ASSIGNMENT AND ASSUMPTION OF LEASE

 

EXHIBIT 10.109

CONFIDENTIAL TREATMENT REQUESTED

CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE

SECURITIES EXCHANGE COMMISSION.

 

ASSIGNMENT AND ASSUMPTION OF LEASE

 

This ASSIGNMENT AND ASSUMPTION OF LEASE (this “Agreement”), dated as of December 6, 2004, is entered into by and between ABOVENET COMMUNICATIONS, INC., a Delaware corporation (“Assignor”) and EQUINIX OPERATING CO., INC., a Delaware corporation (“Assignee”).

 

RECITALS

 

WHEREAS, Assignor is the current lessee under that certain Lease dated as of December 29, 1999 by and between BROKAW INTERESTS (“Landlord”) and Assignor, a copy of which is attached hereto as Exhibit A and incorporated herein by this reference (the “Lease”), pursuant to which Assignor leases from Landlord certain real property described therein and located in San Jose, California, which is commonly referred to as 1735 Lundy Avenue and is more particularly identified in the Lease (the “Premises”);

 

WHEREAS, Assignor desires to assign to Assignee, and Assignee desires to assume from Assignor, all of Assignor’s rights, title, interests, privileges and obligations as lessee under the Lease on the terms and conditions set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants and promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Terms . Capitalized terms used herein but not defined herein shall have the meanings specified in the Lease.

 

2. Assignment . Assignor does hereby assign, transfer and set over to Assignee effective from and after the Effective Date, as defined below, (i) all of Assignor’s rights, title, interests, privileges and benefits as lessee in, to, and under the Lease, including, without limitation, the Security Deposit and, (ii) all of Assignor’s rights, title, interests, privileges and benefits in and to the Premises; to have and to hold the same together with all rights, easements, privileges and appurtenances thereunto belonging or appertaining or held and enjoyed therewith, for and during the full unexpired term of the Lease.

 

3. Acceptance . Assignee hereby accepts the within assignment from and after the Effective Date and, in addition, does hereby covenant and agree, for the benefit of Assignor and Landlord, to faithfully observe, assume, keep, perform and fulfill all of the terms, covenants, conditions and obligations required to be observed, performed and fulfilled by the lessee under the Lease accruing from and after the Effective Date.

 

4. Delivery of Premises . Assignor and Assignee acknowledge and agree that possession of the Premises shall only be delivered to Assignee on the Effective Date. In addition, Assignor and Assignee also acknowledge and agree that Assignee shall accept the Premises in an “AS IS” condition and, except as set forth in Section 9(a)(v) below, Assignor has made no representations or warranties regarding the physical condition of the Premises or its suitability for Assignee’s use and that Assignee is relying on its own independent investigation of the Premises in entering into this Agreement. Notwithstanding the foregoing, the Assignor states that to the best of its knowledge, without any independent investigation or special inquiry (i) it has received no written notice of violations of local, state or federal building codes, statues, rules or regulations, including, without limitation, the Americans With Disabilities Act (“ADA”) or any applicable life safety requirements, with respect to the Tenant Improvements and other Alterations made by the Assignor to the Premises, (ii) all mechanical and electrical systems for the Premises, including, without limitation, all power distribution systems, emergency generators and accompanying fuel delivery systems, HVAC systems (including airside, waterside, controls and automation elements thereof), building alarm and security management systems, life safety and fire suppression systems, and lighting systems, are in ordinary operating condition, (iii) the electrical distribution system for the Premises has a rated critical load capacity of [*] megawatts; Assignor’s use of such electrical distribution system has not reached such critical load capacity but such system has been adequate for Assignor’s uses at the Premises, and (iv) it has received no written notice that any underground storage tanks located on the Premises leak or have leaked during the term of the Lease. Assignor shall have no liability in connection with the statements in the preceding sentence unless and to the extent that such statements are determined by a court of competent jurisdiction to be intentionally fraudulent in making such statements. A list of Tenant Improvements, Alterations, trade fixtures, equipment and components existing in the Premises is attached as Exhibit B. Assignor agrees that in the event of any casualty loss or condemnation to the Premises between the date hereof and the Effective Date that would give the Assignor the right to terminate the Lease with respect to all or a part of the Premises that Assignor shall not exercise such right without the consent of Assignee, which consent shall not be unreasonably withheld, conditioned or delayed. Assignor also agrees that Assignor shall provide Assignee with early access to the Premises for the purposes of inspecting the Premises relating to improvements or alterations that Assignee may desire to make on the Premises and related activities, subject to appropriate insurance and indemnities from Assignee.

 

5. Conveyance of Personal Property and Related Items . As a condition to the Effective Date, Assignor and Assignee must enter into a Bill of Sale (the “Bill of Sale”), to be attached hereto as Exhibit C and incorporated herein by this reference, pursuant to which Assignor will transfer to Assignee the Tenant Improvements and Alterations and Tenants’ trade fixtures, equipment and components. Any sales taxes associated with the transfer of such personal property will be paid for as provided in the Bill of Sale. On the Effective Date Assignor shall also assign to Assignee, pursuant to a mutually acceptable form assignment, and without recourse to Assignor, (i) any service contracts relating to the use or operation of the Premises that are approved by Assignee, if and to the extent that the same are assignable without the consent of the other party thereto, (a list of all service contracts with respect to the Premises is

*	CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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attached as Schedule 1) (ii) all warranties, guaranties, causes of action or similar intangible personal property rights, if any, and to the extent that the same are assignable without the consent of the other party thereto, (a list of all such warranties, guaranties, causes of action or similar intangible personal property rights with respect to the Premises is attached as Schedule 2) relating to the use or operation of the Premises, and shall deliver to Assignee all keys, operating manuals, books and records, copies of service or vendor contracts, utility bills, statements from Landlord and similar items relating to the use or occupancy of the Premises.

 

6. Consent/Final Agreement . The “Effective Date” for this Agreement shall be the later of (i) the date on which (a) the consent of Landlord required under the Lease is obtained and the Assignee and Landlord have entered into First Amendment to Lease in the form attached hereto as Exhibit D and (b) the Assignor and the Assignee have agreed to terms on and executed the Bill of Sale to be attached hereto as Exhibit C ; and (ii) March 1, 2005. The date on which the foregoing conditions are satisfied is referred to as the “Effective Date” and upon the occurrence of such date, this Agreement shall be considered a final agreement (and not executory) and no further action on behalf of Assignor or Assignee shall be required. If on or before December 31, 2004 (x) the Landlord shall not have consented to this Agreement and entered into the First Amendment to Lease or (y) Assignor and the Assignee have not agreed to terms on and executed the Bill of Sale, this Agreement shall automatically terminate.

 

7. Master Service Agreement . Assignor and Assignee acknowledge that Assignor shall have the right, pursuant to that certain Master Service Agreement dated as of March 31, 2003 between Assignor and Assignee (the “MSA”), as supplemented by the Amendment to the Master Service Agreement dated of even date herewith, to use and occupy the portion of the Premises referred to as Collocation Room #5 for the purpose of maintaining and operating its IP infrastructure, fiber termination panels and other equipment. Assignor and Assignee acknowledge that the Assignor’s right to use said Collocation Room #5 in connection with the foregoing is only pursuant to the MSA and is not a right under the Master Lease and shall be subject to all of the provisions of the MSA, as it may be amended from time to time. In the event that Assignee defaults on its obligations under this Agreement, Assignor shall have the option to terminate the MSA with respect to Collocation Room #5, in Assignor’s sole discretion.

 

8. Security Deposit . Upon the Effective Date, Assignee shall pursuant to a separate agreement between Assignor and Assignee reimburse Assignor for the net present value of the Security Deposit posted by Assignor under the Lease and not previously returned to Assignor.

 

9. Representations and Warranties .

 

(a) Assignor hereby represents and warrants to Assignee as of the date hereof:

 

i. Assignor is a corporation duly organized under the laws of Delaware and has full right, power and authority to enter into this Agreement and to carry out its obligations hereunder and all required corporate actions necessary to authorize Assignor to enter into this Agreement and to carry out its obligations hereunder have been taken.

 

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ii. Attached hereto as Exhibit A is a true and complete copy of the Lease, including all amendments or modifications thereto, which constitute all agreements between Landlord and Assignor affecting the Premises.

 

iii. Assignor is the holder of the entire interest of the tenant under the Lease.

 

iv. Subject to obtaining the consent of Landlord, Assignor has obtained all consents and approvals required to allow this Agreement to be valid and effective on its part, provided that this representation does not apply to service contracts, warranties, license agreements or other contracts or intangible personal property rights referenced generally in Section 5 hereinabove where the consent of other parties may be required.

 

v. The Premises will be in substantially the same condition on the Effective Date as on the date hereof, normal wear and tear and damage by insured casualty excepted, provided such proceeds are remitted to Assignee if the damage is not repaired.

 

vi. To the best of its knowledge there are no defaults by any party under the Lease and there are no events or circumstances which with the passage of time and or the giving of notice would result in a default under the Lease, except that a dispute exists between Landlord and Assignor regarding Landlord’s obligation to return a portion of the Security Deposit.

 

vii. Assignor has paid and performed all obligations required to be paid or performed by Assignor under the Lease through the Effective Date.

 

viii. The term of the Lease expires on May 31, 2020.

 

ix. Schedule 3 contains a listing of the additional charges paid by Assignor under the Lease for the most recent two (2) fiscal years.

 

(b) Assignee warrants and represents to Assignor as follows:

 

i. Assignee is a corporation duly organized under the laws of Delaware and has full right power and authority to enter into this Agreement and to carry out its obligations hereunder and all required corporate actions necessary to authorize Assignee to enter into this Agreement and to carry out its obligations hereunder have been taken. Subject to obtaining the consent of Landlord, Assignee has obtained all consents and approvals required to allow this Agreement to be valid and effective on its part,

 

ii. Assignor has reviewed the terms of the Lease.

 

10. Indemnity .

 

(a) Assignor hereby indemnifies and agrees to defend, through attorneys reasonably acceptable to Assignee, and to hold harmless Assignee and its respective successors, assigns, legal and beneficial owners, officers, directors, agents and employees (“Assignee Parties”) from and against any and all reasonable costs, damages (excluding

 

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consequential damages), claims, expenses and liabilities which may at any time be asserted against or suffered by Assignee or the Assignee Parties as a result of or on account of any material breach by Assignee of any representation, warranty or covenant contained in this Agreement, or which arise or have arisen, under the Lease as a result of acts, omissions or events that occur prior to the Effective Date. Assignee hereby indemnifies and agrees to defend, through attorneys reasonably acceptable to Assignor, and to hold harmless Assignor and its respective successors, assigns, legal and beneficial owners, officers, directors, agents and employees (“Assignor Parties”) from and against any and all reasonable costs, damages (excluding consequential damages), claims, expenses and liabilities which may at any time be asserted against or suffered by Assignor or the Assignor Parties as a result of or on account of any material breach by Assignee of any representation, warranty or covenant contained in this Agreement, or which arise or have arisen, under the Lease as a result of acts, omissions or events that occur on or after the Effective Date.

 

(b) Assignee shall deliver to Assignor within three (3) business days after Assignee’s receipt thereof, or delivery thereof by Assignee, a copy of any default notice received from or delivered to Landlord under the Lease. Assignee agrees that in the event that Assignee defaults in any of its obligations under the Lease and demand is made upon Assignor to perform or cure such obligations that Assignee shall upon written request from Assignor made at any time after the expiration of any applicable grace period in connection with such default and prior to the cure thereof by Assignee: (i) reassign to Assignor, without recourse, representation or warranty, but free and clear of all liens and encumbrances, all of Assignee’s interest under the Lease and deliver the Premises to Assignor in the same condition as exists on the Effective Date, subject to normal wear and tear and loss by casualty or condemnation, (ii) transfer to Assignor free and clear of all liens and encumbrances any equipment or other personal property transferred to Assignee in connection with the assignment contemplated herein and assign to Assignor all of Assignee’s interest in any Tenant Improvements or Alterations, each with recourse, representation or warranty and (iii) transfer to Assignor without recourse, representation or warranty all service contracts or intangible personal property related to the leasehold interest or the operation of the Premises as a collocation facility. In connection with any such reassignment of the Lease to the Assignor, (y) Assignor shall have a right of reentry to the Premises to effectuate an orderly transition of the occupancy of the Premises, and (z) Assignor shall reimburse Assignee for any Security Deposit, whether in the form of cash or a letter of credit, held by Landlord, less any amounts which Landlord actually applies on account of defaults by Assignee under the Lease and any actual damages suffered by Assignor on account of any such defaults by Assignee.

 

11. Prorations . All expenses with respect to the Premises shall be apportioned as of the Effective Date as follows, with Assignee being responsible for and getting the benefit of all such items during the entire day on which Effective Date occurs and thereafter and Assignor being responsible for and getting the benefit of all such items for the period prior to the Effective Date. If any of the aforesaid prorations cannot be calculated accurately on the Effective Date, then they shall be calculated as soon after the Effective Date as feasible. Either party owing the other party a sum of money based on such subsequent proration(s) shall promptly pay said sum to the other party, with interest thereon at the rate of ten percent (10%) per annum from the Effective Date to the date of payment, if payment is not made within ten (10) days after delivery of a bill therefor.

 

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12. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the respective legal representatives, successors and assigns of the parties hereto. The words “Assignor” and “Assignee,” wherever used herein, shall include the persons and entities named herein or in the Lease and designated as such and their respective heirs, legal representatives, successors or assigns.

 

13. Notices . All notices or requests provided for hereunder shall be in writing and shall be delivered by any of the following methods: (a) hand, (b) United States Registered or Certified Mail, return receipt requested, postage prepaid, or (c) prepaid nationally recognized overnight carrier, and if to Assignor, to Abovenet Communications, Inc., 360 Hamilton Avenue, White Plains, New York 10601, Attention: President, with a copy to the same address Attention and General Counsel; or if to Assignee, to Equinix Operating Co., Inc., 301 Velocity Way, 5 ^th Floor, Foster City, CA 94404, Attention: Director of Real Estate, Facsimile No. (650) 513 7909, with a copy to Equinix Operating Co., Inc., 301 Velocity Way, 5th Floor, Foster City, CA 94404, Attention: General Counsel, Facsimile No. (650) 513 7909. All such notices shall be deemed received either when hand delivered if sent in the manner provided in (a) above, two (2) business days after being placed in the United States Mail if sent in the manner set forth in (b) above or upon delivery or attempted delivery if sent in the manner provided in (c) above. The parties hereto shall have the right from time to time to change their respective address by at least five (5) days prior written notice to the other party.

 

14. Brokers . Each of Assignor and Assignee represents and warrants to the other that it has dealt with no broker, agent or other person in connection with this Agreement other than CB Richard Ellis, Inc. and Liberty Greenfield LLP, whose commission will be paid by Assignor pursuant to a separate written agreement. Each of Assignor and Assignee agrees to indemnify and hold the other harmless from and against any claims by any broker, agent or other person claiming a commission or other form of compensation by virtue of having dealt with the indemnifying party with regard to this Agreement. The provisions of this Section 14 shall survive the expiration or earlier termination of this Agreement.

 

15. Reimbursement for Landlord’s Expenses . Assignor shall, in accordance with the terms of the Lease, reimburse Landlord for the expenses incurred by Landlord in connection with the request for Landlord’s consent to this Agreement, including, but not limited to, reasonable attorneys’ fees and disbursements.

 

16. Governing Law . This Agreement shall be governed by, and construed in accordance with, the laws of the state of California (without giving effect to its choice of law principles).

 

17. Confidentiality . Assignor and Assignee shall each maintain as confidential any and all non-public material obtained about the other and the transactions contemplated hereby, and shall not, except as required by law or governmental regulation applicable to Assignor or Assignee, disclose such information to any third party. Notwithstanding the foregoing, Assignor and Assignee shall have the right to disclose such information to their respective lenders or their employees and agents and such other persons whose assistance is required in carrying out the terms of this letter provided that all such persons are told that such information is confidential and agree (in writing for any third party

 

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consultants) to keep such information confidential. Assignor and Assignee shall each have the right to publicize the consummation of this Agreement (other than the monetary terms) in whatever manner each deems appropriate; provided, however, that any press release or other public disclosure regarding the transactions contemplated herein, and the wording of same, must be approved in writing in advance by both parties.

 

18. Counterparts . This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

19. Severability . In the event that any one or more of the provisions contained in this Agreement shall be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.

 

20. Attorneys’ Fees . If any action at law or in equity, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees from the other party.

 

21. Amendments . This Agreement may not be altered, changed or amended, except by an instrument in writing executed by all parties hereto.

 

22. Entire Agreement . This Agreement constitutes the entire agreement and supersedes all prior agreements and undertakings, both written and oral, among Assignor and Assignee with respect to the subject matter hereof and is not intended to confer upon any other person or entity any rights or remedies hereunder, except as otherwise expressly provided herein.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed and entered into this Agreement as of the date first above written.

 

 

 

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CONSENT

 

Landlord hereby consents to the foregoing Assignment and Assumption of Lease on the terms and conditions set forth above. The foregoing consent of Landlord shall not release AboveNet Communications, Inc. from any of its obligations under the Lease. Without limiting the generality of the foregoing, the Landlord specifically agrees to the reassignment provisions contained in Section 10.(b) above. Landlord also represents and warrants as follows to the Assignor and Assignee:

 

i. Attached hereto as Exhibit A is a true and complete copy of the Lease, including all amendments or modifications thereto, which constitute all agreements between Landlord and Assignor affecting the Premises.

 

ii. To the best of its knowledge, and except for the dispute described in paragraph 9(a)(vi) above, there are no defaults by any party under the Lease and there are no events or circumstances which with the passage of time and or the giving of notice would result in a default under the Lease. Landlord acknowledges and agrees that upon the occurrence of the Effective Date as described above and the execution of the accompanying First Amendment to Lease, the foregoing dispute shall be resolved in all respects.

 

iii. Assignor has paid and performed all obligations required to be paid or performed by Assignor under the Lease through the Effective Date.

 

iv. The term of the Lease expires on May 31, 2020.

 

Landlord also acknowledges and agrees that it is not entitled to receive any amounts pursuant to Section 17.B. of the Lease with respect to the assignment and assumption of Lease contemplated herein and the acquisition by Assignee of Assignee’s interest in the Tenant Improvements, Alterations and other personal property in connection with this Agreement.

 

 

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EXHIBIT A

 

Lease Between

Brokaw Interests and AboveNet Communications, Inc.

 

 

Page i

 

Page ii

 

EXHIBIT A - Premises

EXHIBIT B - Tenant Improvement Plans and Specifications

EXHIBIT C - Komag Termination Agreement

EXHIBIT D - Required Condition

EXHIBIT E - Guaranty of Lease

 

Page iii

1. PARTIES : THIS LEASE is entered into on this 29 ^th day of December, 1999 (“Effective Date”), between Brokaw Interests, a California Limited Partnership, whose address is 10600 North De Anza Boulevard, Suite 200, Cupertino, CA 95014 and AboveNet Communications, Inc., a Delaware Corporation, whose address is 50 West San Fernando Street, Suite 1010, San Jose, California, 95113, hereinafter called respectively Landlord and Tenant.

 

2. PREMISES : Landlord hereby leases to Tenant, and Tenant hires from Landlord those certain Premises with the appurtenances, situated in the City of San Jose, County of Santa Clara, State of California, commonly known and designated as 1735 Lundy Avenue and consisting of 103,420 rentable square feet (“Building”) as shown on Exhibit “A” and all improvements located therein including but not limited to buildings, parking areas, landscaping, loading docks, sidewalks, service areas and other facilities. Unless expressly provided otherwise, the term Premises as used herein shall include the Tenant Improvements (defined in Section 5.B and subject to Tenant’s ownership thereof) constructed by Tenant pursuant to Section 5.B.

 

3. USE :

 

A. Permitted Uses : Tenant shall use the Premises only for the following purposes and shall not change the use of the Premises without the prior written consent of Landlord: Internet colocation and connection, telecommunications, data center and office uses, together with related service and support functions. All commercial trucks and delivery vehicles shall be parked at the rear of the Building, and permitted to remain on the Premises only so long as is reasonably necessary to complete the loading and unloading. Landlord makes no representation or warranty that any specific use of the Premises desired by Tenant is permitted pursuant to any Laws.

 

B. Uses Prohibited : Tenant shall not commit or suffer to be committed on the Premises any waste, nuisance, or other act or thing which may disturb the quiet enjoyment of any other tenant in or around the Premises, nor allow any sale by auction or any other use of the Premises for an unlawful purpose. Tenant shall not: (i) damage or overload the electrical, mechanical or plumbing systems of the Premises, (ii) attach, hang or suspend anything from the ceiling, walls or columns of the building or set any load on the floor in excess of the load limits for which such items are designed, except as expressly set forth in the Tenant Improvement Plans and Specifications and unless the building is modified by Tenant to support such loads, or (iii) generate dust, fumes or waste products which create a fire or health hazard or damage the Premises, including without limitation the soils or ground water in or around the Premises. Except as expressly set forth in the Tenant Improvement Plans and Specifications, no materials, supplies, equipment, finished products or semi-finished products, raw materials or articles of any nature, or any waste materials, refuse, scrap or debris, shall be stored upon or permitted to remain on any portion of the Premises outside of the Building without Landlord’s prior approval, which approval may be withheld in its sole discretion.

 

C. Advertisements and Signs : Tenant will not place or permit to be placed, in, upon or about the Premises any signs not approved by the city and other governing authority having jurisdiction. Tenant will not place or permit to be placed upon the Premises any signs, advertisements or notices without the written consent of Landlord as to type, size, design, lettering,

 

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coloring and location, which consent will not be unreasonably withheld. Any sign placed on the Premises shall be removed by Tenant, at its sole cost, prior to the Expiration Date or promptly following the earlier termination of the Lease, and Tenant shall repair, at its sole cost, any damage or injury to the Premises caused thereby, and if not so removed, then Landlord may have same so removed at Tenant’s expense.

 

D. Covenants, Conditions and Restrictions : This Lease is subject to the effect of (i) any covenants, conditions, restrictions, easements, mortgages or deeds of trust, ground leases, rights of way of record and any other matters or documents of record; and (ii) any zoning laws of the city, county and state where the Building is situated (collectively referred to herein as “Restrictions”) and Tenant will conform to and will not violate the terms of any such Restrictions.

 

4. TERM AND RENTAL :

 

A. Base Monthly Rent : The term (“Lease Term”) shall be for two hundred forty five (245) months, commencing on the date Landlord delivers possession of the Premises to Tenant, estimated to occur on January 1, 2000 (the “Commencement Date”), subject to adjustment pursuant to Section 6.A below, and ending 245 months thereafter (“Expiration Date”). Notwithstanding the Parties agreement that the Lease Term begins on the Commencement Date, this Lease and all of the obligations of Landlord and Tenant shall be binding and in full force and effect from and after the Effective Date. In addition to all other sums payable by Tenant under this Lease, Tenant shall pay base monthly rent (“Base Monthly Rent”) for the Premises pursuant to the following schedule:

 

 

Base Monthly Rent shall be due in advance on or before the first day of each calendar month during the Lease Term, commencing on the first day of the 6th month following the Commencement Date. All sums payable by Tenant under this Lease shall be paid to Landlord in lawful money of the United States of America, without offset or deduction and without prior notice or demand, at the address specified in Section 1 of this Lease or at such place or places as may be designated in writing by Landlord during the Lease Term. Base Monthly Rent for any period less than a calendar month shall be a pro rata portion of the monthly installment. Concurrently with Tenant’s execution of this Lease, Tenant shall pay to Landlord the sum of [*] as prepaid rent for the first month of the Lease for which Base Monthly Rent is due.

*	CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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B. Late Charges : Tenant hereby acknowledges that late payment by Tenant to Landlord of Base Monthly Rent and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which is extremely difficult to ascertain. Such costs include but are not limited to: administrative, processing, accounting, and late charges which may be imposed on Landlord by the terms of any contract, revolving credit, mortgage, or trust deed covering the Premises. Accordingly, if any installment of Base Monthly Rent or other sum due from Tenant shall not be received by Landlord or its designee within five (5) business days after the rent is due, Tenant shall pay to Landlord a late charge equal to five (5%) percent of such overdue amount, which late charge shall be due and payable on the same date that the overdue amount was due. The parties agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant, excluding interest and attorney’s fees and costs. If any rent or other sum due from Tenant remains delinquent for a period in excess of thirty (30) days then, in addition to such late charge, Tenant shall pay to Landlord interest on any rent that is not paid when due at the Agreed Interest Rate specified in Section 19.J following the date such amount became due until paid. Acceptance by Landlord of such late charge shall not constitute a waiver of Tenant’s default with respect to such overdue amount nor prevent Landlord from exercising any of the other rights and remedies granted hereunder, in the event that a late charge is payable hereunder, whether or not collected, for three (3) consecutive installments of Base Monthly Rent, then the Base Monthly Rent shall automatically become due and payable quarterly in advance, rather than monthly, notwithstanding any provision of this Lease to the contrary.

 

C. Security Deposit : Concurrently with Tenant’s execution of this Lease, Tenant has deposited with Landlord the sum of One Million Four Hundred Twenty Seven Thousand and No/100 Dollars ($1,427,000.00) (“Security Deposit”). Landlord shall not be deemed a trustee of the Security Deposit, may use the Security Deposit in business, and shall not be required to segregate it from its general accounts. Tenant shall not be entitled to interest on the Security Deposit. If Tenant defaults with respect to any provisions of the Lease, including but not limited to the provisions relating to payment of Base Monthly Rent or other charges, Landlord may, to the extent reasonably necessary to remedy Tenant’s default, use any or all of the Security Deposit towards payment of the following: (i) Base Monthly Rent or other charges in default; (ii) any other amount which Landlord may spend or become obligated to spend by reason of Tenant’s default including, but not limited to Tenant’s failure to restore or clean the Premises following vacation thereof. If any portion of the Security Deposit is so used or applied, Tenant shall, within ten (10) days after written demand from Landlord, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its full original amount, and shall pay to Landlord such other sums as necessary to reimburse Landlord for any sums paid by Landlord. Tenant may not assign or encumber the Security Deposit without the consent of Landlord. Any attempt to do so shall be void and shall not be binding on Landlord. The Security Deposit shall be returned to Tenant within thirty (30) days after the Expiration Date and surrender of the Premises to Landlord, less any amount deducted in accordance with this Section, together with Landlord’s written notice

 

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itemizing the amounts and purposes for such deduction. In the event of termination of Landlord’s interest in this Lease, Landlord may deliver or credit the Security Deposit to Landlord’s successor in interest in the Premises and thereupon be relieved of further responsibility with respect to the Security Deposit to the extent that Landlord’s successor assumes all obligations under this Lease.

 

Landlord agrees that in lieu of a cash Security Deposit, Tenant may deposit a letter of credit in a form reasonably acceptable to Landlord. Landlord shall be entitled to draw against the letter of credit at any time provided only that Landlord certifies to the issuer of the letter of credit that Tenant is in default under the Lease. Tenant shall keep the letter of credit in effect during the entire Lease Term, as the same may be extended, plus a period of four (4) weeks after expiration of the Lease Term. At least thirty (30) days prior to expiration of any letter of credit, the term thereof shall be renewed or extended for a period of at least one (1) year. Tenant’s failure to so renew or extend the letter of credit shall be a material default of this Lease by Tenant. In the event Landlord draws against the letter of credit, Tenant shall replenish the existing letter of credit or cause a new letter of credit to be issued such that the aggregate amount of letters of credit available to Landlord at all times during the Lease Term is the amount of the Security Deposit originally required.

 

Notwithstanding the foregoing, Tenant may reduce the amount of the Security Deposit upon the following conditions: (i) after the 36th month of the Lease Term, the amount of the Security Deposit may be reduced by $713,500.00 provided Tenant has not been in monetary default under the Lease during the previous 36 months; (ii) after the 72nd month of the Lease Term, the amount of the Security Deposit may be reduced by $583,500.00 provided Tenant has not been in monetary default under the Lease during the previous 36 months; and (iii) provided Tenant has not been in monetary default under the Lease during the Lease Term, the amount of the Security Deposit shall be reduced to $130,000.00 after Tenant’s parent company, Metromedia Fiber Network, Inc., has posted a net profit (before interest, tax, depreciation, and amortization expenses) for four (4) consecutive quarters.

 

5. CONSTRUCTION :

 

A. Landlord’s Work : Within the first two (2) months of the Lease Commencement Date, Landlord shall: (i) ensure that the Building structure and Building exterior is in compliance with all applicable city, state, and government zoning codes, laws and regulations (excluding ADA, which is specifically addressed below); and (ii) ensure that the Premises are properly closed with respect to Hazardous Materials associated with the Premises’ former use, and deliver to Tenant all related documentation in Landlord’s possession. Landlord agrees to reimburse Tenant for the cost of: (i) putting the existing Building systems (excluding Building systems installed as part of the Tenant Improvements, or Building systems Tenant intends to remove) in good operating condition and repair including the plumbing, HVAC, and electrical; (ii) any required ADA modifications to the Premises, excluding ADA requirements for new Tenant Improvements and improvements Tenant intends to remove. Landlord also agrees to reimburse Tenant the sum of Fifty Two Thousand and No/100 Dollars ($52,000.00) towards Tenant’s cost of installing a new roof membrane on the Building within the first year of the Lease Term.

 

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B. Tenant Construction : Within the first year of the Lease Term, Tenant agrees to remove the existing disc media fabrication improvements at the Premises and install new improvements (“Tenant Improvements”) consistent with Tenant’s use of the Premises as a data center. Tenant shall cause all improvements to the Premises not included in Landlord’s Work to be constructed at Tenant’s expense by a general contractor selected by Tenant (“General Contractor”) in accordance with construction plans and outline specifications prepared at Tenant’s expense by an architect selected by Tenant (“Tenant’s Architect”), to be attached to this Lease as Exhibit “B” (“Tenant Improvement Plans and Specifications”). The Tenant Improvements Plans and Specifications shall include any information required by the relevant agencies regarding Tenant’s use of Hazardous Materials, if applicable. Prior to commencing construction of the Tenant Improvements, Tenant shall: (i) obtain all required governmental approvals and permits; and (ii) provide Landlord seven (7) days’ prior notice so that Landlord may post a notice of nonresponsibility. Landlord acknowledges that the Tenant improvements will include typical improvements which support combined office and data-telecommunications center uses, which may consist of the following: (i) raised floors; (ii) floor-to-ceiling equipment racks; (iii) additional power panels, power converters, and related equipment and fixtures to provide within the Premises additional electric power to support telecommunication equipment; (iv) a UPS system, including back-up, diesel powered generators; (v) fiber conduit, cabling, and risers to support servers, routers, and other equipment; (vi) antenna in the antenna farm; (vii) specialized HVAC systems to support temperature requirements for data-telecommunications areas, including dry cooler units; and (viii) wall partitions to create separate office areas. As part of the Tenant Improvements, Tenant shall have the right, at its sole cost, to install a trench and conduit from the street to the carrier rooms to be located within the Premises, provided that plans and specifications and the contractor to be retained for such work are subject to Landlord’s reasonable approval. Any Tenant Improvement work shall be conducted at Tenant’s risk and in accordance with all Laws. Tenant shall indemnify and hold Landlord harmless from and against all costs, damages, claims, liabilities and expenses (including attorneys’ fees) suffered by or claimed against Landlord, directly or indirectly, based on, arising out of or resulting from Tenant’s construction of the Tenant Improvements. All costs associated with Tenant Improvements shall be paid by Tenant. Immediately upon completion of the Tenant Improvements, Tenant agrees to provide Landlord a complete set of half-size (15” x 21”) vellum as-built drawings for the Tenant Improvements and a certificate of occupancy for the Premises. The Tenant Improvements shall be the property of Tenant until the expiration of the Lease Term or any earlier termination of the Lease, at which time the Tenant Improvements shall become the property of Landlord and shall remain upon and be surrendered with the Premises, and title thereto shall automatically vest in Landlord without any payment therefor.

 

6. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER :

 

A. Delivery and Acceptance : Landlord shall deliver and Tenant shall accept possession of the Premises on the Commencement Date provided, however, that Landlord shall retain a right of entry to complete Landlord’s Work provided Landlord does not interfere with

 

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construction of Tenant Improvements. Tenant acknowledges that it has had an opportunity to conduct, and has conducted, such inspections of the Premises as it deems necessary to evaluate its condition. Except as otherwise specifically provided herein, Tenant agrees to accept possession of the Premises in its then existing condition, subject to all Restrictions and without representation or warranty by Landlord except as provided in Section 5 above.

 

Landlord and Tenant hereby acknowledge that: (i) Komag Corporation (“Komag”) currently occupies the Premises; and (ii) Landlord and Komag have executed a lease termination agreement, attached as Exhibit “D” , that terminates Komag’s lease on December 31, 1999. Landlord, at its sole cost and expense, shall use its reasonable best efforts to assure that Komag vacates and surrenders the Premises, which efforts shall include, without limitation, the prompt initiation of an unlawful detainer proceeding if necessary. Landlord shall be obligated to deliver the Premises to Tenant in such condition (the “Required Condition”) that it is free of possession by Komag with equipment and fixtures of Komag removed or left in place pursuant to Exhibit “E” attached hereto.

 

B. Late Delivery : In the event Landlord does not deliver the Premises to Tenant in the Required Condition by January 1, 2000, then the Commencement Date shall not occur until such delivery is made. Further, in the event Landlord does not deliver the Premises to Tenant in the Required Condition by February 1, 2000, then in addition to such delayed Commencement Date, the Base Monthly Rent which is otherwise payable commencing on the 6th month thereafter shall be abated by a per diem (calculated on a 30-day month using the Base Monthly Rent rate applicable in the 6th month of the Lease Term) amount for each day in the period commencing on February 1, 2000 and ending on the date the Premises are delivered to Tenant in the Required Condition. The rent abatement for a delay in the Commencement Date shall be the sole and exclusive remedy of Tenant with respect to the failure by Landlord to deliver the Premises to Tenant in the Required Condition.

 

Notwithstanding anything to the contrary contained in this Lease, in the event: (i) Komag has not obtained a closure permit (or other evidence from applicable governmental agencies) by January 15, 2000 affirming that Komag has removed all Hazardous Materials associated with its use at the Premises; and (ii) Base Monthly Rent is not already being abated pursuant to the preceding paragraph, then this Lease shall not be void or voidable nor shall Landlord be liable for any loss or damage resulting therefrom; however, Landlord shall pay to Tenant an amount equal to all Holdover Rent due from Komag to Landlord pursuant to paragraph 5 of the attached Exhibit “D” .

 

C. Condition Upon Surrender : Tenant further agrees on the Expiration Date or on the sooner termination of this Lease, to surrender the Premises to Landlord in good condition and repair, normal wear and tear excepted. In this regard, “normal wear and tear” shall be construed to mean wear and tear caused to the Premises by the natural aging process which occurs in spite of prudent application of the best standards for maintenance, repair replacement, and janitorial practices, and does not include items of neglected or deferred maintenance. In any event, Tenant shall cause the following to be done prior to the Expiration Date or sooner termination of this Lease: (i) all interior walls shall be repaired, patched and otherwise made paint-ready, (ii) all tiled floors shall be cleaned and waxed, (iii) all

 

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carpets shall be cleaned and shampooed, (iv) all broken, marred, stained or non-conforming acoustical ceiling tiles shall be replaced, (v) all cabling placed above the ceiling by Tenant or Tenant’s contractors shall be removed, (vi) all windows shall be washed; (vii) the HVAC system shall be serviced by a reputable and licensed service firm and left in “good operating condition and repair” as so certified by such firm, (viii) the plumbing and electrical systems and lighting shall be placed in good order and repair (including replacement of any burned out, discolored or broken light bulbs, ballasts, or lenses. On or before the Expiration Date or sooner termination of this Lease, Tenant shall remove all its personal property and trade fixtures from the Premises. All property and fixtures not so removed shall be deemed as abandoned by Tenant. At the expiration of the Lease Term, Landlord shall not have the right to require that Tenant remove from the Premises any of the Tenant Improvements (other than Tenant’s equipment, fixtures and components) or any Alterations made with Landlord’s consent unless Landlord, at the time of granting such consent, indicates that the subject Alteration must be removed upon the expiration of the Lease Term. With respect to Permitted Alterations as defined in Section 7.A below, Tenant shall ascertain from Landlord within ninety (90) days before the Expiration Date whether Landlord desires to have such Permitted Alterations removed. Tenant shall repair any damage to the Building which results from Tenant’s removal of any Permitted Alteration and any improvements and/or Tenant’s equipment, fixtures, and components. Such repair and restoration shall include causing the Premises to be brought into compliance with all applicable building codes and laws in effect at the time of the removal to the extent such compliance is necessitated by the repair and restoration work.

 

D. Failure to Surrender : If the Premises are not surrendered at the Expiration Date or sooner termination of this Lease in the condition required by this Section 6, Tenant shall be deemed in a holdover tenancy pursuant to this Section 6.C and Tenant shall indemnify, defend, and hold Landlord harmless against loss or liability resulting from delay by Tenant in so surrendering the Premises including, without limitation, any claims made by any succeeding tenant founded on such delay and costs incurred by Landlord in returning the Premises to the required condition, plus interest at the Agreed Interest Rate. Any holding over after the termination or Expiration Date with Landlord’s express written consent, shall be construed as month-to-month tenancy, terminable on thirty (30) days written notice from either party, and Tenant shall pay as Base Monthly Rent to Landlord a rate equal to one hundred twenty five percent (125%) of the Base Monthly Rent due in the month preceding the termination or Expiration Date, plus all other amounts payable by Tenant under this Lease. Any holding over shall otherwise be on the terms and conditions herein specified, except those provisions relating to the Lease Term and any options to extend or renew, which provisions shall be of no further force and effect following the expiration of the applicable exercise period. If Tenant remains in possession of the Premises after the Expiration Date or sooner termination of this Lease without Landlord’s consent, Tenant’s continued possession shall be on the basis of a tenancy at sufferance and Tenant shall pay as rent during the holdover period an amount equal to one hundred fifty percent (150%) of the Base Monthly Rent due in the month preceding the termination or Expiration Date, plus all other amounts payable by Tenant under this Lease. This provision shall survive the termination or expiration of the Lease.

 

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7. ALTERATIONS AND ADDITIONS:

 

A. Tenant’s Alterations : Tenant shall not make, or suffer to be made, any alteration or addition to the Premises (“Alterations”), or any part thereof, without obtaining Landlord’s prior written consent and delivering to Landlord the proposed architectural and structural plans for all such Alterations at least fifteen (15) days prior to the start of construction. If such Alterations affect the structure of the Building, Tenant additionally agrees to reimburse Landlord its reasonable out-of-pocket costs incurred in reviewing Tenant’s plans. After obtaining Landlord’s consent, which consent shall state whether or not Landlord will require Tenant to remove such Alteration at the expiration or earlier termination of this Lease, Tenant shall not proceed to make such Alterations until Tenant has obtained all required governmental approvals and permits. Tenant agrees to provide Landlord: (i) written notice of the anticipated and actual start-date of the work, (ii) a complete set of half-size (15” X 21”) vellum as-built drawings, and (iii) a certificate of occupancy for the work upon completion of the Alterations. All Alterations shall be constructed in compliance with all applicable building codes and laws including, without limitation, the Americans with Disabilities Act of 1990 as amended from time to time. Upon the Expiration Date, all Alterations, except movable furniture and trade fixtures, shall become a part of the realty and belong to Landlord but shall nevertheless be subject to removal by Tenant as provided in Section 6 above. Alterations which are not deemed as trade fixtures include heating, lighting, electrical systems, air conditioning, walls, carpeting, or any other installation which has become an integral part of the Premises. All Alterations shall be maintained, replaced or repaired by Tenant at its sole cost and expense. Notwithstanding the foregoing, Tenant shall be entitled, without obtaining Landlord’s consent, to make Alterations which do not affect the structure of the Building and which do not cost more than One Hundred Thousand Dollars ($100,000.00) per Alteration (“Permitted Alteration”); provided, however, that Tenant shall still be required to comply with all other provisions of this paragraph, and such Permitted Alterations are subject to removal by Tenant at Landlord’s election pursuant to Section 6.C above at the expiration or earlier termination of the Lease. Tenant shall not be required to seek Landlord’s consent with respect to any replacements, modifications, retrofits, or upgrades of Tenant’s equipment, fixtures, and components, provided that any work or installation with respect to the foregoing shall otherwise be carried out in compliance with this Lease.

 

B. Free From Liens : Tenant shall keep the Premises free from all liens arising out of work performed, materials furnished, or obligations incurred by Tenant or claimed to have been performed for Tenant. In the event Tenant fails to discharge any such lien within ten (10) days after receiving notice of the filing, Landlord shall be entitled to discharge the lien at Tenant’s expense and all resulting costs incurred by Landlord, including attorney’s fees shall be due from Tenant as additional rent.

 

C. Compliance With Governmental Regulations : The term Laws or Governmental Regulations shall include all federal, state, county, city or governmental agency laws, statutes, ordinances, standards, rules, requirements, or orders now in force or hereafter enacted, promulgated, or issued. The term also includes government measures regulating or enforcing public access, traffic mitigation, occupational, health, or safety standards for

 

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employers, employees, landlords, or tenants. Tenant, at Tenant’s sole expense shall make all repairs, replacements, alterations, or improvements needed to comply with all Governmental Regulations. The judgment of any court of competent jurisdiction or the admission of Tenant in any action or proceeding against Tenant (whether Landlord be a party thereto or not) that Tenant has violated any such law, regulation or other requirement in its use of the Premises shall be conclusive of that fact as between Landlord and Tenant.

 

8. MAINTENANCE OF PREMISES :

 

A. Landlord’s Obligations : Landlord at its sole cost and expense, shall maintain in good condition, order, and repair, and replace as and when necessary, the foundation, exterior load bearing walls and roof structure of the Building.

 

B. Tenant’s Obligations : Tenant shall clean, maintain, repair and replace when necessary the Premises and every part thereof through regular inspections and servicing, including but not limited to: (i) all plumbing and sewage facilities, (ii) all heating ventilating and air conditioning facilities and equipment, (iii) all fixtures, interior walls floors, carpets and ceilings, (iv) all windows, door entrances, plate glass and glazing systems including caulking, and skylights, (v) all electrical facilities and equipment, (vi) all automatic fire extinguisher equipment, (vii) the parking lot and all un