS INDENTURE OF LEASE dated as of this 30th day of December, 1996, by and
between 1848 ASSOCIATES, a New Hampshire limited partnership with a place of
business at 340 Commercial Street, Manchester, New Hampshire 03101 ("Lessor"),
and Silknet Software, Inc., with a principal place of business at 324 Commercial
Street, Manchester, New Hampshire 03101 ("Lessee").
WITNESSETH
ARTICLE I
LEASED PREMISES
1.1 Lessor hereby leases to Lessee and Lessee hereby leases from Lessor, upon
and subject to the terms and provisions of this Lease, certain space in the
building known as The Gateway Building, located at 50 Phillippe Cote Street,
Manchester, New Hampshire (the "Building"), which space consists of
approximately 10,243 square feet on the third floor of the Building, together
with the right to use the Common Area with others (as defined under ARTICLE VII,
Section 7.1), and is further shown on the plans attached hereto as Exhibit A and
hereby made a part hereof (collectively, the "Leased Premises").
ARTICLE II
TERM OF LEASE
2.1 The term of this Lease shall be for a period of Five (5) years which term
shall commence on February 1, 1997 (the "Commencement Date") and terminate on
January 31, 2002.
2.2 In the event Lessee shall hold over after the expiration of this term, such
holding over shall not extend the term of this Lease, but shall create a month
to month tenancy except that the Monthly Rent, as later defined, will be
increased to $14,084.13.
ARTICLE III
RENT
3.1 Lessee covenants and agrees to pay Lessor at the place provided herein for
giving of notice to Lessor monthly rent equal to the Monthly Rent, as later
defined. Monthly Rent shall be as follows:
Period: Monthly Rent:
March 1, 1997 to February 28, 1998 $6,828.67
March 1, 1998 to February 28, 1999 $8,109.04 x Adjustment Factor
March 1, 1999 to February 29, 2000 $8,962.63 x Adjustment Factor
March 1, 2000 to February 28, 2001 $9,176.02 x Adjustment Factor
March 1, 2001 to February 28, 2002 $9,389.42 x Adjustment Factor
<PAGE> 2
"Adjustment Factor" means the greater of (x) one or (y) the lesser of 1.03 or
the quotient of the following fraction:
CPI (as defined below) as of the January 1 which was two (2) months prior to the
commencement of the current Period divided by CPI as of January 1 which was
fourteen (14) months prior to commencement of the current Period
3.2 As used in this Section, "CPI" means (i) the "Consumer Price Index - Boston
Average - All Urban Consumers - All Items, (1982-84 = 100)" published by the
Boston Office of the Bureau of Labor Statistics of the United States Department
of Labor, or (ii) if the publication of such Consumer Price Index shall be
discontinued, the comparable index most accurately reflecting diminution of the
real value of the monthly rent herein provided for. In the event of a change in
the base for the price index, the numerators of the fractions referred to above
shall be appropriately adjusted to reflect continued use of the base period in
effect at the time of its adoption for use hereunder.
3.3 At the request of either party hereto, the other from time to time shall
execute an appropriate instrument supplemental to this Lease evidencing the then
current monthly rent payable by the Lessee hereunder. Rent shall be paid in
advance on the first day of each and every month during the term hereof.
Interest of one and one-half (1.5%) percent per month shall accrue ten (10) days
after Lessee's receipt of written notice of non-payment of rent.
ARTICLE IV
ADDITIONAL RENT
Section intentionally deleted.
ARTICLE V
QUIET ENJOYMENT
5.1 Lessor shall put Lessee into possession of the Leased Premises at the
beginning of the term hereof, and Lessee, upon paying the rent and observing the
other covenants and conditions herein, upon its part to be observed, shall be
entitled to the peaceful and quiet enjoyment of the Leased Premises.
5.2 If Lessor fails to give possession of the Leased Premises to Lessee within
thirty (30) days of the Commencement Date, Lessee may, at its option, terminate
this Lease by written notice to Lessor. In such a case, no rent shall be due to
Lessor from Lessee.
ARTICLE VI
CONDITION OF LEASED PREMISES: REPAIRS
<PAGE> 3
6.1 After the Leasehold Improvements set forth in Exhibit B, if any, have been
completed at Lessor's expense, Lessor shall contact Lessee to advise Lessee.
Lessee shall then have a reasonable opportunity to inspect Leased Premises.
Lessee will then (i) promptly give notice of observed defects or (ii) accept the
Building, improvements and any equipment or fixtures, latent defects excepted,
on or in the Leased Premises "as is" and in their existing condition and agree
that no representation, statement or warranty, express or implied, has been made
by or on behalf of Lessor as to such condition, or to use that may be made of
such property, except as set forth herein. Lessor agrees to complete said
Leasehold Improvements, including correcting said defects, on or before the
Commencement Date in a good and workmanlike manner and in compliance with all
applicable laws and all lawful ordinances, or regulations and orders of
governmental authority and insurers of the building.
6.2 Lessor covenants and agrees that it will maintain in good repair the roof,
elevators and exterior walls and windows, of the Leased Premises, the structural
beams, structural columns and other structural, electrical and mechanical parts
of the Leased Premises, including but not limited to all heating, ventilation
and air conditioning equipment. Lessee covenants and agrees that it will keep
during the term hereof, at its own cost and expense, the interior of the Leased
Premises in as good condition as the same was at the commencement of the term
hereof, reasonable wear and tear, taking by eminent domain, and damage due to
fire or other casualty excepted. Lessee also agrees to replace at its own cost
and expense, all window glass of the same kind and quality which window glass is
broken as a result of Lessee's negligence, reasonable wear and tear, taking by
eminent domain, and damage due to fire or other casualty excepted. Lessee
further agrees to replace and/or repair, at its own expense, all light bulbs in
the Building which are damaged or broken as a result of Lessee's negligence
during the term hereof, with bulbs of the same kind and quality. Lessor shall
clean all exterior windows annually.
ARTICLE VII
COMMON AREAS
7.1 Lessee shall have the right to use, in common with others entitled thereto,
stairways, lobby, elevators, and hallways which are a part of the Building in
which the Leased Premises are contained, and the exterior common areas,
including walkways and driveways necessary for access to the Building and
Parking Spaces (as hereinafter defined) (collectively, the "Common Area").
Lessee shall have the right to use in common with other tenants a certain
cafeteria in the so-called Technology Center Complex operated for the benefit of
the tenants thereof, but Lessor shall have no obligation to continue to provide
such cafeteria. Lessee shall be entitled to, at no additional charge, the use of
the following certain parking spaces, in common with other lessees of the
Building ("Parking Spaces"): twenty-eight (28) Parking Spaces during the first
year of the term of this Lease; thirty six (36) Parking Spaces during the second
year; and forty six (46) Parking Spaces during the third through fifth years.
During the term of this Lease, Lessee shall be entitled to, at no additional
charge, the use of two (2) on-site
<PAGE> 4
reserved parking spaces which parking spaces shall be visibly marked on behalf
of Lessee. All other Parking Spaces shall be off-site, initially at the
so-called Pandora building lot, subject to a partial relocation by Lessor to
other parking areas controlled by Lessor and adjacent to the Building.
7.2 Lessor, at its expense, agrees to furnish janitor service, snow removal and
utilities to the Common Area.
7.3 Lessor, at its expense, shall maintain the Common Area.
ARTICLE VIII
NUISANCE OR OTHER ACTIVITY OF LESSEE
8.1 Lessee covenants and agrees that it shall make diligent efforts to limit the
emission of any noise or odor from the Leased Premises, or any sound caused by
the operation of any voice amplification or other instrument, apparatus,
machinery or equipment therein, such that its use of the Leased Premises is not
lawful, improper, noisy or offensive.
8.2 Lessor covenants and agrees that it shall make diligent efforts to limit the
emission of any noise or odor by any other lessees of the Building, or any sound
caused by the operation of any voice amplification or other instrument,
apparatus, machinery or equipment therein, such that its use is not lawful,
improper, noisy or offensive.
ARTICLE IX
IMPROVEMENTS BY LESSEE
9.1 Lessee may, with the prior written approval of Lessor which approval shall
not-be delayed or unreasonably withheld, make such alterations, additions or
improvements to the Leased Premises as it shall deem necessary or desirable;
provided, however:
A. No such alteration, addition or improvement shall lessen the fair market
value of the Leased Premises;
B. Any such alteration, addition or improvement shall be made in accordance with
previously prepared plans and specifications, and if the estimated cost of such
alterations, addition, or improvement exceeds Ten Thousand Dollars ($10,000)
such plans and specifications shall have the written approval of Lessor before
any work thereon shall be commenced, which approval shall not be unreasonably
withheld or delayed;
C. That prior to the commencement of work on any such alteration, addition or
improvement, Lessee shall procure, at its own cost and expense, all necessary
permits; furthermore, the plans and specifications covering the same shall have
been submitted to and approved by (i) all municipal or other governmental
departments or agencies having
<PAGE> 5
jurisdiction over the subject matter thereof, and (ii) any mortgagees having an
interest in or lien upon the Leased Premises if required by the terms of the
mortgage, it being understood that Lessor will not unreasonably refuse to join
in any application to any such mortgage to obtain such approval with respect to
any alteration, addition or improvement.
D. In carrying out all such alterations, addition and improvements, Lessee
agrees to comply with the standards, guidelines and specifications imposed by
all municipal or other governmental departments and agencies having jurisdiction
over same, including and without limitation, all building codes.
E. That prior to the commencement of work on any such alteration, addition or
improvements, the Lessee shall have procured and delivered to Lessor the policy
of Builder's Risk insurance hereinafter referred to in ARTICLE XIX hereof or
additional fire and extended coverage insurance as required by ARTICLE XX
hereof, whichever is applicable.
F. That Lessee shall pay the increased premiums, if any, for the regular
insurance coverage of the Leased Premises resulting from any additional risk
during the course of construction or installation of any such alteration,
addition or improvement.
G. Upon the expiration or termination of this Lease, Lessee may remove any such
alteration, addition or improvement made by Lessee pursuant to the terms hereof
and shall restore the Leased Premises to their condition as at the beginning of
the term hereof, reasonable wear and tear taking by eminent domain, and damage
due to fire or other casualty excepted. In the event the Lessee fails to remove
any such alteration, addition or improvement it shall become and remain the
property of Lessor.
ARTICLE X
MACHINERY AND EQUIPMENT - TRADE FIXTURES
10.1 Lessee agrees that all machinery and equipment, and appurtenances thereto,
installed in the Leased Premises by Lessee or by any employee, agent or
subcontractor of Lessee, or subtenant of Lessee, which cannot be removed from
the Leased Premises without permanent or substantial damage to the Leased
Premises shall be and become part of the realty and shall be and become the
property of Lessor and shall not be removed from the Leased Premises without the
written consent of Lessor. Lessor agrees that (a) all machinery and equipment,
and appurtenances thereto, installed in the Leased Premises by Lessee, or by any
employee, agent or subcontractor of Lessee, or by any subtenant of Lessee, which
may be removed from the Leased Premises without permanent or substantial damage
to the Leased Premises and (b) all furniture, furnishings, computers and
accessory equipment and movable trade fixtures installed in the Leased Premises
shall be deemed to remain personal property of Lessee and that all such
machinery, equipment, appurtenances, furniture, furnishings and movable trade
fixtures of Lessee or of any employee, agent or subcontractor of subtenant of
Lessee, may be removed prior to the expiration of this Lease or its earlier
termination for any cause
<PAGE> 6
herein provided for; but Lessee shall repair any damage occasioned by such
removal and shall restore the Leased Premises to their condition as at the
beginning of the term hereof, reasonable wear and tear, taking by eminent
domain, and damage due to fire or other casualty excepted.
ARTICLE XI
UTILITIES
11.1 Lessor shall provide and pay for the following utilities to the Leased
Premises: water, sewerage, sprinklers, mechanical and plumbing systems and the
utilities thereto necessary for the heating, ventilation and air conditioning of
the Leased Premises (collectively, the "Operating Systems"). Lessor shall
provide Lessee with thermostatic control of its exclusive HVAC for the Leased
Premises. The Lessee shall make arrangements for and pay for any electricity for
lighting, plugs,, and any other utilities not expressly provided by Lessor.
11.2 Real estate taxes and any and all assessments levied or assessed on or with
respect to the Building and the Leased Premises shall be the responsibility of
the Lessor.
ARTICLE XII
USE OF PREMISES
12.1 Lessee agrees that it will use the Leased Premises for general and
administrative offices and any other operation pertinent thereto which will not
be injurious to the Leased Premises and for no other purpose without the prior
written consent of Lessor. Lessee agrees that it will not conduct any business
at the Leased Premises providing telecommunications services.
12.2 In its use of the Leased Premises, Lessee shall comply with all statutes,
ordinances and regulations applicable to the use thereof, including, without
limiting the generality of the foregoing, the Zoning Ordinances of the City of
Manchester, New Hampshire, as now in effect or as hereafter amended. Lessee
hereby covenants and agrees to comply with all the rules and regulations of the
Board of Fire Underwriters, Officers or Boards of the City, County or State
having jurisdiction over the Leased Premises, and with all ordinances and
regulations of governmental authorities wherein the leased premises are located,
at Lessee's sole cost and expense, but only insofar as any such rules,
ordinances and regulations pertain to the manner in which the Lessee shall use
the Leased Premises; the obligation to comply in every other case, and also all
cases where such rules, regulations and ordinances require repairs, alterations,
changes or additions to the building (including the Leased Premises) or building
equipment, or any part of either, being hereby expressly assumed by Lessor and
Lessor covenants and agrees promptly and duly to comply with all such rules,
regulations and ordinances with which Lessee has not herein expressly agreed to
comply.
<PAGE> 7
12.3 Lessee shall not injure or deface, or commit waste with respect to the
Leased Premises nor occupy or use the Leased Premises, or permit or suffer any
part thereof to be occupied or used, for any unlawful or illegal business, use
or purpose, not for any business, use or purpose deemed to be disreputable or
extra-hazardous, nor in such manner as to constitute a nuisance of any kind, nor
for any purpose nor in any manner in violation of any present or future laws,
rules, requirements, orders, directions, ordinances or regulation of any
governmental or lawful authority including Boards of Fire Underwriters relative
to Lessee's use of the Leased Premises. Lessee shall, immediately upon the
discovery of any such unlawful, illegal, disruptable or extra hazardous use of
the Leased Premises, take, at its own cost and expense, all necessary steps,
legal and equitable, to compel the discontinuance of such use and to oust and
remove Lessee's subtenants, occupants, employees, agents, or representatives
guilty of such unlawful, illegal, disreputable or extra-hazardous use.
12.4 Lessee shall procure any licenses or permits required by any use of the
Leased Premises by Lessee.
12.5 If the Lessee is found guilty of any unlawful use at the Leased Premises,
then Lessee and not Lessor shall be liable therefor.
ARTICLE XIIA
HAZARDOUS WASTE
12A.1 Lessee covenants that it will not use the Leased Premises for the
generation, storage or treatment of hazardous waste except as normally stored in
general office use, and hereby certifies that its operations or other use of the
Leased Premises will not involve same. For purposes of this Lease, the term
"Hazardous Waste" shall be defined by cumulative reference to the following
sources as amended from time to time: (1) The Resource Conservation and Recovery
Act of 1976, 42 USC 6901 et seq (RCRA); (2) CPA Federal Regulations promulgated
thereunder and codified in 40 C.F.R. Parts 260-265 and Parts 122-124; (3) New
Hampshire R.S.A. ch 147 and 147-A; (4) New Hampshire Regulations promulgated
thereunder by any Agency or Department of the State.
12A.2 Lessor hereby warrants and represents that, to the best of its knowledge,
no waste materials, no hazardous materials including asbestos, and no hazardous
substances have been disposed of or placed on the property. Lessor further
warrants and represents that, to the best of its knowledge, all underground
tanks on the property are properly registered with the appropriate governmental
agency and that such tanks are not leaking.
This covenant shall survive termination of this Lease.
ARTICLE XIIB
LESSOR'S REPRESENTATIONS
<PAGE> 8
12B.1 Lessor hereby warrants and represents that the Building is currently
located in the so-called MXU Zone pursuant to the Manchester Zoning Ordinance
now in effect which Zone permits General Office Use by right.
12B.2 Lessor hereby warrants and represents that the Building and the Leased
Premises are in general compliance with any applicable current federal, state or
municipal law, statute, regulation or ordinance, including without limitation
applicable OSHA and ADA requirements.
12B.3 Lessor hereby warrants and represents that all Operating Systems servicing
the Leased Premises and the structural beams, structural columns and other
structural parts of the Leased Premises are fully operational and in good
working condition or shall be put into same by Lessor.
ARTICLE XIII
ASSIGNMENT: SUBLEASING
13.1 Lessee shall not, without prior written consent of Lessor which shall not
be unreasonably withheld or delayed, assign this Lease or sublease the Leased
Premises, in whole or in part.
ARTICLE XIV
TAXES AND ASSESSMENTS
14.1 Lessor shall punctually pay and discharge all taxes which shall or may
during the term of this Lease be charged, laid, levied or imposed upon or become
a lien upon the Leased Premises or the Building or the land on which the
Building is located.
14.2 Lessee shall punctually pay and discharge all taxes which shall or may
during the term of this Lease be charged, laid, levied or imposed upon or become
a lien upon the personal property of Lessee attached to or used in connection
with Lessee's business conducted on the Leased Premises. Nothing herein
contained shall require Lessee to pay directly to a taxing authority any tax
where a portion of said tax has been included pro rata in rent paid to Lessor.
ARTICLE XV
MECHANIC'S LIEN
15.1 In the event of the filing in the Registry of Deeds of any notice of a
builder's, supplier's or mechanic's lien on the Leased Premises arising out of
any work performed by or on behalf of Lessee, Lessee shall cause without delay
proper proceedings to be instituted to test the validity of the lien claims, and
before the end of the term to discharge the same by the posting of bond or
settling of claim or otherwise causing lien to be
<PAGE> 9
discharged; and during the pendency of any such proceeding, Lessee shall
completely defend and indemnify Lessor against any such claim or lien and all
costs of such proceedings wherein the validity of such lien is contested by
Lessee, and during the pendency of such proceeding such lien may continue until
disposition of such proceeding, and after disposition thereof, Lessee shall
cause said lien to be released and discharged. Notwithstanding the foregoing,
any work done by Lessor, Lessor's agents, employees or contractors on behalf of
Lessee resulting in the filing of any builder's supplier's or mechanic's liens
shall be the responsibility of Lessor for removal.
ARTICLE XVI
EMINENT DOMAIN
16.1 In the event that the Leased Premises or the parking area in which the
Parking Spaces are located shall be lawfully condemned or taken by any public
authority either in their entirety or in such proportion that they are no longer
suitable for the intended use by the Lessee, this Lease shall automatically
terminate without further act of either party hereto on the date when possession
of the Leased Premises shall be taken by such public authority, and each party
hereto shall be relieved of any further obligation to the other except that
Lessee shall be liable for and shall promptly pay to Lessor any rent or other
payments due hereunder then in arrears or the Lessor shall promptly rebate to
Lessee a pro rata portion of any rent or other such payments paid in advance. In
the event that a portion of the Leased Premises is condemned or taken such that
the remainder is still suitable for the intended use by Lessee, as determined by
Lessee in its sole but reasonable discretion, this Lease shall continue in
effect in accordance with its terms and a portion of the rent and other payments
due hereunder shall abate equal to the proportion of the rental value of the
Leased Premises so condemned or taken. In either of the above events, the award
for the property so condemned or taken shall be payable solely to Lessor except
that if the property so condemned or taken includes in whole or in part (a)
machinery, equipment and appurtenances constructed or installed by Lessee at its
expense after the beginning of the term hereof 'which would have been removable
by Lessee pursuant to ARTICLE X hereof, then such award shall be apportioned
between Lessor and Lessee in accordance with the then relative value of the
property and loss described in clause (a) above, so condemned or taken.
ARTICLE XVII
LIABILITY
17.1 Except for injury or damage caused by the negligent act, willful misconduct
or relevant breach of this Lease by Lessor, its servants or agents, Lessor shall
not be liable for any injury or damage to any person happening on the Leased
Premises or for any injury or damage to the Leased Premises or to any property
of Lessee or to any property of a third person, firm, association, or
corporation on or about the Leased Premises. The Lessee shall, except for injury
or damage caused as aforesaid, defend, indemnify and save the Lessor harmless
from and against any and all liability and damages, costs and
<PAGE> 10
expenses, including reasonable attorney's fees and from and against all suits,
claims and demands of any kind or nature whatsoever, by and on behalf of any
person, firm, associations or corporation arising out of or based upon any
incident, occurrence, injury or damage caused by the negligent act, willful
misconduct or relevant breach of this Lease by Lessee, its servants or agents,
which shall or may happen on or about the Leased Premises.
Notwithstanding the foregoing, (i) Lessee shall have no obligation to indemnify
Lessor with regard to any amount against which the Lessor has been effectively
insured, any amounts for which Lessor has the right of compensation or
indemnification by any other party, or for any claims to the extent they arise
from the negligent or intentional acts or omissions of Lessor, its agents,
employees, or contractors; (ii) Lessee shall only be liable for claims or
damages that arise during the term of this Lease.
Further, Lessor agrees to indemnify, defend and hold Lessee harmless from and
against any and all loss, liability, and expense by any person arising out of
either injury or damage in the "Common Areas" of the Building, arising out of
the negligent act, willful misconduct or relevant breach of this Lease by
Lessor, its agents, employees, or contractors, which result in injury or damage
on or about the Premises.
ARTICLE XVIII
LIABILITY INSURANCE
18.1 Lessee shall, from the date on which it takes possession of the Leased
Premises even if such date precedes the commencement of the term hereof and
throughout the term hereof procure and carry at its expense comprehensive
liability insurance on the Leased Premises with an insurance company authorized
to do business in New Hampshire. Such insurance shall be carried in the name of
and for the benefit of Lessee with Lessor named as additional insured, shall be
written on a combined single limit bodily and property damage basis; and shall
provide coverage of at least Two Million Dollars ($2,000,000). Lessee shall
furnish to Lessor a certificate of such insurance which shall provide that the
insurance indicated therein shall not be canceled without at least ten (10) days
written notice to Lessor.
ARTICLE XIX
BUILDER'S RISK INSURANCE
19.1 During any period or periods of construction by Lessee on the Leased
Premises, the construction of which (a) is of a type to which Builder's Risk
Insurance is applicable and (b) requires the advance written approval of Lessor
pursuant to Section 9.1 hereof, Lessee shall itself or cause their contractor to
obtain and maintain in effect standard Builder's Risk Insurance written on a
completed value basis, including extended coverage, and utilizing a maximum
value at date of completion not less that the greater of (a) the aggregate
contract price or prices for the construction of such facilities or (b) the
<PAGE> 11
amount which may be required by a mortgage which is financing such construction.
Such insurance shall be obtained from an insurance company ~-authorized to do
business in New Hampshire and there shall be furnished to Lessor a certificate
of such insurance which shall provide that the insurance indicated therein shall
not be canceled without at least ten (10) days written notice to Lessor.
ARTICLE XX
FIRE AND EXTENDED COVERAGE INSURANCE
20.1 Lessor shall procure and continue in force during the term hereof fire and
extended coverage insurance upon the facilities constructed, erected or
installed on the Leased Premises by Lessor on a full value, repair or
replacement basis; provided, however, at its sole cost and expense, Lessee shall
take all actions reasonably required by Lessor's insurer to make such insurance
available.
20.2 If and to the extent permitted without prejudice to any rights of Lessor
under the applicable insurance policies, Lessee shall be held free and harmless
from liability for loss or damage to the Leased Premises by fire, the extended
coverage perils, sprinkler leakage, vandalism and malicious mischief if and to
the extent actually insured against, whether or not such loss or damage be the
result of the negligence of Lessee, its employees or agents. This subsection
does not impose any added obligation or expense upon Lessor nor requires that it
carry any insurance of any kind and is to be construed only as a limitation upon
the rights of the insurance carriers to subrogation.
20.3 If and to the extent permitted without prejudice to any rights of the
Lessee under the applicable insurance policies, Lessor shall be held free and
harmless from liability for loss or damage to personal property of Lessee in the
Leased Premises by fire, the extended coverage perils, sprinkler leakage,
vandalism, and malicious mischief if and to the extent actually insured against,
unless such loss or damage be the result of the negligence of the Lessor, their
employees or agents. This subsection does not impose any added obligation or
expense upon Lessee nor requires that it carry any insurance of any kind and is
to be construed only as a limitation upon the rights of the insurance carriers
to subrogation.
ARTICLE XXI
DESTRUCTION OR DAMAGE
21.1 In the event that the Leased Premises during the term hereof shall be
totally destroyed by fire or other casualty insured against, or shall be so
damaged that repairs and restoration cannot in the opinion of the Lessee in its
reasonable discretion, be accomplished within a period of One Hundred Twenty
(120) days from the date of such destruction or damage, Lessee may terminate
this Lease by giving written notice to the Lessor within thirty (30) days of
such destruction or damage and upon such termination
<PAGE> 12
each party shall be relieved of any further obligation to the other except for
the rights and obligations of the parties under ARTICLES XVI and XVIII hereof,
and except that Lessee shall be liable for and shall promptly pay Lessor any
rent then in arrears or Lessor shall promptly rebate to Lessee a pro rata
portion of any rent paid in advance. In the event such facilities shall be so
damaged that repairs and restoration can, in the opinion of Lessee in its
reasonable discretion, be accomplished within a period of One Hundred Twenty
(120) days from the date of such destruction or damage, Lessor shall notify
Lessee of the schedule for said repairs and restoration within thirty (30) days
and, this Lease shall continue in effect in accordance with its terms; such
repairs and restoration shall, unless otherwise agreed by Lessor and Lessee, be
performed within Ninety (90) days of the date of such destruction or damage as
closely as practicable to the original specifications (utilizing therefore the
proceeds of the insurance applicable thereto without any apportionment thereof
for damages to the leasehold interest created by this Indenture), and until such
repairs and restoration have been accomplished a portion of the rent shall abate
equal to the portion of the Leased Premises rendered not suitable during this
period for Lessee's intended purposes by the damage. In the event that Lessor
fails to notify Lessee of said schedule for repairs within thirty (30) days,
Lessee may terminate this Lease as of the date of such damage. It is understood
that Lessor's obligation to restore, replace or rebuild such facilities shall
not exceed in amount the sum of the insurance proceeds (plus a reasonable
deductible amount) paid to it and/or released to it by any mortgage with which
settlement was made. If the insurance proceeds are insufficient to permit Lessor
to restore, replace, or rebuild such facilities to comparable condition as at
the commencement of this Lease, then Lessee shall have the right to terminate
this Lease in which event each party shall be relieved of any further obligation
to the other except for the rights and obligations of the parties under ARTICLES
XVI and XVIII hereof, and except that Lessee shall be liable for and shall
promptly pay Lessor any rent then in arrears or Lessor shall promptly rebate to
Lessee a pro rata portion of any rent paid in advance. Lessee agrees to execute
and deliver to Lessor all reasonable instruments and documents necessary to
evidence the fact that the right to such insurance proceeds is vested in Lessor.
In the event of damage or destruction, partial or total to or of machinery,
equipment and appurtenances constructed or installed on or in the Leased
Premises by Lessee, Lessee, provided it then be in full compliance with ARTICLE
XX hereof, shall be entitled to receive an apportionment of the insurance
proceeds in accordance with the relative damage or destruction to or of (a) the
Leased Premises at the beginning of the term hereof and (b) machinery, equipment
and appurtenances, if any, constructed or installed on or in the Leased Premises
by the Lessee at its expense after the beginning of the term hereof and which
would have been removable by Lessee pursuant to ARTICLE X hereof. If in Lessee's
reasonable opinion such untenantable condition is likely to persist for a period
of more than One Hundred Twenty (120) days, then Lessee may, by written notice
to Lessor, terminate this Lease as of the date of such damage or destruction.
ARTICLE XXII
REPOSSESSION BY LESSOR
<PAGE> 13
22.1 At the expiration of this Lease or upon the earlier termination of this
Lease for any cause herein provided for, Lessee shall peaceably and quietly quit
the Leased Premises and deliver possession of the same to Lessor together with
the facilities thereon at the beginning of the term hereof and all facilities
constructed thereon by Lessee which are not removed pursuant to the terms
hereof, and all machinery, equipment and appurtenances installed therein which
have become part of the Leased Premises, or which are not to be removed pursuant
to ARTICLE X hereof. Lessee covenants and agrees that at the time of delivery of
possession to Lessor at the expiration of this Lease any and all machinery,
equipment and appurtenances constructed or installed on or in the Leased
Premises by Lessee at its expense after the beginning of the term hereof and
which have become the property of Lessor pursuant to ARTICLE X hereof shall be
free and clear of any mortgage, lien, pledge or other encumbrance or charge.
ARTICLE XXIII
MORTGAGE LIEN
23.1 Lessee agrees that this Lease and all rights of Lessee hereunder are and
shall be subject and subordinate to the lien of (a) any mortgage or deed of
trust constituting a first lien on the Leased Premises, or any part thereof, at
the date thereof, and (b) the lien of any mortgage or deed of trust hereafter
executed to a person, bank, trust company, insurance company or other recognized
lending institution to provide permanent financing or refinancing of the
facilities on the Leased Premises, and (c) any renewal, modification,
consolidation or extension of any mortgage or deed of trust referred to in
clause (a) or (b). Lessee shall, within twenty (20) days of Lessor's written
notice, execute, acknowledge and deliver to Lessor without any expense to the
Lessor, any and all reasonable instruments that may be necessary or proper to
subordinate this Lease and all rights of Lessee hereunder to the lien of any
mortgage, deed of trust or other instrument referred to in clause (b) or clause
(c) of the preceding sentence, and in the event that Lessee shall fail or
neglect to execute, acknowledge and deliver any such subordination instrument
Lessee shall be in default; provided, however, that the subordination of this
Lease shall be conditioned upon the execution and delivery by the mortgagee or
trustee of an agreement that so long as Lessee is not in default under the terms
of this Lease the mortgagee or trustees, or any such person succeeding to the
rights of the mortgagee or trustee, or any purchaser at a foreclosure sale under
said mortgage or deed of trust, shall assume Lessor's liabilities and
obligations under this Lease and shall not disturb the peaceful possession of
Lessee hereunder; and also provided such document does not adversely affect the
Lessee's rights, liabilities, and financial considerations enumerated in this
Lease.
ARTICLE XXIV
DEFAULT
24.1 In the event (i) any installment of rent rent shall not be paid within ten
(10) business days after the same is due and payable and Lessor has notified
Lessee in writing
<PAGE> 14
of nonpayment of rent; (ii) Lessee defaults in the performance or observance of
any other covenant or condition in this indenture and such default remains
unremedied for thirty (30) days after written notice thereof has been received
by Lessee and Lessee is not diligently proceeding to cure said default; (iii)
any warranty or representation made by Lessee in this Lease proves to be false
or misleading in a material respect; or (iv) Lessee makes an assignment for the
benefit of creditors, is generally not paying its debts as such debts become
due, a custodian is appointed or takes possession of its assets other than a
trustee, receiver or agent appointed or authorized to take charge of
substantially all of the property of Lessee for the purpose of enforcing a lien
against such property, commences any proceeding relating to Lessee or any
substantial part of its property under any reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction whether now or hereafter in effect, or there is commenced against
Lessee any such proceeding which remains undismissed for a period of sixty (60)
days or any order approving the petition in any such proceeding is entered or
Lessee by an act indicates its consent to, or acquiescence in, any such
proceeding or the appointment of any receiver or trustee for Lessee or any
substantial part of its property, or suffers any such receivership or
trusteeship to continue undischarged for a period of sixty (60) days, or any
party holding a security interest in any of Lessee's fixtures or personal
property of any nature whatsoever that are located on the Leased Premises
institutes or gives notice of foreclosure against any such property and the same
is not dismissed within any grace period specified in the applicable security
agreement, then, in any of such events, Lessor may, subject to Lessor's
compliance with applicable laws,immediately or at any time thereafter and with
demand and written notice enter upon the Leased Premises or any part thereof in
the name of the whole and repossess the same as of Lessor's former estate and
expel Lessee and those claiming through or under Lessee and remove their
effects, without being deemed guilty of any manner of trespass and without
prejudice to any remedies which might otherwise be used for arrears of rent or
preceding breach of covenant, and upon such entry this Lease shall terminate,
and Lessee covenants that, in case of such termination or in case of termination
under the provisions of statute by reason of the default of Lessee, Lessee shall
remain and continue liable to Lessor in an amount equal to the total rent
reserved for the balance of the term hereof less the net amounts (after
deducting the reasonable expense of repair) which Lessor realizes, or with due
diligence should have realized, from the reletting of the Leased Premises, plus
all reasonable costs associated with the termination of the Lease, including
Lessor's reasonable attorney's fees. Lessor shall have the right from time to
time to relet the Leased Premises upon the then existing fair market rates and
such additional terms as it may, in good faith, deem fit, and if a sufficient
sum shall not be thus realized to yield the net rent required under this Lease,
Lessee agrees to satisfy and pay all deficiencies as they may become due during
each month of the remaining term of this Lease. Notwithstanding the foregoing,
Lessor shall make every reasonable effort to mitigate its damages. Nothing
herein contained shall be deemed to require Lessor to await the date whereon
this Lease or the term hereof, would have expired had there been no default by
Lessee, or no such termination or cancellation. The rights and remedies given to
each of the Lessee and Lessor in this Lease are distinct, separate and
cumulative remedies, and no one of them, whether or not exercised by the Lessee
or Lessor, as the
<PAGE> 15
case may be, shall be deemed to be in exclusion of any of the others herein or
by law or equity provided.
24.2 In the event Lessor shall default in the performance of any of the
covenants, obligations or agreements of this Lease and such default shall
continue for thirty (30) days after receipt of written notice setting forth such
default, and Lessor is not engaged in diligently pursuing to cure such default,
Lessee shall have the right to cure such default and to recover all costs of
curing said default directly from Lessor's monthly rental obligation to Lessor
together with interest at the rate of one and one-half (1.5%) percent compounded
monthly or Lessee shall have the right to terminate this Lease. If Lessee elects
to terminate this Lease, Lessee shall have thirty (30) days to vacate the
Premises with no Monthly Rent or additional payments of any kind being due
during that period.
ARTICLE XXV
ACCESS TO PREMISES
25.1 Lessor or its representatives shall have access to the Leased Premises at
all times in the case of emergency and at reasonable intervals during normal
business hours upon prior notice to Lessee for the purpose of inspection, or
during the last six months of the term of this Lease, for the purpose of showing
the Leased Premises or for the purpose of making repairs which Lessee is
obligated to make hereunder but has failed or refused to make. The preceding
sentence does not impose upon Lessor any obligation to make repairs.
25.2 Lessee shall have access to the Leased Premises at all times, including use
in common with other tenants of the Building of the so-called central elevator.
Lessor agrees that Lessee may install additional security respecting access
provided that Lessor is provided access to the Leased Premises pursuant to
Section 25.1.
25.3 Normal operating hours for the Building are Monday through Friday, 7:00am
to 7:00pm, and Saturday via keyed access, 8:00am to 12:30pm. HVAC to the Leased
Premises is available twenty-four (24) hours a day. During periods other than
normal operating hours, the temperature in the Leased Premises will be
maintained within a range of 60 to 80 degrees Fahrenheit. Lessee may request and
receive, at Lessor's expense, full HVAC service during time periods outside
normal operating hours, unless such requests are sufficiently numerous such that
Lessor determines it is necessary to charge Lessee not more than $10.00/hour for
additional HVAC service.
ARTICLE XXVI
EARLY TERMINATION
26.1 Lessee may request additional office space of 2,500 - 3,500 square feet in
the Building, specifically excluding the basement and any building adjacent to
the Building,
<PAGE> 16
(the "Expansion Space") in writing, at any time during the term of this Lease.
Lessor shall notify Lessee, within ten (10) business days of Lessor's receipt of
Lessee's request, whether Lessor can provide the Expansion Space at the then
existing fair market rate, within ninety (90) days following Lessee's request.
In the event Lessor cannot provide Lessee with the requested Expansion Space,
Lessee will have the right to secure other space in Manchester or an adjacent
town, where the other space is equal to or greater than the sum of the square
footage of the Leased Premises and the Expansion Space requested by Lessee, and
terminate the Lease with Lessor by written notice to Lessor within sixty (60)
days of the date on which Lessor notified Lessee of its inability to provide
said expansion space. In such case, Lessee would pay Lessor for any commissions
and/or improvements which have not been amortized in the payments of the Lease.
The cost of commissions and improvements and the amortization schedule for both
shall be attached to this Agreement as Exhibit D.
ARTICLE XXVII
NOTICES
27.1 Any written notice, request or demand required or permitted by this
Indenture shall, until either party shall notify the other in writing of a
different address, be properly given, hand delivered or sent by certified or
registered first class mail, postage prepaid and addressed as follows:
If to Lessor: 1848 Associates
Attention: ______________
340 Commercial Street, 4th Floor
Manchester, New Hampshire 03101
If to Lessee: Silknet Software, Inc.
Attention: President
The Gateway Building, Suite _____
50 Phillippe Cote Street
Manchester, New Hampshire 03101
ARTICLE XXVIII
SIGNS
28.1 Lessee may erect only such signs as Lessor shall approve, which approval
shall not be unreasonably withheld by Lessor, prior to installation of said sign
or signs and as are necessary to advertise the location of the Lessee's
business.
ARTICLE XXIX
SECURITY DEPOSIT
<PAGE> 17
29.1 Lessor acknowledges receipt of $20,486.00 paid by Lessee on the date hereof
which shall be retained by Lessor as a security deposit in an interest-bearing
account. After Lessee has vacated the Leased Premises, Lessor will inspect same
and if the Leased Premises are dirty beyond ordinary wear and tear, or if
damages have been caused by Lessee in excess of reasonable wear and tear, Lessor
will restore the Leased Premises to their original condition, reasonable wear
and tear, taking by eminent domain, and damage due to fire or other casualty
excepted, and deduct the cost thereof from the security deposit. In addition,
Lessor may apply the security deposit to unpaid rent or any other damages
suffered by Lessor as a result of Lessee's breach hereof. The balance of the
security deposit plus interest accumulated thereon will be returned promptly to
the Lessee after termination or expiration of this Lease.
ARTICLE XXX
SHORT FORM RECORDING
30.1 The parties covenant and agree that, if required by the applicable
statutes, there shall be recorded in the Hillsborough County Registry of Deeds
notice of this Lease that complies in the form of Exhibit E attached hereto, and
that they will execute and deliver such Notice of Lease for such purpose. The
parties further covenant and agree that, in the event of termination,
cancellation or assignment of this Lease prior to the expiration of the term
hereof, they will execute and deliver, in recordable form, an instrument setting
forth such termination, cancellation or assignment.
ARTICLE XXXI
SUCCESSION
31.1 This Lease shall be binding upon and inure to the benefit of the heirs,
executors, administrators, successors and permitted assigns of the parties
hereto.
ARTICLE XXXII
WAIVER
32.1 Any consent, express or implied, by either party to any breach by the other
party of any covenant or condition of this Lease shall not constitute a waiver
by that party of any prior or succeeding breach of the same or any other
covenant or condition of this Lease. Acceptance by Lessor of rent or other
payment with knowledge of a breach of or default under any term hereof by Lessee
shall not constitute a waiver by Lessor of such breach or default.
ARTICLE XXXIII
GOVERNING LAW
33.1 This Lease shall be construed and interpreted in accordance with the laws
of the
<PAGE> 18
State of New Hampshire.
ARTICLE XXXIV
COUNTERPARTS
34.1 This Lease may be executed in two (2) or more counterparts, each of which
shall be deemed an original and all collectively but one and the same
instrument.
ARTICLE XXXV
MODIFICATION; ENTIRE AGREEMENT
35.1 This Lease contains and embraces the entire agreement between the parties
hereto and neither this Lease nor any part of it may be changed, altered,
amended, modified, limited or extended orally or by agreement between the
parties unless such agreement be expressed in writing and signed by Lessor and
Lessee or their respective successors in interest.
ARTICLE XXXVI
SECTION HEADINGS
36.1 The headings at the beginning of each of the Sections hereof are solely for
purposes of convenience and identification and are not to be deemed or construed
to part of this Lease.
ARTICLE XXXVII
SEVERABILITY
37.1 If any term, clause or provision of this Lease is judged to be invalid
and/or unenforceable, the validity and/or enforceability of any other term,
clause or provision in this Lease shall not be affected thereby.
ARTICLE XXXVIII
RIGHT OF FIRST REFUSAL
38.1 For the first year of the term of this Lease, Lessor hereby grants to
Lessee a Right of First Refusal to lease approximately 12,000 square feet of
vacant space adjacent to the Leased Premises on the third floor of the Building
(the "Adjacent Space") which may be exercised by Lessee within five (5) business
days of Lessee's receipt of written notice from Lessor, which notice shall set
forth (i) the name of the unaffiliated third party to whom Lessor has
tentatively agreed to lease such space and (ii) the applicable terms and
conditions under which such space shall be leased. In the event that Lessee
exercises the Right of First Refusal, Lessor and Lessee shall execute a lease
for the Adjacent Space on
<PAGE> 19
the terms and conditions offered by the third party.
38.2 If Lessee does not elect to exercise its Right of First Refusal, Lessor
shall thereafter be entitled to lease the Adjacent Space to said third party. If
Lessor does not so lease the Adjacent Space, then Lessee's Right of First
Refusal shall continue in full force and effect with respect to any subsequent
offers.
ARTICLE XXXVIIIA
EXPANDED SPACE OPTION
38A.1 During the first three (3) months of the term of this Lease, Lessee may
elect to exercise an option to expand the Leased Premises by executing a new
lease to cover the 12,084+/- square feet of space directly south of the Leased
Premises on the third floor of the Building, in accordance with the terms
specified in Exhibit F attached hereto. In the event that Lessee has not elected
to exercise this option at the end of the first three (3) months of the term of
this Lease, Lessee may extend said option for an additional three (3) months for
an amount equal to $12,000.00 payable to Lessor prior to the last day of said
first three (3) month period.
ARTICLE XXXIX
OPTION TO RENEW
39.1 Lessee shall have the right and option to extend the term of this Lease for
one (1) five (5) year period following the expiration date of the original Lease
term (the "Extended Term"), by written notice to Lessor six (6) months prior to
the expiration of the term of this Lease. If such option is so exercised, then
all of the terms, covenants and conditions herein shall apply during the
Extended Term, except that the Monthly Rent payable pursuant to Section 3.1
shall be at the then existing fair market rate, as mutually agreed upon by the
parties hereto.
ARTICLE XXXX
ARBITRATION
40.1 Any dispute or claim arising in connection with this Lease, other
than eviction for nonpayment of rent, shall be settled by binding arbitration to
be held in Manchester, New Hampshire, in accordance with the Rules of the
American Arbitration Association then in effect. Any and all fees and costs
associated with such arbitration shall be shared equally by Lessee and Lessor.
ARTICLE XXXXI
MISCELLANEOUS
<PAGE> 20
41.1 Each party represents and warrants to the other that it has not dealt with
any broker other than Cushman & Wakefield in connection with this transaction
and that to the best of its knowledge no broker, except Cushman & Wakefield, is
entitled to a commission hereunder. Lessor agrees that Lessor shall be
responsible for any and all payments and/or commissions due Cushman & Wakefield
in connection herewith.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture of Lease to be
executed as of the day and year first written above.
1848 ASSOCIATES ("Lessor")
/s/ Don Clark BY: /s/ Dean Kamen
- -------------------------------- ----------------------------
Witness Its: General Partner
Silknet Software, Inc. ("Lessee")
/s/ Shelly Lyon BY: /s/ James C. Wood
- ------------------------------- ----------------------------
Witness Its: President
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this day of 1996, by
_________________________its duly authorized ____________________ behalf of 1848
Associates.
-------------------------------------------
Notary Public/Justice of the Peace
My Commission Expires:
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this ___day of
_________________ 1996, by_________________________ its duly authorized
_________________________ on behalf of Silknet Software, Inc.
-------------------------------------
Notary Public/Justice of the Peace
My Commission Expires:
<PAGE> 21
EXHIBIT B
LEASEHOLD IMPROVEMENTS
Lesser shall, at Lessor's sole cost and expense, alter and fit-up the premises
as detailed on the attached Exhibit C to include the following:
Acoustical ceiling system throughout the Leased Premises, new 28 oz. level loop
glue down carpeting in all but the rest rooms and break room. Refurbishment of
restrooms, including new tile flooring, new sinks and toilets, laid out as
specified in the documentation from Stibler and Associates, including certain
plans dated 23 Dec. 1996 and attached hereto. New tile flooring, cabinet doors
and countertop in the break room, new paint throughout (including paint of a
color chosen by Lessee on ductwork), replacement of windows as required,
thorough cleaning of windows, and construction of new walls and doors as
specified in the documentation from Stibler and Associates. Electrical work will
include standard outlet and switch configuration in offices, stub-ups for work
stations and overhead lighting throughout the space.
(12/30/96)
<PAGE> 22
EXHIBIT E
NOTICE OF LEASE
Pursuant to New Hampshire Revised Statutes Annotated 477:7-a, the
undersigned hereby give written notice that they are parties to a certain lease
(the "Lease") of certain real estate (the "Premises"), as follows:
I. Names and Addresses of Each Party to the Lease.
(a) The name and address of the lessor/landlord under the
lease is as follows:
1848 Associates
340 Commercial Street
Manchester, New Hampshire 03101
(b) The name and address of the lessee/tenant under the Lease
is as follows:
<PAGE> 23
Silknet Software, Inc.
------------------------
------------------------
II. Date of Execution of the Lease.
The Lease was executed on ________________, 1996.
III. Description of Demised Premises.
A description of the demised Premises as it appears in the
Lease, is attached hereto as Exhibit A.
IV. Term of the Lease.
The term of the Lease is a period of five (5) years, subject
to such rights of extension or renewal as are referenced by Part V below.
V. Date of Commencement of Term; Rights of Extension or Renewal.
The term of the Lease commences on February 1, 1997 and ends
on January 31, 2002. Under the Lease, the lessee/tenant has a right to extend
the term of the Lease for one (1) additional term of five (5) years.
VI. Right of First Refusal.
Lessee has a right of first refusal to lease additional space
adjacent to the demised Premises pursuant to the terms and conditions contained
in the Lease
IN WITNESS WHEREOF, the undersigned parties to the Lease have executed
this Notice of Lease all as of December 30, 1996.
Lessor/Landlord:
1848 ASSOCIATES
Witness: /s/ Don Clark By: /s/ Dean Kamen
------------------------ -------------------------------
Its: Its: General Partner
Lessee/Tenant:
SILKNET SOFTWARE, INC.
Witness: /s/ Shelly Lyon By: /s/ James C. Wood
------------------------- -------------------------------
Its: President
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH
On this, the ___ day of _________, 1996, before me, the undersigned
officer, personally appeared ___________________ who acknowledged himself to be
a _____________ of 1848 Associates, a limited partnership, and that he, as such
______________, being authorized so to do, executed the foregoing instrument for
the purposes therein contained.
----------------------------------
Justice of the Peace/Notary Public
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH
On this, the ___ day of ___________, 1996, before me, the undersigned
officer, personally appeared _____________________ who acknowledged himself to
be the ______________ of Silknet Software, Inc., a corporation, and that he, as
such ____________________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained.
----------------------------------
Justice of the Peace/Notary Public
<PAGE> 24
EXHIBIT F
OPTION LEASE TERMS FOR THIRD FLOOR SOUTH
1. Option Space - The southern portion of the third floor of the
Gateway Building, comprising 12,084 +/- rentable square feet.
2. Tenant Improvements - Lessor will, at its own expense, level the
floors in subject area via the application of gypcrete. Lessor will provide an
allowance of $7.00 per square foot. Such improvements will be as specified by
the Lessee. If the Lessee desires more extensive improvements, Lessor will
perform up to an additional $4.00 per square foot of improvements and amortize
the actual cost of such additional improvements over the term of the lease
through an adjustment of the Rental Rate.
3. Rental Rates
Year 1 - $9.00 p.s.f
Year 2 - $9.50 p.s.f. plus increase in CPI
Year 3 - $10.50 p.s.f. plus increase in CPI
Year 4 - $10.75 p.s.f. plus increase in CPI
Year 5 - $11.00 p.s.f. plus increase in CPI
The CPI increase shall be capped at a maximum of 3% annually. In no instance
shall the CPI Adjustment be a reduction.
4. Other Terms and Conditions - Similar or equivalent to those in the
Lease Agreement for the initial space.
Silknet/1848 Lease
<PAGE> 25
AMENDMENT TO LEASE
1848 ASSOCIATES, a New Hampshire limited partnership with a place of
business at 340 Commercial Street, Manchester, New Hampshire 03101 ("Lessor"),
and SILKNET SOFTWARE, INC., with a principal place of business at 50 Phillippe
Cote Street, Manchester, New Hampshire 03101 ("Lessee"), parties to the
Indenture of Lease dated as of December 30, 1996 (the "Lease") relating to space
in the building known as The Gateway Building located at 50 Phillippe Cote
Street, Manchester, New Hampshire agree to amend the Lease as follows, such
amendments to be effective as of December 15, 1997:
1. Section 38A.1 of the Lease provides Lessee with an option to
expand the Leased Premises. Lessee has exercised that option and this Amendment
sets forth the amendments to the Lease resulting from Lessee's exercise of that
option.
2 Section 1.1 of the Lease is amended so that the Leased
Premises shall include, in addition to the Leased Premises as described in the
Lease, 12,084 +/- rentable square foot of space situated directly south of the
Leased Premises as described in the Lease on the third floor of the Building
(the "Additional Space"). The "Additional Space" is hereafter part of the Leased
Premises under all of the terms of the Lease. On or before December 15, 1997
Lessor shall complete the improvements to the Additional Space as described on
EXHIBIT A attached hereto.
3. Section 2.2 of the Lease is amended by replacing $14,084.13
with $30,699.63.
4. Section 3.1 of the Lease is amended to the following:
Lessee covenants and agrees to pay Lessor at the place
provided herein for giving of notice to Lessor monthly rent equal to the Monthly
Rent, as later defined. Monthly Rent shall be as follows:
PERIOD MONTHLY RENT
12/15/1997 to 2/28/1998 $17,280.10
3/1/1998 to 9/30/1998 ($17,675.54 x Adjustment Factor) + $1,388.43
10/1/1998 to 2/28/1999 ($17,675.54 x Adjustment Factor) + $1,163.00
3/1/1999 to 2/29/2000 ($19,536.13 x Adjustment Factor) + $1,163.00
3/1/2000 to 2/29/2001 ($20,001.27 x Adjustment Factor) + $1,163.00
3/1/2001 to 2/29/2002 ($20,466.42 x Adjustment Factor) + $1,163.00
"Adjustment Factor" means the greater of (x) one or (y) the
lesser of 1.03 or the quotient of the following fraction:
CPI (as defined below) as of the January 1 which was two (2)
months prior to the commencement of the current Period divided by CPI as of
January 1 which was fourteen (14) months prior to commencement of the current
period.
<PAGE> 26
5. The following is added as new Section 3.4 of the Lease:
3.4 Upon completion of the work described in Exhibit A
hereto, Lessee shall pay to Lessor an amount equal to the amount by which
Lessor's costs to complete the work described on Exhibit A hereto exceeds
$132,924.00, which excess amount is currently estimated at $56,228.00. This
payment is in addition to Lessee's obligation to pay rent and other amounts
hereunder.
6. The third and fourth sentences of Section 7.1 are replaced by
the following:
Lessee shall be entitled to, at no additional charge, the use
of the following certain parking spaces, in common with other lessees of the
Building ("Parking Spaces"): sixty-one (61) Parking Spaces during the period
from December 15, 1997 to February 28, 1998; seventy-nine (79) Parking Spaces
during the period from March 1, 1998 to February 28, 1999; and 101 Parking
Spaces during the period from March 1, 1999 to February 28, 2002. During the
term of this Lease, Lessee shall be entitled to, at no additional charge, the
use of four (4) on-site reserved Parking Spaces which Parking Spaces shall be
visibly marked on behalf of Lessee.
7. Section 29.1 of the Lease is amended by replacing $20,486.00
with $47,675.00.
8. Sections 38.1, 38.2, and 38A.1 of the Lease are deleted.
9. Except as expressly modified hereby all other terms and
conditions of the Lease continue in full force and effect with equal application
to the original Leased Premises under the Lease and to the Additional Space
added to the Lease by the terms of this Amendment.
Dated: January 9, 1998.
1848 ASSOCIATES
By: /s/ Robert M. Tuttle
------------------------------
Its: General Partner
SILKNET SOFTWARE, INC.
By: /s/ James C. Wood
------------------------------
Its:
2
<PAGE> 27
SECOND AMENDMENT TO LEASE
1848 ASSOCIATES, a New Hampshire limited partnership with a place of
business at 340 Commercial Street, Manchester, New Hampshire 03101 ("Lessor"),
and SILKNET SOFTWARE, INC., with a principal place of business at 50 Phillippe
Cote Street, Manchester, New Hampshire 03101 ("Lessee"), parties to the
Indenture of Lease dated as of December 30, 1996, as amended (the "Lease")
relating to space in the building known as The Gateway Building located at 50
Phillippe Cote Street, Manchester, New Hampshire agree to amend the Lease as
follows, such amendments to be effective as of November 1, 1998:
1. Section 1.1 of the Lease is amended so that the Leased
Premises shall include, in addition to the Leased Premises as described in the
Lease, as amended, 8,895 +/- rentable square foot of space situated on the
second floor of the Building (the "Additional Space"). The "Additional Space" is
hereafter part of the Leased Premises under all of the terms of the Lease. On or
before November 15, 1998 Lessor shall, at its sole cost and expense complete the
improvements to the Additional Space as described on EXHIBIT A attached hereto.
2. Section 2.2 of the Lease is amended by replacing $30,699.63
with $46,265.88.
3. In addition to the Monthly Rent detailed in Section 3.1 of the
Lease, Lessee covenants and agrees to pay Lessor monthly rent for the Additional
Space as follows:
PERIOD MONTHLY RENT
11/15/1998 to 2/28/1999 $10,377.50
3/1/1999 to 2/29/2000 ($10,377.50 x Adjustment Factor)
3/1/2000 to 2/28/2001 ($10,377.50 x Adjustment Factor)
3/1/2001 to 2/28/2002 ($10,377.50 x Adjustment Factor)
"Adjustment Factor" means the greater of (x) one or (y) the
quotient of the following fraction:
CPI (as defined in section 3.2 of the Lease) as of March of
the Adjustment Year divided by CPI as of November, 1998.
4. The third and fourth sentences of Section 7.1 are replaced by
the following:
Lessee shall be entitled to, at no additional charge, the use
of the following certain parking spaces, in common with other lessees of the
Building ("Parking Spaces"): ninety five (95) Parking Spaces during the term of
this Lease, and the use of eight (8) on-site reserved Parking Spaces which
Parking Spaces shall be visibly marked on behalf of Lessee.
<PAGE> 28
5. Except as expressly modified hereby all other terms and
conditions of the Lease continue in full force and effect with equal application
to the original Leased Premises under the Lease and to the Additional Space
added to the Lease by the terms of this and the previous Amendment.
Dated: Sept. 29, 1998.
1848 ASSOCIATES
By: /s/ Robert M. Tuttle
------------------------------
Its: General Partner
SILKNET SOFTWARE, INC.
By: /s/ Shelly Lyon
------------------------------
Its: Asst. Secretary
2
<PAGE> 29
EXHIBIT "A"
1848 Associates shall, at its sole cost and expense, alter and fit-up the
premises per drawings ID.I and ID.2 prepared by Stibler Associates dated August
17, 1998. In instances where no specific information is included in said
drawings, 1848 Associates shall use building standard finishes in the completion
of its work. Any changes or additions to the work specified in said drawings
requested by Silknet Software, which adds to the cost of Landlord's work, shall
be borne by Silknet. Each such change shall be approved in writing prior to its
inclusion in the work.
3
<PAGE> 30
THIRD AMENDMENT TO LEASE
1848 ASSOCIATES, a New Hampshire limited partnership with a place of
business at 340 Commercial Street, Manchester, New Hampshire 03101 ("Lessor"),
and SILKNET SOFTWARE, INC., with a principal place of business at 50 Phillippe
Cote Street, Manchester, New Hampshire 03101 ("Lessee"), parties to the
Indenture of Lease dated as of December 30, 1996, as amended (the "Lease")
relating to space in the building known as The Gateway Building located at 50
Phillippe Cote Street, Manchester, New Hampshire agree to amend the Lease as
follows, such amendments to be effective as of January 1, 1999:
1. Section 1.1 of the Lease is amended so that the Leased
Premises shall include, in addition to the Leased Premises as described in the
Lease, as amended, 12,870 +/- rentable square feet of space situated on the
first and second floors of the Building (the "Additional Space"). The
"Additional Space" is hereafter part of the Leased Premises under all of the
terms of the Lease.
2. Tenant shall accept the premises "as is". Alterations to the
premises shall be in accordance with the terms described on EXHIBIT A attached
hereto.
3. In addition to the Monthly Rent detailed in Section 3.1 of the
Lease, Lessee covenants and agrees to pay Lessor monthly rent for the Additional
Space as follows:
PERIOD MONTHLY RENT
1/1/1999 to 12/31/1999 $15,873.00
1/1/2000 to 12/31/2000 $15,873.00 x "Adjustment Factor"
1/1/2001 to 12/31/2001 $15,873.00 x "Adjustment Factor"
1/1/2002 to 12/31/2002 $15,873.00 x "Adjustment Factor"
1/1/2003 to 12/31/2003 $15,873.00 x "Adjustment Factor"
"Adjustment Factor" means the greater of (x) one or (y) the
quotient of the following fraction:
CPI (as defined in section 3.2 of the Lease) as of January of
the Adjustment Year divided by CPI as of January, 1999.
4. The third and fourth sentences of Section 7.1 are replaced by
the following:
Lessee shall be entitled to, at no additional charge, the use
of the following certain parking spaces, in common with other lessees of the
Building ("Parking Spaces"): one hundred thirty (130) Unreserved Parking Spaces
during the term of this Lease. In addition, Lessee shall
<PAGE> 31
be entitled to the use of eleven (11) on-site reserved Parking Spaces which
Parking Spaces shall be visibly marked on behalf of Lessee.
5. Tenant is hereby granted an option to lease the remaining
10,347 +/- rentable square feet located on the second floor of the building.
Said option shall be exercised via written notice to Landlord. Said expansion
space will be made available to Tenant twelve (12) months after Landlord's
receipt of written notice from Tenant exercising this option. The annual rental
during the first year of the term for the option space shall be equal to
$153,135.60 plus a prorated 4% annual percentage increase from the period
January 1, 1999 until occupancy of the space. Thereafter, the rental shall be
calculated per the CPI formula expressed herein.
Landlord shall alter and fit-up the expanded premises per drawings
prepared by Tenant. Landlord shall provide an allowance of $103,347.00 towards
completion of work depicted on said drawings. Amounts in excess of this amount
shall be paid by Tenant to Landlord within ten (10) days of receipt of an
invoice from Landlord.
6. The term of the Lease for the new total of 43,092 +/- rentable
square feet is hereby extended through December 31, 2003.
7. Effective March 1, 2002, Annual Base Rental for the 31,222 +/-
rentable square feet leased via the original lease and amendments prior to this
amendment shall increase to $462,085.60 plus the cumulative increase in the CPI
from January 1, 1999 to February 28, 2002.
8. Except as expressly modified hereby all other terms and
conditions of the Lease continue in full force and effect with equal application
to the original Leased Premises under the Lease and to the Additional Space
added to the Lease by the terms of this and the previous Amendment.
Dated: Dec. 31, 1998.
1848 ASSOCIATES
By: /s/ Robert M. Tuttle
------------------------------
Its: General Partner
SILKNET SOFTWARE, INC.
By: /s/ James C. Wood
------------------------------
Its:
2
<PAGE> 32
EXHIBIT "A"
Landlord shall alter and fit-up the premises per drawings prepared by Tenant.
Landlord shall provide an allowance of $120,870.00 towards completion of work
depicted on said drawings. Amounts in excess of this amount shall be paid by
Tenant to Landlord within ten (10) days of receipt of an invoice from Landlord.
3
<PAGE> 1
[LOGO] EXHIBIT 16.01
PEAT MARWICK LLP
99 High Street Telephone 617 988 1000 Telefax 617 988 0800
Boston, MA 02110-2371
March 3, 1999
Securities and Exchange Commission
Washington, D.C. 20549
Ladies and Gentlemen:
We were previously engaged as principal accountants to audit the financial
statements of Silknet Software, Inc. as of and for the year ended June 30,
1998. We were previously principal accountants for Silknet Software, Inc. and,
under the date of October 9, 1997, we reported on the financial statements of
Silknet Software, Inc., as of and for the years ended June 30, 1997 and 1996.
On or about November 16, 1998, our appointment as principal accountants was
terminated. We have read Silknet Software, Inc.'s statements included under
Item 11. (i) of its Form S-1 dated March 3, 1999 and we agree with such
statements, except that we are not in a position to agree or disagree with
Silknet Software, Inc.'s statement that the change was recommended by
management and approved by the board of directors.
Very truly yours,
KPMG Peat Marwick LLP
