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UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended June 30, 1999
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the transition period from _____________
to _____________.
Commission file number 000-23795
------------------------------------
EXODUS COMMUNICATIONS, INC.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 77-0403076
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2831 Mission College Blvd., Santa Clara, CA 95054
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(Address of principal executive offices)
(Zip Code)
(408) 346-2200
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of the issuer's common stock, par value $0.001,
as of August 10, 1999 was 83,209,284 shares. This number reflects the effect of
a two-for-one stock split effected August 12, 1999.
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<PAGE>
EXODUS COMMUNICATIONS, INC.
INDEX
-----
PART I. Financial Information
---------------------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - June 30, 1999 and
December 31, 1998
Condensed Consolidated Statements of Operations - Three
and Six Month Periods Ended June 30, 1999 and 1998
Condensed Consolidated Statements of Cash Flows - Six
Month Periods Ended June 30, 1999 and 1998
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
PART II. Other Information
-----------------
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EXODUS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents......................... $330,605 $150,891
Accounts receivable, net.......................... 24,984 11,174
Prepaid expenses and other current assets......... 6,439 4,677
------------- -------------
Total current assets............................ 362,028 166,742
Property and equipment, net......................... 166,214 68,306
Restricted cash equivalents and investments......... 43,436 45,614
Other assets........................................ 52,373 12,624
------------- -------------
$624,051 $293,286
============= =============
Liabilities and Stockholders' (Deficit) Equity
Current liabilities:
Current portion of equipment loans and line of
credit facilities................................ $7,164 $14,367
Current portion of capital lease obligations...... 11,863 5,140
Accounts payable.................................. 22,758 9,208
Accrued expenses.................................. 17,974 6,771
Accrued interest payable.......................... 15,880 11,563
------------- -------------
Total current liabilities....................... 75,639 47,049
Equipment loans and line of credit facilities,
less current portion............................... 10,775 15,695
Capital lease obligations, less current portion..... 27,732 11,401
Convertible subordinated notes...................... 250,000 --
Senior notes........................................ 275,375 200,000
------------- -------------
Total liabilities............................... 639,521 274,145
------------- -------------
Stockholders' (deficit) equity:
Common stock, $0.001 par value: 300,000,000 and
50,000,000 shares authorized as of June 30, 1999
and December 31, 1998, respectively; 82,850,616
and 80,269,408 shares issued and outstanding
as of June 30, 1999 and December 31, 1998,
respectively..................................... 83 80
Additional paid-in capital........................ 125,236 117,160
Deferred stock compensation....................... (705) (1,080)
Accumulated deficit............................... (140,084) (97,019)
------------- -------------
Total stockholders' (deficit) equity............ (15,470) 19,141
------------- -------------
$624,051 $293,286
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
EXODUS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues......................... $42,499 $10,071 $72,586 $17,176
--------- --------- --------- ---------
Costs and expenses:
Cost of revenues............. 34,596 12,983 62,706 22,864
Marketing and sales.......... 11,970 7,163 22,234 13,580
General and administrative... 8,835 3,000 15,890 5,657
Product development.......... 1,551 719 2,836 1,364
--------- --------- --------- ---------
Total costs and expenses......... 56,952 23,865 103,666 43,465
--------- --------- --------- ---------
Operating loss................... (14,453) (13,794) (31,080) (26,289)
Net interest expense............. 6,448 282 11,985 1,108
--------- --------- --------- ---------
Net loss..................... (20,901) (14,076) (43,065) (27,397)
Cumulative dividends and
accretion on redeemable
convertible preferred stock.... -- -- -- (2,014)
--------- --------- --------- ---------
Net loss attributable to
common stockholders............ ($20,901) ($14,076) ($43,065) ($29,411)
========= ========= ========= =========
Basic and diluted net loss
per share....................... ($0.25) ($0.18) ($0.53) ($0.64)
========= ========= ========= =========
Shares used in computing basic
and diluted net loss per share.. 82,327 77,649 81,693 45,841
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
EXODUS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Six Months Ended
June 30,
--------------------
1999 1998
--------- ---------
Cash flows from operating activities:
Net loss............................................. ($43,065) ($27,397)
Adjustments to reconcile net loss to net cash used
for operating activities:
Depreciation and amortization...................... 12,634 4,689
Loss on disposal of property and equipment......... -- 248
Noncash warrant expense............................ -- 786
Amortization of deferred stock compensation........ 375 752
Amortization of debt issuance costs................ 425 198
Interest accretion on restricted cash equivalents
and investments................................... (1,139) --
Changes in operating assets and liabilities:
Accounts receivable............................ (12,835) (2,547)
Prepaid expenses and other assets.............. (6,689) (905)
Accounts payable............................... 13,121 4,892
Accrued expenses............................... 11,099 2,857
Accrued interest payable....................... 4,317 --
--------- ---------
Net cash used for operating activities..... (21,757) (16,427)
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment.................. (81,491) (17,842)
Business acquired, net of cash received.............. (20,009) --
Release (increase) of restricted cash
equivalents and investments......................... 3,325 (185)
Other assets......................................... (7,967) (243)
--------- ---------
Net cash used for investing activities...... (106,142) (18,270)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of redeemable
convertible preferred stock and warrants............ -- 2,176
Proceeds from issuance of common stock............... 8,079 70,460
Notes receivable from stockholders, net.............. -- 87
Repayment of bank borrowings......................... -- (3,000)
Proceeds from sale-leaseback transactions............ -- 4,035
Payment on capital lease obligations................. (3,861) (895)
Proceeds from debt................................... -- 14,448
Repayment of debt.................................... (12,280) (2,164)
Proceeds from convertible subordinated
notes, net.......................................... 242,250 --
Proceeds from senior notes, net...................... 73,425 --
--------- ---------
Net cash provided by financing activities.. 307,613 85,147
--------- ---------
Net increase in cash and cash equivalents.............. 179,714 50,450
Cash and cash equivalents at beginning of period....... 150,891 10,270
--------- ---------
Cash and cash equivalents at end of period............. $330,605 $60,720
========= =========
Supplemental disclosure of cash flow information:
Cash paid-interest................................... $14,423 $1,016
========= =========
Noncash investing and financing activities:
Assets recorded under capital lease................ $26,915 $6,007
========= =========
Cumulative dividends and accretion on
Series C and D redeemable convertible
preferred stock and warrants.................... $ -- $2,014
========= =========
Conversion of redeemable convertible
preferred stock to common stock................. $ -- $43,576
========= =========
See accompanying notes to condensed consolidated financial statements.
<PAGE>
EXODUS COMMUNICATIONS, INC.
---------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
JUNE 30, 1999
--------------
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information, the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not contain
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, the accompanying unaudited condensed consolidated
financial statements include all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the
Company's financial position as of June 30, 1999 and the results of its
operations and cash flows for the six month periods ended June 30, 1999
and 1998. These financial statements should be read in conjunction with
the Company's audited financial statements as of December 31, 1998 and
1997 and for each of the three years in the period ended December 31,
1998, including notes thereto, included in the Company's 1998 Annual
Report on Form 10-K. Operating results for the six month period ended
June 30, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999.
NOTE 2 - NET LOSS PER SHARE
Basic and diluted net loss per share has been computed by dividing the
net loss attributable to common stockholders by the weighted average
number of shares of common stock outstanding. Diluted net loss per
share for the three and six month periods ended June 30, 1999 and 1998
does not include the effect of (i) 21,591,000 and 13,036,000 shares
issuable under stock options outstanding with weighted average exercise
prices of $9.81 and $1.67 as of June 30, 1999 and June 30, 1998,
respectively, and (ii) 266,000 and 988,000 shares issuable pursuant to
warrants to purchase common stock with weighted average exercise prices
of $3.59 and $1.99, as of June 30, 1999 and June 30, 1998, respectively.
NOTE 3 - REVENUE RECOGNITION
The Company's revenues consist of (i) monthly fees from customer use of
Internet Data Center sites, network services and managed services
including professional services and use of equipment and software
provided by the Company, (ii) revenues from sales of third-party
equipment to customers and (iii) fees for installation and certain
professional services. Currently, substantially all of our revenue is
derived from services. Revenues (other than installation fees, equipment
sales to customers and certain professional services) are generally
billed and recognized ratably over the term of the contract, which is
generally one year. Installation fees are typically recognized at the
time the installation occurs, and equipment revenues are typically
recognized when the equipment is delivered to the customer or placed
into service at an Internet Data Center. We sell third-party equipment
to our customers as an accommodation to facilitate their purchase of
services. One-time professional service fees are typically recognized
when services are rendered.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -----------
<S> <C> <C>
Data centers and related equipment....... $92,436 $43,959
Furniture, fixtures, computer equipment
and other.............................. 61,953 32,887
Construction in progress................. 40,579 8,497
----------- -----------
194,968 85,343
Less accumulated depreciation and
amortization........................... 28,754 17,037
----------- -----------
$166,214 $68,306
=========== ===========
</TABLE>
Computer equipment and certain data center equipment are recorded under
capital leases that aggregated $47,151,000 and $20,236,000 as of June
30, 1999 and December 31, 1998, respectively. Accumulated amortization
on the assets recorded under capital leases aggregated $8,629,000 and
$4,426,000 as of June 30, 1999 and December 31, 1998, respectively.
NOTE 5 - ACQUISITIONS
On October 2, 1998, the Company purchased substantially all of the
assets, including customer agreements, and assumed certain liabilities
of Arca Systems, Inc. ("Arca"), a wholly owned subsidiary of
Cyberguard Corporation. Arca is a provider of advanced network and
system security consulting services and designs and develops security
technology solutions for complex and sensitive information systems. Arca
operates as a wholly owned subsidiary of the Company. Total
consideration paid, including direct acquisition costs, aggregated
approximately $5,800,000. The acquisition was accounted for as a
purchase with the results of Arca included from the acquisition date.
The excess of the purchase price over the fair value of tangible net
assets acquired amounted to approximately $5,000,000 and was attributed
primarily to workforce in place ($2,500,000) and goodwill ($2,400,000).
These amounts are generally being amortized on a straight-line basis
over 10 years.
On February 1, 1999, the Company purchased all of the capital stock of
American Information Systems, Inc ("AIS"). AIS provides hosting services
as well as professional services. Total consideration paid, including
direct acquisition costs, aggregated approximately $20,500,000. The
acquisition was accounted for as a purchase with the results of AIS
included from the acquisition date. The excess of the purchase price
over the fair value of tangible net assets acquired amounted to
approximately $18,700,000 and was attributed primarily to goodwill
($15,000,000), customer lists ($3,200,000) and assembled workforce
($500,000). These amounts are being amortized on a straight-line basis
over periods ranging from 5 to 7 years.
The following summary, prepared on an unaudited pro forma basis,
reflects the condensed consolidated results of operations for the three
and six month periods ended June 30, 1998, assuming Arca and AIS had
been acquired as of the beginning of the periods presented (in
thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
----------- -----------
1998 1998
----------- -----------
<S> <C> <C>
Revenues $12,608 $22,196
Net loss attributable to common stockholders ($15,136) ($31,296)
Basic and diluted net loss per share ($0.19) ($0.68)
Shares used in pro forma per share computation 77,649 45,841
</TABLE>
Pro forma financial information for the six month period ended June 30,
1999 giving effect to the acquisition of AIS is not presented as it
would not have differed materially from the Company's condensed
consolidated results from operations during that time period.
The pro forma results are not necessarily indicative of what would have
occurred if the acquisitions had been in effect for the periods
presented. In addition, they are not intended to be a projection of
future results and do not reflect any synergies that might be achieved
from combined operations.
NOTE 6 - BANK BORROWINGS, EQUIPMENT LOANS AND LINE OF CREDIT FACILITIES
The Company has a $7,000,000 bank line of credit bearing interest at the
bank's prime rate. As of June 30, 1999, no amount was outstanding under
the line of credit. The line of credit expires in August 1999.
On July 1, 1998, the Company issued $200,000,000 of 11 1/4% Senior Notes
due 2008 for aggregate net proceeds of approximately $193,400,000 (net
of discounts to the initial purchasers and offering expenses). Interest
is payable semi-annually on January 1 and July 1 of each year commencing
January 1, 1999. The Company initially deposited approximately
$42,400,000 with an escrow agent that would be sufficient to pay when
due the first four semi-annual interest payments. As of June 30, 1999
restricted cash equivalents and investments include approximately
$33,100,000 for the remaining three interest payments. Subject to
significant exceptions, the Senior Notes Indenture restricts, among
other things, the Company's ability to incur additional indebtedness and
the use of proceeds therefrom, pay dividends, make certain other
restricted payments, incur certain liens to secure indebtedness or
engage in merger transactions.
On March 3, 1999, the Company issued $250,000,000 of 5% Convertible
Subordinated Notes ("the "Convertible Notes") due 2006 for aggregate
net proceeds of approximately $242,300,000 (net of offering expenses).
The Convertible Notes are convertible into the Company's common stock at
a conversion rate of 43.7852 shares per $1,000 principal amount of
Convertible Notes, subject to adjustment in certain events and at each
holder's option. The Convertible Notes will not be subject to
redemption prior to March 20, 2001, and generally will be redeemable on
or after that date at the option of the Company, at the redemption
prices set forth in the indenture to the Convertible Notes
("Convertible Notes Indenture"), subject to certain provisions. In
the event of a Change in Control (as defined in the Convertible Notes
Indenture), each holder of the Convertible Notes has the right, subject
to certain conditions and restrictions, to require the Company to
repurchase all or any part of the holder's Convertible Notes at a
repurchase price of 100% of the principal amount, plus accrued interest
of the Convertible Notes being repurchased. Interest on the Convertible
Notes is payable on March 15 and September 15 of each year, commencing
on September 15, 1999. The Convertible Notes are unsecured obligations
of the Company and are subordinated to all existing and future Senior
Indebtedness (as defined in the Convertible Notes Indenture) and
effectively subordinated to all indebtedness and other liabilities of
the Company's subsidiaries.
On June 22, 1999, the Company issued $75,000,000 of 11 1/4% Senior Notes
due 2008 at 100.50% for aggregate net proceeds of approximately
$73,400,000 (net of discounts to the initial purchasers and offering
expenses). The Company issued these Senior Notes under the Indenture
dated July 1, 1998 under which it previously issued the $200,000,000
Senior Notes due 2008 (the "Original Notes"). These Senior Notes are
subject to substantially the same terms and conditions as the Original
Notes. Interest is payable semi-annually on January 1 and July 1 of each
year commencing July 1, 1999. Concurrently with the closing of the
offering, the Company deposited approximately $8,400,000, which is
included in restricted cash equivalents and investments at June 30,
1999, with an escrow agent that would be sufficient to pay when due the
first three interest payments.
NOTE 7 - COMPREHENSIVE INCOME
There were no material differences between net loss and comprehensive
loss during the three and six months ended June 30, 1999 and 1998.
NOTE 8 - SEGMENT INFORMATION
The Company operates a number of Internet Data Centers throughout the
United States and one in Europe. The Company establishes these Internet
Data Centers using a consistent investment and operating model. As a
result, the expected long term economic characteristics and financial
performance are similar. In particular, each data center provides the
same Internet related services to a similar type of customer who may
locate its servers in multiple Internet Data Centers. As a result, the
Company believes these Internet Data Centers represent one reportable
segment under the aggregation criteria of Statement of Financial
Accounting Standards ("SFAS") No. 131, "Disclosures About Segments of
an Enterprise and Related Information." The Internet Data Center
segment revenues equal the Company's consolidated revenues. A
reconciliation between the Internet Data Center segment operating profit
(loss) and total assets and the Company's consolidated operating loss
and total assets is as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ----------------------
1999 1998 1999 1998
----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Operating profit (loss): Internet Data Centers...... 10,587 (1,428) 15,339 (2,830)
Operating loss: corporate areas..................... (25,040) (12,366) (46,419) (23,459)
----------- ----------- --------- -----------
Total operating loss................................ ($14,453) ($13,794) ($31,080) ($26,289)
=========== =========== ========= ===========
June 30, December 31,
1999 1998
----------- -----------
Total assets: Internet Data Centers................. $116,669 $52,459
Total assets: corporate assets...................... 507,382 240,827
----------- -----------
Total assets........................................ $624,051 $293,286
=========== ===========
</TABLE>
Note 9 - SUBSEQUENT EVENT
On July 21, 1999, the Company's Board of Directors approved a two-for-
one Common Stock split, which is to be effected in the form of a stock
dividend. Shareholders of record on July 29, 1999 (the record date)
will receive one additional share for every share held on that date.
The shares were distributed on or about August 12, 1999. All share
numbers in the condensed consolidated financial statements and
accompanying notes for all periods presented have been adjusted
retroactively to reflect the two-for-one common stock split.
On July 27, 1999, the Company completed its acquisition of Cohesive
Technology Solutions, Inc. ("Cohesive") for approximately $115,000,000
in cash and common stock of the Company and the assumption of Cohesive
options. Cohesive is a technology professional services organization
with expertise in networking, web applications and technology solutions.
The Company expects to account for the purchase of Cohesive under the
purchase method of accounting and anticipates a significant portion of
the purchase price will be allocated to goodwill.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Form 10-Q contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 and Section 27A of
the Securities Act of 1933. Forward-looking statements are identified by
words such as "believes," "anticipates," "expects," "intends," "will,"
"may" and other similar expressions. In addition, any statements which
refer to expectations, projections or other characterizations of future
events or circumstances are forward-looking statements. In addition,
the section labeled "Factors Affecting Future Results" consists
primarily of forward-looking statements. We undertake no obligation to
revise forward-looking statements. Readers are urged to review and
consider carefully the various disclosures made by us in this report and
in our other reports filed with the Securities and Exchange Commission,
including our 1998 Annual Report on Form 10-K, that advise interested
parties of risks and uncertainties that may affect our business. These
risks and uncertainties include: difficulties in achieving timely
expansion of our network and opening of additional Internet Data
Centers, difficulties in executing our current business plan, retaining
customers and attracting new customers, and difficulties in developing
and deploying new services. Our actual results may differ materially
from any forward-looking statements due to such risks and uncertainties.
Overview
We are a leading provider of Internet system and network management
solutions for enterprises with mission-critical Internet operations.
Our solutions include Internet Data Centers, network services and
managed services including professional services, that together provide
the high performance, scalability and expertise that enterprises need to
optimize Internet operations. We deliver our services from our
geographically distributed, state-of-the-art Internet Data Centers that
are connected through a high-performance Internet backbone network.
We are the successor to a Maryland corporation that was formed in August
1992 to provide computer-consulting services. We began offering server
hosting and Internet connectivity services in late 1995, opened our
first dedicated Internet Data Center in August 1996 and introduced
managed services in 1997 and professional services, a subcategory of
managed services, in 1998. We have derived most of our revenues from
customers for whom we provide these services. Each of our Internet Data
Center customers initially purchases a subset of our service offerings
to address specific departmental or enterprise Internet computing needs,
and some of these customers purchase additional services as the scale
and complexity of their Internet operations increase. We sell our
services under contracts that typically have minimum terms of one year.
Customers pay monthly fees for the services utilized, as well as one-
time fees for installation, certain professional services and for
equipment they purchase from us.
We opened our first Internet Data Center in the San Francisco
metropolitan area in August 1996. Since that time, we have opened eleven
additional domestic Internet Data Centers in the metropolitan areas of
New York (March 1997), San Francisco (second site-August 1997; third
site-June 1998; and fourth site June 1999), Seattle (September 1997 and
June 1999), Los Angeles (October 1997), Washington, D.C. (December 1997
and May 1999), Boston (July 1998), and Chicago (April 1999). In
addition, we opened our first Internet Data Center outside of the United
States in London in June 1999. We plan to open six additional Internet
Data Centers and three server hosting sites in the second half of 1999.
The building of Internet Data Centers has required us to obtain
substantial equity and debt financing. See "-Factors Affecting Future
Results-Our Substantial Leverage and Debt Service Obligations Adversely
Affect Our Cash Flow" and "-Liquidity and Capital Resources" below.
In October 1998, we purchased the assets of Arca Systems, Inc. ("Arca"),
a provider of advanced network and system security consulting services.
In February 1999, we acquired American Information Systems, Inc.
("AIS"), a regional provider of co-location, web hosting and
professional services. In July 1999, we completed our acquisition of
Cohesive Technology Solutions, Inc. ("Cohesive"), a technology
professional services organization with expertise in networking, web
applications and technology solutions.
We intend to expand domestically and internationally. Prior to building
an Internet Data Center in a new geographic region, we employ various
means to evaluate the market opportunity in a given location, including
market research on Internet usage statistics, the pre-selling of
services into the proposed market and analysis of specific financial
criteria. We typically require at least six months to select the
appropriate location for an Internet Data Center, construct the
necessary facilities, install equipment and telecommunications
infrastructure, and hire the operations and sales personnel needed to
conduct business at that site. Expenditures related to an Internet Data
Center commence well before the Internet Data Center opens, and it takes
an extended period to approach break-even capacity utilization at each
site. As a result, we expect that individual Internet Data Centers will
experience losses for an excess of one year from the time they are
opened. We experience further losses from sales personnel hired to test
market our services in markets where there is no, and may never be an,
Internet Data Center. As a result, we expect to make investments in
expanding our business rapidly into new geographic regions which, while
potentially increasing our revenues in the long term, will lead to
significant losses for the foreseeable future. See "-Factors Affecting
Future Results-Rapid Expansion Produces a Significant Strain on Our
Business" for risks related to the foregoing forward-looking statements.
Since we began to offer server hosting and Internet connectivity
services in 1995, we have experienced operating losses and negative cash
flows from operations in each quarterly and annual period. As of June
30, 1999, we had an accumulated deficit of approximately $140 million.
The revenue and income potential of our business and market is unproven,
and our limited operating history makes an evaluation of our prospects
and us difficult. We intend to invest in new Internet Data Centers and
other sites, product development, sales and marketing programs, and
therefore we believe that we will continue to experience net losses on a
quarterly and annual basis for the foreseeable future. Companies, such
as Exodus, in the new and rapidly evolving market for Internet system
and network management solutions encounter risks, expenses and
difficulties that affect their business and prospects. There can be no
assurance that we will ever achieve profitability on a quarterly or an
annual basis or will sustain profitability if achieved. See "-Factors
Affecting Future Results-Our Short Operating History and Heavy Losses
Make Our Business Difficult to Evaluate" for risks related to the
foregoing forward-looking statements.
RESULTS OF OPERATIONS
The following table sets forth certain statement of operations data as a
percentage of total revenues for the three and six month periods ended
June 30, 1999 and 1998. This information has been derived from our
unaudited condensed consolidated financial statements which, in
management's opinion, have been prepared on substantially the same basis
as the audited financial statements included in our 1998 Annual Report
on form 10-K and include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the
financial information for the quarters presented. This information
should be read in conjunction with the Condensed Consolidated Financial
Statements and accompanying Notes included in this Form 10-Q. The
operating results in any quarter are not necessarily indicative of the
results to be expected for any future period.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues......................... 100.0% 100.0% 100.0% 100.0%
--------- --------- --------- ---------
Costs and expenses:
Cost of revenues............. 81.4% 128.9% 86.4% 133.1%
Marketing and sales.......... 28.2% 71.1% 30.6% 79.1%
General and administrative... 20.8% 29.8% 21.9% 33.0%
Product development.......... 3.6% 7.2% 3.9% 7.9%
--------- --------- --------- ---------
Total costs and expenses......... 134.0% 237.0% 142.8% 253.1%
--------- --------- --------- ---------
Operating loss................... (34.0%) (137.0%) (42.8%) (153.1%)
Net interest expense............. 15.2% 2.8% 16.5% 6.4%
--------- --------- --------- ---------
Net loss..................... (49.2%) (139.8%) (59.3%) (159.5%)
========= ========= ========= =========
</TABLE>
Revenues
Our revenues consist of (i) monthly fees from customer use of Internet
Data Center sites, network services and managed services including
professional services and use of equipment and software provided by us,
(ii) revenues from sales of third-party equipment to customers and (iii)
fees for installation and certain professional services. Currently,
substantially all of our revenue is derived from services. Revenues
(other than installation fees, equipment sales to customers and certain
professional services) are generally billed and recognized ratably over
the term of the contract, which is generally one year. Installation fees
are typically recognized at the time the installation occurs, and
equipment revenues are typically recognized when the equipment is
delivered to the customer or placed into service at an Internet Data
Center. We sell third-party equipment to our customers as an
accommodation to facilitate their purchase of services. One-time
professional service fees are typically recognized when services are
rendered.
Our revenues increased 322% and 323% to $42.5 million and $72.6 million
for the three and six month periods ended June 30, 1999 from $10.1
million and $17.2 million in the same respective periods of the prior
year. This growth in revenues was the result of increases in the number
of new customers, substantially all of which were Internet Data Center
customers, increases in revenues from existing customers and revenue
contributions from ARCA and AIS.
Cost of Revenues
Our cost of revenues is comprised of the costs for our backbone network
and local telecommunications loops, depreciation, salaries and benefits
for our customer service and operations personnel (customer service
personnel, network engineers and professional services personnel), rent,
repairs and utilities related to our Internet Data Centers and other
sites and costs of third party equipment sold to customers.
Cost of revenues increased 166% and 174% to $34.6 and $62.7 million for
the three and six month periods ended June 30, 1999 from $13.0 million
and $22.9 million in the same respective periods of the prior year.
These increases in cost of revenues in absolute dollars were primarily
the result of costs associated with hiring additional employees and
consultants, increased traffic on our network, depreciation due to
capital expenditures, utilities and other costs related to the opening
and expanding of Internet Data Centers. Our cost of revenues as a
percentage of revenues decreased to 81% and 86% for the three and six
months ended June 30, 1999 from 129% and 133% for the same respective
periods of the prior year. This decline was due primarily to our
increase in revenue between comparison periods. We expect that cost of
revenues will continue to increase in absolute dollars but will continue
to decline as a percentage of total revenue as existing costs are spread
over more substantial operations.
Marketing and Sales
Our marketing and sales expenses are comprised of salaries, commissions
and benefits for our marketing and sales personnel, printing and
advertising costs, public relations costs, consultants' fees and travel
and entertainment expenses.
Our marketing and sales expenses increased 67% and 64% to $12.0 million
and $22.2 million for the three and six month periods ended June 30, 1999
from $7.2 million and $13.6 million in the same respective periods of
the prior year. The increase in absolute dollars was primarily the
result of increased compensation and related expenses associated with
hiring additional marketing and sales personnel. Our marketing and sales
expense as a percentage of revenues decreased to 28% and 31% for the
three and six months ended June 30, 1999 from 71% and 79% for the same
respective periods of the prior year. This decline was primarily due to
our significant increase in revenue between comparison periods. We
expect that marketing and sales expense will continue to decrease as a
percentage of total revenue as existing costs are spread over more
substantial operations.
General and Administrative
Our general and administrative expenses are primarily comprised of
salaries and benefits for our administrative and management information
systems personnel, consulting fees, recruiting fees, and amortization of
intangible assets.
Our general and administrative expenses increased 195% and 181% to $8.8
million and $15.9 million for the three and six month periods ended June
30, 1999 from $3.0 million and $5.7 million in the same respective
periods of the prior year. The increase in absolute dollars was primarily
the result of increased compensation expenses associated with additional
hiring of general and administrative personnel and the amortization of
intangible assets related to the acquisitions of Arca and AIS. Our
general and administrative expense as a percentage of revenues decreased
to 21% and 22% for the three and six month periods ended June 30, 1999
from 30% and 33% for the same respective periods of the prior year. This
decline was primarily due to our significant increase in revenue between
comparison periods. We expect that general and administrative expense
will continue to decrease as a percentage of total revenue as existing
costs are spread over more substantial operations.
Product Development
Our product development expenses primarily consist of salaries and
benefits for our product development personnel and fees paid to
consultants.
Our product development expenses increased 116% and 108% to $1.6 million
and $2.8 million for the three and six month periods ended June 30, 1999
from $0.7 million and $1.4 million in the same respective periods of the
prior year. Our product development expenses grew primarily due to the
addition of product development personnel to support our expanded
service offerings. Our product development expense as a percentage of
revenues decreased to 4% for both the three and six months ended June
30, 1999 from 7% and 8% for the same respective periods of the prior
year. This decline was due to our significant increase in revenue
between comparison periods.
Net Interest Expense
Our net interest expense increased to $6.4 million and $12.0 million for
the three and six month periods ended June 30, 1999, from $0.3 million
and $1.1 million for the same respective periods of the prior year. The
increase in net interest expense was primarily the result of interest
expense associated with our 11 1/4% Senior Notes issued July 1, 1998 and
our 5 % Convertible Subordinated Notes which were issued March 3, 1999.
We expect that net interest expense will continue to increase as we
incur additional interest expense related to our $75,000,000 11 1/4%
Senior Notes offering, which occurred on June 22, 1999, enter into
additional equipment leases and loans, obtain additional borrowings and
long term debt and experience reduced interest income as a result of the
decline in our cash reserves to fund working capital and other uses.
EBITDA
Our loss before interest, taxes, depreciation, amortization and other
non-cash charges ("EBITDA") was $7.2 million and $18.0 million for the
three and six month periods ended June 30, 1999 compared to $10.4
million and $20.1 million for the same respective periods of the prior
year. The decrease in the magnitude of EBITDA losses between the
comparison periods was primarily due to the significant increases in
revenue over these periods along with economies of scale experienced as
a result of more substantial operations offset in part by increased
compensation costs associated with the hiring of additional employees
during those time periods. Although EBITDA should not be used as an
alternative to operating loss or net cash provided by (used for)
operating activities, investing activities or financing activities, each
as measured under generally accepted accounting principles, our
management believes that EBITDA is an additional meaningful measure of
performance and liquidity.
Liquidity and Capital Resources
From inception through June 30, 1999, we have financed our operations
primarily through private sales of preferred stock, our initial public
offering in March 1998, our Senior Notes offerings in July 1998 and June
1999, our Convertible Subordinated Notes offering in March 1999 and
through various types of equipment loans and lease lines and working
capital lines of credit. At June 30, 1999, our principal sources of
liquidity were approximately $331 million in cash and cash equivalents.
As of that date, we also had equipment loans and lease lines of credit
under which we could borrow up to an additional aggregate of $1.2 million
for purchases of equipment. As of June 30, 1999, our total bank
borrowings, equipment loans and lines of credit facilities, capital lease
obligations and Senior and Convertible Notes were $582.9 million. See
Note 6 of Notes to Condensed Consolidated Financial Statements.
Since we began to offer server-hosting services in 1995, we have had
significant negative cash flows from operating activities. Net cash used
for operating activities for the six months ended June 30, 1999 was
$21.8 million, primarily due to net losses and an increase in accounts
receivable, offset in part by increases in accounts payable, accrued
expenses, and depreciation and amortization. This compares to net cash
used for operating activities for the six months ended June 30, 1998 of
$16.4 million which was primarily due to net losses, offset in part by
increases in accounts payable, accrued expenses, and depreciation and
amortization.
Net cash used for investing activities for the six months ended June 30,
1999 was $106.1 million primarily due to capital expenditures for the
continued construction of Internet Data Centers, the acquisition of AIS,
and expenditures related to a telecommunication agreement in which we
entered. This compares to net cash used for investing activities for the
six months ended June 30, 1998 of $18.3 million which was primarily due to
capital expenditures for the construction of Internet Data Centers.
Net cash provided by financing activities for the six month period ended
June 30, 1999 was $307.6 million, primarily due to the proceeds from our
issuance of $250 million of Convertible Subordinated Notes and our
additional $75 million offering of Senior Notes which were issued under
the original $200 million Senior Notes Indenture dated July 1, 1998.
This compares to net cash provided by financing activities for the six
months ended June 30, 1998 of $85.1 million which was primarily due to
our initial public offering of common stock in March 1998.
As of June 30, 1999, we had commitments under capital leases and under
noncancellable operating leases of $39.6 million and $116.5 million,
respectively, through 2010. We intend to make significant expenditures
during the next 12 months primarily for property and equipment, in
particular equipment and construction needed for existing and future
Internet Data Centers, as well as office equipment, computers and
telephones. We expect to finance such capital expenditures primarily
through net proceeds from the Senior Notes and Convertible Subordinated
Notes and existing and future equipment loans and lease lines of credit.
We believe our working capital and capital expenditure requirements over
the next 12 months can be met with existing cash and cash equivalents
and short-term investments, cash from sales of services and proceeds
from existing and future equipment financing lines of credit. We may
enter into additional equipment loans and capital leases. We may also
seek to raise additional funds through public or private financing,
strategic relationships or other arrangements. There can be no assurance
that we will be successful generating sufficient cash flows from
operations or raising capital in sufficient amounts on terms acceptable
to us. See "-Factors Affecting Future Results-Rapid Expansion Produces
a Significant Strain on Our Business."
Factors Affecting Future Results
Our Short Operating History and Heavy Losses Make Our Business Difficult
to Evaluate
Our limited operating history makes evaluating our business operations
and our prospects difficult. We began offering server hosting and
Internet connectivity services in 1995 and opened our first dedicated
Internet Data Center in August 1996. Due to our short operating history,
our business model is still in an emerging state. We have incurred
operating losses and negative cash flows each quarter and year since
1995. Our accumulated deficit was approximately $140.1 million at June
30, 1999. We anticipate making significant investments in new Internet
Data Centers and network infrastructure, product development, sales and
marketing programs and personnel. We believe that we will continue to
experience net losses on a quarterly and annual basis for the
foreseeable future. We may also use significant amounts of cash to
acquire complementary businesses, products, services or technologies.
Although we have experienced significant growth in revenues in recent
periods, we do not believe that this growth rate is necessarily
indicative of future operating results. It is possible that we may never
achieve profitability on a quarterly or an annual basis.
Our Operating Results Have Fluctuated Widely and We Expect This to
Continue
We have experienced significant fluctuations in our results of
operations on a quarterly and an annual basis. We expect to continue to
experience significant fluctuations due to a variety of factors, many of
which are outside of our control, including:
o demand for and market acceptance of our services;
o reliable continuity of service and network availability;
o the ability to increase bandwidth as necessary, both on our
network and at our interconnection points with other networks;
o costs related to the acquisition of network capacity and
arrangements for interconnections with third-party networks;
o customer retention and satisfaction;
o capacity utilization of our Internet Data Centers;
o the timing, magnitude and integration of acquisitions of
complementary businesses and assets;
o the timing of customer installations;
o the provision of customer discounts and credits;
o the mix of services sold by us;
o the timing and success of marketing efforts and service
introductions by us and our competitors;
o the timing and magnitude of capital expenditures, including
construction costs relating to the expansion of operations;
o the timely expansion of existing Internet Data Centers and
completion of new Internet Data Centers;
o the introduction by third parties of new Internet and networking
technologies;
o changes in our pricing policies and those of our competitors; and
o fluctuations in bandwidth used by customers.
In addition, a relatively large portion of our expenses are fixed in the
short-term, particularly with respect to telecommunications,
depreciation, substantial interest expenses, real estate and personnel.
Therefore, our results of operations are particularly sensitive to
fluctuations in revenues. Furthermore, if we were to become unable to
continue leveraging third-party products in our services offerings, our
product development costs could increase significantly. Finally, many of
our customers are in an emerging stage, and there is the possibility
that we will not be able to collect receivables on a timely basis.
Rapid Expansion Produces a Significant Strain on Our Business
The expansion of our network through the opening of additional Internet
Data Centers in geographically diverse locations is one of our key
strategies. We currently have twelve Internet Data Centers located in
seven metropolitan areas of the United States: Boston, Chicago, Los
Angeles, New York, San Francisco, Seattle, and Washington, D.C. We also
opened our first Internet Data Center outside of the United States in
the London metropolitan area in June 1999. We plan to open six
additional Internet Data Centers and three server hosting sites in the
second half of 1999. To expand successfully, we must be able to assess
markets, locate and secure new Internet Data Center sites, install
facilities and establish additional peering interconnections with
Internet service providers in a timely manner and at a reasonable cost.
To manage this expansion effectively, we must continue to improve our
operational and financial systems and expand, train and manage our
employee base. Our inability to establish additional Internet Data
Centers or effectively manage our expansion would have a material
adverse effect upon our business.
We expect to expend substantial resources for leases of real estate,
significant improvements of facilities, purchase of complementary
businesses, assets and equipment, implementation of multiple
telecommunications connections and hiring of network, administrative,
customer support and sales and marketing personnel with the
establishment of each new Internet Data Center. Moreover, we expect to
make significant investments in sales and marketing and the development
of new services as part of our expansion strategy. The failure to
generate sufficient cash flows or to raise sufficient funds may require
us to delay or abandon some or all of our development and expansion
plans or otherwise forego market opportunities, making it difficult for
us to respond to competitive pressures.
It usually takes us at least six months to select the appropriate
location for a new Internet Data Center, construct the necessary
facilities, install equipment and telecommunications infrastructure, and
hire operations and sales personnel. Expenditures commence well before
the Internet Data Center opens, and it takes an extended period for us
to approach break-even capacity utilization. As a result, we expect that
individual Internet Data Centers will experience losses for in excess of
one year from the time they are opened. We experience further losses
from sales personnel hired to test market our services in markets where
there is no Internet Data Center. Growth in the number of our Internet
Data Centers is likely to increase the amount and duration of losses. In
addition, if we do not attract customers to new Internet Data Centers in
a timely manner, or at all, our business would be materially adversely
affected.
We Must Manage Growth Effectively
We are experiencing, and expect to continue experiencing, rapid growth
with respect to the building of our Internet Data Centers and network
infrastructure, expansion of our service offerings, geographic
expansion, expansion of our customer base and increases in the number of
employees. This growth has placed, and if it continues, will place, a
significant strain on our financial, management, operational and other
resources, including our ability to ensure customer satisfaction. This
expansion also requires significant time commitment from our senior
management and places a significant strain on their ability to manage
the existing business. In addition, we may be required to manage
multiple relationships with a growing number of third parties as we seek
to complement our service offerings. Our ability to manage our growth
effectively will require us to continue to expand operating and
financial procedures and controls, to replace or upgrade our
operational, financial and management information systems and to
attract, train, motivate and retain key employees. We have recently
hired many key employees and officers, and as a result, our entire
management team has worked together for only a brief time. In addition,
we intend to hire additional senior management personnel to support our
growth and expansion of our business. If our executives are unable to
manage growth effectively, our business could be materially adversely
affected.
There Are Risks Associated With Acquisitions
In October 1998 we acquired the assets of Arca Systems, Inc., in
February 1999 we acquired AIS, and in July 1999 we acquired Cohesive. We
continue to expend resources integrating Cohesive and the personnel
hired in connection with acquisitions. As we acquire additional
companies, we may incur expenses to remediate Year 2000 problems
relating to these acquired companies.
We believe that our future growth depends, in part, upon the acquisition
of complementary businesses, products, services or technologies. If we
buy a company, we could have difficulty in assimilating that company's
technology, personnel and operations. In addition, the key personnel of
the acquired company may decide not to work for us. These difficulties
could disrupt our ongoing business, distract our management and
employees and increase our expenses. In addition, future acquisitions by
us may result in the incurring of additional debt, large one-time write-
offs and the creation of goodwill or other intangible assets that could
result in amortization expenses.
Our Substantial Leverage and Debt Service Obligations Adversely Affect
Our Cash Flow
We have substantial amounts of outstanding indebtedness, primarily from
our Senior Notes and Convertible Notes. There is the possibility that we
may be unable to generate cash sufficient to pay the principal of,
interest on and other amounts due in respect of our indebtedness when
due. As of June 30, 1999, we had indebtedness of approximately $582.9
million and available borrowings of up to an additional $1.2 million. We
also expect to add additional equipment loans and lease lines to finance
capital expenditures for our Internet Data Centers and may obtain
additional long term debt, working capital lines of credit and lease
lines. There can be no assurance that any financing arrangements will be
available.
Our substantial leverage could have significant negative consequences,
including:
o increasing our vulnerability to general adverse economic and
industry conditions;
o limiting our ability to obtain additional financing;
o requiring the dedication of a substantial portion of our expected
cash flow from operations to service our indebtedness, thereby
reducing the amount of our expected cash flow available for other
purposes, including capital expenditures;
o limiting our flexibility in planning for, or reacting to, changes
in our business and the industry in which we compete; and
o placing us at a possible competitive disadvantage vis-a-vis less
leveraged competitors and competitors that have better access to
capital resources.
We Are Subject to Restrictive Covenants That Limit Our Flexibility
Our Senior Notes and Convertible Notes contain various restrictions on
our ability to incur debt, pay dividends or make other restricted
payments, sell assets, enter into affiliate transactions and take other
actions. Furthermore, our existing financing arrangements are, and
future financing arrangements are likely to be, secured by substantially
all of our assets. The existing financing arrangements require, and
future financing arrangements are likely to require, that we maintain
specific financial ratios and comply with covenants restricting our
ability to incur debt, pay dividends or make other restricted payments,
sell assets, enter into affiliate transactions or take other actions.
In addition, the Convertible Notes proceeds may be used only for limited
purposes. Proceeds in the amount of $48.5 million may be used for
general corporate purposes. The remaining $193.8 million may be used
only to finance the purchase of assets or other businesses to be used in
our business.
We Compete With Much Larger Companies and There Are Few Barriers to
Entry
Our market is intensely competitive. There are few substantial barriers
to entry, and we expect to face additional competition from existing
competitors and new market entrants in the future. The principal
competitive factors in this market include:
o Internet system engineering and other expertise;
o customer service;
o network capability, reliability, quality of service and
scalability;
o the variety of services offered;
o access to network resources, including circuits, equipment and
interconnection capacity to other networks;
o broad geographic presence;
o price;
o the ability to maintain and expand distribution channels;
o brand name;
o the timing of introductions of new services;
o network security; and
o financial resources.
There can be no assurance that we will have the resources or expertise
to compete successfully in the future. Our current and potential
competitors in the market include:
o providers of server hosting services;
o national and regional ISPs;
o global, regional and local telecommunications companies and
Regional Bell Operating Companies;
o large IT outsourcing firms; and
o other technology services and products companies.
Many of our competitors have substantially greater resources, more
customers, longer operating histories, greater name recognition and more
established relationships in the industry. As a result, these
competitors may be able to develop and expand their network
infrastructures and service offerings more quickly, devote greater
resources to the marketing and sale of their products and adopt more
aggressive pricing policies. In addition, these competitors have entered
and will likely continue to enter into business relationships to provide
additional services competitive with those we provide.
Some of our competitors may be able to provide customers with additional
benefits in connection with their Internet system and network management
solutions, including reduced communications costs, which could reduce
the overall costs of their services relative to ours. We may not be able
to offset the effects of any price reductions. In addition, we believe
our market is likely to encounter consolidation in the near future,
which could result in increased competition.
Our Market Is New and Our Services May Not Be Generally Accepted
The market for Internet system and network management solutions has only
recently begun to develop, is evolving rapidly and is characterized by
an increasing number of market entrants. This market may not prove to be
viable or, if it becomes viable, may not continue to grow. Our future
growth depends on the willingness of enterprises to outsource the system
and network management of their mission-critical Internet operations and
our ability to market our services in a cost-effective manner to a
sufficiently large number of customers. If this market fails to develop,
or develops more slowly than expected, or if our services do not achieve
market acceptance, our business would be materially and adversely
affected. In addition, in order to be successful we must be able to
differentiate ourselves from our competition through our service
offerings.
System Failures Could Lead to Significant Costs
We must protect our network infrastructure and customers' equipment
against damage from human error, physical or electronic security
breaches, power loss and other facility failures, fire, earthquake,
flood, telecommunications failure, sabotage, vandalism and similar
events. Despite precautions we have taken, a natural disaster or other
unanticipated problems at one or more of our Internet Data Centers could
result in interruptions in our services or significant damage to
customer equipment. In addition, failure of any of our
telecommunications providers, such as MCI WorldCom, Qwest Communications
Corporation, or local exchange carriers, to provide consistent data
communications capacity could result in interruptions in our services.
Any damage to or failure of our systems or service providers could
result in reductions in, or terminations of, services supplied to our
customers, which could have a material adverse effect on our business.
In the past, we have experienced interruptions in specific circuits
within our network resulting from events outside our control, which led
to short-term degradation in the level of performance of our network.
Customer Satisfaction Is Critical to Our Success
Our customers demand a very high level of service. Our customer
contracts generally provide a limited service level warranty related to
the continuous availability of service on a 24 hours per day, seven days
per week basis. This warranty is generally limited to a credit
consisting of free service for a short period of time for disruptions in
Internet transmission services. To date, only a limited number of
customers have been entitled to this warranty. If we incur significant
warranty obligations in connection with system downtime, our liability
insurance may not be adequate to cover these expenses. As customers
outsource more mission-critical operations to us, we may be subject to
increased liability claims and customer dissatisfaction should our
systems fail or our customers otherwise become unsatisfied.
Our Ability to Expand Our Network Is Unproven
To satisfy customer requirements, we must continue to expand and adapt
our network infrastructure. We are dependent on MCI WorldCom and Qwest
and other telecommunications providers for our network capacity,
including our dedicated clear channel network. The expansion and
adaptation of our telecommunications infrastructure will require
substantial financial, operational and management resources as we
negotiate telecommunications capacity with network infrastructure
suppliers. Due to the limited deployment of our services to date, our
ability to connect and manage a substantially larger number of customers
at high transmission speeds is unknown. We have yet to prove our
network's ability to be scaled up to higher customer levels while
maintaining superior performance. Furthermore, it may be difficult for
us to increase quickly our network capacity in light of current
necessary lead times within the industry to purchase circuits and other
critical items. If we fail to achieve or maintain high capacity data
transmission circuits, consumer demand could shrink because of possible
degradation of service. In addition, as we upgrade our
telecommunications infrastructure to increase bandwidth available to our
customers, we expect to encounter equipment or software incompatibility
which may cause delays in implementation.
We Depend on Network Interconnections
We rely on a number of public and private network interconnections,
commonly referred to as peering relationships, to allow our customers to
connect to other networks. If our peering partners were to discontinue
their support for the peering relationships, our ability to exchange
traffic would be significantly constrained. Furthermore, our business
will be adversely affected if these peering partners do not add more
bandwidth to accommodate increased traffic. Many of the companies with
which we maintain private peering interconnections are our competitors.
There is nothing to prevent any peering partners, many of which are
significantly larger than we are, from charging high usage fees or
denying access. In the future, private peering partners could refuse to
continue to interconnect directly with us, might impose significant
costs on us or limit our customers access to their networks. If we were
unable on a cost-effective basis to access alternative networks to
exchange our customers' traffic or if we were unable to pass through to
our customers any additional costs of utilizing these networks, our
business could be materially adversely affected.
Risks Associated with International Operations
A component of our strategy is to expand into international markets,
including Europe and Japan. We opened our first Internet Data Center
outside of the United States in the London metropolitan area in June
1999. Furthermore, we plan to open additional international server
hosting sites and / or Internet Data Centers in the second half of 1999.
In order to expand international operations, we may enter into joint
ventures or outsourcing agreements with third parties, acquire rights to
high-bandwidth transmission capability, acquire complementary businesses
or operations, or establish and maintain new operations outside of the
United States. Thus, we will depend on third parties to be successful in
our international operations. In addition, the rate of development and
adoption of the Internet has been slower outside of the United States,
and the cost of bandwidth has been higher, which may adversely affect
our ability to expand operations and may increase our cost of operations
internationally. The risks inherent in conducting business
internationally include:
o unexpected changes in regulatory requirements, export
restrictions, tariffs and other trade barriers;
o challenges in staffing and managing foreign operations;
o differences in technology standards;
o employment laws and practices in foreign countries;
o longer payment cycles and problems in collecting accounts
receivable;
o political instability;
o fluctuations in currency exchange rates and imposition of currency
exchange controls; and
o potentially adverse tax consequences.
Rapid Technological Change and Evolving Industry Standards
Our future success will depend on our ability to offer services that
incorporate leading technology and address the increasingly
sophisticated and varied needs of our current and prospective customers.
Our market is characterized by rapidly changing and unproven technology,
evolving industry standards, changes in customer needs, emerging
competition and frequent new service introductions. Future advances in
technology may not be beneficial to, or compatible with, our business,
and we may not be able to incorporate advances on a cost-effective and
timely basis. Moreover, technological advances may have the effect of
encouraging our current or future customers to rely on in-house
personnel and equipment to furnish the services we currently provide. In
addition, keeping pace with technological advances may require
substantial expenditures and lead time.
We believe that our ability to compete successfully is also dependent
upon the continued compatibility and interoperability of our services
with products, services and architectures offered by various vendors.
Although we work with various vendors in testing newly developed
products, these products may not be compatible with our infrastructure
or adequate to address changing customer needs. For instance, existing
networking hardware may not be immediately compatible with leading edge
telecommunications infrastructure services, and therefore may require us
to make significant investments to achieve compatibility. Although we
intend to support emerging standards, industry standards may not be
established or we may not be able to timely conform to new standards.
Our failure to conform to a prevailing standard, or the failure of a
common standard to emerge, could have a material adverse effect on our
business.
System Security Risks Could Disrupt Our Services
The ability to provide secure transmissions of confidential information
over networks accessible to the public is a significant barrier to
electronic commerce and communications. A portion of our services rely
on encryption and authentication technology licensed from third parties.
Despite a variety of network security measures taken by us, we cannot
assure that unauthorized access, computer viruses, accidental or
intentional actions and other disruptions will not occur. Our Internet
Data Centers have experienced and may in the future experience delays or
interruptions in service as a result of the accidental or intentional
actions of Internet users, current and former employees or others.
Furthermore, inappropriate use of the network by third parties could
also jeopardize the security of confidential information, such as
customer and Exodus passwords as well as credit card and bank account
numbers, stored in our computer systems or those of our customers. This
could result in liability to others and the loss of existing customers
or the deterrence of potential customers. The costs required to
eliminate computer viruses and alleviate other security problems could
be prohibitively expensive and the efforts to address these problems
could result in interruptions, delays or cessation of service to our
customers.
We Depend on Third-Party Equipment and Software Suppliers
We depend on vendors to supply key components of our telecommunications
infrastructure and system and network management solutions. Some of the
telecommunications services and networking equipment is available only
from sole or limited sources. For instance, the routers, switches and
modems we use are currently supplied primarily by Cisco Systems, Inc. We
typically purchase or lease all of our components under purchase orders
placed from time to time. We do not carry significant inventories of
components and have no guaranteed supply arrangements with vendors. Our
failure to obtain required products or services on a timely basis and at
an acceptable cost would have a material adverse effect on our business.
In addition, the failure of our sole or limited source suppliers to
provide products or components that comply with evolving Internet and
telecommunications standards or that interoperate with other products or
components we use could have a material adverse effect on our business.
For example, we have experienced performance problems, including
previously unknown software and firmware bugs, with routers and switches
that have caused temporary disruptions in and impairment of network
performance. In addition, we expect to depend for a time on third
parties to deliver our services from and manage certain international
operations.
Government Regulation and Legal Uncertainties May Adversely Affect Our
Business
Laws and regulations directly applicable to communications and commerce
over the Internet are becoming more prevalent. The United States
Congress has recently considered Internet laws regarding children's
privacy, copyrights, taxation and the transmission of sexually explicit
material. The European Union also recently enacted its own privacy
regulations. The law of the Internet, however, remains largely
unsettled, even in areas where there has been some legislative action.
It may take years to determine whether and how existing laws such as
those governing intellectual property, privacy, libel and taxation apply
to the Internet. In addition, the growth and development of the market
for online commerce may prompt calls for more stringent consumer
protection laws, both in the United States and abroad, that may impose
additional burdens on companies conducting business online. The adoption
or modification of laws or regulations relating to the Internet could
adversely affect our business. We provide services over the Internet in
all states in the United States and in many foreign countries, and we
facilitate the activities of our customers in these jurisdictions. As a
result we may be required to qualify to do business, or be subject to
taxation, or be subject to other laws and regulations, in these
jurisdictions even if we do not have a physical presence or employees or
property in these jurisdictions. The application of these multiple sets
of laws and regulations is uncertain, but we could find that Exodus is
subject to regulation, taxation, enforcement or other liability in
unexpected ways, which could materially adversely affect our business.
There Are Risks Involved with the Information Disseminated through Our
Network
The law relating to the liability of online services companies and
Internet access providers for information carried on or disseminated
through their networks is currently unsettled. The Child Online
Protection Act of 1998 imposes criminal penalties and civil liability on
anyone engaged in the business of selling or transferring material that
is harmful to minors, by means of the World Wide Web, without
restricting access to this type of material by underage persons.
Numerous states have adopted or are currently considering similar types
of legislation. The imposition upon us and other Internet network
providers of potential liability for information carried on or
disseminated through systems could require us to implement measures to
reduce exposure to liability, which may require the expenditure of
substantial resources, or to discontinue various service or product
offerings. Further, the costs of defending against any claims and
potential adverse outcomes of these claims could have a material adverse
effect on our business. While we carry professional liability insurance,
it may not be adequate to compensate or may not cover us in the event we
become liable for information carried on or disseminated through our
networks.
Some businesses, organizations and individuals have in the past sent
unsolicited commercial e-mail messages advertising sites hosted at our
facilities to a massive number of people. This practice, known as
"spamming," has led to some complaints against us. In addition, some
ISPs and other online services companies could deny network access to us
if we allow undesired content or spamming to be transmitted through our
networks. Although we prohibit customers by contract from spamming,
there can be no assurance that customers will not engage in this
practice, which could have a material adverse effect on our business.
We Depend on Our Key Personnel
Our success depends in significant part upon the continued services of
our key technical, sales and senior management personnel. Although some
of our executive officers participate in our executive employment
policy, none of our officers is a party to an employment agreement. Any
officer or employee can terminate his or her relationship at any time.
The loss of the services of one or more of our key employees or our
failure to attract additional qualified personnel could have a material
adverse effect on our business. We do not carry key-person life
insurance for any of our employees.
We Depend on the Internet and Internet Infrastructure Development
Our success will depend in large part on continued growth in the use of
the Internet. Critical issues concerning the commercial use of the
Internet, including security, reliability, cost, ease of access, quality
of service and necessary increases in bandwidth availability, remain
unresolved and are likely to affect the development of the market for
our services. In addition, the rate of development and adoption of the
Internet has been slower outside of the United States and the cost of
bandwidth has been higher. The recent growth in the use of the Internet
has caused frequent periods of performance degradation, requiring the
upgrade of routers and switches, telecommunications links and other
components forming the infrastructure of the Internet by ISPs and other
organizations with links to the Internet. Any perceived degradation in
the performance of the Internet as a whole could undermine the benefits
of our services. Consequently, the emergence and growth of the market
for our services is dependent on improvements being made to the entire
Internet infrastructure to alleviate overloading and congestion.
Risks Associated with Protection and Enforcement of Intellectual
Property Rights
We rely on a combination of copyright, trademark, service mark and trade
secret laws and contractual restrictions to establish and protect
proprietary rights in our products and services. We have no patented
technology that would preclude or inhibit competitors from entering our
market. Although we have entered into confidentiality agreements with
our employees, contractors, suppliers, distributors and appropriate
customers to limit access to and disclosure of our proprietary
information, these may prove insufficient to prevent misappropriation of
our technology or to deter independent third-party development of
similar technologies. In addition, the laws of various foreign countries
may not protect our products, services or intellectual property rights
to the same extent as do the laws of the United States.
In addition to licensing technologies from third parties, we are
developing and acquiring additional proprietary intellectual property.
Third parties may try to claim that our products or services infringe
their intellectual property. We expect that participants in our markets
will be increasingly subject to infringement claims. Any claim, whether
meritorious or not, could be time consuming, result in costly
litigation, cause product installation delays or require us to enter
into royalty or licensing agreements. These royalty or licensing
agreements might not be available on terms acceptable to us or at all.
Volatility of Our Stock Price
The market price of our common stock has fluctuated in the past and is
likely to continue to fluctuate. In addition, the securities markets,
particularly with respect to Internet stocks, have experienced
significant price and volume fluctuations.
Risks Related to the Year 2000 Problem
The Year 2000 problem stems from the use of a two digit date to
represent the year (e.g., 85 = 1985) in computer software and firmware.
As a result, many currently installed computer systems are not capable
of distinguishing dates beginning with the Year 2000 from dates prior to
the Year 2000. As a result computer systems or applications used by many
companies in a wide variety of industries may experience operating
difficulties unless the systems or applications are modified to process
adequately information related to the date change. Significant
uncertainty exists in the software and other industries concerning the
scope and magnitude of problems associated with the century change. To
the extent Year 2000 issues cause significant delay in, or cancellation
of decisions to purchase products or product support, due to the
reallocation of resources to address Year 2000 issues or otherwise, our
business could be materially adversely affected.
We recognize the need to ensure our operations will not be adversely
impacted by Year 2000 issues. We have put into place a comprehensive
Year 2000 Risk Management initiative that is adequately funded, staffed
and managed. This initiative's scope covers both our information
technology (IT) systems and non-IT systems and addresses all areas of
the Year 2000 issues as defined by the Information Technology
Association of America (ITAA). Our internal inventory audit was
completed January 1999. Due to our recent acquisition of Cohesive, we
have expanded the independent review of our Year 2000 assessment. The
review will be completed in the third quarter of 1999, with final Year
2000 compliance expected in the third quarter of 1999.
We have determined that our Internet Data Center equipment is either
currently Year 2000 compliant or that a funded replacement/upgrade plan
is in place to resolve known issues. Likewise, based on the on-going
assessment relative to our current software service offerings, we
believe that the current versions of these products are either Year 2000
compliant or will not require substantial effort or cost to make them
Year 2000 compliant by the end of the third quarter of 1999. We have
reviewed, and continue to review, internal management information and
other systems in order to identify and modify those products, services
or systems that may not be Year 2000 compliant. We have completed a
preliminary assessment of the Year 2000 compliance of Cohesive's
internal management information and other systems. Based on our
assessment to date, we believe that our internal management information
and other systems and Cohesive's internal management information and
other systems are either Year 2000 compliant or will not require
substantial effort or cost to make them Year 2000 compliant. We do not
foresee any issues with internal IT and internal non-IT systems being
Year 2000 compliant by the end of the third quarter of 1999. However, we
may discover Year 2000 problems during our on-going assessment of
Cohesive's internal management information and other systems which we
may be unable to remediate by the end of the third quarter of 1999.
Our Year 2000 initiative also addresses vendor relationships (both IT
and non-IT) and their readiness/preparedness relating to Year 2000
issues. IT vendors include software providers, hardware providers,
service providers, off the shelf software publishers and IT consultants.
Non-IT providers include electric power suppliers, vendors of
uninterruptable power supplies and generators, telecommunications
service providers, business partners, facilities maintainers and other
non-IT service contractors. In the event that third parties cannot
provide us with products, services or systems that are Year 2000
compliant on a timely basis, our business could be materially adversely
affected. To date, we have not discovered nor do we anticipate any
material issues with vendors and service providers. Evaluation of vendor
Year 2000 preparedness is an on-going process. As our Year 2000
evaluation does not evaluate our vendors' vendors nor our vendors'
customer base viability issues, we will be developing contingency plans
to address specific vendor/service provider concerns. Our contingency
plan shall be completed by September 30, 1999.
Many of our customers maintain their Internet operations on servers
which maybe impacted by Year 2000 complications. The failure of our
customers to ensure that their servers are Year 2000 compliant could
have a material adverse effect on our customers, which in turn could
have a material adverse effect on our business, if our customers are
forced to cease or interrupt Internet operations or experience
malfunctions related to their equipment.
We have established procedures for evaluating and managing the risks and
costs associated with this problem. Funding and execution for this
initiative is within our existing business units and operating budgets
and is not viewed as material. Based on our current assessment, we
believe the costs, excluding employee personnel time and effort, to
resolve Year 2000 issues, other than unanticipated liabilities, should
not exceed $900,000. We further estimate that the time and effort
required of our personnel to resolve Year 2000 issues will not be
material.
While we believe our Year 2000 initiative to be prudent, properly funded
and staffed and well-managed, there can be no assurance that we will
identify and remedy all Year 2000 problems in a timely fashion, that any
remedial efforts in this regard will not involve significant time and
expense, or that these problems will not have a material adverse effect
on our business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We have limited exposure to financial market risks, including changes in
interest rates. The fair value of our investment portfolio or related
income would not be significantly impacted by a 100 basis point increase
or decrease in interest rates due mainly to the short-term nature of the
major portion of our investment portfolio. Our investment portfolio
primarily consists of money market funds, United States Treasury Notes,
and certificates of deposit. An increase or decrease in interest rates
would not significantly increase or decrease interest expense on debt
obligations due to the fixed nature of our debt obligations. We do not
currently have any significant foreign operations and thus are not
currently materially exposed to foreign currency fluctuations.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not a party to any material legal proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Use of Our Initial Public Offering Proceeds
Our initial public offering of Common Stock was effected through a
Registration Statement on Form S-1 (File No. 333-44469) that was
declared effective by the SEC on March 18, 1998 and pursuant to which we
sold an aggregate of 20,500,000 shares of our common stock.
As of June 30, 1999 we had used the estimated aggregate net proceeds of
$69.8 million from our initial public offering as follows:
Construction of plant, building and facilities......... $1.0 million
Purchase and installation of machinery and equipment... $1.7 million
Purchases of real estate............................... --
Acquisition of other business.......................... --
Repayment of indebtedness.............................. $11.5 million
Working capital........................................ $55.6 million
Temporary investments (short-term, interest bearing,
treasury securities)................................... --
Other purposes......................................... --
These amounts represent our best estimate of our use of proceeds for the
period indicated. No such payments were made to our directors or
officers or their associates, holders of 10% or more of any class of our
equity securities or to our affiliates.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We held our Annual Meeting of Stockholders June 2, 1999. Following are
descriptions of the matters voted on and the results of such meeting
(share numbers do not reflect the two-for-one stock split effected on
August 12, 1999):
<TABLE>
<CAPTION>
Votes Votes Votes Votes Broker
For Against Abstained Withheld Non-votes
----------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1.Election of Directors:
Frederick W.W. Bolander.............. 28,205,262 -- -- 5,268,459 --
K.B. Chandrasekhar................... 28,205,262 -- -- 5,268,459 --
John R. Dougery...................... 28,205,062 -- -- 5,268,659 --
Mark Dubovoy......................... 28,201,362 -- -- 5,272,359 --
Ellen M. Hancock..................... 28,204,868 -- -- 5,268,853 --
Max D. Hopper........................ 28,203,662 -- -- 5,270,059 --
Peter A. Howley...................... 28,205,212 -- -- 5,268,509 --
Daniel C. Lynch...................... 28,205,212 -- -- 5,268,509 --
Thadeus J. Mocarski.................. 28,205,112 -- -- 5,268,609 --
Kanwal S. Rekhi...................... 28,204,962 -- -- 5,268,759 --
2.Amendment of Restated Certificate of
Incorporation to increase the number
of authorized shares of Common
Stock from 100,000,000 to
300,000,000.......................... 26,181,505 7,284,833 7,383 -- --
3.Amendment of the Company's 1998
Equity Incentive Plan to increase
the number of shares of Common Stock
reserved for issuance from
3,000,000 to 5,000,000............... 21,420,662 11,720,353 217,420 -- 115,286
4.Proposal to ratify the appointment
of KPMG LLP as independent auditors
of the Company for the fiscal year
ending December 31, 1999............. 33,385,779 81,661 6,281 -- --
</TABLE>
ITEM 5. OTHER INFORMATION
On July 21, 1999, the Company's Board of Directors approved a two-for-
one Common Stock split, which is to be effected in the form of a stock
dividend. Shareholders of record on July 29, 1999 (the record date)
will receive one additional share for every share held on that date.
The shares were distributed on or about August 12, 1999.
On July 27, 1999, the Company completed its acquisition of Cohesive
Technology Solutions, Inc. ("Cohesive") for approximately $115,000,000
in cash and common stock of the Company and the assumption of Cohesive
options. Cohesive is a technology professional services organization
with expertise in networking, web applications and technology solutions.
The Company expects to account for the purchase of Cohesive under the
purchase method of accounting and anticipates a significant portion of
the purchase price will be allocated to goodwill.
Kanwal Rekhi resigned from the Company's Board of Directors on July 21,
1999. The Board appointed Naomi O. Seligman as a director of the
Company to fill the vacancy created by Kanwal Rekhi's resignation,
effective July 21, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit
No. Description of Exhibit
- ------ -------------------------------------------------------------
10.57 Agreement to lease dated June 18, 1999 and associated exhibits
between Helios Limited, Lloyds Bank PLC, Exodus Internet Limited and
Registrant.
10.58 Building lease dated June 8, 1999 between Talus and Registrant.
10.59 Building lease dated June 4, 1999 between G&I Walsh and Registrant.
10.60 Building lease dated June 30, 1999 between Cameron Road Corporate
Park, Ltd. and Registrant.
10.61 Building lease dated June 7, 1999 between 100 TCD Associates Limited
Partnership and TW Conroy 2 LLC and Registrant.
10.62 Building lease dated April 30, 1999 between Reynolds Metals
Development Company and Registrant.
10.63 Loan modification agreement dated May 6, 1999 between Silicon Valley
Bank and Registrant.
10.64 Purchase agreement dated June 17, 1999 between Goldman, Sachs & Co.
and Registrant.
10.65 Exchange and registration rights agreement dated June 22, 1999 among
Goldman, Sachs & Co. and Registrant.
10.66 First supplemental indenture dated June 22, 1999 between Registrant
as issuer and Chase Manhatten Bank and Trust Company, National
Association, as trustee.
10.67 Form of 11 1/4% Senior Note from 1999 Senior Note Offering.
27.1 Financial Data Schedule
b. Reports on Form 8-K
On June 18, 1999, we filed a report on Form 8-K announcing we entered
into an agreement to sell $75 million of 11 1/4% Senior Notes due 2008 in
a private offering.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EXODUS COMMUNICATIONS, INC.
August 13, 1999 /s/ Ellen M. Hancock
---------------------- -----------------------------------
Date Ellen M. Hancock
President, Chief Executive Officer
and Director
August 13, 1999 /s/ Richard. S. Stoltz
--------------------- ------------------------------------
Date Richard S. Stoltz
Chief Financial Officer and
Chief Operating Officer
(Duly Authorized Officer and Chief
Accounting Officer)
<PAGE>
EXHIBIT 10.57
TABLE OF CONTENTS
Clause Heading
Page
1. DEFINITIONS AND INTERPRETATION 1
1.1 Definitions 1
1.2 Interpretation 11
2. Effectiveness 12
3. DEVELOPER'S PLANNING OBLIGATIONS 13
4. TENANT'S PLANNING OBLIGATIONS 15
5. FIT OUT WORKS INFORMATION 18
6. ADDITIONAL CONTRACT SUM AND FIT OUT WORKS COSTS 20
7. CONDITIONALITY 22
8. EXECUTION OF THE WORKS 22
8.1 Execution 22
8.2 Alterations 23
8.3 Fixtures and Fittings 23
8.4 Prohibited Materials 23
8.5 Liability for Design 23
8.6 CDM Regulations 24
9. TIME FOR COMPLETION OF THE WORKS 24
10. WARRANTIES 25
11. INFORMATION 25
11.1 Information as to Progress 25
11.2 Monthly Progress Meetings 25
11.3 Inspection 26
12. INSPECTION OF DEVELOPER'S WORKS 26
12.1 Inspection 26
12.2 Representations to Employer's Agent 27
13. PRACTICAL COMPLETION 27
13.1 Inspection of the Works 27
13.2 Further Inspection(s) 27
13.3 Snagging List 27
13.4 Copy Certificate and Snagging List 27
14. TENANT'S WORKS 28
14.1 Tenant's Access 28
14.2 Consents and Tenant's Works 28
14.5 No Interference with Works 30
14.6 Tenant's Responsibility 30
14.7 Indemnity 30
14.8 Power Supply 31
15. INSURANCE 31
15.1 Insurance of Works under Building Contract 31
15.2 Insurance of Works under Leases 31
15.3 Insurance of Tenant's Works 31
15.4 Evidence of Cover 32
16. GRANT OF LEASE PARKING AREA DEED AND RENT DEPOSIT DEEDS
AND EXCLUSION ORDER 32
16.1 Grant 32
16.2 Acceptance 32
16.3 Lease Terms 33
16.4 Completion 34
16.5 Exclusion Order 34
17. MEASUREMENT 35
17.1 Measurement of Unit 8 and Unit 9 35
18. OCCUPATION 35
19. RENT 36
20. INSURANCE AND SERVICE CHARGE 36
21. DEFECTS 36
22. TENANT'S OBLIGATIONS 37
23. VAT 37
24. INTEREST 37
25. TITLE 37
26. MATTERS AFFECTING THE LEASE 38
26.1 Matters 38
26.2 No Requisitions 38
27. USER 39
28. NON-MERGER 39
29. GENERAL PROVISIONS 39
30. FORFEITURE 39
31. ACKNOWLEDGEMENTS 40
31.1 Acknowledgements 40
31.2 Entire Contract 40
32. NOTICES 40
33. DISPUTES 41
33.1 Disputes generally 41
33.2 Disputes over construction of Agreement 41
33.3 Disputes regarding Determination 42
33.4 Appointment of Expert 42
34. LANDLORD'S LIABILITY 42
34.1 Personal Obligations 42
34.2 Right to Assign 43
34.3 Assignment 43
35. GUARANTOR'S COVENANT 43
36. JURISDICTION 44
36.1 English Law 44
36.2 English Courts 45
36.3 Service of Notices on Guarantor 45
FIRST SCHEDULE (Prohibited Materials) 47
SECOND SCHEDULE (Onerous Conditions) 48
THIRD SCHEDULE (Fit Out Works) 49
FOURTH SCHEDULE Tenants Works - brief details of parts thereof already
approved in principle 50
ANNEXURES 51
THIS AGREEMENT FOR LEASE is made the 1999
BETWEEN:
(1) HELIOS (PARK ROYAL) LIMITED (Company Number 255294) of 2
Berkeley Square London W1X 5HG (the "Developer" which
expression shall include any assignee of the Developer's
interest under this Agreement);
(2) LLOYDS BANK PLC (as Trustee for SCHRODER EXEMPT PROPERTY UNIT
TRUST) of 71 Lombard Street London EC3P 3BS (the "Landlord"
which expression shall include any assignee of the Landlord's
interest under this Agreement);
(3) EXODUS INTERNET LIMITED (Company Number 3591136) whose
registered office is at Fountain Precinct Balm Green Sheffield
South Yorkshire S1 1RZ (the "Tenant"); and
(4) EXODUS COMMUNICATIONS INC 2831 Mission College Boulevard Santa
Clara CA 95054-1838 USA and whose address for service in
England is Dibb Lupton Alsop (ref RSS) 125 London Wall London
EC2Y 5AE or such other address in the UK as the Guarantor may
from time to time notify in writing to the Landlord and the
Developer (the "Guarantor").
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
Where in this Agreement the following words begin with a
capital letter they have the following meanings (unless the
context otherwise requires):
"Access Date" means the date (if any) prior to the Date of
Practical Completion (but in any event no more than four weeks
prior to the anticipated Date of Practical Completion
certified by the Employers Representative) upon which the
Employer's Representative certifies that the Tenant may have
access to the Premises for the purpose of carrying out the
Tenant's Works (but no such certificate shall be given unless
full and free access to the Premises is available for the
Tenant and unless the Works have reached a sufficiently
advanced stage to enable the Tenant to commence and thereafter
carry out the Tenant's Works without delaying completion of
the Works).
"Additional Costs" the Developer's reasonable bona fide
estimate of the amount of additional costs and expenses
arising out of any Developer's Onerous Conditions attached to
the grant of planning permission in respect of either the
Application or the Tenant's Application (based on facts and
information disclosed to the Tenant upon reasonable request).
"Agreed Term" means 25 years commencing on the Quarter Day (as
defined in the Leases) immediately preceding the Date of
Practical Completion.
"Application" means the application for reserved matters
approval pursuant to the Outline Planning Permission in
respect of the Base Build Works which was made by or on behalf
of the Developer to the London Borough of Ealing on 17th March
1999.
"Architect" means William Gower Partnership Limited or such
other professionally qualified Architect as the Developer may
from time to time appoint and notify to the Tenant in writing.
"Base Build Works" that part of the Works as are identified in
the specification annexed and marked "Outline Specification
(Employers Requirements) Phase 3 - Units 8 & 9".
"Building Contract" means the contract made between the
Developer and the Contractor for the construction of the Works
which shall be in the form of the JCT Standard Form of
Building Contract with Contractors Design 1998 edition
together with amendments previously agreed by the Tenant.
"Certificate of Practical Completion" means the certificate of
practical completion or statement of practical completion (as
appropriate) issued pursuant to the Building Contract to
indicate that practical completion has been achieved.
"CDM Regulations" means the Construction (Design & Management)
Regulations 1994.
"Clause" means a clause in this Agreement.
"Common Parts" are as defined in the Leases.
"Completion Date" means five Working Days after whichever is
the latest of:
(a) the Date of Practical Completion; and
(b) the date both the Unit 8 Rent and the Unit 9 Rent are
agreed or determined pursuant to Clause 17.
"Contract Sum" means the lower of (a) L 1,943,900 and (b) the
actual sum specified as the contract sum in the Building
Contract.
"Conduits" are as defined in the Leases.
"Contractor" means Tolent Construction Limited or such other
contractor which has entered into or shall enter into the
Building Contract.
"Corridor" means the land between Unit 7 Phase 1 Matrix Park
Coronation Road Park Royal London NW10 and Unit 8, shown for
the purpose of identification only edged red on the plan
annexed to the Corridor Lease.
"Corridor Lease" means the lease of the Corridor in the form
of draft annexed hereto.
"Date of Practical Completion" means the date on which the
Works are practically completed in accordance with the
Building Contract being the date specified in the Certificate
of Practical Completion and the expressions "practical
completion" and "practically completed" shall be construed
accordingly and without reference to:
(a) any works of an unfinished nature which would
normally be the subject of a building contractor's
snagging list
(b) any unfinished landscaping works the completion of
which is to be postponed in whole or in part to the
next planting season
(c) any defects liability period.
"Developer's Onerous Conditions" means any conditions which
would have an adverse effect (having regard in the case of
paragraphs (a) and (b) below to the Developer's reasonable
expectation or assessment of all the relevant issues as at the
date of this Agreement) upon any of the following:
(a) the cost to the Developer of designing and/or
constructing the Works;
(b) the time required by the Developer to complete the
construction of the Works; or
(c) the capital value of the Estate to the Landlord once
the Works are completed
unless in relation to paragraphs (a) or (b) above the Tenant
has paid the Additional Costs to the Developer or has provided
such reasonable security reasonably requested by the Developer
for the payment of the Additional Costs all in accordance with
Clauses 3.10 or 4.9 provided that such conditions shall not be
regarded as adverse if the required Additional Costs would be
less than L 5,000.
"Documents" means the plans numbered A3159.003.PO1,
A3159:003.P02B, A3159:003.P03 and A3159:003:P04D (all dated
March 1999) and F1.9707.10 (dated October 97) and the outline
specification (employers requirements) revision (ix) annexed
hereto.
"Employer's Agent" means Gleeds Management Services or such
other professionally qualified employer's agent as the
Developer may from time to time appoint and notify to the
Tenant in writing.
"Employer's Representative" means the Employer's Agent or such
other properly qualified person as the Developer shall notify
to the Tenant in writing from time to time.
"Estate" has the meaning ascribed to that term in the Leases.
"Exclusion Order" means an order granted on
pursuant to s.38(4) Landlord and Tenant Act
1954 (as amended by s.5 Law of the Law of Property Act 1969)
and the joint originating application made by the Landlord and
the Tenant dated operating to
exclude the tenancy to be created by the Corridor Lease from
the security of tenure provisions afforded by sections 24 to
28 (inclusive) of the Landlord and Tenant Act 1954 (as
amended).
"Fit Out Consents" means all relevant permissions and consents
(other than the Satisfactory Tenant's Planning Permission)
including but not limited to Building Regulation and Fire
Authority approvals and requirements set out by the statutory
undertakings (i.e. gas, water and electric boards) which are
necessary for the Fit Out Works.
"Fit Out Works" means that part of the Works specified in the
Third Schedule.
"Fit Out Works Costs" means L 5,217.50 plus VAT as such amount
may be adjusted pursuant to Clauses 5.3 or 5.4.
"Fixed Price Date" means the 23rd July 1999.
"Gross Internal Area" means the gross internal area of Unit 8
and Unit 9 (as the context requires) expressed in square feet
and measured in accordance with the Code of Measuring Practice
of the Royal Institution of Chartered Surveyors and the
Incorporated Society of Valuers and Auctioneers (Fourth
Edition November 1993).
"LAD Expiry Date" the date falling three months from and
including the Target Completion Date or such longer period as
may be specified in a Developer's election notice (if any)
referred to in Clause 9.2.
"Leases" means the Unit 8 Lease and the Unit 9 Lease and the
Corridor Lease and the Supplemental Lease to be granted by the
Landlord to the Tenant in the form of the drafts annexed
hereto.
"Licence for Alterations" means a licence in the form annexed
relating to the Tenant's Works (or such of them as require
Landlord's consent under the terms of the Leases) with the
approved plans and drawings submitted in accordance with
Clause 14.2.1.
"Long Stop Date" means the earlier of:
(a) the date six months from the date of this Agreement (
1999);
(b) the date 45 days (or such longer period as may be
notified to the Tenant in writing by the Developer at
any time during that 45 day period) from and
including the date when a Satisfactory Full Planning
Permission is granted or is deemed to be granted
pursuant to Clause 3.8;
but if such date is not a Working Day the immediately
succeeding Working Day.
"Onerous Conditions" means any of the conditions listed in the
Second Schedule provided that any condition shall not be an
onerous condition within this definition (notwithstanding the
terms of the conditions listed in the Second Schedule) if they
are conditions to the Outline Planning Permission.
"Outline Planning Permission" means the outline planning
permission number P/1997/0789 dated 26th August 1997.
"Parking Area Deed" means the deed relating to car spaces used
in connection with Unit 8 and Unit 9 in the form annexed.
"Permission Date" means the date on which a Satisfactory Full
Planning Permission is granted or is deemed to be granted
pursuant to Clause 3.8.
"Plan" means the plan numbered A3159/0/38 and marked "Estate"
attached hereto.
"Planning Act" means the Town and Country Planning Act 1990
and any statutory re-enactment or modification thereof.
"Planning Agreement" means any agreement under Section 106 of
the Planning Act or Section 33 of the Local Government
(Miscellaneous Provisions) Act 1982 or any statutory
re-enactment or modification thereof or any agreement under
any other enactment having the same or similar effect
including any agreement under the provisions of any enactment
relating to roads drainage sewerage or other works which may
properly be required.
"Premises" means Unit 8 and Unit 9 and the Corridor and the
Supplemental Land collectively and where relevant, each and
every part of the same.
"Prohibited Materials" means the materials referred to in the
First Schedule.
"Quantity Surveyor" means Gleeds Management Services or such
other professionally qualified quantity surveyor as the
Developer may from time to time appoint and notify to the
Tenant in writing.
"Rent Commencement Date" means the earlier of:
(a) the date six calendar months after the Date of
Practical Completion; and
(b) the date six calendar months after the Access Date
PROVIDED THAT if following the Access Date but before
the Date of Practical Completion the Tenant is
prevented from carrying out the Tenant's Works and
thereafter taking up occupation of the Premises due
to any event which under the Building Contract
entitles the building contractor to an extension of
time (unless such event has occurred due to any act
or default of the Tenant its workmen or anyone
authorised by the Tenant) such period of six months
shall be extended by a period equal to the length of
any extension of time afforded to the building
contractor less a period equal to the period between
the Access Date and the date when the event occurred
and PROVIDED FURTHER THAT such period of six months
shall not be extended beyond the date six calendar
months after the Date of Practical Completion;
but in either case subject to such period of six calendar
months being reduced pursuant to Clauses 5.3 or 5.4
"Rent Deposit Deeds" means the rent deposit deeds each in the
form annexed in respect of (a) Unit 8 and (b) Unit 9.
"Review Date" means the fifth anniversary of the date upon
which the Agreed Term commences and each fifth anniversary of
such date thereafter.
"RPS" means RPS Consultants Limited of 1 Stamford Street
London SE1 9NT.
"Satisfactory Full Planning Permission" means the grant of
reserved matters approval for the Base Build Works pursuant to
the Application which:
(a) does not contain Onerous Conditions; and
(b) does not require the Landlord the Developer or the
Tenant to enter into any Planning Agreement; and
(c) does not contain any Developer's Onerous Conditions;
and
(d) does not leave any reserved matters outstanding that
would prevent the immediate commencement of the
Works.
"Satisfactory Tenant's Planning Permission" means the grant of
detailed planning permission pursuant to the Tenant's
Application which:
(a) does not contain Onerous Conditions; and
(b) does not require the Landlord the Developer or the
Tenant to enter into any Planning Agreement; and
(c) does not contain any Developer's Onerous Conditions;
and
(d) does not leave any matters outstanding which would
prevent the immediate commencement of the Fit Out
Works and in the case of the other works in respect
of which the Tenant's Application has been made
commencement following the earlier of the Access Date
and the Date of Practical Completion.
"Secretary of State" means the Secretary of State for the
Environment or other minister or authority for the time being
having or entitled to exercise the powers now conferred upon
the Secretary of State for the Environment by the Planning
Acts.
"Schedule" means a schedule to this Agreement.
"Structural Engineer" means Kennedy Watts Partnership Limited
or such other professionally qualified structural engineer as
the Developer may from time to time appoint and notify to the
Tenant in writing.
"Supplemental Land" means the land adjacent to Unit 7 Phase 1
Matrix Park Coronation Road Park Royal London NW10, shown for
the purpose of identification only edged red on the plan
annexed to the Supplemental Lease.
"Supplemental Lease" means the lease of the Supplemental Land
in the form of draft annexed hereto.
"Target Completion Date" means the later of 234 days after
Unconditional Date or 234 days after the date of this
Agreement ( 1999) or such later date as
is determined pursuant to Clauses 5.3 or 5.4 or such later
date as shall be extended by a period equal to the length of
any extension to the Target Completion Date pursuant to Clause
9.1.
"Tenant's Application" means the application for detailed
planning permission in respect of the Fit Out Works and the
Tenant's Works which was made by or on behalf of the Tenant to
the London Borough of Ealing on 12 April 1999.
"Tenant's Permission Date" means the earlier of:
(a) the date on which a Satisfactory Tenant's Planning
Permission is granted or is deemed to be granted
pursuant to Clause 4.7; or
(b) the date of the Tenant's notice, served upon the
Developer waiving the requirement for a Satisfactory
Tenant's Planning Permission.
"Tenant's Works" means the fitting out works to the Premises
to be carried out by the Tenant pursuant to Clause 14
comprising the provision of all such interior fittings and
equipment and the carrying out of all such works as the Tenant
requires to enable it to carry on in the Premises the user
permitted by the Leases.
"Unconditional Date" the latest of:
(a) the Permission Date;
(b) the Tenant's Permission Date; and
(c) the date upon which the Developer obtains such other
statutory or regulatory approvals it requires to
enable it to lawfully commence the Base Build Works
and the Fit Out Works.
"Unit 8" means that part of the Estate shown for the purpose
of identification only edged red on the plan annexed to the
Unit 8 Lease.
"Unit 8 Lease" means the lease of Unit 8 to be granted by the
Landlord to the Tenant in the form of draft annexed hereto.
"Unit 8 Rent" L 283,264 a year (subject to variation as
provided in Clause 17) and subject to upward review at the
expiration of every fifth year of the Agreed Term.
"Unit 9" means that part of the Estate shown for the purpose
of identification only edged red on the plan annexed to the
Unit 9 Lease.
"Unit 9 Lease" means the Lease of Unit 9 to be granted by the
Landlord to the Tenant in the form of the draft annexed
hereto.
"Unit 9 Rent" means L 141,632 a year (subject to variation as
provided in Clause 17 and subject to upward review at the
expiration of every fifth year of the Agreed Term.
"VAT" means Value Added Tax or other tax of a similar nature.
"Working Day" means a day (other than a Saturday or Sunday) on
which banks are open for business in the City of London.
"Works" means the construction on the Premises of:
(a) the Base Build Works in accordance with the
Documents which state inter alia that the Base Build
Works shall be designed and constructed to comply
with all statutory requirements, the Building
Regulations, the Fire Authority Regulations and
requirements set out by the statutory undertakings
(i.e. gas, water and electric boards) and the current
edition of the IEE Regulations together with such
Conduits and Common Parts specified in the Documents;
and
(b) the Fit Out Works in accordance with the
specification set out in the Third Schedule the Fit
Out Consents and the Satisfactory Tenant's Planning
Permission insofar as the same relates to the Fit Out
Works.
1.2 Interpretation
Save to the extent that the context or the express provisions
of this Agreement otherwise require:
1.2.1 headings and sub-headings are for ease of reference
only and shall not be taken into consideration in the
interpretation or construction of this Agreement;
1.2.2 all references to agreements documents or other
instruments include (subject to all relevant
approvals) a reference to that agreement document or
instrument as amended supplemented substituted
novated or assigned from time to time;
1.2.3 all references to any statute or statutory provision
shall include references to any statute or statutory
provision which amends extends consolidates or
replaces the same or which has been amended extended
consolidated or replaced by the same and shall
include any orders regulations codes of practice
instruments or other subordinate legislation made
under the relevant statute or statutory provision;
1.2.4 any reference to time of day shall be a reference to
London time;
1.2.5 words importing the singular include the plural and
vice versa;
1.2.6 words importing a particular gender include all
genders;
1.2.7 "person" includes any individual partnership firm
trust body corporate government governmental body
authority agency or unincorporated body of persons or
association;
1.2.8 any reference to a public organisation shall be
deemed to include a reference to any successor to
such public organisation or any organisation or
entity which has taken over the functions of such
public organisation;
1.2.9 references to "Party" means a party to this
Agreement;
1.2.10 obligations and liabilities of a party comprising
more than one person are obligations and liabilities
of such persons jointly and severally;
1.2.11 "Landlord" includes any assignee of the Landlord's
interest under this Agreement.
Part 1
2. EFFECTIVENESS
2.1 Clauses 1-6 (inclusive), 23, 24 and 29-36 (inclusive) of this
Agreement shall come into effect on the date hereof
2.2 If a Satisfactory Full Planning Permission has been obtained
by the Long Stop Date but as a result of the failure to obtain
a Satisfactory Tenant's Planning Permission (unless the Tenant
elects by notice in writing given to the Developer to waive
the requirement for a Satisfactory Tenant's Planning
Permission in order to make this Agreement unconditional) the
Unconditional Date has not occurred by the Long Stop Date the
Tenant shall pay to the Landlord on the Long Stop Date
liquidated damages of L 125,000 and the rights remedies and
obligations of the parties under this Agreement shall be at an
end save as to the Tenant's obligations (or right to elect)
contained in this clause and any antecedent breach by any
party and save also that the Tenant shall cancel any
registration made to protect its interest under this
Agreement.
3. DEVELOPER'S PLANNING OBLIGATIONS
3.1 The Developer shall progress the Application and use all
reasonable endeavours to obtain a Satisfactory Full Planning
Permission as soon as reasonably practicable after the date
hereof.
3.2 The Developer shall at its sole cost diligently pursue the
Application and shall use its reasonable endeavours to obtain
a Satisfactory Full Planning Permission but this shall not
oblige the Developer to appeal against any actual or deemed
refusal nor to appeal against any Onerous Conditions or
Developer's Onerous Conditions nor to enter into any Planning
Agreement nor to obtain any planning permission in respect of
the Fit Out Works.
3.3 The Developer shall supply to the Tenant a copy of the
Application the accompanying plans and any covering
correspondence.
3.4 The Developer shall where it is necessary or desirable to do
so enter into discussions and negotiations with the local
planning authority and take such steps in the course of or
following such discussions and negotiations as are
commercially prudent with a view to obtaining a Satisfactory
Full Planning Permission PROVIDED THAT the Developer shall
not vary the terms of the Application in a manner beyond that
which the Developer is permitted to do pursuant to Clause 8.2
without the prior written consent of the Tenant such consent
not to be unreasonably withheld or delayed.
3.5 The Developer will keep the Tenant informed of such
discussions and negotiations and of the progress of the
Application and shall promptly supply to the Tenant one copy
of all relevant correspondence plans and other documentation
after any reasonable request by the Tenant to do so.
3.6 Within five Working Days of the receipt of notification of the
grant or refusal of the Application the Developer shall send a
copy of the grant or refusal or decision to the Tenant and to
its solicitors and shall attach to any such copy grant or
decision a notice requiring the Tenant to respond within five
Working Days pursuant to the provisions of Clause 3.7 hereof.
3.7 Within five Working Days of the receipt by the Tenant of a
copy of a written notification of the grant of planning
permission pursuant to the Application the Tenant shall notify
the Developer in writing (the "Tenant's Notice"):
3.7.1 whether it considers the planning permission is a
Satisfactory Full Planning Permission; and
3.7.2 if not which condition or conditions attached to the
grant of planning permission falls within the
definition of Onerous Conditions and/or why the terms
of any Planning Agreement would fall within the
definition of Onerous Conditions if imposed as
conditions on a planning permission.
3.8 In the event of the Tenant failing to comply with Clause 3.7
and planning permission having been granted such planning
permission shall be deemed to be Satisfactory Full Planning
Permission for the purposes of this Agreement if and when the
Developer notifies the Tenant in writing that it considers it
is a Satisfactory Full Planning Permission.
3.9 Within five Working Days of receipt by the Developer of the
Tenant's Notice or within five Working Days of the date when
the Tenant should have served such notice but failed to do so
the Developer shall notify the Tenant in writing:
3.9.1 whether it considers the planning permission is a
Satisfactory Full Planning Permission; and
3.9.2 if not which condition or conditions attached to the
grant of planning permission falls within the
definition of Developer's Onerous Conditions and/or
why the terms of any Planning Agreement would fall
within the definition of Developer's Onerous
Conditions if imposed as conditions on a planning
permission; and
3.9.3 if the Developer considers a condition or conditions
attached to the grant of planning permission falls
within paragraphs (a) or (b) of the definition of
Developer's Onerous Conditions and if so the amount
of the Additional Costs and what reasonable security
for the payment of the Additional Costs would be
acceptable to the Developer.
3.10 Within five Working Days of receipt by the Tenant of the
Developer's notification pursuant to Clause 3.9 the Tenant
shall either:
3.10.1 notify the Developer in writing that the Tenant
agrees to pay the Additional Costs and shall at the
same time as serving such notice pay to the Developer
the Additional Costs or provide to the Developer such
reasonable security for the payment of the Additional
Costs as the Developer may request; or
3.10.2 notify the Developer in writing that the Tenant does
not agree to pay the Additional Costs in which case
the grant of planning permission for the Base Build
Works shall be deemed not to be a Satisfactory Full
Planning Permission for the purposes of this
Agreement.
3.11 If the Developer does not agree with the Tenant that the
conditions in any planning permission are Onerous Conditions
the matter shall be referred to arbitration in accordance with
Clause 33.
4. TENANT'S PLANNING OBLIGATIONS
4.1 The Tenant shall progress the Tenant's Application and use all
reasonable endeavours to obtain a Satisfactory Tenant's
Planning Permission as soon as reasonably practicable after
the date hereof and shall not until this Agreement becomes
unconditional either itself or through any other party acting
on its behalf prepare submit or progress any other planning
application relating in any way to the Estate.
4.2 The Tenant shall at its sole cost diligently pursue the
Tenant's Application and shall use all reasonable endeavours
to obtain a Satisfactory Tenant's Planning Permission but this
shall not oblige the Tenant to appeal against any actual or
deemed refusal nor to appeal against any Onerous Conditions
nor to enter into any Planning Agreement.
4.3 The Tenant shall supply to the Developer a copy of the
Tenant's Application the accompanying plans and any covering
correspondence.
4.4 The Tenant shall where it is necessary or desirable to do so
enter into discussions and negotiations with the local
planning authority and take such steps in the course of or
following such discussions and negotiations as are
commercially prudent with a view to obtaining a Satisfactory
Tenant's Planning Permission PROVIDED THAT the Tenant shall
not vary the terms of the Tenant's Application without the
prior written consent of the Developer and the Landlord (such
consent not to be unreasonably withheld or delayed where such
variation is required for the purpose of obtaining Building
Regulation and Fire Authority approvals or complying with any
requirements properly made by any competent authority).
4.5 The Tenant will keep the Developer informed of such
discussions and negotiations and of the progress of the
Tenant's Application and shall promptly supply one copy of all
relevant correspondence plans and other documentation after
any reasonable request by the Developer to do so.
4.6 Within five Working Days of the receipt of notification of the
grant or refusal of the Tenant's Application the Tenant shall
send a copy of the grant or refusal or decision to the
Developer and to its solicitors and shall attach to any such
copy grant or decision a notice requiring the Developer to
respond within five Working Days pursuant to the provisions of
Clause 4.7 hereof and in the case of the grant of planning
permission the Tenant shall notify the Developer (the
"Tenant's Fit Out Notice"):
4.6.1 whether it considers the planning permission is a
Satisfactory Tenant's Planning Permission; and
4.6.2 if not which condition or conditions attached to the
grant of planning permission falls within the
definition of Onerous Conditions and/or why the terms
of any Planning Agreement would fall within the
definition of Onerous Conditions if imposed as
conditions on a planning permission.
4.7 In the event of the Tenant failing to comply with Clause 4.6
and planning permission having been granted such planning
permission shall be deemed to be Satisfactory Tenant's
Planning Permission for the purposes of this Agreement if and
when the Developer notifies the Tenant in writing that it
considers it is a Satisfactory Tenant's Planning Permission.
4.8 Within five Working Days of receipt by the Developer of the
Tenant's Fit Out Notice or within five Working Days of the
date when the Tenant should have served such notice but failed
to do so the Developer shall notify the Tenant in writing:
4.8.1 whether it considers the planning permission is a
Satisfactory Tenant's Planning Permission; and
4.8.2 if not which condition or conditions attached to the
grant of planning permission falls within the
definition of Developer's Onerous Conditions and/or
why the terms of any Planning Agreement would fall
within the definition of Developer's Onerous
Conditions if imposed as conditions on a planning
permission; and
4.8.3 if the Developer considers a condition or conditions
attached to the grant of planning permission fall
within paragraphs (a) or (b) of the definition of
Developer's Onerous Conditions and if so the amount
of Additional Costs and what reasonable security for
the payment of the Additional Costs would be
acceptable to the Developer.
4.9 Within five Working Days of receipt by the Tenant of the
Developer's notification pursuant to Clause 4.8 the Tenant
shall either:
4.9.1 notify the Developer in writing that the Tenant
agrees to pay the Additional Costs and shall at the
same time as serving such notice pay to the Developer
the Additional Costs or provide to the Developer such
reasonable security for the payment of the Additional
Costs as the Developer may request; or
4.9.2 notify the Developer in writing that the Tenant does
not agree to pay the Additional Costs in which case
the grant of planning permission for the Fit Out
Works and the Tenant's Works shall be deemed not to
be a Satisfactory Tenant's Planning Permission for
the purposes of this Agreement.
4.10 If the Developer does not agree with the Tenant that the
conditions in any planning permission are Onerous Conditions
the matter shall be referred to arbitration in accordance with
Clause 33.
5. FIT OUT WORKS INFORMATION
5.1 The Tenant shall supply to the Developer such information
concerning the Fit Out Works reasonably required by the
Developer (the "Additional Information") within five Working
Days of receipt of a request for the same from the Developer
or such longer period as the Developer may agree in writing
(the "Additional Information Date") (time to be of the
essence).
5.2 In the event that the Tenant fails to comply with Clause 5.1
the Developer may either:
5.2.1 elect in writing to cancel that element of the Fit
Out Works for which no Additional Information has
been supplied; or
5.2.2 elect in writing to continue with that element of the
Fit Out Works for which no Additional Information has
been supplied.
5.3 If the Developer makes an election pursuant to Clause 5.2.1 to
cancel an element of the Fit Out Works:
5.3.1 the element or elements of the Fit Out Works so
cancelled shall be deleted from the Third Schedule
and shall not form part of the definition of the
Works nor the definition of the Fit Out Works;
5.3.2 the Developer shall not be under any obligation to
construct that element of the Fit Out Works so
cancelled;
5.3.3 the Developer shall be entitled to make consequential
amendments to the Base Build Works the remaining Fit
Out Works and the Fit Out Works Costs to reflect that
element of the Fit Out Works so cancelled and the
cost of any consequential works require to be
undertaken;
5.3.4 the Developer shall be entitled to extend the Target
Completion Date and the LAD Expiry Date by a period
equal to the delay caused to the Developer in
consequence of the cancellation;
5.3.5 the Developer shall be entitled to reduce the period
between the Date of Practical Completion and the Rent
Commencement Date by a period equal to the period of
delay caused to the Developer in consequence of the
cancellation;
5.3.6 the Tenant shall pay to the Developer within 5
Working Days of written demand the amount of any
reasonable and proper out of pocket costs and
expenses incurred by the Developer any loss and/or
expense payable to the Contractor in consequence of
the cancellation and any sum properly due to the
Contractor for the consequential adjustments to the
Base Build Works and the remaining Fit Out Works
PROVIDED THAT the Developer shall provide to the
Tenant such reasonable details and information as the
Tenant shall reasonably require in order to verify
any such costs payments or sums.
5.4 If the Developer makes an election pursuant to Clause 5.2.2 to
proceed with an element of the Fit Out Works then:
5.4.1 the Developer shall specify in its election a new
Additional Information Date by which the Additional
Information must be provided to the Developer;
5.4.2 the Developer shall be entitled to make consequential
adjustments to the Fit Out Works Costs to reflect the
delay caused to the Developer in consequence of the
Tenant's failure to provide the Additional
Information by the Additional Information Date;
5.4.3 the Developer shall be entitled to extend the Target
Completion Date and the LAD Expiry Date by a period
equal to the delay caused to the Developer in
consequence of the Tenant's failure to provide the
Additional Information by the Additional Information
Date; and
5.4.4 the Developer shall be entitled to reduce the period
between the Date of Practical Completion and the Rent
Commencement Date by a period equal to the period of
delay caused to the Developer in consequence of the
Tenant's failure to provide the Additional
Information by the Additional Information Date.
5.5 In the event that the Developer makes an election pursuant to
Clause 5.2.2 to proceed with an element of the Fit Out Works
the provisions of this Clause 5 shall apply mutatis mutandis
(except that the Additional Information Date shall be the new
date specified in the Developer's election) as often as may be
necessary until all elements of the Additional Information
have been supplied or all elements of the Fit Out Works have
been cancelled which ever is the earlier.
6. ADDITIONAL CONTRACT SUM AND FIT OUT WORKS COSTS
6.1 If the Unconditional Date has not occurred on or before the
Fixed Price Date as a result of the failure to obtain a
Satisfactory Tenant's Planning Permission the Tenant shall pay
to the Developer on the Unconditional Date an additional sum
(the "Additional Contract Sum") calculated in accordance
with the following formula together with VAT thereon (and the
Developer shall supply to the Tenant a valid VAT invoice
within 5 Working Days of the Unconditional Date):
Additional Contract = (Contract Sum x IF2) x the Relevant Period
Sum ---
IF1
-------------------
Index Period
where:
6.1.1 In circumstances where a Satisfactory Full Planning
Permission has been obtained on or before the Fixed
Price Date:
IF1 = the Index Figure published immediately before
the Fixed Price Date
Relevant = the number of days between the Fixed Price
Period Date and the Unconditional Date;
or
6.1.2 In circumstances where a Satisfactory Full Planning
Permission has been obtained after the Fixed Price
Date:
IF1 = the Index Figure published immediately before
the date when Satisfactory Full Planning
Permission was obtained
Relevant = the number of days between the date
Period when Satisfactory Full Planning
obtained and the Unconditional Date;
and in either case
6.1.3 where:
Index = the BCIS Tender Price Index or in the event of
Figure such index ceasing to be published such other
reasonably comparable index nominated by the
Developer
IF2 = the Index Figure published immediately after the
Unconditional Date
Index = the number of days between the date when IF1 is
Period published and the date when IF2 is published
6.2 The Tenant shall pay to the Developer on the Unconditional
Date ninety five per cent. (95%) of the Fit Out Works Costs
and the Developer shall pay such monies into a deposit account
in the name of the Developer and hold the same as stakeholders
(the "Deposit Account").
6.3 The Developer shall be entitled to make withdrawals from the
Deposit Account two Working Days after making an application
for payment to the Tenant.
6.4 Each application for payment of the Fit Out Works Costs made
by the Developer to the Tenant shall be accompanied by the
following:
6.4.1 to the extent that the Fit Out Works Costs relate to
payments to be made to the Contractor pursuant to the
Building Contract, a certificate from the Employer's
Agent that the application for payment made by the
Contractor insofar as it relates to the Fit Out Works
is in accordance with the Building Contract and a
certificate from the Quantity Surveyor certifying how
much of the Contractor's application for payment is
attributable to the Fit Out Works;
6.4.2 a statement of any other part of the Fit Out Works
Costs then due and payable and the basis upon which
they are then due and payable;
6.4.3 a valid VAT invoice.
6.5 The Tenant shall pay to the Developer on the Date of Practical
Completion the balance of the Fit Out Works Costs.
Part 2
7. CONDITIONALITY
Save in the case of Clauses 23 and 24 which shall have
immediate effect, this part of this Agreement is conditional
upon and shall not come into effect unless and until the
Unconditional Date has occurred before the Long Stop Date.
8. EXECUTION OF THE WORKS
8.1 Execution
The Developer shall carry out the Works in accordance with the
Outline Planning Permission the Satisfactory Full Planning
Permission the Satisfactory Tenant's Planning Permission the
Fit Out Consents and all other relevant permissions and
consents (which insofar as the same are Fit Out Consents or
are required for and relate to the Base Build Works the
Developer will use all reasonable endeavours to obtain as soon
as possible) in a good and workmanlike manner with good
quality materials and otherwise in accordance with the terms
of this Agreement (but for the avoidance of doubt the
Developer is not obliged to comply with any fire or other
regulations insofar as they concern the Tenant's Works).
8.2 Alterations
No alterations to the Documents shall be made without the
prior approval of the Tenant (such approval not to be
unreasonably withheld) but such approval shall not be
required:
8.2.1 to an alteration required for the purpose of
obtaining any requisite permissions consents licences
and approvals or complying with any requirements
properly made by any competent authority; or
8.2.2 for the substitution of materials where those
originally specified are not obtainable either at all
or at a reasonable cost or within a reasonable time
and where the substitute materials are of an
equivalent (or better) quality
PROVIDED THAT in any event the Developer shall within 5
Working Days notify the Tenant of any alterations and provide
full details relating thereto including copy documents and an
explanation of the relevant circumstances.
8.3 Fixtures and Fittings
All items in the nature of the landlord's fixtures and
fittings installed as part of the Works shall become
landlord's fixtures and fittings and remain the property of
the Landlord.
8.4 Prohibited Materials
The Developer will not use or permit or suffer to be used in
the Works any Prohibited Materials.
8.5 Liability for Design
The Developer shall have the same liability to the Tenant in
respect of the design of the Works whether under statute or
otherwise as would an architect or as the case may be other
appropriate professional designer holding himself out as
competent to take on work for such design.
8.6 CDM Regulations
On the Date of Practical Completion the Developer shall give
to the Tenant a copy of the interim Health and Safety file
then available relating to the Works and within 20 Working
Days following the Date of Practical Completion the Developer
shall give to the Tenant a copy of the final Health and Safety
File relating to the Works prepared pursuant to the CDM
Regulations.
9. TIME FOR COMPLETION OF THE WORKS
9.1 The Developer shall use all reasonable endeavours to ensure
that the Works are practically completed by the Target
Completion Date unless prevented or delayed by any cause which
under the Building Contract entitles the building contractor
to an extension of time or any other cause or circumstance not
within the reasonable control of the Developer in which case
the Developer shall be entitled to an extension of time as
shall be reasonable in all the circumstances.
9.2 If the Works are not practically completed by the date
specified in Clause 9.1 above (as such date is extended in
accordance with that Clause if applicable) the Developer shall
pay liquidated damages at a rate of Two Thousand Pounds
(L 2,000) per day up to and including the LAD Expiry Date
PROVIDED THAT at any time after the LAD Expiry Date the Tenant
shall have the right to terminate this Agreement (but without
prejudice to the rights of the parties in respect of any
antecedent breach) by notice in writing to the Developer
unless prior to the LAD Expiry Date the Developer shall elect
by notice in writing to the Tenant to extend the LAD Expiry
Date to a later date specified in the notice of election (such
later date not being later than the date falling 12 months
after the Target Completion Date) and such liquidated damages
shall continue to be payable for the period up to the date
specified in the notice of election.
9.3 Either party shall be entitled to terminate this Agreement if
the Works are not practically completed by the date 12 months
after the Target Completion Date.
9.4 After the LAD Expiry Date the Developer shall have no further
liability to the Tenant whether for liquidated or unliquidated
damages but without prejudice to the rights of the parties in
respect of any antecedent breach relating to matters other
than delay under this clause.
9.5 If the Developer is obliged to pay to the Tenant liquidated
damages in accordance with Clause 9.2 the first payment of
liquidated damages shall be made on the date falling three
months from and including the Target Completion Date and
thereafter any further liquidated damages shall be paid to the
Tenant on the date specified in the Developer's notice of
election served pursuant to Clause 9.2.
10. WARRANTIES
The Developer shall procure that prior to the Date of
Practical Completion there shall be delivered to the Tenant
collateral agreements executed as Deeds by each of the
Contractor and the Employer's Agent and within three months of
the Date of Practical Completion there shall be delivered to
the Tenant collateral agreements executed as Deeds by each of
the Structural Engineer, the Architect and RPS such collateral
agreements to be substantially in the form of each of the
drafts annexed hereto provided that any amendment to the same
shall only be made with the consent of the Tenant such consent
not to be unreasonably withheld or delayed.
11. INFORMATION
11.1 Information as to Progress
The Developer shall keep the Tenant informed of progress with
the Works and supply such other information in connection with
the Works as the Tenant may reasonably require from time to
time.
11.2 Monthly Progress Meetings
The Developer shall as often as is requested by the Tenant
(but no more than once a month) convene a meeting between the
Tenant the Developer and the Contractor in order to discuss
the progress of the Works and shall notify the Tenant of such
meetings 5 Working Days in advance.
11.3 Inspection
The Tenant shall have the right to appoint or nominate its own
representative to make inspections of the Works at its own
cost and subject to Clause 12.
12. INSPECTION OF DEVELOPER'S WORKS
12.1 Inspection
Subject to the Tenant giving the Developer or the Employer's
Representative two Working Days' notice the Tenant or its duly
authorised agent shall be allowed at all reasonable times in
the company of the Employer's Representative to view the state
and progress of the Works and to inspect the workmanship and
the materials used (but not to test any of the materials) on
the following conditions:
12.1.1 the person inspecting must report to the site office
before making an inspection and act in accordance
with the instructions of the Contractor's
representatives;
12.1.2 the person inspecting must comply with all relevant
safety and security precautions and insurance
requirements;
12.1.3 every inspection is entirely at the risk of the
person inspecting;
12.1.4 there must be no communication with the building
contractor about the Works; and
12.1.5 the progress of the Works must not be impeded.
12.2 Representations to Employer's Agent
If as a result of an inspection the Tenant wishes to make
representations regarding the Works such representations shall
be made exclusively to the Employer's Agent who shall have
regard to such representations.
13. PRACTICAL COMPLETION
13.1 Inspection of the Works
The Developer shall procure that the Tenant is given not less
than ten Working Days notice in writing of the date on which
the Employer's Representative intends to inspect the Works
with a view to issuing the Certificate of Practical Completion
pursuant to the Building Contract and shall procure that the
Tenant is afforded the opportunity of attending the inspection
of the Works and that the Employer's Representative has regard
to any representations made by or on behalf of the Tenant.
13.2 Further Inspection(s)
In the event of the Employer's Representative not issuing the
Certificate of Practical Completion as anticipated the
provisions of Clause 13.1 shall apply mutatis mutandis (except
that the period of notice shall be two Working Days instead of
ten) as often as may be necessary until practical completion
of the Works is actually certified.
13.3 Snagging List
In the event of the Certificate of Practical Completion being
issued subject to a snagging list the Developer shall procure
that the Works on the snagging list are carried out as soon as
is reasonably practicable free of expense to the Tenant.
13.4 Copy Certificate and Snagging List
2 Working Days after the issue thereof the Developer will
provide the Tenant with a copy of the Certificate of Practical
Completion and any snagging list.
14. TENANT'S WORKS
14.1 Tenant's Access
14.1.1 The Developer shall use reasonable endeavours to procure that
the Employer's Agent certifies the Access Date as soon as
practicable having regard to the matters required to be
satisfied before an Access Date can be certified and the
progress of the Landlord's Works and that the Employer's Agent
gives written notice of the Access Date to the Tenant
forthwith after the certification thereof.
14.1.2 As from the Access Date or (if none) the Date of Practical
Completion but subject to Clauses 14.1.3 and 14.2 the Tenant
shall be afforded access to the Premises for the purpose of
carrying out the Tenant's Works
14.1.3 Before the Tenant shall be entitled to be afforded access to
the Premises before the Completion Date the Tenant shall pay
over to the Landlord sums equivalent to the deposits to be
payable in accordance with the terms of the Rent Deposit
Deeds. The Landlord shall hold such monies in a separate
interest bearing account and shall upon reasonable request
supply such information as the Tenant may reasonably from time
to time request in relation to the amounts held in or
withdrawn from that account. In the event that the Landlord
or the Developer carry out works of removal and/or
reinstatement the expense and costs of which are to be borne
by the Tenant as envisaged by Clause 30, such expense and
costs may be deducted from the deposit monies and retained by
the Landlord or the Developer (as the case may be) in
satisfaction of the reimbursement of such expenses and costs
and the balance shall be repaid to the Tenant as soon as
reasonably practicable and in any event within six months of
the determination of this Agreement pursuant to Clause 30.
Upon completion of the Leases any sums paid by the Tenant to
the Landlord pursuant to this Clause shall form the deposits
payable by the Tenant pursuant to Clause 16.2.2 and all
interest accrued on such monies shall be credited or paid to
the Tenant on such completion.
14.2 Consents and Tenant's Works
The Tenant shall:
14.2.1 to the extent that it has not already done so submit
to the Landlord for approval (such approval not to be
unreasonably withheld or delayed) within two months
of the date hereof plans or drawings in triplicate of
the Tenant's Works and shall not commence the
Tenant's Works until such approval has been obtained
and the Licence for Alterations has been entered into
by the Landlord and the Tenant and the Guarantor;
14.2.2 obtain all requisite licences consents and
permissions of the local planning and other
authorities for the Tenant's Works and shall provide
copies thereof to the Landlord and shall not commence
the Tenant's Works until all such have been obtained;
14.2.3 carry out the Tenant's Works in a good and
substantial manner with good quality materials in
accordance with the said plans and the terms and
conditions of all such licences consents and
permissions and to the reasonable satisfaction of the
Landlord; and
14.2.4 permit the Landlord and the Employer's Agent at all
reasonable times to inspect the progress of the
Tenant's Works and the quality of the materials and
workmanship used therein.
14.3 Once the plans and drawings of the Tenant's Works have been
approved by the Landlord in accordance with Clause 14.2.1 and
subject to completion of the Leases the Landlord and Tenant
and the Guarantor shall enter into the Licence for
Alterations. If the plans and drawings are approved on or
before the Completion Date the Landlord and Tenant and the
Guarantor shall enter into the Licence for Alterations on the
Completion Date. If the plans and drawings have not been
approved on or before the Completion Date the Landlord and the
Tenant and the Guarantor shall enter into the Licence for
Alterations within 5 Working Days of such approval being
given.
14.4 For the avoidance of doubt the Landlord confirms:
14.4.1 its in principle consent to that part of the Tenant's
Works briefly described in the Fourth Schedule
subject to approval of detailed plans and
specifications and the grant of the Licence for the
Alterations in accordance with this Clause 14;
14.4.2 that it will subject to approval of detailed plans
and specifications enter into a licence for
alterations in a form reasonably acceptable to the
Landlord and similar to the Licence for Alterations
allowing the Tenant to carry out alterations to Unit
7 marked on the Plan for the purpose of constructing
a connecting corridor between Unit 7 and Unit 8 and
that it undertakes that it shall procure that any
successor to the reversionary title in respect of the
relevant leases shall be bound by such obligation.
14.5 No Interference with Works
The Tenant shall ensure that neither it nor its agents
employees or contractors do anything to impede the progress of
the Works.
14.6 Tenant's Responsibility
As between the Landlord, the Developer and the Tenant all
materials goods plant machinery equipment and other items used
in connection with the Tenant's Works shall be at the sole
risk and responsibility of the Tenant and all agents employees
and contractors engaged in the Tenant's Works shall be persons
for whom the Tenant is responsible.
14.7 Indemnity
The Tenant shall be liable for and shall indemnify each of the
Landlord and the Developer against any expense liability loss
claim or proceedings in respect of personal injury to or the
death of any person whomsoever or injury or damage whatsoever
to any property real or personal arising out of or in the
course of or by reason of the carrying out of the Tenant's
Works.
14.8 Power Supply
The Tenant agrees that it will draw no more than 90 KVA of
power to each of the units (being Unit 8 and Unit 9) from the
existing electricity network supply to the Estate. If the
Tenant requires additional power supplies to the Premises the
Tenant will at its own expense and without any cost to the
Landlord or the Developer install such infrastructure as may
be required to provide such additional power supplies to the
Premises. For the avoidance of doubt the Tenant cannot
utilise the existing high voltage cable or other
infrastructure servicing or intending to service the bakery
unit numbered 10 on the Plan, the units marked 11 to 14
inclusive on the Plan and the units marked 1 to 7 on the Plan.
15. INSURANCE
15.1 Insurance of Works under Building Contract
Until the Date of Practical Completion the Developer will
cause the Works to be insured in accordance with the Building
Contract.
15.2 Insurance of Works under Leases
Thereafter the Landlord will insure the Works or cause the
same to be kept insured against the Insured Risks as defined
in the Leases in accordance with the covenant on its behalf
and subject to the conditions therein contained.
15.3 Insurance of Tenant's Works
Until completion of the Tenant's Works the Tenant shall keep
the Tenant's Works insured (or shall procure such insurance)
against the Insured Risks (as so defined) and on completion
thereof shall advise the Landlord in writing of the value of
the Tenant's Works and within 10 Working Days of receipt of
such written advice the Landlord shall insure or cause the
same (insofar as they are comprised within the Property as
defined in the Leases to be kept insured against the Insured
Risks in accordance with the covenant on its behalf and
subject to the conditions therein contained.
15.4 Evidence of Cover
Each party will produce to the other whenever reasonably
required written evidence of such insurance cover.
16. GRANT OF LEASE PARKING AREA DEED AND RENT DEPOSIT DEEDS AND
EXCLUSION ORDER
16.1 Grant
Subject to previous compliance by the Tenant with the
provisions of this Agreement the Landlord will grant to the
Tenant on the Completion Date the Unit 8 Lease and Unit 9
Lease and the Corridor Lease for the Agreed Term and the
Supplemental Lease for the term set out in the Supplemental
Lease and shall enter into the Rent Deposit Deeds and the
Parking Area Deed.
16.2 Acceptance
16.2.1 The Tenant and the Guarantor will accept the Leases the
Parking Area Deed and the Rent Deposit Deeds and execute
counterparts thereof but (for the avoidance of doubt) it is
hereby agreed that neither the Tenant nor the Guarantor shall
be obliged to accept any Lease unless there is a simultaneous
grant of all the Leases and of the Parking Area Deed.
16.2.2 On the Completion Date the Tenant shall pay over to the
Landlord the deposits payable in accordance with the terms of
the Rent Deposit Deeds but such payments shall not be payable
unless there is a simultaneous grant of all of the Leases and
of the Parking Area Deed.
16.2.3 The Guarantor will procure that Fenwick & West LLP of Two Palo
Alto Square Palo Alto CA 94306 (or such other US law firm as
the Guarantor may appoint) issues to the Developer and the
Landlord on the Completion Date a legal opinion in a form that
is reasonably acceptable to the Developer and the Landlord.
16.3 Lease Terms
16.3.1 The Unit 8 Lease shall be at the Unit 8 Rent (subject to
variation as provided in Clause 17) which shall be the amount
to be specified in clause 4(1)(b) of the Unit 8 Lease and
otherwise subject in all respects to the terms and conditions
set out in the Unit 8 Lease.
16.3.2 The Unit 9 Lease shall be at the Unit 9 Rent (subject to
variation as provided in Clause 17) which shall be the amount
to be specified in clause 4(1)(b) of the Unit 9 Lease and
otherwise subject in all respects to the terms and conditions
set out in the Unit 9 Lease.
16.3.3 The Corridor Lease shall be subject in all respects to the
terms and conditions set out in the Corridor Lease and the
Supplemental Lease shall be subject in all respects to the
terms and conditions set out in the Supplemental Lease.
16.3.4 The following matters shall be inserted in each of the Unit 8
Lease and the Unit 9 Lease and the Corridor Lease and the
Supplemental Lease as indicated below:
(A) The Review Date to be specified in clause 1 of the
Unit 8 Lease and the Unit 9 Lease shall be the Review
Date as specified in this Agreement;
(B) The date to be specified in clause 3(1) of the Unit 8
Lease and the Unit 9 Lease and the Corridor Lease
shall be the Quarter Day (as defined in the Leases)
immediately preceding the Date of Practical
Completion;
(C) The date to be specified in clause 4(1)(a) of the
Unit 8 Lease and the Unit 9 Lease shall be the day
before the Rent Commencement Date as specified in
this Agreement;
(D) The date to be specified in clauses 4(1)(b) and 4(2)
of the Unit 8 Lease and the Unit 9 Lease shall be the
Rent Commencement Date specified in this Agreement;
(E) The date to be specified in clause 5(1) of the Unit 8
Lease and the Unit 9 Lease shall be the Date of
Practical Completion.
(F) The date to be specified in the definition of
"Provisional Service Charge" in clause 5(7) of the
Unit 8 Lease and the Unit 9 Lease shall be the Date
of Practical Completion.
(G) The date to be specified in clause 15(1) of the Unit
8 Lease and the Unit 9 Lease and clause 14(1) of the
Corridor Lease shall be the fifteenth anniversary of
the date upon which the Agreed Term commences.
(H) The figure to be specified in Schedule 1 of the Unit
8 Lease and the Unit 9 Lease shall be the Gross
Internal Area specified in this Agreement.
(I) The dates to be inserted in Part 2 of Schedule 7 of
the Corridor Lease shall be the date of completion of
the Unit 8 Lease and the term commencement date of
that lease, respectively.
(J) The date to be inserted into the new paragraph (g)
set out in clause 4 of the Supplemental Lease shall
be the date of the Supplemental Lease.
16.4 Completion
Completion of the grant of each of the Leases shall take place
at the offices of the Developer's Solicitors Wilde Sapte of 1
Fleet Place London EC4M 7WS or elsewhere as they may
reasonably direct.
16.5 Exclusion Order
If on the Completion Date the Exclusion Order is no longer
effective to exclude the tenancy to be created by the Corridor
Lease from the security of tenure provisions afforded by
Sections 24 to 28 (inclusive) of the Landlord and Tenant Act
1954 (as amended) the Landlord and the Tenant (acting through
the Landlord's Solicitors and the Tenant's Solicitors
respectively) shall forthwith sign and submit to the relevant
Court (in triplicate) a joint originating application in a
form reasonably acceptable to both parties and all relevant
documents in support thereof together with the requisite fee
for the same (such fee to be paid by the Landlord) and each of
the Landlord and Tenant shall use its reasonable endeavours to
ensure that the security of tenure provisions afforded by
Sections 24 to 28 (inclusive) of the Landlord and Tenant Act
1954 (as amended) do not apply to the Corridor Lease.
17. MEASUREMENT
17.1 Measurement of Unit 8 and Unit 9
The Landlord the Developer and the Tenant shall procure that
surveyors appointed by them shall measure the Gross Internal
Area of each of Unit 8 and Unit 9 within five Working Days of
the Date of Practical Completion and in the event of their
failure to agree upon the Gross Internal Area within five
Working Days after the Date of Practical Completion the matter
shall be referred to the decision of an independent expert
pursuant to the provisions of Clause 33.
17.2 Rent Adjustment
17.2.1 If the Gross Internal Area of Unit 8 as agreed or
determined is more or less than 35,408 square feet
(but not otherwise) the Unit 8 Rent shall be the sum
of the Gross Internal Area multiplied by L 8.00
instead of the sum specified in the definition of
"Unit 8 Rent".
17.2.2 If the Gross Internal Area of Unit 9 as agreed or
determined is more or less than 17,704 square feet
(but not otherwise) the Unit 9 Rent shall be the sum
of the Gross Internal Area multiplied by L 8.00
instead of the sum specified in the definition of
"Unit 9 Rent".
18. OCCUPATION
As soon as the Tenant shall have completed the Tenant's Works
to the reasonable satisfaction of the Landlord the Tenant
shall notwithstanding that the Leases may not then be
completed take up occupation of and commence trading at the
Premises upon the terms and conditions of the Leases and with
the benefit of but subject to the rights (so far as consistent
with the physical state of the Premises from time to time)
exceptions and reservations agreements and declarations and
provisos therein contained and the Landlord shall have and be
entitled to all remedies by distress action or otherwise for
breach of any of the covenants or conditions on the part of
the Tenant as if the Leases had actually been granted.
19. RENT
Until the Leases shall be granted the Tenant shall be liable
for the payment to the Landlord on the dates to be specified
in the Leases of sums equal to the amounts which would have
been payable by way of rent and other payments under the
covenants of the Leases had the same actually been granted on
the Completion Date provided nevertheless that any money so
paid shall be set against the rent and other payments which
would otherwise be due under the Leases in respect of the same
period and provided further that pending the ascertainment of
the Gross Internal Area pursuant to Clause 17 such sums shall
be paid at the rate of the rent specified as the Unit 8 Rent
and the Unit 9 Rent and upon the Gross Internal Area being
ascertained such adjustment as is necessary shall be made on
the next following quarter day.
20. INSURANCE AND SERVICE CHARGE
The Tenant shall also be liable on and from the Date of
Practical Completion until the Leases shall be granted for the
payment to the Landlord on the dates to be specified in the
Leases of sums equal to the amounts which would have been
payable by way of insurance and service charge under the
covenants of the Leases had the same actually been granted on
the Date of Practical Completion provided nevertheless that
any money so paid shall be set against the insurance and
service charge which would otherwise be due under the Leases
in respect of the same period.
21. DEFECTS
Any defects shrinkages or other faults in the Works which
shall appear within the defects liability period or periods
provided under the Building Contract shall be certified by the
Tenant in a schedule of defects to be delivered by the Tenant
to the Developer not later than 10 Working Days prior to the
date of expiry of each defects liability period and the
Developer shall take all reasonable steps to procure the
making good of all such defects as are covered by the defects
liability clause in the Building Contract and the Tenant shall
give reasonable access to the Contractor for this purpose.
22. TENANT'S OBLIGATIONS
The Tenant agrees to observe and perform the following
stipulations:
22.1 Not to enter into possession of the Premises until
the Access Date or (if none) the Date of Practical
Completion;
22.2 Not to assign charge or otherwise deal with its
interest under this Agreement or any part thereof but
to take up occupation of the Premises itself and
enter into the Leases itself and commence trading
therefrom as hereinbefore provided.
23. VAT
All payments of whatever nature which are payable under this
agreement are exclusive of VAT and the Tenant shall pay and
keep each of the Landlord and the Developer indemnified
against all VAT which may from time to time be charged on any
monies payable by the Tenant under this Agreement.
24. INTEREST
If any sum of money payable by the Tenant under this Agreement
remains unpaid for more than five Working Days after the date
when payment is due the Tenant shall pay interest on the
amount due from time to time at the rate of four per cent per
annum above the base lending rate from time to time of Lloyds
Bank PLC from the date when payment was due until the date of
payment (both before and after any judgment).
25. TITLE
Title has been deduced to the Tenant's Solicitors (as the
Tenant hereby acknowledges) and the Tenant is deemed to have
full knowledge thereof and shall raise no objection or
requisition relating thereto.
26. MATTERS AFFECTING THE LEASE
26.1 Matters
The Leases will be granted subject to and with the benefit of
such of the following as may apply:
26.1.1 all local land charges (whether registered or not
before the date of this agreement) and all matters
capable of registration as a local land charge or
otherwise registrable by any competent authority or
pursuant to statute or like instrument;
26.1.2 all notices served and orders demands proposals or
requirements made by any local or other public or
competent authority whether before or after the date
of this Agreement;
26.1.3 all actual or proposed charges notices orders
restrictions agreements conditions or other matters
arising under any enactment relating to Town and
Country Planning;
26.1.4 all existing rights and easements and quasi-
easements;
26.1.5 all matters in the nature of overriding interests as
defined in Section 70 of the Land Registration Act
1925; and
26.1.6 the matters contained mentioned or referred to in the
documents mentioned in the Leases.
26.2 No Requisitions
The Tenant is deemed to have full knowledge of all matters
referred to in Clause 26.1 and shall raise no objection or
requisition in relation to any such matter.
27. USER
Neither the Landlord nor the Developer warrants that the
Premises may lawfully be used for any purpose authorised under
the Leases.
28. NON-MERGER
The provisions of this Agreement so far as not performed prior
to completion of the Leases shall remain in full force and
effect notwithstanding the completion of the Leases.
Part 3
29. GENERAL PROVISIONS
This part of this Agreement shall come into effect on the date
hereof
30. FORFEITURE
If the Tenant commits any substantive breach of the provisions
of this agreement and fails to remedy such breach within
twenty-one (21) days after notice in writing by the Developer
or the Landlord to the Tenant specifying the breach or if an
Event of Default (as that term is defined in the Leases)
occurs then in any such case the Developer or the Landlord may
at any time thereafter by notice in writing to the Tenant
determine this Agreement but without prejudice to any claim
which the Developer or the Landlord may have against the
Tenant arising before the date of determination Provided that
notwithstanding such determination the Tenant shall if and to
the extent required by the Developer or the Landlord remove at
its own expense the Fit Out Works and any works carried out by
or on behalf of the Tenant to the Premises (including the
Tenant's Works) and reinstate the same and if the Tenant shall
default in carrying out any such works of removal and
reinstatement either of the Landlord or the Developer shall be
entitled to carry out such works at the Tenant's expense and
all costs so incurred shall be repaid by the Tenant forthwith
upon demand or may be deducted from any money held by the
Landlord pursuant to Clause 14.1.3.
31. ACKNOWLEDGEMENTS
31.1 Acknowledgements
The Tenant hereby acknowledges and admits:
31.1.1 that it has not entered into this Agreement in
reliance upon any representation made by or on behalf
of the Landlord and/or the Developer but not embodied
in this Agreement except to the extent that the
Tenant may be entitled to rely on any representation
made by the Developer's solicitors on behalf of the
Developer in any written reply to any enquiry made by
the Tenant's solicitors on behalf of the Tenant; and
31.1.2 that it has satisfied itself on all matters relating
to user under the Planning Act and accepts that it
shall be deemed to take the Premises with full
knowledge thereof and shall raise no requisition or
objection in relation thereto.
31.2 Entire Contract
The parties agree that this Agreement constitutes the entire
contract between them and may not be varied except by written
agreement between them or their respective solicitors.
32. NOTICES
32.1 All notices requests demands approvals consents and other
communications under this Agreement shall be in writing and
shall be deemed to be duly given if delivered personally or
sent by telex or facsimile or by prepaid registered or
recorded delivery mail to a party at its address set forth
above or at such other address as such party may specify from
time to time by written notice to the others and if by
facsimile shall be deemed to be given at the time of receipt
and if by mail then shall be deemed to be given on the second
Working Day after the day of posting.
32.2 During such period that the Estate is vested in the trustee of
Schroder Exempt Property Unit Trust no notice shall be deemed
to be validly served on the Landlord unless a copy of such
notice is also served on Schroder Property Investment
Management Limited at 31 Gresham Street, London EC2V 7QA or
such other address as the Landlord shall notify to the Tenant
and the Developer.
33. DISPUTES
33.1 Disputes generally
Any dispute or difference arising between the parties hereto
as to their respective rights duties and obligations hereunder
or as to any matter arising out of or in connection with the
subject matter of this Agreement (excluding any dispute or
difference referred to in Clause 33.3) shall be referred to
and determined by an independent person who has been
professionally qualified in respect of the subject matter of
the dispute or difference for not less than ten years and who
is a specialist in relation to such subject matter such
independent person to be agreed between the parties or failing
such agreement to be nominated by the President or Vice-
President or other duly authorised officer of the Royal
Institution of Chartered Surveyors on the application of any
party hereto.
33.2 Disputes over construction of Agreement
Any dispute or difference arising between the parties hereto
over the meaning or construction of this Agreement (and also
any dispute as to whether a particular dispute or difference
should be dealt with under Clause 33.1) shall be referred to
an independent solicitor or barrister agreed between the
parties hereto or failing such agreement nominated by the
President or the Vice-President or other duly authorised
officer of the Law Society on the application of any party
hereto.
33.3 Disputes regarding Determination
Clauses 33.1 and 33.2 do not apply to disputes relating to the
determination or purported determination of this Agreement
under Clause 30.
33.4 Appointment of Expert
Whenever a person is to be appointed under this Clause 33 the
following provisions shall have effect:
33.4.1 the person shall act as an expert and not as an
arbitrator and his decision shall be final and
binding upon the parties hereto;
33.4.2 the person shall consider (inter alia) any written
representations on behalf of any party (if made
promptly) but shall not be bound thereby;
33.4.3 the parties shall use all reasonable endeavours to
procure that the person gives his decision as
speedily as possible;
33.4.4 the costs of appointing the person and his costs and
disbursements in connection with his duties under
this agreement shall be shared between the parties in
such proportions as the person shall determine or in
the absence of such determination equally between
them; and
33.4.5 if the person becomes unable or unwilling to act then
the procedure hereinbefore contained for appointment
of an expert may be repeated as often as necessary.
34. LANDLORD'S LIABILITY
34.1 Personal Obligations
The obligations on the part of the Developer contained in this
Agreement shall be personal to the Developer and shall not be
binding on the Landlord nor the owner for the time being of
the reversion to the interest to be granted pursuant to the
Leases.
34.2 Right to Assign
The Landlord shall have the right to assign the benefit of
this Agreement by way of absolute legal assignment or by way
of security or otherwise. The Landlord shall within 10
Working Days after such assignment give written notice (or
procure that the assignee gives such notice) to the Tenant of
such assignment and setting out full details of the assignee
and its address for service.
34.3 Assignment
If the Landlord assigns the benefit of this Agreement and the
assignee gives notice of such assignment to the Tenant the
Tenant shall forthwith following receipt of the notice of
assignment acknowledge receipt of the same and shall also
acknowledge to the assignee that it shall not treat this
Agreement as repudiated by reason of any act or omission on
the part of the Landlord named in this Agreement without first
giving not less than 10 Working Days notice in writing to the
assignee and allowing the assignee a reasonable opportunity to
remedy or procure remediation of the breach (where capable of
remedy).
35. GUARANTOR'S COVENANT
The Guarantor covenants with the Landlord and as a separate
covenant with the Developer that:
35.1 during the continuance of this agreement the Tenant
shall observe and perform the obligations covenants
and conditions on the Tenant's part contained in this
agreement and in case of default the Guarantor will
observe and perform the obligations covenants and
conditions in respect of which the Tenant is in
default and make good to each of the Landlord and the
Developer on demand and indemnify each of the
Landlord and the Developer against all losses damages
costs and expenses thereby arising or incurred by the
Landlord or the Developer (as appropriate);
35.2 the liability of the Guarantor under Clause 35.1
shall not be affected in any way by:
35.2.1 any neglect or forbearance of the Landlord or
the Developer in enforcing the observance or
performance of the obligations covenants and
conditions on the Tenant's part;
35.2.2 any time or indulgence given to the Tenant by
the Landlord or the Developer;
35.2.3 any variation in the terms of this Agreement;
35.2.4 the death of the Tenant (if an individual) or
the dissolution of the Tenant or the Tenant
otherwise ceasing to exist; or
35.2.5 any other act matter or thing or the release
of any person apart from the express release
in writing of the Guarantor;
35.3 if during the continuance of this Agreement the
Tenant (being a company) is dissolved or if the
liquidator of the Tenant or (if the Tenant is an
individual) the trustee in bankruptcy of the Tenant
disclaims this agreement the Guarantor shall upon
written notice from the Landlord or the Developer
given within three months after the date of
dissolution or disclaimer enter into an agreement for
Lease of the Premises (as tenant) upon the same terms
as in this Agreement (without however requiring any
other person to act as guarantor) such new agreement
to take effect from the date of dissolution or
disclaimer and to be granted at the cost of the
Guarantor who shall execute and deliver to the
Landlord and the Developer a counterpart of it.
36. JURISDICTION
36.1 English Law
This Agreement shall be governed by and construed in
accordance with English law.
36.2 English Courts
Each party to this Agreement submits to the exclusive
jurisdiction of the English courts in respect of all matters
arising out of this Agreement but each of the Landlord and the
Developer shall have the right to bring proceedings in the
courts of any other jurisdiction for the purpose of enforcing
a judgment.
36.3 Service of Notices on Guarantor
The Guarantor appoints Dibb Lupton Alsop (ref RSS) of 125
London Wall London EC2Y 5AE (or such other person in the UK as
the Guarantor may from time to time nominate by written notice
to the Landlord and to the Developer) as its agents to accept
on its behalf service of all notices served in accordance with
the provisions of this agreement and to accept service of
process in respect of all proceedings arising out of this
agreement.
AS WITNESS the hands of duly authorised signatories for the Landlord,
the Developer and the Tenant and executed as a deed by the Guarantor
SIGNED by
for and on behalf of the DEVELOPER
)
)
SIGNED by
for and on behalf of the LANDLORD
)
)
SIGNED by
for and on behalf of the TENANT
)
)
SIGNED as a DEED
by the GUARANTOR acting by Richard
Stoltz its Authorised Signatory in
accordance with the constitution of
the company and the country in which
it is incorporated
)
)
)
)
Authorised Signatory
FIRST SCHEDULE
(Prohibited Materials)
The materials identified in the publication entitled "Good Practice in
the Selection of Construction Materials" produced by the British
Council for Offices and the British Property Federation
SECOND SCHEDULE
(Onerous Conditions)
1. Any restriction on the hours of use or anything which would
prevent the use of the Premises for any day or days in any
year
2. Any restrictions on the permitted use of Unit 8 and Unit 9
which would prevent their use for any purposes within use
classes B1(c), B2 or B8 of the Town and Country (Use Classes)
Order 1987 or as an internet data centre or any restrictions
on the permitted use of the Corridor as a connecting corridor
between Unit 7 and Unit 8 and otherwise as open space
3. Any restrictions on increasing the internal floorspace of Unit
8 and Unit 9 by way of a mezzanine floor except a restriction
on increasing the internal floorspace of Unit 8 and Unit 9
beyond that applied for in the Tenant's Application
4. Any restrictions on the use of the car parking (other than a
restriction requiring the car parking to be used only by
occupiers of Unit 8 and Unit 9 or their visitors or only in
conjunction with the use or occupation of Unit 8 or Unit 9)
5. Any condition which requires the reduction in number of car
spaces to be provided as part of the Works unless such
condition is attached to a planning permission granted
pursuant to the Tenant's Application
6. Any restrictions on the height or weight of vehicles which
access or service the Premises
7. Any restrictions on external storage on site, or the ability
to make alterations to the Premises such as installation of
satellite dishes or power generators, signage or air
conditioning equipment other than a restriction requiring
planning permission to be obtained before such alterations are
made
THIRD SCHEDULE
(Fit Out Works)
1. Steelwork in Unit 8 is to be designed to allow for a future
door (such future door not forming part of the works described
in this schedule), size 2m wide x 2.6m high located between
grid lines C and D on grid line 16 (such grid lines being
shown on the plans annexed to the Documents).
2. 3no. 100 mm dia. service ducts are to be laid from each of the
2no. telecom manholes near to Unit 8 entrance, to accommodate
future fibre optic cables (such future fibre optic cables not
forming part of the works described in this schedule). Ducts
are to have slow bends at changes of direction, and are to be
complete with draw ropes. Ducts terminate above slab within
the building. Positions of ducts as follows: from manhole
near to grids A/9 to near to intersection of grids E/12,
running parallel to grids 9 and then E; and from manhole near
to grids A/12 to near to intersection of grids D/12, running
parallel to grids 12 and then D. Dimensioned locations to
ducts to be confirmed.
FOURTH SCHEDULE
(Tenants Works - brief details of parts thereof approved in principle)
1. Security fencing around the perimeter of the demise, including
the rear yard area to the line of phase 1.
2. The right to install steel mezzanine structures within the
units.
3. The installation of service plant within a purpose built
structure to be site to the rear of the units and within the
demised yard area.
4. The right to construct a connecting corridor between Units 7 &
8, specification to be agreed
as such works are more particularly specified in the Tenant's
Application and drawings numbered PR/NC/1, 9021/PA/01 (dated 12/4/99),
9021/PA/02 (dated 11/4/99) and 9021/PA/03 (dated 12/4/99).
ANNEXURES
Annexure 1 - Documents
Annexure 2 - Unit 8 Lease
Annexure 3 - Unit 9 Lease
Annexure 4 - Corridor Lease
Annexure 5 - Supplemental Lease
Annexure 6 - Plan
Annexure 7 - Contractor's Warranty
Annexure 8 - Employer's Agent's Warranty
Annexure 9 - Structural Engineer's Warranty
Annexure 10 - Architect's Warranty
Annexure 11 - RPS's Warranty
Annexure 12 - Rent Security Deposit Deed relating to Unit 8
Annexure 13 - Rent Security Deposit Deed relating to Unit 9
Annexure 14 - Licence for Alterations
Annexure 15 - Parking Area Deed
TLF/SJG/145764
PY0439854.03
DATED 1999
HELIOS (PARK ROYAL) LIMITED
and
LLOYDS BANK PLC (as Trustee of the
Schroder Exempt Property Unit Trust)
and
EXODUS INTERNET LIMITED
and
EXODUS COMMUNICATIONS INC
----------------------------------
AGREEMENT FOR LEASE
relating to
Units 8 and 9 Phase 3 Matrix Park,
Coronation Road, Park Royal
London NW10
----------------------------------
WILDE SAPTE
1 Fleet Place
London EC4M 7WS
Tel. 0171 246 7000
Fax. 0171 246 7777
Ref. TLF/SJG/145764
PY0439854.05
<PAGE>
H.M. LAND REGISTRY
Land Registration Acts 1925-1988
County & District: London Boroughs of Ealing and Brent
Title Number: AGL 54738
Property: Unit 8 Phase 3 Matrix Park, Coronation Road,
Park Royal,
London NW10
THIS LEASE is made on , 1999
BETWEEN:
(1) LLOYDS BANK PLC (registered number 2065) (as trustee of Schroder
Exempt Property Unit Trust) whose registered office is at 71
Lombard Street, London EC3P 3BS (the "Landlord");
(2) EXODUS INTERNET LIMITED (registered number 3591136) whose
registered office is at Fountain Precinct Balm Green Sheffield
South Yorkshire S1 1RZ (the "Tenant"); and
(3) EXODUS COMMUNICATIONS INC of 2650 San Thomas Expressway, Santa
Clara CA95051, USA (the "Guarantor").
This Lease is a new tenancy for the purposes of section 1 of the
Landlord and Tenant (Covenants) Act 1995.
THIS DEED WITNESSES as follows:
1. DEFINITIONS
In this Lease:
"authorised guarantee agreement" means an authorised guarantee
agreement as defined in section 16 of the Landlord and Tenant
(Covenants) Act 1995;
"Business Day" means a day (other than a Saturday or Sunday) on
which banks are generally open in London for normal business;
"Car Spaces" means 26 parking spaces on the Estate from time to
time designated by the Landlord for the Tenant's use of which
not less than 25 parking spaces shall be within the area shown
edged green on the Plan;
"Clearing Bank" means a bank which is a member of CHAPS Clearing
Company Limited;
"Common Parts" means the roads, footpaths, service areas, car
parks, loading bays, landscaped and open areas, entrances and
other areas from time to time during the Term provided by the
Landlord for common use by the tenants of the Estate (but shall
not include any such items as may exclusively serve and be
demised to a tenant of any Unit) but for the avoidance of doubt
the common parts shall always include the road coloured brown on
the Plan and the Car Spaces and shall afford the Tenant access
to and from the Property and the Car Spaces;
"Conduits" includes those for sewage, water, gas, electricity,
telecommunications and data processing;
"Default Interest Rate" means four per centum per annum above
the Interest Rate;
"End of the Term" includes the expiry of the Term by effluxion
of time or the determination of the Term by forfeiture,
surrender, merger, notice or in any other way;
"Estate" means Phases 1 and 3 Matrix Park Coronation Road Park
Royal London NW10 the present extent of which is shown edged
green on the Estate Plan but such expression shall mean such
greater or lesser area which shall include the Property and
which shall from time to time be managed by the Landlord as a
single estate (including all buildings and other structures on
and all parts of such estate);
"Estate Plan" means the plan numbered A3159/0/38 annexed to this
Lease;
"Guarantor" includes the person named in this Lease as
guarantor, if any, and any other person who is for the time
being a guarantor in respect of the Tenant's obligations under
this Lease and his personal representatives and successors;
"Insured Risks" means fire, lightning, explosion, earthquake,
aircraft and other aerial devices and articles dropped from
them, escape of oil, impact by vehicles or animals, riot, civil
commotion, strikes and labour disturbances, storm, flood,
bursting and overflowing of water tanks, apparatus or pipes and
other risks against which the Landlord reasonably decides from
time to time to insure and any other risks that the Tenant shall
reasonably require to be included and which the insurers shall
accept subject to such exclusions, limitations and excesses as
are imposed by its insurers and to the extent to which the risks
mentioned in this definition are insurable with the Landlord's
insurers but shall include loss or damage by acts of terrorism
if and only to the extent that the Landlord has insured against
acts of terrorism;
"Interest Rate" means the base rate for the time being of Lloyds
Bank Plc or of another Clearing Bank designated from time to
time by the Landlord or if there is no such base rate the rate
from time to time prescribed under section 32 of the Land
Compensation Act 1961;
"Landlord" includes the person for the time being entitled to
the reversion immediately expectant on the End of the Term;
"Lease" means this lease, all deeds varying this lease and all
licences and consents granted under this lease or under any deed
of variation;
"Lettable Areas" means all buildings on the Estate designed to
be let for commercial use;
"Parking Area" means the car parking areas forming part of the
Estate including the Car Spaces;
"Plan" means the plan annexed to this Lease numbered A3159-003.P01;
"Planning Acts" means the Town and Country Planning Act 1990,
the Planning (Listed Building and Conservation Areas) Act 1990,
the Planning (Hazardous Substances) Act 1990, the Planning
(Consequential Provisions) Act 1990 and the Planning and
Compensation Act 1991;
"Property" means the property described in Schedule 1 and every
part of it and all additions and alterations to it and includes
(without limitation):
(a) every part of all buildings and other structures now or
during the Term on the property including walls, roofs,
foundations, load-bearing parts, doors, windows and
Conduits exclusively serving the Property;
(b) landlord's fixtures and fittings including floor
coverings;
(c) electrical and mechanical installations, plant, equipment
and machinery including (without limitation) lifts,
heating plant, air conditioning plant and ventilation
plant and radiators;
(d) one half (severed vertically) of any wall separating the
Property from any adjoining Unit;
(e) service areas, loading bays and landscaped and open areas;
and
(f) boundary walls and fences (if any);
"Quarter Days" means 25th March, 24th June, 29th September and
25th December in every year;
"Rent" includes all sums reserved as rent by this Lease and any
interim rent determined under the Landlord and Tenant Act 1954;
"Rent Review Specification" means the specification annexed to
this Lease;
"Retained Areas" means the whole of the Estate other than the
Units;
"Review Date" means in the year
and in every fifth year after that year
for so long as the Term continues;
"Review Period" means the period starting with any Review Date
up to the next Review Date or starting with the last Review Date
up to the End of the Term;
"Tenant" includes the Tenant's successors in title;
"Term" means the term granted by this Lease and any statutory or
other continuation or extension of it or any holding over;
"Term Commencement Date" means the date of commencement of the
Term specified in clause 3(1);
"Units" means the units of accommodation on the Estate that are
let or otherwise exclusively occupied or designed or intended
for letting or exclusive occupation and "Unit" shall mean any
one of them;
"VAT" means value added tax and any imposition or levy of a like
nature; and
"VATA 1994" means the Value Added Tax Act 1994.
2. INTERPRETATION
(1) Where there are two or more persons included in the expressions
"the Landlord", "the Tenant" or "the Guarantor" each reference
to the Landlord, the Tenant or the Guarantor includes a separate
reference to each of those persons.
(2) Any reference, express or implied, to an enactment includes
references to:
(a) that enactment as amended, extended or applied by or under
any other enactment (before or after this Lease);
(b) any enactment which that enactment re-enacts (with or
without modification);
(c) any subordinate legislation made (before or after this
Lease) under that enactment, as amended, extended or
applied as described in paragraph (a) above or under any
enactment referred to in paragraph (b) above; and
(d) any consents, licences and permissions given (before or
after this lease) under that enactment, as amended,
extended or applied as described in paragraph (a) above or
under any enactment referred to in paragraph (b) above or
under that subordinate legislation and any conditions
contained in those consents, licences and permissions.
(3) Any reference, express or implied, to enactments generally
includes subordinate legislation and any legislation of the
European Union that is directly applicable in the United Kingdom
and includes existing enactments and those that come into effect
during the Term.
(4) Sub-clauses (1) to (3) above apply unless the contrary intention
appears.
(5) The headings in this Lease do not affect its interpretation.
3. LEASE
(1) The Landlord lets the Property to the Tenant together with the
rights set out in Schedule 2 but except and reserving to the
Landlord the rights set out in Schedule 3 for the term of twenty
five years commencing on and including [
] subject to all rights and covenants affecting the Property
including (without prejudice to the generality of the foregoing)
the matters contained or referred to in Schedule 4 at a yearly
rent ascertained in accordance with clause 4.
(2) The rights granted to the Tenant are granted in common with the
Landlord, any person authorised by the Landlord and everyone
else having the like or similar rights.
(3) This Lease does not include any rights other than those set out
in Schedule 2.
(4) The rights excepted and reserved to the Landlord are also
excepted and reserved to those authorised by the Landlord and
everyone else entitled to them.
4. RENT AND RENT REVIEW
(1) Rent
The yearly rent shall be:-
(a) until [ ] the rent of one peppercorn (if
demanded);
(b) from and including [ ] until
the first Review Date the rent of [ ] pounds
[L ]; and
(c) during each successive Review Period a rent equal to the
rent previously payable under this Lease (or the rent
which would be payable but for any abatement or suspension
of rent under this Lease) or the revised rent ascertained
in accordance with this clause, whichever is the greater.
(2) Rent payment dates
The yearly rent is payable without any deduction by equal
quarterly payments in advance on the Quarter Days. The first
payment (which is an apportioned sum) is to be made on
[ ] in respect of the period
commencing on that date and ending on the day before the next
following Quarter Day.
(3) Rent review - method
The revised rent for any Review Period may be agreed in writing
at any time between the Landlord and the Tenant or (in the
absence of agreement) determined not earlier than the relevant
Review Date by an independent valuer (acting as an expert and
not as an arbitrator) of recognised standing and having
experience in letting and valuing property of a like kind and
character to the Property.
(4) Nomination
The independent valuer may be nominated in the absence of
agreement by or on behalf of the president for the time being of
the Royal Institution of Chartered Surveyors on the application
of either the Landlord or the Tenant made not earlier than three
months before the relevant Review Date.
(5) Rent review - amount
In the case of valuation the revised rent to be determined by
the valuer shall be such as he shall decide is the yearly rent
at which the Property might reasonably be expected to be let at
the relevant Review Date
(a) after the expiry of a rent free period or a concessionary
rent period given for fitting-out purposes only of such
length and the giving of such other inducements
(including, without limitation, any rental concession,
capital payment or contribution to fitting out-costs)
given for fitting out purposes only as in either case
would be negotiated in the open market between a willing
landlord and a willing tenant so that the yearly rent is
that payable after the expiry of any such rent free period
or concessionary rent period and after the giving of such
inducement; and
(b) on the assumptions set out in sub-clause (6) but
disregarding the matters set out in sub-clause (7).
(6) Assumptions
The assumptions are that at the relevant Review Date:
(a) the Property:
(i) is available to let on the open market by a willing
landlord to a willing tenant by one lease without a
premium from either party and with vacant possession
for a term of 10 years or a term equal to the
residue then unexpired of the Term (whichever be the
longer) but in either event commencing on the
relevant Review Date with the rent payable from
then;
(ii) is to be let as a whole on a lease which is to
contain the same terms as this Lease (other than the
amount of the rent referred to in sub-clause (1)(a)
and (b) and any rent free or reduced rent period
allowed to the Tenant but including the provisions
for review of that rent at the same intervals as
those in this Lease) the first Review Date in that
lease being the fifth anniversary of the relevant
Review Date;
(iii) has been built to the specification set out in the
Rent Review Specification with the inclusion of an
internal dividing wall (with no openings in such
wall) between the Property and the adjacent Unit
numbered 9 and is fit and available for immediate
occupation and use with connections to all mains
services independently of any other Unit and is
available for immediate use as authorised by this
Lease; and
(iv) may be used for any of the purposes permitted by
this Lease including any purpose which falls within
the same use class (under the Town & Country
Planning (Use Classes) Order for the time being in
force) as the purpose permitted by this Lease;
(b) all the covenants in this Lease by the Landlord and the
Tenant have been performed and observed; and
(c) no work has been carried out to the Property which has
diminished the rental value and in case the Property has
been destroyed or damaged it has been fully restored.
(7) Disregards
The matters to be disregarded are:
(a) any effect on rent of the fact that the Tenant, its
subtenants or their respective predecessors in title have
been in occupation of the Property;
(b) any goodwill attached to the Property by reason of the
carrying on at it of the business of the Tenant, its
subtenants or their predecessors in title in their
respective businesses; and
(c) any increase in rental value of the Property attributable
to the existence at the relevant Review Date of any
improvement carried out with consent of the Landlord
(where required) but not under an obligation to the
Landlord or its predecessors in title to the Property
carried out by and at the cost of the Tenant, its
subtenants or their respective predecessors in title
during the Term or during any earlier period of occupation
arising out of an agreement to grant the Term.
(8) Valuer
In the case of determination by a valuer:
(a) the fees and expenses of the valuer including the cost of
his appointment shall be borne as he shall decide or in
the absence of any decision equally by the Landlord and
the Tenant who shall otherwise each bear their own costs;
(b) the valuer shall afford the Landlord and the Tenant an
opportunity to make representations to him; and
(c) if the valuer dies, delays or becomes unwilling or
incapable of acting or if for any other reason the
president for the time being of the Royal Institution of
Chartered Surveyors or the person acting on his behalf
thinks fit he may discharge the valuer and appoint another
in his place.
(9) Memorandum
When the revised rent has been ascertained memoranda of it shall
be signed by or on behalf of the Landlord and the Tenant and
annexed to this Lease and the counterpart of it and the Landlord
and the Tenant shall bear their own costs in respect of the
memoranda.
(10) Interest
If the revised rent payable with effect from any Review Date has
not been agreed by that Review Date rent shall continue to be
payable at the rate previously payable. Forthwith on the
revised rent being ascertained the Tenant shall pay to the
Landlord any shortfall between the rent and the revised rent
payable up to and on the preceding quarter day together with
interest at the Interest Rate compounded quarterly on each part
of the shortfall from the date or respective dates on which each
part would have been due for payment had the revised rent been
ascertained before the relevant Review Date until the date of
payment.
For the purpose of this clause the revised rent shall be deemed
to have been ascertained on the date when it has been agreed
between the Landlord and the Tenant or the date of the
determination by the valuer.
(11) Costs
If either the Landlord or the Tenant fails to pay the relevant
part of the fees and expenses of the valuer under sub-clause (8)
within 15 Business Days of the same being demanded by the valuer
the other shall be entitled to pay the same and the amount so
paid shall be repaid on demand by the party chargeable and
recoverable from that party as a debt due.
(12) Time not of the essence
Time shall not be of the essence for the purposes of this clause
4.
5. SERVICE CHARGE
(1) The Tenant shall pay to the Landlord the Provisional Service
Charge without any deduction by equal quarterly payments in
advance on the Quarter Days. The first payment (which is an
apportioned sum) is to be made on the date of the Lease in
respect of the period commencing on
[ ] and ending on the Quarter Day
next following the date of this Lease.
(2) As soon as possible after every Accounting Date the Landlord
shall prepare and supply to the Tenant an account:
(a) showing the Gross Expenses, the Income and the Net
Expenses for the Financial Year referred to in the
account;
(b) containing a fair summary of the items referred to in it;
and
(c) certified by the Landlord or its agents (who may be the
managing agents for the Estate).
The account shall be conclusive evidence of all matters of fact
referred to it in it (save in the case of manifest error) and
the Tenant shall be afforded on request reasonable facilities
for inspecting and taking copies of the accounts and receipts
and other documents supporting the account.
(3) In the case of the first Accounting Date after the date for
commencement of payment of the Provisional Service Charge
specified in clause 5(1), if the proportion of the Tenant's
Share of the Net Expenses shown in the account apportioned on a
daily basis for the period from that date to the Accounting
Date:
(a) exceeds the amount already paid as Provisional Service
Charge before the first Accounting Date, the Tenant shall
pay the excess to the Landlord within 14 days of written
demand; and
(b) is less than the amount already paid as Provisional
Service Charge before the first Accounting Date, the
Landlord shall credit the excess to the Tenant against the
next quarterly payment of Provisional Service Charge.
(4) In the case of every subsequent Accounting Date, if the Tenant's
Share of the Net Expenses shown in the account for the period
beginning on the day after the previous Accounting Date and
ending on that Accounting Date:
(a) exceeds the amount paid as Provisional Service Charge
during that period, the Tenant shall pay the excess to the
Landlord within 14 days of written demand; and
(b) is less than the amount paid as Provisional Service Charge
during that period, the Landlord shall credit the excess
to the Tenant against the next quarterly payment of
Provisional Service Charge or repay the excess in respect
of the last year of the Term.
(5) If the Landlord fails to include in any account for a Financial
Year a sum expended or liability incurred in that year the
Landlord may include such sum or the amount of such liability in
an account for any subsequent Financial Year.
(6) All sums payable under this clause shall be reserved as rent.
(7) In this clause:
"Accounting Date" means 31st December or any other date that the
Landlord may nominate;
"Financial Year" means a year ending on an Accounting Date;
"Gross Expenses" means all the expenses incurred by the Landlord
in connection with the Estate including, without limitation, the
matters referred to in Schedule 7;
"Gross Internal Area" has the meaning ascribed to that
expression in the Code of Measuring Practice published by the
Royal Institution of Chartered Surveyors and the Incorporated
Society of Valuers and Auctioneers (4th Edition);
"Income" means:
(a) any insurance money received under an insurance policy
which the Landlord was obliged to effect under this Lease
where the Landlord has incurred expenses in making good
the insured loss itself; and
(b) any money received from any person (other than the service
charge paid by the tenants in the Estate) who was liable
to contribute to the cost of compliance with the
Landlord's obligations under this Lease where the Landlord
has itself incurred the expense towards which that person
contributed;
"Net Expenses" means the amount by which Gross Expenses exceeds
Income;
"Provisional Service Charge" means:
(a) in respect of the period from the [ ] to
the Accounting Date next following the date of this Lease
the annual sum of L10,620; and
(b) in respect of each subsequent Financial Year, the sum
fixed from time to time by the Landlord or its agents
acting reasonably (who may be the managing agents for the
Estate) as being a reasonable estimate of the Tenant's
Share of the Net Expenses for the relevant Financial Year;
"Tenant's Share" means the same proportion of the Net Expenses
as the Gross Internal Area of the Property from time to time
bears to the Gross Internal Area of the Lettable Areas at such
time provided always that if the Landlord shall consider that
having regard to the nature and degree of use by the Tenant or
other tenants on the Estate of the facilities covered by the
Gross Expenses or any other factors which the Landlord may
reasonably consider relevant some other proportion ought
properly to be payable by the Tenant the Landlord may substitute
such other percentage as it shall consider reasonable either
with regard to all or any items making up the Net Expenses
provided that the proportion of the Net Expenses payable by the
Tenant shall not be increased by reason solely or in part of any
Lettable Areas being vacant or unlet.
6. TENANT'S COVENANTS
(1) Introduction
The Tenant covenants with the Landlord to comply with its
obligations set out in this clause and in clauses 5, 8 and 9.
(2) Rent
The Tenant shall:
(a) pay the yearly rent to the Landlord at the times and in
the manner referred to in clause 4 without any deduction;
and
(b) not exercise or seek to exercise any right or claim to
withhold rent or any right or claim to legal or equitable
set-off.
(3) Outgoings
The Tenant shall:
(a) pay all present and future Outgoings assessed, charged or
imposed on, or payable in respect of the Property or the
Car Spaces or assessed, charged or imposed on, or payable
by the owner or occupier of the Property or the Car
Spaces;
(b) pay the proportion properly attributable to the Property
or the Car Spaces of all Outgoings assessed, charged or
imposed on or payable in respect of the Property and other
properties or the Car Spaces and other car spaces or
assessed, charged or imposed on or payable by the owner or
occupier of the Property and other properties or the Car
Spaces and other car spaces;
(c) pay all charges for the supply to and consumption at the
Property of water, gas and electricity and all charges for
telecommunications (including equipment rents) and observe
and perform all regulations of the supply authorities;
(d) where such charges as are referred to in paragraph (c) are
made in relation to the Property and other properties or
upon the owner or occupier of the Property and other
properties, pay the suppliers and indemnify the Landlord
against the proportion of those charges properly
attributable to the Property or its owner or occupier; and
(e) if the Landlord loses rating relief because it has been
allowed to the Tenant or any other person deriving title
under the Tenant during the Term, make good that loss to
the Landlord.
Provided that the Tenant shall not be obliged to pay such sums
referred to above to the extent that the same have been
recovered by the Landlord under Clause 5.
In this sub-clause "Outgoings" means rates, taxes, duties,
charges, assessments, impositions and outgoings whether
parliamentary, parochial, local or of any other description and
whether of the nature of capital or revenue and even though of a
wholly novel character and the proportion referred to in
paragraphs (b) and (d) shall be determined by the Landlord
acting reasonably and shall be conclusive save as to questions
of law and save in cases of manifest error.
(4) Repair
The Tenant shall:
(a) put and keep the Property in good repair and condition,
but shall not be obliged to repair damage caused by an
Insured Risk save where:
(i) the damage is not insured because of an exclusion,
limitation or excess imposed by the insurers; or
(ii) and to the extent that the insurance monies are
irrecoverable in whole or in part because of the
act, default or omission of the Tenant, any person
deriving title under the Tenant or anyone at the
Property with the express or implied authority of
any of them;
(b) replace all the Landlord's fixtures and fittings in the
Property which become beyond repair during the Term with
those of no lesser quality;
(c) keep all windows and other glass in the Property (both
inside and outside) clean, cleaning them at least once a
month and more frequently where necessary;
(d) keep any open area within the Property adequately surfaced
(where appropriate) in good condition, properly cultivated
(where landscaped) and free from weeds;
(e) enter into and maintain throughout the Term fully
comprehensive maintenance contracts in respect of all
plant, equipment and machinery forming part of the
Property with a reputable company or companies and produce
the contracts to the Landlord on demand with evidence that
any payments due under them are paid up to date;
(f) ensure that the electrical circuits within the Property
comply with the then current regulations of the Institute
of Electrical Engineers or other amended standards or
recommended current codes of practice (save that this
shall not obligate the Tenant to upgrade the existing
circuits within the Property save where it is unlawful not
to do so); and
(g) notify the Landlord of all defects in the Property which
are relevant defects for the purpose of section 4 of the
Defective Premises Act 1972.
(5) Redecoration
The Tenant shall redecorate the exterior of the Property in
every third year and in the last year of the Term and the
interior of the Property in every fifth year and in the last
year of the Term in colours and patterns which, in the case of
external decorations, shall be first approved by the Landlord at
all times during the Term and, in the case of internal
decorations, shall be first approved by the Landlord in the last
year of the Term. The Tenant shall also have all parts of the
Property requiring treatment for their preservation and
protection treated in accordance with the best approved manner
for preserving and protecting them. All works under this sub-
clause shall be carried out in a good and workmanlike manner and
with suitable, good quality materials.
In this sub-clause the "last year of the Term" means the period
of 12 months ending at the End of the Term and all approvals
shall not be unreasonably withheld or delayed by the Landlord.
(6) Entry by the Landlord
The Tenant shall:
(a) permit the Landlord to enter the Property to examine its
condition and take inventories;
(b) permit the Landlord to enter the Property to exercise any
of the rights reserved to the Landlord by this Lease and
for any other reasonable purpose connected with the
management of the Estate subject to the Landlord making
good to the Tenant all damage to the Property but not
being obliged to compensate the Tenant for any loss
suffered by the Tenant or for any nuisance, annoyance,
inconvenience, noise or vibration;
(c) permit the Landlord and any person acting as valuer under
clause 4 to enter the Property and inspect and measure the
Property for all purposes connected with insurance of the
Property, any action under the Landlord and Tenant Act
1954 Part II, or the implementation of clause 4; and
(d) furnish all information relevant for those purposes as the
Landlord or anyone having a right of entry under this sub-
clause may reasonably request.
Except in case of emergency the Landlord shall give the Tenant
reasonable prior written notice before exercising the right of
entry and shall comply with the Tenant's reasonable security and
confidentiality requirements. After notice or in case of
emergency the Landlord may break into the Property. Such rights
shall be exercised in a reasonable manner and in such a way so
far as reasonably practicable as not to prevent the Tenant's
beneficial user and enjoyment of the Property and to use
reasonable endeavours not to damage or interfere with any
equipment or machinery or data transmission and storage
facilities in the Property and shall make good any damage
caused.
(7) Remedy breaches
The Tenant shall remedy all breaches of covenant notified by the
Landlord to the Tenant which the Tenant is liable to remedy
under this Lease as soon as possible and in any event within
three months or sooner if appropriate after service of the
notice. If the Tenant fails to do so the Landlord may enter the
Property and remedy the breach and such entry shall be subject
to the same conditions as referred to in clause 6(6). All costs
and expenses incurred by the Landlord shall be paid by the
Tenant within 14 days of written demand.
(8) Alterations
Subject to the rights granted to the Tenant in Schedule 2 to
this Lease the Tenant shall:
(a) not make any alteration or addition to the Property (other
than the erection, alteration or removal of internal, non
structural, demountable partitioning) save as permitted by
paragraph (b);
(b) not make any non-structural alteration to the Property
(other than as mentioned in paragraph (a)) nor make any
openings in or remove or subsequently rebuild the dividing
wall between the Property and Unit 9 without the prior
consent of the Landlord which shall not be unreasonably
withheld or delayed; and
(c) before the End of the Term if required to do so by the
Landlord but not otherwise, remove any alteration or
addition (including any made before the beginning of the
Term) and make good all damage caused by the removal.
In this sub-clause a non-structural alteration is one which does
not affect the roof, foundations or exterior of the Property or
any load-bearing part of it.
(9) Signs
The Tenant shall:
(a) not display on the Property any signs visible from outside
the Property except those which in the Landlord's opinion
are reasonably necessary in connection with the business
carried on at the Property and which are in a form
approved by the Landlord and are affixed in positions
approved by the Landlord (such approvals not to be
unreasonably withheld or delayed);
(b) at the End of the Term remove all signs (including any
erected before the beginning of the Term) and make good
all damage caused by their removal; and
(c) not affix to the Property any external radio, television
or other aerial or satellite dish or any pole, mast, flag
or wire save with the prior written consent of the
Landlord such consent not to be unreasonably withheld or
delayed and in making such decision the Landlord shall
have due regard to the Tenant's use of the Property.
In this sub-clause "signs" includes signs, hoardings, posters,
placards, advertisements, letters, bills and inscriptions.
(10) Use
The Property shall not be used for any purpose other than a use
within Class B1, Class B2 or Class B8 of the schedule to the
Town and Country Planning (Use Classes) Order 1987 as that Order
is in force at the date of this Lease.
(11) Use obligations
The Tenant shall:
(a) use any open area within the Property only for the purpose
for which it is designed and not keep any caravan or
temporary building on it;
(b) not leave the Property unoccupied for more than a month
without notifying the Landlord and providing the security
arrangements reasonably required by the Landlord and its
insurers;
(c) not do anything on the Property which may become a
nuisance or damage to the Landlord or any nearby owner or
occupier;
(d) not allow to pass into the Conduits serving the Property
anything that may obstruct them or cause damage, danger or
pollution or anything poisonous or radioactive;
(e) not bring onto or keep in the Property anything dangerous,
inflammable, explosive, or noxious save for materials
ordinarily and properly used in connection with
alternative power generation provided that such materials
are safely stored and are otherwise in accordance with all
statutory requirements and the reasonable requirements of
insurers;
(f) not use the Property for any illegal purpose or for any
dangerous, noxious, or noisy occupation;
(g) not use the Property for the holding of public meetings or
auction sales or as a residence or sleep at the Property
or keep any animal on it;
(h) not overload the Property or its Conduits;
(i) remove all refuse on a reasonably frequent basis but no
less than once a week and keep the Property clean, tidy
and in good order;
(j) not obstruct any road or footpath on the Estate and not do
anything as a result of which reasonable use of the Common
Parts by others may be impeded; and
(k) not park vehicles on or load or unload goods onto or from
vehicles save in those parts of the Property or the Common
Parts designated by the Landlord for that purpose.
(12) Statutory requirements
The Tenant shall comply with every enactment and with the
requirements and recommendations of every authority relating to
or affecting the Property or its use or the employment of anyone
at the Property or any equipment or chattels in the Property and
whether applicable to the owner, landlord, tenant or occupier of
the Property save that this obligation shall not include
responsibility for compliance with anything relating to
remediation of any contamination affecting the Property which
was caused before the date hereof.
In this sub-clause "authority" includes every government
department, local or other authority and court of competent
jurisdiction.
(13) Notices
The Tenant shall:
(a) give the Landlord a copy of every notice or order or any
proposal for a notice or order issued to the Tenant, its
sub-tenants or any occupier of the Property or left at the
Property relating to the Property or the Tenant's its sub-
tenants or any occupiers use thereof within five Business
Days of its service;
(b) (if it is the Tenant's responsibility to so comply in
accordance with the terms of this Lease) take all steps
necessary to comply with every notice or order without
delay; and
(c) at the request and cost of the Landlord make or join with
the Landlord in making such objections or representations
in respect of the notice, order or proposal as the
Landlord shall reasonably require.
(14) Fire authority requirements
The Tenant shall comply with all requirements and
recommendations of the appropriate authority and the Landlord's
insurers and all reasonable requirements of the Landlord as to
means of escape from the Property in case of fire or other
emergency and as to the provision and maintenance of fire
detection equipment, fire alarm equipment and fire fighting
equipment.
(15) Planning Acts
The Tenant shall:
(a) comply with the Planning Acts in relation to the Property,
any operations carried out at the Property and its use and
not commit any breach of planning control (as defined in
the Planning Acts);
(b) obtain from the local planning authority planning
permission for the carrying out of any operation on the
Property or the institution or continuance of any use
which may constitute development within the meaning of the
Planning Acts;
(c) not make any application for planning permission without
the Landlord's prior consent (which shall not be
unreasonably withheld or delayed) to the making of the
application, indemnify the Landlord against all charges
payable in respect of the application and repay to the
Landlord all reasonable and proper professional fees and
expenses properly incurred by the Landlord in connection
with the application;
(d) forthwith after the grant or refusal of any application
give the Landlord a copy of the permission or the refusal;
(e) not make any alteration or addition to or change of use of
the Property (being an alteration or addition or change of
use which is prohibited by or for which the consent of the
Landlord must be obtained under this Lease and for which a
planning permission must be obtained) before planning
permission for it has been produced to the Landlord and
acknowledged by the Landlord as satisfactory to it but so
that the Landlord may refuse to express satisfaction with
the planning permission on the grounds that anything
contained in it or omitted from it in the reasonable
opinion of the Landlord would be or be likely to be
materially prejudicial to the Landlord's interest in the
Property during the Term or after the End of the Term such
acknowledgement from the Landlord shall not be
unreasonably delayed;
(f) pay any charge imposed under the Planning Acts in respect
of the carrying out of any operation or the institution or
continuance of any use;
(g) unless the Landlord directs otherwise, carry out before
the End of the Term all works required to be carried out
as a condition of any planning permission which may have
been granted and implemented during the Term whether or
not the date by which the planning permission requires
those works to be carried out falls within the Term;
(h) pay to the Landlord within 14 days of written demand a
fair and reasonable proportion of any compensation
received by the Tenant because of a restriction on the use
of the Property under the Planning Acts, any dispute as to
the proportion to be referred to arbitration;
(i) produce to the Landlord all drawings, documents and other
evidence reasonably required by the Landlord to satisfy
itself that this sub-clause has been complied with;
(j) not implement any planning permission without providing
reasonable security if reasonably required for compliance
with the conditions imposed by that permission;
(k) not serve any purchase notice under the Planning Acts
requiring any authority to purchase the Tenant's interest
in the Property without first offering to surrender this
Lease at the price which might reasonably be expected to
be obtained from the authority under the purchase notice,
any dispute as to the amount of the price to be referred
to arbitration;
(l) not to make any objection or adverse representation in
respect of any planning application made by or with the
consent of the Landlord:
(i) within 12 months before the date specified in clause
15 of this Lease if the Tenant has served the notice
referred to in that clause; or
(ii) within 12 months before the End of the Term unless
the Tenant has exercised its rights to take a new
lease under the provisions of the Landlord and
Tenant Act 1954;
and in either case this clause shall not prevent the
Tenant making such objections if it is entitled to do so
under a lease of another Unit on the Estate.
(16) Obstruction
The Tenant shall not:
(a) stop up, darken or obstruct any window or opening
belonging to the Property save as part of the Tenant's
usual security measures; or
(b) give to any third party any acknowledgement that the
Tenant enjoys the access of light or air to any of the
windows or openings in the Property by the consent of a
third party; or
(c) pay to any third party any sum of money or enter into any
agreement with any third party for the purpose of inducing
or binding him to abstain from obstructing the access of
light or air to any windows or openings.
(17) Obstruction proceedings
If any of the owners or occupiers of nearby land or buildings do
or threaten to do anything which obstructs the access of light
or air to any of the windows or openings in the Property the
Tenant shall:
(a) notify the same forthwith to the Landlord; and
(b) permit and afford all reasonable assistance to the
Landlord to bring proceedings in the name of the Tenant
and at the joint cost of the Landlord and Tenant against
any of the owners or occupiers of the nearby land or
buildings in respect of the obstruction.
(18) Acquisition of rights
The Tenant shall not allow any easement to be acquired over the
Property. If any such easement is acquired or attempted to be
acquired, the Tenant shall give immediate notice of it to the
Landlord and at the request of the Landlord but at the cost of
the Tenant adopt the course reasonably required by the Landlord
for preventing the acquisition of the easement.
(19) Party Matters
The Tenant shall pay a fair proportion of all costs and expenses
payable in respect of repairing, lighting, cleansing and
maintaining anything used in common by the Property and any
other property to the extent that those costs and expenses are
not recovered under clause 5. The proportion shall be
determined by the Landlord and shall be conclusive save as to
questions of law and save in the case of manifest error.
(20) New Guarantor
If a guarantor's event of default occurs, the Tenant shall give
notice to the Landlord of the event within ten Business Days of
its occurrence. If the Landlord serves notice on the Tenant
under this sub-clause within thirty Business Days of service of
the Tenant's notice, the Tenant shall procure that guarantors
reasonably acceptable to the Landlord shall covenant by deed
with the Landlord in the form set out in Schedule 5.
In this sub-clause a guarantor's event of default is any of the
following:
(a) in the case of a Guarantor who is an individual:
(i) the death of the individual;
(ii) the individual being regarded as a patient under the
Mental Health Act 1983 section 94;
(iii) an application being made for an interim order in
respect of the individual or an interim order being
made under the Act;
(iv) the making by the individual of a proposal for a
voluntary arrangement;
(v) a petition being presented for a bankruptcy order to
be made against the individual or a bankruptcy order
being made;
(b) in the case of a Guarantor which is a company:
(i) a proposal being made to the company and to its
creditors for a voluntary arrangement;
(ii) a petition being presented for an administration
order in respect of the company or an administration
order being made;
(iii) the company having an administrative or other
receiver or a manager appointed of the whole or any
part of its property;
(iv) the company passing a resolution for winding up or a
petition being presented for the winding up of the
company or a winding up being made or the company
being dissolved other than (in any such case) a
voluntary winding up of a solvent company for the
purposes of amalgamation or reconstruction;
(v) the company, having been registered as an unlimited
company, being re-registered as a limited company
without the previous consent of the Landlord;
(c) in the case of a Guarantor who is an individual or which
is a company:
(i) the individual or the company entering into any kind
of composition, scheme of arrangement, compromise or
arrangement for the benefit of creditors or any
class of creditors or permitting or suffering any
distress or execution to be levied on his goods at
the Property which remains unsatisfied for more than
21 days;
(ii) there occurring in relation to the individual or the
company in any country or territory in which he
carries on business or to the jurisdiction of whose
courts he or any of his property is subject any
event which corresponds in that country or territory
with any of those mentioned in paragraphs (a)(iii)
to (v) or (b) above or the individual or the company
otherwise becoming subject in any such country or
territory to any law relating to insolvency,
bankruptcy or winding up.
(21) Costs
The Tenant shall pay the reasonable and proper costs and
expenses incurred by the Landlord:
(a) in or in contemplation of any proceedings relating to the
Property under the Law of Property Act 1925 sections 146
and 147, or the Leasehold Property (Repairs) Act 1938, the
preparation and service of any notice under those sections
or the taking of steps subsequent to such notice
notwithstanding that forfeiture is avoided otherwise than
by relief granted by the Court;
(b) in the preparation and service of any notice to repair or
any schedule of dilapidations at any time during the Term
or after the End of the Term;
(c) in connection with the recovery of arrears of Rent or
other sums due to the Landlord under this Lease including
the levy or attempted levy of any distress; and
(d) in respect of any application for consent required by this
Lease whether or not the consent is granted (including any
inspection of works authorised by the consent and of any
re-instatement of those works).
Where the Landlord could recover the cost of services or advice
under the first part of this sub-clause if they were undertaken
by a third party but those services or that advice are provided
by the Landlord or by a company which is a member of the same
group as the Landlord (within the meaning of section 42 of the
Landlord and Tenant Act 1954), the Tenant shall pay to the
Landlord or to that company a reasonable sum (plus VAT if
payable) for such services or advice but not more than the
amount payable by the Tenant if those services or that advice
had been provided by a third party
(22) Indemnity
The Tenant shall:
(a) pay and make good to the Landlord every loss and damage
incurred or sustained by the Landlord as a consequence of
every breach or non-observance of the Tenant's covenants
contained in this Lease and shall indemnify the Landlord
against all actions, claims, liabilities, costs and
expenses arising by reason of the breach; and
(b) indemnify and keep the Landlord indemnified from liability
in respect of all loss, damage, actions, proceedings,
claims, demands, costs, damages and expenses in respect of
any injury to or the death of any person or damage to any
property or in respect of the infringement, disturbance or
destruction of any right by reason of or arising in any
way directly or indirectly out of:
(i) the state of repair or condition of the Property;
(ii) the act, omission or default of the Tenant, any
person deriving title under the Tenant or any person
at the Property with the express or implied
authority of any of them;
(iii) the construction or existence of any additions or
alterations to the Property;
(iv) the use of the Property;
(v) anything now or in the future attached to or on the
Property;
(vi) the use of vehicles on the Property;
(vii) the omission of the Tenant to give written notice to
the Landlord of any defects or items requiring
repair of which the Tenant is aware or ought
reasonably to be aware; and
(viii) any breach by the Tenant or by any person
deriving title under the Tenant of any covenant by
the Tenant or any condition contained in this Lease.
Provided that the Tenant shall not be obliged to indemnify
the Landlord in respect of such matters to the extent that
such damage arises out of the Landlord's wilful misconduct
or negligence.
(23) Notices for sale and re-letting
The Tenant shall:
(a) permit (at a suitable location which does not materially
interfere with or obstruct the access of light to the
Property) the Landlord during the six months before the
End of the Term to affix to the Property a notice (of a
suitable size and nature) for re-letting it;
(b) permit (at a suitable location which does not materially
interfere with or obstruct the access of light to the
Property) the Landlord at any time during the Term to
affix to the Property a notice (of a suitable size and
nature) for dealing with the Landlord's interest in the
Property; and
(c) permit all persons with written authority from the
Landlord or the Landlord's agent to view the Property upon
the Landlord giving at least 24 hours prior written notice
and subject to such person complying with the Tenant's
reasonable security and confidentiality requirements.
(24) Regulations
The Tenant shall observe all reasonable regulations made by the
Landlord for the proper management of the Estate.
(25) Car Spaces
The Tenant shall:
(a) not use the Car Spaces otherwise than for the purpose of
the parking of one private motor car in each Car Space and
not to keep anything else in the Parking Area including,
without limitation, plant, equipment, materials,
containers of any description or any skip or other
receptacle for refuse or any caravan or temporary
building;
(b) not without the express permission of the Landlord carry
out any repairs to any vehicle whilst it is in the Parking
Area and if permission is granted ensure that any repairs
are carried out in such manner as not to cause any
nuisance, annoyance, inconvenience or disturbance to the
Landlord or any tenant or occupier of the Estate or other
user of the Parking Area;
(c) keep the Car Spaces and the surrounding area clean, tidy
and free from deposits of oil or grease;
(d) not cause any obstruction in the Parking Area;
(e) take all reasonable and proper precautions against fire
occurring in any vehicle using the Car Spaces;
(f) not do anything in the Parking Area which causes nuisance,
annoyance, inconvenience or disturbance to the Landlord or
any tenant or occupier of the Estate or other user of the
Parking Area.
(26) Freehold covenants
The Tenant shall observe and perform the covenants contained in
or referred to in the documents specified in Schedule 4 so far
as they relate to the Property and are still subsisting and
capable of taking effect and shall indemnify and keep
indemnified the Landlord from and against any non-observance or
non-performance of the same.
(27) Yield up
The Tenant shall:
(a) yield up the Property (except tenant's or trade fixtures
including those of the type listed on annexed schedule) to
the Landlord at the End of the Term with vacant possession
with an internal dividing wall between the Property and
the adjacent Unit numbered 9 constructed to the Landlord's
reasonable satisfaction and in accordance with the
specification of such wall contained in the Rent Review
Specification and otherwise in accordance with the
Tenant's covenants contained in this Lease; and
(b) make good to the satisfaction of the Landlord all damage
occasioned by the removal of any tenant's or trade
fixtures.
(28) Release of Landlord
If the Landlord or any former landlord applies for release of a
covenant under section 8 of the Landlord and Tenant (Covenants)
Act 1995:
(a) the Tenant shall not object unreasonably to the release of
the Landlord or the former landlord; and
(b) if, following such an application, the Tenant serves
notice objecting to the release, but the Court makes a
declaration that it is reasonable for the covenant to be
released, the Tenant shall indemnify the Landlord and any
former landlord against all loss, damage, costs and
expenses incurred or sustained by any of them as a result
of the objection of the Tenant.
7. LANDLORD'S COVENANTS
(1) Introduction
The Landlord covenants with the Tenant to comply with its
obligations set out in this clause and in clauses 5 and 9.
(2) Quiet enjoyment
For so long as the Tenant pays the Rent and performs and
observes the covenants by the Tenant and the conditions
contained in this Lease the Tenant may peaceably and quietly
hold and enjoy the Property during the Term without any lawful
interruption by the Landlord or any person claiming under or in
trust for the Landlord.
(3) Services
The Landlord shall use all reasonable endeavours to:
(a) maintain in good working order and repair all Conduits in,
under or upon the Estate which serve the Property (other
than those which exclusively serve the Property); and
(b) keep the surfaces of the Common Parts in good repair and
cleaned at regular intervals and reasonably well lit.
The Landlord will not be liable to the Tenant for any breach of
these obligations unless the Tenant has given the Landlord
notice of the breach and the Landlord is aware or should
reasonably be aware of the breach and has failed to remedy the
breach within a reasonable time of service of the notice.
8. ALIENATION
(1) Restrictions on alienation
The Tenant shall not:
(a) save to the extent permitted by the following sub-clauses
of this clause, part with possession of the whole or any
part of the Property or part with or share occupation of
the whole or any part of the Property or permit occupation
by a licensee of the whole or any part of the Property or
hold on any trust the whole or any part of the Property;
nor
(b) if it is an unlimited company, incorporate itself as a
limited company without the prior consent of the Landlord
(such consent not to be unreasonably withheld or delayed).
(2) Assignment
The Tenant shall not:
(a) assign part of the Property; nor
(b) assign the whole of the Property without the prior consent
of the Landlord which, subject to sub-clauses (3) and (4),
shall not be unreasonably withheld or delayed.
(3) Agreement as to circumstances
The Landlord and the Tenant agree that the Landlord may withhold
its consent to an assignment if any one or more of the following
circumstances (which are specified for the purposes of section
19(1A) of the Landlord and Tenant Act 1927) exist and it shall
not be regarded as unreasonably withholding its consent if it
does so:
(a) any rent payable pursuant to clause 4(1) of this Lease
agreed service charge, insurance and VAT on such sums
payable in accordance with this Lease due from the Tenant
under this Lease is unpaid;
(b) the Landlord reasonably determines that the proposed
assignee is not a person who is likely to be able both to
comply with the tenant's covenants in this Lease and to
continue to be such a person following the assignment;
(c) the proposed assignee or any proposed guarantor for it
(other than any guarantor under an authorised guarantee
agreement) has the benefit of state or diplomatic immunity
or the Landlord determines that it is likely to acquire
that immunity;
(d) the proposed assignee is a company which is a member of
the same group (within the meaning of section 42 of the
Landlord and Tenant Act 1954) as the Tenant; and
(e) the proposed assignee or any proposed guarantor for it
(other than any guarantor under an authorised guarantee
agreement) is a corporation registered in or an individual
resident in a jurisdiction in which a judgement obtained
in the courts of England and Wales will not necessarily be
enforced without any re-examination of the merits of the
case.
(4) Agreement as to conditions
The Landlord and the Tenant agree that the Landlord may grant
consent to an assignment subject to any one or more of the
following conditions (which are specified for the purposes of
section 19(1A) of the Landlord and Tenant Act 1927) and it shall
not be regarded as giving consent subject to unreasonable
conditions if it does so:
(a) that before the assignment the Tenant enters into and
unconditionally delivers to the Landlord an authorised
guarantee agreement, such agreement to be a deed and to
contain the provisions in Schedule 6 or at the Landlord's
absolute discretion) such other provisions as the Landlord
shall reasonably prescribe and (in either case) such
ancillary provisions as the Landlord shall reasonably
prescribe;
(b) that before the assignment any person (other than a former
Tenant) who at the time of the application for the consent
is guaranteeing the obligations and liabilities under this
Lease of the Tenant covenants by deed with the Landlord
that the Tenant shall perform its obligations under the
authorised guarantee agreement required under paragraph
(a), the deed to contain provisions equivalent to those
contained in paragraphs 1 to 4 and 9 of Schedule 5 and an
obligation on the part of the covenantor (in the event of
default on the part of the Tenant) to perform any
obligation entered into by the Tenant in the authorised
guarantee agreement to take up a new lease, and otherwise
to be in such form as the Landlord reasonably requires;
(c) that before the assignment, if the Landlord determines it
to be necessary, one or more guarantors acceptable to the
Landlord, acting reasonably, covenant by deed with the
Landlord in the form set out in Schedule 5 (with
"assignee" substituted for "Tenant" in paragraphs 1 to 9
inclusive and with such other provisions as the Landlord
reasonably requires) in respect of the period during which
the assignee is bound by the tenant's covenants and the
conditions in this Lease;
(d) that all rent payable pursuant to clause 4(1) of this
Lease agreed service charge, insurance and VAT on such
sums payable in accordance with this Lease due from the
Tenant under this Lease as at the date of the assignment
has been paid;
(e) that the assignment is completed and registered with the
Landlord in accordance with sub-clause (14) within three
months of the date of the consent and that if it is not,
the consent shall be void but any of the guarantees
referred to in paragraphs (a) to (c) shall nevertheless
remain in full force and effect.
(f) that before the assignment of this Lease to an assignee
who is not also taking an assignment of the adjacent Unit
numbered 9 the Tenant has constructed to the Landlord's
reasonable specification and satisfaction an internal
dividing wall between the Property and the adjacent Unit
numbered 9.
(5) Further agreement
The Landlord and the Tenant agree that:
(a) the Landlord may withhold consent to an assignment in
circumstances which are not referred to in sub-clause (3)
if it is reasonable to do so and may grant consent subject
to conditions which are not specified in sub-clause (4) if
the conditions are reasonable; and
(b) any power on the part of the Landlord to determine any
matter for the purposes of sub-clauses (3) or (4) shall be
exercised reasonably.
(6) Underletting
The Tenant shall not:
(a) underlet part only of the Property;
(b) underlet the whole of the Property:
(i) without complying with the provisions of sub-clauses
(7) to (11); and
(ii) without the prior consent of the Landlord, which
shall not be unreasonably withheld or delayed.
(7) Underletting Conditions
Not to underlet the whole of the Property without producing to
the Landlord:
(a) an order of the Court under section 38(4) of the Landlord
and Tenant Act 1954 authorising the inclusion in the
intended underlease of an agreement excluding sections 24
to 28 of that Act; and
(b) a written undertaking by the Tenant not to release the
intended undertenant from or otherwise waive or modify the
agreement authorised by the order
and without including the agreement in the intended underlease.
(8) Covenants on underletting
The Tenant shall procure that any intended undertenant covenants
by deed with the Landlord:
(a) to pay the rent to be reserved by and the other sums to be
payable under the underlease and to perform and observe,
the tenant's covenants and the conditions to be contained
in the underlease throughout the period during which the
undertenant is bound by the tenant's covenants and
conditions in the underlease;
(b) without prejudice to paragraph (a), not to assign the
underlet property without:
(i) first obtaining a deed of covenant from the intended
assignee in favour of the Landlord in the same form
(with the necessary changes) as the deed referred to
in this sub-clause, including (without limitation)
the covenants in this paragraph (b); and
(ii) if the Landlord reasonably requires, first obtaining
a deed from one or more guarantors acceptable to the
Landlord, acting reasonably, in favour of the
Landlord guaranteeing the due and punctual payment
and performance of all the obligations and
liabilities of the intended assignee under the deed
referred to in sub-paragraph (i), the deed to
contain provisions equivalent to those contained in
paragraphs 1 to 4 and 9 of Schedule 5 and otherwise
to be in such form as the Landlord reasonably
requires.
(9) Guarantee on underletting
If the Landlord reasonably requires, the Tenant shall procure
that, before the underlease is granted, one or more guarantors
acceptable to the Landlord, acting reasonably, guarantee (by way
of deed) to the Landlord, in respect of the period during which
the undertenant is bound by the tenant's covenants and the
conditions in the underlease, the due and punctual payment and
performance of all the obligations and liabilities of the
intended undertenant, the guarantee to contain provisions
equivalent to those contained in paragraphs 1 to 4 and 9 of
Schedule 5 and otherwise to be in such form as the Landlord
reasonably requires.
(10) Form of underlease
The Tenant shall procure that every underlease shall:
(a) contain the same tenant's covenants and other terms and
conditions as are contained in this Lease subject only to:
(i) such amendments as may be provided for in paragraphs
(b) to (d); and
(ii) such amendments as may reasonably be required by the
Tenant, having regard only to the duration of the
proposed underlease, and as may be approved by the
Landlord, such approval not to be unreasonably
withheld;
(b) not permit any assignment, underlease or other dealing or
disposal of the Property which is prohibited by the terms
of this Lease and prohibit any further underletting of the
whole or any part of the Property;
(c) provide that where the underlease requires the undertenant
to obtain the landlord's consent, the undertenant shall be
required to obtain also the consent of the Landlord (such
consent not to be unreasonably withheld or delayed);
(d) contain provisions that require a review of the rent
payable under the underlease to open market rent in
accordance with the provisions and at the dates for review
of the rent payable under this Lease, but this paragraph
shall not prohibit an underlease of the Property upon
terms that require review of the rent payable under the
underlease at dates additional to the dates for review of
the rent payable under this Lease;
(11) Underlease requirements
The Tenant shall:
(a) not grant any underlease at a fine or premium;
(b) not grant any underlease at a rent which at the time of
the grant of the underlease is less than the open market
rent of the Property;
(c) not vary the terms of any underlease or release the
undertenant from any covenant or condition in the
underlease without the prior consent of the Landlord such
consent not to be unreasonably withheld or delayed and
shall notify the Landlord of any surrender of any
underlease;
(d) not waive any breach of any of the covenants on the part
of the undertenant and the conditions contained in any
underlease but take all such reasonable steps as are
lawfully available to the Tenant (including re-entry) to
enforce such covenants and conditions;
(e) procure that the rent reserved by any underlease is
reviewed in accordance with the provisions of the
underlease but not agree any revised rent with the
undertenant without the prior consent of the Landlord
(such consent not to be unreasonably withheld), and if on
any rent review under any underlease the revised rent is
to be determined by an independent third party, procure
that any reasonable representations which the Landlord may
wish to make concerning the revised rent are put forward
to the third party at the same time as the representations
of the Tenant and as though they were representations made
by the Tenant; and
(f) procure that on any assignment of any underlease the
outgoing undertenant enters into an authorised guarantee
agreement and, where appropriate, guarantors enter into a
contractual guarantee in each case with the landlord under
the underlease in accordance with the provisions of the
underlease.
In paragraphs (c) to (f) of this sub-clause an underlease
includes any lease where, by virtue of the grant of this Lease,
the Tenant under this Lease becomes the holder of the immediate
reversion to that lease.
(12) Associated companies
The Tenant may share the occupation of any part of the Property
with a company which is a member of the same group as the Tenant
(within the meaning of section 42 of the Landlord and Tenant Act
1954) for so long as both companies remain members of that group
and provided that:
(a) no relationship of landlord and tenant is created between
the two companies and no security of tenure is conferred
upon the occupier; and
(b) within 15 Business Days of the commencement of the sharing
the Tenant gives to the Landlord notice of the company
sharing occupation and the address of its registered
office.
(13) Charging
The Tenant shall not
(a) charge part of the Property; or
(b) charge the whole of the Property by way of fixed security
without the prior consent of the Landlord, which shall not
be unreasonably withheld.
(14) Registration of dealings
Within 15 Business Days of every assignment, transfer,
underlease or charge of the Property or the creation or transfer
of any interest derived out of the Term or any devolution of the
interest of the Tenant or any person deriving title under the
Tenant, the Tenant shall produce a certified copy of the
assignment, transfer, underlease or charge or (in the case of a
devolution) the document evidencing or under which the
devolution arises and pay the Landlord a registration fee of a
reasonable amount, being not less than L 25, in respect of each
assignment, transfer, underlease, charge or devolution.
9. INSURANCE
(1) Landlord's insurance obligations
Unless the insurance is vitiated by any act, default or omission
of the Tenant, any person deriving title under the Tenant or any
person at the Property with the express or implied authority of
any of them the Landlord shall keep the Property (other than
plate glass and tenant's or trade fixtures) insured with
insurers or underwriters selected by the Landlord in accordance
with the provisions of this clause to the extent to which the
Property is insurable and subject to all exclusions, limitations
and excesses imposed by the insurers.
(2) Sum and risks insured
The Property shall be insured in a sum not less than its full
reinstatement cost (as determined from time to time by the
Landlord) against loss or damage by the Insured Risks.
(3) Fees
The insurance shall extend to:
(a) architects' and other professional fees in relation to the
reinstatement of the Property for a minimum sum of 15% of
the amount insured in respect of the Property;
(b) the costs of demolition and removal of debris; and
(c) loss of rent for such period as the Landlord may decide in
an amount which takes into account the Landlord's estimate
of potential increases in rent.
(4) Production of policy
Whenever reasonably required to do so by the Tenant and at the
Tenant's cost, but not more often than twice a year, the
Landlord shall produce to the Tenant at the Landlord's office a
copy of the insurance policy or other evidence of it and
evidence of payment of the last premium.
(5) Reinstatement
Subject to sub-clause (13) if the Property is destroyed or
damaged by any of the Insured Risks, then unless the insurance
is vitiated by any act, default or omission of the Tenant, any
person deriving title under the Tenant or any person at the
Property with the express or implied authority of any of them,
the Landlord shall use reasonable endeavours to:
(a) obtain all consents and permissions necessary for
reinstatement as soon as reasonably possible;
(b) subject to obtaining those consents and permissions, lay
out as soon as practicable all insurance monies received
by the Landlord (other than for fees and loss of rent) in
reinstating the Property; and
(c) subject to the Tenant complying with its obligations in
sub-clauses (6)(a)(iii), (7) and(9) make good out of the
Landlord's own monies any deficiency (other than one
arising from an exclusion, limitation or excess imposed by
the insurers).
(6) Tenant's insurance obligations
(a) The Tenant shall pay to the Landlord on demand:
(i) every premium payable by the Landlord (including any
part of it which the Landlord is entitled to retain
by way of commission) for insuring the Property in
accordance with its obligations in sub-clause (1)
and for effecting insurance in respect of liability
to third parties including members of the public and
such other insurances as the Landlord reasonably
considers desirable;
(ii) where the policy includes the Property and other
properties, the proportion properly attributable to
the Property of every premium payable by the
Landlord (including any part of it which the
Landlord is entitled to retain by way of commission)
for insuring the Property and the other properties
in accordance with its obligations in sub-clause (1)
and for effecting (in relation to the Property and
the other properties) the other insurances referred
to in sub-paragraph (i), the proportion to be
determined by the Landlord whose determination shall
be conclusive save as to questions of law and save
in case of manifest error;
(iii) the amount of any excess deducted or deductible by
the insurers on any claim made by the Landlord; and
(iv) all costs and expenses reasonably incurred by the
Landlord in obtaining a valuation of the Property
for insurance purposes (provided this is limited to
one such valuation every two years).
All sums payable by the Tenant under paragraph (a)(i)
shall be reserved as rent.
(b) The Tenant shall insure all plate glass in the Property
against all risks with an insurance company approved by
the Landlord in the joint names of the Landlord and the
Tenant and, on demand, produce a copy of the insurance
policy and evidence of payment of the last premium to the
Landlord.
(7) Vitiation
The Tenant shall not use the Property or carry on any business
at the Property or do or omit to do at the Property anything
which may make void or voidable any policy for the insurance of
the Property or any nearby property of the Landlord.
(8) Increased premium
The Tenant shall:
(a) not without the prior consent of the Landlord use the
Property or carry on any business at the Property or do or
omit to do at the Property anything which may increase the
premium payable for the insurance; and
(b) if consent is given, repay on demand to the Landlord any
resulting increased insurance premium payable by the
Landlord.
(9) Irrecoverable reinstatement cost
If the Property is destroyed or damaged by any of the Insured
Risks and the insurance money under any insurance effected by
the Landlord is wholly or partly irrecoverable because of any
act, default or omission of the Tenant, any person deriving
title under the Tenant or any person at the Property with the
express or implied authority of any of them the Tenant shall pay
to the Landlord within 14 days of written demand the whole or
the appropriate proportion of the cost of reinstating the
Property. Any dispute as to the amount of such proportion shall
be referred to arbitration.
(10) Notice of damage
If the Property is destroyed or damaged by any of the Insured
Risks the Tenant shall give notice to the Landlord as soon as
the destruction or damage comes to the notice of the Tenant.
(11) Double insurance
The Tenant shall not effect any insurance relating to the
Property against any of the Insured Risks. If the Tenant is
entitled to the benefit of any insurance in respect of the
Property, the Tenant shall pay to the Landlord all monies
received by virtue of the insurance to enable the Landlord to
apply them in making good the loss or damage in respect of which
they have been received.
(12) Cesser of rent
If the Property or any part of it (or the means of access to or
egress from it) is destroyed or damaged by any of the Insured
Risks so as to be unfit for occupation or use the rent or a fair
proportion of it according to the nature and extent of the
damage sustained shall be suspended until the Property (or the
means of access to or egress from it) has been reinstated and
made fit for occupation and use or until the end of three years
from the date of the destruction or damage, whichever first
occurs. Any dispute as to the amount of the proportion shall be
referred to arbitration. This sub-clause does not apply if and
to the extent that the insurance monies in respect of loss of
rent are wholly or partially irrecoverable solely or partly
because of the act, default or omission of the Tenant or any
person deriving title under the Tenant or any person at the
Property with the express or implied authority of any of them.
(13) Prevention of reinstatement
The Landlord shall not be obliged to reinstate the Property in
accordance with sub-clause (5) while prevented by a supervening
event. If the Landlord is unable to commence reinstatement
within twenty four months from the date of destruction or damage
because of a supervening event and the Property or a substantial
part of it is unfit for occupation or use either party may
determine the Term by serving notice on the other party at any
time within six months of the end of the twenty four month
period. On service of the notice the Term will cease but
without prejudice to any rights that any party may have against
another for breach of any of their respective covenants or the
conditions contained in this Lease and all insurance monies
shall belong to the Landlord.
In this sub-clause a supervening event means any of the
following:
(a) inability of the Landlord to obtain the consents and
permissions referred to in sub-clause (5) despite using
all reasonable endeavours to do so;
(b) grant of any of the consents or permissions subject to a
lawful condition with which it would be unreasonable to
expect the Landlord to comply or the Landlord being
requested as a precondition to obtaining any of the
consents or permissions to enter into an agreement with
the planning authority or any other authority containing
conditions with which it would be unreasonable to expect
the Landlord to comply;
(c) some defect in the site upon which reinstatement is to
take place so that it could not be undertaken or could be
undertaken only at a cost unacceptable to the Landlord
(acting reasonably);
(d) inability of the Landlord to obtain access to the site to
reinstate;
(e) prevention of reinstatement by any cause beyond the
control of the Landlord.
10. RE-ENTRY
(1) If an Event of Default occurs then notwithstanding the waiver of
any previous right of re-entry the Landlord may re-enter the
Property or any part of it when the Term shall cease but without
prejudice to any rights or remedies which may then have accrued
to any party against another in respect of any antecedent breach
(including the breach in respect of which re-entry is made) of
any of the covenants or obligations contained in this Lease.
(2) In this clause an Event of Default is any one of the following:
(a) the Rent or any part of it is in arrear and unpaid for
seven Business Days after becoming payable (whether
formally demanded or not); or
(b) a breach by the Tenant of any of the covenants by the
Tenant in this Lease; or
(c) the Tenant (being a company) is deemed unable to pay its
debts under section 123 of the Insolvency Act 1986 or the
Tenant or any Guarantor (being a company) passes a
resolution for winding-up or the directors of any of them
present a petition for winding-up or an order for the
winding-up of the Tenant or any Guarantor is made (other
than (in any such case) a voluntary winding-up of a
solvent company for the purposes of amalgamation or
reconstruction) or the Tenant or any Guarantor is
dissolved; or
(d) the Tenant (being a company) has an administrative or
other receiver or a manager appointed of the whole or any
part of its property or a petition is presented for an
administration order or an administration order is made in
respect of the Tenant or any Guarantor; or
(e) the Tenant (being a company) being registered as an
unlimited company is re-registered as a limited company
without the previous consent of the Landlord; or
(f) the Tenant (being an individual) presents a petition for a
bankruptcy order to be made against him or a bankruptcy
order is made against the Tenant or any Guarantor; or
(g) in relation to the Tenant (whether an individual or a
company) a proposal is made or the Tenant (whether a
company or an individual) enters into any kind of
composition, scheme of arrangement, compromise or
arrangement for the benefit of creditors or any class of
creditors or permits or suffers any distress or execution
to be levied on his goods; or
(h) there occurs in relation to the Tenant in any country or
territory in which any of them carries on business or to
the jurisdiction of whose courts any of them or any of the
property of any of them is subject to any event which
corresponds in that country or territory with any of those
mentioned in paragraphs (c) to (g) above or the Tenant
otherwise becomes subject in any such country or territory
to any law relating to insolvency, bankruptcy or winding
up.
11. GUARANTEE
The Guarantor covenants with the Landlord in the terms set out
in Schedule 5 in respect of the period during which Exodus
Internet Limited is bound by the Tenant's covenants and
conditions in this Lease and any additional period during which
Exodus Internet Limited is liable under an authorised guarantee
agreement.
12. VALUE ADDED TAX
(1) If any VAT is chargeable on any supply made to the Tenant under
the terms of this Lease, the Tenant shall pay by way of
additional consideration the amount of that VAT and the Landlord
shall provide a valid VAT invoice in relation to such VAT to the
Tenant.
(2) Without limiting sub-clause (1) above, each sum reserved or
payable by the Tenant under the terms of this Lease is exclusive
of VAT (if any) and is accordingly to be construed as a
reference to that sum plus any VAT in respect of it, and where
any sum is reserved as rent, the VAT is also reserved as rent.
(3) If VAT is chargeable on any supply made by the Landlord to the
Tenant for which a sum is not reserved or payable under the
terms of this Lease, the Tenant shall pay that VAT to the
Landlord against issue of a VAT invoice five Business Days
before the Landlord has to pay the VAT to Customs.
(4) Where under the terms of this Lease the Tenant is obliged:
(a) to make any payment to the Landlord or any other person
(including, without limitation, by way of service charge,
indemnity or reimbursement) by reference to any amount
incurred or which will or may be incurred by the Landlord
or any other person; or
(b) otherwise to pay all or part of the consideration for any
supply made to the Landlord or any other person,
then without prejudice to sub-clauses (1) to (3) above, the
Tenant shall not be obliged to pay any amount in respect of VAT
to the extent that it is recoverable by the Landlord or any
other person as appropriate.
(5) For the purposes of sub-clause (3) above, VAT is recoverable by
a person, if that person (or any company treated as a member of
the same VAT Group as that person) is entitled to credit for it
as input tax under sections 25 and 26 VATA 1994. For the
avoidance of doubt, VAT is not recoverable by a person only
because he could elect to waive exemption, but has not done so.
(6) Where for the purposes of this Lease it is necessary to
calculate or estimate the cost or value of anything, including
any building, structure, work, item, act or service, the cost or
value shall be calculated or estimated so as to include any VAT
which will or may be incurred in addition.
(7) This clause shall not affect the generality of clause 6(3)
(Outgoings).
(8) Where the Tenant pays to the Landlord VAT in respect of any
supply by the Landlord to the Tenant, the Landlord shall issue
the Tenant with a proper VAT invoice in respect of that VAT.
(9) If the Landlord wishes to make an election to waive the
exemption in respect of the Property under paragraph 2 of
Schedule 10, VATA 1994, the Landlord shall notify the Tenant, no
less than 20 Business Days before the election is to take
effect, of the election and the date on which it is intended to
take effect.
(10) If for any reason the election referred to in sub-clause (9)
above is validly revoked within three months after coming into
effect, the Landlord shall repay to the Tenant any VAT paid by
the Tenant, five Business Days after receipt by the Landlord
from Customs of acknowledgement of the revocation.
13. TRUSTEE LIABILITY PROVISION
(1) Lloyds Bank Plc has entered into this Lease in its capacity as
trustee of Schroder Exempt Property Unit Trust ("SEPUT") and
therefore notwithstanding any other provision contained in this
Lease neither Lloyds Bank Plc nor any successor trustee of SEPUT
shall be obliged to meet any liability or claim hereunder save
to the extent that the same can be met by it out of the Trust
Assets.
(2) For the purposes of this clause "Trust Assets" means the assets
for the time being held upon the trusts of SEPUT.
14. GENERAL
(1) Interest and powers of recovery
If any Rent or other sum payable under this Lease is not paid on
the day falling 7 days after the date on which it is due it
shall bear interest from the date on which it is due until the
date of payment at the Default Interest Rate compounded
quarterly. Every amount payable under this Lease shall be
reserved as rent and shall be recoverable as rent in arrear.
(2) Disputes
In relation to disputes:
(a) any statement in this Lease that any dispute shall be
referred to arbitration means that the dispute shall be
determined by a single arbitrator agreed by the Landlord
and the Tenant and failing agreement by a single
arbitrator appointed by the president or his deputy for
the time being of the Royal Institution of Chartered
Surveyors in accordance with the Arbitration Acts 1950 to
1979 and 1996; and
(b) any dispute between the Tenant and any tenant or occupier
of any other property owned or leased by the Landlord
about any right in connection with the use of the Property
and the other property or about any boundary structure
separating the Property from the other property shall be
determined by the Landlord acting reasonably.
(3) Compensation
Subject to the provisions of section 38(2) of the Landlord and
Tenant Act 1954 neither the Tenant nor any person deriving title
under the Tenant shall be entitled on quitting the Property to
any compensation under section 37 of that Act.
(4) Joint and several liability
Where the Tenant or any Guarantor is more than one person:
(a) those persons shall be jointly and severally responsible
in respect of every obligation undertaken by them under
this Lease; and
(b) the Landlord may release or compromise the liability of
any of those persons under this Lease or grant any time or
other indulgence without affecting the liability of any
other of them.
(5) Whole agreement
This Lease contains the whole agreement between the parties
relating to the transaction contemplated by this Lease and
supersedes all previous agreements between the parties relating
to the transaction.
(6) Representations
The Tenant acknowledges that in agreeing to enter into this
Lease, the Tenant has not relied on any representation,
warranty, collateral contract or other assurance. The Tenant
waives all rights and remedies which, but for this sub-clause,
might otherwise be available to it in respect of any such
representation, warranty, collateral contract or other
assurance, but nothing in this sub-clause shall limit or exclude
any liability for fraud.
(7) Rights of entry
All rights of entry exercisable by the Landlord extend to
include (without limitation) its employees, agents, surveyors,
contractors and licensees with or without plant, equipment,
appliances and materials.
(8) Interpretation of covenants
Any covenant by the Tenant not to do or omit anything shall be
construed as though the covenant was in addition a covenant not
to permit or suffer to be done or omitted that thing.
(9) Tenant's possessions
If after the Tenant has vacated the Property at the End of the
Term any of the Tenant's possessions remain on the Property and
the Tenant fails to remove them within fifteen Business Days
after being requested to do so by the Landlord then:
(a) the Landlord may dispose of the possessions as agent for
the Tenant;
(b) (if disposal is by sale) subject to paragraph (c) the
Landlord shall hold the proceeds of sale after deducting
the costs and expenses of removal, storage and sale
incurred by it to the order of the Tenant;
(c) if the Tenant fails to claim the proceeds of sale within
sixty Business Days of the date of the sale, the Landlord
may keep them;
(d) the Tenant indemnifies the Landlord against:
(i) any liability incurred by the Landlord to any third
party whose possessions have been sold by the
Landlord in the mistaken belief (which shall be
presumed) that the possessions belonged to the
Tenant;
(ii) any damage caused to the Property by the
possessions; and
(iii) all loss, damage, actions, proceedings, claims,
demands, costs, damages and expenses properly
incurred or suffered by or brought or awarded
against the Landlord as a result of the presence of
the possessions on the Property after the Tenant has
left it at the End of Term.
(10) Other land
Nothing contained in or implied by this Lease shall:
(a) impose or be deemed to impose any restriction on the use
of any land or buildings not comprised in this Lease; or
(b) give the Tenant:
(i) the benefit of or the right to enforce or to have
enforced or to prevent the release or modification
of any covenant, lease, condition or stipulation
entered into by any purchaser or tenant from the
Landlord in respect of any property not comprised in
this Lease; or
(ii) the right to prevent or restrict in any way the
development of any land not comprised in this Lease.
(11) Severance
To the extent that any provision of this Lease is rendered void
by section 25 of the Landlord and Tenant (Covenants) Act 1995,
that provision shall be severed from the remainder of this Lease
which shall remain in full force and effect. In this sub-clause
"provision" includes a clause, a sub-clause or a schedule or any
part of any of them.
(12) Perpetuity Period
The perpetuity period applicable to this Lease is 80 years
beginning on the date of this Lease and whenever in this Lease
either the Landlord or the Tenant is granted a future interest
it must vest within that period and if it has not it will be
void for remoteness.
(13) Notices in writing
Every notice, consent, approval or direction given under this
Lease shall be in writing.
(14) Counterparts
This lease may be executed in any number of counterparts, all of
which, taken together, shall constitute one and the same lease
and any party may enter into this lease by executing a
counterpart.
15. BREAK CLAUSE
(1) The Tenant may terminate this Lease on
[ ](the "Termination Date") by giving to
the Landlord not less than one year and one day's prior written
notice, subject to the Tenant:
(1) paying any arrears of rent payable pursuant to clause
4(1) and VAT thereon on or before the Termination Date;
(2) giving up vacant possession of the Property by the
Termination Date;
(3) making the payment specified in clause 15(2).
In such case the Term shall cease on the Termination Date and no
party shall have any further rights or obligations under this
Lease, but this shall not affect any rights or remedies which
may have accrued at the Termination Date to any party against
the other in respect of any prior breach of any of the covenants
and conditions contained in the lease.
(2) On the Termination Date the Tenant shall pay the Landlord a sum
calculated in accordance with clause 15(3) and shall hand over
to the Landlord the original Lease and all other title deeds and
documents relating to the Tenant's interest in the Property and
shall execute such documents as the Landlord shall reasonably
require in order to cancel any entry or title at H.M. Land
Registry.
(3) The Tenant shall pay a sum calculated in accordance with the
following formula:
R x IF2
----
IF1
where:
R = the annual rent payable pursuant to clause 4(1)
of this Lease at the Termination Date or the
annual rent that would be payable but for any
cesser or abatement of rent;
Index Figure = the monthly index figure of rental growth
published by Investment Property Databank Limited
in relation to industrial properties in Greater
London or in the event of such publication
ceasing, such other reasonably comparable index
nominated by the Landlord;
IF1 = the Index Figure last published prior to the
tenth anniversary of the Term Commencement Date;
IF2 = the greater of (a) the Index Figure last published
prior to the Termination Date or (b) IF1.
16. NOTICES
(1) Any notice or other document served under this Lease may be
served in any way in which a notice required or authorised to be
served under section 196 of the Law of Property Act 1925 may be
served.
(2) During such period that the reversion to this Lease is vested in
the trustee of Schroder Exempt Property Unit Trust no notice
shall be deemed to be validly served on the Landlord unless a
copy of such notice is also served on Schroder Property
Investment Management Limited at 31 Gresham Street, London EC2V
7QA or such other address as the Landlord shall notify to the
Tenant.
17. GOVERNING LAW AND JURISDICTION
(1) This Lease is governed by and shall be construed in accordance
with English law.
(2) The Tenant and the Guarantor submit to the jurisdiction of the
English courts for all purposes relating to this Lease and
appoint Dibb Lupton Alsop (ref RSS) 125 London Wall London EC2Y
5AE (or such other person in the UK as the Guarantor and the
Tenant may from time to time nominate by written notice to the
Landlord) as agent of each of them for service of process and so
that each appointment shall be irrevocable until such time as
the Guarantor and the Tenant have given written notice to the
Landlord of an alternative person in the UK to accept service of
process on their behalf
I N W I T N E S S of which this Lease has been executed as a deed
and has been delivered on the date which first appears on page 1.
SCHEDULE 1
The Property
Land on the north side of Coronation Road, Park Royal London NW10
which for the purpose of identification only is shown edged red on the
Plan with the building on it having a Gross Internal Area (as defined
in the Code) of [ ] square feet and known as Unit 8,
Phase 3 Matrix Park, Coronation Road, Park Royal, London, NW10. In
this Schedule the Code means the fourth edition of the Code of
Measuring Practice published by the Royal Institution of Chartered
Surveyors and the Incorporated Society of Valuers and Auctioneers.
SCHEDULE 2
Rights granted to the Tenant
1. The right to use the Common Parts for all reasonable and
appropriate purposes connected with the use and enjoyment of the
Property pursuant to this Lease (subject to temporary
interruption for repair and maintenance).
2. The right to park 26 motor cars in the Car Spaces.
3. The right to use the Conduits in the Estate which serve the
Property (subject to temporary interruption for repair,
alteration or replacement).
4. The right of support and protection from the other parts of the
Estate as now enjoyed by the Property.
5. Subject to obtaining the prior written consent of the Landlord
(such consent not to be unreasonably withheld or delayed but
which consent may be made subject to reasonable requirements and
conditions of the Landlord) the right to lay within the Common
Parts but along routes reasonably specified by the Landlord
additional Conduits to serve the Property.
6. Subject to the giving of reasonable prior notice to the Landlord
and to compliance with all reasonable requirements of the
Landlord the right to enter the Common Parts in order to
maintain, repair, replace or alter any Conduits now or hereafter
exclusively serving the Property the Tenant causing to others as
little inconvenience and disturbance as practicable and making
good without delay all damage thereby occasioned.
SCHEDULE 3
Rights reserved to the Landlord
1. The right to use the Conduits in the Property which serve other
parts of the Estate, the right to install new Conduits for the
benefit of the remainder of the Estate and the right to repair,
maintain and renew existing and new Conduits.
2. The right to enter the Property to exercise any of the rights
referred to in this Schedule or for the purposes set out in
clause 6(6) PROVIDED THAT such right shall only be exercised
(except in case of emergency) by giving reasonable prior notice
to the Tenant and by complying with the Tenant's reasonable
security and confidentiality requirements.
3. All rights of light or air or other easements or rights over or
belonging to any other land or buildings (including other parts
of the Estate).
4. The right to build, re-build or carry out any works on any other
land or buildings (including other parts of the Estate) even if
it interferes with the passage of light or air to the Property
or causes nuisance, damage, annoyance or inconvenience to the
Tenant or occupier of the Property by noise, dust, vibration or
otherwise provided that it does not materially affect the
ability of the Tenant or the occupier to use the Property for
any purpose permitted by this Lease.
5. The support and protection from the Property enjoyed by other
parts of the Estate.
6. The right to build, alter and install and afterwards to maintain
buildings, structures and fixtures on, into or projecting over
or under or taking support from the Property (but those
buildings, structures and fixtures shall not become part of the
Property).
SCHEDULE 4
Matters affecting the freehold
All matters registered or pending registration as at the date hereof
in the Property and Charges Registers of Title Number AGL54738
maintained by HM Land Registry (with the exception of Financial
charges, if any) and the Deed dated 7th August 1998 made between the
Landlord and Railtrack insofar as such matters affect the Property
still subsist and are capable of enforcement
SCHEDULE 5
Guarantee Provisions
1. The Guarantor guarantees to the Landlord the due and punctual
payment and performance by the Tenant of all the tenant's
obligations and liabilities under this Lease and shall indemnify
the Landlord against all losses, damages, costs and expenses
arising or incurred by the Landlord as a result of the non-
payment or non-performance of those obligations or liabilities.
2. The obligations of the Guarantor under this Lease:
(a) constitute a direct, primary and unconditional liability
to pay on demand to the Landlord any sum which the Tenant
is liable to pay under this Lease and to perform on demand
by the Landlord any obligation of the Tenant under this
Lease without the need for any recourse on the part of the
Landlord against the Tenant;
(b) will not be affected by:
(i) any time or indulgence granted to the Tenant by the
Landlord;
(ii) any legal limitation, disability or other
circumstances relating to the Tenant or any
irregularity, unenforceability or invalidity of any
obligations of the Tenant under this Lease;
(iii) any licence or consent granted to the Tenant or any
variation in the terms of this Lease save as
provided in section 18 of the Landlord and Tenant
(Covenants) Act 1995;
(iv) the release of one or more of the parties defined as
the Guarantor (if more than one); or
(v) any other act, omission, matter, event or thing
whereby (but for this provision) the Guarantor would
be exonerated in whole or in part from the guarantee
other than a release by deed given by the Landlord.
3. So long as this guarantee remains in force the Guarantor shall
not:
(a) in the event of any bankruptcy, liquidation,
rehabilitation, moratorium or other insolvency proceedings
relating to the Tenant, claim or prove as creditor in
competition with the Landlord; or
(b) be entitled to claim or participate in any security held
by the Landlord in respect of the obligations of the
Tenant under this Lease; or
(c) exercise any right of set-off against the Tenant.
4. If the Landlord brings proceedings against the Tenant, the
Guarantor shall be bound by any findings of fact, interim or
final award or interlocutory or final judgment made by an
arbitrator or the court in those proceedings in so far as the
same relate to the subject matter of this Lease PROVIDED THAT
the Landlord shall have served a copy of the writ summons
petition or similar process which initiated such proceedings on
the Guarantor before the expiry of 7 days after such proceedings
were initiated
5. If:
(a) the Tenant (being a company) enters into liquidation and
the liquidator disclaims this Lease; or
(b) the Tenant (being a company) is dissolved and the Crown
disclaims this Lease; or
(c) the Tenant (being an individual) becomes bankrupt and the
trustee in bankruptcy disclaims this Lease; or
(d) this Lease is forfeited,
then within six months after the disclaimer or forfeiture the
Landlord may require the Guarantor by notice to accept a lease
of the Property for a term equivalent to the residue which would
have remained of the Term if there had been no disclaimer or
forfeiture at the same rents and subject to the same covenants
and conditions (including those as to the review of rent) as are
reserved by and contained in this Lease (with the exception of
this Schedule).
6. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer or forfeiture and the
Guarantor shall be liable for all payments due under the new
lease as from the date of disclaimer or forfeiture as if the new
lease had been granted on the date of disclaimer or forfeiture.
7. The Guarantor or his personal representatives shall pay the
Landlord's costs of and accept the new lease and shall execute
and deliver to the Landlord a counterpart of it.
8. If the Landlord does not require the Guarantor to take a Lease
of the Property, the Guarantor shall pay to the Landlord on
demand a sum equal to the rent that would have been payable
under this Lease but for the disclaimer or forfeiture in respect
of the period from the date of the disclaimer or forfeiture
until the date which is six months after the date of the
disclaimer or forfeiture or the date on which the Property has
been re-let by the Landlord, whichever first occurs.
9. If any VAT is payable by the Tenant to the Landlord under the
terms of the Lease, the Guarantor's obligation shall extend to
that VAT. If the Guarantor makes any payment in respect of VAT,
the Landlord's obligation to issue a VAT invoice to the Tenant
under the Lease in respect of that VAT shall not be affected,
and the Landlord shall not be under any obligation to issue a
VAT invoice to the Guarantor in respect of that VAT.
SCHEDULE 6
Authorised guarantee provisions
1. The Guarantor guarantees to the Landlord the performance by the
Assignee throughout the Guarantee Period of each of the
covenants falling to be complied with by the tenant under this
Lease and shall indemnify the Landlord against all losses,
damages, costs and expenses arising or incurred by the Landlord
as a result of such non-performance.
2. The obligations of the Guarantor under this guarantee will not
be affected by:
(a) any time or indulgence granted to the Assignee by the
Landlord;
(b) any legal limitation, disability or other circumstances
relating to the Assignee or any irregularity,
unenforceability or invalidity of any obligations of the
Assignee under this Lease;
(c) any licence or consent granted to the Assignee or any
variation in the terms of this Lease save as provided in
section 18 of the Act;
(d) the release of one or more of the parties defined as the
Guarantor (if more than one); or
(e) any other act, omission, matter, event or thing whereby
(but for this provision) the Guarantor would be exonerated
in whole or in part from the guarantee other than a
release under seal given by the Landlord.
3. The Guarantor is liable to the Landlord under this guarantee as
sole or principal debtor and the obligations of the Guarantor
under this guarantee constitute a direct, primary and
unconditional liability to pay on demand to the Landlord any sum
which the Assignee is liable to pay under this Lease and to
perform on demand by the Landlord any obligation of the Assignee
under this Lease without the need for any recourse on the part
of the Landlord against the Assignee. If the Landlord brings
proceedings against the Assignee, the Guarantor shall be bound
by any findings of fact, interim or final award or interlocutory
or final judgment made by an arbitrator or the court in those
proceedings.
4. If during the Guarantee Period the Assignee (being a company)
enters into liquidation and the liquidator disclaims this Lease,
or the Assignee (being a company) is dissolved and the Crown
disclaims this Lease, or the Assignee (being an individual)
becomes bankrupt and the trustee in bankruptcy disclaims this
Lease, then within six months after the disclaimer the Landlord
may require the Guarantor by notice to enter into a new lease of
the Property for a term equivalent to the residue which would
have remained of the term granted by this Lease if there had
been no disclaimer at the same rents and subject to the same
covenants and conditions (including as to the review of rent) as
are reserved by and contained in this Lease.
5. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer and the Guarantor
shall be liable for all payments due under the new lease as from
the date of disclaimer as if the new lease had been granted on
the date of disclaimer.
6. The Guarantor shall pay the Landlord's costs of and accept the
new lease and shall execute and deliver to the Landlord a
counterpart of it.
7. If the Landlord does not require the Guarantor to take a new
lease of the Property the Guarantor shall pay to the Landlord on
demand a sum equal to the rents that would have been payable
under this Lease but for the disclaimer in respect of the period
from the date of the disclaimer until the date which is six
months after the date of the disclaimer or the date on which the
Property has been re-let by the Landlord, whichever first
occurs.
8. During the Guarantee Period the Guarantor shall not;
(a) in the event of any bankruptcy, liquidation,
rehabilitation, moratorium or other insolvency proceedings
relating to the Assignee claim or prove as creditor in
competition with the Landlord; or
(b) be entitled to claim or participate in any security held
by the Landlord in respect of the Assignee's obligations
to the Landlord under this Lease; or
(c) exercise any right of set off against the Assignee.
9. To the extent that any provision of this guarantee does not
conform with section 16 of the Act, that provision shall be
severed from the remainder of this guarantee and this guarantee
shall have effect as if it excluded that provision.
10 If any VAT is payable by the Tenant to the Landlord under the
terms of the Lease, the Guarantor's obligation shall extend to
that VAT. If the Guarantor makes any payment in respect of VAT,
the Landlord's obligation to issue a VAT invoice to the Assignee
under the Lease in respect of that VAT shall not be affected,
and the Landlord shall not be under any obligation to issue a
VAT invoice to the Guarantor in respect of that VAT.
11. In this Schedule:
"Act" means the Landlord and Tenant (Covenants) Act 1995;
"Assignee" means [insert name of assignee in respect of whom the
Tenant is entering into the authorised guarantee agreement];
"Guarantee Period" means the period during which the Assignee is
bound by the covenants by the Tenant in this Lease; and
"Guarantor" means the outgoing Tenant.
SCHEDULE 7
Service Charge Costs
1. The cost of inspecting, repairing, maintaining, cleaning,
decorating and lighting the whole of the Retained Areas
(including any party walls separating Lettable Areas) including
any retaining walls situate on the Estate and the boundary walls
and fences of the Estate and all Conduits serving the Estate
(excluding those serving solely any of the Lettable Areas).
2. The cost of providing the services referred to in clause 7(3).
3. The cost of the maintenance (including planting) of all open and
landscaped areas within the Retained Area.
4. The cost of the erection and maintenance of directional or other
signs or notice boards relating to the Estate or it occupiers.
5. The cost of the establishment and enforcement of regulations for
the benefit or better ordering of the Estate or any part of the
Estate.
6. The cost of providing caretaking and security services to the
Estate.
7. The cost of marking out the roads, footpaths, service areas,
loading bays and all other relevant parts of the Retained Areas.
8. The cost of refuse disposal.
9. The cost of all fuel for the functions referred to in the other
paragraphs of this Schedule.
10. All Outgoings (as defined in clause 6(3)) assessed, charged or
imposed on the Estate as a whole and the Retained Areas.
11. Any amount which the Landlord may be called upon to pay as a
contribution towards the expense of making, repairing,
maintaining, cleaning or lighting anything used by the Estate
and any nearby property.
12. The cost of complying with, making representations against or
contesting the incidence of any enactment relating or alleged to
relate to the Estate.
13. All professional fees reasonably and properly incurred by the
Landlord in connection with the administration and the general
management of the Estate including (without limitation):
(a) the Landlord's agent's fees in connection with management
of the Estate (excluding rent collection); and
(b) fees payable in connection with the service charge
account.
14. The reasonable fees of the Landlord or any company associated
with the Landlord where the Landlord or that company, rather
than a third party, undertakes any obligations under this Lease
or other function referred to in this Schedule.
15. The interest and fees on borrowing any money to finance any of
the functions referred to in this Schedule.
16. Any other sum properly incurred by the Landlord in connection
with the management of the Estate.
SIGNED as a deed by )
Trust Manager)
as attorney for LLOYDS BANK PLC )
in the presence of: )
Witness's
Signature: ...............................................
Name : ...................................................
Address : ................................................
...............................................................
...............................................................
EXECUTED as a DEED by EXODUS
INTERNET LIMITED acting by
two Directors or a Director and its
Company Secretary
Director
Director/Secretary
SIGNED as a DEED by EXODUS
COMMUNICATIONS Plc acting by
Richard Stoltz its Authorised Signatory
in accordance with the constitution of the
Company and the country in which it
is incorporated
Authorised Signatory
DATED 1999
LLOYDS BANK PLC
(as trustee of Schroder Exempt Property Unit Trust)
- and -
EXODUS INTERNET LIMITED
- and -
EXODUS COMMUNICATIONS INC
L E A S E
of property known as
Unit 8 Phase 3 Matrix Park,
Coronation Road, Park Royal, London NW10
ALLEN & OVERY
London
PY0431729.05
<PAGE>
DATED 1999
-----------------------------------------
LLOYDS BANK PLC (as Trustee for SCHRODER EXEMPT PROPERTY UNIT TRUST) (1)
- and -
EXODUS INTERNET LIMITED (2)
-----------------------------------------
RENT SECURITY DEPOSIT DEED
Relating to Unit 8 Phase 3 Matrix Park
Coronation Road Park Royal London NW10
-----------------------------------------
WILDE SAPTE
1 Fleet Place
London EC4M 7WS
Tel. 0171 246 7000
Fax. 0171 246 7777
Ref: TLF/SJG/145764/PY431785.01
TABLE OF CONTENTS
Clause Heading Page No.
1. Definitions and Interpretation 1
2. The Deposit 2
3. The Deposit Account 3
4. Withdrawals from and Maintenance of the Deposit Account 3
5. Transfer of the Landlord's Interest 4
6. Release of Deposit 4
7. Interest 5
8. Miscellaneous 5
THIS DEED is made the day of 1999
BETWEEN
(1) LLOYDS BANK PLC (as Trustee for SCHRODER EXEMPT PROPERTY UNIT
TRUST) of 71 Lombard Street London EC3P 3BS ("the Landlord")
(2) EXODUS INTERNET LIMITED whose registered office is at Fountain
Precinct Balm Green Sheffield South Yorkshire S1 1RZ
(Company Number 3591136) ("the Tenant")
WHEREAS
(A) This Deed is supplemental to the Lease
(B) The Landlord is entitled to the reversion immediately
expectant upon the determination of the term of the Lease and
the Tenant is entitled to the residue of the term of the Lease
WITNESSES as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Deed unless the context otherwise requires or except
as otherwise expressly provided
the "Bank" means Lloyds Bank PLC or such other London Clearing
Bank or registered building society of the Landlord's choice
at which the Deposit Account is maintained from time to time
the "Deposit" means the moneys referred to in Clause 2 below
together with any interest credited to the Deposit Account and
any moneys received from the Tenant and added to the Deposit
Account
the "Deposit Account" means such interest bearing deposit
account opened at the Bank in the Landlord's name and into
which the Deposit is paid by the Landlord
the "Landlord" (where the context so admits) shall include its
successors in title and personal representatives
the "Lease" means the lease dated today made between the
Landlord and Tenant of the Property for a term of 25 years
from [ ] 1999 and includes all documents made
supplemental or pursuant thereto
"Net Asset Value" means tangible net asset value excluding
goodwill and intellectual property determined in accordance
with UK Accounting Principles.
"Net Profits" means net trading profit (excluding
extraordinary and exceptional items) or net investment income
(after deduction of management expenses) in each case after
tax and determined in accordance with UK Accounting Principles
the "Property" means Unit 8 Phase 3 Matrix Park Coronation
Road Park Royal London NW10 being the property demised by
the Lease
"Rental Liability" means a sum equal to the rent from time to
time payable under the Lease or (if higher) the Landlord's
reasonable estimate of the anticipated rent payable under the
Lease following any rent review outstanding during the Years
of Account
"UK Accounting Principles" means UK accounting principles
generally accepted from time to time and consistently applied
"Years of Account" means three consecutive years of account
1.2 Interpretation
In this Deed (unless otherwise provided)
1.2.1 clause headings are inserted for ease of reference
only and shall not affect construction
1.2.2 reference to clauses and sub-clauses are to the
clauses and sub-clauses of and to this Deed and
1.2.3 words denoting one gender include all genders, words
denoting individuals or persons include corporations
and trusts and vice versa, words denoting the
singular include the plural and vice versa, and words
denoting the whole include a reference to any part
thereof
2. THE DEPOSIT
2.1 The Landlord hereby acknowledges receipt of a bank draft
issued by a bank which is a member of CHAPS Limited or of the
receipt of monies by telegraphic transfer to its solicitors
account in the sum of L [insert amount equal to one year's
rent] plus Value Added Tax such payment being made as security
for the due performance and observance of the covenants
agreements and conditions on the part of the Tenant under the
Lease and all losses costs and expenses which the Landlord may
incur by reason of or consequent upon any breach of those
covenants agreements and conditions and (without prejudice to
the generality of the foregoing) as more particularly provided
in Clause 4 below and the Landlord shall be entitled to set
off the Deposit against any sums owed to it under the Lease
2.2 Following the ascertainment of a revised rent expressed as an
annual amount (the "Revised Rent") in accordance with clause 4
of the Lease the Tenant shall pay to the Landlord by way of a
bank draft issued by a bank which is a member of CHAPS Limited
within seven days of such ascertainment an additional sum
calculated in accordance with the following
formula (the "Additional Sum") plus VAT on the Additional Sum:
L X = L A - B
Where:
X = the additional sum to be paid to the Landlord in accordance with
this Clause
A = the amount of the Revised Rent
B = the yearly rent payable under clause 4 of the Lease immediately
prior to the ascertainment of the Revised Rent or the yearly rent
which would be payable immediately prior to such ascertainment
but for any abatement or suspension of rent under the Lease
2.3 Within five Working Days of receipt of the Additional Sum by
the Landlord the Landlord shall pay the Additional Sum into
the Deposit Account and the Additional Sum shall thereafter
form part of the Deposit against which the Landlord shall be
entitled to set off any sums owed to it under the Lease in
accordance with this Deed
3. THE DEPOSIT ACCOUNT
3.1 The Landlord shall forthwith place the Deposit in the Deposit
Account until withdrawal or repayment of the Deposit in
accordance with the terms of Clause 6 below
3.2 The Landlord shall also credit to the Deposit Account any sums
subsequently paid to it by the Tenant under Clause 4.2
4. WITHDRAWALS FROM AND MAINTENANCE OF THE DEPOSIT ACCOUNT
4.1 The Landlord and Tenant hereby agree that without prejudice to
any other right or remedy which the Landlord may have under
this Deed or the Lease the Landlord shall be entitled on 5
days prior written notice to the Tenant to withdraw from the
Deposit from time to time the sums specified below which shall
thereupon become the absolute property of the Landlord
4.1.1 any liquidated and ascertained sum (including
interest) (whether rent or otherwise and whether or
not any formal demand has been made) which is due to
the Landlord from the Tenant in respect of the Lease
and which is unpaid for a period of fourteen days
after the due date
4.1.2 any liquidated and ascertained loss, expense, cost,
claim, liability or damage suffered or incurred by
the Landlord as the result of any breach of any
covenant agreement or condition on the part of the
Tenant under the Lease
4.2 The Landlord shall notify the Tenant in writing within
fourteen days after any withdrawal of any sum from the Deposit
and the reason for such withdrawal and (if the Lease is still
subsisting) the Tenant hereby covenants forthwith to pay the
Landlord for payment into the Deposit Account a bank draft
issued by a bank which is a member of CHAPS Limited for such
further sum as shall restore the Deposit to its balance prior
to such withdrawal
4.3 It is further agreed that if the Lease shall be forfeited or
disclaimed by any liquidator or trustee in bankruptcy of the
Tenant or otherwise determined otherwise than by agreement
(which agreement shall include the valid exercise of an option
to determine the Lease) the Deposit shall continue to be
available to the Landlord in the manner set out above until it
shall be exhausted or until there shall be no further
liability of the Tenant to the Landlord whereupon any
remaining balance of the Deposit shall be released to the
Tenant as soon as reasonably practicable
4.4 The Landlord should as soon as reasonably practicable pay into
the Deposit Account the full amount of any sum (together with
Interest (as defined in the Lease)) shown to have been
incorrectly withdrawn by the Landlord or if earlier following
the date on which the Landlord first becomes aware of an error
having been made
5. TRANSFER OF THE LANDLORD'S INTEREST
If the Landlord transfers the reversion immediately expectant
upon the determination of the Lease before the Deposit has
become repayable to the Tenant pursuant to Clause 6 either
5.1 5.1.1 the Tenant shall if required by (and at the cost of)
the Landlord such costs if incurred by the Tenant to
be reasonable, enter into a rent deposit deed with
the transferee of such reversion in identical terms
to this Deed (but with the name of the transferee
being substituted for the name of the Landlord) and
5.1.2 the Landlord shall procure that any transferee enters
into a rent deposit deed with the Tenant in identical
terms to this Deed (but with the transferee's name
substituted for the name of the Landlord) and on
completion of such deed transfer the balance of the
Deposit to such account as shall have been opened by
the transferee (after the deduction of any sum
withdrawn pursuant to Clause 4 above) and upon
serving notice of such transfer on the Tenant shall
forthwith be released automatically from any further
liability under the terms of this Deed
or
5.2 The Landlord may instead release the balance of the Deposit to
the Tenant (after the deduction of any sum withdrawn pursuant
to Clause 4 above)
6. RELEASE OF DEPOSIT
6.1 The Deposit or such part thereof as shall be remaining shall
be released by the Landlord and repaid to the Tenant on the
earlier of:
6.1.1 one calendar month after the expiration or sooner
determination (by agreement) of the term granted by
the Lease or its determination in consequence of the
exercise by the Tenant of any option to determine
conferred on it by the Lease and in either case
vacant possession of the premises demised by the
Lease being given to the Landlord; or
6.1.2 the Tenant demonstrating that it has made Net Profits
for each of the immediately preceding Years of
Account at least equal to three times the Rental
Liability and that in each of those Years of Account
it has a Net Asset Value of not less than five times
the Rental Liability
and provided always the Tenant has paid to the Landlord all
sums set out as in Clause 4 above (failing which the Landlord
may deduct such sums as are properly due from the Deposit) the
Landlord shall then release the balance to the Tenant within 5
working days of receipt of a written request from the Tenant
for such release
6.2 The Tenant may demonstrate that it satisfies the requirements
of Clause 6.1.2 by means of audited accounts or by means of
such other evidence as shall be reasonably acceptable to the
Landlord
7. INTEREST
7.1 The Landlord shall use all reasonable endeavours to select a
Deposit Account which yields the best rate of interest
reasonably obtainable from the Bank having regard to the
provisions of this Deed
7.2 The interest accruing on the Deposit shall belong to the
Tenant but in the first instance shall be used in or towards
payment of any sums payable by the Tenant pursuant to clauses
2.3 and 4.2 of this Deed and subject thereto such interest
(less tax properly deducted) shall be paid to the Tenant on an
annual basis
7.3 All tax payable in respect of interest accruing on the Deposit
shall be paid by the Tenant from its own money
8. MISCELLANEOUS
It is hereby agreed and declared that:
8.1 The existence of the Deposit shall not prejudice the
Landlord's ability to proceed against the Tenant for
any breach of any covenant agreement or condition on
the part of the Tenant under the Lease or entitle the
Tenant to withhold any moneys or fail to perform any
covenant agreement or condition under the Lease and
the Deposit shall not be regarded as an advance
payment of rent
8.2 The proviso for re-entry contained in the Lease shall
be exercisable as well upon any breach of any
covenant or obligation on the part of the Tenant
contained in this Deed as on the happening of any of
the events mentioned in the Lease
8.3 The rights of the Landlord under this Deed do not
limit its rights under the Lease
8.4 The provisions as to notices contained in the Lease
shall apply to notices served pursuant to this Deed
8.5 The Landlord may at any time terminate this Deed by
paying the Deposit to the Tenant and on doing so will
automatically be released from all liabilities and
obligations under this Deed except in relation to
rights of the Tenant that have arisen before the
termination
8.6 Any termination under clause 8.5 and any payment of
the Deposit shall not affect the Landlord's rights
under the Lease
8.7 The Tenant shall not assign to any person whatsoever
the benefit of any of the Tenant's rights under this
Deed, nor assign, transfer or otherwise dispose of
all or any part of its rights, title or interest in
or to the Deposit, nor create any further encumbrance
or other security interest over the whole or any part
of the Deposit
8.8 If any provision of this Deed is or becomes void or
unenforceable in whole or in part that provision to
that extent is to be deemed not to form part of this
Deed but the validity and enforceability of the
remainder of that provision or of the Deed are not to
be affected
8.9 This Agreement shall be governed by and construed in
accordance with English law and the parties
irrevocably agree that the courts of England are to
have exclusive jurisdiction to settle any disputes
which may arise out of or in connection with this
Agreement
AS WITNESS this Deed (which shall be delivered when dated) has been
executed by the parties or their duly authorised representatives on
the date first stated above
SIGNED and DELIVERED as a DEED
by [
] Trust Manager as attorney for
LLOYDS BANK PLC in the presence
of:
)
)
)
)
EXECUTED and DELIVERED as a DEED by
EXODUS INTERNET LIMITED acting by two
Directors or a Director and its
Company Secretary
)
)
)
)
Director
Director/Company Secretary
<PAGE>
THIS LICENCE is made as a deed on , 1999 BETWEEN
(1) LLOYDS BANK PLC (registered number 2065) whose registered office
is at 71 Lombard Street London EC3P 3BS (as trustee of Schroder
Exempt Property Unit Trust) (the "Landlord");
(2) EXODUS INTERNET LIMITED (registered number 3591136) whose
registered office is at Fountain Precinct Balm Green Sheffield
South Yorkshire S1 1RZ (the "Tenant"); and
(3) EXODUS COMMUNICATIONS INC of 2650 San Thomas Expressway, Santa
Clara CA 95051, USA and whose address for service in England is
Dibb Lupton Alsop (ref RSS) 125 London Wall London EC2Y 5AE or
such other address in the UK as the Guarantor may from time to
time notify in writing to the Landlord (the "Guarantor")
WHEREAS:
(A) This licence is supplemental and collateral to the Leases
whereby the Property was let for the Term.
(B) The Landlord is entitled to the reversion immediately expectant
on the determination of the Term.
(C) The Property is vested in the Tenant for the remainder of the
Term.
(D) The Landlord has agreed to permit alterations to the Property
upon the terms contained in this licence notwithstanding the
provisions of the alterations clause contained in the Leases.
THIS DEED WITNESSES as follows:
1. Definitions and interpretation
(1) In this licence:
"CDM Regulations" means the Construction (Design and Management)
Regulations 1994 or any remaking of them or any amendment to a
regulation in them;
"Consents" means all planning, bye-law, building regulation and
other permissions, licences and consents which are or may be
necessary for the Works to be carried out;
"End of the Term" includes the expiry of the Term by effluxion
of time or the determination of the Term by forfeiture,
surrender, merger, notice or in any other way;
"Landlord" includes the person for the time being entitled to
the reversion immediately expectant on the End of the Term;
"Leases" means each and all of the Unit 8 Lease and the Unit 9
Lease;
"Property" means each and all of Unit 8 and Unit 9;
"Tenant" includes the Tenant's successors in title and assigns;
"Term" means in respect of the Unit 8 Lease the term of years
set out in Part 1 of Schedule 1 and in respect of the Unit 9
Lease the term of years set out in Part 2 of Schedule 1 and in
each case includes any statutory or other extension of it or any
holding over;
"Unit 8" means the property briefly described in Part 1 of
Schedule 2 being the property demised by and more particularly
described in the Unit 8 Lease.
"Unit 8 Lease" means the document short details of which are set
out in Part 1 of Schedule 1 and, where the context permits,
includes any documents supplemental or collateral to it.
"Unit 9" means the property briefly described in Part 2 of
Schedule 2 being the property demised by and more particularly
described in the Unit 9 Lease.
"Unit 9 Lease" means the document short details of which are set
out in Part 2 of Schedule 1 and, where the context permits,
includes any documents supplemental or collateral to it.
"Works" means the alterations and works specified in Schedule 3.
(2) The headings in this licence do not affect its interpretation.
(3) References in this licence to clauses or schedules are, unless
otherwise defined, references to the clauses or schedules in
this licence.
2. Licence
In consideration of the covenants on the part of the Tenant and
the Guarantor contained in this licence and at the request of
the Guarantor, the Landlord grants to the Tenant licence to
carry out the Works at the Property notwithstanding the
provisions of the alterations clause contained in the Leases.
3. Tenant's covenants
(1) The Tenant covenants with the Landlord to comply with the
obligations set out in this clause throughout the period
during which the Tenant is bound by the tenant covenants
of each of the Leases.
(2) Before starting any part or parts of the Works the Tenant
shall at its own expense (in relation to the relevant part
or parts of the Works):
(a) obtain all Consents;
(b) produce to the Landlord and obtain the Landlord's
written acknowledgement (which the Landlord shall
not unreasonably withhold or delay) that the
Consents obtained for the relevant part or parts of
the Works (if any) are satisfactory to the Landlord;
and
(c) give full particulars of the relevant part or parts
of the Works to the insurers of the Property, obtain
their consent to the same, produce the consent to
the Landlord immediately upon its receipt and pay
any additional premium which the insurers may
require.
(3) The Tenant shall carry out and complete the Works:
(a) in a good and workmanlike manner using good quality
materials fit for the purpose for which they will be
used;
(b) in compliance with every enactment, every
instrument, rule, order, regulation or by-law,
including those of every local authority and every
supply authority or other competent authority which
has any jurisdiction with regard to the Works or
with whose systems the Works are to be connected;
(c) in accordance with good building practice;
(d) without infringing any rights, covenants or other
encumbrances binding on or affecting the whole or
any part of the Property.
(e) to the reasonable satisfaction of the Landlord's
surveyors; and
(f) in accordance with the terms of each of the Leases
and all Consents.
(4) The Tenant shall take all proper and sufficient
precautions during the progress of the Works so that the
Tenant:
(a) causes as little inconvenience and disturbance as
possible (whether by noise, dust, vibration or
otherwise) to the Landlord or the occupiers of
adjoining or neighbouring property; and
(b) shall not at any time damage or render unsafe the
structure of the whole or any part of the Property
or any part of any adjoining or neighbouring
property or any plant or machinery in such property
but shall forthwith make good any damage occasioned
by the carrying out of the Works to any such
property as is mentioned in this paragraph.
(5) The Tenant shall use all reasonable endeavours to ensure
that anyone involved in the design of the Works
understands and complies with the requirements of
Regulation 13 of the CDM Regulations.
(6) If the Works are notifiable (as defined in Regulation 2(4)
of the CDM Regulations) and five or more people will be
involved in the Works at any one time, the Tenant shall:
(a) act as the sole client in respect of the Works for
the purposes of the CDM Regulations and issue a
declaration to that effect pursuant to Regulation 4
of the CDM Regulations;
(b) appoint a competent planning supervisor and a
competent principal contractor pursuant to its
obligations under the CDM Regulations;
(c) provide the Landlord with a full and complete copy
of the health and safety plan (as defined in the CDM
Regulations) prior to the commencement of the Works;
(d) provide the Landlord with a full and complete copy
of the health and safety file (as defined in the CDM
Regulations) within 30 days of practical completion
of the Works; and
(e) provide to the Landlord at the End of the Term of
each of the Unit 8 Lease and the Unit 9 Lease the
original health and safety file relating to that
unit and incorporating any subsequent amendments
made to update it.
(7) The Tenant shall indemnify the Landlord from liability in
respect of all loss, damage, actions, proceedings, claims,
demands, costs, damages and expenses:
(a) arising out of any breach of the provisions of this
licence; or
(b) in respect of any injury to or the death of any
person or damage to any property; or
(c) in respect of the infringement, disturbance or
destruction of any right of a third party due to the
carrying out or existence of the Works
and shall insure (or procure such insurance) against any
liability arising under sub paragraph (b) to the
reasonable satisfaction of the Landlord.
(8) The Tenant shall notify the Landlord's surveyors of the
date of commencement and completion of the Works and shall
permit the Landlord and its surveyors to inspect the Works
at all reasonable times (provided that the Landlord and/or
its surveyors comply with the Tenant's reasonable security
and confidentiality requirements).
(9) The Tenant shall pay any charge, levy or tax that may be
imposed under any Act of Parliament, bye-law or regulation
as a result of the Works, whether on the Landlord or on
the Tenant, and shall indemnify the Landlord from any
liability in respect of such charge, levy or tax.
(10) Unless the Landlord shall otherwise direct the Tenant
shall carry out before the End of the Term of each of the
Unit 8 Lease and the Unit 9 Lease any works required to be
carried out to Unit 8 or Unit 9 as the case may be as a
condition of any Consent.
(11) Before the End of the Term of each of the Unit 8 Lease and
the Unit 9 Lease (unless and to the extent released by the
Landlord in writing from this obligation) the Tenant shall
remove that part of the Works relating to Unit 8 and/or
Unit 9 as the case may be and reinstate Unit 8 and/or Unit
9 as the case may be, making good all damage to the whole
or any part of the Property and to the decoration of the
whole or any part of the Property. The Tenant shall carry
out the works of removal and reinstatement at its own
expense, in a good and workmanlike manner and to the
reasonable satisfaction of the Landlord's surveyors.
(12) The Tenant shall pay on demand the reasonable and proper
fees, expenses and disbursements of the Landlord's
surveyors and any other professional advisers (together
with any Value Added Tax on them) incurred by the Landlord
relating to any works of removal and re-instatement it is
required to undertake in accordance with this Licence.
(13) The Tenant shall deal with the insurance of the Works in
accordance with the terms of the Agreement for Lease dated
[ ].
4. Guarantor's covenants
(1) The Guarantor guarantees to the Landlord the due and punctual
payment and performance of all the liabilities and obligations
of the Tenant under this licence and shall indemnify the
Landlord against all losses, damages, costs and expenses arising
or incurred by the Landlord as a result of the non-payment or
non-performance of those obligations or liabilities.
(2) The obligations of the Guarantor under this licence:
(a) constitute a direct, primary and unconditional liability
to pay on demand to the Landlord any sum which the Tenant
is liable to pay under this licence and to perform on
demand by the Landlord any obligation of the Tenant under
this licence without the need for any recourse on the part
of the Landlord against the Tenant; and
(b) will not be affected by:-
(i) any time or indulgence granted to the Tenant by the
Landlord;
(ii) any legal limitation, disability or other
circumstances relating to the Tenant or any
irregularity, unenforceability or invalidity of any
obligations of the Tenant under this licence;
(iii) any licence or consent granted to the Tenant, any
variation in the terms of this licence or any
variation in the terms of any of the Leases;
(iv) the release of one or more of the parties defined as
the Guarantor (if more than one); or
(v) any other act, omission, matter or thing whereby
(but for this provision) the Guarantor would be
exonerated in whole or in part from this guarantee
other than a release under seal given by the
Landlord.
(3) So long as this guarantee remains in force the Guarantor shall
not:
(a) in the event of any bankruptcy, liquidation,
rehabilitation, moratorium or other insolvency proceedings
relating to the Tenant, claim or prove as creditor in
competition with the Landlord; or
(b) be entitled to claim or participate in any security held
by the Landlord in respect of the obligations of the
Tenant under this licence; or
(c) exercise any right of set-off against the Tenant.
(4) If the Landlord brings proceedings against the Tenant, the
Guarantor shall be bound by any findings of fact, interim or
final award of interlocutory or final judgment made by an
arbitrator or the court in those proceedings insofar as the same
relate to the subject matter of this Deed PROVIDED THAT the
Landlord shall have served a copy of the writ summons petition
or similar process which initiated such proceedings on the
Guarantor before the expiry of 7 days after such proceedings
were initiated
5. Declarations
It is agreed and declared that:
(a) at the sole discretion of the Landlord the licence granted
by the Landlord under this licence shall lapse and become
void if the Works are not commenced within six months from
the date of this licence;
(b) the carrying out of the Works is subject to all rights of
the owners and occupiers of adjoining or neighbouring
properties;
(c) all the covenants on the part of the Tenant and conditions
contained in the Leases which are now applicable to the
Property shall continue to be applicable to the Property
and shall extend to the Works;
(d) the proviso for re-entry on breach or non-observance in
the Leases shall be read and construed from the date of
this licence as including a reference to the covenants
contained in this licence;
(e) the Tenant shall not be entitled to any compensation in
respect of the Works or the reinstatement of the Property
whether at the End of the Term or at any other time;
(f) this licence and any approval of the Works by or on behalf
of the Landlord is granted without any liability on the
part of the Landlord or its architects, surveyors or other
agents, whether for the design or carrying out of the
Works or otherwise;
(g) any decrease or increase in the rental value of Unit 8 or
Unit 9 as a result of the Works shall be disregarded on
any rent review under the respective Leases; and
(h) the Works shall be at the sole risk of the Tenant until
such time as the Landlord's surveyors certify that the
Works have been completed to their satisfaction and until
that time the Landlord's covenant to insure contained in
the Leases shall not apply to the Works.
6. Joint and several liability
Where the Tenant or the Guarantor is more than one person:
(a) those persons shall be jointly and severally responsible
in respect of every obligation undertaken by them under
this licence; and
(b) the Landlord may release or compromise the liability of
any of those persons under this licence or grant any time
or other indulgence without affecting the liability of any
other of them.
7. Notices
Any notice or other document served under this licence shall be
in writing and may be served in any way in which a notice
required or authorised to be served under Section 196 of the Law
of Property Act 1925 (as amended or re-enacted) may be served.
8. Jurisdiction
This Deed shall be governed by and construed in accordance with
English law and the parties irrevocably agree that the courts of
England are to have exclusive jurisdiction to settle any
disputes which may arise out of or in connection with this Deed.
IN WITNESS of which this licence has been executed as a deed and has
been delivered on the date first appearing on Page 1.
SCHEDULE 1
Details of the Leases and the Term
Part 1
Lease or underlease:
Lease of Unit 8 Phase 3 Matrix Park dated as
set out below, for the Term and made between
the Parties set out below
Date:
Parties:
(1) Lloyds Bank Plc (as trustee of Schroder
Exempt Property Unit Trust)
(2) Exodus Internet Limited
(3) Exodus Communications Inc
Term:
25 years from [ ]
Part 2
Lease or underlease:
Lease of Unit 9 Phase 3 Matrix Park dated as
set out below, for the Term and made between
the Parties set out below
Date:
Parties:
(1) Lloyds Bank Plc (as trustee of Schroder
Exempt Property Unit Trust)
(2) Exodus Internet Limited
(3) Exodus Communications Inc
Term:
25 years from [ ]
SCHEDULE 2
Details of the Property
Part 1
Unit 8 Phase 3 Matrix Park, Coronation Road, Park Royal, London NW10
Part 2
Unit 9 Phase 3 Matrix Park, Coronation Road, Park Royal, London NW10
SCHEDULE 3
Details of the Works
[Tenant to provide]
SIGNED as a deed by )
Trust Manager )
as attorney for LLOYDS BANK PLC )
in the presence of: )
Witness's
Signature : .....................................................
Name : ...........................................................
Address : ........................................................
......................................................................
.
......................................................................
.
EXECUTED and DELIVERED as a Deed by )
EXODUS INTERNET LIMITED )
acting by two Directors or a Director and its )
Company Secretary )
Director
Director/Secretary
SIGNED and DELIVERED as a Deed by )
EXODUS COMMUNICATIONS INC )
acting by its Authorised Signatory Richard )
Stoltz in accordance with the constitution )
of the Company and the country in which it is )
incorporated )
Authorised Signatory
DATED 1999
LLOYDS BANK PLC
(as trustee of Schroder Exempt Property Unit Trust)
to
EXODUS INTERNET LIMITED
and
EXODUS COMMUNICATIONS INC
_______________________________
LICENCE FOR ALTERATIONS
of leasehold premises being
Units 8 and 9 Phase 3 Matrix Park
Coronation Road Park Royal London NW10
_______________________________
WILDE SAPTE
1 Fleet Place
London EC4M 7WS
Tel. 0171 246 7000
Fax. 0171 246 7777
Ref TLF/SJG/143834
PY0431778.02
<PAGE>
THIS DEED is made on , 1999 BETWEEN
(1) LLOYDS BANK PLC (registered number 2065) whose registered office
is at 71 Lombard Street London EC3P 3BS (as trustee of Schroder
Exempt Property Unit Trust) (the "Landlord");
(2) EXODUS INTERNET LIMITED (registered number 3591136) whose
registered office is at Fountain Precinct Balm Green Sheffield
South Yorkshire S1 1RZ (the "Tenant"); and
(3) EXODUS COMMUNICATIONS INC of 2650 San Thomas Expressway, Santa
Clara CA 95051, USA and whose address for service in England is
Dibb Lupton Alsop (ref RSS) 125 London EC2Y 5AE or such other
address in the UK as the Guarantor may from time to time notify
in writing to the Landlord (the "Guarantor").
WHEREAS:
(A) The parties hereto have today entered into the Leases which,
inter alia, grant the Tenant the right to park motor vehicles in
Parking Area 1 and Parking Area 2.
(B) The parties hereto have agreed to enter into this deed for the
purposes hereinafter set out.
THIS DEED WITNESSES as follows:
1. Definitions and interpretation
(1) In this deed:
"CDM Regulations" means the Construction (Design and Management)
Regulations 1994 or any remaking of them or any amendment to a
regulation in them;
"Consents" means all planning, bye-law, building regulation and
other permissions, licences and consents which are or may be
necessary for the Works to be carried out;
"End of the Term" includes the expiry of the Term by effluxion
of time or the determination of the Term by forfeiture,
surrender, merger, notice or in any other way;
"Entry System 1" means an electronic entry or other similar
system of a type to be first approved in writing by the Landlord
(such approval not to be unreasonably withheld or delayed) to be
installed by the Tenant at the Tenant's own cost in the
approximate position marked "X" on the Plan but so that the
positioning of such system shall be such as to allow vehicles to
come to a halt between the entry barrier at point "X" and the
Service Road without the vehicle in any way obstructing the
passage of other vehicles over and along the Service Road;
"Entry System 2" means an electronic entry or other similar
system of a type to be first approved in writing by the Landlord
(such approval not to be unreasonably withheld or delayed) to be
installed by the Tenant at the Tenant's own cost in the
approximate position marked "Y" on the Plan;
"Estate" has the same meaning as ascribed in the Leases;
"Landlord" includes the person for the time being entitled to
the reversion immediately expectant on the End of the Term of
the Leases;
"Leases" means each and all of the Unit 8 Lease and the Unit 9
Lease;
"Parking Area 1" means the areas edged blue and edged green on
the Plan;
"Parking Area 1 Rights" means the rights granted by clause 2(2);
"Parking Area 2" means the area edged green on the Plan;
"Parking Area 2 Rights" means the rights granted by clause 2(3);
"Parking Areas" means each and both of Parking Area 1 and Area
2;
"Plan" means the plan attached to this deed;
"Property" means each and all of Unit 8 and Unit 9;
"Service Road" means the road on the Estate which is shown in
part coloured brown on the Plan;
"Tenant" means Exodus Internet Limited only and does not include
the Tenant's successors in title and assigns;
"Term" means in respect of the Unit 8 Lease the term of years
mentioned in Part 1 of the Schedule and in respect of the Unit 9
Lease the term of years mentioned in Part 2 of the Schedule and
in each case includes any statutory or other extension of it or
any holding over;
"Unit 8" means the premises briefly described in Part 1 of the
Schedule being the premises demised by and more particularly
described in the Unit 8 Lease;
"Unit 8 Lease" means the document short details of which are set
out in Part 1 of the Schedule and, where the context permits,
includes any documents supplemental or collateral to it;
"Unit 9" means the premises briefly described in Part 2 of the
Schedule being the premises demised by and more particularly
described in the Unit 9 Lease;
"Unit 9 Lease" means the document short details of which are set
out in Part 2 of the Schedule and, where the context permits,
includes any documents supplemental or collateral to it;
"Works" means the works described in clause 2.
(2) The headings in this deed do not affect its interpretation.
(3) References in this deed to clauses or schedules are, unless
otherwise defined, references to the clauses or schedules in
this deed.
2. Rights granted to the Tenant
(1) In consideration of the covenants on the part of the Tenant and
the Guarantor contained in this deed and at the request of the
Guarantor, the Landlord grants to the Tenant the following
rights.
(2) For so long as the respective terms created by the Unit 8 Lease
and the Unit 9 Lease shall both remain vested in the Tenant the
Tenant shall have the following rights:
subject to obtaining the Landlord's prior written approval
of detailed drawings and specifications as to size, design
and positioning (such approval not to be unreasonably
withheld or delayed) the right to install and thereafter
maintain and remove:
(a) a closed circuit television monitoring system within
Parking Area 1; and
(b) Entry System 1.
(3) If the term created by the Unit 8 Lease or the term created by
the Unit 9 Lease shall cease to be vested in the Tenant then the
rights granted in clause 2(2) shall automatically and
immediately terminate but so long as the term created by the
Unit 8 Lease remains vested in the Tenant the Tenant shall have
rights in identical terms as those set out in clause 2(2) save
that the reference to Parking Area 1 shall be deemed to be a
reference to Parking Area 2 and the reference to Entry System 1
shall be deemed to be a reference to Entry System 2.
3. Expiration and termination of Tenant's rights
The rights contained in clause 2 shall automatically and
immediately terminate on the earlier of the following events
occurring:
(a) assignment of the Unit 8 Lease only or the Tenant
ceasing for any reason to be tenant under the Unit 8
Lease;
(b) the End of the Term of the Leases;
(c) the End of the Term of the Unit 8 Lease alone;
(d) the Tenant is the tenant under the Unit 9 Lease only;
(e) the Landlord exercises its rights of re-entry in
accordance with clause 10 of the Leases in respect of
the Leases or the Unit 8 Lease alone (save where the
Tenant successfully obtains relief from forfeiture
from a court of competent jurisdiction in relation to
any such re-entry);
(f) the Tenant serving written notice on the Landlord to
the effect that the Tenant with immediate effect
surrenders such rights.
4. Tenant's covenants
(1) The Tenant covenants with the Landlord to comply with the
obligations set out in this clause.
(2) Before starting the Works the Tenant shall at its own expense:
(a) obtain all Consents;
(b) produce to the Landlord and obtain the Landlord's written
acknowledgement (which the Landlord shall not unreasonably
withhold or delay) that the Consents obtained for the
Works (if any) are satisfactory to the Landlord; and
(c) give full particulars of the Works to the insurers of the
Property, obtain their consent to the Works, produce the
consent to the Landlord immediately upon its receipt and
pay any additional premium which the insurers may require.
(3) The Tenant shall carry out and complete the Works:
(a) in a good and workmanlike manner using good quality
materials fit for the purpose for which they will be used;
(b) in compliance with every enactment, every instrument,
rule, order, regulation or by-law, including those of
every local authority and every supply authority or other
competent authority which has any jurisdiction with regard
to the Works or with whose systems the Works are to be
connected;
(c) in accordance with good building practice;
(d) to the reasonable satisfaction of the Landlord's
surveyors; and
(e) in accordance with the terms of all Consents.
(4) The Tenant shall take all proper and sufficient precautions
during the progress of the Works so that the Tenant:
(a) causes as little inconvenience and disturbance as possible
(whether by noise, dust, vibration or otherwise) to the
Landlord or the occupiers of adjoining or neighbouring
property; and
(b) shall not at any time damage or render unsafe the
structure of the whole or any part of the Estate or any
plant or machinery in such property but shall forthwith
make good any damage occasioned by the carrying out of the
Works to any such property as is mentioned in this
paragraph.
(5) The Tenant shall use all reasonable endeavours to ensure that
anyone involved in the design of the Works understands and
complies with the requirements of Regulation 13 of the CDM
Regulations.
(6) If the Works are notifiable (as defined in Regulation 2(4) of
the CDM Regulations) and five or more people will be involved in
the Works at any one time, the Tenant shall:
(a) act as the sole client in respect of the Works for the
purposes of the CDM Regulations and issue a declaration to
that effect pursuant to Regulation 4 of the CDM
Regulations;
(b) appoint a competent planning supervisor and a competent
principal contractor pursuant to its obligations under the
CDM Regulations;
(c) provide the Landlord with a full and complete copy of the
health and safety plan (as defined in the CDM Regulations)
prior to the commencement of the Works;
(d) provide the Landlord with a full and complete copy of the
health and safety file (as defined in the CDM Regulations)
within 30 days of practical completion of the Works.
(7) The Tenant shall indemnify the Landlord from liability in
respect of all loss, damage, actions, proceedings, claims,
demands, costs, damages and expenses:
(a) arising out of any breach of the provisions of this deed;
or
(b) in respect of any injury to or the death of any person or
damage to any property due to the carrying out or
existence of the Works ; or
(c) in respect of the infringement, disturbance or destruction
of any right of a third party due to the carrying out or
existence of the Works
and shall insure against any liability arising under sub
paragraph (b) to the reasonable satisfaction of the Landlord.
(8) The Tenant shall notify the Landlord's surveyors of the date of
commencement and completion of the Works and shall permit the
Landlord and its surveyors to inspect the Works at all
reasonable times.
(9) The Tenant shall pay any charge, levy or tax that may be imposed
under any Act of Parliament, bye-law or regulation as a result
of the Works, whether on the Landlord or on the Tenant, and
shall indemnify the Landlord from any liability in respect of
such charge, levy or tax.
(10) Any equipment or apparatus from time to time comprised in the
Works shall be maintained by the Tenant at its own cost in good
and substantial repair and condition.
(11) Upon the expiration or termination of the Parking Area 1 Rights
or the Parking Area 2 Rights the Tenant shall forthwith:
(a) remove all equipment installed pursuant to clause 2
including Entry System 1 where the Parking Area 1 Rights
have terminated and Entry System 2 where the Parking Area
2 Rights have terminated;
(b) cease to employ the security measures referred to in
clause 2(2) where the Parking Area 1 Rights have
terminated and in clause 2(3) where the Parking Area 2
Rights have terminated;
(c) reinstate Parking Area 1 where the Parking Area 1 Rights
have terminated and Parking Area 2 where the Parking Area
2 Rights have terminated; and
(d) carry out any works required as a condition of any Consent
and in each case making good all damage to Parking Area 1 and
Parking Area 2 respectively and to the Estate.
(12) The Tenant shall carry out the works of reinstatement required
by sub-clause (11) at its own expense and in a good and
workmanlike manner and to the reasonable satisfaction of the
Landlord or their surveyors.
(13) The Tenant shall pay on demand the reasonable and proper fees,
expenses and disbursements of the Landlord and its surveyors and
any other professional advisers (together with any Value Added
Tax on them) incurred by the Landlord relating to the approvals
required by this deed and any works of removal and re-
instatement the Tenant is required to undertake in accordance
with this deed.
5. Landlord's covenants
The Landlord hereby covenants with the Tenant as follows:
(a) for so long as the respective terms created by the Unit 8
Lease and the Unit 9 Lease shall remain vested in the
Tenant the Landlord will not grant to any other person any
rights in respect of the parking of vehicles on or over
Parking Area 1; and
(b) for so long as the term created by the Unit 8 Lease
remains vested in the Tenant the Landlord will not grant
to any other person any rights in respect of the parking
of vehicles on or over Parking Area 2,
(c) during the subsistence of the rights granted by clause
2(2) or clause 2(3) the Landlord shall give to the Tenant
at least 3 working days prior notice (save in case of
emergency) of the date on which the Landlord (or its agent
or contractors as the case may be) intends to enter on to
Parking Area 1 or Parking Area 2 (as appropriate) for any
purpose which may substantially interfere with or impair
the Tenant's ability to exercise the rights granted to it
in this deed.
6. Alienation
The Tenant may not assign, underlet, charge or otherwise deal
with its rights under this deed.
7. Transfer of the Landlord's interest
If the Landlord transfers the reversion immediately expectant
upon the determination of the Leases the Landlord may procure
that any transferee enters into a deed with the Tenant to
observe the covenants on the Landlord's part contained in clause
5 and on delivery of such deed to the Tenant the Landlord shall
be automatically released from its obligations under such clause
(save in respect of any rights the Tenant may have against the
Landlord in respect of any prior breach of such covenant by the
Landlord).
8. Guarantor's covenants
(1) The Guarantor guarantees to the Landlord the performance of all
the liabilities and obligations of the Tenant under this deed
and shall indemnify the Landlord against all losses, damages,
costs and expenses arising or incurred by the Landlord as a
result of the non-payment or non-performance of those
obligations or liabilities.
(2) The obligations of the Guarantor under this deed:
(a) constitute a direct, primary and unconditional liability
to pay on demand to the Landlord any sum which the Tenant
is liable to pay under this deed and to perform on demand
by the Landlord any obligation of the Tenant under this
deed without the need for any recourse on the part of the
Landlord against the Tenant; and
(b) will not be affected by:-
(i) any time or indulgence granted to the Tenant by the
Landlord;
(ii) any legal limitation, disability or other
circumstances relating to the Tenant or any
irregularity, unenforceability or invalidity of any
obligations of the Tenant under this deed;
(iii) any licence or consent granted to the Tenant, any
variation in the terms of this deed or any variation
in the terms of the Leases or any one or more of
them;
(iv) the release of one or more of the parties defined as
the Guarantor (if more than one); or
(v) any other act, omission, matter or thing whereby
(but for this provision) the Guarantor would be
exonerated in whole or in part from this guarantee
other than a release under seal given by the
Landlord.
(3) So long as this guarantee remains in force the Guarantor shall
not:
(a) in the event of any bankruptcy, liquidation,
rehabilitation, moratorium or other insolvency proceedings
relating to the Tenant, claim or prove as creditor in
competition with the Landlord; or
(b) be entitled to claim or participate in any security held
by the Landlord in respect of the obligations of the
Tenant under this deed; or
(c) exercise any right of set-off against the Tenant.
(4) If the Landlord brings proceedings against the Tenant, the
Guarantor shall be bound by any findings of fact, interim or
final award of interlocutory or final judgment made by an
arbitrator or the court in those proceedings insofar as the same
relate to the subject matter of this deed PROVIDED THAT the
Landlord shall have served a copy of the writ summons petition
or similar process which initiated such proceedings on the
Guarantor before the expiry of 7 days after such proceedings
were initiated
9. Declarations
It is agreed and declared that:
(a) the Tenant shall not be entitled to any compensation in
respect of the Works or the reinstatement of Parking
Area 1 and Parking Area 2 following the removal of the
Works;
(b) this deed and any approval of the Works by or on behalf of
the Landlord is granted without any liability on the part
of the Landlord or its surveyors or other agents, whether
for the design or carrying out of the Works or otherwise;
(c) the Works shall be and shall remain at the sole risk of
the Tenant;
(d) the Tenant is not granted and shall not acquire any rights
over Parking Area 1 or Parking Area 2 save as specifically
set out in this deed; and
(e) any decrease in the rental value of the Property as a
result of this deed shall be disregarded on any rent
review under the Leases or any one of them.
10. Joint and several liability
Where the Tenant or the Guarantor is more than one person:
(a) those persons shall be jointly and severally responsible
in respect of every obligation undertaken by them under
this deed; and
(b) the Landlord may release or compromise the liability of
any of those persons under this deed or grant any time or
other indulgence without affecting the liability of any
other of them.
11. Notices
Any notice or other document served under this deed shall be in
writing and may be served in any way in which a notice required
or authorised to be served under Section 196 of the Law of
Property Act 1925 (as amended or re-enacted) may be served.
12. Jurisdiction
This deed shall be governed by and construed in accordance with
English law and the parties irrevocably agree that the courts of
England are to have exclusive jurisdiction to settle any
disputes which may arise out of or in connection with this deed.
IN WITNESS of which this deed has been executed as a deed and has been
delivered on the date first appearing on Page 1.
THE SCHEDULE
Part 1
------
Lease or underlease: Lease of Unit 8
Premises demised Unit 8 Phase 3 Matrix Park, Coronation Road, Park
Royal, London NW10
Date:
Parties: (1) Lloyds Bank Plc (as trustee of Schroder Exempt
Property Unit Trust)
(2) Exodus Internet Limited
(3) Exodus Communications Inc
Term: 25 years from
Part 2
------
Lease or underlease: Lease of Unit 9
Premises demised Unit 9 Phase 3 Matrix Park, Coronation Road, Park
Royal, London NW10
Date:
Parties: (1) Lloyds Bank Plc (as trustee of Schroder Exempt
Property Unit Trust)
(2) Exodus Internet Limited
(3) Exodus Communications Inc
Term: 25 years from
SIGNED as a deed by )
Trust Manager )
as attorney for LLOYDS BANK PLC )
in the presence of: )
Witness's
Signature : .....................................................
Name : ...........................................................
Address : ........................................................
......................................................................
.
......................................................................
.
PY409042
EXECUTED and DELIVERED as a deed by )
EXODUS INTERNET LIMITED )
acting by two Directors or a Director and its )
Company Secretary )
Director
Director/Secretary
SIGNED and DELIVERED as a deed by )
EXODUS COMMUNICATIONS INC )
acting by its Authorised Signatory Richard )
Stoltz in accordance with the constitution )
of the Company and the country in which it is )
incorporated )
Authorised Signatory
PY0439735.01
DATED 1999
LLOYDS BANK PLC
(as trustee of Schroder Exempt Property Unit Trust)
and
EXODUS INTERNET LIMITED
and
EXODUS COMMUNICATIONS INC
_______________________________
DEED
relating to car spaces used in
connection with leasehold
premises being Units 8 & 9, Phase
3, Matrix Park, Coronation Road,
Park Royal, London, NW10
_______________________________
ALLEN & OVERY
LONDON
PY0439735.01
<PAGE>
H.M. LAND REGISTRY
Land Registration Acts 1925-1988
County & District: London Boroughs of Ealing and Brent
Title Number: AGL 54738
Property: Land between Unit 7 Phase 1 Matrix Park
Coronation Road Park Royal and Unit 8 Phase 3
Matrix Park, Coronation Road, Park Royal,
London NW10
THIS LEASE is made on , 1999
BETWEEN:
(1) LLOYDS BANK PLC (registered number 2065) (as trustee of Schroder
Exempt Property Unit Trust) whose registered office is at 71
Lombard Street, London EC3P 3BS (the "Landlord");
(2) EXODUS INTERNET LIMITED (registered number 3591136) whose
registered office is at Fountain Precinct Balm Green Sheffield
South Yorkshire S1 1RZ (the "Tenant"); and
(3) EXODUS COMMUNICATIONS INC of 2650 San Thomas Expressway, Santa
Clara CA95051, USA (the "Guarantor").
This Lease is a new tenancy for the purposes of section 1 of the
Landlord and Tenant (Covenants) Act 1995.
THIS DEED WITNESSES as follows:
1. DEFINITIONS
In this Lease:
"authorised guarantee agreement" means an authorised guarantee
agreement as defined in section 16 of the Landlord and Tenant
(Covenants) Act 1995;
"Business Day" means a day (other than a Saturday or Sunday) on
which banks are generally open in London for normal business;
"Clearing Bank" means a bank which is a member of CHAPS Clearing
Company Limited;
"Common Parts" means the roads, footpaths, service areas, car
parks, loading bays, landscaped and open areas, entrances and
other areas from time to time during the Term provided by the
Landlord for common use by the tenants of the Estate (but shall
not include any such items as may exclusively serve and be
demised to a tenant of any Units);
"Conduits" includes those for sewage, water, gas, electricity,
telecommunications and data processing;
"Default Interest Rate" means four per centum per annum above
the Interest Rate;
"End of the Term" includes the expiry of the Term by effluxion
of time or the determination of the Term by forfeiture,
surrender, merger, notice or in any other way;
"Estate" means Phases 1 and 3 Matrix Park Coronation Road Park
Royal London NW10 the present extent of which is shown edged
green on the Estate Plan but such expression shall mean such
greater or lesser area which shall include the Property and
which shall from time to time be managed by the Landlord as a
single estate (including all buildings and other structures on
and all parts of such estate);
"Estate Plan" means the plan numbered A3159/0/38 annexed to this
Lease;
"Guarantor" includes the person named in this Lease as
guarantor, if any, and any other person who is for the time
being a guarantor in respect of the Tenant's obligations under
this Lease and his personal representatives and successors;
"Insured Risks" means fire, lightning, explosion, earthquake,
aircraft and other aerial devices and articles dropped from
them, escape of oil, impact by vehicles or animals, riot, civil
commotion, strikes and labour disturbances, storm, flood,
bursting and overflowing of water tanks, apparatus or pipes and
other risks against which the Landlord reasonably decides from
time to time to insure and any other risks that the Tenant shall
reasonably require to be included and which the insurers shall
accept subject to such exclusions, limitations and excesses as
are imposed by its insurers and to the extent to which the risks
mentioned in this definition are insurable with the Landlord's
insurers but shall include loss or damage by acts of terrorism
if and only to the extent that the Landlord has insured against
acts of terrorism;
"Interest Rate" means the base rate for the time being of Lloyds
Bank Plc or of another Clearing Bank designated from time to
time by the Landlord or if there is no such base rate the rate
from time to time prescribed under section 32 of the Land
Compensation Act 1961;
"Landlord" includes the person for the time being entitled to
the reversion immediately expectant on the End of the Term;
"Lease" means this lease, all deeds varying this lease and all
licences and consents granted under this lease or under any deed
of variation;
"Lettable Areas" means all buildings on the Estate designed to
be let for commercial use;
"Plan" means the plan annexed to this Lease numbered A3159-
003.P01;
"Planning Acts" means the Town and Country Planning Act 1990,
the Planning (Listed Building and Conservation Areas) Act 1990,
the Planning (Hazardous Substances) Act 1990, the Planning
(Consequential Provisions) Act 1990 and the Planning and
Compensation Act 1991;
"Property" means the property described in Schedule 1 and every
part of it and all additions and alterations to it and includes
(without limitation):
(a) every part of all buildings and other structures now or
during the Term on the property including walls, roofs,
foundations, load-bearing parts, doors, windows and
Conduits exclusively serving the Property;
(b) landlord's fixtures and fittings;
(c) electrical and mechanical installations, plant, equipment
and machinery; and
(d) boundary walls and fences (if any);
but excludes any part of the buildings which comprise Unit 7 and
Unit 8;
"Quarter Days" means 25th March, 24th June, 29th September and
25th December in every year;
"Rent" includes all sums reserved as rent by this Lease;
"Retained Areas" means the whole of the Estate other than the
Units;
"Tenant" includes the Tenant's successors in title;
"Term" means the term granted by this Lease and any continuation
or extension of it;
"Term Commencement Date" means the date of commencement of the
Term specified in clause 3(1);
"Unit Leases" means each and all of the Unit 7 Lease and the
Unit 8 Lease;
"Units" means the units of accommodation on the Estate that are
let or otherwise exclusively occupied or designed or intended
for letting or exclusive occupation and "Unit" shall mean any
one of them;
"Unit 7" means the premises briefly described in Part 1 of
Schedule 7 being the premises demised by and more particularly
described in the Unit 7 Lease;
"Unit 7 Lease" means the document short details of which are set
out in Part 1 of Schedule 7 and where the context permits
includes any documents supplemental or collateral to it;
"Unit 8" means the premises briefly described in Part 2 of
Schedule 7 being the premises demised by and more particularly
described in the Unit 8 Lease;
"Unit 8 Lease" means the premises briefly described in Part 2 of
Schedule 7 being the premises demised by and more particularly
described in the Unit 8 Lease;
"VAT" means value added tax and any imposition or levy of a like
nature; and
"VATA 1994" means the Value Added Tax Act 1994.
2. INTERPRETATION
(1) Where there are two or more persons included in the expressions
"the Landlord", "the Tenant" or "the Guarantor" each reference
to the Landlord, the Tenant or the Guarantor includes a separate
reference to each of those persons.
(2) Any reference, express or implied, to an enactment includes
references to:
(a) that enactment as amended, extended or applied by or under
any other enactment (before or after this Lease);
(b) any enactment which that enactment re-enacts (with or
without modification);
(c) any subordinate legislation made (before or after this
Lease) under that enactment, as amended, extended or
applied as described in paragraph (a) above or under any
enactment referred to in paragraph (b) above; and
(d) any consents, licences and permissions given (before or
after this lease) under that enactment, as amended,
extended or applied as described in paragraph (a) above or
under any enactment referred to in paragraph (b) above or
under that subordinate legislation and any conditions
contained in those consents, licences and permissions.
(3) Any reference, express or implied, to enactments generally
includes subordinate legislation and any legislation of the
European Union that is directly applicable in the United Kingdom
and includes existing enactments and those that come into effect
during the Term.
(4) Sub-clauses (1) to (3) above apply unless the contrary intention
appears.
(5) The headings in this Lease do not affect its interpretation.
3. LEASE
(1) The Landlord lets the Property to the Tenant together with the
rights set out in Schedule 2 but except and reserving to the
Landlord the rights set out in Schedule 3 for the term of twenty
five years commencing on and including [
] subject to all rights and covenants affecting the Property
including (without prejudice to the generality of the foregoing)
the matters contained or referred to in Schedule 4 at the yearly
rent specified in clause 4.
(2) The rights granted to the Tenant are granted in common with the
Landlord, any person authorised by the Landlord and everyone
else having the like or similar rights.
(3) This Lease does not include any rights other than those set out
in Schedule 2.
(4) The rights excepted and reserved to the Landlord are also
excepted and reserved to those authorised by the Landlord and
everyone else entitled to them.
4. RENT
(1) Rent
The yearly rent shall be one peppercorn (if demanded).
(2) Rent payment dates
The yearly rent is payable without any deduction in advance on
each anniversary of the Term Commencement Date.
5. TENANT'S COVENANTS
(1) Introduction
The Tenant covenants with the Landlord to comply with its
obligations set out in this clause and in clauses 7 and 8.
(2) Rent
The Tenant shall:
(a) pay the yearly rent to the Landlord at the times and in
the manner referred to in clause 4 without any deduction;
and
(b) not exercise or seek to exercise any right or claim to
withhold rent or any right or claim to legal or equitable
set-off.
(3) Outgoings
The Tenant shall:
(a) pay all present and future Outgoings assessed, charged or
imposed on, or payable in respect of the Property or
assessed, charged or imposed on, or payable by the owner
or occupier of the Property;
(b) pay the proportion properly attributable to the Property
of all Outgoings assessed, charged or imposed on or
payable in respect of the Property and other properties or
assessed, charged or imposed on or payable by the owner or
occupier of the Property and other properties;
(c) pay all charges for the supply to and consumption at the
Property of water, gas and electricity and all charges for
telecommunications (including equipment rents) and observe
and perform all regulations of the supply authorities;
(d) where such charges as are referred to in paragraph (c) are
made in relation to the Property and other properties or
upon the owner or occupier of the Property and other
properties, pay the suppliers and indemnify the Landlord
against the proportion of those charges properly
attributable to the Property or its owner or occupier; and
(e) if the Landlord loses rating relief because it has been
allowed to the Tenant or any other person deriving title
under the Tenant during the Term, make good that loss to
the Landlord.
In this sub-clause "Outgoings" means rates, taxes, duties,
charges, assessments, impositions and outgoings whether
parliamentary, parochial, local or of any other description and
whether of the nature of capital or revenue and even though of a
wholly novel character and the proportion referred to in
paragraphs (b) and (d) shall be determined by the Landlord
acting reasonably and shall be conclusive save as to questions
of law and save in cases of manifest error.
(4) Repair
The Tenant shall:
(a) put and keep the Property in good repair and condition,
but shall not be obliged to repair damage caused by an
Insured Risk save where:
(i) the damage is not insured because of an exclusion,
limitation or excess imposed by the insurers; or
(ii) and to the extent that the insurance monies are
irrecoverable in whole or in part because of the
act, default or omission of the Tenant, any person
deriving title under the Tenant or anyone at the
Property with the express or implied authority of
any of them;
(b) replace all the Landlord's fixtures and fittings in the
Property which become beyond repair during the Term with
those of no lesser quality;
(c) keep all windows and other glass in the Property (both
inside and outside) clean, cleaning them at least once a
month and more frequently where necessary;
(d) keep any open area within the Property adequately surfaced
(where appropriate) in good condition, properly cultivated
(where landscaped) and free from weeds;
(e) enter into and maintain throughout the Term fully
comprehensive maintenance contracts in respect of all
plant, equipment and machinery forming part of the
Property with a reputable company or companies and produce
the contracts to the Landlord on demand with evidence that
any payments due under them are paid up to date;
(f) ensure that the electrical circuits within the Property
comply with the then current regulations of the Institute
of Electrical Engineers or other amended standards or
recommended current codes of practice (save that this
shall not obligate the Tenant to upgrade the existing
circuits within the Property save where it is unlawful not
to do so); and
(g) notify the Landlord of all defects in the Property which
are relevant defects for the purpose of section 4 of the
Defective Premises Act 1972.
(5) Redecoration
The Tenant shall redecorate the exterior of the Property in
every third year and in the last year of the Term and the
interior of the Property in every fifth year and in the last
year of the Term in colours and patterns which, in the case of
external decorations, shall be first approved by the Landlord at
all times during the Term and, in the case of internal
decorations, shall be first approved by the Landlord in the last
year of the Term. The Tenant shall also have all parts of the
Property requiring treatment for their preservation and
protection treated in accordance with the best approved manner
for preserving and protecting them. All works under this sub-
clause shall be carried out in a good and workmanlike manner and
with suitable, good quality materials.
In this sub-clause the "last year of the Term" means the period
of 12 months ending at the End of the Term and all approvals
shall not be unreasonably withheld or delayed by the Landlord.
(6) Entry by the Landlord
The Tenant shall:
(a) permit the Landlord to enter the Property to examine its
condition and take inventories;
(b) permit the Landlord to enter the Property to exercise any
of the rights reserved to the Landlord by this Lease and
for any other reasonable purpose connected with the
management of the Estate subject to the Landlord making
good to the Tenant all damage to the Property but not
being obliged to compensate the Tenant for any loss
suffered by the Tenant or for any nuisance, annoyance,
inconvenience, noise or vibration;
(c) permit the Landlord to enter the Property and inspect and
measure the Property for all purposes connected with
insurance of the Property; and
(d) furnish all information relevant for those purposes as the
Landlord or anyone having a right of entry under this sub-
clause may reasonably request.
Except in case of emergency the Landlord shall give the Tenant
reasonable prior written notice before exercising the right of
entry and shall comply with the Tenant's reasonable security and
confidentiality requirements. After notice or in case of
emergency the Landlord may break into the Property. Such rights
shall be exercised in a reasonable manner and in such a way so
far as reasonably practicable as not to prevent the Tenant's
beneficial user and enjoyment of the Property and to use
reasonable endeavours not to damage or interfere with any
equipment or machinery or data transmission and storage
facilities in the Property and shall make good any damage
caused.
(7) Remedy breaches
The Tenant shall remedy all breaches of covenant notified by the
Landlord to the Tenant which the Tenant is liable to remedy
under this Lease as soon as possible and in any event within
three months or sooner if appropriate after service of the
notice. If the Tenant fails to do so the Landlord may enter the
Property and remedy the breach and such entry shall be subject
to the same conditions as referred to in clause 5(6). All costs
and expenses incurred by the Landlord shall be paid by the
Tenant within 14 days of written demand.
(8) Alterations
The Tenant shall:
(a) not make any alteration or addition to the Property other
than the erection of a covered connecting corridor between
Unit 7 and Unit 8 (as indicated on plan G1 dated 26th
April 1999 a copy of which is annexed hereto) in
accordance with drawings and specifications to be first
approved by the Landlord such approval not to be
unreasonably withheld or delayed and thereafter the
erection, alteration or removal of internal, non
structural, demountable partitioning situate within such
corridor;
(b) save where the Landlord is obliged to grant a further
lease of the Property pursuant to Clause 18 before the End
of the Term if required to do so by the Landlord but not
otherwise, remove the covered connecting corridor referred
to in paragraph (a) and any other alteration or addition
(including any made before the beginning of the Term) and
make good all damage caused by the removal.
(9) Signs
The Tenant shall:
(a) not display on the Property any signs visible from outside
the Property;
(b) not affix to the Property any external radio, television
or other aerial or satellite dish or any pole, mast, flag
or wire.
In this sub-clause "signs" includes signs, hoardings, posters,
placards, advertisements, letters, bills and inscriptions.
(10) Use
The Property shall not be used for any purpose other than as a
connecting corridor between Unit 7 and Unit 8 and otherwise as
open space.
(11) Use obligations
The Tenant shall:
(a) use any open area within the Property only for the purpose
for which it is designed and not keep any caravan or
temporary building on it;
(b) not leave the Property unoccupied for more than a month
without notifying the Landlord and providing the security
arrangements reasonably required by the Landlord and its
insurers;
(c) not do anything on the Property which may become a
nuisance or damage to the Landlord or any nearby owner or
occupier;
(d) not allow to pass into the Conduits serving the Property
anything that may obstruct them or cause damage, danger or
pollution or anything poisonous or radioactive;
(e) not bring onto or keep in the Property anything dangerous,
inflammable, explosive, or noxious save for materials
ordinarily and properly used in connection with
alternative power generation provided that such materials
are safely stored and are otherwise in accordance with all
statutory requirements and the reasonable requirements of
insurers;
(f) not use the Property for any illegal purpose or for any
dangerous, noxious, or noisy occupation;
(g) not use the Property for the holding of public meetings or
auction sales or as a residence or sleep at the Property
or keep any animal on it;
(h) not overload the Property or its Conduits;
(i) remove all refuse on a reasonably frequent basis but no
less than once a week and keep the Property clean, tidy
and in good order;
(j) not obstruct any road or footpath on the Estate and not do
anything as a result of which reasonable use of the Common
Parts by others may be impeded; and
(k) not park vehicles on or load or unload goods onto or from
vehicles on the Property.
(12) Statutory requirements
The Tenant shall comply with every enactment and with the
requirements and recommendations of every authority relating to
or affecting the Property or its use or the employment of anyone
at the Property or any equipment or chattels in the Property and
whether applicable to the owner, landlord, tenant or occupier of
the Property save that this obligation shall not include
responsibility for compliance with anything relating to
remediation of any contamination affecting the Property which
was caused before the date hereof.
In this sub-clause "authority" includes every government
department, local or other authority and court of competent
jurisdiction.
(13) Notices
The Tenant shall:
(a) give the Landlord a copy of every notice or order or any
proposal for a notice or order issued to the Tenant, its
sub-tenants or any occupier of the Property or left at the
Property relating to the Property or the Tenant's its sub-
tenants or any occupiers use thereof within five Business
Days of its service;
(b) (if it is the Tenant's responsibility to so comply in
accordance with the terms of this Lease) take all steps
necessary to comply with every notice or order without
delay; and
(c) at the request and cost of the Landlord make or join with
the Landlord in making such objections or representations
in respect of the notice, order or proposal as the
Landlord shall reasonably require.
(14) Fire authority requirements
The Tenant shall comply with all requirements and
recommendations of the appropriate authority and the Landlord's
insurers and all reasonable requirements of the Landlord as to
means of escape from the Property and from Unit 7 and Unit 8 in
case of fire or other emergency and as to the provision and
maintenance of fire detection equipment, fire alarm equipment
and fire fighting equipment.
(15) Planning Acts
The Tenant shall:
(a) comply with the Planning Acts in relation to the Property,
any operations carried out at the Property and its use and
not commit any breach of planning control (as defined in
the Planning Acts);
(b) obtain from the local planning authority planning
permission for the carrying out of any operation on the
Property or the institution or continuance of any use
which may constitute development within the meaning of the
Planning Acts;
(c) not make any application for planning permission without
the Landlord's prior consent to the making of the
application, indemnify the Landlord against all charges
payable in respect of the application and repay to the
Landlord all reasonable and proper professional fees and
expenses properly incurred by the Landlord in connection
with the application;
(d) forthwith after the grant or refusal of any application
give the Landlord a copy of the permission or the refusal;
(e) not make any alteration or addition to or change of use of
the Property (being an alteration or addition or change of
use which is prohibited by or for which the consent of the
Landlord must be obtained under this Lease and for which a
planning permission must be obtained) before planning
permission for it has been produced to the Landlord and
acknowledged by the Landlord as satisfactory to it but so
that the Landlord may refuse to express satisfaction with
the planning permission on the grounds that anything
contained in it or omitted from it in the reasonable
opinion of the Landlord would be or be likely to be
materially prejudicial to the Landlord's interest in the
Property during the Term or after the End of the Term such
acknowledgement from the Landlord shall not be
unreasonably delayed;
(f) pay any charge imposed under the Planning Acts in respect
of the carrying out of any operation or the institution or
continuance of any use;
(g) unless the Landlord directs otherwise, carry out before
the End of the Term all works required to be carried out
as a condition of any planning permission which may have
been granted and implemented during the Term whether or
not the date by which the planning permission requires
those works to be carried out falls within the Term;
(h) pay to the Landlord within 14 days of written demand a
fair and reasonable proportion of any compensation
received by the Tenant because of a restriction on the use
of the Property under the Planning Acts, any dispute as to
the proportion to be referred to arbitration;
(i) produce to the Landlord all drawings, documents and other
evidence reasonably required by the Landlord to satisfy
itself that this sub-clause has been complied with;
(j) not implement any planning permission without providing
reasonable security if reasonably required for compliance
with the conditions imposed by that permission;
(k) not serve any purchase notice under the Planning Acts
requiring any authority to purchase the Tenant's interest
in the Property without first offering to surrender this
Lease at the price which might reasonably be expected to
be obtained from the authority under the purchase notice,
any dispute as to the amount of the price to be referred
to arbitration;
(l) not to make any objection or adverse representation in
respect of any planning application made by or with the
consent of the Landlord:
(i) within 12 months before the date specified in clause
14 of this Lease if the Tenant has served the notice
referred to in that clause; or
(ii) within 12 months before the End of the Term unless
the Tenant has exercised its right to call for a new
lease under the provisions of clause 18;
and in either case this clause shall not prevent the
Tenant making such objections if it is entitled to do so
under a lease of another Unit on the Estate.
(16) Obstruction
The Tenant shall not:
(a) stop up, darken or obstruct any window or opening
belonging to the Property save as part of the Tenant's
usual security measures; or
(b) give to any third party any acknowledgement that the
Tenant enjoys the access of light or air to any of the
windows or openings in the Property by the consent of a
third party; or
(c) pay to any third party any sum of money or enter into any
agreement with any third party for the purpose of inducing
or binding him to abstain from obstructing the access of
light or air to any windows or openings.
(17) Obstruction proceedings
If any of the owners or occupiers of nearby land or buildings do
or threaten to do anything which obstructs the access of light
or air to any of the windows or openings in the Property the
Tenant shall:
(a) notify the same forthwith to the Landlord; and
(b) permit and afford all reasonable assistance to the
Landlord to bring proceedings in the name of the Tenant
and at the joint cost of the Landlord and Tenant against
any of the owners or occupiers of the nearby land or
buildings in respect of the obstruction.
(18) Acquisition of rights
The Tenant shall not allow any easement to be acquired over the
Property. If any such easement is acquired or attempted to be
acquired, the Tenant shall give immediate notice of it to the
Landlord and at the request of the Landlord but at the cost of
the Tenant adopt the course reasonably required by the Landlord
for preventing the acquisition of the easement.
(19) Party Matters
The Tenant shall pay a fair proportion of all costs and expenses
payable in respect of repairing, lighting, cleansing and
maintaining anything used in common by the Property and any
other property. The proportion shall be determined by the
Landlord and shall be conclusive save as to questions of law and
save in the case of manifest error.
(20) New Guarantor
If a guarantor's event of default occurs, the Tenant shall give
notice to the Landlord of the event within ten Business Days of
its occurrence. If the Landlord serves notice on the Tenant
under this sub-clause within thirty Business Days of service of
the Tenant's notice, the Tenant shall procure that guarantors
reasonably acceptable to the Landlord shall covenant by deed
with the Landlord in the form set out in Schedule 5.
In this sub-clause a guarantor's event of default is any of the
following:
(a) in the case of a Guarantor who is an individual:
(i) the death of the individual;
(ii) the individual being regarded as a patient under the
Mental Health Act 1983 section 94;
(iii) an application being made for an interim order in
respect of the individual or an interim order being
made under the Act;
(iv) the making by the individual of a proposal for a
voluntary arrangement;
(v) a petition being presented for a bankruptcy order to
be made against the individual or a bankruptcy order
being made;
(b) in the case of a Guarantor which is a company:
(i) a proposal being made to the company and to its
creditors for a voluntary arrangement;
(ii) a petition being presented for an administration
order in respect of the company or an administration
order being made;
(iii) the company having an administrative or other
receiver or a manager appointed of the whole or any
part of its property;
(iv) the company passing a resolution for winding up or a
petition being presented for the winding up of the
company or a winding up being made or the company
being dissolved other than (in any such case) a
voluntary winding up of a solvent company for the
purposes of amalgamation or reconstruction;
(v) the company, having been registered as an unlimited
company, being re-registered as a limited company
without the previous consent of the Landlord;
(c) in the case of a Guarantor who is an individual or which
is a company:
(i) the individual or the company entering into any kind
of composition, scheme of arrangement, compromise or
arrangement for the benefit of creditors or any
class of creditors or permitting or suffering any
distress or execution to be levied on his goods at
the Property which remains unsatisfied for more than
21 days;
(ii) there occurring in relation to the individual or the
company in any country or territory in which he
carries on business or to the jurisdiction of whose
courts he or any of his property is subject any
event which corresponds in that country or territory
with any of those mentioned in paragraphs (a)(iii)
to (v) or (b) above or the individual or the company
otherwise becoming subject in any such country or
territory to any law relating to insolvency,
bankruptcy or winding up.
(21) Costs
The Tenant shall pay the reasonable and proper costs and
expenses incurred by the Landlord:
(a) in or in contemplation of any proceedings relating to the
Property under the Law of Property Act 1925 sections 146
and 147, or the Leasehold Property (Repairs) Act 1938, the
preparation and service of any notice under those sections
or the taking of steps subsequent to such notice
notwithstanding that forfeiture is avoided otherwise than
by relief granted by the Court;
(b) in the preparation and service of any notice to repair or
any schedule of dilapidations at any time during the Term
or after the End of the Term;
(c) in connection with the recovery of arrears of Rent or
other sums due to the Landlord under this Lease including
the levy or attempted levy of any distress; and
(d) in respect of any application for consent required by this
Lease whether or not the consent is granted (including any
inspection of works authorised by the consent and of any
re-instatement of those works).
Where the Landlord could recover the cost of services or advice
under the first part of this sub-clause if they were undertaken
by a third party but those services or that advice are provided
by the Landlord or by a company which is a member of the same
group as the Landlord (within the meaning of section 42 of the
Landlord and Tenant Act 1954), the Tenant shall pay to the
Landlord or to that company a reasonable sum (plus VAT if
payable) for such services or advice but not more than the
amount payable by the Tenant if those services or that advice
had been provided by a third party
(22) Indemnity
The Tenant shall:
(a) pay and make good to the Landlord every loss and damage
incurred or sustained by the Landlord as a consequence of
every breach or non-observance of the Tenant's covenants
contained in this Lease and shall indemnify the Landlord
against all actions, claims, liabilities, costs and
expenses arising by reason of the breach; and
(b) indemnify and keep the Landlord indemnified from liability
in respect of all loss, damage, actions, proceedings,
claims, demands, costs, damages and expenses in respect of
any injury to or the death of any person or damage to any
property or in respect of the infringement, disturbance or
destruction of any right by reason of or arising in any
way directly or indirectly out of:
(i) the state of repair or condition of the Property;
(ii) the act, omission or default of the Tenant, any
person deriving title under the Tenant or any person
at the Property with the express or implied
authority of any of them;
(iii) the construction or existence of any additions or
alterations to the Property;
(iv) the use of the Property;
(v) anything now or in the future attached to or on the
Property;
(vi) the use of vehicles on the Property;
(vii) the omission of the Tenant to give written notice to
the Landlord of any defects or items requiring
repair of which the Tenant is aware or ought
reasonably to be aware; and
(viii) any breach by the Tenant or by any person
deriving title under the Tenant of any covenant by
the Tenant or any condition contained in this Lease.
Provided that the Tenant shall not be obliged to indemnify
the Landlord in respect of such matters to the extent that
such damage arises out of the Landlord's wilful misconduct
or negligence.
(23) Notices for sale and re-letting
The Tenant shall:
(a) permit (at a suitable location which does not materially
interfere with or obstruct the access of light to the
Property) the Landlord during the six months before the
End of the Term to affix to the Property a notice (of a
suitable size and nature) for re-letting it;
(b) permit (at a suitable location which does not materially
interfere with or obstruct the access of light to the
Property) the Landlord at any time during the Term to
affix to the Property a notice (of a suitable size and
nature) for dealing with the Landlord's interest in the
Property; and
(c) permit all persons with written authority from the
Landlord or the Landlord's agent to view the Property upon
the Landlord giving at least 24 hours prior written notice
and subject to such person complying with the Tenant's
reasonable security and confidentiality requirements.
(24) Regulations
The Tenant shall observe all reasonable regulations made by the
Landlord for the proper management of the Estate.
(25) Freehold covenants
The Tenant shall observe and perform the covenants contained in
or referred to in the documents specified in Schedule 4 so far
as they relate to the Property and are still subsisting and
capable of taking effect and shall indemnify and keep
indemnified the Landlord from and against any non-observance or
non-performance of the same.
(26) Yield up
Save where the Landlord is obliged to grant a further lease of
the Property pursuant to Clause 18 the Tenant shall:
(a) yield up the Property (except tenant's or trade fixtures)
to the Landlord at the End of the Term with vacant
possession and in accordance with the Tenant's covenants
contained in this Lease; and
(b) make good to the satisfaction of the Landlord all damage
occasioned by the removal of any tenant's or trade
fixtures.
(27) Release of Landlord
If the Landlord or any former landlord applies for release of a
covenant under section 8 of the Landlord and Tenant (Covenants)
Act 1995:
(a) the Tenant shall not object unreasonably to the release of
the Landlord or the former landlord; and
(b) if, following such an application, the Tenant serves
notice objecting to the release, but the Court makes a
declaration that it is reasonable for the covenant to be
released, the Tenant shall indemnify the Landlord and any
former landlord against all loss, damage, costs and
expenses incurred or sustained by any of them as a result
of the objection of the Tenant.
6. LANDLORD'S COVENANTS
(1) Introduction
The Landlord covenants with the Tenant to comply with its
obligations set out in this clause and in clause 8.
(2) Quiet enjoyment
For so long as the Tenant pays the Rent and performs and
observes the covenants by the Tenant and the conditions
contained in this Lease the Tenant may peaceably and quietly
hold and enjoy the Property during the Term without any lawful
interruption by the Landlord or any person claiming under or in
trust for the Landlord.
7. ALIENATION
(1) Restrictions on alienation
The Tenant shall not:
(a) save to the extent permitted by the following sub-clauses
of this clause, part with possession of the whole or any
part of the Property or part with or share occupation of
the whole or any part of the Property or permit occupation
by a licensee of the whole or any part of the Property or
hold on any trust the whole or any part of the Property;
nor
(b) if it is an unlimited company, incorporate itself as a
limited company without the prior consent of the Landlord
(such consent not to be unreasonably withheld or delayed).
(2) Assignment
The Tenant shall not:
(a) assign part of the Property; nor
(b) assign the whole of the Property except to an assignee of
the Unit Leases and with the prior consent of the Landlord
which, subject to sub-clauses (3) and (4), shall not be
unreasonably withheld or delayed.
(3) Agreement as to circumstances
The Landlord and the Tenant agree that the Landlord may withhold
its consent to an assignment if any one or more of the following
circumstances (which are specified for the purposes of section
19(1A) of the Landlord and Tenant Act 1927) exist and it shall
not be regarded as unreasonably withholding its consent if it
does so:
(a) any rent payable pursuant to clause 4(1) of this Lease
insurance and VAT on such sums payable in accordance with
this Lease due from the Tenant under this Lease is
unpaid;
(b) the Landlord reasonably determines that the proposed
assignee is not a person who is likely to be able both to
comply with the tenant's covenants in this Lease and to
continue to be such a person following the assignment;
(c) the proposed assignee or any proposed guarantor for it
(other than any guarantor under an authorised guarantee
agreement) has the benefit of state or diplomatic immunity
or the Landlord determines that it is likely to acquire
that immunity;
(d) the proposed assignee is a company which is a member of
the same group (within the meaning of section 42 of the
Landlord and Tenant Act 1954) as the Tenant; and
(e) the proposed assignee or any proposed guarantor for it
(other than any guarantor under an authorised guarantee
agreement) is a corporation registered in or an individual
resident in a jurisdiction in which a judgement obtained
in the courts of England and Wales will not necessarily be
enforced without any re-examination of the merits of the
case.
(f) the proposed assignee is not taking a simultaneous
assignment of both the Unit 7 Lease and the Unit 8 Lease.
(4) Agreement as to conditions
The Landlord and the Tenant agree that the Landlord may grant
consent to an assignment subject to any one or more of the
following conditions (which are specified for the purposes of
section 19(1A) of the Landlord and Tenant Act 1927) and it shall
not be regarded as giving consent subject to unreasonable
conditions if it does so:
(a) that before the assignment the Tenant enters into and
unconditionally delivers to the Landlord an authorised
guarantee agreement, such agreement to be a deed and to
contain the provisions in Schedule 6 or at the Landlord's
absolute discretion) such other provisions as the Landlord
shall reasonably prescribe and (in either case) such
ancillary provisions as the Landlord shall reasonably
prescribe;
(b) that before the assignment any person (other than a former
Tenant) who at the time of the application for the consent
is guaranteeing the obligations and liabilities under this
Lease of the Tenant covenants by deed with the Landlord
that the Tenant shall perform its obligations under the
authorised guarantee agreement required under paragraph
(a), the deed to contain provisions equivalent to those
contained in paragraphs 1 to 4 and 9 of Schedule 5 and an
obligation on the part of the covenantor (in the event of
default on the part of the Tenant) to perform any
obligation entered into by the Tenant in the authorised
guarantee agreement to take up a new lease, and otherwise
to be in such form as the Landlord reasonably requires;
(c) that before the assignment, if the Landlord determines it
to be necessary, one or more guarantors acceptable to the
Landlord, acting reasonably, covenant by deed with the
Landlord in the form set out in Schedule 5 (with
"assignee" substituted for "Tenant" in paragraphs 1 to 9
inclusive and with such other provisions as the Landlord
reasonably requires) in respect of the period during which
the assignee is bound by the tenant's covenants and the
conditions in this Lease;
(d) that all rent payable pursuant to clause 4(1) of this
Lease, insurance and VAT on such sums payable in
accordance with this Lease due from the Tenant under this
Lease as at the date of the assignment has been paid;
(e) that the assignment is completed and registered with the
Landlord in accordance with sub-clause (8) within three
months of the date of the consent and that if it is not,
the consent shall be void but any of the guarantees
referred to in paragraphs (a) to (c) shall nevertheless
remain in full force and effect.
(5) Further agreement
The Landlord and the Tenant agree that:
(a) the Landlord may withhold consent to an assignment in
circumstances which are not referred to in sub-clause (3)
if it is reasonable to do so and may grant consent subject
to conditions which are not specified in sub-clause (4) if
the conditions are reasonable; and
(b) any power on the part of the Landlord to determine any
matter for the purposes of sub-clauses (3) or (4) shall be
exercised reasonably.
(6) Underletting
The Tenant shall not:
(a) underlet part only of the Property;
(b) underlet the whole of the Property:
(i) without complying with the provisions of sub-clauses
(7) to (11); and
(ii) except to an underlessee of the Unit Leases and with
the prior consent of the Landlord, which shall not
be unreasonably withheld or delayed.
(7) Underletting Conditions
Not to underlet the whole of the Property without producing to
the Landlord:
(a) an order of the Court under section 38(4) of the Landlord
and Tenant Act 1954 authorising the inclusion in the
intended underlease of an agreement excluding sections 24
to 28 of that Act; and
(b) a written undertaking by the Tenant not to release the
intended undertenant from or otherwise waive or modify the
agreement authorised by the order
and without including the agreement in the intended underlease.
(8) Covenants on underletting
The Tenant shall procure that any intended undertenant covenants
by deed with the Landlord:
(a) to pay the rent to be reserved by and the other sums to be
payable under the underlease and to perform and observe,
the tenant's covenants and the conditions to be contained
in the underlease throughout the period during which the
undertenant is bound by the tenant's covenants and
conditions in the underlease;
(b) without prejudice to paragraph (a), not to assign the
underlet property without:
(i) first obtaining a deed of covenant from the intended
assignee in favour of the Landlord in the same form
(with the necessary changes) as the deed referred to
in this sub-clause, including (without limitation)
the covenants in this paragraph (b); and
(ii) if the Landlord reasonably requires, first obtaining
a deed from one or more guarantors acceptable to the
Landlord, acting reasonably, in favour of the
Landlord guaranteeing the due and punctual payment
and performance of all the obligations and
liabilities of the intended assignee under the deed
referred to in sub-paragraph (i), the deed to
contain provisions equivalent to those contained in
paragraphs 1 to 4 and 9 of Schedule 5 and otherwise
to be in such form as the Landlord reasonably
requires.
(9) Guarantee on underletting
If the Landlord reasonably requires, the Tenant shall procure
that, before the underlease is granted, one or more guarantors
acceptable to the Landlord, acting reasonably, guarantee (by way
of deed) to the Landlord, in respect of the period during which
the undertenant is bound by the tenant's covenants and the
conditions in the underlease, the due and punctual payment and
performance of all the obligations and liabilities of the
intended undertenant, the guarantee to contain provisions
equivalent to those contained in paragraphs 1 to 4 and 9 of
Schedule 5 and otherwise to be in such form as the Landlord
reasonably requires.
(10) Form of underlease
The Tenant shall procure that every underlease shall:
(a) contain the same tenant's covenants and other terms and
conditions as are contained in this Lease subject only to:
(i) such amendments as may be provided for in paragraphs
(b) to (d); and
(ii) such amendments as may reasonably be required by the
Tenant, having regard only to the duration of the
proposed underlease, and as may be approved by the
Landlord, such approval not to be unreasonably
withheld;
(b) not permit any assignment, underlease or other dealing or
disposal of the Property which is prohibited by the terms
of this Lease and prohibit any further underletting of the
whole or any part of the Property;
(c) provide that where the underlease requires the undertenant
to obtain the landlord's consent, the undertenant shall be
required to obtain also the consent of the Landlord (such
consent not to be unreasonably withheld or delayed);
(d) contain provisions that require a review of the rent
payable under the underlease to open market rent in
accordance with the provisions and at the dates for review
of the rent payable under this Lease, but this paragraph
shall not prohibit an underlease of the Property upon
terms that require review of the rent payable under the
underlease at dates additional to the dates for review of
the rent payable under this Lease;
(11) Underlease requirements
The Tenant shall:
(a) not grant any underlease at a fine or premium;
(b) not grant any underlease at a rent which at the time of
the grant of the underlease is less than the open market
rent of the Property;
(c) not vary the terms of any underlease or release the
undertenant from any covenant or condition in the
underlease without the prior consent of the Landlord such
consent not to be unreasonably withheld or delayed and
shall notify the Landlord of any surrender of any
underlease;
(d) not waive any breach of any of the covenants on the part
of the undertenant and the conditions contained in any
underlease but take all such reasonable steps as are
lawfully available to the Tenant (including re-entry) to
enforce such covenants and conditions;
(e) procure that the rent reserved by any underlease is
reviewed in accordance with the provisions of the
underlease but not agree any revised rent with the
undertenant without the prior consent of the Landlord
(such consent not to be unreasonably withheld), and if on
any rent review under any underlease the revised rent is
to be determined by an independent third party, procure
that any reasonable representations which the Landlord may
wish to make concerning the revised rent are put forward
to the third party at the same time as the representations
of the Tenant and as though they were representations made
by the Tenant; and
(f) procure that on any assignment of any underlease the
outgoing undertenant enters into an authorised guarantee
agreement and, where appropriate, guarantors enter into a
contractual guarantee in each case with the landlord under
the underlease in accordance with the provisions of the
underlease.
In paragraphs (c) to (f) of this sub-clause an underlease
includes any lease where, by virtue of the grant of this Lease,
the Tenant under this Lease becomes the holder of the immediate
reversion to that lease.
(12) Associated companies
The Tenant may share the occupation of any part of the Property
with a company which is a member of the same group as the Tenant
(within the meaning of section 42 of the Landlord and Tenant Act
1954) for so long as both companies remain members of that group
and provided that:
(a) no relationship of landlord and tenant is created between
the two companies and no security of tenure is conferred
upon the occupier; and
(b) within 15 Business Days of the commencement of the sharing
the Tenant gives to the Landlord notice of the company
sharing occupation and the address of its registered
office.
(13) Charging
The Tenant shall not
(a) charge part of the Property; or
(b) charge the whole of the Property by way of fixed security
without the prior consent of the Landlord, which shall not
be unreasonably withheld.
(14) Registration of dealings
Within 15 Business Days of every assignment, transfer,
underlease or charge of the Property or the creation or transfer
of any interest derived out of the Term or any devolution of the
interest of the Tenant or any person deriving title under the
Tenant, the Tenant shall produce a certified copy of the
assignment, transfer, underlease or charge or (in the case of a
devolution) the document evidencing or under which the
devolution arises and pay the Landlord a registration fee of a
reasonable amount, being not less than L 25, in respect of each
assignment, transfer, underlease, charge or devolution.
8. INSURANCE
(1) Landlord's insurance obligations
Unless the insurance is vitiated by any act, default or omission
of the Tenant, any person deriving title under the Tenant or any
person at the Property with the express or implied authority of
any of them the Landlord shall keep the Property (other than
plate glass and tenant's or trade fixtures) insured with
insurers or underwriters selected by the Landlord in accordance
with the provisions of this clause to the extent to which the
Property is insurable and subject to all exclusions, limitations
and excesses imposed by the insurers.
(2) Sum and risks insured
The Property shall be insured in a sum not less than its full
reinstatement cost (as determined from time to time by the
Landlord) against loss or damage by the Insured Risks.
(3) Fees
The insurance shall extend to:
(a) architects' and other professional fees in relation to the
reinstatement of the Property for a minimum sum of 15% of
the amount insured in respect of the Property;
(b) the costs of demolition and removal of debris; and
(c) loss of rent for such period as the Landlord may decide in
an amount which takes into account the Landlord's estimate
of potential increases in rent.
(4) Production of policy
Whenever reasonably required to do so by the Tenant and at the
Tenant's cost, but not more often than twice a year, the
Landlord shall produce to the Tenant at the Landlord's office a
copy of the insurance policy or other evidence of it and
evidence of payment of the last premium.
(5) Reinstatement
Subject to sub-clause (13) if the Property is destroyed or
damaged by any of the Insured Risks, then unless the insurance
is vitiated by any act, default or omission of the Tenant, any
person deriving title under the Tenant or any person at the
Property with the express or implied authority of any of them,
the Landlord shall use reasonable endeavours to:
(a) obtain all consents and permissions necessary for
reinstatement as soon as reasonably possible;
(b) subject to obtaining those consents and permissions, lay
out as soon as practicable all insurance monies received
by the Landlord (other than for fees and loss of rent) in
reinstating the Property; and
(c) subject to the Tenant complying with its obligations in
sub-clauses (6)(a)(iii), (7) and(9) make good out of the
Landlord's own monies any deficiency (other than one
arising from an exclusion, limitation or excess imposed by
the insurers).
(6) Tenant's insurance obligations
(a) The Tenant shall pay to the Landlord on demand:
(i) every premium payable by the Landlord (including any
part of it which the Landlord is entitled to retain
by way of commission) for insuring the Property in
accordance with its obligations in sub-clause (1)
and for effecting insurance in respect of liability
to third parties including members of the public and
such other insurances as the Landlord reasonably
considers desirable;
(ii) where the policy includes the Property and other
properties, the proportion properly attributable to
the Property of every premium payable by the
Landlord (including any part of it which the
Landlord is entitled to retain by way of commission)
for insuring the Property and the other properties
in accordance with its obligations in sub-clause (1)
and for effecting (in relation to the Property and
the other properties) the other insurances referred
to in sub-paragraph (i), the proportion to be
determined by the Landlord whose determination shall
be conclusive save as to questions of law and save
in case of manifest error;
(iii) the amount of any excess deducted or deductible by
the insurers on any claim made by the Landlord; and
(iv) all costs and expenses reasonably incurred by the
Landlord in obtaining a valuation of the Property
for insurance purposes (provided this is limited to
one such valuation every two years).
All sums payable by the Tenant under paragraph (a)(i) shall be
reserved as rent.
(b) The Tenant shall insure all plate glass in the Property
against all risks with an insurance company approved by
the Landlord in the joint names of the Landlord and the
Tenant and, on demand, produce a copy of the insurance
policy and evidence of payment of the last premium to the
Landlord.
(7) Vitiation
The Tenant shall not use the Property or carry on any business
at the Property or do or omit to do at the Property anything
which may make void or voidable any policy for the insurance of
the Property or any nearby property of the Landlord.
(8) Increased premium
The Tenant shall:
(a) not without the prior consent of the Landlord use the
Property or carry on any business at the Property or do or
omit to do at the Property anything which may increase the
premium payable for the insurance; and
(b) if consent is given, repay on demand to the Landlord any
resulting increased insurance premium payable by the
Landlord.
(9) Irrecoverable reinstatement cost
If the Property is destroyed or damaged by any of the Insured
Risks and the insurance money under any insurance effected by
the Landlord is wholly or partly irrecoverable because of any
act, default or omission of the Tenant, any person deriving
title under the Tenant or any person at the Property with the
express or implied authority of any of them the Tenant shall pay
to the Landlord within 14 days of written demand the whole or
the appropriate proportion of the cost of reinstating the
Property. Any dispute as to the amount of such proportion shall
be referred to arbitration.
(10) Notice of damage
If the Property is destroyed or damaged by any of the Insured
Risks the Tenant shall give notice to the Landlord as soon as
the destruction or damage comes to the notice of the Tenant.
(11) Double insurance
The Tenant shall not effect any insurance relating to the
Property against any of the Insured Risks. If the Tenant is
entitled to the benefit of any insurance in respect of the
Property, the Tenant shall pay to the Landlord all monies
received by virtue of the insurance to enable the Landlord to
apply them in making good the loss or damage in respect of which
they have been received.
(12) Cesser of rent
If the Property or any part of it (or the means of access to or
egress from it) is destroyed or damaged by any of the Insured
Risks so as to be unfit for occupation or use the rent or a fair
proportion of it according to the nature and extent of the
damage sustained shall be suspended until the Property (or the
means of access to or egress from it) has been reinstated and
made fit for occupation and use or until the end of three years
from the date of the destruction or damage, whichever first
occurs. Any dispute as to the amount of the proportion shall be
referred to arbitration. This sub-clause does not apply if and
to the extent that the insurance monies in respect of loss of
rent are wholly or partially irrecoverable solely or partly
because of the act, default or omission of the Tenant or any
person deriving title under the Tenant or any person at the
Property with the express or implied authority of any of them.
(13) Prevention of reinstatement
The Landlord shall not be obliged to reinstate the Property in
accordance with sub-clause (5) while prevented by a supervening
event. If the Landlord is unable to commence reinstatement
within twenty four months from the date of destruction or damage
because of a supervening event and the Property or a substantial
part of it is unfit for occupation or use either party may
determine the Term by serving notice on the other party at any
time within six months of the end of the twenty four month
period. On service of the notice the Term will cease but
without prejudice to any rights that any party may have against
another for breach of any of their respective covenants or the
conditions contained in this Lease and all insurance monies
shall belong to the Landlord.
In this sub-clause a supervening event means any of the
following:
(a) inability of the Landlord to obtain the consents and
permissions referred to in sub-clause (5) despite using
all reasonable endeavours to do so;
(b) grant of any of the consents or permissions subject to a
lawful condition with which it would be unreasonable to
expect the Landlord to comply or the Landlord being
requested as a precondition to obtaining any of the
consents or permissions to enter into an agreement with
the planning authority or any other authority containing
conditions with which it would be unreasonable to expect
the Landlord to comply;
(c) some defect in the site upon which reinstatement is to
take place so that it could not be undertaken or could be
undertaken only at a cost unacceptable to the Landlord
(acting reasonably);
(d) inability of the Landlord to obtain access to the site to
reinstate;
(e) prevention of reinstatement by any cause beyond the
control of the Landlord.
9. RE-ENTRY
(1) If an Event of Default occurs then notwithstanding the waiver of
any previous right of re-entry the Landlord may re-enter the
Property or any part of it when the Term shall cease but without
prejudice to any rights or remedies which may then have accrued
to any party against another in respect of any antecedent breach
(including the breach in respect of which re-entry is made) of
any of the covenants or obligations contained in this Lease.
(2) In this clause an Event of Default is any one of the following:
(a) the Rent or any part of it is in arrear and unpaid for
seven Business Days after becoming payable (whether
formally demanded or not); or
(b) a breach by the Tenant of any of the covenants by the
Tenant in this Lease; or
(c) the Tenant (being a company) is deemed unable to pay its
debts under section 123 of the Insolvency Act 1986 or the
Tenant or any Guarantor (being a company) passes a
resolution for winding-up or the directors of any of them
present a petition for winding-up or an order for the
winding-up of the Tenant or any Guarantor is made (other
than (in any such case) a voluntary winding-up of a
solvent company for the purposes of amalgamation or
reconstruction) or the Tenant or any Guarantor is
dissolved; or
(d) the Tenant (being a company) has an administrative or
other receiver or a manager appointed of the whole or any
part of its property or a petition is presented for an
administration order or an administration order is made in
respect of the Tenant or any Guarantor; or
(e) the Tenant (being a company) being registered as an
unlimited company is re-registered as a limited company
without the previous consent of the Landlord; or
(f) the Tenant (being an individual) presents a petition for a
bankruptcy order to be made against him or a bankruptcy
order is made against the Tenant or any Guarantor; or
(g) in relation to the Tenant (whether an individual or a
company) a proposal is made or the Tenant (whether a
company or an individual) enters into any kind of
composition, scheme of arrangement, compromise or
arrangement for the benefit of creditors or any class of
creditors or permits or suffers any distress or execution
to be levied on his goods; or
(h) there occurs in relation to the Tenant in any country or
territory in which any of them carries on business or to
the jurisdiction of whose courts any of them or any of the
property of any of them is subject to any event which
corresponds in that country or territory with any of those
mentioned in paragraphs (c) to (g) above or the Tenant
otherwise becomes subject in any such country or territory
to any law relating to insolvency, bankruptcy or winding
up.
10. GUARANTEE
The Guarantor covenants with the Landlord in the terms set out
in Schedule 5 in respect of the period during which Exodus
Internet Limited is bound by the Tenant's covenants and
conditions in this Lease and any additional period during which
Exodus Internet Limited is liable under an authorised guarantee
agreement.
11. VALUE ADDED TAX
(1) If any VAT is chargeable on any supply made to the Tenant under
the terms of this Lease, the Tenant shall pay by way of
additional consideration the amount of that VAT and the Landlord
shall provide a valid VAT invoice in relation to such VAT to the
Tenant.
(2) Without limiting sub-clause (1) above, each sum reserved or
payable by the Tenant under the terms of this Lease is exclusive
of VAT (if any) and is accordingly to be construed as a
reference to that sum plus any VAT in respect of it, and where
any sum is reserved as rent, the VAT is also reserved as rent.
(3) If VAT is chargeable on any supply made by the Landlord to the
Tenant for which a sum is not reserved or payable under the
terms of this Lease, the Tenant shall pay that VAT to the
Landlord against issue of a VAT invoice five Business Days
before the Landlord has to pay the VAT to Customs.
(4) Where under the terms of this Lease the Tenant is obliged:
(a) to make any payment to the Landlord or any other person
(including, without limitation, by way of service charge,
indemnity or reimbursement) by reference to any amount
incurred or which will or may be incurred by the Landlord
or any other person; or
(b) otherwise to pay all or part of the consideration for any
supply made to the Landlord or any other person,
then without prejudice to sub-clauses (1) to (3) above, the
Tenant shall not be obliged to pay any amount in respect of VAT
to the extent that it is recoverable by the Landlord or any
other person as appropriate.
(5) For the purposes of sub-clause (3) above, VAT is recoverable by
a person, if that person (or any company treated as a member of
the same VAT Group as that person) is entitled to credit for it
as input tax under sections 25 and 26 VATA 1994. For the
avoidance of doubt, VAT is not recoverable by a person only
because he could elect to waive exemption, but has not done so.
(6) Where for the purposes of this Lease it is necessary to
calculate or estimate the cost or value of anything, including
any building, structure, work, item, act or service, the cost or
value shall be calculated or estimated so as to include any VAT
which will or may be incurred in addition.
(7) This clause shall not affect the generality of clause 5(3)
(Outgoings).
(8) Where the Tenant pays to the Landlord VAT in respect of any
supply by the Landlord to the Tenant, the Landlord shall issue
the Tenant with a proper VAT invoice in respect of that VAT.
(9) If the Landlord wishes to make an election to waive the
exemption in respect of the Property under paragraph 2 of
Schedule 10, VATA 1994, the Landlord shall notify the Tenant, no
less than 20 Business Days before the election is to take
effect, of the election and the date on which it is intended to
take effect.
(10) If for any reason the election referred to in sub-clause (9)
above is validly revoked within three months after coming into
effect, the Landlord shall repay to the Tenant any VAT paid by
the Tenant, five Business Days after receipt by the Landlord
from Customs of acknowledgement of the revocation.
12. TRUSTEE LIABILITY PROVISION
(1) Lloyds Bank Plc has entered into this Lease in its capacity as
trustee of Schroder Exempt Property Unit Trust ("SEPUT") and
therefore notwithstanding any other provision contained in this
Lease neither Lloyds Bank Plc nor any successor trustee of SEPUT
shall be obliged to meet any liability or claim hereunder save
to the extent that the same can be met by it out of the Trust
Assets.
(2) For the purposes of this clause "Trust Assets" means the assets
for the time being held upon the trusts of SEPUT.
13. GENERAL
(1) Interest and powers of recovery
If any Rent or other sum payable under this Lease is not paid on
the day falling 7 days after the date on which it is due it
shall bear interest from the date on which it is due until the
date of payment at the Default Interest Rate compounded
quarterly. Every amount payable under this Lease shall be
reserved as rent and shall be recoverable as rent in arrear.
(2) Disputes
In relation to disputes:
(a) any statement in this Lease that any dispute shall be
referred to arbitration means that the dispute shall be
determined by a single arbitrator agreed by the Landlord
and the Tenant and failing agreement by a single
arbitrator appointed by the president or his deputy for
the time being of the Royal Institution of Chartered
Surveyors in accordance with the Arbitration Acts 1950 to
1979 and 1996; and
(b) any dispute between the Tenant and any tenant or occupier
of any other property owned or leased by the Landlord
about any right in connection with the use of the Property
and the other property or about any boundary structure
separating the Property from the other property shall be
determined by the Landlord acting reasonably.
(3) Joint and several liability
Where the Tenant or any Guarantor is more than one person:
(a) those persons shall be jointly and severally responsible
in respect of every obligation undertaken by them under
this Lease; and
(b) the Landlord may release or compromise the liability of
any of those persons under this Lease or grant any time or
other indulgence without affecting the liability of any
other of them.
(4) Whole agreement
This Lease contains the whole agreement between the parties
relating to the transaction contemplated by this Lease and
supersedes all previous agreements between the parties relating
to the transaction.
(5) Representations
The Tenant acknowledges that in agreeing to enter into this
Lease, the Tenant has not relied on any representation,
warranty, collateral contract or other assurance. The Tenant
waives all rights and remedies which, but for this sub-clause,
might otherwise be available to it in respect of any such
representation, warranty, collateral contract or other
assurance, but nothing in this sub-clause shall limit or exclude
any liability for fraud.
(6) Rights of entry
All rights of entry exercisable by the Landlord extend to
include (without limitation) its employees, agents, surveyors,
contractors and licensees with or without plant, equipment,
appliances and materials.
(7) Interpretation of covenants
Any covenant by the Tenant not to do or omit anything shall be
construed as though the covenant was in addition a covenant not
to permit or suffer to be done or omitted that thing.
(8) Tenant's possessions
If after the Tenant has vacated the Property at the End of the
Term any of the Tenant's possessions remain on the Property and
the Tenant fails to remove them within fifteen Business Days
after being requested to do so by the Landlord then:
(a) the Landlord may dispose of the possessions as agent for
the Tenant;
(b) (if disposal is by sale) subject to paragraph (c) the
Landlord shall hold the proceeds of sale after deducting
the costs and expenses of removal, storage and sale
incurred by it to the order of the Tenant;
(c) if the Tenant fails to claim the proceeds of sale within
sixty Business Days of the date of the sale, the Landlord
may keep them;
(d) the Tenant indemnifies the Landlord against:
(i) any liability incurred by the Landlord to any third
party whose possessions have been sold by the
Landlord in the mistaken belief (which shall be
presumed) that the possessions belonged to the
Tenant;
(ii) any damage caused to the Property by the
possessions; and
(iii) all loss, damage, actions, proceedings, claims,
demands, costs, damages and expenses properly
incurred or suffered by or brought or awarded
against the Landlord as a result of the presence of
the possessions on the Property after the Tenant has
left it at the End of Term.
(9) Other land
Nothing contained in or implied by this Lease shall:
(a) impose or be deemed to impose any restriction on the use
of any land or buildings not comprised in this Lease; or
(b) give the Tenant:
(i) the benefit of or the right to enforce or to have
enforced or to prevent the release or modification
of any covenant, lease, condition or stipulation
entered into by any purchaser or tenant from the
Landlord in respect of any property not comprised in
this Lease; or
(ii) the right to prevent or restrict in any way the
development of any land not comprised in this Lease.
(10) Severance
To the extent that any provision of this Lease is rendered void
by section 25 of the Landlord and Tenant (Covenants) Act 1995,
that provision shall be severed from the remainder of this Lease
which shall remain in full force and effect. In this sub-clause
"provision" includes a clause, a sub-clause or a schedule or any
part of any of them.
(11) Perpetuity Period
The perpetuity period applicable to this Lease is 80 years
beginning on the date of this Lease and whenever in this Lease
either the Landlord or the Tenant is granted a future interest
it must vest within that period and if it has not it will be
void for remoteness.
(12) Notices in writing
Every notice, consent, approval or direction given under this
Lease shall be in writing.
(13) Counterparts
This lease may be executed in any number of counterparts, all of
which, taken together, shall constitute one and the same lease
and any party may enter into this lease by executing a
counterpart.
14. BREAK CLAUSE
(1) The Tenant may terminate this Lease at any time by giving to the
Landlord not less than one month's prior written notice, subject
to the Tenant giving up vacant possession of the Property by the
date specified in such notice as the requisite date of
termination ("the Termination Date").
In such case the Term shall cease on the Termination Date and no
party shall have any further rights or obligations under this
Lease, but this shall not affect any rights or remedies which
may have accrued at the Termination Date to any party against
the other in respect of any prior breach of any of the covenants
and conditions contained in this Lease.
(2) The Landlord may terminate this Lease at any time on prior
written notice to the Tenant on any of the following events
occurring:
(1) assignment by the Tenant of either the Unit 7 Lease or the
Unit 8 Lease (without a simultaneous assignment of the
other to the same party) or the Tenant ceasing for any
reason to be the tenant under either the Unit 7 Lease or
the Unit 8 Lease only;
(2) the End of the Term of the Unit Leases or either the Unit
7 Lease alone or the Unit 8 Lease alone unless the
Landlord has become obliged to grant a further lease of
the Property to the Tenant pursuant to Clause 18;
(3) the Tenant is the tenant under the Unit 7 Lease only or
the Unit 8 Lease only;
(4) the Landlord exercises its right of re-entry in accordance
with Clause 10 of either or both of the Unit 7 Lease and
the Unit 8 Lease alone (save where the Tenant successfully
obtains relief from forfeiture from a court of competent
jurisdiction in relation to any such re-entry and remains
tenant under the Leases).
In such case the Term shall cease on the date of service of the
Landlord's notice and no party shall have any further rights or
obligations under this Lease, but this shall not affect any
rights or remedies which may have accrued at the date of service
of the Landlord's notice to any party against the other in
respect of any prior breach of any of the covenants and
conditions contained in this Lease.
(3) On the Termination Date or in the case of the Landlord
exercising its break on the date of service of the Landlord's
notice, the Tenant shall hand over to the Landlord the original
Lease and all other title deeds and documents relating to the
Tenant's interest in the Property and shall execute such
documents as the Landlord shall reasonably require in order to
cancel any entry or title at H.M. Land Registry.
15. NOTICES
(1) Any notice or other document served under this Lease may be
served in any way in which a notice required or authorised to be
served under section 196 of the Law of Property Act 1925 may be
served.
(2) During such period that the reversion to this Lease is vested in
the trustee of Schroder Exempt Property Unit Trust no notice
shall be deemed to be validly served on the Landlord unless a
copy of such notice is also served on Schroder Property
Investment Management Limited at 31 Gresham Street, London EC2V
7QA or such other address as the Landlord shall notify to the
Tenant.
16. GOVERNING LAW AND JURISDICTION
(1) This Lease is governed by and shall be construed in accordance
with English law.
(2) The Tenant and the Guarantor submit to the jurisdiction of the
English courts for all purposes relating to this Lease and
appoint Dibb Lupton Alsop (ref RSS) 125 London Wall London EC2Y
5AE (or such other person in the UK as the Guarantor and the
Tenant may from time to time nominate by written notice to the
Landlord) as agent of each of them for service of process and so
that each appointment shall be irrevocable until such time as
the Guarantor and the Tenant have given written notice to the
Landlord of an alternative person in the UK to accept service of
process on their behalf
17. EXCLUSION OF THE LANDLORD
Having been authorised to do so by Order of the Mayors and City
of London Court made on the day of
One thousand nine hundred and ninety nine
under the provisions of Section 38(4) of the Landlord and Tenant
Act 1954 (as amended by Section 5 of the Law of Property Act
1969) the Landlord and Tenant hereby agree that the provisions
of Section 24 to 28 of the Landlord and Tenant Act shall be
excluded in relation to the tenancy hereby created.
18. RIGHT TO A FURTHER LEASE
(1) This clause shall cease to be of effect if either the Landlord
or the Tenant validly exercises its right to break contained in
clause 14 of this Lease or if the Landlord exercises the right
of re-entry contained in clause 9 of this Lease and the Tenant
is not successful in a claim for relief against forfeiture.
(2) If the Tenant wishes to take a further lease of the Property
from the expiration of the Term and at any time not more than 12
months nor less than 3 months before the end of the Term gives
to the Landlord notice of that wish, then, subject to:
(a) the Tenant then being and until the grant of any further
lease pursuant to this clause remaining, tenant of both
Unit 7 and Unit 8; and
(b) an order being granted pursuant to Section 38(4) of the
Landlord and Tenant Act 1954 (as amended by Section 5 of
the Law of Property Act 1969) excluding the further
tenancy to be granted to the Tenant pursuant to this
clause from the security of tenure provisions afforded by
Sections 24 to 28 (inclusive) of the Landlord and Tenant
Act 1954 (as amended)
the Landlord will at the cost of the Tenant grant to the Tenant
a further lease of the Property on the terms referred to below.
(3) The lease (if any) to be granted pursuant to this clause 18
shall be on the same terms as this Lease (mutatis mutandis)
including the Landlord's right to break contained in clause
14(2) save that:
(a) the term of the further lease shall be for a term of
fourteen years which shall commence on the day following
the last day of the Term or such other term agreed between
the Landlord and the Tenant; and
(b) the further lease shall not contain a right for the Tenant
to take a further lease as in this clause contained; and
(c) where the parties agree in writing that the terms of this
Lease should not be repeated in the further lease to be
granted they shall be deleted and such other amendments as
shall be agreed by the parties shall be made to the
further lease; and
(d) where the language of this Lease is no longer appropriate
such language shall be brought up-to-date.
(4) The right contained in this clause 18 shall be of no effect if
the Tenant fails to protect it by notice under the Land
Registration Act 1925 within three months from the date of this
Lease.
(5) If the Tenant serves a notice under clause 18(2) above then both
the Landlord and the Tenant shall use all reasonable endeavours
(at the cost of the Tenant) to agree the form of such further
lease in accordance with this clause 18 and to obtain the order
referred to in clause 18(2)(b) above as soon as possible after
the date of such notice.
I N W I T N E S S of which this Lease has been executed as a deed
and has been delivered on the date which first appears on page 1.
SCHEDULE 1
The Property
Land on the north side of Coronation Road, Park Royal London NW10
which for the purpose of identification only is shown edged red on the
Plan and known as Land between Unit 7 Phase 1 Matrix Park Coronation
Road Park Royal London NW10 and Unit 8, Phase 3 Matrix Park,
Coronation Road, Park Royal, London, NW10.
SCHEDULE 2
Rights granted to the Tenant
1. The right to use the Common Parts for all reasonable and
appropriate purposes connected with the use and enjoyment of the
Property pursuant to this Lease (subject to temporary
interruption for repair and maintenance).
2. The right to use the Conduits in the Estate which serve the
Property (subject to temporary interruption for repair,
alteration or replacement).
3. The right of support and protection from the other parts of the
Estate as now enjoyed by the Property.
4. Subject to obtaining the prior written consent of the Landlord
(such consent not to be unreasonably withheld or delayed but
which consent may be made subject to reasonable requirements and
conditions of the Landlord) the right to lay within the Common
Parts but along routes reasonably specified by the Landlord
additional Conduits to serve the Property.
5. Subject to the giving of reasonable prior notice to the Landlord
and to compliance with all reasonable requirements of the
Landlord the right to enter the Common Parts in order to
maintain, repair, replace or alter any Conduits now or hereafter
exclusively serving the Property the Tenant causing to others as
little inconvenience and disturbance as practicable and making
good without delay all damage thereby occasioned.
SCHEDULE 3
Rights reserved to the Landlord
1. The right to use the Conduits in the Property which serve other
parts of the Estate, the right to install new Conduits for the
benefit of the remainder of the Estate and the right to repair,
maintain and renew existing and new Conduits.
2. The right to enter the Property to exercise any of the rights
referred to in this Schedule or for the purposes set out in
clause 5(6) PROVIDED THAT such right shall only be exercised
(except in case of emergency) by giving reasonable prior notice
to the Tenant and by complying with the Tenant's reasonable
security and confidentiality requirements.
3. All rights of light or air or other easements or rights over or
belonging to any other land or buildings (including other parts
of the Estate).
4. The right to build, re-build or carry out any works on any other
land or buildings (including other parts of the Estate) even if
it interferes with the passage of light or air to the Property
or causes nuisance, damage, annoyance or inconvenience to the
Tenant or occupier of the Property by noise, dust, vibration or
otherwise provided that it does not materially affect the
ability of the Tenant or the occupier to use the Property for
any purpose permitted by this Lease.
5. The support and protection from the Property enjoyed by other
parts of the Estate.
6. The right to build, alter and install and afterwards to maintain
buildings, structures and fixtures on, into or projecting over
or under or taking support from the Property (but those
buildings, structures and fixtures shall not become part of the
Property).
SCHEDULE 4
Matters affecting the freehold
All matters registered or pending registration as at the date hereof
in the Property and Charges Registers of Title Number AGL54738
maintained by HM Land Registry (with the exception of Financial
charges, if any) and the Deed dated 7th August 1998 made between the
Landlord and Railtrack insofar as such matters affect the Property
still subsist and are capable of enforcement
SCHEDULE 5
Guarantee Provisions
1. The Guarantor guarantees to the Landlord the due and punctual
payment and performance by the Tenant of all the tenant's
obligations and liabilities under this Lease and shall indemnify
the Landlord against all losses, damages, costs and expenses
arising or incurred by the Landlord as a result of the non-
payment or non-performance of those obligations or liabilities.
2. The obligations of the Guarantor under this Lease:
(a) constitute a direct, primary and unconditional liability
to pay on demand to the Landlord any sum which the Tenant
is liable to pay under this Lease and to perform on demand
by the Landlord any obligation of the Tenant under this
Lease without the need for any recourse on the part of the
Landlord against the Tenant;
(b) will not be affected by:
(i) any time or indulgence granted to the Tenant by the
Landlord;
(ii) any legal limitation, disability or other
circumstances relating to the Tenant or any
irregularity, unenforceability or invalidity of any
obligations of the Tenant under this Lease;
(iii) any licence or consent granted to the Tenant or any
variation in the terms of this Lease save as
provided in section 18 of the Landlord and Tenant
(Covenants) Act 1995;
(iv) the release of one or more of the parties defined as
the Guarantor (if more than one); or
(v) any other act, omission, matter, event or thing
whereby (but for this provision) the Guarantor would
be exonerated in whole or in part from the guarantee
other than a release by deed given by the Landlord.
3. So long as this guarantee remains in force the Guarantor shall
not:
(a) in the event of any bankruptcy, liquidation,
rehabilitation, moratorium or other insolvency proceedings
relating to the Tenant, claim or prove as creditor in
competition with the Landlord; or
(b) be entitled to claim or participate in any security held
by the Landlord in respect of the obligations of the
Tenant under this Lease; or
(c) exercise any right of set-off against the Tenant.
4. If the Landlord brings proceedings against the Tenant, the
Guarantor shall be bound by any findings of fact, interim or
final award or interlocutory or final judgment made by an
arbitrator or the court in those proceedings in so far as the
same relate to the subject matter of this Lease PROVIDED THAT
the Landlord shall have served a copy of the writ summons
petition or similar process which initiated such proceedings on
the Guarantor before the expiry of 7 days after such proceedings
were initiated
5. If:
(a) the Tenant (being a company) enters into liquidation and
the liquidator disclaims this Lease; or
(b) the Tenant (being a company) is dissolved and the Crown
disclaims this Lease; or
(c) the Tenant (being an individual) becomes bankrupt and the
trustee in bankruptcy disclaims this Lease; or
(d) this Lease is forfeited,
then within six months after the disclaimer or forfeiture the
Landlord may require the Guarantor by notice to accept a lease
of the Property for a term equivalent to the residue which would
have remained of the Term if there had been no disclaimer or
forfeiture at the same rents and subject to the same covenants
and conditions (including those as to the review of rent) as are
reserved by and contained in this Lease (with the exception of
this Schedule).
6. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer or forfeiture and the
Guarantor shall be liable for all payments due under the new
lease as from the date of disclaimer or forfeiture as if the new
lease had been granted on the date of disclaimer or forfeiture.
7. The Guarantor or his personal representatives shall pay the
Landlord's costs of and accept the new lease and shall execute
and deliver to the Landlord a counterpart of it.
8. If the Landlord does not require the Guarantor to take a Lease
of the Property, the Guarantor shall pay to the Landlord on
demand a sum equal to the rent that would have been payable
under this Lease but for the disclaimer or forfeiture in respect
of the period from the date of the disclaimer or forfeiture
until the date which is six months after the date of the
disclaimer or forfeiture or the date on which the Property has
been re-let by the Landlord, whichever first occurs.
9. If any VAT is payable by the Tenant to the Landlord under the
terms of the Lease, the Guarantor's obligation shall extend to
that VAT. If the Guarantor makes any payment in respect of VAT,
the Landlord's obligation to issue a VAT invoice to the Tenant
under the Lease in respect of that VAT shall not be affected,
and the Landlord shall not be under any obligation to issue a
VAT invoice to the Guarantor in respect of that VAT.
SCHEDULE 6
Authorised guarantee provisions
1. The Guarantor guarantees to the Landlord the performance by the
Assignee throughout the Guarantee Period of each of the
covenants falling to be complied with by the tenant under this
Lease and shall indemnify the Landlord against all losses,
damages, costs and expenses arising or incurred by the Landlord
as a result of such non-performance.
2. The obligations of the Guarantor under this guarantee will not
be affected by:
(a) any time or indulgence granted to the Assignee by the
Landlord;
(b) any legal limitation, disability or other circumstances
relating to the Assignee or any irregularity,
unenforceability or invalidity of any obligations of the
Assignee under this Lease;
(c) any licence or consent granted to the Assignee or any
variation in the terms of this Lease save as provided in
section 18 of the Act;
(d) the release of one or more of the parties defined as the
Guarantor (if more than one); or
(e) any other act, omission, matter, event or thing whereby
(but for this provision) the Guarantor would be exonerated
in whole or in part from the guarantee other than a
release under seal given by the Landlord.
3. The Guarantor is liable to the Landlord under this guarantee as
sole or principal debtor and the obligations of the Guarantor
under this guarantee constitute a direct, primary and
unconditional liability to pay on demand to the Landlord any sum
which the Assignee is liable to pay under this Lease and to
perform on demand by the Landlord any obligation of the Assignee
under this Lease without the need for any recourse on the part
of the Landlord against the Assignee. If the Landlord brings
proceedings against the Assignee, the Guarantor shall be bound
by any findings of fact, interim or final award or interlocutory
or final judgment made by an arbitrator or the court in those
proceedings.
4. If during the Guarantee Period the Assignee (being a company)
enters into liquidation and the liquidator disclaims this Lease,
or the Assignee (being a company) is dissolved and the Crown
disclaims this Lease, or the Assignee (being an individual)
becomes bankrupt and the trustee in bankruptcy disclaims this
Lease, then within six months after the disclaimer the Landlord
may require the Guarantor by notice to enter into a new lease of
the Property for a term equivalent to the residue which would
have remained of the term granted by this Lease if there had
been no disclaimer at the same rents and subject to the same
covenants and conditions (including as to the review of rent) as
are reserved by and contained in this Lease.
5. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer and the Guarantor
shall be liable for all payments due under the new lease as from
the date of disclaimer as if the new lease had been granted on
the date of disclaimer.
6. The Guarantor shall pay the Landlord's costs of and accept the
new lease and shall execute and deliver to the Landlord a
counterpart of it.
7. If the Landlord does not require the Guarantor to take a new
lease of the Property the Guarantor shall pay to the Landlord on
demand a sum equal to the rents that would have been payable
under this Lease but for the disclaimer in respect of the period
from the date of the disclaimer until the date which is six
months after the date of the disclaimer or the date on which the
Property has been re-let by the Landlord, whichever first
occurs.
8. During the Guarantee Period the Guarantor shall not;
(a) in the event of any bankruptcy, liquidation,
rehabilitation, moratorium or other insolvency proceedings
relating to the Assignee claim or prove as creditor in
competition with the Landlord; or
(b) be entitled to claim or participate in any security held
by the Landlord in respect of the Assignee's obligations
to the Landlord under this Lease; or
(c) exercise any right of set off against the Assignee.
9. To the extent that any provision of this guarantee does not
conform with section 16 of the Act, that provision shall be
severed from the remainder of this guarantee and this guarantee
shall have effect as if it excluded that provision.
10 If any VAT is payable by the Tenant to the Landlord under the
terms of the Lease, the Guarantor's obligation shall extend to
that VAT. If the Guarantor makes any payment in respect of VAT,
the Landlord's obligation to issue a VAT invoice to the Assignee
under the Lease in respect of that VAT shall not be affected,
and the Landlord shall not be under any obligation to issue a
VAT invoice to the Guarantor in respect of that VAT.
11. In this Schedule:
"Act" means the Landlord and Tenant (Covenants) Act 1995;
"Assignee" means [insert name of assignee in respect of whom the
Tenant is entering into the authorised guarantee agreement];
"Guarantee Period" means the period during which the Assignee is
bound by the covenants by the Tenant in this Lease; and
"Guarantor" means the outgoing Tenant.
SCHEDULE 7
Part 1
------
Lease or underlease: Lease of Unit 7
Premises demised Unit 7 Phase 1 Matrix Park, Coronation Road, Park
Royal, London NW10
Date: 24th December 1998
Parties: (1) Lloyds Bank Plc (as trustee of Schroder Exempt
Property Unit Trust)
(2) Exodus Internet Limited
(3) Exodus Communications Inc
Term: 25 years from 29th September 1998
Part 2
------
Lease or underlease: Lease of Unit 8
Premises demised Unit 8 Phase 3 Matrix Park, Coronation Road, Park
Royal, London NW10
Date: [ ]
Parties: (1) Lloyds Bank Plc (as trustee of Schroder Exempt
Property Unit Trust)
(2) Exodus Internet Limited
(3) Exodus Communications Inc
Term: 25 years from [ ]
SIGNED as a deed by )
Trust Manager )
as attorney for LLOYDS BANK PLC )
in the presence of: )
Witness's
Signature: ...............................................
Name : ...................................................
Address : ................................................
...............................................................
...............................................................
EXECUTED as a DEED by EXODUS
INTERNET LIMITED acting by
two Directors or a Director and its
Company Secretary
Director
Director/Secretary
SIGNED as a DEED by EXODUS
COMMUNICATIONS Plc acting by
Richard Stoltz its Authorised Signatory
in accordance with the constitution of the
Company and the country in which it
is incorporated
Authorised Signatory
DATED 1999
LLOYDS BANK PLC
(as trustee of Schroder Exempt Property Unit Trust)
- and -
EXODUS INTERNET LIMITED
- and -
EXODUS COMMUNICATIONS INC
-------------------------------
L E A S E
of property known as
land between Unit 7, Phase 1
Matrix Park and Unit 8, Phase 3,
Matrix Park, Coronation Road,
Park Royal, London NW10
--------------------------------
ALLEN & OVERY
London
PY0441902.04
<PAGE>
H.M. LAND REGISTRY
Land Registration Acts 1925-1988
County & District: London Boroughs of Ealing and Brent
Title Number: AGL54738
Property: Unit 7 Phase 1 Matrix Park, Coronation Road,
Park Royal, London, NW10
THIS DEED is made on 1999
BETWEEN:
(1) LLOYDS BANK PLC (registered number 2065) (as trustee of Schroder
Exempt Property Unit Trust) whose registered office is at 71
Lombard Street, London EC3P 3BS (the "Landlord");
(2) EXODUS INTERNET LIMITED (registered number 3591136) whose
registered office is at Fountain Precinct, Balm Green,
Sheffield, South Yorkshire S1 1RZ (the "Tenant"); and
(3) EXODUS COMMUNICATIONS INC of 2650 San Thomas Expressway, Santa
Clara, CA95051, USA (the "Guarantor").
WHEREAS:
(A) This Lease is a new tenancy for the purposes of section 1 of the
Landlord and Tenant (Covenants) Act 1995.
(B) By a lease dated 24th December 1998 made between the Landlord
(1), the Tenant (2) and the Guarantor (3) the premises known as
Unit 7, Phase 1, Matrix Park, Coronation Road, Park Royal,
London NW10 as more particularly described in that lease were
demised to the Tenant upon the terms therein set out.
(C) The reversion immediately expectant on and the term granted by
the Principal Lease remain vested in the Landlord and the Tenant
respectively.
THIS DEED WITNESSES as follows:
1. DEFINITIONS
In this Lease:
"Principal Lease" means the lease referred to in recital (B) above as
varied or supplemented by any document which is supplemental to it;
"Property" means the land adjacent to Unit 7, Phase 1, Matrix Park,
Coronation Road, Park Royal, London NW10 which is shown edged red on
the plan annexed to this Lease;
"Term" means the term of years from and including the date of this
deed and expiring on and including 28th September 2023 and any
statutory or other continuation or extension of it or any holding
over.
"this Lease" means this deed as varied or supplemented by any document
which is supplemental to this deed;
2. DEMISE
(1) The Landlord lets the Property to the Tenant for the Term at the
yearly rent of One Pound (L 1).
(2) This Lease is granted together with the rights set out in
Schedule 2 of the Principal Lease but except and reserving the
rights set out in Schedule 3 of the Principal Lease.
3. TERMS OF THIS LEASE
Except as to the premises demised, the term of years granted, the
amount of rent reserved and the modifications set out in clause 5,
this Lease is made on the same terms and subject to the same
covenants, provisos, conditions and other matters as are contained in
the Principal Lease, as if they were set out in full in this deed but
referred to the Property, the Term and the yearly rent reserved by
clause 2(1) of this Lease.
4. VARIATION TO THE PRINCIPAL LEASE
Clause 8(4) of the Principal Lease is varied by the addition of the
following as a new paragraph (g):
"(g) that contemporaneously with the assignment of this
Lease the Tenant assigns to the same assignee the
lease of the adjacent land demised by a lease
dated [ ] made between the
same parties as this Lease if such lease still
subsists at that time."
and the parties shall procure that a note of this variation is
made on the registered leasehold title AGL67070.
5. MODIFICATIONS
The terms of the Principal Lease as incorporated into this Lease shall
be modified so that:
(1) the Tenant shall not assign this Lease or the Property nor agree
to do the same, unless, at the same time, the Tenant assigns or
agrees to assign to the same assignee the Principal Lease;
(2) this Lease shall automatically determine upon the lawful
determination of the Principal Lease (whether by surrender
forfeiture (unless the Tenant obtains relief from such
forfeiture from a competent court) effluxion of time exercise of
a break option or otherwise) but without prejudice to the rights
of any party against any other party relating to any antecedent
breach hereof;
(3) clause 5 of the Principal Lease shall not apply; and
(4) clause 6(25) and paragraph 2 of Schedule 2 of the Principal
Lease shall not apply.
6. COVENANTS
(1) The Tenant covenants with the Landlord to observe and perform
the covenants and conditions on its part in the Principal Lease
as incorporated into this Lease and as modified by this Lease.
(2) The Landlord covenants with the Tenant to observe and perform
the covenants and conditions on its part in the Principal Lease
as incorporated into this Lease and as modified by this Lease.
(3) The Guarantor covenants with the Landlord to observe and perform
the covenants and conditions on its part in the Principal Lease
as incorporated into this Lease.
7. ENDORSEMENT ON PRINCIPAL LEASE
The Landlord and the Tenant shall procure that a memorandum of this
deed shall be endorsed on the Principal Lease and its counterpart and
each shall supply to the other a certified copy of the relevant
endorsed memorandum within seven days of the date of this deed.
IN WITNESS of which this Lease has been executed as a deed and has
been delivered on the date which appears first on page 1.
DATED 1999
LLOYDS BANK PLC
(as trustee of Schroder Exempt Property Unit Trust)
- and -
EXODUS INTERNET LIMITED
- and -
EXODUS COMMUNICATIONS INC
_______________________________________________________
SUPPLEMENTAL LEASE AND DEED OF VARIATION
relating to
Unit 7 Phase 1 Matrix Park,
Coronation Road, Park Royal, London NW10
_______________________________________________________
ALLEN & OVERY
London
PY:447732.02
<PAGE>
H.M. LAND REGISTRY
Land Registration Acts 1925-1988
County & District: London Boroughs of Ealing and Brent
Title Number: AGL 54738
Property: Unit 9 Phase 3 Matrix Park, Coronation Road,
Park Royal, London NW10
THIS LEASE is made on , 1999
BETWEEN:
(1) LLOYDS BANK PLC (registered number 2065) (as trustee of Schroder
Exempt Property Unit Trust) whose registered office is at 71
Lombard Street, London EC3P 3BS (the "Landlord");
(2) EXODUS INTERNET LIMITED (registered number 3591136) whose
registered office is at Fountain Precinct Balm Green Sheffield
South Yorkshire S1 1RZ (the "Tenant"); and
(3) EXODUS COMMUNICATIONS INC of 2650 San Thomas Expressway, Santa
Clara CA95051, USA (the "Guarantor").
This Lease is a new tenancy for the purposes of section 1 of the
Landlord and Tenant (Covenants) Act 1995.
THIS DEED WITNESSES as follows:
1. DEFINITIONS
In this Lease:
"authorised guarantee agreement" means an authorised guarantee
agreement as defined in section 16 of the Landlord and Tenant
(Covenants) Act 1995;
"Business Day" means a day (other than a Saturday or Sunday) on
which banks are generally open in London for normal business;
"Car Spaces" means 12 parking spaces on the Estate from time to
time designated by the Landlord for the Tenant's use of which
not less than 11 parking spaces shall be within the area shown
edged green on the Plan;
"Clearing Bank" means a bank which is a member of CHAPS Clearing
Company Limited;
"Common Parts" means the roads, footpaths, service areas, car
parks, loading bays, landscaped and open areas, entrances and
other areas from time to time during the Term provided by the
Landlord for common use by the tenants of the Estate (but shall
not include any such items as may exclusively serve and be
demised to a tenant of any Unit) but for the avoidance of doubt
the common parts shall always include the road coloured brown on
the Plan and the Car Spaces and shall afford the Tenant access
to and from the Property and the Car Spaces;
"Conduits" includes those for sewage, water, gas, electricity,
telecommunications and data processing;
"Default Interest Rate" means four per centum per annum above
the Interest Rate;
"End of the Term" includes the expiry of the Term by effluxion
of time or the determination of the Term by forfeiture,
surrender, merger, notice or in any other way;
"Estate" means Phases 1 and 3 Matrix Park Coronation Road Park
Royal London NW10 the present extent of which is shown edged
green on the Estate Plan but such expression shall mean such
greater or lesser area which shall include the Property and
which shall from time to time be managed by the Landlord as a
single estate (including all buildings and other structures on
and all parts of such estate);
"Estate Plan" means the plan numbered A3159/0/38 annexed to this
Lease;
"Guarantor" includes the person named in this Lease as
guarantor, if any, and any other person who is for the time
being a guarantor in respect of the Tenant's obligations under
this Lease and his personal representatives and successors;
"Insured Risks" means fire, lightning, explosion, earthquake,
aircraft and other aerial devices and articles dropped from
them, escape of oil, impact by vehicles or animals, riot, civil
commotion, strikes and labour disturbances, storm, flood,
bursting and overflowing of water tanks, apparatus or pipes and
other risks against which the Landlord reasonably decides from
time to time to insure and any other risks that the Tenant shall
reasonably require to be included and which the insurers shall
accept subject to such exclusions, limitations and excesses as
are imposed by its insurers and to the extent to which the risks
mentioned in this definition are insurable with the Landlord's
insurers but shall include loss or damage by acts of terrorism
if and only to the extent that the Landlord has insured against
acts of terrorism;
"Interest Rate" means the base rate for the time being of Lloyds
Bank Plc or of another Clearing Bank designated from time to
time by the Landlord or if there is no such base rate the rate
from time to time prescribed under section 32 of the Land
Compensation Act 1961;
"Landlord" includes the person for the time being entitled to
the reversion immediately expectant on the End of the Term;
"Lease" means this lease, all deeds varying this lease and all
licences and consents granted under this lease or under any deed
of variation;
"Lettable Areas" means all buildings on the Estate designed to
be let for commercial use;
"Parking Area" means the car parking areas forming part of the
Estate including the Car Spaces;
"Plan" means the plan annexed to this Lease numbered A3159-
003.P01;
"Planning Acts" means the Town and Country Planning Act 1990,
the Planning (Listed Building and Conservation Areas) Act 1990,
the Planning (Hazardous Substances) Act 1990, the Planning
(Consequential Provisions) Act 1990 and the Planning and
Compensation Act 1991;
"Property" means the property described in Schedule 1 and every
part of it and all additions and alterations to it and includes
(without limitation):
(a) every part of all buildings and other structures now or
during the Term on the property including walls, roofs,
foundations, load-bearing parts, doors, windows and
Conduits exclusively serving the Property;
(b) landlord's fixtures and fittings including floor
coverings;
(c) electrical and mechanical installations, plant, equipment
and machinery including (without limitation) lifts,
heating plant, air conditioning plant and ventilation
plant and radiators;
(d) one half (severed vertically) of any wall separating the
Property from any adjoining Unit;
(e) service areas, loading bays and landscaped and open areas;
and
(f) boundary walls and fences (if any);
"Quarter Days" means 25th March, 24th June, 29th September and
25th December in every year;
"Rent" includes all sums reserved as rent by this Lease and any
interim rent determined under the Landlord and Tenant Act 1954;
"Rent Review Specification" means the specification annexed to
this Lease;
"Retained Areas" means the whole of the Estate other than the
Units;
"Review Date" means in the year
and in every fifth year after that year
for so long as the Term continues;
"Review Period" means the period starting with any Review Date
up to the next Review Date or starting with the last Review Date
up to the End of the Term;
"Tenant" includes the Tenant's successors in title;
"Term" means the term granted by this Lease and any statutory or
other continuation or extension of it or any holding over;
"Term Commencement Date" means the date of commencement of the
Term specified in clause 3(1);
"Units" means the units of accommodation on the Estate that are
let or otherwise exclusively occupied or designed or intended
for letting or exclusive occupation and "Unit" shall mean any
one of them;
"VAT" means value added tax and any imposition or levy of a like
nature; and
"VATA 1994" means the Value Added Tax Act 1994.
2. INTERPRETATION
(1) Where there are two or more persons included in the expressions
"the Landlord", "the Tenant" or "the Guarantor" each reference
to the Landlord, the Tenant or the Guarantor includes a separate
reference to each of those persons.
(2) Any reference, express or implied, to an enactment includes
references to:
(a) that enactment as amended, extended or applied by or under
any other enactment (before or after this Lease);
(b) any enactment which that enactment re-enacts (with or
without modification);
(c) any subordinate legislation made (before or after this
Lease) under that enactment, as amended, extended or
applied as described in paragraph (a) above or under any
enactment referred to in paragraph (b) above; and
(d) any consents, licences and permissions given (before or
after this lease) under that enactment, as amended,
extended or applied as described in paragraph (a) above or
under any enactment referred to in paragraph (b) above or
under that subordinate legislation and any conditions
contained in those consents, licences and permissions.
(3) Any reference, express or implied, to enactments generally
includes subordinate legislation and any legislation of the
European Union that is directly applicable in the United Kingdom
and includes existing enactments and those that come into effect
during the Term.
(4) Sub-clauses (1) to (3) above apply unless the contrary intention
appears.
(5) The headings in this Lease do not affect its interpretation.
3. LEASE
(1) The Landlord lets the Property to the Tenant together with the
rights set out in Schedule 2 but except and reserving to the
Landlord the rights set out in Schedule 3 for the term of twenty
five years commencing on and including [
] subject to all rights and covenants affecting the Property
including (without prejudice to the generality of the foregoing)
the matters contained or referred to in Schedule 4 at a yearly
rent ascertained in accordance with clause 4.
(2) The rights granted to the Tenant are granted in common with the
Landlord, any person authorised by the Landlord and everyone
else having the like or similar rights.
(3) This Lease does not include any rights other than those set out
in Schedule 2.
(4) The rights excepted and reserved to the Landlord are also
excepted and reserved to those authorised by the Landlord and
everyone else entitled to them.
4. RENT AND RENT REVIEW
(1) Rent
The yearly rent shall be:-
(a) until [ ] the rent of one peppercorn (if
demanded);
(b) from and including [ ] until
the first Review Date the rent of [ ] pounds
[L ]; and
(c) during each successive Review Period a rent equal to the
rent previously payable under this Lease (or the rent
which would be payable but for any abatement or suspension
of rent under this Lease) or the revised rent ascertained
in accordance with this clause, whichever is the greater.
(2) Rent payment dates
The yearly rent is payable without any deduction by equal
quarterly payments in advance on the Quarter Days. The first
payment (which is an apportioned sum) is to be made on
[ ] in respect of the period
commencing on that date and ending on the day before the next
following Quarter Day.
(3) Rent review - method
The revised rent for any Review Period may be agreed in writing
at any time between the Landlord and the Tenant or (in the
absence of agreement) determined not earlier than the relevant
Review Date by an independent valuer (acting as an expert and
not as an arbitrator) of recognised standing and having
experience in letting and valuing property of a like kind and
character to the Property.
(4) Nomination
The independent valuer may be nominated in the absence of
agreement by or on behalf of the president for the time being of
the Royal Institution of Chartered Surveyors on the application
of either the Landlord or the Tenant made not earlier than three
months before the relevant Review Date.
(5) Rent review - amount
In the case of valuation the revised rent to be determined by
the valuer shall be such as he shall decide is the yearly rent
at which the Property might reasonably be expected to be let at
the relevant Review Date
(a) after the expiry of a rent free period or a concessionary
rent period given for fitting-out purposes only of such
length and the giving of such other inducements
(including, without limitation, any rental concession,
capital payment or contribution to fitting out-costs)
given for fitting out purposes only as in either case
would be negotiated in the open market between a willing
landlord and a willing tenant so that the yearly rent is
that payable after the expiry of any such rent free period
or concessionary rent period and after the giving of such
inducement; and
(b) on the assumptions set out in sub-clause (6) but
disregarding the matters set out in sub-clause (7).
(6) Assumptions
The assumptions are that at the relevant Review Date:
(a) the Property:
(i) is available to let on the open market by a willing
landlord to a willing tenant by one lease without a
premium from either party and with vacant possession
for a term of 10 years or a term equal to the
residue then unexpired of the Term (whichever be the
longer) but in either event commencing on the
relevant Review Date with the rent payable from
then;
(ii) is to be let as a whole on a lease which is to
contain the same terms as this Lease (other than the
amount of the rent referred to in sub-clause (1)(a)
and (b) and any rent free or reduced rent period
allowed to the Tenant but including the provisions
for review of that rent at the same intervals as
those in this Lease) the first Review Date in that
lease being the fifth anniversary of the relevant
Review Date;
(iii) has been built to the specification set out in the
Rent Review Specification with the inclusion of an
internal dividing wall (with no openings in such
wall) between the Property and the adjacent Unit
numbered 8 and is fit and available for immediate
occupation and use with connections to all mains
services independently of any other Unit and is
available for immediate use as authorised by this
Lease; and
(iv) may be used for any of the purposes permitted by
this Lease including any purpose which falls within
the same use class (under the Town & Country
Planning (Use Classes) Order for the time being in
force) as the purpose permitted by this Lease;
(b) all the covenants in this Lease by the Landlord and the
Tenant have been performed and observed; and
(c) no work has been carried out to the Property which has
diminished the rental value and in case the Property has
been destroyed or damaged it has been fully restored.
(7) Disregards
The matters to be disregarded are:
(a) any effect on rent of the fact that the Tenant, its
subtenants or their respective predecessors in title have
been in occupation of the Property;
(b) any goodwill attached to the Property by reason of the
carrying on at it of the business of the Tenant, its
subtenants or their predecessors in title in their
respective businesses; and
(c) any increase in rental value of the Property attributable
to the existence at the relevant Review Date of any
improvement carried out with consent of the Landlord
(where required) but not under an obligation to the
Landlord or its predecessors in title to the Property
carried out by and at the cost of the Tenant, its
subtenants or their respective predecessors in title
during the Term or during any earlier period of occupation
arising out of an agreement to grant the Term.
(8) Valuer
In the case of determination by a valuer:
(a) the fees and expenses of the valuer including the cost of
his appointment shall be borne as he shall decide or in
the absence of any decision equally by the Landlord and
the Tenant who shall otherwise each bear their own costs;
(b) the valuer shall afford the Landlord and the Tenant an
opportunity to make representations to him; and
(c) if the valuer dies, delays or becomes unwilling or
incapable of acting or if for any other reason the
president for the time being of the Royal Institution of
Chartered Surveyors or the person acting on his behalf
thinks fit he may discharge the valuer and appoint another
in his place.
(9) Memorandum
When the revised rent has been ascertained memoranda of it shall
be signed by or on behalf of the Landlord and the Tenant and
annexed to this Lease and the counterpart of it and the Landlord
and the Tenant shall bear their own costs in respect of the
memoranda.
(10) Interest
If the revised rent payable with effect from any Review Date has
not been agreed by that Review Date rent shall continue to be
payable at the rate previously payable. Forthwith on the
revised rent being ascertained the Tenant shall pay to the
Landlord any shortfall between the rent and the revised rent
payable up to and on the preceding quarter day together with
interest at the Interest Rate compounded quarterly on each part
of the shortfall from the date or respective dates on which each
part would have been due for payment had the revised rent been
ascertained before the relevant Review Date until the date of
payment.
For the purpose of this clause the revised rent shall be deemed
to have been ascertained on the date when it has been agreed
between the Landlord and the Tenant or the date of the
determination by the valuer.
(11) Costs
If either the Landlord or the Tenant fails to pay the relevant
part of the fees and expenses of the valuer under sub-clause (8)
within 15 Business Days of the same being demanded by the valuer
the other shall be entitled to pay the same and the amount so
paid shall be repaid on demand by the party chargeable and
recoverable from that party as a debt due.
(12) Time not of the essence
Time shall not be of the essence for the purposes of this clause 4.
5. SERVICE CHARGE
(1) The Tenant shall pay to the Landlord the Provisional Service
Charge without any deduction by equal quarterly payments in
advance on the Quarter Days. The first payment (which is an
apportioned sum) is to be made on the date of the Lease in
respect of the period commencing on
[ ] and ending on the Quarter Day
next following the date of this Lease.
(2) As soon as possible after every Accounting Date the Landlord
shall prepare and supply to the Tenant an account:
(a) showing the Gross Expenses, the Income and the Net
Expenses for the Financial Year referred to in the
account;
(b) containing a fair summary of the items referred to in it;
and
(c) certified by the Landlord or its agents (who may be the
managing agents for the Estate).
The account shall be conclusive evidence of all matters of fact
referred to it in it (save in the case of manifest error) and
the Tenant shall be afforded on request reasonable facilities
for inspecting and taking copies of the accounts and receipts
and other documents supporting the account.
(3) In the case of the first Accounting Date after the date for
commencement of payment of the Provisional Service Charge
specified in clause 5(1), if the proportion of the Tenant's
Share of the Net Expenses shown in the account apportioned on a
daily basis for the period from that date to the Accounting
Date:
(a) exceeds the amount already paid as Provisional Service
Charge before the first Accounting Date, the Tenant shall
pay the excess to the Landlord within 14 days of written
demand; and
(b) is less than the amount already paid as Provisional
Service Charge before the first Accounting Date, the
Landlord shall credit the excess to the Tenant against the
next quarterly payment of Provisional Service Charge.
(4) In the case of every subsequent Accounting Date, if the Tenant's
Share of the Net Expenses shown in the account for the period
beginning on the day after the previous Accounting Date and
ending on that Accounting Date:
(a) exceeds the amount paid as Provisional Service Charge
during that period, the Tenant shall pay the excess to the
Landlord within 14 days of written demand; and
(b) is less than the amount paid as Provisional Service Charge
during that period, the Landlord shall credit the excess
to the Tenant against the next quarterly payment of
Provisional Service Charge or repay the excess in respect
of the last year of the Term.
(5) If the Landlord fails to include in any account for a Financial
Year a sum expended or liability incurred in that year the
Landlord may include such sum or the amount of such liability in
an account for any subsequent Financial Year.
(6) All sums payable under this clause shall be reserved as rent.
(7) In this clause:
"Accounting Date" means 31st December or any other date that the
Landlord may nominate;
"Financial Year" means a year ending on an Accounting Date;
"Gross Expenses" means all the expenses incurred by the Landlord
in connection with the Estate including, without limitation, the
matters referred to in Schedule 7;
"Gross Internal Area" has the meaning ascribed to that
expression in the Code of Measuring Practice published by the
Royal Institution of Chartered Surveyors and the Incorporated
Society of Valuers and Auctioneers (4th Edition);
"Income" means:
(a) any insurance money received under an insurance policy
which the Landlord was obliged to effect under this Lease
where the Landlord has incurred expenses in making good
the insured loss itself; and
(b) any money received from any person (other than the service
charge paid by the tenants in the Estate) who was liable
to contribute to the cost of compliance with the
Landlord's obligations under this Lease where the Landlord
has itself incurred the expense towards which that person
contributed;
"Net Expenses" means the amount by which Gross Expenses exceeds
Income;
"Provisional Service Charge" means:
(a) in respect of the period from the [ ] to
the Accounting Date next following the date of this Lease
the annual sum of L 5,310; and
(b) in respect of each subsequent Financial Year, the sum
fixed from time to time by the Landlord or its agents
acting reasonably (who may be the managing agents for the
Estate) as being a reasonable estimate of the Tenant's
Share of the Net Expenses for the relevant Financial Year;
"Tenant's Share" means the same proportion of the Net Expenses
as the Gross Internal Area of the Property from time to time
bears to the Gross Internal Area of the Lettable Areas at such
time provided always that if the Landlord shall consider that
having regard to the nature and degree of use by the Tenant or
other tenants on the Estate of the facilities covered by the
Gross Expenses or any other factors which the Landlord may
reasonably consider relevant some other proportion ought
properly to be payable by the Tenant the Landlord may substitute
such other percentage as it shall consider reasonable either
with regard to all or any items making up the Net Expenses
provided that the proportion of the Net Expenses payable by the
Tenant shall not be increased by reason solely or in part of any
Lettable Areas being vacant or unlet.
6. TENANT'S COVENANTS
(1) Introduction
The Tenant covenants with the Landlord to comply with its
obligations set out in this clause and in clauses 5, 8 and 9.
(2) Rent
The Tenant shall:
(a) pay the yearly rent to the Landlord at the times and in
the manner referred to in clause 4 without any deduction;
and
(b) not exercise or seek to exercise any right or claim to
withhold rent or any right or claim to legal or equitable
set-off.
(3) Outgoings
The Tenant shall:
(a) pay all present and future Outgoings assessed, charged or
imposed on, or payable in respect of the Property or the
Car Spaces or assessed, charged or imposed on, or payable
by the owner or occupier of the Property or the Car
Spaces;
(b) pay the proportion properly attributable to the Property
or the Car Spaces of all Outgoings assessed, charged or
imposed on or payable in respect of the Property and other
properties or the Car Spaces and other car spaces or
assessed, charged or imposed on or payable by the owner or
occupier of the Property and other properties or the Car
Spaces and other car spaces;
(c) pay all charges for the supply to and consumption at the
Property of water, gas and electricity and all charges for
telecommunications (including equipment rents) and observe
and perform all regulations of the supply authorities;
(d) where such charges as are referred to in paragraph (c) are
made in relation to the Property and other properties or
upon the owner or occupier of the Property and other
properties, pay the suppliers and indemnify the Landlord
against the proportion of those charges properly
attributable to the Property or its owner or occupier; and
(e) if the Landlord loses rating relief because it has been
allowed to the Tenant or any other person deriving title
under the Tenant during the Term, make good that loss to
the Landlord.
Provided that the Tenant shall not be obliged to pay such sums
referred to above to the extent that the same have been
recovered by the Landlord under Clause 5.
In this sub-clause "Outgoings" means rates, taxes, duties,
charges, assessments, impositions and outgoings whether
parliamentary, parochial, local or of any other description and
whether of the nature of capital or revenue and even though of a
wholly novel character and the proportion referred to in
paragraphs (b) and (d) shall be determined by the Landlord
acting reasonably and shall be conclusive save as to questions
of law and save in cases of manifest error.
(4) Repair
The Tenant shall:
(a) put and keep the Property in good repair and condition,
but shall not be obliged to repair damage caused by an
Insured Risk save where:
(i) the damage is not insured because of an exclusion,
limitation or excess imposed by the insurers; or
(ii) and to the extent that the insurance monies are
irrecoverable in whole or in part because of the
act, default or omission of the Tenant, any person
deriving title under the Tenant or anyone at the
Property with the express or implied authority of
any of them;
(b) replace all the Landlord's fixtures and fittings in the
Property which become beyond repair during the Term with
those of no lesser quality;
(c) keep all windows and other glass in the Property (both
inside and outside) clean, cleaning them at least once a
month and more frequently where necessary;
(d) keep any open area within the Property adequately surfaced
(where appropriate) in good condition, properly cultivated
(where landscaped) and free from weeds;
(e) enter into and maintain throughout the Term fully
comprehensive maintenance contracts in respect of all
plant, equipment and machinery forming part of the
Property with a reputable company or companies and produce
the contracts to the Landlord on demand with evidence that
any payments due under them are paid up to date;
(f) ensure that the electrical circuits within the Property
comply with the then current regulations of the Institute
of Electrical Engineers or other amended standards or
recommended current codes of practice (save that this
shall not obligate the Tenant to upgrade the existing
circuits within the Property save where it is unlawful not
to do so); and
(g) notify the Landlord of all defects in the Property which
are relevant defects for the purpose of section 4 of the
Defective Premises Act 1972.
(5) Redecoration
The Tenant shall redecorate the exterior of the Property in
every third year and in the last year of the Term and the
interior of the Property in every fifth year and in the last
year of the Term in colours and patterns which, in the case of
external decorations, shall be first approved by the Landlord at
all times during the Term and, in the case of internal
decorations, shall be first approved by the Landlord in the last
year of the Term. The Tenant shall also have all parts of the
Property requiring treatment for their preservation and
protection treated in accordance with the best approved manner
for preserving and protecting them. All works under this sub-
clause shall be carried out in a good and workmanlike manner and
with suitable, good quality materials.
In this sub-clause the "last year of the Term" means the period
of 12 months ending at the End of the Term and all approvals
shall not be unreasonably withheld or delayed by the Landlord.
(6) Entry by the Landlord
The Tenant shall:
(a) permit the Landlord to enter the Property to examine its
condition and take inventories;
(b) permit the Landlord to enter the Property to exercise any
of the rights reserved to the Landlord by this Lease and
for any other reasonable purpose connected with the
management of the Estate subject to the Landlord making
good to the Tenant all damage to the Property but not
being obliged to compensate the Tenant for any loss
suffered by the Tenant or for any nuisance, annoyance,
inconvenience, noise or vibration;
(c) permit the Landlord and any person acting as valuer under
clause 4 to enter the Property and inspect and measure the
Property for all purposes connected with insurance of the
Property, any action under the Landlord and Tenant Act
1954 Part II, or the implementation of clause 4; and
(d) furnish all information relevant for those purposes as the
Landlord or anyone having a right of entry under this sub-
clause may reasonably request.
Except in case of emergency the Landlord shall give the Tenant
reasonable prior written notice before exercising the right of
entry and shall comply with the Tenant's reasonable security and
confidentiality requirements. After notice or in case of
emergency the Landlord may break into the Property. Such rights
shall be exercised in a reasonable manner and in such a way so
far as reasonably practicable as not to prevent the Tenant's
beneficial user and enjoyment of the Property and to use
reasonable endeavours not to damage or interfere with any
equipment or machinery or data transmission and storage
facilities in the Property and shall make good any damage
caused.
(7) Remedy breaches
The Tenant shall remedy all breaches of covenant notified by the
Landlord to the Tenant which the Tenant is liable to remedy
under this Lease as soon as possible and in any event within
three months or sooner if appropriate after service of the
notice. If the Tenant fails to do so the Landlord may enter the
Property and remedy the breach and such entry shall be subject
to the same conditions as referred to in clause 6(6). All costs
and expenses incurred by the Landlord shall be paid by the
Tenant within 14 days of written demand.
(8) Alterations
Subject to the rights granted to the Tenant in Schedule 2 to
this Lease the Tenant shall:
(a) not make any alteration or addition to the Property (other
than the erection, alteration or removal of internal, non
structural, demountable partitioning) save as permitted by
paragraph (b);
(b) not make any non-structural alteration to the Property
(other than as mentioned in paragraph (a)) nor make any
openings in or remove or subsequently rebuild the dividing
wall between the Property and Unit 8 without the prior
consent of the Landlord which shall not be unreasonably
withheld or delayed; and
(c) before the End of the Term if required to do so by the
Landlord but not otherwise, remove any alteration or
addition (including any made before the beginning of the
Term) and make good all damage caused by the removal.
In this sub-clause a non-structural alteration is one which does
not affect the roof, foundations or exterior of the Property or
any load-bearing part of it.
(9) Signs
The Tenant shall:
(a) not display on the Property any signs visible from outside
the Property except those which in the Landlord's opinion
are reasonably necessary in connection with the business
carried on at the Property and which are in a form
approved by the Landlord and are affixed in positions
approved by the Landlord (such approvals not to be
unreasonably withheld or delayed);
(b) at the End of the Term remove all signs (including any
erected before the beginning of the Term) and make good
all damage caused by their removal; and
(c) not affix to the Property any external radio, television
or other aerial or satellite dish or any pole, mast, flag
or wire save with the prior written consent of the
Landlord such consent not to be unreasonably withheld or
delayed and in making such decision the Landlord shall
have due regard to the Tenant's use of the Property.
In this sub-clause "signs" includes signs, hoardings, posters,
placards, advertisements, letters, bills and inscriptions.
(10) Use
The Property shall not be used for any purpose other than a use
within Class B1, Class B2 or Class B8 of the schedule to the
Town and Country Planning (Use Classes) Order 1987 as that Order
is in force at the date of this Lease.
(11) Use obligations
The Tenant shall:
(a) use any open area within the Property only for the purpose
for which it is designed and not keep any caravan or
temporary building on it;
(b) not leave the Property unoccupied for more than a month
without notifying the Landlord and providing the security
arrangements reasonably required by the Landlord and its
insurers;
(c) not do anything on the Property which may become a
nuisance or damage to the Landlord or any nearby owner or
occupier;
(d) not allow to pass into the Conduits serving the Property
anything that may obstruct them or cause damage, danger or
pollution or anything poisonous or radioactive;
(e) not bring onto or keep in the Property anything dangerous,
inflammable, explosive, or noxious save for materials
ordinarily and properly used in connection with
alternative power generation provided that such materials
are safely stored and are otherwise in accordance with all
statutory requirements and the reasonable requirements of
insurers;
(f) not use the Property for any illegal purpose or for any
dangerous, noxious, or noisy occupation;
(g) not use the Property for the holding of public meetings or
auction sales or as a residence or sleep at the Property
or keep any animal on it;
(h) not overload the Property or its Conduits;
(i) remove all refuse on a reasonably frequent basis but no
less than once a week and keep the Property clean, tidy
and in good order;
(j) not obstruct any road or footpath on the Estate and not do
anything as a result of which reasonable use of the Common
Parts by others may be impeded; and
(k) not park vehicles on or load or unload goods onto or from
vehicles save in those parts of the Property or the Common
Parts designated by the Landlord for that purpose.
(12) Statutory requirements
The Tenant shall comply with every enactment and with the
requirements and recommendations of every authority relating to
or affecting the Property or its use or the employment of anyone
at the Property or any equipment or chattels in the Property and
whether applicable to the owner, landlord, tenant or occupier of
the Property save that this obligation shall not include
responsibility for compliance with anything relating to
remediation of any contamination affecting the Property which
was caused before the date hereof.
In this sub-clause "authority" includes every government
department, local or other authority and court of competent
jurisdiction.
(13) Notices
The Tenant shall:
(a) give the Landlord a copy of every notice or order or any
proposal for a notice or order issued to the Tenant, its
sub-tenants or any occupier of the Property or left at the
Property relating to the Property or the Tenant's its sub-
tenants or any occupiers use thereof within five Business
Days of its service;
(b) (if it is the Tenant's responsibility to so comply in
accordance with the terms of this Lease) take all steps
necessary to comply with every notice or order without
delay; and
(c) at the request and cost of the Landlord make or join with
the Landlord in making such objections or representations
in respect of the notice, order or proposal as the
Landlord shall reasonably require.
(14) Fire authority requirements
The Tenant shall comply with all requirements and
recommendations of the appropriate authority and the Landlord's
insurers and all reasonable requirements of the Landlord as to
means of escape from the Property in case of fire or other
emergency and as to the provision and maintenance of fire
detection equipment, fire alarm equipment and fire fighting
equipment.
(15) Planning Acts
The Tenant shall:
(a) comply with the Planning Acts in relation to the Property,
any operations carried out at the Property and its use and
not commit any breach of planning control (as defined in
the Planning Acts);
(b) obtain from the local planning authority planning
permission for the carrying out of any operation on the
Property or the institution or continuance of any use
which may constitute development within the meaning of the
Planning Acts;
(c) not make any application for planning permission without
the Landlord's prior consent (which shall not be
unreasonably withheld or delayed) to the making of the
application, indemnify the Landlord against all charges
payable in respect of the application and repay to the
Landlord all reasonable and proper professional fees and
expenses properly incurred by the Landlord in connection
with the application;
(d) forthwith after the grant or refusal of any application
give the Landlord a copy of the permission or the refusal;
(e) not make any alteration or addition to or change of use of
the Property (being an alteration or addition or change of
use which is prohibited by or for which the consent of the
Landlord must be obtained under this Lease and for which a
planning permission must be obtained) before planning
permission for it has been produced to the Landlord and
acknowledged by the Landlord as satisfactory to it but so
that the Landlord may refuse to express satisfaction with
the planning permission on the grounds that anything
contained in it or omitted from it in the reasonable
opinion of the Landlord would be or be likely to be
materially prejudicial to the Landlord's interest in the
Property during the Term or after the End of the Term such
acknowledgement from the Landlord shall not be
unreasonably delayed;
(f) pay any charge imposed under the Planning Acts in respect
of the carrying out of any operation or the institution or
continuance of any use;
(g) unless the Landlord directs otherwise, carry out before
the End of the Term all works required to be carried out
as a condition of any planning permission which may have
been granted and implemented during the Term whether or
not the date by which the planning permission requires
those works to be carried out falls within the Term;
(h) pay to the Landlord within 14 days of written demand a
fair and reasonable proportion of any compensation
received by the Tenant because of a restriction on the use
of the Property under the Planning Acts, any dispute as to
the proportion to be referred to arbitration;
(i) produce to the Landlord all drawings, documents and other
evidence reasonably required by the Landlord to satisfy
itself that this sub-clause has been complied with;
(j) not implement any planning permission without providing
reasonable security if reasonably required for compliance
with the conditions imposed by that permission;
(k) not serve any purchase notice under the Planning Acts
requiring any authority to purchase the Tenant's interest
in the Property without first offering to surrender this
Lease at the price which might reasonably be expected to
be obtained from the authority under the purchase notice,
any dispute as to the amount of the price to be referred
to arbitration;
(l) not to make any objection or adverse representation in
respect of any planning application made by or with the
consent of the Landlord:
(i) within 12 months before the date specified in clause
15 of this Lease if the Tenant has served the notice
referred to in that clause; or
(ii) within 12 months before the End of the Term unless
the Tenant has exercised its rights to take a new
lease under the provisions of the Landlord and
Tenant Act 1954;
and in either case this clause shall not prevent the
Tenant making such objections if it is entitled to do so
under a lease of another Unit on the Estate.
(16) Obstruction
The Tenant shall not:
(a) stop up, darken or obstruct any window or opening
belonging to the Property save as part of the Tenant's
usual security measures; or
(b) give to any third party any acknowledgement that the
Tenant enjoys the access of light or air to any of the
windows or openings in the Property by the consent of a
third party; or
(c) pay to any third party any sum of money or enter into any
agreement with any third party for the purpose of inducing
or binding him to abstain from obstructing the access of
light or air to any windows or openings.
(17) Obstruction proceedings
If any of the owners or occupiers of nearby land or buildings do
or threaten to do anything which obstructs the access of light
or air to any of the windows or openings in the Property the
Tenant shall:
(a) notify the same forthwith to the Landlord; and
(b) permit and afford all reasonable assistance to the
Landlord to bring proceedings in the name of the Tenant
and at the joint cost of the Landlord and Tenant against
any of the owners or occupiers of the nearby land or
buildings in respect of the obstruction.
(18) Acquisition of rights
The Tenant shall not allow any easement to be acquired over the
Property. If any such easement is acquired or attempted to be
acquired, the Tenant shall give immediate notice of it to the
Landlord and at the request of the Landlord but at the cost of
the Tenant adopt the course reasonably required by the Landlord
for preventing the acquisition of the easement.
(19) Party Matters
The Tenant shall pay a fair proportion of all costs and expenses
payable in respect of repairing, lighting, cleansing and
maintaining anything used in common by the Property and any
other property to the extent that those costs and expenses are
not recovered under clause 5. The proportion shall be
determined by the Landlord and shall be conclusive save as to
questions of law and save in the case of manifest error.
(20) New Guarantor
If a guarantor's event of default occurs, the Tenant shall give
notice to the Landlord of the event within ten Business Days of
its occurrence. If the Landlord serves notice on the Tenant
under this sub-clause within thirty Business Days of service of
the Tenant's notice, the Tenant shall procure that guarantors
reasonably acceptable to the Landlord shall covenant by deed
with the Landlord in the form set out in Schedule 5.
In this sub-clause a guarantor's event of default is any of the
following:
(a) in the case of a Guarantor who is an individual:
(i) the death of the individual;
(ii) the individual being regarded as a patient under the
Mental Health Act 1983 section 94;
(iii) an application being made for an interim order in
respect of the individual or an interim order being
made under the Act;
(iv) the making by the individual of a proposal for a
voluntary arrangement;
(v) a petition being presented for a bankruptcy order to
be made against the individual or a bankruptcy order
being made;
(b) in the case of a Guarantor which is a company:
(i) a proposal being made to the company and to its
creditors for a voluntary arrangement;
(ii) a petition being presented for an administration
order in respect of the company or an administration
order being made;
(iii) the company having an administrative or other
receiver or a manager appointed of the whole or any
part of its property;
(iv) the company passing a resolution for winding up or a
petition being presented for the winding up of the
company or a winding up being made or the company
being dissolved other than (in any such case) a
voluntary winding up of a solvent company for the
purposes of amalgamation or reconstruction;
(v) the company, having been registered as an unlimited
company, being re-registered as a limited company
without the previous consent of the Landlord;
(c) in the case of a Guarantor who is an individual or which
is a company:
(i) the individual or the company entering into any kind
of composition, scheme of arrangement, compromise or
arrangement for the benefit of creditors or any
class of creditors or permitting or suffering any
distress or execution to be levied on his goods at
the Property which remains unsatisfied for more than
21 days;
(ii) there occurring in relation to the individual or the
company in any country or territory in which he
carries on business or to the jurisdiction of whose
courts he or any of his property is subject any
event which corresponds in that country or territory
with any of those mentioned in paragraphs (a)(iii)
to (v) or (b) above or the individual or the company
otherwise becoming subject in any such country or
territory to any law relating to insolvency,
bankruptcy or winding up.
(21) Costs
The Tenant shall pay the reasonable and proper costs and
expenses incurred by the Landlord:
(a) in or in contemplation of any proceedings relating to the
Property under the Law of Property Act 1925 sections 146
and 147, or the Leasehold Property (Repairs) Act 1938, the
preparation and service of any notice under those sections
or the taking of steps subsequent to such notice
notwithstanding that forfeiture is avoided otherwise than
by relief granted by the Court;
(b) in the preparation and service of any notice to repair or
any schedule of dilapidations at any time during the Term
or after the End of the Term;
(c) in connection with the recovery of arrears of Rent or
other sums due to the Landlord under this Lease including
the levy or attempted levy of any distress; and
(d) in respect of any application for consent required by this
Lease whether or not the consent is granted (including any
inspection of works authorised by the consent and of any
re-instatement of those works).
Where the Landlord could recover the cost of services or advice
under the first part of this sub-clause if they were undertaken
by a third party but those services or that advice are provided
by the Landlord or by a company which is a member of the same
group as the Landlord (within the meaning of section 42 of the
Landlord and Tenant Act 1954), the Tenant shall pay to the
Landlord or to that company a reasonable sum (plus VAT if
payable) for such services or advice but not more than the
amount payable by the Tenant if those services or that advice
had been provided by a third party
(22) Indemnity
The Tenant shall:
(a) pay and make good to the Landlord every loss and damage
incurred or sustained by the Landlord as a consequence of
every breach or non-observance of the Tenant's covenants
contained in this Lease and shall indemnify the Landlord
against all actions, claims, liabilities, costs and
expenses arising by reason of the breach; and
(b) indemnify and keep the Landlord indemnified from liability
in respect of all loss, damage, actions, proceedings,
claims, demands, costs, damages and expenses in respect of
any injury to or the death of any person or damage to any
property or in respect of the infringement, disturbance or
destruction of any right by reason of or arising in any
way directly or indirectly out of:
(i) the state of repair or condition of the Property;
(ii) the act, omission or default of the Tenant, any
person deriving title under the Tenant or any person
at the Property with the express or implied
authority of any of them;
(iii) the construction or existence of any additions or
alterations to the Property;
(iv) the use of the Property;
(v) anything now or in the future attached to or on the
Property;
(vi) the use of vehicles on the Property;
(vii) the omission of the Tenant to give written notice to
the Landlord of any defects or items requiring
repair of which the Tenant is aware or ought
reasonably to be aware; and
(viii) any breach by the Tenant or by any person
deriving title under the Tenant of any covenant by
the Tenant or any condition contained in this Lease.
Provided that the Tenant shall not be obliged to indemnify
the Landlord in respect of such matters to the extent that
such damage arises out of the Landlord's wilful misconduct
or negligence.
(23) Notices for sale and re-letting
The Tenant shall:
(a) permit (at a suitable location which does not materially
interfere with or obstruct the access of light to the
Property) the Landlord during the six months before the
End of the Term to affix to the Property a notice (of a
suitable size and nature) for re-letting it;
(b) permit (at a suitable location which does not materially
interfere with or obstruct the access of light to the
Property) the Landlord at any time during the Term to
affix to the Property a notice (of a suitable size and
nature) for dealing with the Landlord's interest in the
Property; and
(c) permit all persons with written authority from the
Landlord or the Landlord's agent to view the Property upon
the Landlord giving at least 24 hours prior written notice
and subject to such person complying with the Tenant's
reasonable security and confidentiality requirements.
(24) Regulations
The Tenant shall observe all reasonable regulations made by the
Landlord for the proper management of the Estate.
(25) Car Spaces
The Tenant shall:
(a) not use the Car Spaces otherwise than for the purpose of
the parking of one private motor car in each Car Space and
not to keep anything else in the Parking Area including,
without limitation, plant, equipment, materials,
containers of any description or any skip or other
receptacle for refuse or any caravan or temporary
building;
(b) not without the express permission of the Landlord carry
out any repairs to any vehicle whilst it is in the Parking
Area and if permission is granted ensure that any repairs
are carried out in such manner as not to cause any
nuisance, annoyance, inconvenience or disturbance to the
Landlord or any tenant or occupier of the Estate or other
user of the Parking Area;
(c) keep the Car Spaces and the surrounding area clean, tidy
and free from deposits of oil or grease;
(d) not cause any obstruction in the Parking Area;
(e) take all reasonable and proper precautions against fire
occurring in any vehicle using the Car Spaces;
(f) not do anything in the Parking Area which causes nuisance,
annoyance, inconvenience or disturbance to the Landlord or
any tenant or occupier of the Estate or other user of the
Parking Area.
(26) Freehold covenants
The Tenant shall observe and perform the covenants contained in
or referred to in the documents specified in Schedule 4 so far
as they relate to the Property and are still subsisting and
capable of taking effect and shall indemnify and keep
indemnified the Landlord from and against any non-observance or
non-performance of the same.
(27) Yield up
The Tenant shall:
(a) yield up the Property (except tenant's or trade fixtures
including those of the type listed on annexed schedule) to
the Landlord at the End of the Term with vacant possession
with an internal dividing wall between the Property and
the adjacent Unit numbered 8 constructed to the Landlord's
reasonable satisfaction and in accordance with the
specification of such wall contained in the Rent Review
Specification and otherwise in accordance with the
Tenant's covenants contained in this Lease; and
(b) make good to the satisfaction of the Landlord all damage
occasioned by the removal of any tenant's or trade
fixtures.
(28) Release of Landlord
If the Landlord or any former landlord applies for release of a
covenant under section 8 of the Landlord and Tenant (Covenants)
Act 1995:
(a) the Tenant shall not object unreasonably to the release of
the Landlord or the former landlord; and
(b) if, following such an application, the Tenant serves
notice objecting to the release, but the Court makes a
declaration that it is reasonable for the covenant to be
released, the Tenant shall indemnify the Landlord and any
former landlord against all loss, damage, costs and
expenses incurred or sustained by any of them as a result
of the objection of the Tenant.
7. LANDLORD'S COVENANTS
(1) Introduction
The Landlord covenants with the Tenant to comply with its
obligations set out in this clause and in clauses 5 and 9.
(2) Quiet enjoyment
For so long as the Tenant pays the Rent and performs and
observes the covenants by the Tenant and the conditions
contained in this Lease the Tenant may peaceably and quietly
hold and enjoy the Property during the Term without any lawful
interruption by the Landlord or any person claiming under or in
trust for the Landlord.
(3) Services
The Landlord shall use all reasonable endeavours to:
(a) maintain in good working order and repair all Conduits in,
under or upon the Estate which serve the Property (other
than those which exclusively serve the Property); and
(b) keep the surfaces of the Common Parts in good repair and
cleaned at regular intervals and reasonably well lit.
The Landlord will not be liable to the Tenant for any breach of
these obligations unless the Tenant has given the Landlord
notice of the breach and the Landlord is aware or should
reasonably be aware of the breach and has failed to remedy the
breach within a reasonable time of service of the notice.
8. ALIENATION
(1) Restrictions on alienation
The Tenant shall not:
(a) save to the extent permitted by the following sub-clauses
of this clause, part with possession of the whole or any
part of the Property or part with or share occupation of
the whole or any part of the Property or permit occupation
by a licensee of the whole or any part of the Property or
hold on any trust the whole or any part of the Property;
nor
(b) if it is an unlimited company, incorporate itself as a
limited company without the prior consent of the Landlord
(such consent not to be unreasonably withheld or delayed).
(2) Assignment
The Tenant shall not:
(a) assign part of the Property; nor
(b) assign the whole of the Property without the prior consent
of the Landlord which, subject to sub-clauses (3) and (4),
shall not be unreasonably withheld or delayed.
(3) Agreement as to circumstances
The Landlord and the Tenant agree that the Landlord may withhold
its consent to an assignment if any one or more of the following
circumstances (which are specified for the purposes of section
19(1A) of the Landlord and Tenant Act 1927) exist and it shall
not be regarded as unreasonably withholding its consent if it
does so:
(a) any rent payable pursuant to clause 4(1) of this Lease
agreed service charge, insurance and VAT on such sums
payable in accordance with this Lease due from the Tenant
under this Lease is unpaid;
(b) the Landlord reasonably determines that the proposed
assignee is not a person who is likely to be able both to
comply with the tenant's covenants in this Lease and to
continue to be such a person following the assignment;
(c) the proposed assignee or any proposed guarantor for it
(other than any guarantor under an authorised guarantee
agreement) has the benefit of state or diplomatic immunity
or the Landlord determines that it is likely to acquire
that immunity;
(d) the proposed assignee is a company which is a member of
the same group (within the meaning of section 42 of the
Landlord and Tenant Act 1954) as the Tenant; and
(e) the proposed assignee or any proposed guarantor for it
(other than any guarantor under an authorised guarantee
agreement) is a corporation registered in or an individual
resident in a jurisdiction in which a judgement obtained
in the courts of England and Wales will not necessarily be
enforced without any re-examination of the merits of the
case.
(4) Agreement as to conditions
The Landlord and the Tenant agree that the Landlord may grant
consent to an assignment subject to any one or more of the
following conditions (which are specified for the purposes of
section 19(1A) of the Landlord and Tenant Act 1927) and it shall
not be regarded as giving consent subject to unreasonable
conditions if it does so:
(a) that before the assignment the Tenant enters into and
unconditionally delivers to the Landlord an authorised
guarantee agreement, such agreement to be a deed and to
contain the provisions in Schedule 6 or at the Landlord's
absolute discretion) such other provisions as the Landlord
shall reasonably prescribe and (in either case) such
ancillary provisions as the Landlord shall reasonably
prescribe;
(b) that before the assignment any person (other than a former
Tenant) who at the time of the application for the consent
is guaranteeing the obligations and liabilities under this
Lease of the Tenant covenants by deed with the Landlord
that the Tenant shall perform its obligations under the
authorised guarantee agreement required under paragraph
(a), the deed to contain provisions equivalent to those
contained in paragraphs 1 to 4 and 9 of Schedule 5 and an
obligation on the part of the covenantor (in the event of
default on the part of the Tenant) to perform any
obligation entered into by the Tenant in the authorised
guarantee agreement to take up a new lease, and otherwise
to be in such form as the Landlord reasonably requires;
(c) that before the assignment, if the Landlord determines it
to be necessary, one or more guarantors acceptable to the
Landlord, acting reasonably, covenant by deed with the
Landlord in the form set out in Schedule 5 (with
"assignee" substituted for "Tenant" in paragraphs 1 to 9
inclusive and with such other provisions as the Landlord
reasonably requires) in respect of the period during which
the assignee is bound by the tenant's covenants and the
conditions in this Lease;
(d) that all rent payable pursuant to clause 4(1) of this
Lease agreed service charge, insurance and VAT on such
sums payable in accordance with this Lease due from the
Tenant under this Lease as at the date of the assignment
has been paid;
(e) that the assignment is completed and registered with the
Landlord in accordance with sub-clause (14) within three
months of the date of the consent and that if it is not,
the consent shall be void but any of the guarantees
referred to in paragraphs (a) to (c) shall nevertheless
remain in full force and effect.
(f) that before the assignment of this Lease to an assignee
who is not also taking an assignment of the adjacent Unit
numbered 8 the Tenant has constructed to the Landlord's
reasonable specification and satisfaction an internal
dividing wall between the Property and the adjacent Unit
numbered 8.
(5) Further agreement
The Landlord and the Tenant agree that:
(a) the Landlord may withhold consent to an assignment in
circumstances which are not referred to in sub-clause (3)
if it is reasonable to do so and may grant consent subject
to conditions which are not specified in sub-clause (4) if
the conditions are reasonable; and
(b) any power on the part of the Landlord to determine any
matter for the purposes of sub-clauses (3) or (4) shall be
exercised reasonably.
(6) Underletting
The Tenant shall not:
(a) underlet part only of the Property;
(b) underlet the whole of the Property:
(i) without complying with the provisions of sub-clauses
(7) to (11); and
(ii) without the prior consent of the Landlord, which
shall not be unreasonably withheld or delayed.
(7) Underletting Conditions
Not to underlet the whole of the Property without producing to
the Landlord:
(a) an order of the Court under section 38(4) of the Landlord
and Tenant Act 1954 authorising the inclusion in the
intended underlease of an agreement excluding sections 24
to 28 of that Act; and
(b) a written undertaking by the Tenant not to release the
intended undertenant from or otherwise waive or modify the
agreement authorised by the order
and without including the agreement in the intended underlease.
(8) Covenants on underletting
The Tenant shall procure that any intended undertenant covenants
by deed with the Landlord:
(a) to pay the rent to be reserved by and the other sums to be
payable under the underlease and to perform and observe,
the tenant's covenants and the conditions to be contained
in the underlease throughout the period during which the
undertenant is bound by the tenant's covenants and
conditions in the underlease;
(b) without prejudice to paragraph (a), not to assign the
underlet property without:
(i) first obtaining a deed of covenant from the intended
assignee in favour of the Landlord in the same form
(with the necessary changes) as the deed referred to
in this sub-clause, including (without limitation)
the covenants in this paragraph (b); and
(ii) if the Landlord reasonably requires, first obtaining
a deed from one or more guarantors acceptable to the
Landlord, acting reasonably, in favour of the
Landlord guaranteeing the due and punctual payment
and performance of all the obligations and
liabilities of the intended assignee under the deed
referred to in sub-paragraph (i), the deed to
contain provisions equivalent to those contained in
paragraphs 1 to 4 and 9 of Schedule 5 and otherwise
to be in such form as the Landlord reasonably
requires.
(9) Guarantee on underletting
If the Landlord reasonably requires, the Tenant shall procure
that, before the underlease is granted, one or more guarantors
acceptable to the Landlord, acting reasonably, guarantee (by way
of deed) to the Landlord, in respect of the period during which
the undertenant is bound by the tenant's covenants and the
conditions in the underlease, the due and punctual payment and
performance of all the obligations and liabilities of the
intended undertenant, the guarantee to contain provisions
equivalent to those contained in paragraphs 1 to 4 and 9 of
Schedule 5 and otherwise to be in such form as the Landlord
reasonably requires.
(10) Form of underlease
The Tenant shall procure that every underlease shall:
(a) contain the same tenant's covenants and other terms and
conditions as are contained in this Lease subject only to:
(i) such amendments as may be provided for in paragraphs
(b) to (d); and
(ii) such amendments as may reasonably be required by the
Tenant, having regard only to the duration of the
proposed underlease, and as may be approved by the
Landlord, such approval not to be unreasonably
withheld;
(b) not permit any assignment, underlease or other dealing or
disposal of the Property which is prohibited by the terms
of this Lease and prohibit any further underletting of the
whole or any part of the Property;
(c) provide that where the underlease requires the undertenant
to obtain the landlord's consent, the undertenant shall be
required to obtain also the consent of the Landlord (such
consent not to be unreasonably withheld or delayed);
(d) contain provisions that require a review of the rent
payable under the underlease to open market rent in
accordance with the provisions and at the dates for review
of the rent payable under this Lease, but this paragraph
shall not prohibit an underlease of the Property upon
terms that require review of the rent payable under the
underlease at dates additional to the dates for review of
the rent payable under this Lease;
(11) Underlease requirements
The Tenant shall:
(a) not grant any underlease at a fine or premium;
(b) not grant any underlease at a rent which at the time of
the grant of the underlease is less than the open market
rent of the Property;
(c) not vary the terms of any underlease or release the
undertenant from any covenant or condition in the
underlease without the prior consent of the Landlord such
consent not to be unreasonably withheld or delayed and
shall notify the Landlord of any surrender of any
underlease;
(d) not waive any breach of any of the covenants on the part
of the undertenant and the conditions contained in any
underlease but take all such reasonable steps as are
lawfully available to the Tenant (including re-entry) to
enforce such covenants and conditions;
(e) procure that the rent reserved by any underlease is
reviewed in accordance with the provisions of the
underlease but not agree any revised rent with the
undertenant without the prior consent of the Landlord
(such consent not to be unreasonably withheld), and if on
any rent review under any underlease the revised rent is
to be determined by an independent third party, procure
that any reasonable representations which the Landlord may
wish to make concerning the revised rent are put forward
to the third party at the same time as the representations
of the Tenant and as though they were representations made
by the Tenant; and
(f) procure that on any assignment of any underlease the
outgoing undertenant enters into an authorised guarantee
agreement and, where appropriate, guarantors enter into a
contractual guarantee in each case with the landlord under
the underlease in accordance with the provisions of the
underlease.
In paragraphs (c) to (f) of this sub-clause an underlease
includes any lease where, by virtue of the grant of this Lease,
the Tenant under this Lease becomes the holder of the immediate
reversion to that lease.
(12) Associated companies
The Tenant may share the occupation of any part of the Property
with a company which is a member of the same group as the Tenant
(within the meaning of section 42 of the Landlord and Tenant Act
1954) for so long as both companies remain members of that group
and provided that:
(a) no relationship of landlord and tenant is created between
the two companies and no security of tenure is conferred
upon the occupier; and
(b) within 15 Business Days of the commencement of the sharing
the Tenant gives to the Landlord notice of the company
sharing occupation and the address of its registered
office.
(13) Charging
The Tenant shall not
(a) charge part of the Property; or
(b) charge the whole of the Property by way of fixed security
without the prior consent of the Landlord, which shall not
be unreasonably withheld.
(14) Registration of dealings
Within 15 Business Days of every assignment, transfer,
underlease or charge of the Property or the creation or transfer
of any interest derived out of the Term or any devolution of the
interest of the Tenant or any person deriving title under the
Tenant, the Tenant shall produce a certified copy of the
assignment, transfer, underlease or charge or (in the case of a
devolution) the document evidencing or under which the
devolution arises and pay the Landlord a registration fee of a
reasonable amount, being not less than L 25, in respect of each
assignment, transfer, underlease, charge or devolution.
9. INSURANCE
(1) Landlord's insurance obligations
Unless the insurance is vitiated by any act, default or omission
of the Tenant, any person deriving title under the Tenant or any
person at the Property with the express or implied authority of
any of them the Landlord shall keep the Property (other than
plate glass and tenant's or trade fixtures) insured with
insurers or underwriters selected by the Landlord in accordance
with the provisions of this clause to the extent to which the
Property is insurable and subject to all exclusions, limitations
and excesses imposed by the insurers.
(2) Sum and risks insured
The Property shall be insured in a sum not less than its full
reinstatement cost (as determined from time to time by the
Landlord) against loss or damage by the Insured Risks.
(3) Fees
The insurance shall extend to:
(a) architects' and other professional fees in relation to the
reinstatement of the Property for a minimum sum of 15% of
the amount insured in respect of the Property;
(b) the costs of demolition and removal of debris; and
(c) loss of rent for such period as the Landlord may decide in
an amount which takes into account the Landlord's estimate
of potential increases in rent.
(4) Production of policy
Whenever reasonably required to do so by the Tenant and at the
Tenant's cost, but not more often than twice a year, the
Landlord shall produce to the Tenant at the Landlord's office a
copy of the insurance policy or other evidence of it and
evidence of payment of the last premium.
(5) Reinstatement
Subject to sub-clause (13) if the Property is destroyed or
damaged by any of the Insured Risks, then unless the insurance
is vitiated by any act, default or omission of the Tenant, any
person deriving title under the Tenant or any person at the
Property with the express or implied authority of any of them,
the Landlord shall use reasonable endeavours to:
(a) obtain all consents and permissions necessary for
reinstatement as soon as reasonably possible;
(b) subject to obtaining those consents and permissions, lay
out as soon as practicable all insurance monies received
by the Landlord (other than for fees and loss of rent) in
reinstating the Property; and
(c) subject to the Tenant complying with its obligations in
sub-clauses (6)(a)(iii), (7) and(9) make good out of the
Landlord's own monies any deficiency (other than one
arising from an exclusion, limitation or excess imposed by
the insurers).
(6) Tenant's insurance obligations
(a) The Tenant shall pay to the Landlord on demand:
(i) every premium payable by the Landlord (including any
part of it which the Landlord is entitled to retain
by way of commission) for insuring the Property in
accordance with its obligations in sub-clause (1)
and for effecting insurance in respect of liability
to third parties including members of the public and
such other insurances as the Landlord reasonably
considers desirable;
(ii) where the policy includes the Property and other
properties, the proportion properly attributable to
the Property of every premium payable by the
Landlord (including any part of it which the
Landlord is entitled to retain by way of commission)
for insuring the Property and the other properties
in accordance with its obligations in sub-clause (1)
and for effecting (in relation to the Property and
the other properties) the other insurances referred
to in sub-paragraph (i), the proportion to be
determined by the Landlord whose determination shall
be conclusive save as to questions of law and save
in case of manifest error;
(iii) the amount of any excess deducted or deductible by
the insurers on any claim made by the Landlord; and
(iv) all costs and expenses reasonably incurred by the
Landlord in obtaining a valuation of the Property
for insurance purposes (provided this is limited to
one such valuation every two years).
All sums payable by the Tenant under paragraph (a)(i) shall be
reserved as rent.
(b) The Tenant shall insure all plate glass in the Property
against all risks with an insurance company approved by
the Landlord in the joint names of the Landlord and the
Tenant and, on demand, produce a copy of the insurance
policy and evidence of payment of the last premium to the
Landlord.
(7) Vitiation
The Tenant shall not use the Property or carry on any business
at the Property or do or omit to do at the Property anything
which may make void or voidable any policy for the insurance of
the Property or any nearby property of the Landlord.
(8) Increased premium
The Tenant shall:
(a) not without the prior consent of the Landlord use the
Property or carry on any business at the Property or do or
omit to do at the Property anything which may increase the
premium payable for the insurance; and
(b) if consent is given, repay on demand to the Landlord any
resulting increased insurance premium payable by the
Landlord.
(9) Irrecoverable reinstatement cost
If the Property is destroyed or damaged by any of the Insured
Risks and the insurance money under any insurance effected by
the Landlord is wholly or partly irrecoverable because of any
act, default or omission of the Tenant, any person deriving
title under the Tenant or any person at the Property with the
express or implied authority of any of them the Tenant shall pay
to the Landlord within 14 days of written demand the whole or
the appropriate proportion of the cost of reinstating the
Property. Any dispute as to the amount of such proportion shall
be referred to arbitration.
(10) Notice of damage
If the Property is destroyed or damaged by any of the Insured
Risks the Tenant shall give notice to the Landlord as soon as
the destruction or damage comes to the notice of the Tenant.
(11) Double insurance
The Tenant shall not effect any insurance relating to the
Property against any of the Insured Risks. If the Tenant is
entitled to the benefit of any insurance in respect of the
Property, the Tenant shall pay to the Landlord all monies
received by virtue of the insurance to enable the Landlord to
apply them in making good the loss or damage in respect of which
they have been received.
(12) Cesser of rent
If the Property or any part of it (or the means of access to or
egress from it) is destroyed or damaged by any of the Insured
Risks so as to be unfit for occupation or use the rent or a fair
proportion of it according to the nature and extent of the
damage sustained shall be suspended until the Property (or the
means of access to or egress from it) has been reinstated and
made fit for occupation and use or until the end of three years
from the date of the destruction or damage, whichever first
occurs. Any dispute as to the amount of the proportion shall be
referred to arbitration. This sub-clause does not apply if and
to the extent that the insurance monies in respect of loss of
rent are wholly or partially irrecoverable solely or partly
because of the act, default or omission of the Tenant or any
person deriving title under the Tenant or any person at the
Property with the express or implied authority of any of them.
(13) Prevention of reinstatement
The Landlord shall not be obliged to reinstate the Property in
accordance with sub-clause (5) while prevented by a supervening
event. If the Landlord is unable to commence reinstatement
within twenty four months from the date of destruction or damage
because of a supervening event and the Property or a substantial
part of it is unfit for occupation or use either party may
determine the Term by serving notice on the other party at any
time within six months of the end of the twenty four month
period. On service of the notice the Term will cease but
without prejudice to any rights that any party may have against
another for breach of any of their respective covenants or the
conditions contained in this Lease and all insurance monies
shall belong to the Landlord.
In this sub-clause a supervening event means any of the
following:
(a) inability of the Landlord to obtain the consents and
permissions referred to in sub-clause (5) despite using
all reasonable endeavours to do so;
(b) grant of any of the consents or permissions subject to a
lawful condition with which it would be unreasonable to
expect the Landlord to comply or the Landlord being
requested as a precondition to obtaining any of the
consents or permissions to enter into an agreement with
the planning authority or any other authority containing
conditions with which it would be unreasonable to expect
the Landlord to comply;
(c) some defect in the site upon which reinstatement is to
take place so that it could not be undertaken or could be
undertaken only at a cost unacceptable to the Landlord
(acting reasonably);
(d) inability of the Landlord to obtain access to the site to
reinstate;
(e) prevention of reinstatement by any cause beyond the
control of the Landlord.
10. RE-ENTRY
(1) If an Event of Default occurs then notwithstanding the waiver of
any previous right of re-entry the Landlord may re-enter the
Property or any part of it when the Term shall cease but without
prejudice to any rights or remedies which may then have accrued
to any party against another in respect of any antecedent breach
(including the breach in respect of which re-entry is made) of
any of the covenants or obligations contained in this Lease.
(2) In this clause an Event of Default is any one of the following:
(a) the Rent or any part of it is in arrear and unpaid for
seven Business Days after becoming payable (whether
formally demanded or not); or
(b) a breach by the Tenant of any of the covenants by the
Tenant in this Lease; or
(c) the Tenant (being a company) is deemed unable to pay its
debts under section 123 of the Insolvency Act 1986 or the
Tenant or any Guarantor (being a company) passes a
resolution for winding-up or the directors of any of them
present a petition for winding-up or an order for the
winding-up of the Tenant or any Guarantor is made (other
than (in any such case) a voluntary winding-up of a
solvent company for the purposes of amalgamation or
reconstruction) or the Tenant or any Guarantor is
dissolved; or
(d) the Tenant (being a company) has an administrative or
other receiver or a manager appointed of the whole or any
part of its property or a petition is presented for an
administration order or an administration order is made in
respect of the Tenant or any Guarantor; or
(e) the Tenant (being a company) being registered as an
unlimited company is re-registered as a limited company
without the previous consent of the Landlord; or
(f) the Tenant (being an individual) presents a petition for a
bankruptcy order to be made against him or a bankruptcy
order is made against the Tenant or any Guarantor; or
(g) in relation to the Tenant (whether an individual or a
company) a proposal is made or the Tenant (whether a
company or an individual) enters into any kind of
composition, scheme of arrangement, compromise or
arrangement for the benefit of creditors or any class of
creditors or permits or suffers any distress or execution
to be levied on his goods; or
(h) there occurs in relation to the Tenant in any country or
territory in which any of them carries on business or to
the jurisdiction of whose courts any of them or any of the
property of any of them is subject to any event which
corresponds in that country or territory with any of those
mentioned in paragraphs (c) to (g) above or the Tenant
otherwise becomes subject in any such country or territory
to any law relating to insolvency, bankruptcy or winding
up.
11. GUARANTEE
The Guarantor covenants with the Landlord in the terms set out
in Schedule 5 in respect of the period during which Exodus
Internet Limited is bound by the Tenant's covenants and
conditions in this Lease and any additional period during which
Exodus Internet Limited is liable under an authorised guarantee
agreement.
12. VALUE ADDED TAX
(1) If any VAT is chargeable on any supply made to the Tenant under
the terms of this Lease, the Tenant shall pay by way of
additional consideration the amount of that VAT and the Landlord
shall provide a valid VAT invoice in relation to such VAT to the
Tenant.
(2) Without limiting sub-clause (1) above, each sum reserved or
payable by the Tenant under the terms of this Lease is exclusive
of VAT (if any) and is accordingly to be construed as a
reference to that sum plus any VAT in respect of it, and where
any sum is reserved as rent, the VAT is also reserved as rent.
(3) If VAT is chargeable on any supply made by the Landlord to the
Tenant for which a sum is not reserved or payable under the
terms of this Lease, the Tenant shall pay that VAT to the
Landlord against issue of a VAT invoice five Business Days
before the Landlord has to pay the VAT to Customs.
(4) Where under the terms of this Lease the Tenant is obliged:
(a) to make any payment to the Landlord or any other person
(including, without limitation, by way of service charge,
indemnity or reimbursement) by reference to any amount
incurred or which will or may be incurred by the Landlord
or any other person; or
(b) otherwise to pay all or part of the consideration for any
supply made to the Landlord or any other person,
then without prejudice to sub-clauses (1) to (3) above, the
Tenant shall not be obliged to pay any amount in respect of VAT
to the extent that it is recoverable by the Landlord or any
other person as appropriate.
(5) For the purposes of sub-clause (3) above, VAT is recoverable by
a person, if that person (or any company treated as a member of
the same VAT Group as that person) is entitled to credit for it
as input tax under sections 25 and 26 VATA 1994. For the
avoidance of doubt, VAT is not recoverable by a person only
because he could elect to waive exemption, but has not done so.
(6) Where for the purposes of this Lease it is necessary to
calculate or estimate the cost or value of anything, including
any building, structure, work, item, act or service, the cost or
value shall be calculated or estimated so as to include any VAT
which will or may be incurred in addition.
(7) This clause shall not affect the generality of clause 6(3)
(Outgoings).
(8) Where the Tenant pays to the Landlord VAT in respect of any
supply by the Landlord to the Tenant, the Landlord shall issue
the Tenant with a proper VAT invoice in respect of that VAT.
(9) If the Landlord wishes to make an election to waive the
exemption in respect of the Property under paragraph 2 of
Schedule 10, VATA 1994, the Landlord shall notify the Tenant, no
less than 20 Business Days before the election is to take
effect, of the election and the date on which it is intended to
take effect.
(10) If for any reason the election referred to in sub-clause (9)
above is validly revoked within three months after coming into
effect, the Landlord shall repay to the Tenant any VAT paid by
the Tenant, five Business Days after receipt by the Landlord
from Customs of acknowledgement of the revocation.
13. TRUSTEE LIABILITY PROVISION
(1) Lloyds Bank Plc has entered into this Lease in its capacity as
trustee of Schroder Exempt Property Unit Trust ("SEPUT") and
therefore notwithstanding any other provision contained in this
Lease neither Lloyds Bank Plc nor any successor trustee of SEPUT
shall be obliged to meet any liability or claim hereunder save
to the extent that the same can be met by it out of the Trust
Assets.
(2) For the purposes of this clause "Trust Assets" means the assets
for the time being held upon the trusts of SEPUT.
14. GENERAL
(1) Interest and powers of recovery
If any Rent or other sum payable under this Lease is not paid on
the day falling 7 days after the date on which it is due it
shall bear interest from the date on which it is due until the
date of payment at the Default Interest Rate compounded
quarterly. Every amount payable under this Lease shall be
reserved as rent and shall be recoverable as rent in arrear.
(2) Disputes
In relation to disputes:
(a) any statement in this Lease that any dispute shall be
referred to arbitration means that the dispute shall be
determined by a single arbitrator agreed by the Landlord
and the Tenant and failing agreement by a single
arbitrator appointed by the president or his deputy for
the time being of the Royal Institution of Chartered
Surveyors in accordance with the Arbitration Acts 1950 to
1979 and 1996; and
(b) any dispute between the Tenant and any tenant or occupier
of any other property owned or leased by the Landlord
about any right in connection with the use of the Property
and the other property or about any boundary structure
separating the Property from the other property shall be
determined by the Landlord acting reasonably.
(3) Compensation
Subject to the provisions of section 38(2) of the Landlord and
Tenant Act 1954 neither the Tenant nor any person deriving title
under the Tenant shall be entitled on quitting the Property to
any compensation under section 37 of that Act.
(4) Joint and several liability
Where the Tenant or any Guarantor is more than one person:
(a) those persons shall be jointly and severally responsible
in respect of every obligation undertaken by them under
this Lease; and
(b) the Landlord may release or compromise the liability of
any of those persons under this Lease or grant any time or
other indulgence without affecting the liability of any
other of them.
(5) Whole agreement
This Lease contains the whole agreement between the parties
relating to the transaction contemplated by this Lease and
supersedes all previous agreements between the parties relating
to the transaction.
(6) Representations
The Tenant acknowledges that in agreeing to enter into this
Lease, the Tenant has not relied on any representation,
warranty, collateral contract or other assurance. The Tenant
waives all rights and remedies which, but for this sub-clause,
might otherwise be available to it in respect of any such
representation, warranty, collateral contract or other
assurance, but nothing in this sub-clause shall limit or exclude
any liability for fraud.
(7) Rights of entry
All rights of entry exercisable by the Landlord extend to
include (without limitation) its employees, agents, surveyors,
contractors and licensees with or without plant, equipment,
appliances and materials.
(8) Interpretation of covenants
Any covenant by the Tenant not to do or omit anything shall be
construed as though the covenant was in addition a covenant not
to permit or suffer to be done or omitted that thing.
(9) Tenant's possessions
If after the Tenant has vacated the Property at the End of the
Term any of the Tenant's possessions remain on the Property and
the Tenant fails to remove them within fifteen Business Days
after being requested to do so by the Landlord then:
(a) the Landlord may dispose of the possessions as agent for
the Tenant;
(b) (if disposal is by sale) subject to paragraph (c) the
Landlord shall hold the proceeds of sale after deducting
the costs and expenses of removal, storage and sale
incurred by it to the order of the Tenant;
(c) if the Tenant fails to claim the proceeds of sale within
sixty Business Days of the date of the sale, the Landlord
may keep them;
(d) the Tenant indemnifies the Landlord against:
(i) any liability incurred by the Landlord to any third
party whose possessions have been sold by the
Landlord in the mistaken belief (which shall be
presumed) that the possessions belonged to the
Tenant;
(ii) any damage caused to the Property by the
possessions; and
(iii) all loss, damage, actions, proceedings, claims,
demands, costs, damages and expenses properly
incurred or suffered by or brought or awarded
against the Landlord as a result of the presence of
the possessions on the Property after the Tenant has
left it at the End of Term.
(10) Other land
Nothing contained in or implied by this Lease shall:
(a) impose or be deemed to impose any restriction on the use
of any land or buildings not comprised in this Lease; or
(b) give the Tenant:
(i) the benefit of or the right to enforce or to have
enforced or to prevent the release or modification
of any covenant, lease, condition or stipulation
entered into by any purchaser or tenant from the
Landlord in respect of any property not comprised in
this Lease; or
(ii) the right to prevent or restrict in any way the
development of any land not comprised in this Lease.
(11) Severance
To the extent that any provision of this Lease is rendered void
by section 25 of the Landlord and Tenant (Covenants) Act 1995,
that provision shall be severed from the remainder of this Lease
which shall remain in full force and effect. In this sub-clause
"provision" includes a clause, a sub-clause or a schedule or any
part of any of them.
(12) Perpetuity Period
The perpetuity period applicable to this Lease is 80 years
beginning on the date of this Lease and whenever in this Lease
either the Landlord or the Tenant is granted a future interest
it must vest within that period and if it has not it will be
void for remoteness.
(13) Notices in writing
Every notice, consent, approval or direction given under this
Lease shall be in writing.
(14) Counterparts
This lease may be executed in any number of counterparts, all of
which, taken together, shall constitute one and the same lease
and any party may enter into this lease by executing a
counterpart.
15. BREAK CLAUSE
(1) The Tenant may terminate this Lease on
[ ](the "Termination Date") by giving to
the Landlord not less than one year and one day's prior written
notice, subject to the Tenant:
(1) paying any arrears of rent payable pursuant to clause
4(1) and VAT thereon on or before the Termination Date;
(2) giving up vacant possession of the Property by the
Termination Date;
(3) making the payment specified in clause 15(2).
In such case the Term shall cease on the Termination Date and no
party shall have any further rights or obligations under this
Lease, but this shall not affect any rights or remedies which
may have accrued at the Termination Date to any party against
the other in respect of any prior breach of any of the covenants
and conditions contained in the lease.
(2) On the Termination Date the Tenant shall pay the Landlord a sum
calculated in accordance with clause 15(3) and shall hand over
to the Landlord the original Lease and all other title deeds and
documents relating to the Tenant's interest in the Property and
shall execute such documents as the Landlord shall reasonably
require in order to cancel any entry or title at H.M. Land
Registry.
(3) The Tenant shall pay a sum calculated in accordance with the
following formula:
R x IF2
---
IF1
where:
R = the annual rent payable pursuant to clause 4(1) of this Lease at
the Termination Date or the annual rent that would be payable but
for any cesser or abatement of rent;
Index Figure = the monthly index figure of rental growth published by Investment
Property Databank Limited in relation to industrial properties
in Greater London or in the event of such publication ceasing,
such other reasonably comparable index nominated by the Landlord;
IF1 = the Index Figure last published prior to the tenth anniversary
of the Term Commencement Date;
IF2 = the greater of (a) the Index Figure last published prior to the
Termination Date or (b) IF1.
16. NOTICES
(1) Any notice or other document served under this Lease may be
served in any way in which a notice required or authorised to be
served under section 196 of the Law of Property Act 1925 may be
served.
(2) During such period that the reversion to this Lease is vested in
the trustee of Schroder Exempt Property Unit Trust no notice
shall be deemed to be validly served on the Landlord unless a
copy of such notice is also served on Schroder Property
Investment Management Limited at 31 Gresham Street, London EC2V
7QA or such other address as the Landlord shall notify to the
Tenant.
17. GOVERNING LAW AND JURISDICTION
(1) This Lease is governed by and shall be construed in accordance
with English law.
(2) The Tenant and the Guarantor submit to the jurisdiction of the
English courts for all purposes relating to this Lease and
appoint Dibb Lupton Alsop (ref RSS) 125 London Wall London EC2Y
5AE (or such other person in the UK as the Guarantor and the
Tenant may from time to time nominate by written notice to the
Landlord) as agent of each of them for service of process and so
that each appointment shall be irrevocable until such time as
the Guarantor and the Tenant have given written notice to the
Landlord of an alternative person in the UK to accept service of
process on their behalf
I N W I T N E S S of which this Lease has been executed as a deed
and has been delivered on the date which first appears on page 1.
SCHEDULE 1
The Property
Land on the north side of Coronation Road, Park Royal London NW10
which for the purpose of identification only is shown edged red on the
Plan with the building on it having a Gross Internal Area (as defined
in the Code) of [ ] square feet and known as Unit 9,
Phase 3 Matrix Park, Coronation Road, Park Royal, London, NW10. In
this Schedule the Code means the fourth edition of the Code of
Measuring Practice published by the Royal Institution of Chartered
Surveyors and the Incorporated Society of Valuers and Auctioneers.
SCHEDULE 2
Rights granted to the Tenant
1. The right to use the Common Parts for all reasonable and
appropriate purposes connected with the use and enjoyment of the
Property pursuant to this Lease (subject to temporary
interruption for repair and maintenance).
2. The right to park 12 motor cars in the Car Spaces.
3. The right to use the Conduits in the Estate which serve the
Property (subject to temporary interruption for repair,
alteration or replacement).
4. The right of support and protection from the other parts of the
Estate as now enjoyed by the Property.
5. Subject to obtaining the prior written consent of the Landlord
(such consent not to be unreasonably withheld or delayed but
which consent may be made subject to reasonable requirements and
conditions of the Landlord) the right to lay within the Common
Parts but along routes reasonably specified by the Landlord
additional Conduits to serve the Property.
6. Subject to the giving of reasonable prior notice to the Landlord
and to compliance with all reasonable requirements of the
Landlord the right to enter the Common Parts in order to
maintain, repair, replace or alter any Conduits now or hereafter
exclusively serving the Property the Tenant causing to others as
little inconvenience and disturbance as practicable and making
good without delay all damage thereby occasioned.
SCHEDULE 3
Rights reserved to the Landlord
1. The right to use the Conduits in the Property which serve other
parts of the Estate, the right to install new Conduits for the
benefit of the remainder of the Estate and the right to repair,
maintain and renew existing and new Conduits.
2. The right to enter the Property to exercise any of the rights
referred to in this Schedule or for the purposes set out in
clause 6(6) PROVIDED THAT such right shall only be exercised
(except in case of emergency) by giving reasonable prior notice
to the Tenant and by complying with the Tenant's reasonable
security and confidentiality requirements.
3. All rights of light or air or other easements or rights over or
belonging to any other land or buildings (including other parts
of the Estate).
4. The right to build, re-build or carry out any works on any other
land or buildings (including other parts of the Estate) even if
it interferes with the passage of light or air to the Property
or causes nuisance, damage, annoyance or inconvenience to the
Tenant or occupier of the Property by noise, dust, vibration or
otherwise provided that it does not materially affect the
ability of the Tenant or the occupier to use the Property for
any purpose permitted by this Lease.
5. The support and protection from the Property enjoyed by other
parts of the Estate.
6. The right to build, alter and install and afterwards to maintain
buildings, structures and fixtures on, into or projecting over
or under or taking support from the Property (but those
buildings, structures and fixtures shall not become part of the
Property).
SCHEDULE 4
Matters affecting the freehold
All matters registered or pending registration as at the date hereof
in the Property and Charges Registers of Title Number AGL54738
maintained by HM Land Registry (with the exception of Financial
charges, if any) and the Deed dated 7th August 1998 made between the
Landlord and Railtrack insofar as such matters affect the Property
still subsist and are capable of enforcement
SCHEDULE 5
Guarantee Provisions
1. The Guarantor guarantees to the Landlord the due and punctual
payment and performance by the Tenant of all the tenant's
obligations and liabilities under this Lease and shall indemnify
the Landlord against all losses, damages, costs and expenses
arising or incurred by the Landlord as a result of the non-
payment or non-performance of those obligations or liabilities.
2. The obligations of the Guarantor under this Lease:
(a) constitute a direct, primary and unconditional liability
to pay on demand to the Landlord any sum which the Tenant
is liable to pay under this Lease and to perform on demand
by the Landlord any obligation of the Tenant under this
Lease without the need for any recourse on the part of the
Landlord against the Tenant;
(b) will not be affected by:
(i) any time or indulgence granted to the Tenant by the
Landlord;
(ii) any legal limitation, disability or other
circumstances relating to the Tenant or any
irregularity, unenforceability or invalidity of any
obligations of the Tenant under this Lease;
(iii) any licence or consent granted to the Tenant or any
variation in the terms of this Lease save as
provided in section 18 of the Landlord and Tenant
(Covenants) Act 1995;
(iv) the release of one or more of the parties defined as
the Guarantor (if more than one); or
(v) any other act, omission, matter, event or thing
whereby (but for this provision) the Guarantor would
be exonerated in whole or in part from the guarantee
other than a release by deed given by the Landlord.
3. So long as this guarantee remains in force the Guarantor shall
not:
(a) in the event of any bankruptcy, liquidation,
rehabilitation, moratorium or other insolvency proceedings
relating to the Tenant, claim or prove as creditor in
competition with the Landlord; or
(b) be entitled to claim or participate in any security held
by the Landlord in respect of the obligations of the
Tenant under this Lease; or
(c) exercise any right of set-off against the Tenant.
4. If the Landlord brings proceedings against the Tenant, the
Guarantor shall be bound by any findings of fact, interim or
final award or interlocutory or final judgment made by an
arbitrator or the court in those proceedings in so far as the
same relate to the subject matter of this Lease PROVIDED THAT
the Landlord shall have served a copy of the writ summons
petition or similar process which initiated such proceedings on
the Guarantor before the expiry of 7 days after such proceedings
were initiated
5. If:
(a) the Tenant (being a company) enters into liquidation and
the liquidator disclaims this Lease; or
(b) the Tenant (being a company) is dissolved and the Crown
disclaims this Lease; or
(c) the Tenant (being an individual) becomes bankrupt and the
trustee in bankruptcy disclaims this Lease; or
(d) this Lease is forfeited,
then within six months after the disclaimer or forfeiture the
Landlord may require the Guarantor by notice to accept a lease
of the Property for a term equivalent to the residue which would
have remained of the Term if there had been no disclaimer or
forfeiture at the same rents and subject to the same covenants
and conditions (including those as to the review of rent) as are
reserved by and contained in this Lease (with the exception of
this Schedule).
6. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer or forfeiture and the
Guarantor shall be liable for all payments due under the new
lease as from the date of disclaimer or forfeiture as if the new
lease had been granted on the date of disclaimer or forfeiture.
7. The Guarantor or his personal representatives shall pay the
Landlord's costs of and accept the new lease and shall execute
and deliver to the Landlord a counterpart of it.
8. If the Landlord does not require the Guarantor to take a Lease
of the Property, the Guarantor shall pay to the Landlord on
demand a sum equal to the rent that would have been payable
under this Lease but for the disclaimer or forfeiture in respect
of the period from the date of the disclaimer or forfeiture
until the date which is six months after the date of the
disclaimer or forfeiture or the date on which the Property has
been re-let by the Landlord, whichever first occurs.
9. If any VAT is payable by the Tenant to the Landlord under the
terms of the Lease, the Guarantor's obligation shall extend to
that VAT. If the Guarantor makes any payment in respect of VAT,
the Landlord's obligation to issue a VAT invoice to the Tenant
under the Lease in respect of that VAT shall not be affected,
and the Landlord shall not be under any obligation to issue a
VAT invoice to the Guarantor in respect of that VAT.
SCHEDULE 6
Authorised guarantee provisions
1. The Guarantor guarantees to the Landlord the performance by the
Assignee throughout the Guarantee Period of each of the
covenants falling to be complied with by the tenant under this
Lease and shall indemnify the Landlord against all losses,
damages, costs and expenses arising or incurred by the Landlord
as a result of such non-performance.
2. The obligations of the Guarantor under this guarantee will not
be affected by:
(a) any time or indulgence granted to the Assignee by the
Landlord;
(b) any legal limitation, disability or other circumstances
relating to the Assignee or any irregularity,
unenforceability or invalidity of any obligations of the
Assignee under this Lease;
(c) any licence or consent granted to the Assignee or any
variation in the terms of this Lease save as provided in
section 18 of the Act;
(d) the release of one or more of the parties defined as the
Guarantor (if more than one); or
(e) any other act, omission, matter, event or thing whereby
(but for this provision) the Guarantor would be exonerated
in whole or in part from the guarantee other than a
release under seal given by the Landlord.
3. The Guarantor is liable to the Landlord under this guarantee as
sole or principal debtor and the obligations of the Guarantor
under this guarantee constitute a direct, primary and
unconditional liability to pay on demand to the Landlord any sum
which the Assignee is liable to pay under this Lease and to
perform on demand by the Landlord any obligation of the Assignee
under this Lease without the need for any recourse on the part
of the Landlord against the Assignee. If the Landlord brings
proceedings against the Assignee, the Guarantor shall be bound
by any findings of fact, interim or final award or interlocutory
or final judgment made by an arbitrator or the court in those
proceedings.
4. If during the Guarantee Period the Assignee (being a company)
enters into liquidation and the liquidator disclaims this Lease,
or the Assignee (being a company) is dissolved and the Crown
disclaims this Lease, or the Assignee (being an individual)
becomes bankrupt and the trustee in bankruptcy disclaims this
Lease, then within six months after the disclaimer the Landlord
may require the Guarantor by notice to enter into a new lease of
the Property for a term equivalent to the residue which would
have remained of the term granted by this Lease if there had
been no disclaimer at the same rents and subject to the same
covenants and conditions (including as to the review of rent) as
are reserved by and contained in this Lease.
5. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer and the Guarantor
shall be liable for all payments due under the new lease as from
the date of disclaimer as if the new lease had been granted on
the date of disclaimer.
6. The Guarantor shall pay the Landlord's costs of and accept the
new lease and shall execute and deliver to the Landlord a
counterpart of it.
7. If the Landlord does not require the Guarantor to take a new
lease of the Property the Guarantor shall pay to the Landlord on
demand a sum equal to the rents that would have been payable
under this Lease but for the disclaimer in respect of the period
from the date of the disclaimer until the date which is six
months after the date of the disclaimer or the date on which the
Property has been re-let by the Landlord, whichever first
occurs.
8. During the Guarantee Period the Guarantor shall not;
(a) in the event of any bankruptcy, liquidation,
rehabilitation, moratorium or other insolvency proceedings
relating to the Assignee claim or prove as creditor in
competition with the Landlord; or
(b) be entitled to claim or participate in any security held
by the Landlord in respect of the Assignee's obligations
to the Landlord under this Lease; or
(c) exercise any right of set off against the Assignee.
9. To the extent that any provision of this guarantee does not
conform with section 16 of the Act, that provision shall be
severed from the remainder of this guarantee and this guarantee
shall have effect as if it excluded that provision.
10 If any VAT is payable by the Tenant to the Landlord under the
terms of the Lease, the Guarantor's obligation shall extend to
that VAT. If the Guarantor makes any payment in respect of VAT,
the Landlord's obligation to issue a VAT invoice to the Assignee
under the Lease in respect of that VAT shall not be affected,
and the Landlord shall not be under any obligation to issue a
VAT invoice to the Guarantor in respect of that VAT.
11. In this Schedule:
"Act" means the Landlord and Tenant (Covenants) Act 1995;
"Assignee" means [insert name of assignee in respect of whom the
Tenant is entering into the authorised guarantee agreement];
"Guarantee Period" means the period during which the Assignee is
bound by the covenants by the Tenant in this Lease; and
"Guarantor" means the outgoing Tenant.
SCHEDULE 7
Service Charge Costs
1. The cost of inspecting, repairing, maintaining, cleaning,
decorating and lighting the whole of the Retained Areas
(including any party walls separating Lettable Areas) including
any retaining walls situate on the Estate and the boundary walls
and fences of the Estate and all Conduits serving the Estate
(excluding those serving solely any of the Lettable Areas).
2. The cost of providing the services referred to in clause 7(3).
3. The cost of the maintenance (including planting) of all open and
landscaped areas within the Retained Area.
4. The cost of the erection and maintenance of directional or other
signs or notice boards relating to the Estate or it occupiers.
5. The cost of the establishment and enforcement of regulations for
the benefit or better ordering of the Estate or any part of the
Estate.
6. The cost of providing caretaking and security services to the
Estate.
7. The cost of marking out the roads, footpaths, service areas,
loading bays and all other relevant parts of the Retained Areas.
8. The cost of refuse disposal.
9. The cost of all fuel for the functions referred to in the other
paragraphs of this Schedule.
10. All Outgoings (as defined in clause 6(3)) assessed, charged or
imposed on the Estate as a whole and the Retained Areas.
11. Any amount which the Landlord may be called upon to pay as a
contribution towards the expense of making, repairing,
maintaining, cleaning or lighting anything used by the Estate
and any nearby property.
12. The cost of complying with, making representations against or
contesting the incidence of any enactment relating or alleged to
relate to the Estate.
13. All professional fees reasonably and properly incurred by the
Landlord in connection with the administration and the general
management of the Estate including (without limitation):
(a) the Landlord's agent's fees in connection with management
of the Estate (excluding rent collection); and
(b) fees payable in connection with the service charge
account.
14. The reasonable fees of the Landlord or any company associated
with the Landlord where the Landlord or that company, rather
than a third party, undertakes any obligations under this Lease
or other function referred to in this Schedule.
15. The interest and fees on borrowing any money to finance any of
the functions referred to in this Schedule.
16. Any other sum properly incurred by the Landlord in connection
with the management of the Estate.
SIGNED as a deed by )
Trust Manager )
as attorney for LLOYDS BANK PLC )
in the presence of: )
Witness's
Signature: ...............................................
Name : ...................................................
Address : ................................................
...............................................................
...............................................................
EXECUTED as a DEED by EXODUS
INTERNET LIMITED acting by
two Directors or a Director and its
Company Secretary
Director
Director/Secretary
SIGNED as a DEED by EXODUS
COMMUNICATIONS Plc acting by
Richard Stoltz its Authorised Signatory
in accordance with the constitution of the
Company and the country in which it
is incorporated
Authorised Signatory
DATED 1999
LLOYDS BANK PLC
(as trustee of Schroder Exempt Property Unit Trust)
- and -
EXODUS INTERNET LIMITED
- and -
EXODUS COMMUNICATIONS INC
----------------------------------------
L E A S E
of property known as
Unit 9 Phase 3 Matrix Park,
Coronation Road, Park Royal, London NW10
----------------------------------------
ALLEN & OVERY
London
PY0447813.01
<PAGE>
DATED 1999
--------------------------------------------
LLOYDS BANK PLC (as Trustee for SCHRODER EXEMPT PROPERTY UNIT TRUST)(1)
- and -
EXODUS INTERNET LIMITED (2)
-----------------------------------------
RENT SECURITY DEPOSIT DEED
Relating to Unit 9 Phase 3 Matrix Park
Coronation Road Park Royal London NW10
-----------------------------------------
WILDE SAPTE
1 Fleet Place
London EC4M 7WS
Tel. 0171 246 7000
Fax. 0171 246 7777
Ref: TLF/SJG/145764/PY447840.01
TABLE OF CONTENTS
Clause Heading Page No.
1. Definitions and Interpretation 1
2. The Deposit 2
3. The Deposit Account 3
4. Withdrawals from and Maintenance of the Deposit Account 3
5. Transfer of the Landlord's Interest 4
6. Release of Deposit 4
7. Interest 5
8. Miscellaneous 5
THIS DEED is made the day of 1999
BETWEEN
(1) LLOYDS BANK PLC (as Trustee for SCHRODER EXEMPT PROPERTY UNIT
TRUST) of 71 Lombard Street London EC3P 3BS ("the Landlord")
(2) EXODUS INTERNET LIMITED whose registered office is at Fountain
Precinct Balm Green Sheffield South Yorkshire S1 1RZ
(Company Number 3591136) ("the Tenant")
WHEREAS
(A) This Deed is supplemental to the Lease
(B) The Landlord is entitled to the reversion immediately
expectant upon the determination of the term of the Lease and
the Tenant is entitled to the residue of the term of the Lease
WITNESSES as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Deed unless the context otherwise requires or except
as otherwise expressly provided
the "Bank" means Lloyds Bank PLC or such other London Clearing
Bank or registered building society of the Landlord's choice
at which the Deposit Account is maintained from time to time
the "Deposit" means the moneys referred to in Clause 2 below
together with any interest credited to the Deposit Account and
any moneys received from the Tenant and added to the Deposit
Account
the "Deposit Account" means such interest bearing deposit
account opened at the Bank in the Landlord's name and into
which the Deposit is paid by the Landlord
the "Landlord" (where the context so admits) shall include its
successors in title and personal representatives
the "Lease" means the lease dated today made between the
Landlord and Tenant of the Property for a term of 25 years
from [ ] 1999 and includes all documents made
supplemental or pursuant thereto
"Net Asset Value" means tangible net asset value excluding
goodwill and intellectual property determined in accordance
with UK Accounting Principles.
"Net Profits" means net trading profit (excluding
extraordinary and exceptional items) or net investment income
(after deduction of management expenses) in each case after
tax and determined in accordance with UK Accounting Principles
the "Property" means Unit 9 Phase 3 Matrix Park Coronation
Road Park Royal London NW10 being the property demised by
the Lease
"Rental Liability" means a sum equal to the rent from time to
time payable under the Lease or (if higher) the Landlord's
reasonable estimate of the anticipated rent payable under the
Lease following any rent review outstanding during the Years
of Account
"UK Accounting Principles" means UK accounting principles
generally accepted from time to time and consistently applied
"Years of Account" means three consecutive years of account
1.2 Interpretation
In this Deed (unless otherwise provided)
1.2.1 clause headings are inserted for ease of reference
only and shall not affect construction
1.2.2 reference to clauses and sub-clauses are to the
clauses and sub-clauses of and to this Deed and
1.2.3 words denoting one gender include all genders, words
denoting individuals or persons include corporations
and trusts and vice versa, words denoting the
singular include the plural and vice versa, and words
denoting the whole include a reference to any part
thereof
2. THE DEPOSIT
2.1 The Landlord hereby acknowledges receipt of a bank draft
issued by a bank which is a member of CHAPS Limited or of the
receipt of monies by telegraphic transfer to its solicitors
account in the sum of L [insert amount equal to one year's
rent] plus Value Added Tax such payment being made as security
for the due performance and observance of the covenants
agreements and conditions on the part of the Tenant under the
Lease and all losses costs and expenses which the Landlord may
incur by reason of or consequent upon any breach of those
covenants agreements and conditions and (without prejudice to
the generality of the foregoing) as more particularly provided
in Clause 4 below and the Landlord shall be entitled to set
off the Deposit against any sums owed to it under the Lease
2.2 Following the ascertainment of a revised rent expressed as an
annual amount (the "Revised Rent") in accordance with clause 4
of the Lease the Tenant shall pay to the Landlord by way of a
bank draft issued by a bank which is a member of CHAPS Limited
within seven days of such ascertainment an additional sum
calculated in accordance with the following
formula (the "Additional Sum") plus VAT on the Additional Sum:
L X = L A - B
Where:
X = the additional sum to be paid to the Landlord in accordance with this
Clause
A = the amount of the Revised Rent
B = the yearly rent payable under clause 4 of the Lease immediately
prior to the ascertainment of the Revised Rent or the yearly rent
which would be payable immediately prior to such ascertainment
but for any abatement or suspension of rent under the Lease
2.3 Within five Working Days of receipt of the Additional Sum by
the Landlord the Landlord shall pay the Additional Sum into
the Deposit Account and the Additional Sum shall thereafter
form part of the Deposit against which the Landlord shall be
entitled to set off any sums owed to it under the Lease in
accordance with this Deed
3. THE DEPOSIT ACCOUNT
3.1 The Landlord shall forthwith place the Deposit in the Deposit
Account until withdrawal or repayment of the Deposit in
accordance with the terms of Clause 6 below
3.2 The Landlord shall also credit to the Deposit Account any sums
subsequently paid to it by the Tenant under Clause 4.2
4. WITHDRAWALS FROM AND MAINTENANCE OF THE DEPOSIT ACCOUNT
4.1 The Landlord and Tenant hereby agree that without prejudice to
any other right or remedy which the Landlord may have under
this Deed or the Lease the Landlord shall be entitled on 5
days prior written notice to the Tenant to withdraw from the
Deposit from time to time the sums specified below which shall
thereupon become the absolute property of the Landlord
4.1.1 any liquidated and ascertained sum (including
interest) (whether rent or otherwise and whether or
not any formal demand has been made) which is due to
the Landlord from the Tenant in respect of the Lease
and which is unpaid for a period of fourteen days
after the due date
4.1.2 any liquidated and ascertained loss, expense, cost,
claim, liability or damage suffered or incurred by
the Landlord as the result of any breach of any
covenant agreement or condition on the part of the
Tenant under the Lease
4.2 The Landlord shall notify the Tenant in writing within
fourteen days after any withdrawal of any sum from the Deposit
and the reason for such withdrawal and (if the Lease is still
subsisting) the Tenant hereby covenants forthwith to pay the
Landlord for payment into the Deposit Account a bank draft
issued by a bank which is a member of CHAPS Limited for such
further sum as shall restore the Deposit to its balance prior
to such withdrawal
4.3 It is further agreed that if the Lease shall be forfeited or
disclaimed by any liquidator or trustee in bankruptcy of the
Tenant or otherwise determined otherwise than by agreement
(which agreement shall include the valid exercise of an option
to determine the Lease) the Deposit shall continue to be
available to the Landlord in the manner set out above until it
shall be exhausted or until there shall be no further
liability of the Tenant to the Landlord whereupon any
remaining balance of the Deposit shall be released to the
Tenant as soon as reasonably practicable
4.4 The Landlord should as soon as reasonably practicable pay into
the Deposit Account the full amount of any sum (together with
Interest (as defined in the Lease)) shown to have been
incorrectly withdrawn by the Landlord or if earlier following
the date on which the Landlord first becomes aware of an error
having been made
5. TRANSFER OF THE LANDLORD'S INTEREST
If the Landlord transfers the reversion immediately expectant
upon the determination of the Lease before the Deposit has
become repayable to the Tenant pursuant to Clause 6 either
5.1 5.1.1 the Tenant shall if required by (and at the cost of)
the Landlord such costs if incurred by the Tenant to
be reasonable, enter into a rent deposit deed with
the transferee of such reversion in identical terms
to this Deed (but with the name of the transferee
being substituted for the name of the Landlord) and
5.1.2 the Landlord shall procure that any transferee enters
into a rent deposit deed with the Tenant in identical
terms to this Deed (but with the transferee's name
substituted for the name of the Landlord) and on
completion of such deed transfer the balance of the
Deposit to such account as shall have been opened by
the transferee (after the deduction of any sum
withdrawn pursuant to Clause 4 above) and upon
serving notice of such transfer on the Tenant shall
forthwith be released automatically from any further
liability under the terms of this Deed
or
5.2 The Landlord may instead release the balance of the Deposit to
the Tenant (after the deduction of any sum withdrawn pursuant
to Clause 4 above)
6. RELEASE OF DEPOSIT
6.1 The Deposit or such part thereof as shall be remaining shall
be released by the Landlord and repaid to the Tenant on the
earlier of:
6.1.1 one calendar month after the expiration or sooner
determination (by agreement) of the term granted by
the Lease or its determination in consequence of the
exercise by the Tenant of any option to determine
conferred on it by the Lease and in either case
vacant possession of the premises demised by the
Lease being given to the Landlord; or
6.1.2 the Tenant demonstrating that it has made Net Profits
for each of the immediately preceding Years of
Account at least equal to three times the Rental
Liability and that in each of those Years of Account
it has a Net Asset Value of not less than five times
the Rental Liability
and provided always the Tenant has paid to the Landlord all
sums set out as in Clause 4 above (failing which the Landlord
may deduct such sums as are properly due from the Deposit) the
Landlord shall then release the balance to the Tenant within 5
working days of receipt of a written request from the Tenant
for such release
6.2 The Tenant may demonstrate that it satisfies the requirements
of Clause 6.1.2 by means of audited accounts or by means of
such other evidence as shall be reasonably acceptable to the
Landlord
7. INTEREST
7.1 The Landlord shall use all reasonable endeavours to select a
Deposit Account which yields the best rate of interest
reasonably obtainable from the Bank having regard to the
provisions of this Deed
7.2 The interest accruing on the Deposit shall belong to the
Tenant but in the first instance shall be used in or towards
payment of any sums payable by the Tenant pursuant to clauses
2.3 and 4.2 of this Deed and subject thereto such interest
(less tax properly deducted) shall be paid to the Tenant on an
annual basis
7.3 All tax payable in respect of interest accruing on the Deposit
shall be paid by the Tenant from its own money
8. MISCELLANEOUS
It is hereby agreed and declared that:
8.1 The existence of the Deposit shall not prejudice the
Landlord's ability to proceed against the Tenant for
any breach of any covenant agreement or condition on
the part of the Tenant under the Lease or entitle the
Tenant to withhold any moneys or fail to perform any
covenant agreement or condition under the Lease and
the Deposit shall not be regarded as an advance
payment of rent
8.2 The proviso for re-entry contained in the Lease shall
be exercisable as well upon any breach of any
covenant or obligation on the part of the Tenant
contained in this Deed as on the happening of any of
the events mentioned in the Lease
8.3 The rights of the Landlord under this Deed do not
limit its rights under the Lease
8.4 The provisions as to notices contained in the Lease
shall apply to notices served pursuant to this Deed
8.5 The Landlord may at any time terminate this Deed by
paying the Deposit to the Tenant and on doing so will
automatically be released from all liabilities and
obligations under this Deed except in relation to
rights of the Tenant that have arisen before the
termination
8.6 Any termination under clause 8.5 and any payment of
the Deposit shall not affect the Landlord's rights
under the Lease
8.7 The Tenant shall not assign to any person whatsoever
the benefit of any of the Tenant's rights under this
Deed, nor assign, transfer or otherwise dispose of
all or any part of its rights, title or interest in
or to the Deposit, nor create any further encumbrance
or other security interest over the whole or any part
of the Deposit
8.8 If any provision of this Deed is or becomes void or
unenforceable in whole or in part that provision to
that extent is to be deemed not to form part of this
Deed but the validity and enforceability of the
remainder of that provision or of the Deed are not to
be affected
8.9 This Agreement shall be governed by and construed in
accordance with English law and the parties
irrevocably agree that the courts of England are to
have exclusive jurisdiction to settle any disputes
which may arise out of or in connection with this
Agreement
AS WITNESS this Deed (which shall be delivered when dated) has been
executed by the parties or their duly authorised representatives on
the date first stated above
SIGNED and DELIVERED as a DEED )
by [ ] )
Trust Manager as attorney for )
LLOYDS BANK PLC in the presence of: )
EXECUTED and DELIVERED as a DEED by )
EXODUS INTERNET LIMITED acting by two )
Directors or a Director and its )
Company Secretary )
Director
Director/Company Secretary
EXHIBIT 10.58
EXODUS SUBLEASE
THIS EXODUS SUBLEASE ("Sublease"), is made and effective this 8th day of
June, 1999 (if and only if it is executed below where indicated by
Sublessor, Sublessee and Lessor), by and between TALUS CORPORATION, a
California corporation, c/o E-M Solutions, 120 Ninth Avenue, Longmont,
CO 80501 ("Sublessor"), and EXODUS COMMUNICATIONS, INC., a Delaware
corporation, 2831 Mission College Blvd., Santa Clara, CA 95054
("Sublessee"), Talus Corporation and Exodus Communications, Inc. are
referred to collectively as the "Parties" and individually as a
"Party").
RECITALS:
A. Sublessor, formerly known as Scientific Custom Metal Products
International, Inc., as Lessee, entered into a Standard
Industrial/Commercial Single-Tenant Lease - Net including Exhibit
(A) with Mopar, LLC as lessor, dated as of January 25, 1996, as
amended by that certain Lease Amendment, identical counterparts of
which have been dated as of November 14, 1997, and November 20, 1997
(as so amended, the "Original Lease"), for the lease of a portion of
an industrial building of approximately 94,500 square feet (the
"Building") located at 2403 Walsh Avenue, Santa Clara, California.
G&I Walsh LLC, a Delaware limited liability company ("Lessor") has
purchased the Building from Mopar, LLC, and is the present Lessor
under the Lease. Except as provided herein, terms shall have the
same meanings in this Sublease as in the Lease (as that term) is
hereinafter defined).
B. The Original Lease has been amended by a further Second Amendment to
Lease dated as of January 29, 1999 (the "January Lease Amendment"),
and a Third Amendment to Lease dated as of June 8, 1999 (the "June
Lease Amendment"). The Original Lease as amended by the January
Lease Amendment and the June Lease Amendment, all of which are
attached hereto, are hereinafter collectively referred to as the
"Lease."
C. On October 3, 1996, Sublessor agreed to lease to Computer Access
Technology Corporation ("CAT"), approximately 12,026 rentable feet
in the Building, more or less ("CAT Sublease Premises"), as well as
other terms and conditions pursuant to the Standard Office Lease -
Gross with attached First Addendum to Lease Agreement (with attached
Exhibits A and B) ("Existing CAT Sublease"), also attached hereto.
Paragraph 62 of the Existing CAT Sublease generally provides CAT the
right to extend the term of the CAT Sublease for a period of five
(5) years (the "CAT Sublease Option").
D. From the Commencement Date (as defined below) prior to any vacating
of the CAT Sublease Premises by CAT, the premises leased to
Sublessor under the Lease (i.e. consisting of approximately 94,500
square feet at 2403 Walsh Avenue), less the CAT Sublease Premises,
is hereinafter referred to as the "Premises." On and after any date
that CAT vacates (for any reason) the CAT Sublease Premises when
Sublessee is obligated herein to also rent the CAT Sublease
Premises, and as to any references which relate to this time period
(i.e., when Sublessee is obligated to also rent the CAT Sublease
Premises), the term "Premises" herein shall refer to the entire
"Premises" leased to Sublessor under the Original Lease (regardless
of whether the CAT Sublease Premises is also expressly mentioned).
E. Sublessee's signature below evidences its receipt and careful review
of the terms and conditions contained in all of the above-mentioned
documents.
F. Sublessor desires to sublease to Sublessee and Sublessee desires to
sublease from Sublessor the Premises on the terms and conditions set
forth in this Sublease.
For and in consideration of the foregoing recitals, the mutual
promises and covenants of the parties, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Sublessor and Sublessee hereby covenant and agree as
follows:
ARTICLE I
BASIC SUBLEASE PROVISIONS
1.1 Subleased Premises. Sublessor hereby subleases to Sublessee and
Sublessee hereby rents from Sublessor the Premises. On and after any
date prior to June 30, 2003 that CAT vacates the CAT Sublease Premises,
as long as Sublessee is not then in default under the terms of this
Sublease, and no event shall have occurred and be continuing which,
under the terms of this Sublease would constitute a default under the
Sublease after the giving of notice or passage of time, or both,
Sublessee shall immediately obtain possession and begin renting the CAT
Sublease Premises (which thereafter shall be included in the
"Premises"). Notwithstanding anything to the contrary, in the event that
Sublessee is or may be in default under the terms of this Sublease as
described above, so long as Sublessor was able to deliver possession of
the CAT Sublease Premises to Sublessee, Sublessee shall nevertheless
thereafter also be liable for all Base Rent, Additional Rent and all
other obligations relating to the CAT Sublease Premises, regardless of
whether possession is actually granted to Sublessee. Sublessor shall not
be responsible for any delays in delivering possession of the CAT
Sublease Premises to Sublessee so long as it uses reasonable steps to
deliver possession to Sublessee as soon as such becomes available. In
the event that Sublessor is unable, notwithstanding its reasonable
steps, to deliver possession of the CAT Sublease Premises to Sublessee,
Sublessee's obligations to pay Base Rent (as set forth below) and other
Rent (as set forth below) which is attributable to the CAT Sublease
Premises shall be suspended until Sublessor is able to deliver
possession of the CAT Sublease Premises. In other words, unless and
until Sublessor is able to deliver possession of the CAT Sublease
Premises, Sublessee shall pay only Eighty-Seven and 27/100 percent
(87.27 %) of the Base Rent amounts for the applicable period(s) set
forth below in section 2.1 plus those costs for Additional Rent set
forth in section 2.2 (in lieu of section 2.3) below, in addition to its
other obligations under the Sublease. If and after Sublessor is also
able to deliver possession of the CAT Sublease Premises, Sublessee shall
be responsible and pay One Hundred and 00/100 percent (100%) of the Base
Rent amounts for the applicable period(s) set forth below in section 2.1
plus those costs for Additional Rent set forth in section 2.3 below, in
addition to its other obligations under the Sublease. Additionally,
Sublessee hereby agrees to assume (and Sublessor hereby agrees to assign
to Sublessee) any and all obligations and rights of Sublessor,
commencing on July 1, 2003, which relate in any manner to the CAT
Sublease including, without limitation, the CAT Sublease Option, and
further, hereby agrees to defend, indemnify and hold Sublessor harmless
from and against any claims, losses, damages, penalties and other costs,
actions, judgments, expenses and other liability (including, without
limitation, attorneys' fees, expert witness fees and other legal costs),
made, suffered and/or brought by CAT (or its assignees) which relate in
any manner to the CAT Sublease including, without limitation, the CAT
Sublease Option (which involves any breach by Sublessee of any terms of
this Sublease which in any manner concerns CAT). By way of example but
not limitation, if CAT exercises the CAT Sublease Option and CAT brings
a claim against Sublessor arising from some alleged failure occurring on
or after July 1, 2003, on the part of Sublessor to honor some
provision(s) of the CAT Sublease (extended by the CAT Sublease Option),
Sublessee shall be solely responsible for any such claim and to defend,
indemnify and hold Sublessor harmless from any such claim. In the event
that the Lease is terminated due to a Breach by Sublessor under the
terms of the Lease and Sublessee begins Early Commencement under the
Standard Industrial/Commercial Single-Lessee Lease -- Net, dated June 4,
1999, by and between G&I Walsh LLC and Sublessee, Sublessee also hereby
agrees to assume (and Sublessor hereby agrees to assign to Sublessee)
all obligations and rights of Sublessor which relate in any manner to
the CAT Sublease including, without limitation, the CAT Sublease Option;
further, in addition to its other obligations under this Sublease,
Sublessee hereby agrees to defend, indemnify and hold Sublessor harmless
from and against any claims, losses, damages, penalties and other costs,
actions, judgments, expenses and other liability (including, without
limitation, attorneys' fees, expert witness fees and other legal costs),
made, suffered and/or brought by CAT (or its assignees) in any manner
related to the CAT Sublease including, without limitation, the CAT
Sublease Option which relates to any time period on and after the date
of automatic assignment to Sublessee and Sublessee's assumption of the
CAT Sublease. Notwithstanding the preceding, Sublessor agrees that it
will not amend or modify the CAT Sublease without Sublessee's consent if
such amendment or modification would alter Sublessee's rights or
obligations regarding the CAT Sublease, including the CAT Sublease
Option, in a material manner.
1.2 Use. Sublessee shall use the Premises as data center processing
and other lawful related uses (restricted, however, for non-hazardous
purposes) only ("Agreed Use"). With respect to the foregoing
restrictions on the use of the Premises, Sublessee agrees to abide by
such restrictions unless Sublessor gives its advance written consent to
another use. Sublessee agrees to comply with all zoning and land use
laws and requirements imposed on the Premises.
1.3 Term. The Term of this Sublease shall commence on the first day of
July, 1999 (hereinafter called the "Commencement Date") and shall end at
twelve o'clock midnight on June 30, 2003 (hereinafter called the
"Expiration Date"), or shall end on such earlier date pursuant to any of
the terms and conditions of this Sublease (which in this and other
provisions herein includes, unless expressly indicated otherwise, the
Incorporated Lease). Notwithstanding the preceding, where the context of
this Sublease requires such an interpretation, this Sublease shall
survive the termination of this Sublease.
1.4 Condition of Subleased Premises. Sublessee represents that it has
inspected the Premises (including the CAT Sublease Premises) and is
familiar with the condition of every part thereof including, without
limitation, the occupancy and operation of CAT. Sublessee agrees that it
enters into this Sublease without any representations, promises,
agreements or warranties by Sublessor, its officers, employees, agents,
or other representatives, as to the condition or fitness for a
particular purpose or use of the Premises (including the CAT Sublease
Premises) or any part, element or component thereof, including, but not
limited to, ADA compliance or lack thereof, electrical, plumbing, fire
sprinkler, life safety, lighting, or heating ventilating and air
conditioning ("HVAC") systems, loading doors, roof, exterior walls,
foundations or other structural elements, except as provided in section
4.1(c) below, Sublessee agrees to accept the Premises (including but not
limited to the CAT Sublease Premises) in an "AS-IS, WITH ALL FAULTS"
basis, without requiring any alteration, addition, installation, repair,
decoration or other improvement to be made by Sublessor or at
Sublessor's expense.
1.5 Services. Without limiting the effect of the provisions of the
incorporated Lease relating thereto, Sublessor shall not be obligated to
provide any services to Sublessee. Sublessor makes no representations or
warranties as to the availability or adequacy of services.
1.6 Vehicle Parking. So long as Sublessee is not in default, and
subject to the rules and regulations promulgated from time to time by
Sublessor and/or Lessor, Sublessee shall be entitled to use 49.7% of the
parking spaces for the 2401/2403 Walsh Avenue building project (less,
unless and until Sublessee's rental of the CAT Lease Premises, 40
spaces), for use by its agents', servants', employees' and invitees'
(individually and collectively referred to as "Sublessee's Agents")
passenger vehicles with 8 or less capacity only. If Sublessor in its
sole discretion agrees in writing to permit Sublessee to use any parking
spaces for any other purpose (e.g., temporary storage of materials,
satellite dish installation, etc.), Sublessee's then current number of
parking spaces will automatically be reduced by the number of spaces
utilized for such purpose plus any spaces which cannot be reasonably
used for normal parking as a result thereof. Sublessee agrees that
overnight parking is prohibited. Sublessee also agrees that under no
circumstances shall Sublessee's Agents in any manner interfere with
occupancy and/or access to the property known as 2401 Walsh Avenue,
including, without limitation, interference with the ingress or egress
to the building, parking lot or shipping and receiving areas. If
Sublessee commits, permits or allows any of the prohibited activities
described in the Sublease (including the incorporated Lease) or the
rules and regulations then in effect, then Sublessor shall have the
right, without notice, in addition to such other rights and remedies
that it may have, to remove or tow away the vehicle(s) involved and
charge the cost to Sublessee, which cost shall be immediately payable
upon demand by Lessor. Sublessee agrees that Sublessor (or its designee)
may "re-stripe" so as to reconfigure the existing parking lots, so long
as such does not reduce the number of parking spaces that Sublessee is
otherwise entitled. Subject to the prior written approval of Sublessor
and Lessor which shall not be unreasonably withheld or delayed,
Sublessee may also "re-stripe" so as to reconfigure the existing parking
lots, so long as such does not reduce the number of total parking spaces
or unreasonably interfere with the use or occupancy of 2401 Walsh Avenue
or its marketability to prospective subtenants.
1.7 Sublessee Compliance. Sublessor shall not be required to tender
possession of the Premises to Sublessee until Sublessee provides
satisfactory evidence of insurance pursuant to paragraph 8.5 of the
Lease and section 5.1 of this Sublease, delivers the original Letter of
Credit (hereinafter defined) pursuant to section 2.5 below of this
Sublease, and delivers the initial monthly Base Rent payment in the
amount of $65,976.12. Pending delivery of such evidence of insurance,
Letter of Credit and initial Base Rent payment, Sublessee shall be
required to perform all of its obligations under the Sublease from and
after the Commencement Date, including the payment of Rent (as
hereinafter defined), notwithstanding Sublessor's election to withhold
possession pending receipt of such evidence of insurance, Letter of
Credit and initial Base Rent payment.
ARTICLE II
RENT AND OTHER CHARGES
2.1 Base Rent. Notwithstanding anything contained in this Sublease
(including the incorporated Lease), except as provided in section 1.1
above, Sublessee agrees to pay Sublessor Base Rent commencing on July 1,
1999, and on the first day of each month thereafter, in accordance with
the schedule set forth below:
Starting Date Ending Date Monthly Base Rent
07/01/1999 01/31/2000 $75,600.00
02/01/2000 01/31/2001 $80,325.00
02/01/2001 01/31/2002 $85,050.00
02/01/2002 01/31/2003 $89,775.00
02/01/2003 06/30/2003 $94,500.00
2.2 Additional Rent. For the period from July 1, 1999 through the
earlier of July 1, 2003 or the last day that CAT occupies the CAT
Sublease Premises, Sublessee shall also pay to Sublessor (or such other
party(s) as may be designated in writing by Sublessor) as and when due
under the Lease any and all additional rent and other charges which are
due and payable by Lessee under the Lease, without any deduction or
offset of any kind or nature, including, but not limited to, the costs
associated with:
(a) All maintenance and repair obligations of Lessee which concern the
Premises and/or are caused in whole or in part, directly or
indirectly, by Sublessee's Agents, as generally set forth in
paragraph 7 of the Lease (without regard to deduction or offset in
this and the following provisions of this section 2.2 for any
payments by CAT). With respect to other maintenance and/or repairs
which do not only concern the Premises or are not caused in whole
or in part, directly or indirectly, by Sublessee's Agents,
Sublessee shall pay its pro rata share (as hereinafter defined) of
all such obligations,
(b) All non-Building exterior repairs of the building project (i.e.,
2401 and 2403 Walsh Avenue) including, without limitation, repairs
of the landscaping, walkways, lawns, parking lots and exterior
lighting (individually and collectively referred to hereinafter as
the "Exterior Grounds") which are caused in whole or in part,
directly or indirectly, by Sublessee's Agents, as generally set
forth in paragraph 7 of the Lease. With respect to other Exterior
Grounds repairs which are not caused in whole or in part, directly
or indirectly, by Sublessee's Agents, as well as maintenance of the
Exterior Grounds, Sublessee shall pay Forty-Three and 64/100
percent (43.64%) of all such obligations,
(c) All insurance obligations of Lessee, generally set forth in
paragraph 8 of the Lease. Notwithstanding the preceding, Sublessor
shall reimburse Sublessee for the period from July 1, 1999 through
the earlier of July 1, 2003 or the last day that CAT occupies the
CAT Sublease Premises, Twelve and 73/100 percent (12.73%) of the
reasonable cost of such insurance directly attributable to the
Premises, except for the cost for insurance which is attributable
to earthquake and flood coverage which shall be solely borne by
Sublessee, as set forth in section 5.1 below,
(d) Sublessee's pro rata share of all Real Property Taxes obligations
of Lessee, and 100% of Personal Property Taxes obligations of
Lessee for property on the Premises (including any exterior areas
around the Building), generally set forth in paragraph 10 of the
Lease,
(e) All utility obligations of Lessee, generally set forth in
paragraph 11 of the Lease, less the agreed upon sum of $1,180.00
per month, until such time as Sublessor installs a meter or meters
to separately monitor the utility obligations of Sublessee and/or
CAT (which are capable of monitoring) when Sublessee shall then pay
the amounts represented by such meter(s) in addition to any other
utility obligations which are not capable of monitoring.
(f) All Alterations and improvements made to the Premises by reason of
the laws and requirements of any public authorities and any
application, permit, inspection or license fees required in
connection therewith or for the operation, use or occupancy of the
Premises.
Sublessee's "pro rata share" shall refer to Eighty-Seven and 27/100
percent (87.27%) of the total costs of the subject item(s).
Notwithstanding anything contained in any agreements between Sublessor
and Sublessee, Sublessee agrees that its obligations set forth in this
Sublease are in addition to its obligations set forth in the previously
entered into Exodus Sublease dated February 1, 1999. By way of example
but not limitation, Sublessee's obligation of 43.64% set forth above in
subsection (b) are in addition to (and not in lieu of) its obligations
of 44.52% in section 2.2(b) of the February 1, 1999 Exodus Sublease.
2.3 Additional Rent. For the period commencing from the date (if any)
prior to June 30, 2003 that CAT vacates the CAT Sublease Premises (or
such earlier date as provided herein or otherwise agreed to in writing
by the Parties), through June 30, 2003, Sublessee shall also pay to
Sublessor (or such other party(s) as may be designated in writing by
Sublessor) as and when due under the Lease any and all additional rent
and other charges which are due and payable by Lessee under the Lease,
without any deduction or offset of any kind or nature, including, but
not limited to, the costs associated with:
(a) All maintenance and repair obligations of Lessee generally set
forth in paragraph 7 of the Lease,
(b) All non-Building exterior repairs of the office building project
(i.e., 2401 and 2403 Walsh Avenue) including, without limitation,
repairs of the landscaping, walkways, lawns, parking lots and
exterior lighting (individually and collectively referred to as
"Exterior Grounds") which are caused in whole or in part, directly
or indirectly, by Sublessee's Agents, as generally set forth in
paragraph 7 of the Lease. With respect to other Exterior Grounds
repairs which are not caused in whole or in part, directly or
indirectly, by Sublessee's Agents, as well as maintenance of the
Exterior Grounds, Sublessee shall pay Fifty percent (50%) of all
such obligations,
(c) All insurance obligations of Lessee, generally set forth in
paragraph 8 of the Lease,
(d) All Real Property Taxes obligations of Lessee, and all Personal
Property Taxes obligations of Lessee for property on the Premises
(including any exterior areas around the Building), generally set
forth in paragraph 10 of the Lease,
(e) All utilities obligations of Lessee, generally set forth in
paragraph 11 of the Lease, and
(f) All Alterations and improvements made to the Premises by reason of
the laws and requirements of any public authorities and any
application, permit, inspection or license fees required in
connection therewith or for the operation, use or occupancy of the
Premises.
Notwithstanding anything contained in the Lease, except as expressly
provided to the contrary in this Sublease (e.g., with respect to the CAT
Sublease Premises prior to rental by Sublessee), the Parties agree that
it is the intent of this Sublease that Sublessee perform and pay all
obligations of Lessee under the Lease.
2.4 Payment. The Base Rent, and any additional rent and the other
charges payable herein in the Sublease (and in the Lease incorporated
herein) reserved or payable, shall be paid to Sublessor at its address
first-above stated (directed to the attention of: Controller) or at such
other place as Sublessor may designate in writing, in lawful money of
the United States of America, as and when the same become due and
payable, without demand therefor and without any deduction, notice,
offset, counterclaim or abatement whatsoever, except as otherwise
expressly provided in this Sublease. All monetary obligations of
Sublessee to Sublessor under the terms of the Sublease (except for the
Security Deposit) are deemed to be rent ("Rent"). Rent for any period
during the Term hereof which is for less than one (1) full calendar
month shall be prorated based upon the actual number of days of said
month. Acceptance of a payment which is less than the amount then due
shall not be a waiver of Sublessor's rights to the balance of such Rent,
regardless of Sublessor's endorsement of any check so stating.
2.5 Security Deposit.
(a) Upon execution of this Sublease, Sublessee shall deliver to
Sublessor the Letter of Credit described below as security for
Sublessee's performance of all of Sublessee's covenants and obligations
under this Sublease, provided, however, that neither the Letter of
Credit nor any Letter of Credit Proceeds (as defined below) shall be
deemed an advance rent deposit or an advance payment of any other kind,
or a measure of Sublessor's damages upon Sublessee's Default or Breach.
The Letter of Credit shall be maintained in effect from the date hereof
through the date which is one hundred twenty (120) days after the
Expiration Date, provided that upon Sublessee's surrender of the
Premises at the expiration of the Term, Sublessor and Sublessee shall
endeavor to determine as soon as practicable any amounts owing by
Sublessee, and within five (5) Business Days after payment of such
amount and Sublessee's fulfillment of any other obligations to
Sublessor, Sublessor shall return to Sublessee the Letter of Credit and
any Letter of Credit Proceeds then held by Sublessor (other than those
held for application by, Sublessor as provided below). Sublessor shall
not be required to segregate the Letter of Credit Proceeds from its
other funds, and in no event shall Letter of Credit Proceeds or any
portion thereof be deemed to be held in trust for Sublessee. No interest
shall accrue or be payable to Sublessee with respect to the Letter of
Credit Proceeds. Sublessor may (but shall not be required to) draw upon
the Letter of Credit and use the proceeds therefrom (the "Letter of
Credit Proceeds") or any portion thereof to cure any Default or Breach
under this Sublease or to compensate Sublessor for any damage Sublessor
incurs as a result of Sublessee's failure to perform any of its
obligations hereunder, it being understood that any use of the Letter of
Credit Proceeds shall not constitute a bar or defense to any of
Sublessor's remedies set forth herein. In such event and upon written
notice from Sublessor to Sublessee specifying the amount of the Letter
of Credit Proceeds so utilized by Sublessor and the particular purpose
for which such amount was applied, Sublessee shall immediately deliver
to Sublessor an amendment Letter of Credit or a replacement Letter of
Credit in an amount equal to one hundred percent (100%) of the amount
specified below. Sublessee's failure to deliver such replacement Letter
of Credit to Sublessor within five (5) business days of Lessor's notice
shall constitute a Breach hereunder. If Sublessee is not in default at
the expiration or termination of this Sublease, within one hundred
twenty (120) days after such expiration or termination, or such earlier
date as provided above, Sublessor shall return to Sublessee the Letter
of Credit or the balance of the Letter of Credit Proceeds then held by
Sublessor, provided, however, that in no event shall any such return be
construed as an admission by Sublessor that Sublessee has performed all
of its obligations hereunder. Under no circumstances shall Sublessor be
required to return the Letter of Credit or Letter of Credit proceeds
before receiving written acknowledgment by Lessor that Sublessor has
fulfilled all of its Sublessor's obligations and is completely released
from liability under the Lease.
(b) As used herein, Letter of Credit shall mean an unconditional,
irrevocable letter of credit (hereinafter referred to as the "Letter of
Credit") issued by a major "money center" bank satisfactory to Sublessor
in its sole and absolute discretion (the "Bank"), drawings under which
may be made at an office of the Bank located in Denver or Boulder,
Colorado, naming Sublessor as beneficiary, in the amounts set forth
below, and otherwise in form and substance satisfactory to Sublessor.
The amount of the Letter of Credit shall be Four Hundred Thousand
Dollars ($400,000.00) during the period from the execution of this
Sublease for so long as the Letter of Credit is required to be
maintained pursuant to subsection (a) above. In addition, should the
Agreed Use be amended to accommodate a material change in the business
of Sublessee or to accommodate a sublessee or assignee of Sublessee,
Sublessee shall, upon thirty (30) days' written notice from Sublessor,
cause the amount of the Letter of Credit to be increased to an amount
necessary, in Sublessor's reasonable judgment, to account for any
increased wear and tear that the Premises may suffer as a result
thereof. Furthermore, if a change in control of Sublessee occurs during
the term of this Sublease, and following such change in control, (1)
Sublessee is not a publicly traded company, and (2) the financial
condition of Sublessee is, in Sublessor's reasonable judgment,
significantly reduced, Sublessee shall, upon thirty days' written notice
from Sublessor, cause the amount of the Letter of Credit to be
increased, effective on the later to occur of the expiration of thirty
(30) days after Sublessor gives such notice, or the thirtieth (30th) day
prior to the Commencement Date, to an amount, which, in Sublessor's
reasonable judgment, is commercially reasonable based on such change in
financial condition. The Letter of Credit shall be for an initial term
of not less than one year and shall provide: (i) that Sublessor may make
partial and multiple draws thereunder, up to the face amount thereof,
(ii) that Sublessor may draw upon the Letter of Credit up to the full
amount thereof, as determined by Sublessor, and the Bank will pay to
Sublessor the amount of such draw upon receipt by the Bank of a sight
draft signed by Sublessor and accompanied by a written certification
from Sublessor to the Bank stating either: (A) that a Breach has
occurred and is continuing under this Lease or (B) that Sublessor has
not received notice from the Bank that the Letter of Credit will be
renewed by the Bank for at least one (1) year beyond the then applicable
expiration date and Sublessee has not furnished Sublessor with a
replacement Letter of Credit as hereinafter provided; and (iii) that, in
the event of Sublessor's assignment or other transfer of its interest in
this Sublease, the Letter of Credit shall be freely transferable by
Sublessor, without charge and without recourse, to the assignee or
transferee of such interest and the Bank shall confirm the same to
Sublessor and such assignee or transferee. The Letter of Credit shall
further provide that a draw thereon pursuant to clause (ii)(B) above may
only be made during the thirty (30) day period preceding the then
applicable expiration date of the Letter of Credit. In the event that no
later than thirty (30) days prior to the then applicable expiration date
of the Letter of Credit, neither (1) the Bank shall have notified
Sublessor that the Letter of Credit will be renewed for at least one (1)
year beyond the then applicable expiration date, nor (2) Sublessee shall
have delivered to Sublessor a replacement Letter of Credit in the amount
required hereunder and otherwise meeting the requirements set forth
above, then Sublessor shall be entitled to draw on the Letter of Credit
as provided above, and shall hold the proceeds of such draw as Letter of
Credit Proceeds pursuant to subsection (a) above and Paragraph 5 of the
Lease, provided that such drawing shall not constitute a waiver of
Sublessor's right to declare a Breach of the Sublease pursuant to
paragraph 13.1(c) of the Lease.
(c) At any time during the Term, Sublessee may replace any Letter
of Credit provided hereunder with another Letter of Credit meeting the
requirements hereunder, and Sublessor shall cooperate in arranging a
simultaneous exchange of such Letters of Credit.
ARTICLE III
SUBLESSEE'S AFFIRMATIVE OBLIGATIONS
Without limiting Sublessee's obligations pursuant to the Lease,
including those set forth in paragraph 7, Sublessee also agrees to the
following:
3.1 Alterations. Sublessee agrees that any Alteration, Utility
Installation, addition, improvement, installation of Trade Fixtures,
and/or other installation or decoration after the Commencement Date
shall be made only (a) with the prior written consent of Sublessor which
shall not be unreasonably withheld or delayed (and the Lessor, if
required by the terms of the Lease), (b) by workmen or contractors
approved by Sublessor which shall not be unreasonably withheld or
delayed; (c) in full compliance with all laws, ordinances and
regulations of applicable authorities (including any fire insurance
rating organizations having jurisdiction over the Premises); (d) in
accordance with the provisions of the Lease, and (e) after receipt by
Sublessor of such insurance policies as are reasonably required by
Sublessor and Lessor. Notwithstanding anything to the contrary and
without limiting in any manner Sublessee's obligations under this
Sublease, Sublessee shall also be responsible for all restoration
obligations of Lessee under the Lease including, without limitation, the
restoration obligations relating to the items mentioned in paragraph 10
of the June Lease Amendment.
3.2 Sublessor's Consent. Sublessor shall not unreasonably withhold or
delay the granting of its consent to Sublessee making and/or installing
the Alterations, Utility Installations and Trade Fixtures desired to be
made by Exodus which are consistent with the types of Alterations,
Utility Installations or Trade Fixtures approved by Sublessor and Lessor
in connection with Sublessee's occupancy of the adjacent building
located at 2401 Walsh Avenue, Santa Clara, so long as prior to any
construction whatsoever, Sublessee shall first furnish to Sublessor a
lien and completion bond satisfactory to Sublessor in an amount equal to
the estimated cost of such Alteration(s) or Utility Installation(s).
Notwithstanding anything contained in the Sublease, Sublessor hereby
affirmatively states that it does not approve of or consent to any
Alterations, Utility Installations or Trade Fixtures which are mentioned
or described in the plans and specifications but do not include
specifics as to their location, size, mechanical, architectural or
electrical detail or specifications. Without limiting the foregoing or
Sublessee's obligations under this Sublease, notwithstanding the June
Lease Amendment, Sublessee also agrees to the following:
(a) Sublessor hereby consents to the installation by Sublessee of two
(2) above-ground diesel fuel tanks and five (5) diesel generators
at the Premises, provided that such installation shall be in
compliance with all Applicable Law, and Sublessee shall obtain
Sublessor's prior written approval of the precise location thereof,
and of the protective enclosures or encasements thereof, which
approval shall not be unreasonably withheld or delayed. Sublessee
agrees that reasonable considerations in determining such approval
shall include without limitation whether such tanks, enclosures,
encasements and/or generators unreasonably interfere with the use
or occupancy (including parking, ingress and egress) of the CAT
Sublease Premises, or the use or occupancy (including parking,
ingress and egress) of 2401 Walsh Avenue or its marketability to
prospective subtenants.
(b) Sublessor hereby consents to the installation by Sublessee
satellite dishes not to exceed two (2) feet in diameter, on the
roof of the Building only, so long as prior notice is provided to
Sublessor and Lessor and provided that they are installed behind a
roof screen, are not visible from the street, and are installed in
compliance with Applicable Law. If Sublessee wishes to use other
satellite dishes and/or install satellite dishes in any other
manner or location, such installation shall be in compliance with
all Applicable Law, and shall not be made without Sublessor's and
Lessor's prior written approval of such installation, which
approval shall not be unreasonably withheld or delayed. Sublessee
agrees that reasonable considerations in determining such approval
shall include without limitation whether such satellite dishes
unreasonably interfere with the use or occupancy (including
parking, ingress and egress) of the CAT Sublease Premises, or the
use or occupancy (including parking, ingress and egress) of 2401
Walsh Avenue or its marketability to prospective subtenants, or
increase the restoration obligations pursuant to paragraph 7.4 of
the Lease without the provision of additional security or payment
to Sublessor.
(c) While Sublessor shall not unreasonably withhold or delay the
granting of its consent to Alterations, Utility Installations or
Trade Fixtures which are consistent with the Alterations, Utility
Installations or Trade Fixtures approved by Sublessor and Lessor in
connection with Sublessee's occupancy of the adjacent building
located at 2401 Walsh Avenue, Santa Clara (subject to the above
conditions set forth in the first sentence of section 3.2),
Sublessee agrees that reasonable considerations in determining such
approval shall include without limitation whether such Alterations,
Utility Installations and/or Trade Fixtures unreasonably interfere
with the use or occupancy (including parking, ingress and egress)
of the CAT Sublease Premises, or the use or occupancy (including
parking, ingress and egress) of 2401 Walsh Avenue or its
marketability to prospective subtenants, or increase the
restoration obligations pursuant to paragraph 7.4 of the Lease
without the provision of additional security or payment to
Sublessor.
(d) Sublessor hereby agrees not to unreasonably withhold its consent
to the installation by Sublessee of security fencing which will in
part enclose the Building, provided that such installation shall be
in compliance with all Applicable Law, and Sublessee shall obtain
Sublessor's prior written approval of the precise location, height
and type thereof. Sublessee agrees that reasonable considerations
in determining such approval shall include without limitation
whether such security fencing unreasonably interferes with the use
or occupancy (including parking, ingress and egress) of the CAT
Sublease Premises, or the use or occupancy (including parking,
ingress and egress) of 2401 Walsh Avenue or its marketability to
prospective subtenants.
(e) Sublessor hereby consents to the installation by Sublessee, at
Sublessee's sole cost and expense, of a demising wall acceptable to
Sublessor to separate the 2000 square feet occupied by CAT on the
mezzanine level from the balance of the space on the mezzanine
level. Sublessee agrees to use its best efforts to construct such
demising wall on or before July 1, 1999, and in any event, agrees
to complete such demising wall by August 1, 1999.
3.3 Maintenance and Repair. Sublessee shall take good care of, repair
and maintain the Premises and the fixtures, equipment and other
improvements and appurtenances therein. All damage or injury to the
Premises and to its fixtures, glass, appurtenances and equipment caused
by the moving of property by Sublessee's Agents in or out of the
Premises, or by the installation or removal by Sublessee's Agents of
furniture, fixtures or other property, or resulting from carelessness,
omission, neglect or improper conduct of Sublessee's Agents, shall be
repaired, restored or replaced promptly by Sublessee, at its sole cost
and expense, to the reasonable satisfaction of Sublessor and Lessor. All
of said repairs and replacements required to be made by Sublessee shall
be in quality and class equal to the original work or installation and
shall be done in a good and workmanlike manner.
3.4 Financial Information. On the first day of February of each
calendar year during the term of this Sublease, Sublessee shall provide
Sublessor, upon request, with copies of all of the most recent financial
statements of Sublessee, and all of its parent and/or subsidiary
company(s). Upon request, Sublessee also agrees to provide any
supplemental financial information as may be from time to time requested
by Sublessor.
3.5 Non-Interference. Sublessee agrees that it will in no manner
disrupt or otherwise interfere with CAT's tenancy and use of the
Building pursuant to the Existing CAT Sublease.
ARTICLE IV
SUBLESSOR'S COVENANTS AND REPRESENTATIONS
4.1 Covenants and Representations. Sublessor covenants and represents
to Sublessee as follows that:
(a) The Lease is in full force and effect, Sublessor has received no
notice of default and, to the best of Sublessor's knowledge, no
default exists thereunder;
(b) During the term of this Sublease, Sublessor will fully and
faithfully perform the terms and conditions of the Lease on its
part to be performed; and
(c) Sublessor has no knowledge or information that the Premises
contain Hazardous Substances, except as disclosed in the
Environmental Site Assessment dated August 18, 1997, receipt of
which is hereby acknowledged by Sublessee.
4.2 Sublessor Indemnity. Notwithstanding any provisions to the
contrary, and in particular paragraph 6 of the Lease, Sublessor shall
defend, indemnify and hold Sublessee harmless from and against any and
all claims, response or remediation costs, losses, damages, penalties,
other costs, actions, judgments, expenses and other liability
(including, without limitation, attorney's fees and expenses of
investigation, remediation or defense) due to Hazardous Substances which
were brought onto the Premises by Sublessor after November 14, 1997 and
before the Commencement Date, and Hazardous Substances brought onto the
Premises by Sublessor during the Term of this Sublease.
ARTICLE V
INSURANCE
5.1 Insurance. Notwithstanding anything to the contrary except as is
expressly provided herein below in this section 5.1, Sublessee shall
procure and maintain at its own cost and expense, throughout the Term of
this Sublease, such policy or policies of insurance with respect to the
entire Premises as Sublessor is required (as Lessee) to maintain
pursuant to the Lease (i.e., including the CAT Sublease Premises)
including, but not limited to, the policies required pursuant to
paragraph 8 of the Lease. Sublessee shall also pay for any insurance
policy(s) which Lessor is required or otherwise permitted to maintain
pursuant to the Lease (including the CAT Sublease Premises). All
insurance policies must maintain during the policy term a "General
Policyholders Rating" of at least A, IX. Notwithstanding the preceding,
for the period July 1, 1999 through the date (if any) prior to June 30,
2003 that CAT vacates the CAT Sublease Premises), Sublessor shall pay to
Sublessee Twelve and 73/100 percent (12.73%) of the reasonable cost of
such insurance directly attributable to the Premises within thirty (30)
days of receipt of invoice(s) and other documentation evidencing such
cost, except for the cost for insurance which is attributable to
earthquake and flood coverage which shall be solely borne by Sublessee.
The policies shall also name Sublessor, Lessor and their respective
officers, directors and employees, as additional insureds, shall insure
performance of the indemnities of Sublessee contained in the Sublease
and shall be primary coverage in the instance of Sublessee's
indemnities, so that any insurance coverage obtained by Lessor or
Sublessor shall be in excess thereto. All policies required under the
Sublease shall be endorsed to provide a waiver of subrogation as to
Sublessor and Lessor. Sublessee shall from time to time upon written
request promptly deliver to Sublessor evidence that all premiums have
been paid and all policies are in full force and effect, all in such
form as Sublessor may reasonably request. All policies required under
this Sublease shall include an unconditional agreement by the insurer
that the policy shall not be canceled, terminated, modified or allowed
to expire without 90 days' advance written notice to Sublessor and
Lessor. When Sublessee has any reason to believe that any insurance
policy required under the Lease may be cancelled, modified, expire or
terminate, Sublessee agrees to immediately provide written notice
detailing the same to Sublessor. All policy(s) required of Sublessee
pursuant to the Lease shall be tendered to Sublessee, upon renewal and
modification without request, and at any other time upon Sublessor's
request. Sublessor shall be under no obligation to maintain any
insurance, and if in its sole discretion it elects to do so, Sublessee
shall not be named as an additional insured therein.
ARTICLE VI
LOSS OF SUBLEASED PREMISES
6.1 Casualty. If the Subleased Premises shall be damaged by fire or
other casualty, or be condemned or taken in any manner for a public or
quasi-public use (and if this Sublease shall not have been terminated as
provided in the Lease), Sublessee agrees that Sublessor's obligation, if
any, to repair, restore or rebuild the Premises shall be determined in
accordance with the Lease. If the Premises or any part thereof shall be
damaged by fire or other casualty, Sublessee shall give prompt written
notice to Sublessor.
6.2 Condemnation. In the event of any condemnation or taking of the
Premises, or any portion thereof, Sublessee's rights are limited by the
Lease. Sublessee agrees that under no circumstances is Sublessor
responsible for any payment whatsoever to Sublessee arising from or in
any manner related to any condemnation involving the Premises. In the
event of a taking of all or a portion of the Premises, Sublessee shall
also not be entitled to receive any part of any award made in the
condemnation proceeding; provided, however, that nothing contained
herein shall be deemed to preclude Sublessee from intervening for
Sublessee's own interest in such proceedings to claim or receive from
the condemning authority any compensation to which Sublessee may
otherwise be lawfully entitled, and Sublessee shall be entitled to the
benefit of any diminution in rent granted to Sublessor under the Lease
which is applicable to the portion of the Premises so condemned or
taken.
ARTICLE VII
DEFAULT AND BREACH
7.1 Sublessor's Remedies. In the event of any Default and/or Breach on
the part of Sublessee under any of the terms, provisions, covenants or
agreements of the Lease or of this Sublease, Sublessor shall have the
same rights and remedies against Sublessee under this Sublease as are
available to the Lessor against Lessee under the provisions of the Lease
including, but not limited to, those under paragraph 13 of the Lease.
Without limiting the foregoing, the occurrence of any of the following
events shall also constitute a Breach under this Sublease, and Sublessor
shall have all rights and remedies available under the Lease to Lessor
in the event of a Breach as a result of:
(a) The failure of Sublessee to cause the amount of the Letter of
Credit to be increased as and when required in accordance with the
requirements of section 2.5(b) above, where such failure continues
for a period of three (3) business days following written notice to
Sublessee, or
(b) Upon the election of Sublessor, in the event that no later than
thirty (30) days prior to the then applicable expiration date of
the Letter of Credit, neither (1) the Bank shall have notified
Sublessor that the Letter of Credit will be renewed for at least
one (1) year beyond the then applicable expiration date, nor (2)
Sublessee shall have delivered to Sublessor a replacement Letter of
Credit in the amount required hereunder and otherwise meeting the
requirements set forth in section 2.5 above, or
(c) The occurrence of any Breach under (and as defined in) that
certain Exodus Sublease dated as of February 1, 1999 between
Sublessor and Sublessee (as amended by the Amendment to Exodus
Sublease dated February 1999), covering premises located at 2401
Walsh Avenue, Santa Clara.
7.2 Sublessee's Remedies. In the event of any Default and/or Breach on
the part of Sublessor under any of the terms, provisions, covenants or
agreements of this Sublease, Sublessee shall have the right to seek
monetary damages or specific performance, but shall not have the right
to terminate this Sublease, except as otherwise expressly provided
herein in this Sublease. Notwithstanding anything contained in this
Sublease, Sublessor shall not be deemed in breach of any obligation
under this Sublease if it is reasonably unable to perform such
obligation due to its status as a Lessee (and not the Lessor) under the
Lease. By way of example but not limitation, if Lessor were required
under the Lease to make certain repairs but refused to do so, and
Sublessor (as Lessee under the Lease) was not permitted under the terms
of the Lease to make such repairs, Sublessor would be reasonably unable
to perform such repairs and therefore, not be deemed in Breach of the
Sublease. As to obligations under the Sublease that Sublessor is
reasonably able to perform, Sublessor shall not be deemed in breach of
this Sublease unless Sublessor fails within a reasonable time to perform
an obligation required to be performed by Sublessor. For purposes of the
preceding sentence, a reasonable time shall in no event be more than
thirty (30) days after receipt by Sublessor of written notice specifying
wherein such obligation of Sublessor has not been performed; provided,
however, that if the nature of Sublessor's obligation is such that more
than thirty (30) days are reasonably required for its performance, then
Sublessor shall not be in breach if performance is commenced within such
thirty (30) day period and thereafter diligently pursued to completion.
ARTICLE VIII
SUBLEASE
8.1 Incorporation of the Lease. Except as set forth herein in this
Sublease, the terms, covenants, conditions and agreements of the Lease,
are incorporated herein and made part of this Sublease as though fully
set forth herein (and references to the Sublease herein shall refer to
both this Sublease and the incorporated Lease regardless of whether the
Lease is expressly mentioned) and are applicable to this Sublease with
the same force and effect as though Sublessor was Lessor under the
Lease, Sublessee was Lessee under the Lease, and the Premises herein
were the Premises under the Lease. In the incorporation of such terms,
covenants, provisions, conditions and agreements, if there is a conflict
between the terms of the Lease and this Sublease, the terms of this
Sublease shall control. By way of example but not limitation, the terms
"Breach" and "Default" shall have the same meanings as those contained
in the Lease and entitle Sublessor to invoke against Sublessee those
remedies enjoyed by Lessor when Lessee causes a Breach and/or Default
under the Lease; however, Sublessee's obligations to pay Base Rent are
based on the amounts set forth in section 2.1 above and not those
contained in the Lease. Without limiting the generality of the
foregoing, regardless of whether certain provisions of the June Lease
Amendment refer to "Exodus" specifically or simply "Lessee," such
provisions shall nonetheless apply to Sublessee (except as set forth
below in section 8.2). Sublessor and Sublessee acknowledge and agree
that as between them with respect to the interpretation of provisions of
the June Lease Amendment which is incorporated into this Sublease by
reference, the sole purpose of using the term "Exodus" instead of
"Lessee" in the June Lease Amendment is to clarify certain distinctions
being made in the June Lease Amendment. Additionally, by way of example
but not limitation, when a particular provision in the Lease requires
Lessor's consent, Lessor's approval, Lessor's judgment or comparable
language, such consent, approval, etc., will be required of both Talus
Corporation (which stands in the shoes of the Lessor in the Lease
pursuant to section 8.1 of the Sublease), and G&I Walsh LLC (which is
the actual Lessor under the Lease). This Sublease is subject and
subordinate to, and Sublessee accepts this Sublease subject and
subordinate to, all of the terms, covenants, provisions, conditions and
agreements contained in the Lease, Existing CAT Sublease and the matters
to which the Lease is subject and subordinate. This Sublease shall also
be subject to any amendments and supplements to the Lease hereafter made
between Lessor and Sublessor, provided that any such amendment or
supplement to the Lease will not prevent or adversely affect the use by
Sublessee of the Premises in accordance with the terms of this Sublease
or additionally increase the Base Rent, additional rent or other charges
required to be paid by Sublessee under the terms of this Sublease.
Sublessee acknowledges and agrees that it shall not be permitted to
exercise any options granted to Lessee under the Lease,
8.2 Exclusions. Notwithstanding anything contained in the Sublease,
the following provisions of the Lease are expressly excluded from
incorporation herein (as are any references to the following provisions
which are contained in a non-excluded provision): paragraphs 1.1 through
1.12.1 paragraphs 2.2, 2.3, 2.5, 3.1, 3.2, 4.1, 8.2(b), 13.1(g), 15.1
through 15.6, 37.1, 37.2, 38, 39.1 through 39.4, 48, paragraphs 1, 3 and
4 (and the first sentence of paragraph 2) of Exhibit (A), the
Guaranties, the Lease Amendment dated November 14, 1997 and November 20,
1997, and paragraphs 31, 32, 33 and 34 of the June Lease Amendment.
8.3 Sublessee's Additional Duties Regarding the Lease. Without
limiting Sublessee's obligations pursuant to the Sublease relating to
the below matters, Sublessee also covenants and agrees as follows:
(a) To perform and observe all of the terms, covenants, conditions and
agreements of the Lease to be performed on the part of Sublessor
with respect to the Premises to the extent the same are not
expressly modified or inconsistent with the terms of this Sublease;
(b) That Sublessee will not do or cause to be done or suffer or permit
any act or thing to be done which would or might cause any Default
and/or Breach under this Sublease or the Lease, or cause the rights
of Sublessor as Lessee thereunder to be canceled, terminated or
forfeited, or which would make Sublessor liable for any damages,
claim or penalty,
(c) Except as provided in the Sublease with respect to diesel fuel,
Sublessee shall not cause or permit any Hazardous Substances to be
used, stored, generated or disposed of on the Premises;
(d) Sublessor shall also have the right to enter the Premises at any
time, in the case of an emergency, and otherwise with 24 hours'
advance notice for the purpose of inspecting the Premises.
Sublessor acknowledges that Sublessee intends to operate a secure
internet data center facility at the Premises. Accordingly, except
in the case of an emergency, Sublessor or its agents shall give
Sublessee 24 hours' advance notice prior to entering the Premises,
and Sublessee shall have the right to require that a representative
of Sublessee accompany any parties entering the Premises. In the
case of an emergency, Sublessor or its agents shall make such
effort as is deemed appropriate by Sublessor or its agents under
the circumstances to contact an on-site representative of
Sublessee, if one is present at the Premises, prior to entering the
Premises; provided, however, that if an on-site representative
cannot be located after such effort is made or if immediately entry
to the Premises without attempting to locate an on-site
representative of Sublessee is deemed appropriate by Sublessor or
its agents due to the nature of the emergency, Sublessor or its
agents may enter the Premises unaccompanied by a representative of
Sublessee, and
(e) Sublessee acknowledges and agrees that paragraph 40 of the Lease
is applicable to this Sublease since the Premises are part of a
group of buildings controlled by Lessor.
ARTICLE IX
NONDISTURBANCE
9.1 Quiet Possession. If, and so long as Sublessee pays the Base Rent,
additional rent and other charges due and payable described herein and
keeps, observes and performs all of the other covenants, agreements,
terms, provisions and conditions herein contained on the part of
Sublessee to be kept, observed and performed, Sublessee shall have quiet
possession of the Premises, subject, however, to the covenants,
agreements, terms, provisions and conditions of this Sublease, the
Lease, the Existing CAT Sublease, and to the matters to which the Lease
is or becomes subject and/or subordinate.
9.2 Notice of Default and Right to Cure. Sublessor shall provide
Sublessee with copies of any written notice to or from Lessor specifying
a Default by Sublessor under the terms of the Lease within seventy-two
(72) hours of Sublessor's receipt from or delivery of the notice to
Lessor. Upon demand from Sublessee and so long as Sublessee has not
defaulted under the terms of this Sublease, Sublessor shall take all
action reasonably necessary to avoid termination of the Lease or
disturbance of Sublessee's use and occupancy of the Premises as a result
of such Default. Sublessor shall keep Sublessee fully advised as to
Sublessor's efforts to cure or resolve any allegation of a Default and
shall provide Sublessee, at Sublessor's expense, with copies of all non-
privileged correspondence, and documentation, including but not limited
to, any pleadings filed by or on behalf of Sublessor or Lessor in the
course of any litigation which involves an alleged Default relating
thereto. If Sublessor fails to timely cure a Default or contests the
same by appropriate legal proceedings, and Lessor has threatened to
disturb Sublessee's use or occupancy of the Premises or any party
thereof, Sublessee shall have the right so long as it is not in default
under this Sublease, but not the duty, to take whatever action is
reasonably necessary to cure the Default. All reasonable and necessary
costs, expenses and fees (including reasonable attorneys' fees) incurred
by Sublessee in the course of curing a Default shall be fully
recoverable from all payments (including Base Rent and additional rent)
that come due to Sublessor under this Sublease.
ARTICLE X
NOTICE
10.1 Notice. Paragraph 23 of the Lease shall govern notices except the
designated addresses shall be those provided in the initial paragraph of
this Sublease. All notices to Sublessor shall be sent to Sublessor's
address, to the attention of the Controller. All notices to Sublessee
shall be sent to the attention of Richard Stoltz, CFO, COO.
10.2 Courtesy Copies. Whenever notice is delivered pursuant to this
Sublease, copies shall also be delivered to the following:
To Sublessor:
Robert M. Horowitz, Esq.
Pearson, Milligan & Horowitz, P.C.
1999 Broadway, Suite 2300
Denver, CO 80202 Fax: (303) 298-7010
To Sublessee:
Kyle Barriger, IDC Manager
Exodus Communications, Inc.
2403 Walsh Avenue
Santa Clara, CA 95054
Fax: (408) 346-2206
ARTICLE XI
SUBLEASING AND ASSIGNMENT BY SUBLESSEE
11.1 No Future Assignment or Sublease.
(a) Except as provided herein in this section 11.1, Sublessee shall
not assign or otherwise transfer, mortgage, pledge, hypothecate or
encumber this Sublease or the Premises, or any interest therein,
and shall not sublet (which term herein shall also include "sub-
subletting") the Premises or any part thereof, or any right or
privilege appurtenant thereof, or permit any other party to occupy
the Premises, or any portion thereof, except in accordance with the
provisions of paragraph 12 of the Lease. The foregoing shall also
require the written consent of both Sublessor and Lessor in
accordance with the criteria set forth in paragraph 12 of the
Lease. Sublessor's consent to any assignment, transfer or
subletting by Sublessee shall not relieve Sublessee from any of its
obligations under this Sublease. As a condition to providing such
written consent, Sublessor reserves the right to make such changes
in the Sublease as Sublessor and/or Lessor may require to be made
to the Lease pursuant to paragraph 12 thereof. If Sublessee
violates any of the terms contained in this section 11.1, such
shall constitute a Breach under the terms of this Sublease.
(b) Notwithstanding anything to the contrary, Sublessee agrees that
Sublessor, as a condition to giving its consent to any proposed
sublease or assignment, in addition to any other obligations of or
amounts due from Sublessee pursuant to the Lease, shall require
that Sublessee pay to Sublessor, as additional Rent under the
Sublease, before execution of any proposed assignment or sublease
(i) any and all amounts required by Lessor to be paid by Sublessor
pursuant to paragraph 12.2(e) of the Original Lease, (ii) any and
all other amounts which Lessor requires to be paid or delivered by
Sublessor in connection with or in any manner related to the
proposed assignment or sublease, and (iii) all other reasonable
out-of-pocket expenses incurred by Sublessor in connection with the
proposed assignment or sublease, including, without limitations
attorneys' and consultants' fees and expenses. The amounts
described in subsection (iii) above shall be referred to (if at
all) in the June Lease Amendment as the "Talus Amounts," and such
amounts shall be paid regardless of and in addition to any amounts
set forth in section 11.1(c) below. The Parties agree that it is
the express intent of this section 11.1(b) to make Sublessor
"whole" by not requiring Sublessor to incur any expense whatsoever
in connection or relating to Sublessee's subletting(s) or
assignment(s), proposed or otherwise, all such expense to be
immediately reimbursed by Sublessee to Sublessor.
(c) Notwithstanding any provision of paragraph 12 of the Lease,
Sublessor, as a condition to giving its consent to any proposed
sublease or assignment, may also (i.e., in addition to Sublessee's
obligations under the Sublease including without limitation those
set forth in section 11.1(b) above) require that Sublessee pay to
Sublessor, as additional Rent under the Sublease,
(i) In the case of an assignment where the Sublease is the only
asset assigned by Sublessee to the assignee, promptly after
receipt by Sublessee (or any affiliate thereof or other person or
entity designated by Sublessee) seventy-five percent (75%) of the
amount, if any, by which (A) any consideration (including,
without limitation, payment for leasehold improvements) paid by
the assignee to Sublessee or such affiliate or other designated
person or entity for the assignment or otherwise attributable to
the value of Sublessee's interest in the Sublease exceeds (B) the
Assignment or Subletting Costs (as defined below);
(ii) In the case of an assignment where the Sublease is not the
only asset assigned by Sublessee to the assignee (e.g., an
assignment in connection with a sale of Sublessee's operations at
the Premises or an assignment resulting from a change in control
of Sublessee where Sublessee is not a publicly traded company
immediately following such change in control), on a monthly
basis, seventy-five percent (75%) of the amount, if any, by which
(A) the Prevailing Market Rent (as defined below) for the
Premises for each month of the term of the Sublease after the
date of the assignment exceeds (B) the total amount of Rent
payable hereunder for each such month; as used herein, the term
"Prevailing Market Rent" for the Premises shall mean the total
monthly Rent that Sublessor could obtain for each month of term
of the Sublease remaining after the date of the assignment from a
third party desiring to lease the Premises for the remaining term
of the Sublease after the date of the assignment, taking into
account the age of the Building, the size of the Premises, the
quality of construction of the Building, the other terms of this
Sublease, the rental and any other consideration then being
obtained for new leases of space comparable to the Premises in
the locality of the Building and all other factors that would be
relevant to a third party desiring to lease the Premises for such
term in determining the rental such party would be willing to pay
therefor, but excluding any rental value attributable to any
items Sublessee is permitted to remove from the Premises upon
expiration of the term of this Sublease pursuant to paragraph 7.4
of the Lease; provided that if Sublessee and Sublessor are unable
to agree upon the Prevailing Market Rent within thirty (30) days
after the date of the assignment, then the Prevailing Market Rent
for the remaining term of this Sublease shall be determined by
appraisal following the same procedures as set forth in paragraph
39(c) of the Addendum to the Direct Lease between Exodus
Communications, Inc. and G&I Walsh LLC dated June 4, 1999 (which
provision is incorporated herein by reference solely for purposes
of such appraisal procedures), for the determination of "Fair
Market Rent" for the first year of a Renewal Option Term; and
(iii) in the case of a sublease, on a monthly basis, seventy-five
percent (75%) of the amount, if any, by which (A) the rent paid
to Sublessee (or any affiliate thereof or other person or entity
designated by Sublessee) for the sublet space by the sublessee
(such rent to include all consideration paid for the sublet
space) for each month exceeds (B) the total amount of Rent
payable under the Sublease attributable to the sublet space for
such month; provided, however, that in the case of a sublease,
prior to paying any amounts to Sublessor pursuant to this section
11.1(c)(iii), Sublessee may recover out of the rent or other
consideration payable by the sublessee to Sublessee (or any
affiliate thereof or other person or entity designated by
Sublessee), and use such recovery to reimburse itself for, a pro
rata share of the Assignment or Subletting Costs incurred in
connection with such sublease, such pro rata share to be
determined by allocating an equal portion of the total amount of
Assignment or Subletting Costs incurred in connection with such
sublease to each month of the term of such sublease; if there is
more than one sublease under this Sublease, the amounts (if any)
to be paid by Sublessee to Sublessor pursuant to this section
11.1(c)(iii) shall be separately calculated for each sublease and
amounts due Sublessor with regard to any one sublease may not be
offset against rental and other consideration pertaining to or
due under any other sublease.
As used herein, the term "Assignment or Subletting Costs" means the
total amount of any brokerage commissions paid by Sublessee in
connection with a specific subletting or assignment (not to exceed
commissions typically paid in the market at the time of such Subletting
or assignment), Sublessee's reasonable costs of advertising the space
for sublease or assignment, Sublessee's reasonable legal fees and
expenses in connection with such assignment or sublease, and any
improvement allowance or other inducement (such as moving expenses and
lease takeover obligations), paid by Sublessee to the sublessee or
assignee; provided that, as a condition to Sublessee recovering
Assignment or Subletting Costs pursuant to section (1) or (iii) of this
section 11.1(c), Sublessee shall provide to Sublessor, within sixty (60)
days of Sublessor's execution of Sublessor's consent to the assignment
or subletting, a detailed accounting of the Assignment or Subletting
Costs and supporting documents, such as receipts and invoices, except
that if any Assignment or Subletting Costs are not determinable by such
date, Sublessee shall so state in its accounting, identifying with
reasonable specificity the costs not determinable, and promptly after
such costs are determinable, but in no event later than thirty (30) days
after effective date of the assignment or ninety (90) days after the
commencement of the term of such sublease, as applicable, a supplemental
accounting shall be delivered to Sublessor setting forth all Assignment
or Subletting Costs and supporting documents (if not previously
delivered)
ARTICLE XII
MISCELLANEOUS
12.1 Binding Effect. The covenants, agreements, terms, provisions and
conditions of this Sublease shall bind and inure to the benefit of the
respective successors and assigns of the parties with the same effect as
if mentioned in each instance where a party is named or referred to,
except that no violation of the provisions of section 11.1 above shall
operate to vest any rights in any successor, assignee or legal
representative of Sublessee.
12.2 Broker. Sublessee warrants and represents that the only person,
firm, brokers or finders with whom it had any dealings in connection
with this transaction are CPS. Sublessee hereby agrees to indemnify,
protect, defend and hold harmless from and against liability for
compensation or charges which may be claimed by any unnamed broker,
finder or other similar party by reason of any dealings or actions of
Sublessee, any costs, expenses, attorneys fees reasonably incurred with
respect thereto.
12.3 Sole Agreement. This Sublease with attachments sets forth the
entire agreement between the parties. This Sublease supersedes all prior
negotiations and agreements between Sublessor and Sublessee with respect
to the subject matter of this Sublease. No modification or alteration of
this Sublease shall be effective unless reduced to writing and executed
by Sublessor or Sublessee, together with any necessary consent by
Lessor.
12.4 Sublessor's Consent. Whenever the consent and/or approval of
Sublessor is required to be given under the provisions of this Sublease,
Sublessor shall be conclusively deemed not to have unreasonably withheld
its consent and/or approval if the Lessor has refused or withheld its
consent and/or approval thereto for any reason.
12.5 Severability. Should any of the provisions of the Sublease to any
extent be held to be invalid or unenforceable, the remainder of this
Sublease shall continue in full force and effect.
12.6 Headings. The subject headings used in this Sublease are included
for purposes of reference only, and shall not affect the construction or
interpretation of any of its provisions.
12.7 Construction. The Rule of Construction which provides that
ambiguities in a contract shall be construed against the drafter shall
not apply to this Sublease and the Parties waive any such claim or
defense to the terms of this Sublease.
12.8 Further Acts. Upon reasonable request by Sublessor from time to
time, Sublessee shall execute and deliver such additional documents and
instruments and take such other actions as may be reasonably necessary
to give effect to the intents and purposes of this Sublease.
12.9 Non-modification of obligations under the Lease. Nothing
hereinabove in this Sublease is intended to reduce or increase Talus
Corporation's obligations or reduce or increase G & I Walsh LLC's
obligations under the Lease.
12.10 Facsimile Signature. The parties hereto agree that a facsimile
signature may substitute for and have the same legal effect as the
original signature.
IN WITNESS WHEREOF, Sublessor and Sublessee have duly executed this
Sublease as of the day and year first above written.
SUBLESSOR:
TALUS CORPORATION
By: /s/ SUSAN GOODNATURE
Name: Susan Goodnature
Title: Senior Vice President
SUBLESSEE:
EXODUS COMMUNICATIONS, INC.
By: /s/ ADAM WEGNER
Name: Adam Wegner
Title: Vice President and General Counsel
APPROVAL AND CONSENT OF LESSOR
Lessor's signature below evidences its approval of and consent to the
foregoing Sublease. Lessor's approval of and consent to the foregoing
Sublease does not constitute Lessor's approval of or consent to any
future or further assignment of or subletting under the Lease or the
foregoing Sublease, which shall require the future consent of the Lessor
subject to the conditions set forth in paragraph 12 of the Lease.
Lessor's approval of and consent to the foregoing Sublease shall not
constitute the waiver of any other terms or provisions of the Lease, and
Sublessor and Sublessee shall at all times comply with the terms and
provisions thereof
LESSOR:
G&I WALSH LLC, a Delaware limited liability company
By: G&I Investment Walsh LLC, a Delaware limited
liability company, its managing member
By: G&I Investment Walsh Corp., a
Delaware corporation, is managing member
By: /s/ BRIAN T. SUMMERS
Name: Brian T. Summers
Title: Vice President
<PAGE>
LEASE AMENDMENT
(January 25, 1996 Lease)
This Lease Amendment (this "Amendment"), dated and effective on
November 20, 1997 (the "Effective Date"), is by and between Talus
Corporation, a California corporation ("Lessee"), and Mopar, LLC, a
California limited liability company ("Lessor").
RECITALS:
A. Lessee (formerly known as "Scientific Custom Metal Products
International, Inc.," as lessee, and Lessor, as lessor are parties to
that certain commercial lease dated January 25, 1996 (the "January
Lease") for the premises located at 2403 Walsh Avenue, Santa Clara,
California, and that certain commercial lease dated March 1, 1996 (the
"March Lease") for the premises located at 2401 Walsh Avenue, Santa
Clara, California.
B. Lessee and Lessor desire to amend the January Lease on the terms
contained below. Lessee and Lessor are also entering into an amendment
of the March Lease (the "March Lease Amendment") effective on the
Effective Date. Capitalized Terms used but not defined herein shall have
the respective meanings assigned to them in the January Lease.
In consideration of the premises and the following mutual covenants,
it is agreed:
1. Term. Effective on the Effective Date, November 20, 1997, the
Original Term, which commenced on the Commencement Date, shall expire on
June 30, 2003, which date shall be deemed the Expiration Date, for all
purposes of the January Lease.
2. Rent Indexing. Section 1 of Exhibit (A) of the January Lease is
hereby amended by adding the following sentence thereto:
"The base rent payable during any renewal period shall be determined
as follows: (a) if Lessee elects (pursuant to Section 3 below) to have
the new base rent during the first year of the renewal period equal
current market rent, thereafter the base rent shall increase by the
greater of 5% of the CPI (as defined below), whichever is greater, on
each anniversary of the commencement of the renewal period; and (b) if
Lessee elects (pursuant to Section 3 below) to have the new base rent
during the renewal period equal scheduled rent, thereafter the base
rent shall increase during the remainder of the term to the amounts
and at the times indicated on the Rent Schedule attached as part of
this Exhibit (A). For purposes of this provision, CPI shall mean the
Consumer Price Index for all urban consumers, Urban Wage Earners and
Clerical Workers for the U.S., San Francisco. All Items based on the
years 1982 - 1984 - 100 as published by the Bureau of Labor Statistics
("BLS") for the United States Department of Labor, as it may be
revised from time to time by the BLS or any substantially equivalent
successor index published by BLS."
3. Option to Extend. Section 3 of Exhibit (A) of the January Lease
is hereby amended in its entirety to read as follows:
"In the event that Lessee is not in default in the performance of any
term or condition of this lease, then at the Expiration Date, Lessee
shall have the option to renew the lease for an additional term of ten
(10) years. During such renewal period, all of the terms and
conditions of the lease shall remain in effect, except that the new
base rent shall equal, at the election of Lessee, the rent then
payable on the Expiration Date in accordance with the Rent Schedule
attached as part of this Exhibit (A), or current market rent on the
Expiration Date, as determined by appraisal. Lessee shall provide
Lessor with not less than eighteen (18) months advance written notice
of its intention to exercise this option, together with its election
to have the new base rent to be scheduled rent or current market rent,
or this option will become null and void. If Lessee elects to have the
new base rent be current market rent, then Lessee and Lessor, at least
forty-five (45) days before the Expiration Date, shall jointly select
an appraiser, who shall determine current market rent on the
Expiration Date and whose appraisal shall be deemed final and binding
on Lessee and Lessor. Lessee and Lessor shall jointly bear the expense
of such appraiser."
4. Condition to Option. Any exercise by Lessee of the option to
extend the term of the January Lease contained in Exhibit (A) thereto,
as amended herein, shall be null and void and of no force or effect
unless on the date of exercise, Lessee also exercises the option to
extend contained in Exhibit (A) of the March Lease, as amended by the
March Lease Amendment.
5. Subletting. Effective on the Effective Date, Section 4 of Exhibit
(A) of the January Lease shall be null and void and of no further force
or effect.
6. Assignment in Connection with EMS Transaction. Lessor hereby
consents to the assignment of the January Lease and this Amendment
thereto which will result from the purchase, by Electronic Manufacturing
Systems, Inc. ("EMS"), of one hundred percent (100%) of the outstanding
voting securities of Lessee (the "EMS Assignment"), pursuant to the
Purchase Agreement, dated October 24, 1997, among EMS, Lessee, and the
shareholders (the "Shareholders") of Lessee (the "Purchase Agreement").
In connection with the EMS Assignment only, Lessor hereby waives
compliance, by Lessee, with Section 12.2 of the January Lease.
7. Option Personal to Original Lessee. Effective on the Effective
Date, Section 39.2 of the January Lease shall be full and void and of no
further force or effect.
8. Release of Talus Guarantee/Guarantee by EMS. Effective on the
Effective Date, and subject to the closing of the purchase, by EMS, of
the outstanding voting securities of Lessee (the "Closing") and the
execution of a guarantee by EMS pursuant to Section 7.2(1) of the
Purchase Agreement, Lessor hereby releases Lessee from all obligations
pursuant to the guarantee executed by lessee in connection with the
January Lease.
9. Default in Payment under Affiliate Debt or Affiliate Debt
Guarantees. Subject to consummation of the Closing and the EMS
Assignment and the execution of this Amendment, in the event that Lessor
or the Shareholders fail to repay the debt of Lessor to Lessee on or
before December 31, 1997 in the original principal amount of Seven
Hundred Fifty-Six Thousand Six Hundred Thirty-Nine Dollars
($756,639)(the "Lessor Debt"), Lessee and/or EMS shall have the right to
offset the amount of any such default (including any continuing default
thereunder) against any lease payments due to Lessor under the January
Lease. Upon repayment of the Lessor Debt, this Section 9 shall terminate
and be of no further force or effect, Lessor shall have no further
obligation under this provision, and Lessee, upon demand by Lessor,
shall execute and deliver to Lessor a certificate in form and substance
reasonably satisfactory to Lessor, acknowledging repayment of the Lessor
Debt and the termination of Lessee's obligations hereunder.
10. No other Changes. Except as amended by this Amendment, all terms
of the January Lease are unchanged and shall remain in full force and
effect.
Mopar, LLC Talus Corporation
By: /s/ MICHAEL W. MOSHIER By: /s/ ANDREW T. MOSHIER
Michael W. Moshier, CEO Andrew T. Moshier, President
[AIR LOGO] AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET
(Do not use this form for Multi-Tenant Property)
1. Basic Provisions ("Basic Provisions")
1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
January 25, 1996, is made by and between MOPAR, LLC ("Lessor") and
Scientific Custom Metal Products International, Inc. ("Lessee"),
(collectively the "Parties," or individually a "Party").
1.2 Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and
commonly known by the street address of 2403 Walsh Avenue, Santa Clara
located in the County of Santa Clara State of California and generally
described as (describe briefly the nature of the property) Industrial
Building, approximately 94,500 square feet; APN 216-28-037 (parcel #1)
("Premises"). See Paragraph 2 for further provisions.)
1.3 Term: 20 years and 0 months ("Original Term") commencing February
1, 1996 ("Commencement Date") and ending January 31, 2016 ("Expiration
Date"). (See Paragraph 3 for further provisions.)
1.4 Early Possession: N/A ("Early Possession Date"). (See Paragraphs
3.2 and 3.3 for further provisions.)
1.5 Base Rent: $66,150 per month ("Base Rent"), payable on the 1st
day of each month commencing February 1, 1996, and thereafter according
to the rent schedule as set forth on Exhibit (A) to this agreement. (See
Paragraph 4 for further provisions.) [X] If this box is checked, there
are provisions in this Lease for the Base Rent to be adjusted.
1.6 Base Rent Paid Upon Execution: $30,000 as Base Rent for the
period February 1, 1996 through February 28, 1996, and thereafter as set
forth in Exhibit (A) to this agreement.
1.7 Security Deposit: $10,000 ("Security Deposit"). (See Paragraph 5
for further provisions.)
1.8 Permitted Use: Light manufacturing, Office, & Research &
Development (See Paragraph 6 for further provisions.)
1.9 Insuring Party: Lessor is the "Insuring Party" unless otherwise
stated herein. (See Paragraph 8 for further provisions.)
1.10 Real Estate Brokers: The following real estate brokers
(collectively, the "Brokers") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable
boxes):
None represents [ ] Lessor exclusively ("Lessor's Broker"); [ ]
both Lessor and Lessee, and
None represents [ ] Lessee exclusively ("Lessee's Broker"); [ ]
both Lessee and Lessor. (See Paragraph 15 for further provisions.)
1.11 Guarantor. The obligations of the Lessee under this Lease are to
be guaranteed by Scientific Custom Metal Products International, Inc.
("Guarantor"). (See Paragraph 37 for further provisions.)
1.12 Addenda. Attached hereto is an Addendum or Addenda consisting of
Paragraphs through and Exhibits A and the Guarantee Agreement
all of which constitute a part of this Lease.
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease. Unless
otherwise provided herein, any statement of square footage set forth in
this Lease, or that may have been used in calculating rental, is an
approximation which Lessor and Lessee agree is reasonable and the rental
based thereon is not subject to revision whether or not the actual
square footage is more or less.
2.2 Condition. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the
existing plumbing, fire sprinkler system, lighting, air conditioning,
heating, and loading doors, if any, in the Premises, other than those
constructed by Lessee, shall be in good operating condition on the
Commencement Date. If a non-compliance with said warranty exists as of
the Commencement Date, Lessor shall, except as otherwise provided in
this Lease, promptly after receipt of written notice from Lessee setting
forth with specificity the nature and extent of such non-compliance,
rectify same at Lessor's expense. If Lessee does not give Lessor written
notice of a non-compliance with this warranty within thirty (30) days
after the Commencement Date, correction of that non-compliance shall be
the obligation of Lessee at Lessee's sole cost and expense.
2.3 Compliance With Covenants, Restrictions And Building Code. Lessor
warrants to Lessee that the improvements on the Premises comply with all
applicable covenants or restrictions of record and applicable building
codes, regulations and ordinances in effect on the Commencement Date.
Said warranty does not apply to the use to which Lessee will put the
Premises or to any Alterations or Utility Installations (as defined in
Paragraph 7.3(a)) made or to be made by Lessee. If the Premises do not
comply with said warranty, Lessor shall, except as otherwise provided in
this Lease, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-
compliance, rectify the same at Lessor's expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within
six (6) months following the Commencement Date, correction of that non-
compliance shall be the obligation of Lessee at Lessee's sole cost and
expense.
2.4 Acceptance Of Premises. Lessee hereby acknowledges: (a) that it
has been advised by the Brokers to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical
and fire sprinkler systems, security, environmental aspects, compliance
with Applicable Law, as defined in Paragraph 6.3) and the present and
future suitability of the Premises for Lessee's intended use, (b) that
Lessee has made such investigation as it deems necessary with reference
to such matters and assumes all responsibility therefor as the same
relate to Lessee's occupancy of the Premises and/or the term of this
Lease, and (c) that neither Lessor, nor any of Lessor's agents, has made
any oral or written representations or warranties with respect to the
said matters other than as set forth in this Lease.
2.5 Lessee Prior Owner/Occupant. The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to
the date set forth in Paragraph 1.1 Lessee was the owner or occupant of
the Premises. In such event, Lessee shall, at Lessee's sole cost and
expense, correct any non-compliance of the Premises with said
warranties.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent
shall be abated for the period of such early possession. All other terms
of this Lease, however, (including but not limited to the obligations to
pay Real Property Taxes and Insurance premiums and to maintain the
Premises) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the
Original Term.
3.3 Delay In Possession. If for any reason Lessor cannot deliver
possession of the Premises to Lessee as agreed herein by the Early
Possession Date, if one is specified in Paragraph 1.4, or, if no Early
Possession Date is specified, by the Commencement Date, Lessor shall not
be subject to any liability therefor, nor shall such failure affect the
validity of this Lease, or the obligations of Lessee hereunder, or
extend the term hereof, but in such case, Lessee shall not, except as
otherwise provided herein, be obligated to pay rent or perform any other
obligation of Lessee under the terms of this Lease until Lessor delivers
possession of the Premises to Lessee. If possession of the Premises is
not delivered to Lessee within sixty (60) days after the Commencement
Date, Lessee may, at its option, by notice in writing to Lessor within
ten (10) days thereafter, cancel this Lease, in which event the Parties
shall be discharged from all obligations hereunder; provided, however,
that if such written notice by Lessee is not received by Lessor within
said ten (10) day period, Lessee's right to cancel this Lease shall
terminate and be of no further force or effect. Except as may be
otherwise provided, and regardless of when the term actually commences,
if possession is not tendered to Lessee when required by this Lease and
Lessee does not terminate this Lease, as aforesaid, the period free of
the obligation to pay Base Rent, if any, that Lessee would otherwise
have enjoyed shall run from the date of delivery of possession and
continue for a period equal to what Lessee would otherwise have enjoyed
under the terms hereof, but minus any days of delay caused by the acts,
changes or omissions of Lessee.
4. Rent.
4.1 Base Rent. Lessee shall cause payment of Base Rent and other rent
or charges, as the same may be adjusted from time to time, to be
received by Lessor in lawful money of the United States, without offset
or deduction, on or before the day on which it is due under the terms of
this Lease. Base Rent and all other rent and charges for any period
during the term hereof which is for less than one (1) full calendar
month shall be prorated based upon the actual number of days of the
calendar month involved. Payment of Base Rent and other charges shall be
made to Lessor at its address stated herein or to such other persons or
at such other addresses as Lessor may from time to time designate in
writing to Lessee.
5. Security Deposit. Lessee shall deposit with Lessor upon execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for
Lessee's faithful performance of Lessee's obligations under this Lease.
If Lessee fails to pay Base Rent or other rent or charges due hereunder,
or otherwise Defaults under this Lease (as defined in Paragraph 13.1),
Lessor may use, apply or retain all or any portion of said Security
Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, cost, expense, loss or damage
(including attorneys' fees) which Lessor may suffer or incur by reason
thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request
therefor deposit moneys with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. Any time the Base
Rent increases during the term of this Lease, Lessee shall, upon written
request from Lessor, deposit additional moneys with Lessor sufficient to
maintain the same ratio between the Security Deposit and the Base Rent
as those amounts are specified in the Basic Provisions. Lessor shall not
be required to keep all or any part of the Security Deposit separate
from its general accounts. Lessor shall, at the expiration or earlier
termination of the term hereof and after Lessee has vacated the
Premises, return to Lessee (or, at Lessor's option, to the last
assignee, if any, of Lessee's interest herein), that portion of the
Security Deposit not used or applied by Lessor. Unless otherwise
expressly agreed in writing by Lessor, no part of the Security Deposit
shall be considered to be held in trust, to bear interest or other
increment for its use, or to be prepayment for any moneys to be paid by
Lessee under this Lease.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the
purposes set forth in Paragraph 1.8, or any other use which is
comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that creates waste or a
nuisance, or that disturbs owners and/or occupants of, or causes damage
to, neighboring premises or properties. Lessor hereby agrees to not
unreasonably withhold or delay its consent to any written request by
Lessee, Lessee's assignees or subtenants, and by prospective assignees
and subtenants of the Lessee, its assignees and subtenants, for a
modification of said permitted purpose for which the premises may be
used or occupied, so long as the same will not impair the structural
integrity of the improvements on the Premises, the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises and the improvements thereon, and is otherwise permissible
pursuant to this Paragraph 6. If Lessor elects to withhold such consent,
Lessor shall within five (5) business days give a written notification
of same, which notice shall include an explanation of Lessor's
reasonable objections to the change in use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance" as
used in this Lease shall mean any product, substance, chemical, material
or waste whose presence, nature, quantity and/or intensity of existence,
use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the public
health, safety or welfare, the environment or the Premises, (ii)
regulated or monitored by any governmental authority, or (iii) a basis
for liability of Lessor to any governmental agency or third party under
any applicable statute or common law theory. Hazardous Substance shall
include, but not be limited to, hydrocarbons, petroleum, gasoline, crude
oil or any products, by-products or fractions thereof. Lessee shall not
engage in any activity in, on or about the Premises which constitutes a
Reportable Use (as hereinafter defined) of Hazardous Substances without
the express prior written consent of Lessor and compliance in a timely
manner (at Lessee's sole cost and expense) with all Applicable Law (as
defined in Paragraph 6.3). "Reportable Use" shall mean (i) the
installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a
Hazardous Substance that requires a permit from, or with respect to
which a report, notice, registration or business plan is required to be
filed with, any governmental authority. Reportable Use shall also
include Lessee's being responsible for the presence in, on or about the
Premises of a Hazardous Substance with respect to which any Applicable
Law requires that a notice be given to persons entering or occupying the
Premises or neighboring properties. Notwithstanding the foregoing,
Lessee may, without Lessor's prior consent, but in compliance with all
Applicable Law, use any ordinary and customary materials reasonably
required to be used by Lessee in the normal course of Lessee's business
permitted on the Premises, so long as such use is not a Reportable Use
and does not expose the Premises or neighboring properties to any
meaningful risk of contamination or damage or expose Lessor to any
liability therefor. In addition, Lessor may (but without any obligation
to do so) condition its consent to the use or presence of any Hazardous
Substance, activity or storage tank by Lessee upon Lessee's giving
Lessor such additional assurances as Lessor, in its reasonable
discretion, deems necessary to protect itself, the public, the Premises
and the environment against damage, contamination or injury and/or
liability therefrom or therefor, including, but not limited to, the
installation (and removal on or before Lease expiration or earlier
termination) of reasonably necessary protective modifications to the
Premises (such as concrete encasements) and/or the deposit of an
additional Security Deposit under Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance, or a condition involving or
resulting from same, has come to be located in, on, under or about the
Premises, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor. Lessee shall
also immediately give Lessor a copy of any statement, report, notice,
registration, application, permit, business plan, license, claim, action
or proceeding given to, or received from, any governmental authority or
private party, or persons entering or occupying the Premises, concerning
the presence, spill, release, discharge of, or exposure to, any
Hazardous Substance or contamination in, on, or about the Premises,
including but not limited to all such documents as may be involved in
any Reportable Uses involving the Premises.
(c) Indemnification. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and
the Premises, harmless from and against any and all loss of rents and/or
damages, liabilities, judgments, costs, claims, liens, expenses,
penalties, permits and attorney's and consultant's fees arising out of
or involving any Hazardous Substance or storage tank brought onto the
Premises by or for Lessee or under Lessee's control. Lessee's
obligations under this Paragraph 8 shall include, but not be limited to,
the effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of investigation
(including consultant's and attorney's fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any
contamination therein involved, and shall survive the expiration or
earlier termination of this Lease. No termination, cancellation or
release agreement entered into by Lessor and Lessee shall release Lessee
from its obligations under this Lease with respect to Hazardous
Substances or storage tanks, unless specifically so agreed by Lessor in
writing at the time of such agreement.
6.3 Lessee's Compliance With Law. Except as otherwise provided in this
Lease, Lessee, shall, at Lessee's sole cost and expense, fully,
diligently and in a timely manner, comply with all "Applicable Law,"
which term is used in this Lease to include all laws, rules,
regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of
Lessor's engineers and/or consultants, relating in any manner to the
Premises (including but not limited to matters pertaining to (i)
industrial hygiene, (ii) environmental conditions on, in, under or about
the Premises, including soil and groundwater conditions, and (iii) the
use, generation, manufacture, production, installation, maintenance,
removal, transportation, storage, spill or release of any Hazardous
Substance or storage tank), now in effect or which may hereafter come
into effect, and whether or not reflecting a change in policy from any
previously existing policy. Lessee shall, within five (5) days after
receipt of Lessor's written request, provide Lessor with copies of all
documents and information, including, but not limited to, permits,
registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing
(with copies of any documents involved) of any threatened or actual
claim, notice, citation, warning, complaint or report pertaining to or
involving failure by Lessee or the Premises to comply with any
Applicable Law.
6.4 Inspection; Compliance. Lessor and Lessor's Lender(s) (as defined
in Paragraph 8.3(a)) shall have the right to enter the Premises at any
time, in the case of an emergency, and otherwise at reasonable times,
for the purpose of inspecting the condition of the Premises and for
verifying compliance by Lessee with this Lease and all Applicable Laws
(as defined in Paragraph 6.3), and to employ experts and/or consultants
in connection therewith and/or to advise Lessor with respect to Lessee's
activities, including but not limited to the installation, operation,
use, monitoring, maintenance, or removal of any Hazardous Substance or
storage tank on or from the Premises. The costs and expenses of any such
inspections shall be paid by the party requesting same, unless a Default
or Breach of this Lease, violation of Applicable Law, or a
contamination, caused or materially contributed to by Lessee is found to
exist or be imminent, or unless the inspection is requested or ordered
by a governmental authority as the result of any such existing or
imminent violation or contamination. In any such case, Lessee shall upon
request reimburse Lessor or Lessor's Lender, as the case may be, for the
costs and expenses of such inspections.
7. Maintenance; Repairs; Utility Installations; Trade Fixtures and
Alterations.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Lessor's
warranty as to condition), 2.3 (Lessor's warranty as to compliance with
covenants, etc.), 7.2 (Lessor's obligations to repair), 9 (damage and
destruction), and 14 (condemnation), Lessee shall, at Lessee's sole cost
and expense and at all times, keep the Premises and every part thereof
in good order, condition and repair, structural and non-structural
(whether or not such portion of the Premises requiring repairs, or the
means of repairing the same, are reasonably or readily accessible to
Lessee, and whether or not the need for such repairs occurs as a result
of Lessee's use, any prior use, the elements or the age of such portion
of the Premises), including, without limiting the generality of the
foregoing, all equipment or facilities serving the Premises, such as
plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire sprinkler
and/or standpipe and hose or other automatic fire extinguishing system,
including fire alarm and/or smoke detection systems and equipment, fire
hydrants, fixtures, walls (interior and exterior), foundations,
ceilings, roofs, floors, windows, doors, plate glass, skylights
landscaping, driveways, parking lots, fences, retaining walls, signs,
sidewalks and parkways located in, on, about, or adjacent to the
Premises. Lessee shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under or about the Premises (including
through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense, take all investigatory and/or remedial action
reasonably recommended, whether or not formally ordered or required, for
the cleanup of any contamination of, and for the maintenance, security
and/or monitoring of the Premises, the elements surrounding same, or
neighboring properties, that was caused or materially contributed to by
Lessee, or pertaining to or involving any Hazardous Substance and/or
storage tank brought onto the Premises by or for Lessee or under its
control. Lessee, in keeping the Premises in good order, condition and
repair, shall exercise and perform good maintenance practices. Lessee's
obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part
thereof in good order, condition and state of repair. If Lessee occupies
the Premises for seven (7) years or more, Lessor may require Lessee to
repaint the exterior of the buildings on the Premises as reasonably
required, but not more frequently than once every seven (7) years.
(b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in, the
inspection, maintenance and service of the following equipment and
improvements, if any, located on the Premises: (i) heating, air
conditioning and ventilation equipment, (ii) boiler, fired or unfired
pressure vessels, (iii) fire sprinkler and/or standpipe and hose or
other automatic fire extinguishing systems, including fire alarm and/or
smoke detection, (iv) landscaping and irrigation systems, (v) roof
covering and drain maintenance and (vi) asphalt and parking lot
maintenance.
7.2 Lessor's Obligations. Except for the warranties and agreements of
Lessor contained in Paragraphs 2.2 (relating to condition of the
Premises), 2.3 (relating to compliance with covenants, restrictions and
building code), 9 (relating to destruction of the Premises) and 14
(relating to condemnation of the Premises), it is intended by the
Parties hereto that Lessor have no obligation, in any manner whatsoever,
to repair and maintain the Premises, the improvements located thereon,
or the equipment therein, whether structural or non structural, all of
which obligations are intended to be that of the Lessee under Paragraph
7.1 hereof. It is the intention of the Parties that the terms of this
Lease govern the respective obligations of the Parties as to maintenance
and repair of the Premises. Lessee and Lessor expressly waive the
benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease with respect to, or which
affords Lessee the right to make repairs at the expense of Lessor or to
terminate this Lease by reason of any needed repairs.
7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility
Installations" is used in this Lease to refer to all carpeting, window
coverings, air lines, power panels, electrical distribution, security,
fire protection systems, communications systems, lighting fixtures,
heating, ventilating, and air conditioning equipment, plumbing, and
fencing in, on or about the Premises. The term "Trade Fixtures" shall
mean Lessee's machinery and equipment that can be removed without doing
material damage to the Premises. The term "Alterations" shall mean any
modification of the improvements on the Premises from that which are
provided by Lessor under the terms of this Lease, other than Utility
Installations or Trade Fixtures, whether by addition or deletion.
"Lessee Owned Alterations And/Or Utility Installations" are defined as
Alterations and/or Utility Installations made by lessee that are not yet
owned by Lessor as defined in Paragraph 7.4(a). Lessee shall not make
any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent. Lessee may, however,
make non-structural Utility Installations to the interior of the
Premises (excluding the roof), as long as they are not visible from the
outside, do not involve puncturing, relocating or removing the roof or
any existing walls, and the cumulative cost thereof during the term of
this Lease as extended does not exceed $25,000.
(b) Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall
be presented to Lessor in written form with proposed detailed plans. All
consents given by Lessor, whether by virtue of Paragraph 7.3(a) or by
subsequent specific consent, shall be deemed conditioned upon: (i)
Lessee's acquiring all applicable permits required by governmental
authorities, (ii) the furnishing of copies of such permits together with
a copy of the plans and specifications for the Alteration or Utility
Installation to Lessor prior to commencement of the work thereon, and
(iii) the compliance by Lessee with all conditions of said permits in a
prompt and expeditious manner. Any Alterations or Utility Installations
by Lessee during the term of this Lease shall be done in a good and
workmanlike manner, with good and sufficient materials, and in
compliance with all Applicable Law. Lessee shall promptly upon
completion thereof furnish Lessor with as-built plans and specifications
therefor. Lessor may (but without obligation to do so) condition its
consent to any requested Alteration or Utility Installation that costs
$10,000 or more upon Lessee's providing Lessor with a lien and
completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation and/or upon
Lessee's posting an additional Security Deposit with Lessor under
Paragraph 36 hereof.
(c) Indemnification. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured
by any mechanics' or materialmen's lien against the Premises or any
interest therein. Lessee shall give Lessor not less than ten (10) days'
notice prior to the commencement of any work in, on or about the
Premises, and Lessor shall have the right to post notices of non-
responsibility in or on the Premises as provided by law. If Lessee
shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before
the enforcement thereof against the Lessor or the Premises. If Lessor
shall require, Lessee shall furnish to Lessor a surety bond satisfactory
to Lessor in an amount equal to one and one-half times the amount of
such contested lien claim or demand, indemnifying Lessor against
liability for the same, as required by law for the holding of the
Premises free from the effect of such lien or claim. In addition, Lessor
may require Lessee to pay Lessor's attorney's fees and costs in
participating in such action if Lessor shall decide it is to its best
interest to do so.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require their removal
or become the owner thereof as hereinafter provided in this Paragraph
7.4, all Alterations and Utility Additions made to the Premises by
Lessee shall be the property of and owned by Lessee, but considered a
part of the Premises. Lessor may, at any time and at its option, elect
in writing to Lessee to be the owner of all or any specified part of the
Lessee Owned Alterations and Utility Installations. Unless otherwise
instructed per subparagraph 7.4(b) hereof, all Lessee Owned Alterations
and Utility Installations shall, at the expiration or earlier
termination of this Lease, become the property of Lessor and remain upon
and be surrendered by Lessee with the Premises.
(b) Removal. Unless otherwise agreed in writing, Lessor may
require that any or all Lessee Owned Alterations or Utility
Installations be removed by the expiration or earlier termination of
this Lease, notwithstanding their installation may have been consented
to by Lessor. Lessor may require the removal at any time of all or any
part of any Lessee Owned Alterations or Utility Installations made
without the required consent of Lessor.
(c) Surrender/Restoration. Lessee shall surrender the Premises by
the end of the last day of the Lease term or any earlier termination
date, with all of the improvements, parts and surfaces thereof clean and
free of debris and in good operating order, condition and state of
repair, ordinary wear and tear excepted. "Ordinary Wear And Tear" shall
not include any damage or deterioration that would have been prevented
by good maintenance practice or by Lessee performing all of its
obligations under this Lease. Except as otherwise agreed or specified in
writing by Lessor, the Premises, as surrendered, shall include the
Utility Installations. The obligation of Lessee shall include the repair
of any damage occasioned by the installation, maintenance or removal of
Lessee's Trade Fixtures, furnishings, equipment, and Alterations and/or
Utility Installations, as well as the removal of any storage tank
installed by or for Lessee, and the removal, replacement, or remediation
of any soil, material or ground water contaminated by Lessee, all as may
then be required by Applicable Law and/or good service practice.
Lessee's Trade Fixtures shall remain the property of Lessee and shall be
removed by Lessee subject to its obligation to repair and restore the
Premises per this Lease.
8. Insurance; Indemnity.
8.1 Payment for Insurance. Regardless of whether the Lessor or Lessee
is the Insuring Party, Lessee shall pay for all insurance required under
this Paragraph 8 except to the extent of the cost attributable to
liability insurance carried by Lessor in excess of $1,000,000 per
occurrence. Premiums for policy periods commencing prior to or extending
beyond the Lease term shall be prorated to correspond to the Lease term.
Payment shall be made by Lessee to Lessor within ten (10) days following
receipt of an invoice for any amount due.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force
during the term of this Lease a Commercial General Liability policy of
insurance protecting Lessee and Lessor (as an additional insured)
against claims for bodily injury, personal injury and property damage
based upon, involving or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such
insurance shall be on an occurrence basis providing single limit
coverage in an amount not less than $1,000,000 per occurrence with an
"Additional Insured-Managers or Lessors of Premises" Endorsement and
contain the "Amendment of the Pollution Exclusion" for damage caused by
heat, smoke or fumes from a hostile fire. The policy shall not contain
any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under
this Lease as an "Insured contract" for the performance of Lessee's
indemnity obligations under this Lease. The limits of said insurance
required by this Lease or as carried by Lessee shall not, however, limit
the liability of Lessee nor relieve Lessee of any obligation hereunder.
All insurance to be carried by Lessee shall be primary to and not
contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.
(b) Carried by Lessor. In the event Lessor is the insuring Party,
Lessor shall also maintain liability insurance described in Paragraph
8.2(a), above, in addition to, and not in lieu of, the insurance
required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.
8.3 Property Insurance--Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain and
keep in force during the term of this Lease a policy or policies in the
name of Lessor, with loss payable to Lessor and to the holders of any
mortgages, deeds of trust or ground leases on the Premises
("Lender(a)"), insuring loss or damage to the Premises. The amount of
such insurance shall be equal to the full replacement cost of the
Premises, as the same shall exist from time to time, or the amount
required by Lenders, but in no event more than the commercially
reasonable and available insurable value thereof if, by reason of the
unique nature or age of the improvements involved, such latter amount is
less than full replacement cost. If Lessor is the Insuring Party,
however, Lessee Owned Alterations and Utility Installations shall be
insured by Lessee under Paragraph 8.4 rather than by Lessor. If the
coverage is available and commercially appropriate, such policy or
policies shall insure against all risks of direct physical loss or
damage (except the perils of flood and/or earthquake unless required by
a Lender), including coverage for any additional costs resulting from
debris removal and reasonable amounts of coverage for the enforcement of
any ordinance or law regulating the reconstruction or replacement of any
undamaged sections of the Premises required to be demolished or removed
by reason of the enforcement of any building, zoning, safety or land use
laws as the result of a covered cause of loss. Said policy or policies
shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation guard
protection causing an increase in the annual property insurance coverage
amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest
to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per
occurrence, and Lessee shall be liable for such deductible amount in the
event of an Insured Loss, as defined in Paragraph 9.1(c).
(b) Rental Value. The Insuring Party shall, in addition, obtain and
keep in force during the term of this Lease a policy or policies in the
name of Lessor, with loss payable to Lessor and Lender(s). Insuring the
loss of the full rental and other charges payable by Lessee to Lessor
under this Lease for one (1) year (including all real estate taxes,
insurance costs, and any scheduled rental increases). Said insurance
shall provide that in the event the Lease is terminated by reason of an
insured loss, the period of indemnity for such coverage shall be
extended beyond the date of the completion of repairs or replacement of
the Premises, to provide for one full year's loss of rental revenues
from the date of any such loss. Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental
income, property taxes, insurance premium costs and other expenses, if
any, otherwise payable by Lessee, for the next twelve (12) month period.
Lessee shall be liable for any deductible amount in the event of such
loss.
(c) Adjacent Premises. If the Premises are part of a larger building,
or if the Premises are part of a group of buildings owned by Lessor
which are adjacent to the Premises, the Lessee shall pay for any
increase in the premiums for the property insurance of such building or
buildings if said increase is caused by Lessee's acts, omissions, use or
occupancy of the Premises.
(d) Tenant's Improvements. If the Lessor is the Insuring Party, the
Lessor shall not be required to insure Lessee Owned Alterations and
Utility Installations unless the item in question has become the
property of Lessor under the terms of this Lease. If Lessee is the
Insuring Party, the policy carried by Lessee under this Paragraph 8.3
shall insure Lessee Owned Alterations and Utility Installations.
8.4 Lessee's Property Insurance. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at
Lessor's option, by endorsement to a policy already carried, maintain
insurance coverage on all of Lessee's personal property, Lessee Owned
Alterations and Utility Installations in, on, or about the Premises
similar in coverage to that carried by the Insuring Party under
Paragraph 8.3. Such insurance shall be full replacement cost coverage
with a deductible of not to exceed $1,000 per occurrence. The proceeds
from any such insurance shall be used by Lessee for the replacement of
personal property or the restoration of Lessee Owned Alterations and
Utility Installations. Lessee shall be the Insuring Party with respect
to the insurance required by this Paragraph 8.4 and shall provide Lessor
with written evidence that such insurance is in force.
8.5 Insurance Policies. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the
Premises are located, and maintaining during the policy term a "General
Policyholders Rating" of at least B+, V, or such other rating as may be
required by a Lender having a lien on the Premises, as set forth in the
most current issue of "Best's Insurance Guide." Lessee shall not do or
permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8. If Lessee is the Insuring Party, Lessee
shall cause to be delivered to Lessor certified copies of policies of
such insurance or certificates evidencing the existence and amounts of
such insurance with the insureds and loss payable clauses as required by
this Lease. No such policy shall be cancellable or subject to
modification except after thirty (30) days prior written notice to
Lessor. Lessee shall at least thirty (30) days prior to the expiration
of such policies, furnish Lessor with evidence of renewals or "insurance
binders" evidencing renewal thereof, or Lessor may order such insurance
and charge the cost thereof to Lessee, which amount shall be payable by
Lessee to Lessor upon demand. If the Insuring Party shall fail to
procure and maintain the insurance required to be carried by the
Insuring Party under this Paragraph 8, the other Party may, but shall
not be required to, procure and maintain the same, but at Lessee's
expense.
8.6 Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor ("Waiving Party") each hereby release and
relieve the other, and waive their entire right to recover damages
(whether in contract or in tort) against the other, for loss of or
damage to the Waiving Party's property arising out of or incident to the
perils required to be insured against under Paragraph 8. The effect of
such releases and waivers of the right to recover damages shall not be
limited by the amount of insurance carried or required, or by any
deductibles applicable thereto.
8.7 Indemnity. Except for Lessor's negligence and/or breach of express
warranties, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, Lessor's master or ground lessor,
partners and Lenders, from and against any and all claims, loss of rents
and/or damages, costs, liens, judgments, penalties, permits, attorney's
and consultant's fees, expenses and/or liabilities arising out of,
involving, or in dealing with, the occupancy of the Premises by Lessee,
the conduct of Lessee's business, any act, omission or neglect of
Lessee, its agents, contractors, employees or invitees, and out of any
Default or Breach by Lessee in the performance in a timely manner of any
obligation on Lessee's part to be performed under this Lease. The
foregoing shall include, but not be limited to, the defense or pursuit
of any claim or any action or proceeding involved therein, and whether
or not (in the case of claims made against Lessor) litigated and/or
reduced to judgment, and whether well founded or not. In case any action
or proceeding be brought against Lessor by reason of any of the
foregoing matters, Lessee upon notice from Lessor shall defend the same
at Lessee's expense by counsel reasonably satisfactory to Lessor and
Lessor shall cooperate with Lessee in such defense. Lessor need not have
first paid any such claim in order to be so indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees,
customers, or any other person in or about the Premises, whether such
damage or injury is caused by or results from fire, steam, electricity,
gas, water or rain, or from the breakage, leakage, obstruction or other
defects of pipes, fire sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether the
said injury or damage results from conditions arising upon the Premises
or upon other portions of the building of which the Premises are a part,
or from other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is accessible
or not. Lessor shall not be liable for any damages arising from any act
of neglect of any other tenant of Lessor. Notwithstanding Lessor's
negligence or breach of this Lease, Lessor shall under no circumstances
be liable for injury to Lessee's business or for any loss of income or
profit therefrom.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to
the improvements on the Premises, other than Lessee Owned Alterations
and Utility Installations, the repair cost of which damage or
destruction is less than 50% of the then Replacement Cost of the
Premises immediately prior to such damage or destruction, excluding from
such calculation the value of the land and Lessee Owned Alterations and
Utility Installations.
(b) "Premises Total Destruction" shall mean damage or destruction
to the Premises, other than Lessee Owned Alterations and Utility
Installations the repair cost of which damage or destruction is 50% or
more of the then Replacement Cost of the Premises immediately prior to
such damage or destruction, excluding from such calculation the value of
the land and Lessee Owned Alterations and Utility Installations.
(c) "Insured Loss" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of
any deductible amounts or coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition,
debris removal and upgrading required by the operation of applicable
building codes, ordinances or laws, and without deduction for
depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination
by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or
under the Premises.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that
is an Insured Loss occurs, then Lessor shall, at Lessor's expense,
repair such damage (but not Lessee's Trade Fixtures or Lessee Owned
Alterations and Utility Installations) as soon as reasonably possible
and this Lease shall continue in full force and effect; provided,
however, that Lessee shall, at Lessor's election, make the repair of any
damage or destruction the total cost to repair of which is $10,000 or
less, and, in such event, Lessor shall make the insurance proceeds
available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such
repair, the Insuring Party shall promptly contribute the shortage in
proceeds (except as to the deductible which is Lessee's responsibility)
as and when required to complete said repairs. In the event, however,
the shortage in proceeds was due to the fact that, by reason of the
unique nature of the improvements, full replacement cost insurance
coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to
fully restore the unique aspects of the Premises unless Lessee provides
Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such
shortage and request therefor. If Lessor receives said funds or adequate
assurance thereof within said ten (10) day period, the party responsible
for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect. If Lessor
does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days
thereafter to make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case
this Lease shall remain in full force and effect. If in such case Lessor
does not so elect, then this Lease shall terminate sixty (60) days
following the occurrence of the damage or destruction. Unless otherwise
agreed, Lessee shall in no event have any right to reimbursement from
Lessor for any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be
subject to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that
there may be some insurance coverage, but the net proceeds of any such
insurance shall be made available for the repairs made by either Party.
9.3 Partial Damage-Uninsured Loss. If a Premises Partial Damage that
is not an insured Loss occurs, unless caused by a negligent or willful
act of Lessee (in which event Lessee shall make the repairs at Lessee's
expense and this Lease shall continue in full force and effect, but
subject to Lessor's rights under Paragraph 13), Lessor may at Lessor's
option, either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force
and effect, or (ii) give written notice to Lessee within thirty (30)
days after receipt by Lessor of knowledge of the occurrence of such
damage of Lessor's desire to terminate this Lease as of the date sixty
(60) days following the giving of such notice. In the event Lessor
elects to give such notice of Lessor's intention to terminate this
Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's
commitment to pay for the repair of such damage totally at Lessee's
expense and without reimbursement from Lessor. Lessee shall provide
Lessor with the required funds or satisfactory assurance thereof within
thirty (30) days following Lessee's said commitment. In such event this
Lease shall continue in full force and effect, and Lessor shall proceed
to make such repairs as soon as reasonably possible and the required
funds are available. If Lessee does not give such notice and provide the
funds or assurance thereof within the times specified above, this Lease
shall terminate as of the date specified in Lessor's notice of
termination.
9.4 Total Destruction. Notwithstanding any other provision hereof, if
a Premises Total Destruction occurs (including any destruction required
by any authorized public authority), this Lease shall terminate sixty
(60) days following the date of such Premises Total Destruction, whether
or not the damage or destruction is an Insured Loss or was caused by a
negligent or willful act of Lessee. In the event, however, that the
damage or destruction was caused by Lessee, Lessor shall have the right
to recover Lessor's damages from Lessee except as released and waived in
Paragraph 8.6.
9.5 Damage Near End Of Term. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost of
repair exceeds one (1) month's Base Rent, whether or not an Insured
Loss, Lessor may, at Lessor's option, terminate this Lease effective
sixty (60) days following the date of occurrence of such damage by
giving written notice to Lessee or Lessor's election to do so within
thirty (30) days after the date of occurrence of such damage. Provided,
however, if Lessee at that time has an exercisable option to extend this
Lease or to purchase the Premises, then Lessee may preserve this Lease
by, within twenty (20) days following the occurrence of the damage, or
before the expiration of the time provided in such option for its
exercise, whichever is earlier ("Exercise Period"), (i) exercising such
option and (ii) providing Lessor with any shortage in insurance proceeds
(or adequate assurance thereof) needed to make the repairs. If Lessee
duly exercises such option during said Exercise Period and provides
Lessor with funds (or adequate assurance thereof) to cover any shortage
in insurance proceeds, Lessor shall, at Lessor's expense repair such
damage as soon as reasonably possible and this Lease shall continue in
full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during said Exercise Period, then Lessor
may at Lessor's option terminate this Lease as of the expiration of said
sixty (60) day period following the occurrence of such damage by giving
written notice to Lessee of Lessor's election to do so within ten (10)
days after the expiration of the Exercise Period, notwithstanding any
term or provision in the grant of option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in Paragraph 9.2 (Partial Damage-
Insured), whether or not Lessor or Lessee repairs or restores the
Premises, the Base Rent, Real Property Taxes, insurance premiums, and
other charges, if any, payable by Lessee hereunder for the period during
which such damage, its repair or the restoration continues (not to
exceed the period for which rental value insurance is required under
Paragraph 8.3(b)), shall be abated in proportion to the degree to which
Lessee's use of the Premises is impaired. Except for abatement of Base
Rent, Real Property Taxes, insurance premiums, and other charges, if
any, as aforesaid, all other obligations of Lessee hereunder shall be
performed by Lessee, and Lessee shall have no claim against Lessor for
any damage suffered by reason of any such repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the
Premises within ninety (90) days after such obligation shall accrue,
Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which
Lessee has actual notice of Lessee's election to terminate this Lease on
a date not less than sixty (60) days following the giving of such
notice. If Lessee gives such notice to Lessor and such Lenders and such
repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date
specified in said notice. If Lessor or a Lender commences the repair or
restoration of the Premises within thirty (30) days after receipt of
such notice, this Lease shall continue in full force and effect.
"Commence" as used in this Paragraph shall mean either the unconditional
authorization of the preparation of the required plans, or the beginning
of the actual work on the Premises, whichever first occurs.
9.7 Hazardous Substance Conditions. If a Hazardous Substance
Condition occurs, unless Lessee is legally responsible therefor (in
which case Lessee shall make the investigation and remediation thereof
required by Applicable Law and this Lease shall continue in full force
and effect; but subject to Lessor's rights under Paragraph 13), Lessor
may at Lessor's option either (i) investigate and remediate such
Hazardous Substance Condition, if required, as soon as reasonably
possible at Lessor's expense, in which event this Lease shall continue
in full force and effect, or (ii) if the estimated cost to investigate
and remediate such condition exceeds twelve (12) times the then monthly
Base Rent or $100,000, whichever is greater, give written notice to
Lessee within thirty (30) days after receipt by Lessor of knowledge of
the occurrence of such Hazardous Substance Condition of Lessor's desire
to terminate this Lease as of the date sixty (60) days following the
giving of such notice. In the event Lessor elects to give such notice of
Lessor's intention to terminate this Lease, Lessee shall have the right
within ten (10) days after the receipt of such notice to give written
notice to Lessor of Lessee's commitment to pay for the investigation and
remediation of such Hazardous Substance Condition totally at Lessee's
expense and without reimbursement from Lessor except to the extent of an
amount equal to twelve (12) times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with the
funds required of Lessee or satisfactory assurance thereof within thirty
(30) days following Lessee's said commitment. In such event this Lease
shall continue in full force and effect, and Lessor shall proceed to
make such investigation and remediation as soon as reasonably possible
and the required funds are available. If Lessee does not give such
notice and provide the required funds or assurance thereof within the
times specified above, this lease shall terminate as of the date
specified in Lessor's notice of termination. if a Hazardous Substance
Condition occurs for which Lessee is not legally responsible, there
shall be abatement of Lessee's obligations under this Lease to the same
extent as provided in Paragraph 9.6(a) for a period of not to exceed
twelve (12) months.
9.8 Termination-Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by
Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of
Lessee's Security Deposit as has not been, or is not required to be,
used by Lessor under the terms of this Lease.
9.9 Waive Statutes. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the
Premises with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent
inconsistent herewith.
10. Real Property Taxes.
10.1 (a) Payment of Taxes. Lessee shall pay the Real Property Taxes,
as defined in Paragraph 10.2, applicable to the Premises during the term
of this Lease. Subject to Paragraph 10.1(b), all such payments shall be
made at least ten (10) days prior to the delinquency date of the
applicable installment. Lessee shall promptly furnish Lessor with
satisfactory evidence that such taxes have been paid. If any such taxes
to be paid by Lessee shall cover any period of time prior to or after
the expiration or earlier termination of the term hereof, Lessee's share
of such taxes shall be equitably prorated to cover only the period of
time within the tax fiscal year this Lease is in effect, and Lessor
shall reimburse Lessee for any overpayment after such proration. If
Lessee shall fail to pay any Real Property Taxes required by this Lease
to be paid by Lessee, Lessor shall have the right to pay the same, and
Lessee shall reimburse Lessor therefor upon demand.
(b) Advance Payment. In order to insure payment when due and before
delinquency of any or all Real Property Taxes, Lessor reserves the
right, at Lessor's option, to estimate the current Real Property Taxes
applicable to the Premises, and to require such current year's Real
Property Taxes to be paid in advance to Lessor by Lessee, either: (i) in
a lump sum amount equal to the installment due, at least twenty (20)
days prior to the applicable delinquency date, or (ii) monthly in
advance with the payment of the Base Rent. If Lessor elects to require
payment monthly in advance, the monthly payment shall be that equal
monthly amount which, over the number of months remaining before the
month in which the applicable tax installment would become delinquent
(and without interest thereon), would provide a fund large enough to
fully discharge before delinquency the estimated installment of taxes to
be paid. When the actual amount of the applicable tax bill is known, the
amount of such equal monthly advance payment shall be adjusted as
required to provide the fund needed to pay the applicable taxes before
delinquency. If the amounts paid to Lessor by Lessee under the
provisions of this Paragraph are insufficient to discharge the
obligations of Lessee to pay such Real Property Taxes as the same become
due, Lessee shall pay to Lessor, upon Lessor's demand, such additional
sums as are necessary to pay such obligations. All moneys paid to Lessor
under this Paragraph may be intermingled with other moneys of Lessor and
shall not bear interest. In the event of a Breach by Lessee in the
performance of the obligations of Lessee under this Lease, then any
balance of funds paid to Lessor under the provisions of this Paragraph
may, subject to proration as provided in Paragraph 10.1(a) at the option
of Lessor, be treated as an additional Security Deposit under Paragraph
5.
10.2 Definition Of "Real Property Taxes." As used herein, the term
"Real Property Taxes" shall include any form of real estate tax or
assessment, general, special, ordinary or extraordinary, and any license
fee, commercial rental tax, improvement bond or bonds, levy or tax
(other than inheritance, personal income or estate taxes) imposed upon
the Premises by any authority having the direct or indirect power to
tax, including any city, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage or other improvement
district thereof, levied against any legal or equitable interest of
Lessor in the Premises or in the real property of which the Premises are
a part, Lessor's right to rent or other income therefrom, and/or
Lessor's business of leasing the Premises. The term "Real Property
Taxes" shall also include any tax, fee, levy, assessment or charge, or
any increase therein, imposed by reason of events occurring, or changes
in applicable law taking effect, during the term of this Lease,
including but not limited to a change in the ownership of the Premises
or in the improvements thereon, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not
contemplated by the Parties.
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property
Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the
respective valuation assigned in the assessor's work sheets or such
other information as may be reasonably available. Lessor's reasonable
determination thereof, in good faith, shall be conclusive.
10.4 Personal Property Taxes. Lessee shall pay prior to delinquency
all taxes assessed against and levied upon Lessee Owned Alterations,
Utility Installations, Trade Fixtures, furnishings, equipment and all
personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause its Trade Fixtures, furnishings, equipment
and all other personal property to be assessed and billed separately
from the real property of Lessor. If any of Lessee's said personal
property shall be assessed with Lessor's real property, Lessee shall pay
Lessor the taxes attributable to Lessee within ten (10) days after
receipt of a written statement setting forth the taxes applicable to
Lessee's property or, at Lessor's option, as provided in Paragraph
10.1(b).
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to
the Premises, together with any taxes thereon. If any such services are
not separately metered to Lessee, Lessee shall pay a reasonable
proportion, to be determined by Lessor, of all charges jointly metered
with other premises.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively,
"assignment") or sublet all or any part of Lessee's interest in this
Lease or in the Premises without Lessor's prior written consent given
under and subject to the terms of Paragraph 36.
(b) A change in the control of Lessee shall constitute an
assignment requiring Lessor's consent. The transfer, on a cumulative
basis, of twenty-five percent (25%) or more of the voting control of
Lessee shall constitute a change in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction,
or series of transactions (by way of merger, sale, acquisition,
financing, refinancing, transfer, leveraged buy-out or otherwise),
whether or not a formal assignment or hypothecation of this Lease or
Lessee's assets occurs, which results or will result in a reduction of
the Net Worth of Lessee, as hereinafter defined, by an amount equal to
or greater than twenty-five percent (25%) of such Net Worth of Lessee as
it was represented to Lessor at the time of the execution by Lessor of
this Lease or at the time of the most recent assignment to which Lessor
has consented, or as it exists immediately prior to said transaction or
transactions constituting such reduction, at whichever time said Net
Worth of Lessee was or is greater, shall be considered an assignment of
this Lease by Lessee to which Lessor may reasonably withhold its
consent. "Net Worth of Lessee" for purposes of this Lease shall be the
net worth of Lessee (excluding any guarantors) established under
generally accepted accounting principles consistently applied.
(d) An assignment or subletting of Lessee's interest in this
Lease without Lessor's specific prior written consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c), or a
noncurable Breach without the necessity of any notice and grace period.
If Lessor elects to treat such unconsented to assignment or subletting
as a noncurable Breach, Lessor shall have the right to either: (i)
terminate this Lease, or (ii) upon thirty (30) days written notice
("Lessor's Notice"), increase the monthly Base Rent to fair market
rental value or one hundred ten percent (110%) of the Base Rent then in
effect, whichever is greater. Pending determination of the new fair
market rental value, if disputed by Lessee, Lessee shall pay the amount
set forth in Lessor's Notice, with any overpayment credited against the
next installment(s) of Base Rent coming due, and any underpayment for
the period retroactively to the effective date of the adjustment being
due and payable immediately upon the determination thereof. Further, in
the event of such Breach and market value adjustment, (i) the purchase
price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to the then fair market value (without the
Lease being considered an encumbrance or any deduction for depreciation
or obsolescence, and considering the Premises at its highest and best
use and in good condition), or one hundred ten percent (110%) of the
price previously in effect, whichever is greater, (ii) any index-
oriented rental or price adjustment formulas contained in this Lease
shall be adjusted to require that the base index be determined with
reference to the index applicable to the time of such adjustment, and
(iii) any fixed rental adjustments scheduled during the remainder of the
Lease term shall be increased in the same ratio as the new market rental
bears to the Base Rent in effect immediately prior to the market value
adjustment.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by
Lessor shall be limited to compensatory damages and injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by
such assignee or sublessee of the obligations of Lessee under this
Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter
the primary liability of Lessee for the payment of Base Rent and other
sums due Lessor hereunder or for the performance of any other
obligations to be performed by Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's
obligations from any person other than Lessee pending approval or
disapproval of an assignment. Neither a delay in the approval or
disapproval of such assignment nor the acceptance of any rent or
performance shall constitute a waiver or estoppel of Lessor's right to
exercise its remedies for the Default or Breach by Lessee of any of the
terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall
not constitute a consent to any subsequent assignment or subletting by
Lessee or to any subsequent or successive assignment or subletting by
the sublessee. However, Lessor may consent to subsequent sublettings and
assignments of the sublease or any amendments or modifications thereto
without notifying Lessee or anyone else liable on the Lease or sublease
and without obtaining their consent and such action shall not relieve
such persons from liability under this Lease or sublease.
(d) In the event of any Default or Breach of Lessee's obligations
under this Lease, Lessor may proceed directly against Lessee, any
Guarantors or any one else responsible for the performance of the
Lessee's obligations under this Lease, including the sublessee, without
first exhausting Lessor's remedies against any other person or entity
responsible therefor to Lessor, or any security held by Lessor or
Lessee.
(e) Each request for consent to an assignment or subletting shall
be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not
limited to the intended use and/or required modification of the
Premises, if any, together with a non-refundable deposit of $1,000 or
ten percent (10%) of the current monthly Base Rent, whichever is
greater, as reasonable consideration for Lessor's considering and
processing the request for consent. Lessee agrees to provide Lessor with
such other or additional information and/or documentation as may be
reasonably requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be
deemed, for the benefit of Lessor, to have assumed and agreed to conform
and comply with each and every term, covenant, condition and obligation
herein to be observed or performed by Lessee during the term of said
assignment or sublease, other than such obligations as are contrary to
or inconsistent with provisions of an assignment or sublease to which
Lessor has specifically consented in writing.
(g) The occurrence of a transaction described in Paragraph
12.1(c) shall give Lessor the right (but not the obligation) to require
that the Security Deposit be increased to an amount equal to six (6)
times the then monthly Base Rent, and Lessor may make the actual receipt
by Lessor of the amount required to establish such Security Deposit a
condition to Lessor's consent to such transaction.
(h) Lessor, as a condition to giving its consent to any
assignment or subletting, may require that the amount and adjustment
structure of the rent payable under this Lease be adjusted to what is
then the market value and/or adjustment structure for property similar
to the Premises as then constituted.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee
of all or any part of the Premises and shall be deemed included in all
subleases under this Lease whether or not expressly incorporated
therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a
portion of the Premises heretofore or hereafter made by Lessee, and
Lessor may collect such rent and income and apply same toward Lessee's
obligations under this Lease; provided, however, that until a Breach (as
defined in Paragraph 13.1) shall occur in the performance of Lessee's
obligations under this Lease, Lessee may, except as otherwise provided
in this Lease, receive, collect and enjoy the rents accruing under such
sublease. Lessor shall not, by reason of this or any other assignment of
such sublease to Lessor, nor by reason of the collection of the rents
from a sublessee, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such
sublessee under such sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor
stating that a Breach exists in the performance of Lessee's obligations
under this Lease, to pay to Lessor the rents and other charges due and
to become due under the sublease. Sublessee shall rely upon any such
statement and request from Lessor and shall pay such rents and other
charges to Lessor without any obligation or right to inquire as to
whether such Breach exists and notwithstanding any notice from or claim
from Lessee to the contrary. Lessee shall have no right or claim against
said sublessee, or, until the Breach has been cured, against Lessor, for
any such rents and other charges so paid by said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in
which event Lessor shall undertake the obligations of the sublessor
under such sublease from the time of the exercise of said option to the
expiration of such sublease; provided, however, Lessor shall not be
liable for any prepaid rents or security deposit paid by such sublessee
to such sublessor or for any other prior Defaults or Breaches of such
sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor
under a sublease shall also require the consent of Lessor herein.
(d) No sublessee shall further assign or sublet all or any part
of the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the
Default of Lessee within the grace period, if any, specified in such
notice. The sublessee shall have a right of reimbursement and offset
from and against Lessee for any such Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such
occurrence for legal services and costs in the preparation and service
of a notice of Default, and that Lessor may include the cost of such
services and costs in said notice as rent due and payable to cure said
Default. A "Default" is defined as a failure by the Lessee to observe,
comply with or perform any of the terms, covenants, conditions or rules
applicable to Lessee under this Lease. A "Breach" is defined as the
occurrence of any one or more of the following Defaults, and, where a
grace period for cures after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable
grace period, shall entitle Lessor to pursue the remedies set forth in
Paragraphs 13.2 and/or 13.3:
(a) The vacating of the Premises without the intention to
reoccupy same, or the abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the
failure by Lessee to make any payment of Base Rent or any other monetary
payment required to be made by Lessee hereunder, whether to Lessor or to
a third party, as and when due, the failure by Lessee to provide Lessor
with reasonable evidence of insurance or surety bond required under this
Lease, or the failure of Lessee to fulfill any obligation under this
Lease which endangers or threatens life or property, where such failure
continues for a period of three (3) days following written notice
thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the
failure by Lessee to provide Lessor with reasonable written evidence (in
duly executed original form, if applicable) of (i) compliance with
Applicable Law per Paragraph 6.3, (ii) the inspection, maintenance and
service contracts required under Paragraph 7.1(b), (iii) the recission
of an unauthorized assignment or subletting per Paragraph 12.1(b), (iv)
a Tenancy Statement per Paragraphs 16 or 37, (v) the subordination or
non-subordination of this Lease per Paragraph 30, (vi) the guaranty of
the performance of Lessee's obligations under this Lease if required
under Paragraphs 1.11 and 37, (vii) the execution of any document
requested under Paragraph 42 (easements), or (viii) any other
documentation or information which Lessor may reasonably require of
Lessee under the terms of this Lease, where any such failure continues
for a period of ten (10) days following written notice by or on behalf
of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40
hereof, that are to be observed, complied with or performed by Lessee,
other than those described in subparagraphs (a), (b) or (c), above,
where such Default continues for a period of thirty (30) days after
written notice thereof by or on behalf of Lessor to Lessee; provided,
however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not
be deemed to be a Breach of this Lease by Lessee if Lessee commences
such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) The making
by Lessee of any general arrangement or assignment for the benefit of
creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S.C.
Section 101 or any successor statute thereto (unless, in the case of a
petition filed against Lessee, the same is dismissed within sixty (60)
days); (iii) the appointment of a trustee or receiver to take possession
of substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where possession is not restored to
Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located
at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in
the event that any provision of this subparagraph (e) is contrary to any
applicable law, such provision shall be of no force or effect, and not
affect the validity of the remaining provisions.
(f) The discovery by Lessor that any financial statement given to
Lessor by Lessee or any Guarantor of Lessee's obligations hereunder was
materially false.
(g) If the performance of Lessee's obligations under this Lease
is guaranteed: (i) the death of a guarantor, (ii) the termination of a
guarantor's liability with respect to this Lease other than in
accordance with the terms of such guaranty, (iii) a guarantor's becoming
insolvent or the subject of a bankruptcy filing, (iv) a guarantor's
refusal to honor the guaranty, or (v) a guarantor's breach of its
guaranty obligation on an anticipatory breach basis, and Lessee's
failure, within sixty (60) days following written notice by or on behalf
of Lessor to Lessee of any such event, to provide Lessor with written
alternative assurance or security, which, when coupled with the then
existing resources of Lessee, equals or exceeds the combined financial
resources of Lessee and the guarantors that existed at the time of
execution of this Lease.
13.2 Remedies. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after
written notice to Lessee (or in case of an emergency, without notice),
Lessor may at its option (but without obligation to do so), perform such
duty or obligation on Lessee's behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or
governmental licenses, permits or approvals. The costs and expenses of
any such performance by Lessor shall be due and payable by Lessee to
Lessor upon invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its
option, may require all future payments to be made under this Lease by
Lessee to be made only by cashier's check. In the event of a Breach of
this Lease by Lessee, as defined in Paragraph 13.1, with or without
further notice or demand, and without limiting Lessor in the exercise of
any right or remedy which Lessor may have by reason of such Breach,
Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall
terminate and Lessee shall immediately surrender possession of the
Premises to Lessor. In such event Lessor shall be entitled to recover
from Lessee: (i) the worth at the time of the award of the unpaid rent
which had been earned at the time of termination; (ii) the worth at the
time of award of the amount by which the unpaid rent which would have
been earned after termination until the time of award exceeds the amount
of such rental loss that the Lessee proves could have been reasonably
avoided; (iii) the worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds
the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate
Lessor for all the detriment proximately caused by the Lessee's failure
to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including but not
limited to the cost of recovering possession of the Premises, expenses
of reletting, including necessary renovation and alteration of the
Premises, reasonable attorney's fees, and that portion of the leasing
commission paid by Lessor applicable to the unexpired term of this
Lease. The worth at the time of award of the amount referred to in
provision (iii) of the prior sentence shall be computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%). Efforts by Lessor
to mitigate damages caused by Lessee's Default or Breach of this Lease
shall not waive Lessor's right to recover damages under this Paragraph.
If termination of this Lease is obtained through the provisional remedy
of unlawful detainer, Lessor shall have the right to recover in such
proceeding the unpaid rent and damages as are recoverable therein, or
Lessor may reserve therein the right to recover all or any part thereof
in a separate suit for such rent and/or damages. If a notice and grace
period required under subparagraphs 13.1(b), (c) or (d) was not
previously given, a notice to pay rent or quit, or to perform or quit,
as the case may be, given to Lessee under any statute authorizing the
forfeiture of leases for unlawful detainer shall also constitute the
applicable notice for grace period purposes required by subparagraphs
13.1(b), (c) or (d). In such case, the applicable grace period under
subparagraphs 13.1(b), (c) or (d) and under the unlawful detainer
statute shall run concurrently after the one such statutory notice, and
the failure of Lessee to cure the Default within the greater of the two
such grace periods shall constitute both an unlawful detainer and a
Breach of this Lease entitling Lessor to the remedies provided for in
this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in effect
(in California under California Civil Code Section 1951.4) after
Lessee's Breach and abandonment and recover the rent as it becomes due,
provided Lessee has the right to sublet or assign, subject only to
reasonable limitations. See Paragraphs 12 and 38 for the limitations on
assignment and subletting which limitations Lessee and Lessor agree are
reasonable. Acts of maintenance or preservation, efforts to relet the
Premises, or the appointment of a receiver to protect the Lessor's
interest under the Lease, shall not constitute a termination of the
Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises
are located.
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee
from liability under any indemnity provisions of this Lease as to
matters occurring or accruing during the term hereof or by reason of
Lessee's occupancy of the Premises.
13.3 Inducement Recapture in Event Of Breach. Any agreement by Lessor
for free or abated rent or other charges applicable to the Premises, or
for the giving or paying by Lessor to or for Lessee of any cash or other
bonus, inducement or consideration for Lessee's entering into this
Lease, all of which concessions are hereinafter referred to as
"Inducement Provisions," shall be deemed conditioned upon Lessee's full
and faithful performance of all of the terms, covenants and conditions
of this Lease to be performed or observed by Lessee during the term
hereof as the same may be extended. Upon the occurrence of a Breach of
this Lease by Lessee, as defined in Paragraph 13.1, any such Inducement
Provision shall automatically be deemed deleted from this Lease and of
no further force or effect, and any rent, other charge, bonus,
inducement or consideration theretofore abated, given or paid by Lessor
under such an Inducement Provision shall be immediately due and payable
by Lessee to Lessor, and recoverable by Lessor as additional rent due
under this Lease, notwithstanding any subsequent cure of said Breach by
Lessee. The acceptance by Lessor of rent or the cure of the Breach which
initiated the operation of this Paragraph shall not be deemed a waiver
by Lessor of the provisions of this Paragraph unless specifically so
stated in writing by Lessor at the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor
to incur costs not contemplated by this Lease, the exact amount of which
will be extremely difficult to ascertain. Such costs include, but are
not limited to, processing and accounting charges, and late charges
which may be imposed upon Lessor by the terms of any ground lease,
mortgage or trust deed covering the Premises. Accordingly, if any
installment of rent or any other sum due from Lessee shall not be
received by Lessor or Lessor's designee within five (5) days after such
amount shall be due, then, without any requirement for notice to Lessee,
Lessee shall pay to Lessor a late charge equal to six percent (6%) of
such overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur
by reason of late payment by Lessee. Acceptance of such late charge by
Lessor shall in no event constitute a waiver of Lessee's Default or
Breach with respect to such overdue amount, nor prevent Lessor 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 Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to
the contrary, Base Rent shall, at Lessor's option, become due and
payable quarterly in advance.
13.5 Breach by Lessor. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an
obligation required to be performed by Lessor. For purposes of this
Paragraph 13.5, a reasonable time shall in no event be less than thirty
(30) days after receipt by Lessor, and by the holders of any ground
lease, mortgage or deed of trust covering the Premises whose name and
address shall have been furnished Lessee in writing for such purpose, of
written notice specifying wherein such obligation of Lessor has not been
performed; provided, however, that if the nature of Lessor's obligation
is such that more than thirty (30) days after such notice are reasonably
required for its performance, then Lessor shall not be in breach of this
Lease if performance is commenced within such thirty (30) day period and
thereafter diligently pursued to completion.
14. Condemnation. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of exercise of said
power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs, if more
than ten percent (10%) of the floor area of the Premises, or more than
twenty-five percent (25%) of the land area not occupied by any building,
is taken by condemnation, Lessee may, at Lessee's option, to be
exercised in writing within ten (10) days after Lessor shall have given
Lessee written notice of such taking (or in the absence of such notice,
within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority
takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and
effect as to the portion of the Premises remaining, except that the Base
Rent shall be reduced in the same proportion as the rentable floor area
of the Premises taken bears to the total rentable floor area of the
building located on the Premises. No reduction of Base Rent shall occur
if the only portion of the Premises taken is land on which there is no
building. Any award for the taking of all or any part of the Premises
under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Lessor, whether such
award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages;
provided, however, that Lessee shall be entitled to any compensation
separately awarded to Lessee for Lessee's relocation expenses and/or
loss of Lessee's Trade Fixtures. In the event that this Lease is not
terminated by reason of such condemnation, Lessor shall to the extent of
its net severance damages received, over and above the legal and other
expenses incurred by Lessor in the condemnation matter, repair any
damage to the Premises caused by such condemnation, except to the extent
that Lessee has been reimbursed therefor by the condemning authority.
Lessee shall be responsible for the payment of any amount in excess of
such net severance damages required to complete such repair.
15. Broker's Fee.
15.1 The Brokers named in Paragraph 1.10 are the procuring causes of
this Lease.
15.2 Upon execution of this Lease by both Parties, Lessor shall pay to
said Brokers jointly, or in such separate shares as they may mutually
designate in writing, a fee as set forth in a separate written agreement
between Lessor and said Brokers (or in the event there is no separate
written agreement between Lessor and said Brokers, the sum of $ None )
for brokerage services rendered by said Brokers to Lessor in this
transaction.
15.3 Unless Lessor and Brokers have otherwise agreed in writing,
Lessor further agrees that: (a) If Lessee exercises any Option (as
defined in Paragraph 39.1) or any Option subsequently granted which is
substantially similar to an Option granted to Lessee in this Lease, or
(b) If Lessee acquires any rights to the Premises or other premises
described in this Lease which are substantially similar to what Lessee
would have acquired had an Option herein granted to Lessee been
exercised, or (c) If Lessee remains in possession of the Premises, with
the consent of Lessor, after the expiration of the term of this Lease
after having failed to exercise an Option, or (d) If said Brokers are
the procuring cause of any other lease or sale entered into between the
Parties pertaining to the Premises and/or any adjacent property in which
Lessor has an interest, or (e) If Base Rent is increased, whether by
agreement or operation of an escalation clause herein, then as to any of
said transactions, Lessor shall pay said Brokers a fee in accordance
with the schedule of said Brokers in effect at the time of the execution
of this Lease.
15.4 Any buyer or transferee of Lessor's interest in this Lease,
whether such transfer is by agreement or by operation of the law, shall
be deemed to have assumed Lessor's obligation under this Paragraph 15.
Each Broker shall be a third party beneficiary of the provisions of this
Paragraph 15 to the extent of its interest in any commission arising
from this Lease and may enforce that right directly against Lessor and
its successors.
15.5 Lessee and Lessor each represent and warrant to the other that it
has had no dealings with any person, firm, broker or finder (other than
the Brokers, if any named in Paragraph 1.10) in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity
other than said named Brokers is entitled to any commission or finder's
fee in connection with said transaction. Lessee and Lessor do each
hereby agree to indemnify, protect, defend and hold the other harmless
from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by
reason of any dealings or actions of the Indemnifying Party, including
any costs, expenses, attorney's fees reasonably incurred with respect
thereto.
15.6 Lessor and Lessee hereby consent to and approve all agency
relationships, including any dual agencies, indicated in Paragraph 1.10.
16. Tenancy Statement.
16.1 Each Party (as "Responding Party") shall within ten (10) days
after written notice from the other Party (the "Requesting Party")
execute, acknowledge and deliver to the Requesting Party a statement in
writing in form similar to the then most current "Tenancy Statement"
form published by the American Industrial Real Estate Association, plus
such additional information, confirmation and/or statements as may be
reasonably requested by the Requesting Party.
16.2 If Lessor desires to finance, refinance, or sell the Premises,
any part thereof, or the building of which the Premises are a part,
Lessee and all Guarantors of Lessee's performance hereunder shall
deliver to any potential lender or purchaser designated by Lessor such
financial statements of Lessee and such Guarantors as may be reasonably
required by such lender or purchaser, including but not limited to
Lessee's financial statements for the past three (3) years. All such
financial statements shall be received by Lessor and such lender or
purchaser in confidence and shall be used only for the purposes herein
set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the
Premises, or, if this is a sublease, of the Lessee's interest in the
prior lease. In the event of a transfer of Lessor's title or interest in
the Premises or in this Lease, Lessor shall deliver to the transferee or
assignee (in cash or by credit) any unused Security Deposit held by
Lessor at the time of such transfer or assignment. Except as provided in
Paragraph 15, upon such transfer or assignment and delivery of the
Security Deposit, as aforesaid, the prior Lessor shall be relieved of
all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the
foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect
the validity of any other provision hereof.
19. Interest On Past-Due Obligations. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty
(30) days following the date on which it was due, shall bear interest
from the thirty-first (31st) day after it was due at the rate of 12% per
annum, but not exceeding the maximum rate allowed by law, in addition to
the late charge provided for in Paragraph 13.4.
20. Time Of Essence. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the
Parties under this Lease.
21. Rent Defined. All monetary obligations of Lessee to Lessor under
the terms of this Lease are deemed to be rent.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease
contains all agreements between the Parties with respect to any matter
mentioned herein, and no other prior or contemporaneous agreement or
understanding shall be effective. Lessor and Lessee each represents and
warrants to the Brokers that it has made, and is relying solely upon,
its own investigation as to the nature, quality, character and financial
responsibility of the other Party to this Lease and as to the nature,
quality and character of the Premises. Brokers have no responsibility
with respect thereto or with respect to any default or breach hereof by
either Party.
23. Notices.
23.1 All notices required or permitted by this Lease shall be in
writing and may be delivered in person (by hand or by messenger or
courier service) or may be sent by regular, certified or registered mail
or U.S. Postal Service Express Mail, with postage prepaid, or by
facsimile transmission, and shall be deemed sufficiently given if served
in a manner specified in this Paragraph 23. The addresses noted adjacent
to a Party's signature on this Lease shall be that Party's address for
delivery or mailing of notice purposes. Either Party may by written
notice to the other specify a different address for notice purposes,
except that upon Lessee's taking possession of the Premises, the
Premises shall constitute Lessee's address for the purpose of mailing or
delivering notices to Lessee. A copy of all notices required or
permitted to be given to Lessor hereunder shall be concurrently
transmitted to such party or parties at such addresses as Lessor may
from time to time hereafter designate by written notice to Lessee.
23.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the
receipt card, or if no delivery date is shown, the postmark thereon. If
sent by regular mail the notice shall be deemed given forty-eight (48)
hours after the same is addressed as required herein and mailed with
postage prepaid. Notices delivered by United States Express Mail or
overnight courier that guarantees next day delivery shall be deemed
given twenty-four (24) hours after delivery of the same to the United
States Postal Service or courier. If any notice is transmitted by
facsimile transmission or similar means, the same shall be deemed served
or delivered upon telephone confirmation of receipt of the transmission
thereof, provided a copy is also delivered via delivery or mail. If
notice is received on a Sunday or legal holiday, it shall be deemed
received on the next business day.
24. Waivers. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any
other term, covenant or condition hereof, or of any subsequent Default
or Breach by Lessee of the same or of any other term, covenant or
condition hereof. Lessor's consent to, or approval of, any act shall not
be deemed to render unnecessary the obtaining of Lessor's consent to, or
approval of, any subsequent or similar act by Lessee, or be construed as
the basis of an estoppel to enforce the provision or provisions of this
Lease requiring such consent. Regardless of Lessor's knowledge of a
Default or Breach at the time of accepting rent, the acceptance of rent
by Lessor shall not be a waiver of any preceding Default or Breach by
Lessee of any provision hereof, other than the failure of Lessee to pay
the particular rent so accepted. Any payment given Lessor by Lessee may
be accepted by Lessor on account of moneys or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall
be of no force or effect whatsoever unless specifically agreed to in
writing by Lessor at or before the time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the
other, execute, acknowledge and deliver to the other a short form
memorandum of this Lease for recording purposes. The Party requesting
recordation shall be responsible for payment of any fees or taxes
applicable thereto.
26. No Right to Holdover. Lessee has no right to retain possession of
the Premises or any part thereof beyond the expiration or earlier
termination of this Lease.
27. Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all
other remedies at law or in equity.
28. Covenants and Conditions. All provisions of this Lease to be
observed or performed by Lessee are both covenants and conditions.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be
governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be
initiated in the county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or
other hypothecation or security device (collectively, "Security
Device"), now or hereafter placed by Lessor upon the real property of
which the Premises are a part, to any and all advances made on the
security thereof, and to all renewals, modifications, consolidations,
replacements and extensions thereof. Lessee agrees that the Lenders
holding any such Security Device shall have no duty, liability or
obligation to perform any of the obligations of Lessor under this Lease,
but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default
and allow such Lender thirty (30) days following receipt of such notice
for the cure of said default before invoking any remedies Lessee may
have by reason thereof. If any Lender shall elect to have this Lease
and/or any Option granted hereby superior to the lien of its Security
Device and shall give written notice thereof to Lessee, this Lease and
such Options shall be deemed prior to such Security Device,
notwithstanding the relative dates of the documentation or recordation
thereof.
30.2 Attornment. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party
who acquires ownership of the Premises by reason of a foreclosure of a
Security Device, and that in the event of such foreclosure, such new
owner shall not: (i) be liable for any act or omission of any prior
lessor or with respect to events occurring prior to acquisition of
ownership, (ii) be subject to any offsets or defenses which Lessee might
have against any prior lessor, or (iii) be bound by prepayment of more
than one (1) month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this
Lease shall be subject to receiving assurance (a "Non-Disturbance
Agreement") from the Lender that Lessee's possession and this Lease,
including any options to extend the term hereof, will not be disturbed
so long as Lessee is not in Breach hereof and attorns to the record
owner of the Premises.
30.4 Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents;
provided, however, that, upon written request from Lessor or a Lender in
connection with a sale, financing or refinancing of the Premises, Lessee
and Lessor shall execute such further writings as may be reasonably
required to separately document any such subordination or non-
subordination, attornment and/or non-disturbance agreement as is
provided for herein.
31. Attorney's Fees. If any Party or Broker brings an action or
proceeding to enforce the terms hereof or declare rights hereunder, the
Prevailing Party (as hereafter defined) or Broker in any such
proceeding, action, or appeal thereon, shall be entitled to reasonable
attorney's fees. Such fees may be awarded in the same suit or recovered
in a separate suit, whether or not such action or proceeding is pursued
to decision or judgment. The term, "Prevailing Party" shall include,
without limitation, a Party or Broker who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of
its claim or defense. The attorney's fees award shall not be computed in
accordance with any court fee schedule, but shall be such as to fully
reimburse all attorney's fees reasonably incurred. Lessor shall be
entitled to attorney's fees, costs and expenses incurred in the
preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently
commenced in connection with such Default or resulting Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's
agents shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times for the purpose
of showing the same to prospective purchasers, lenders, or lessees, and
making such alterations, repairs, improvements or additions to the
Premises or to the building of which they are a part, as Lessor may
reasonably deem necessary. Lessor may at any time place on or about the
Premises or building any ordinary "For Sale" signs and Lessor may at any
time during the last one hundred twenty (120) days of the term hereof
place on or about the Premises any ordinary "For Lease" signs. All such
activities of Lessor shall be without abatement of rent or liability to
Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises
without first having obtained Lessor's prior written consent.
Notwithstanding anything to the contrary in this Lease, Lessor shall not
be obligated to exercise any standard of reasonableness in determining
whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the Premises, except
that Lessee may, with Lessor's prior written consent, install (but not
on the roof) such signs as are reasonably required to advertise Lessee's
own business. The installation of any sign on the Premises by or for
Lessee shall be subject to the provisions of Paragraph 7 (Maintenance,
Repairs, Utility Installations, Trade Fixtures and Alterations). Unless
otherwise expressly agreed herein, Lessor reserves all rights to the use
of the roof and the right to install, and all revenues from the
installation of, such advertising signs on the Premises, including the
roof, as do not unreasonably interfere with the conduct of Lessee's
business.
35. Termination; Merger. Unless specifically stated otherwise in
writing by Lessor, the voluntary or other surrender of this Lease by
Lessee, the mutual termination or cancellation hereof, or a termination
hereof by Lessor for Breach by Lessee, shall automatically terminate any
sublease or lesser estate in the Premises; provided, however, Lessor
shall, in the event of any such surrender, termination or cancellation,
have the option to continue any one or all of any existing subtenancies.
Lessor's failure within ten (10) days following any such event to make a
written election to the contrary by written notice to the holder of any
such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.
36. Consents.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is
required to an act by or for the other Party, such consent shall not be
unreasonably withheld or delayed. Lessor's actual reasonable costs and
expenses (including but not limited to architects', attorneys',
engineers' or other consultants' fees) incurred in the consideration of,
or response to, a request by Lessee for any Lessor consent pertaining to
this Lease or the Premises, including but not limited to consents to an
assignment, a subletting or the presence or use of a Hazardous
Substance, practice or storage tank, shall be paid by Lessee to Lessor
upon receipt of an invoice and supporting documentation therefor.
Subject to Paragraph 12.2(e) (applicable to assignment or subletting),
Lessor may, as a condition to considering any such request by Lessee,
require that Lessee deposit with Lessor an amount of money (in addition
to the Security Deposit held under Paragraph 5) reasonably calculated by
Lessor to represent the cost Lessor will incur in considering and
responding to Lessee's request. Except as otherwise provided, any unused
portion of said deposit shall be refunded to Lessee without interest.
Lessor's consent to any act, assignment of this Lease or subletting of
the Premises by Lessee shall not constitute an acknowledgement that no
Default or Breach by Lessee of this Lease exists, nor shall such consent
be deemed a waiver of any then existing Default or Breach, except as may
be otherwise specifically stated in writing by Lessor at the time of
such consent.
(b) All conditions to Lessor's consent authorized by this Lease
are acknowledged by Lessee as being reasonable. The failure to specify
herein any particular condition to Lessor's consent shall not preclude
the imposition by Lessor at the time of consent of such further or other
conditions as are then reasonable with reference to the particular
matter for which consent is being given.
37. Guarantor.
37.1 If there are to be any Guarantors of this Lease per Paragraph
1.11, the form of the guaranty to be executed by each such Guarantor
shall be in the form most recently published by the American Industrial
Real Estate Association, and each said Guarantor shall have the same
obligations as Lessee under this Lease, including but not limited to the
obligation to provide the Tenancy Statement and Information called for
by Paragraph 16.
37.2 It shall constitute a Default of the Lessee under this Lease if
any such Guarantor fails or refuses, upon reasonable request by Lessor
to give: (a) evidence of the due execution of the guaranty called for by
this Lease, including the authority of the Guarantor (and of the party
signing on Guarantor's behalf) to obligate such Guarantor on said
guaranty, and including in the case of a corporate Guarantor, a
certified copy of a resolution of its board of directors authorizing the
making of such guaranty, together with a certificate of incumbency
showing the signature of the persons authorized to sign on its behalf,
(b) current financial statements of Guarantor as may from time to time
be requested by Lessor, (c) a Tenancy Statement, or (d) written
confirmation that the guaranty is still in effect.
38. Quiet Possession. Upon payment by Lessee of the rent for the
Premises and the observance and performance of all of the covenants,
conditions and provisions on Lessee's part to be observed and performed
under this Lease, Lessee shall have quiet possession of the Premises for
the entire term hereof subject to all of the provisions of this Lease.
39. Options.
39.1 Definition. As used in this Paragraph 39 the word "Option" has
the following meaning: (a) the right to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Lessee has on
other property of Lessor; (b) the right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right
of first refusal to lease other property of Lessor or the right of first
offer to lease other property of Lessor; (c) the right to purchase the
Premises, or the right of first refusal to purchase the Premises, or the
right of first offer to purchase the Premises, or the right to purchase
other property of Lessor, or the right of first refusal to purchase
other property of Lessor, or the right of first offer to purchase other
property of Lessor.
39.2 Options Personal to Original Lessee. Each Option granted to
Lessee in this Lease is personal to the original Lessee named in
Paragraph 1.1 hereof, and cannot be voluntarily or involuntarily
assigned or exercised by any person or entity other than said original
Lessee while the original Lessee is in full and actual possession of the
Premises and without the intention of thereafter assigning or
subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or
separately or apart therefrom, and no Option may be separated from this
Lease in any manner, by reservation or otherwise.
39.3 Multiple Options. In the event that Lessee has any Multiple
Options to extend or renew this Lease, a later Option cannot be
exercised unless the prior Options to extend or renew this Lease have
been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary:
(i) during the period commencing with the giving of any notice of
Default under Paragraph 13.1 and continuing until the noticed Default is
cured, or (ii) during the period of time any monetary obligation due
Lessor from Lessee is unpaid (without regard to whether notice thereof
is given Lessee), or (iii) during the time Lessee is in Breach of this
Lease, or (iv) in the event that Lessor has given to Lessee three (3) or
more notices of Default under Paragraph 13.1, whether or not the
Defaults are cured, during the twelve (12) month period immediately
preceding the exercise of the Option.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to
exercise an Option because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's
due and timely exercise of the Option, if, after such exercise and
during the term of this Lease, (i) Lessee fails to pay to Lessor a
monetary obligation of Lessee for a period of thirty (30) days after
such obligation becomes due (without any necessity of Lessor to give
notice thereof to Lessee), or (ii) Lessor gives to Lessee three (3) or
more notices of Default under Paragraph 13.1 during any twelve (12)
month period, whether or not the Defaults are cured, or (iii) if Lessee
commits a Breach of this Lease.
40. Multiple Buildings. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and
observe all reasonable rules and regulations which Lessor may make from
time to time for the management, safety, care, and cleanliness of the
grounds, the parking and unloading of vehicles and the preservation of
good order, as well as for the convenience of other occupants or tenants
of such other buildings and their invitees, and that Lessee will pay its
fair share of common expenses incurred in connection therewith.
41. Security Measures. Lessee hereby acknowledges that the rental
payable to Lessor hereunder does not include the cost of guard service
or other security measures, and that Lessor shall have no obligation
whatsoever to provide same. Lessee assumes all responsibility for the
protection of the Premises, Lessee, its agents and invitees and their
property from the acts of third parties.
42. Reservations. Lessor reserves to itself the right, from time to
time, to grant, without the consent or joinder of Lessee, such
easements, rights and dedications that Lessor deems necessary, and to
cause the recordation of parcel maps and restrictions, so long as such
easements, rights, dedications, maps and restrictions do not
unreasonably interfere with the use of the Premises by Lessee. Lessee
agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as
to any amount or sum of money to be paid by one Party to the other under
the provisions hereof, the Party against whom the obligation to pay the
money is asserted shall have the right to make payment "under protest"
and such payment shall not be regarded as a voluntary payment and there
shall survive the right on the part of said Party to institute suit for
recovery of such sum. If it shall be adjudged that there was no legal
obligation on the part of said Party to pay such sum or any part
thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of
this Lease.
44. Authority. If either Party hereto is a corporation, trust, or
general or limited partnership, each individual executing this Lease on
behalf of such entity represents and warrants that he or she is duly
authorized to execute and deliver this Lease on its behalf. If Lessee is
a corporation, trust or partnership, Lessee shall, within thirty (30)
days after request by Lessor, deliver to Lessor evidence satisfactory to
Lessor of such authority.
45. Conflict. Any conflict between the printed provisions of this Lease
and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. Offer. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease to
Lessee. This Lease is not intended to be binding until executed by all
Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by
the Parties in interest at the time of the modification. The parties
shall amend this Lease from time to time to reflect any adjustments that
are made to the Base Rent or other rent payable under this Lease. As
long as they do not materially change Lessee's obligations hereunder,
Lessee agrees to make such reasonable non-monetary modifications to this
Lease as may be reasonably required by an institutional, insurance
company, or pension plan Lender in connection with the obtaining of
normal financing or refinancing of the property of which the Premises
are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if
more than one person or entity is named herein as either Lessor or
Lessee, the obligations of such Multiple Parties shall be the joint and
several responsibility of all persons or entities named herein as such
Lessor or Lessee.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE
SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY
AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE
ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF
LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION
TO YOUR ATTORNEY FOR HIS APPROVAL. FURTHER, EXPERTS SHOULD BE
CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE
PRESENCE OF ASBESTOS, STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL
REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER(S) OR THEIR
AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE
PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO
THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY
IS LOCATED IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE
STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place on the dates
specified above to their respective signatures.
Executed at Santa Clara, CA Executed at Santa Clara, CA
on January 25, 1996 on January 25, 1996
by LESSOR: by LESSEE:
MOPAR, LLC Scientific Custom Metal
Products International, Inc.
By /s/ Michael W. Moshier By: /s/ Andrew T. Moshier
Name Printed: Michael W. Moshier Name Printed: Andrew T. Moshier
Title: CEO Title: President
By By
Name Printed: Name Printed:
Title: Title:
Address: Address:
Tel. No. ( ) Tel. No. ( )
Fax No. ( ) Fax No. ( )
NET
NOTICE: These forms are often modified to meet changing requirements of
law and industry needs. Always write or call to make sure you
are utilizing the most current form: American Industrial Real
Estate Association, 345 South Figueroa Street, Suite M-1, Los
Angeles, CA 90071. (213) 687-8777. Fax No. (213) 687-8616.
Exhibit A
This Exhibit is part of that certain real property lease dated January
25, 1996, between MOPAR, LLC, Lessor, and Scientific Custom Metal
Products International, Inc., Lessee. The following additional terms and
conditions are part of said lease, and are hereby incorporated therein,
and made a part thereof:
1. Rent Indexing The base rent as set forth in paragraph 1.5 of the
lease agreement, shall be adjusted annually at each anniversary by an
amount equal to the CPI as published in the Wall Street Journal, or the
Rent Schedule shown on page two of this Exhibit, whichever is greater.
2. Insurance The "Insuring Party" as set forth in paragraph 1.9 of the
lease agreement shall be changed from the Lessor, to the Lessee. The
amount of insurance coverage set forth in paragraphs 8.1 and 8.2 of the
lease agreement shall be changed from $1,000,000 to $10,000,000. The
insurance deductible amounts set forth in paragraphs 8.3 and 8.4 of the
lease agreement shall be changed from $1,000 to $5,000.
3. Option To Extend In the event that Lessee is not in default in the
performance of any term or condition of this lease, then upon the
expiration of the lease term as set forth in paragraph 1.3 of the
original lease agreement, Lessee shall have the option to renew the
lease for an additional term of 10 years. During such renewal period,
all of the terms and conditions of the lease shall remain in effect,
except that the new base rent shall be equal to the rent payable during
the last year of the original lease, or adjusted to the then current
market rent determined by appraisal, whichever is greater. Lessee shall
provide Lessor with not less than eighteen (18) months advance written
notice of its intention to exercise this option, or this option will
become null and void.
4. Subletting Notwithstanding the provisions of paragraphs 12.1, 12.2
and 12.3 of the lease agreement, and if Lessee is not in default of any
other terms or conditions of the lease agreement, then Lessee shall have
the right to sublet portions of the leased spaces to a sub-tenant(s),
however it shall be Lessee's responsibility to ensure that such sub-
tenancy complies with the spirit and intention of the lease agreement
between Lessor and Lessee. If in Lessor's sole discretion such sub-
tenancy does not comply, then paragraphs 12.1, 12.2 and 12.3 of the
lease agreement shall fully apply.
LESSEE LESSOR
/s/ Andrew T. Moshier /s/ Michael W. Moshier
By: Andrew T. Moshier By: Michael W. Moshier
President CEO
Scientific Custom Metal MOPAR, LLC
Products Int., Inc.
Date: 1-25-96 Date: 1-25-96
RENT SCHEDULE-2403 lease
MOPAR, LLC - SCMP International Lease
Rent Schedule: Bldg. 2403
Lease Commencement Date: February 1, 1996
Year
Lease Ending Starting Monthly Number of
Year* (January) Date Rental Months
----- --------- ---------- ---------- -----------
1 1997 1-Feb-96 $ 30,000 1
1997 1-Mar-96 $ 66,150 10
1997 1-Jan-97 $ 66,150 1
2 1998 1-Feb-97 $ 66,150 2
1998 1-Apr-97 $ 69,900 10
3 1999 1-Feb-98 $ 73,395 12
4 2000 1-Feb-99 $ 77,065 12
5 2001 1-Feb-00 $ 80,918 12
6 2002 1-Feb-01 $ 84,964 12
7 2003 1-Feb-02 $ 89,212 12
8 2004 1-Feb-03 $ 93,673 12
9 2005 1-Feb-04 $ 98,356 12
10 2006 1-Feb-05 $ 103,274 12
11 2007 1-Feb-06 $ 108,438 12
12 2008 1-Feb-07 $ 113,860 12
13 2009 1-Feb-08 $ 119,553 12
14 2010 1-Feb-09 $ 125,530 12
15 2011 1-Feb-10 $ 131,807 12
16 2012 1-Feb-11 $ 138,397 12
17 2013 1-Feb-12 $ 145,317 12
18 2014 1-Feb-13 $ 152,583 12
19 2015 1-Feb-14 $ 160,212 12
20 2016 1-Feb-15 $ 168,223 12
GUARANTY OF LEASE [AIR LOGO]
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
WHEREAS, MOPAR, LLC, hereinafter referred to as "Lessor", and
Scientific Custom Metal Products International, Inc., hereinafter
referred to as "Lessee", are about to execute a document entitled
"Lease" dated Jan. 25, 1996 concerning the premises commonly known as
2403 Walsh Avenue, Santa Clara, CA wherein Lessor will lease the
premises to Lessee, and
WHEREAS, Scientific Custom Metal Products International, Inc.
hereinafter referred to as "Guarantors" have a financial interest in
Lessee, and
WHEREAS, Lessor would not execute the Lease if Guarantors did not
execute and deliver to Lessor this Guarantee of Lease.
NOW THEREFORE, for and in consideration of the execution of the
foregoing Lease by Lessor and as a material inducement to Lessor to
execute said Lease, Guarantors hereby jointly, severally,
unconditionally and irrevocably guarantee the prompt payment by Lessee
of all rentals and all other sums payable by Lessee under said Lease and
the faithful and prompt performance by Lessee of each and every one of
the terms, conditions and covenants of said Lease to be kept and
performed by Lessee.
It is specifically agreed and understood that the terms of the
foregoing Lease may be altered, affected, modified or changed by
agreement between Lessor and Lessee, or by a course of conduct, and said
Lease may be assigned by Lessor or any assignee of Lessor without
consent or notice to Guarantors and that this Guaranty shall thereupon
and thereafter guarantee the performance of said Lease as so changed,
modified, altered or assigned.
This Guaranty shall not be released, modified or affected by failure
or delay on the part of Lessor to enforce any of the rights or remedies
of the Lessor under said Lease, whether pursuant to the terms thereof or
at law or in equity.
No notice of default need be given to Guarantors, it being
specifically agreed and understood that the guarantee of the undersigned
is a continuing guarantee under which Lessor may proceed forthwith and
immediately against Lessee or against Guarantors following any breach or
default by Lessee or for the enforcement of any rights which Lessor may
have as against Lessee pursuant to or under the terms of the within
Lease or at law or in equity.
Lessor shall have the right to proceed against Guarantors hereunder
following any breach or default by Lessee without first proceeding
against Lessee and without previous notice to or demand upon either
Lessee or Guarantors.
Guarantors hereby waive (a) notice of acceptance of this Guaranty, (b)
demand of payment, presentation and protest, (c) all right to assert or
plead any statute of limitations as to or relating to this Guaranty and
the Lease, (d) any right to require the Lessor to proceed against the
Lessee or any other Guarantor or any other person or entity liable to
Lessor, (e) any right to require Lessor to apply to any default any
security deposit or other security it may hold under the Lease, (f) any
right to require Lessor to proceed under any other remedy Lessor may
have before proceeding against Guarantors, (g) any right of subrogation.
Guarantors do hereby subrogate all existing or future indebtedness of
Lessee to Guarantors to the obligations owed to Lessor under the Lease
and this Guaranty.
Any married woman who signs this Guaranty expressly agrees that
recourse may be had against her separate property for all of her
obligations hereunder.
The obligations of Lessee under the Lease to execute and deliver
estoppel statements and financial statements, as therein provided, shall
be deemed to also require the Guarantors hereunder to do and provide the
same relative to Guarantors.
The term "Lessor" whenever hereinabove used refers to and means the
Lessor in the foregoing Lease specifically named and also any assignee
of said Lessor, whether by outright assignment or by assignment for
security, and also any successor to the interest of said Lessor or of
any assignee in such Lease or any part thereof, whether by assignment or
otherwise. So long as the Lessor's interest in or to the leased premises
or the rents, issues and profits therefrom, or in, to or under said
Lease, are subject to any mortgage or deed of trust or assignment for
security, no acquisition by Guarantors of the Lessor's interest in the
leased premises or under said Lease shall affect the continuing
obligation of Guarantors under this Guaranty which shall nevertheless
continue in full force and effect for the benefit of the mortgages,
beneficiary, trustee or assignee under such mortgage, deed of trust or
assignment, of any purchase at sale by judicial foreclosure or under
private power of sale, and of the successors and assigns of any such
mortgages, beneficiary, trustee, assignee or purchaser.
The term "Lessee" whenever hereinabove used refers to and means the
Lessee in the foregoing Lease specifically named and also any assignee
or sublessee of said Lease and also any successor to the interests of
said Lessee, assignee or sublessee of such Lease or any part thereof,
whether by assignment, sublease or otherwise.
In the event any action be brought by said Lessor against Guarantors
hereunder to enforce the obligation of Guarantors hereunder, the
unsuccessful party in such action shall pay to the prevailing party
therein a reasonable attorney's fee which shall be fixed by the court.
If this Form has been filled in it has been prepared for submission to
your attorney for his approval. No representation or recommendation is
made by the real estate broker or its agents or employees as to the
legal sufficiency, legal effect, or tax consequences of this Form or
the transaction relating thereto.
Executed at Santa Clara, CA /s/ Andrew T. Moshier
on January 25, 1996 By: Andrew T. Moshier, President
Address 2403 Walsh Avenue Scientific Custom Metal Products
International, Inc.
"GUARANTORS"
* 1977--American Industrial Real Estate Association.
All rights reserved. No part of these works may be reproduced in any
form without permission in writing.
NOTE: These forms are often modified to meet changing requirements of
law and needs of the industry. Always write or call to make sure
you are utilizing the most current form: AMERICAN INDUSTRIAL REAL
ESTATE ASSOCIATION, 345 So. Figueroa St., M-1, Los Angeles, CA
90071, (213) 687-8777.
<PAGE>
SECOND AMENDMENT TO EXODUS SUBLEASE
THIS SECOND AMENDMENT TO EXODUS SUBLEASE (this "Amendment") is made as of
June 8, 1999, by and between TALUS CORPORATION, a California corporation
("Sublessor"), and EXODUS COMMUNICATIONS, INC., a Delaware corporation
("Sublessee").
RECITALS:
A. Sublessor and Sublessee have previously entered into that certain
Exodus Sublease dated as of February 1, 1999 ("Original Sublease"),
covering certain premises commonly known as 2401 Walsh Avenue, Santa
Clara, California (the "Premises").
B. Sublessor and Sublessee amended the Original Sublease through their
Amendment to Exodus Sublease dated February 1999 (as amended, the "First
Amended Sublease").
C. Sublessor and Sublessee are also concurrently with the execution of
this Second Amendment to Exodus Sublease entering into a second Exodus
Sublease covering certain premises commonly known as 2403 Walsh Avenue,
Santa Clara, California (the "2403 Walsh Sublease").
D. Sublessor and Sublessee desire to amend the First Amended Sublease
in connection with entering into the 2403 Walsh Sublease, in order to
add a cross-default provision as more fully set forth hereinbelow.
NOW THEREFORE, in consideration of the agreements of Sublessor and
Sublessee herein contained and other valuable consideration, the receipt
and adequacy of which are hereby acknowledged, Sublessor and Sublessee
hereby agree as follows:
1. Use of Terms. As used herein, terms shall have the same meanings
as in the Original Sublease. The term "Lease" as used in the
Original Sublease and in this Second Amendment to Exodus Sublease
shall mean the Original Sublease as modified by the First Amended
Sublease and this Second Amendment to Exodus Sublease.
2. Cross-Default Provision. In addition to the events set forth in
section 7.1 of the Original Sublease (including those set forth in
incorporated paragraph 13 of the Original Lease), the occurrence of
any Breach under (and as defined in) the 2403 Walsh Sublease shall
constitute a Breach under the Lease, and Sublessor shall have all
rights and remedies available under the Lease in the event of a
Breach as a result thereof
3. Counterparts; Facsimile Signatures. This Amendment may be signed
in counterparts, and delivered by facsimile, and such facsimile
counterparts shall be valid and binding on Sublessor and Sublessee
with the same effect as if original signatures had been exchanged.
4. Ratification. The First Amended Sublease, as modified hereby, is
hereby ratified and confirmed in all respects.
5. Successors and Assigns. This Amendment shall bind and inure to the
benefit of Sublessor and Sublessee and their respective legal
representatives and successors and assigns.
IN WITNESS WHEREOF, Sublessor and Sublessee have executed this Amendment
as of the date first above written.
SUBLESSEE:
EXODUS COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ ADAM WEGNER
Name: Adam Wegner
Title: Vice President & General Counsel
SUBLESSOR:
TALUS CORPORATION
By: /s/ SUSAN GOODNATURE
Name: Susan Goodnature
Title: Senior Vice President
APPROVAL AND CONSENT OF LESSOR
Lessor's signature below evidences its approval of and consent to the
foregoing Second Amendment to Exodus Sublease. Lessor's approval of and
consent to the foregoing Second Amendment to Exodus Sublease does not
constitute Lessor's approval of or consent to any future or further
assignment of or subletting under the Lease or the Exodus Sublease,
which shall require the future consent of the Lessor subject to the
conditions set forth in paragraph 12 of the Lease. Lessor's approval of
and consent to the foregoing Second Amendment to Exodus Sublease shall
not constitute the waiver of any other terms or provisions of the Lease,
and Sublessor and Sublessee shall at all times comply with the terms and
provisions thereof.
LESSOR:
G&I WALSH LLC, a Delaware limited liability company
By: G&I Investment Walsh LLC, a Delaware
limited liability company, its managing member
By: G&I Investment Walsh Corp., a
Delaware corporation, its managing member
By: /s/ BRIAN T. SUMMERS
Name: Brian T. Summers
Title: Vice President
<PAGE>
THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE (this "Amendment") is made as of June 8,
1999, by and between G&I WALSH LLC, a Delaware limited liability company
("Lessor"), and TALUS CORPORATION, a California corporation, formerly known
as Scientific Custom Metal Products International, Inc. ("Lessee").
RECITALS
A. Mopar, LLC, Lessor's predecessor-in-interest, and Lessee have
previously entered into that certain Standard Industrial/Commercial
Single-Tenant Lease-Net, dated as of January 25, 1996, as amended by
that certain Lease Amendment, identical counterparts of which have been
dated as of November 14, 1997, and November 20, 1997, and by that
certain Second Amendment to Lease, dated as of January 29, 1999 (as so
amended, the "Original Lease"), covering certain premises commonly known
as 2403 Walsh Avenue, Santa Clara, California (the "Premises"); and
B. Lessee has previously entered into a sublease with Computer Access
Technology Corporation ("CAT"), dated October 3, 1996 (the "Existing CAT
Sublease"), pursuant to which CAT has subleased a portion of the
Premises consisting of an agreed area of 12,026 rentable square feet
(the "CAT Sublease Premises").
C. Lessor and Lessee desire to amend the Original Lease in connection
with the Proposed subletting by Lessee to Exodus Communications, Inc., a
Delaware corporation ("Exodus") of, initially, that portion of the
Premises other than the CAT Sublease Premises, and, possibly,
eventually, the entire Premises, pursuant to that certain sublease
entered into or to be entered into on or about the date hereof, between
Lessee, as sublessor, and Exodus, as sublessee (the "Exodus Sublease"),
upon and subject to the terms, covenants and conditions hereinafter set
forth.
NOW THEREFORE, in consideration of the agreements of Lessor and Lessee
herein contained and other valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Lessor and Lessee hereby
agree as follows:
1. Use of Terms. As used herein, terms shall have the same meanings as
in the Original Lease. The term "Lease" as used in the Original Lease
and in this Amendment shall mean the Original Lease as modified by this
Amendment. As used herein, the term "Talus Corporation" shall mean Talus
Corporation, a California corporation, formerly known as Scientific
Custom Metal Products International, Inc., the present Lessee under the
Lease, any successor-in-interest thereto, or any assignee of its
interest under the Lease. As between Lessor and Talus Corporation, the
terms "Lessee" and "Talus Corporation" are interchangeable. Lessee and
Lessor acknowledge that the sole purpose of using the term" "Talus
Corporation" herein instead of "Lessee" is to facilitate certain
distinctions being made in the Exodus Sublease with respect to
provisions of the Lease which are being incorporated by reference in the
Exodus Sublease.
2. [Intentionally Omitted.]
3. Termination of Options to Extend. All options for Lessee to extend
the term of the Lease beyond June 30, 2003, are hereby terminated, and
shall be of no further force or effect.
4. Permitted Use. Paragraph 1.8 of the Original Lease is modified to
add data center processing and other lawful related uses as additional
permitted uses.
5. Modification of Paragraph 6.2; Consent to Diesel Fuel Tank(s). In
the fourth and fifth lines of Paragraph 6.2(a) the words: ", or (iii) a
basis for liability . . . common law theory" are hereby deleted.
Pursuant to Paragraph 6.2(a) of the Original Lease, Lessor hereby
consents to the installation by Exodus of one or more above-ground
diesel fuel tanks at the Premises, provided that such installation shall
be in compliance with all Applicable Law, and Exodus shall obtain
Lessor's prior approval of the precise location thereof, and of the
protective enclosures or encasements thereof, which approval shall not
be unreasonably withheld or delayed.
6. Modification of Paragraph 6.3. In the fourth line of Paragraph 6.3,
following the word "consultants" and preceding the comma which follows
the word "consultants" the following shall be added: "as the same
pertain to interpretation of the foregoing".
7. Modification of Paragraph 6.4. In the second line of Paragraph 6.4,
following the word "times" and preceding the comma which follows the
word "times" the following shall be added: "in accordance with Paragraph
26 of the Third Amendment to this Lease". In the seventh line of
Paragraph 6.4, the words "or be imminent" (which follow the words "to
exist") are deleted. In the seventh and eighth lines of Paragraph 6.4,
the words "as the result of any such existing or imminent violation or
contamination" are deleted. In the eighth and ninth lines of Paragraph
6.4, the words "or Lessor's Lender, as the case may be, for the costs
and expenses of such inspections." are deleted and replaced with the
following: "for the reasonable cost of such inspections, so long as such
inspection is reasonably related to the violation or contamination."
8. Modification of Paragraph 7.1. The last sentence of Paragraph 7.1
is hereby deleted and replaced with the following: "Lessee shall, during
the term of this Lease, keep the exterior appearance of the Building in
good and tenantable condition consistent with the exterior appearance of
other similar facilities of comparable age and size in the vicinity,
including, when necessary, the exterior repainting of the Building."
9. Modification of Paragraph 7.3. In the first line of Paragraph
7.3(a), the word "carpeting," is deleted and replaced with "floor and".
In the third line of Paragraph 7.3(a), the words "in, on or about" are
deleted and replaced with "in or on". In the fourth and fifth lines of
Paragraph 7.3(a), the words "on the Premises from that which are
provided by Lessor under the terms of this Lease" are hereby deleted. In
the sixth and seventh lines of Paragraph 7.3(a), the words "as defined
in Paragraph 7.4(a)" are deleted and replaced with "pursuant to
Paragraph 7.4(a) or that Exodus is permitted to remove pursuant to
Paragraph 10 of the Third Amendment to this Lease". In the eighth line
of Paragraph 7.3(a), the words "(excluding the roof)" are hereby
deleted. In the ninth line of Paragraph 7.3(a), the words "the roof or"
are hereby deleted. In the tenth line of Paragraph 7.3(a), the word
"$25,000." is hereby deleted and replaced with "$100,000 in any one
year." The following sentences are added to the end of Paragraph 7.3(a)
of the Lease: "In addition, Lessee may install satellite dishes, not to
exceed two (2) feet in diameter, on the roof of the Building only,
without Lessor's consent, but upon notice to Lessor, provided that such
satellite dishes are installed behind a roof screen, are not visible
from the street, and are installed in compliance with Applicable Law. If
Lessee wishes to use other satellite dishes and/or install satellite
dishes in any other manner or location, such installation shall be in
compliance with Applicable Law, and shall not be made without Lessor's
prior written approval of such installation, which approval shall not be
unreasonably withheld or delayed." In the seventh line of Paragraph
7.3(b), following the word "therefor" and preceding the period which
follows the word "therefor" the following shall be added: "whether or
not such Alterations or Utility Installations require Lessor's consent".
In the ninth line of Paragraph 7.3(b), the words "under Paragraph 36
hereof" are deleted. Lessor shall not unreasonably withhold or delay the
granting of its consent to Alterations, Utility Installations or Trade
Fixtures desired to be made by Exodus which are consistent with the
types of Alterations, Utility Installations or Trade Fixtures approved
by Lessor in connection with Exodus' occupancy of the adjacent building
located at 2401 Walsh Avenue, Santa Clara. Lessor hereby consents to the
installation of separate meters for monitoring utilities for the CAT
Sublease Premises and/or the portion of the Premises to be subleased by
Exodus. Lessor shall not unreasonably withhold or delay the granting of
its con-sent to the installation by Exodus of security fencing which
will in part enclose the Building, provided that such installation shall
be in compliance with Applicable Law, and Lessee shall obtain Lessor's
prior written approval of the precise location, height and type thereof.
Lessee agrees that reasonable considerations in determining such
approval shall include, but not be limited to, whether such security
fencing unreasonably interferes with the use or occupancy (including
parking, ingress and egress) of 2401 Walsh Avenue or its marketability
to prospective tenants or subtenants.
10. Modification of Paragraph 7.4. In the second line of Paragraph
7.4(c), following the word "thereof" and preceding the word "clean" the
following is added: "(except for those which Lessee is permitted to
remove pursuant to Paragraph 10 of the Third Amendment to this Lease or
required to remove pursuant to subparagraph 7.4(b) above) broom". In the
third through the fifth lines of Paragraph 7.4(c) the words "or by
Lessee performing . . . include the Utility Installations." are deleted.
In the sixth line of Paragraph 7.4(c), following the word "and" and
preceding the word "Alterations" the following is added: "Lessee Owned".
Notwithstanding any provision of the Lease to the contrary, so long as
Exodus remains in possession of the Premises following the termination
of the Lease, pursuant to a direct lease between Lessor and Exodus (the
"Exodus Direct Lease"), Lessee shall have no obligations to remove any
Lessee Owned Alterations or Utility Installations or to restore the
Premises upon the termination of the Lease, and thereafter Lessor shall
look solely to Exodus with respect to any damage caused to the Premises
by Exodus, whether during the term of the Exodus Sublease or during the
term of the Exodus Direct Lease. Notwithstanding any provisions of
Paragraph 7.4(a) to the contrary, Lessor acknowledges that the following
items installed at the Premises by Exodus shall at all times during the
term of this Lease be and remain the Property of Exodus, and Exodus
shall have the right to remove the same upon the expiration of the term
of the Lease, subject to Lessee's obligations under Paragraph 7.4(c):
(a) Raised Flooring, Racking, Cage materials, cabinets and patch
panels.
(b) UPS Battery Systems including electrical switch gear.
(c) FM200 fire suppression canisters, piping and nozzles.
(d) VESDA or smoke sensor stations in ceiling or floor area.
(e) Inside or outside security cameras, access card reader stations,
VCR, multiplexer, monitors and computers.
(f) Partition and conference room furniture systems and freestanding,
cabinets, storage units.
(g) Telephone and voice mail system with desk stations and
receptionist, computers, servers, printers, phone sets.
(h) Fiber Muxes or other Telco equipment installed in MPOE rooms.
(i) Emergency distribution board and telephone backboard with
connectors.
(j) Maintenance bypass electronic and manual switch gear.
(k) Kitchen appliances like microwaves, refrigerators and vending
machines.
(1) Console monitors, screen projection and screens in command center.
(m) Bulletproof/resistant glass, provided that removal of the same
shall be conditioned upon replacement of the openings with other
glazing suitable in Lessor's reasonable judgment.
(n) Satellite dishes or other communications equipment, provided that
removal of the same from the roof shall be conditioned upon
Lessee's or Exodus' repair of all roof penetrations so that the
integrity of the roof is not compromised in any manner, as
determined by Lessor in its reasonable judgment.
(o) Customer and vendor equipment and related materials of the type
listed above in this Paragraph 10.
(p) Exodus, Exodus Customer and Exodus Vendor personal property which
is not attached to the Premises.
(q) Any Trade Fixtures similar or related to the foregoing items that
were installed by or for Exodus pursuant to the terms of the Lease.
Notwithstanding anything in the Lease to the contrary, under no
circumstances shall Talus Corporation be obligated to restore the
Premises with respect to, or to remove, any Alterations, Utility
Installations or other improvements to be installed by Exodus pursuant
to any plans and specifications approved by Lessor other than removal of
the items listed in subparagraphs (a) through (q) above (excluding any
raised flooring), and any restoration related to such removal. Without
limiting the generality of the foregoing, Talus Corporation shall have
no obligation or right to remove the following Alterations, Utility
Installations or other improvements to be installed by Exodus pursuant
to any plans and specifications approved by Lessor:
(r) Permanent and temporary generator systems including enclosures and
fuel tanks with the associated electronic and manual switch gear.
(s) Independent, stand-alone air-conditioning units or any other
components of the HVAC system at the Premises.
(t) Electrical distribution equipment consisting of an automatic
transfer switch, parallel switch and bypass unit, parallel UPS
Units and several power distribution units installed inside the
Building by Lessee, inward from the most inward point(s) of
connection to all transformers, switches, meters and other
electrical distribution equipment installed by the public utility
providing power to the Building, or any electrical distribution
equipment installed by the City of Santa Clara Power and Electric
Company to add two new 3000 AMP services to the Building, including
two transformers placed on the exterior of the Building (one for
each 3000 AMP service), and one or more power switches and metering
boxes inside the Building.
(u) The mezzanine floor.
(v) Any raised flooring.
(w) Security fencing.
11. Modification of Paragraph 8.1. Notwithstanding the provisions of
Paragraph 8.1, Lessor, and not Lessee shall pay any increase in the
premiums for the property insurance covering the Premises carried by
Lessor pursuant to Paragraph 8.3 to the extent such increase results
from any acts or omissions occurring on, or the use or occupancy of, any
building(s) owned by Lessor which are adjacent to the Building, and
which are not occupied by Lessee, either as a direct tenant of Lessor,
or as a subtenant.
12. [Intentionally Omitted.]
13. [Intentionally Omitted.]
14. [Intentionally Omitted.]
15. Modification of Paragraph 8.4. Paragraph 8.4 is hereby deleted in
its entirety and replaced with the following: "8.4 Lessee's Property
Insurance. Lessee shall obtain and maintain insurance coverage on all of
Lessee's personal property, Trade Fixtures, and Lessee Owned Alterations
and Utility Installations. Such insurance shall be full replacement cost
coverage with a deductible of not to exceed $5,000 per occurrence. The
proceeds of any such insurance shall be used by Lessee for the
replacement of personal property, Trade Fixtures and Lessee Owned
Alterations and Utility Installations, except in the case of a casualty
occurring during the final year of the term of this Lease. Lessee shall
provide Lessor with written evidence that such insurance is in force.
Lessor makes no representation that the limits or forms of coverage of
insurance specified herein are adequate to cover Lessee's property,
business operations or obligations under this Lease."
16. Modification of Paragraph 8.5. In the fourth line of Paragraph
8.5, the words "If Lessee is the Insuring Party," are deleted. The
following sentence is added to Paragraph 8.5, immediately preceding the
final sentence thereof: "Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever
is less." In the next to the last line of Paragraph 8.5, the words "the
Insuring Party" are deleted both places where they appear, and in the
first such place, they are replaced with the words "either Party", and
in the second such place they are replaced with the words "it".
17. Additional Matter Pertaining to Insurance. During the term of the
Exodus Sublease, any insurance required to be provided by Lessee under
the terms of the Lease may be provided by either Talus Corporation or
Exodus, and Lessor shall not require Talus Corporation and Exodus to
carry duplicative insurance, provided that all insurance required under
the terms of the Lease shall be maintained by one or the other of them
in accordance with the requirements of the Lease.
18. Modification of Paragraph 9.2. The following is added to the end
of the last sentence of Paragraph 9.2: "; provided, however, that if
Lessor actually receives proceeds sufficient to cover the fully amount
of the loss, excluding any deductible, this Paragraph 9.2 shall govern."
19. Modification of Paragraph 9.5. Notwithstanding the provisions of
Paragraph 9.5, in the event Exodus confirms in writing to Talus
Corporation and Lessor within twenty (20) days after the occurrence of
any damage which would entitle Lessor to terminate the Lease pursuant to
Paragraph 9.5, that Exodus shall not terminate either the Exodus
Sublease or the direct lease between Exodus and Lessor which commences
immediately following the termination of this Lease, on account of such
damage, then Lessor shall have no right to terminate the Lease pursuant
to Paragraph 9.5.
20. Modification of Paragraph 9.6. The last sentence of Paragraph
9.6(b) is deleted and replaced with the following: "`Commence' as used
in this Paragraph shall mean the beginning of actual work on the
Premises." If Lessor shall be obligated to repair or restore the
Premises pursuant to any provision of Article 9, and it is possible, at
additional cost, to commence such repair or restoration earlier than
ninety (90) days after such obligation shall accrue and/or to accelerate
the work so that the same shall be completed prior to the deadline for
Lessor to complete the same pursuant to the applicable provision of this
Article 9, then upon Lessee's written request, and subject to the
conditions set forth below, Lessor shall use its best efforts to
commence such repair or restoration as soon as is possible, subject to
availability of labor and materials; provided that (1) prior to
incurring any additional costs to commence such repair or restoration
earlier than Lessor is obligated to do so or to accelerate the work,
Lessee shall have agreed, in writing, to pay all such additional costs,
and shall have deposited with Lessor, funds equal to the amount
reasonably estimated by Lessor as the total amount of such additional
costs to be incurred (provided that the amount of such deposit shall not
limit Lessee's liability to pay such additional costs, and Lessor shall
refund to Lessee upon completion of the repair and restoration, the
amount of such deposit, if any, in excess of the additional costs
incurred); and (2) in no event will Lessor be obligated to commence any
repair or restoration prior to obtaining all necessary governmental
permits and approvals therefor.
21. Modification of Paragraph 9.7. Notwithstanding any provision of
Paragraph 9.7, Lessor shall not be permitted to exercise the termination
option under clause (ii) of Paragraph 9.7, (1) if Lessor is subject to
an order of a governmental agency with jurisdiction over the Hazardous
Substance Condition requiring Lessor to remediate the same, unless such
remediation cannot practicably be accomplished with Lessee remaining in
possession of the Premises, or (2) unless in Lessor's reasonable
judgment, continued occupancy of the Premises by Lessee without
remediation of the Hazardous Substance Condition poses a risk of
potential liability to Lessor. Furthermore, and notwithstanding any
provision of Paragraph 9.7, Lessor shall be under no duty to remediate
any Hazardous Substance Condition except to the extent Lessor is subject
to an order of a governmental agency with Jurisdiction over the
Hazardous Substance Condition requiring Lessor to remediate the same. To
the extent Lessor is subject to an order of a governmental agency with
jurisdiction over the Hazardous Substance Condition requiring Lessor to
remediate the same, Lessor shall diligently proceed with such
remediation, in accordance with any remedial action plan approved by the
appropriate governmental agency(ies). In the event that in the opinion
of the environmental consultant hired by Lessor to oversee the
remediation, the remediation cannot practicably be completed without
Lessee vacating the Premises for a period which will exceed six (6)
months, Lessee shall have the option to terminate this Lease by giving
notice to Lessor within thirty (30) days after Lessee is notified by
Lessor that the remediation cannot practicably be completed without
Lessee vacating the Premises for a period which will exceed six (6)
months (which notification shall include notice of the date Lessor
requires Lessee to vacate the Premises for such remediation, which date
shall not be earlier than six(6) months after the date of such
notification, except to the extent it is reasonably necessary for Lessor
to commence such remediation on an earlier date in order to comply with
any order of a governmental agency requiring Lessor to remediate the
same, including any remedial action plan approved by the appropriate
governmental agency(ies)), such termination to be effective upon the
date set forth in Lessor's notice that Lessor requires Lessee to vacate
the Premises.
22. Modification of Paragraph 10.1. In the first line of Paragraph
10.1(b), the words "In order to assure payment ... Real Property Taxes,"
are deleted and replaced with the following: "In the event Lessee incurs
a late charge on any Rent payment two (2) times during any twelve (12)
month period,". Lessee may contest the amount of Real Property Taxes
assessed against the Premises, at its sole cost and expense, including,
but not limited to, any penalties or fees associated with an
unsuccessful contest. In the event Lessee elects to contest the amount
of Real Property, Taxes, Lessee must pay the contested Real Property
Taxes under protest, and apply for a refund, or provide such security as
Lessor may require to prevent such taxes from becoming a delinquent lien
upon the Premises. Any refund of Real Property Taxes paid by Lessee with
respect to the term of this Lease shall belong to Lessee, whether
received as a result of a contest by Lessee or otherwise, and regardless
of when received. Lessee shall have no right to any refund of Property
Taxes applicable to any period of time other than the term of this
Lease, even if such refund is received during the term of this Lease.
23. Modification of Paragraph 10.2. On the fifth line of Paragraph
10.2, the words "other income therefrom" are deleted and replaced with
"gross revenues therefrom (but not any tax on Lessor's net income from
all sources)".
24. Modification of Paragraph 10.3. On the second line of Paragraph
10.3, following the word "be", and prior to the word "determined", the
word "reasonably" shall be inserted.
25. Modification of Article 12 With Respect to Subletting or
Assignment by Exodus. Notwithstanding any provision of Article 12 of the
Lease, (i) in the event of any change in the control of Exodus, such
change in control shall not constitute an assignment of the Lease or the
Exodus Sublease so long as Exodus is a publicly traded company
immediately following such change in control, and (ii) the granting of a
security interest in the Exodus Sublease by Exodus in connection with a
senior secured credit facility provided by Goldman, Sachs & Co. ("GS"),
shall not constitute an assignment of the Lease or the Exodus Sublease,
and shall not require Lessor's consent under the Lease, provided that GS
shall not be entitled to foreclose such security interest or otherwise
take any possessory interest in the Premises or any portion thereof,
unless GS assumes all of Exodus' obligations under the Exodus Sublease
and the Exodus Direct Lease, and cures all then uncured defaults (if
any) under the Exodus Sublease and the Exodus Direct Lease. Any other
assignment of, or subletting under, the Exodus Sublease shall require
Lessor's prior written consent, in accordance with the provisions of
Article 12 of the Lease, provided that Lessor agrees that it shall not
unreasonably withhold or delay its consent to any proposed assignment of
the Exodus Sublease by Exodus or any proposed subletting thereunder by
Exodus. In the event Talus Corporation receives any consideration from
Exodus in connection with any assignment of, or subletting under, the
Exodus Sublease, in excess of the rent and other consideration payable
by Exodus to Talus Corporation under the Exodus Sublease in the absence
of such assignment or subletting, Talus Corporation shall pay to Lessor,
the entire amount of such excess consideration, excluding the Talus
Amounts (as defined below) which shall be retained by Talus Corporation,
as additional rent under the Lease, as and when received by Talus
Corporation, in lieu of any adjustment of the rent payable under the
Lease pursuant to Paragraph 12.2(h) on account of such assignment of, or
subletting under, the Exodus Sublease. As used in this Paragraph 25, the
term "Talus Amounts" shall mean any amounts which Talus Corporation
collects from Exodus, which amounts are expressly designated between
Talus Corporation and Exodus as reimbursement of reasonable out-of
pocket expenses incurred by Talus Corporation in connection with any
assignment or subletting (or proposed assignment or subletting) by
Exodus under the Exodus Sublease, including, but not limited to,
attorneys' and consultants' fees and expenses. Notwithstanding the
foregoing, in the event that the Exodus Sublease provides that any
amounts to be paid to Talus Corporation in connection with any
assignment or subletting by Exodus are to be determined based on "market
rent," "fair market rent," "prevailing market rent," or other similar
concept, (a) Talus Corporation shall not agree with Exodus as to the
determination of the same without obtaining Lessor's prior written
consent, which consent may be granted or withheld in Lessor's sole and
absolute discretion, (b) if an appraisal procedure is used to determine
"market rent," "fair market rent," "prevailing market rent," or other
similar concept, Talus Corporation shall obtain Lessor's prior written
approval of any appraiser to be appointed by it, which approval may be
withheld or granted in Lessor's sole and absolute discretion, (c) Talus
Corporation agrees to notify Lessor of the of any appraisal procedure by
Talus Corporation or Exodus within three (3) business day after such
initiation by Talus Corporation or after Talus Corporation receives
notice of such initiation by Exodus, whichever is applicable, and (d)
Lessor may, if it elects to do so, participate in all negotiations and
appraisal procedures between Talus Corporation and Exodus with regard to
the determination of "market rent," "fair market rent," "prevailing
market rent," or other similar concept.
26. Modification of Paragraph 32. In the first line of Paragraph 32,
following the words "Lessor's agents" and preceding the words "shall
have the right", the words "and any Lender and its agents" shall be
inserted. In the second line of Paragraph 32, following the words "or
lessees," and preceding the words "and making such", the words
"inspecting the Premises," shall be inserted. Lessor acknowledges that
Exodus intends to operate a secure internet data center facility at the
Premises. Accordingly, except in the case of an emergency, Lessor, its
agents, any Lender or its agents shall give Exodus twenty-four (24)
hours' advance notice prior to entering the Premises, and Exodus shall
have the right to require that a representative of Exodus accompany any
parties entering the Premises. In the case of an emergency, Lessor or
its agents shall make such effort as is deemed appropriate by Lessor or
its agents under the circumstances to contact an on-site representative
of Exodus, if one is present at the Premises, prior to entering the
Premises; provided, however, that if an on-site representative cannot be
located after such effort is made, or if immediate entry to the Premises
without attempting to locate an on-site representative of Exodus is
deemed appropriate by Lessor or its agents due to the nature of the
emergency, Lessor or its agents may enter the Premises unaccompanied by
a representative of Exodus.
27. Modification of Paragraph 34. Paragraph 34 is deleted in its
entirety and replaced with the following: "34. Signs. Except for
ordinary `For Sublease' signs, Lessee shall not place any sign upon the
Premises without Lessor's prior written consent, which consent shall not
be unreasonably withheld or delayed. All signs must comply with all
Applicable Law."
28. Modification of Paragraph 41. The following words are added to the
end of the last sentence of Paragraph 41: ", except those resulting from
Lessor's willful misconduct or gross negligence."
29. [Intentionally Omitted.]
30. Consent to Assignment and Subletting Required. Execution of this
Amendment does not constitute Lessor's consent to Talus Corporation's
subletting of the Premises to Exodus; such consent shall be indicated
only by Lessor's specific written consent on a copy of the proposed
Exodus Sublease which has been fully executed by both Talus Corporation
and Exodus. Except as provided in Paragraph 25 hereof, nothing in this
Amendment shall constitute Lessor's consent to any future assignment or
subletting by Talus Corporation or Exodus, should it become a sublessee
of the Premises, which consent shall be granted only in accordance with
the provisions of Paragraph 12 of the Lease.
31. Reservation of Rights. By executing this Amendment, Lessor is not
waiving any rights with respect to any transaction (other than the
Exodus Sublease, upon execution of Lessor's consent thereto) which
occurred during the term of the Lease, and which under terms of
Paragraph 12 of the Lease constitutes an assignment or subletting by
Talus Corporation, or otherwise requires Lessor's consent pursuant to
Paragraph 11, including, but not limited to, any change in control of
Talus Corporation, and to which Lessor (or its predecessor-in-interest)
has not previously granted its consent. By executing this Amendment,
Talus Corporation is not waiving any rights to contend that no
transaction occurred during the term of the Lease without Lessor's (or
its predecessor-in-interest's) consent pursuant to Paragraph 12 of the
Lease, which under terms of Paragraph 12 of the Lease constitutes an
assignment or subletting by Talus Corporation, or otherwise requires
Lessor's consent (or otherwise required Lessor's predecessor-in
interest's consent) pursuant to Paragraph 12, including, but not limited
to any change in control of Talus Corporation. Talus Corporation also
reserves all of its rights under the Original Lease, including all
rights in connection with defending any such claim(s) or contention(s)
by Lessor.
32. Return of Security Deposit. Provided that Exodus remains in
possession of the Premises following the termination of the Lease
pursuant to the Exodus Direct Lease, Lessor shall return the Security
Deposit, less any deductions Lessor is entitled to make therefrom, to
Lessee, within thirty (30) days after the termination of the Lease.
33. Lessee's Right to Extend Term Under Limited Circumstances. If the
Exodus Sublease is terminated as a result of Exodus' default, and the
Exodus Termination Date occurs after May 1, 2003, and provided that the
Lease has not otherwise terminated, then Lessee shall have the right to
extend the term of the Lease to a date which is not later than sixty
(60) days after the Exodus Termination Date, by giving notice of such
extension to Lessor within five (5) business days after the Exodus
Termination Date; provided that the Monthly Base Rent payable during the
term of such extension shall be $108,675.00, prorated for any partial
month.
34. Processing Fee; Reimbursement of Legal Fees; Leasing Commission.
In connection with Lessee's request that Lessor consider granting its
consent to the Exodus Sublease, and that Lessor cause its counsel to
prepare this Amendment and the Exodus Direct Lease, and that Lessor
simultaneously consider granting its consent to a proposed alternative
sublease transaction with Pacific Gateway Exchange, Inc. ("PGE"), and
cause its counsel to prepare documentation in connection with the
proposed alternative sublease transaction with PGE, Lessee has paid to
Lessor the sum of $14,679.00, representing payment in full of the
nonrefundable payment required under Paragraph 12.2(e) of the Lease with
respect to Lessor's consideration of granting its consent to the Exodus
Sublease and the proposed alternative sublease transaction with PGE. In
addition, in the event Lessor's reasonable attorneys' fees incurred in
connection with the documentation of the Exodus Sublease, this
Amendment, the Exodus Direct Lease and the comparable documentation for
the proposed alternative sublease transaction with PGE, in the
aggregate, exceed $14,679.00, Lessee shall pay to Lessor the amount of
such excess; provided that Lessee's obligation to pay such excess shall
be limited to the first $7,660.50 of such excess. Any such excess shall
be payable within five (5) business days after Lessee receives copies of
invoices evidencing that Lessor has incurred reasonable attorneys' fees
in excess of $14,679.00. Furthermore, Lessee agrees to pay any leasing
commission due Exodus' broker, The Commercial Property Services Company
(a/k/a CPS), in connection with either of both of the Exodus Sublease
and the Exodus Direct Lease, and Lessee shall indemnify and hold
harmless Lessor from any claim, demand, cost or liability in connection
with such leasing commission. Lessor hereby represents and warrants to
Lessee that neither Lessor, nor any agent of Lessor, has promised or
agreed that Lessor or Lessee would pay any specific commission amount to
CPS in connection with the Exodus Sublease or the Exodus Direct Lease,
and Lessor further agrees that so long as Lessee honors its
indemnification obligation in favor of Lessee set forth in this
Paragraph 34, the amount of any such commission shall be resolved solely
between Lessee and CPS. The provisions of this Paragraph 34 are solely
for the benefit of Lessee and Lessor, and nothing in this Paragraph 34
shall be construed as giving CPS any right to receive a commission from
Lessee or Lessor in connection with the Exodus Sublease or the Exodus
Direct Lease.
35. Counterparts; Facsimile Signatures. This Amendment may be signed
in counterparts, and delivered by facsimile, and such facsimile
counterparts shall be valid and binding on Lessor and Lessee (subject to
Paragraph 38, below) with the same effect as if original signatures had
been exchanged.
36. Ratification. The Original Lease, as modified hereby, is hereby
ratified and confirmed in all respects.
37. Successors and Assigns. This Amendment shall bind and inure to the
benefit of Lessor and Lessee and their respective legal representatives
and successors and assigns.
38. Effectiveness of This Amendment. Notwithstanding any provision of
this Amendment to the contrary, (1) this Amendment shall not be come
effective unless and until Talus Corporation and Exodus shall have both
fully executed and delivered the Exodus Sublease, and Lessor shall have
given its specific written consent thereto on a copy thereof, and (2) in
the event that termination of the Exodus Sublease does not occur
concurrently with the termination of the Lease, then from and after the
date of termination of the Exodus Sublease, Paragraphs 3 through 9,
inclusive, 11, and 15 through 28, inclusive of this Amendment shall
become null and void, but said provisions shall continue to govern with
respect to the period of time during which the Exodus Sublease was in
effect.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment as of
the date first above written.
Lessee: TALUS CORPORATION,
a California corporation, formerly known as Scientific Custom
Metal Products International, Inc.
By: /s/ SUSAN GOODNATURE
Name: Susan Goodnature
Title: Senior Vice President
Lessor: G&I WALSH LLC, a Delaware limited liability company
By: G&I Investment Walsh LLC,
a Delaware limited liability company, its managing member
By: G&I Investment Walsh Corp.,
a Delaware corporation, its managing member
By: /s/ BRIAN T. SUMMERS
Name: Brian T. Summers
Title: Vice President
CONSENT OF GUARANTOR
WHEREAS, ELECTRONIC MANUFACTURING SYSTEMS, INC., a Delaware corporation
("EMS"), did execute that certain Lease Guaranty, dated as of November
20, 1997 (the "Lease Guaranty") whereby EMS did guaranty Lessee's
obligations under the Original Lease (as defined in the foregoing Third
Amendment to Lease);
NOW, THEREFORE, EMS hereby consents to the terms and conditions of the
foregoing Third Amendment to Lease, and hereby ratifies and confirms
that the Lease Guaranty, remains in full force and effect as a valid and
binding obligation of EMS, with respect to Lessee's obligations under
the Original Lease as modified by the foregoing Third Amendment to Lease
(whether such obligations are stated as being obligations of "Lessee" or
obligations of "Talus Corporation").
Dated: June 10, 1999
ELECTRONIC MANUFACTURING SYSTEMS, INC.,
a Delaware corporation
By: /s/ SUSAN GOODNATURE
Name: Susan Goodnature
Title: Senior Vice President
EXHIBIT 10.59
[LOGO] AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -- NET
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
1. Basic Provisions ("Basic Provisions").
1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
June 4, 1999, is made by and between G&I WALSH LLC, a Delaware limited
liability company ("Lessor") and EXODUS COMMUNICATIONS, INC., a
Delaware corporation ("Lessee"), (collectively the "Parties," or
individually a "Party").
1.2 Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and
commonly known as 2403 Walsh Avenue, Santa Clara, located in the County
of Santa Clara, State of California, and generally described as
(describe briefly the nature of the property and, if applicable, the
"Project", if the property is located within a Project) an
industrial/commercial building (the "Building") with an agreed rentable
area of 94,500 square feet ("Premises"). (See also Paragraph 2)
1.3 Term: Five (5) years and 7 months ("Original Term") commencing
July 1, 2003 ("Commencement Date") and ending January 31, 2009
("Expiration Date"). (See also Paragraph 3)
1.4 Early Possession: [Not applicable] ("Early Possession Date"). (See
also Paragraphs 3.2 and 3.3)
1.5 Base Rent: $108,675.00 per month ("Base Rent"), payable on the
first day of each month commencing July 1, 2003. (See also Paragraph 4)
[X] If this box is checked, there are provisions in this Lease for the
Base Rent to be adjusted. See Addendum 1.5
1.6 Base Rent Paid Upon Execution: $ None as Base Rent for the period
[Not applicable].
1.7 Security Deposit: $ See Addendum 1.7 ("Security Deposit"). (See
also Paragraph 5)
1.8 Agreed Use: Data Center processing and other lawful related uses.
(See also Paragraph 6)
1.9 Insuring Party: Lessor is the "Insuring Party" unless otherwise
stated herein. (See also Paragraph 8)
1.10 Real Estate Brokers: (See also Paragraph 15)
(a) Representation: The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in this transaction
(check applicable boxes):
[X] Landmark Asset Management Group represents Lessor exclusively
("Lessor's Broker");
[X] The Commercial Property Services Company represents Lessee
exclusively ("Lessee's Broker"); or
[ ] represents both Lessor and Lessee ("Dual Agency").
(b) Payment to Brokers: Upon execution and delivery of this Lease by
both Parties, Lessor shall pay to the Broker the fee agreed to in their
separate written agreement
1.11 Guarantor. The obligations of the Lessee under this Lease are to
be guaranteed by [Not applicable] ("Guarantor"). (See also Paragraph 37)
1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of 19 pages and Exhibits A and B, all of which constitute a
part of this Lease.
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease. Unless
otherwise provided herein, any statement of size set forth in this
Lease, or that may have been used in calculating rental, is an
approximation which the Parties agree is reasonable and the rental based
thereon is not subject to revision whether or not the actual size is
more or less.
2.2 See Addendum 2.2
2.3 Compliance. Lessor makes no representation or warranty as to
whether the improvements on the Premises comply with applicable laws,
covenants or restrictions of record, building codes, regulations and
ordinances ("Applicable Requirements") NOTE: Lessee is responsible for
determining whether or not the zoning is appropriate for Lessee's
intended use, and acknowledges that past uses of the Premises may no
longer be allowed. If the Applicable Requirements are hereafter changed
(as opposed to being in existence at the commencement of the term of the
Prior Sublease (as defined in Addendum 2.2), which is addressed in
Paragraph 6.2(e) below) so as to require during the term of this Lease
the construction of an addition to or an alteration of the Building, the
remediation of any Hazardous Substance, or the reinforcement or other
physical modification of the Building ("Capital Expenditure"), Lessor
and Lessee shall allocate the cost of such work as follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures
are required as a result of the specific and unique use of the Premises
by Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost thereof, provided, however that if such
Capital Expenditure is required during the last two (2) years of this
Lease and the cost thereof exceeds six (6) months' Base Rent, Lessee may
instead terminate this Lease unless Lessor notifies Lessee, in writing,
within ten (10) days after receipt of Lessee's termination notice that
Lessor has elected to pay the difference between the actual cost thereof
and the amount equal to six (6) months' Base Rent. If Lessee elects
termination, Lessee shall immediately cease the use of the Premises
which requires such Capital Expenditure and deliver to Lessor written
notice specifying a termination date at least ninety (90) days
thereafter. Such termination date shall, however, in no event be earlier
than the last day that Lessee could legally utilize the Premises without
commencing such Capital Expenditure.
(b) If such Capital Expenditure is not the result of the specific and
unique use of the Premises by Lessee (such as, governmentally mandated
seismic modifications), then Lessor and Lessee shall allocate the
obligation to pay for such costs pursuant to the provisions of Paragraph
7.1(c); provided, however, that if such Capital Expenditure is required
during the last two years of this and the cost thereof exceeds six (6)
months Base Rent Lessor shall have the option to terminate this Lease
upon ninety (90) days prior written notice to Lessee unless Lessee
notifies Lessor, in writing, within ten (10) days after receipt of
Lessor's termination notice that Lessee will pay the difference between
the actual cost of such Capital Expenditure and the amount equal to six
(6) months' Base Rent. If Lessor does not elect to terminate, and fails
to tender its share of any such Capital Expenditure, Lessee may advance
such funds and deduct same, with Interest, from Rent until Lessor's
share of such costs have been fully paid. If Lessee is unable to finance
Lessor's share, or if the balance of the Rent due and payable for the
remainder of this Lease is not sufficient to fully reimburse Lessee on
an offset basis, Lessee shall have the right to terminate this Lease
upon thirty (30) days written notice to Lessor.
(c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected,
and new Applicable Requirements. If the Capital Expenditures are instead
triggered by Lessee as a result of an actual or proposed change in use,
change in intensity of use, or modification to the Premises then, and in
that event, Lessee shall be fully responsible for the cost thereof, and
Lessee shall not have any right to terminate this Lease.
2.4 Acknowledgements. Lessee acknowledges that: (a) it has been
advised by Lessor and/or Brokers to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical,
HVAC and fire sprinkler systems, security, environmental aspects, and
compliance with Applicable Requirements), and their suitability for
Lessee's intended use; (b) Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all
responsibility therefor as the same relate to its occupancy of the
Premises; and (c) neither Lessor, Lessor's agents, nor any Broker has
made any oral or written representations or warranties with respect to
said matters other than as set forth in this Lease. In addition, Lessor
acknowledges that: (a) Broker has made no representations, promises or
warranties concerning Lessee's ability to honor the Lease or suitability
to occupy the Premises; and (b) it is Lessor's sole responsibility to
investigate the financial capability and/or suitability of all proposed
tenants.
2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the
Start Date Lessee was the owner or occupant of the Premises. In such
event, Lessee shall be responsible for any necessary corrective work.
3. Term. See Addendum 3.1
3.1 Term. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
3.3 Delay In Possession. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by
the Commencement Date. If, despite said efforts, Lessor is unable to
deliver possession as agreed, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this
Lease. Lessee shall not, however, be obligated to pay Rent or perform
its other obligations until it receives possession of the Premises. If
possession is not delivered within sixty (60) days after the
Commencement Date, Lessee may, at its option, by notice in writing
within ten (10) days after the end of such sixty (60) day period, cancel
this Lease, in which event the Parties shall be discharged from all
obligations hereunder. If such written notice is not received by Lessor
within said ten (10) day period, Lessee's right to cancel shall
terminate. Except as otherwise provided, if possession is not tendered
to Lessee by the Start Date and Lessee does not terminate this Lease, as
aforesaid, any period of rent abatement that Lessee would otherwise have
enjoyed shall run from the date of delivery of possession and continue
for a period equal to what Lessee would otherwise have enjoyed under the
terms hereof, but minus any days of delay caused by the acts or
omissions of Lessee. If possession of the Premises is not delivered
within four (4) months after the Commencement Date, this Lease shall
terminate unless other agreements are reached between Lessor and Lessee,
in writing.
3.4 Lessee Compliance. Lessor shall not be required to tender
possession of the Premises to Lessee until Lessee complies with its
obligation to provide evidence of insurance (Paragraph 8.5). Pending
delivery of such evidence, Lessee shall be required to perform all of
its obligations under this Lease from and after the Start Date,
including the payment of Rent, notwithstanding Lessor's election to
withhold possession pending receipt of such evidence of insurance.
Further, if Lessee is required to perform any other conditions prior to
or concurrent with the Start Date, the Start Date shall occur but Lessor
may elect to withhold possession until such conditions are satisfied.
4. Rent.
4.1. Rent Defined. All monetary obligations of Lessee to Lessor under
the terms of this Lease (except for the Security Deposit) are deemed to
be rent ("Rent").
4.2 Payment. Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction
(except as specifically permitted in this Lease), on or before the day
on which it is due. Rent for any period during the term hereof which is
for less than one (1) full calendar month shall be prorated based upon
the actual number of days of said month. Payment of Rent shall be made
to Lessor at its address stated herein or to such other persons or place
as Lessor may from time to time designate in writing. Acceptance of a
payment which is less than the amount then due shall not be a waiver of
Lessor's rights to the balance of such Rent, regardless of Lessor's
endorsement of any check so stating.
5. Security Deposit. See Addendum 1.7.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto, and
for no other purpose. Lessee shall not use or permit the use of the
Premises in a manner that is unlawful, creates damage, waste or a
nuisance, or that disturbs owners and/or occupants of, or causes damage
to neighboring properties. Lessor shall not unreasonably withhold or
delay its consent to any written request for a modification of the
Agreed Use, so long as the same will not impair the structural integrity
of the improvements on the Premises or the mechanical or electrical
systems therein, is not significantly more burdensome to the Premises.
If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same,
which notice shall include an explanation of Lessor's objections to the
change in use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release, either
by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health,
safety or welfare, the environment or the Premises, (ii) regulated or
monitored by any governmental authority. Hazardous Substances shall
include, but not be limited to, hydrocarbons, petroleum, gasoline,
diesel fuel and/or crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in or on the Premises
which constitutes a Reportable Use of Hazardous Substances without the
express prior written consent of Lessor and timely compliance (at
Lessee's expense) with all Applicable Requirements. "Reportable Use"
shall mean (i) the installation or use of any above or below ground
storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a
permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority,
and/or (iii) the presence at the Premises of a Hazardous Substance with
respect to which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring
properties. Notwithstanding the foregoing, Lessee may use any ordinary
and customary materials reasonably required to be used in the normal
course of the Agreed Use, so long as such use is in compliance with all
Applicable Requirements, is not a Reportable Use, and does not expose
the Premises or neighboring property to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor. In
addition, Lessor may condition its consent to any Reportable Use upon
receiving such additional assurances as Lessor reasonably deems
necessary to protect itself, the public, the Premises and/or the
environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or
before Lease expiration or termination) of protective modifications
(such as concrete encasements) and/or increasing the Security Deposit.
See Addendum 6.2(a).
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on,
under or about the Premises, other than as previously consented to by
Lessor, Lessee shall immediately give written notice of such fact to
Lessor, and provide Lessor with a copy of any report, notice, claim or
other documentation which it has concerning the presence of such
Hazardous Substance.
(c) Lessee Remediation. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under, or about
the Premises (including through the plumbing or sanitary sewer system)
and shall promptly, at Lessee's expense, take all investigatory and/or
remedial action reasonably recommended, whether or not formally ordered
or required, for the cleanup of any contamination of, and for the
maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the
Premises during the term of this Lease, by or for Lessee, or any third
party other than Lessor.
(d) Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any,
harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, claims, expenses, penalties, and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance
brought onto the Premises during the term of this Lease or the Prior
Sublease by or for Lessee, or any party other than Lessor (provided,
however, that Lessee shall have no liability under this Lease with
respect to underground migration of any Hazardous Substance under the
Premises from adjacent properties). Lessee's obligations shall include,
but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee, and
the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this
Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this
Lease with respect to Hazardous Substances, unless specifically so
agreed by Lessor in writing at the time of such agreement.
(e) Lessor Indemnification. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its employees and
lenders, harmless from and against any and all environmental damages,
including the cost of remediation, which existed as a result of
Hazardous Substances on the Premises prior to the date of commencement
of the Prior Sublease or which are caused by the gross negligence or
willful misconduct of Lessor, its agents or employees. Lessor's
obligations, as and when required by the Applicable Requirements, shall
include, but not be limited to, the cost of investigation, removal,
remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease.
(f) Investigations and Remediations. Lessor shall retain the
responsibility and pay for any investigations or remediation measures
required by governmental entities having jurisdiction with respect to
the existence of Hazardous Substances on the Premises prior to the date
of commencement of the Prior Sublease unless such remediation measure is
required as a result of Lessee's use (including "Alterations", as
defined in Paragraph 7.3(a) below) of the Premises, in which event
Lessee shall be responsible for such payment. Lessee shall cooperate
fully in any such activities at the request of Lessor, including
allowing Lessor and Lessor's agents to have reasonable access in
accordance with Section 32 of the Addendum to the Premises at reasonable
times in order to carry out Lessor's investigative and remedial
responsibilities.
(g) Lessor Termination Option. If a Hazardous Substance Condition
occurs during the term of this Lease, unless Lessee is legally
responsible therefor (in which case Lessee shall make the investigation
and remediation thereof required by the Applicable Requirements and this
Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's
option, either (i) investigate and remediate such Hazardous Substance
Condition, if required, as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and
effect, or (ii) if the estimated cost to remediate such condition
exceeds twelve (12) times the then monthly Base Rent or $100,000,
whichever is greater, give written notice to Lessee, within thirty (30)
days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition, of Lessor's desire to terminate this
Lease as of the date sixty (60) days following the date of such notice.
In the event Lessor elects to give a termination notice, Lessee may,
within ten (10) days thereafter, give written notice to Lessor of
Lessee's commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount
equal to twelve (12) times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within thirty (30) days following such
commitment. In such event, this Lease shall continue in full force and
effect, and Lessor shall proceed to make such remediation as soon as
reasonably possible after the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance
thereof within the time provided, this Lease shall terminate as of the
date specified in Lessor's notice of termination. See Addendum 6.2(g).
6.3 Lessee's Compliance with Applicable Requirements. Except as
otherwise provided in this Lease, Lessee shall, at Lessee's sole
expense, fully, diligently and in a timely manner, materially comply
with all Applicable Requirements, the requirements of any applicable
fire insurance underwriter or rating bureau, and the recommendations of
Lessor's engineers and/or consultants which relate in any manner to the
Premises, as the same pertain to interpretation of the Applicable
Requirements without regard to whether said requirements are now in
effect or become effective after the Start Date. Lessee shall, within
ten (10) days after receipt of Lessor's written request, provide Lessor
with copies of all permits and other documents, and other information
evidencing Lessee's compliance with any Applicable Requirements
specified by Lessor, and shall immediately upon receipt, notify Lessor
in writing (with copies of any documents involved) of any threatened or
actual claim, notice, citation, warning, complaint or report pertaining
to or involving the failure of Lessee or the Premises to comply with any
Applicable Requirements.
6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined
in Paragraph 30 below) and consultants shall have the right to enter
into Premises at any time, in the case of an emergency, and otherwise at
reasonable times in accordance with Section 32 of the Addendum, for the
purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease. The cost of any such inspections
shall be paid by Lessor, unless a violation of Applicable Requirements,
or a contamination is found to exist, or the inspection is requested or
ordered by a governmental authority. In such case, Lessee shall upon
request reimburse Lessor for the reasonable cost of such inspections, so
long as such inspection is reasonably related to the violation or
contamination.
7. Maintenance; Repairs, Utility Installations; Trade Fixtures and
Alterations.
7.1 Lessee's Obligations.
(a) In General. Subject to the provisions of Addendum 2.2 and
Paragraphs 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction),
and 14 (Condemnation), Lessee shall, at Lessee's sole expense, keep the
Premises, Utility Installations, and Alterations in good order,
condition and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or
readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements
or the age of such portion of the Premises), including, but not limited
to, all equipment or facilities, such as plumbing, heating, ventilating,
air-conditioning, electrical, lighting facilities, boilers, pressure
vessels, fire protection system, fixtures, walls (interior and
exterior), foundations, ceilings, roofs, floors, windows, doors, plate
glass, skylights, landscaping, driveways, parking lots, fences,
retaining walls, signs, sidewalks and parkways located in, on, or
adjacent to the Premises. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and maintenance of the
service contracts required by Paragraph 7.1(b) below. Lessee's
obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part
thereof in good order, condition and state of repair. Lessee shall,
during the term of this Lease, keep the exterior appearance of the
Building in a good and tenantable condition consistent with the exterior
appearance of other similar facilities of comparable age and size in the
vicinity, including, when necessary, the exterior repainting of the
Building.
(b) Service Contracts. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form
and substance for, and with contractors specializing and experienced in
the maintenance of the following equipment and improvements, if any, if
and when installed on the Premises: (i) HVAC equipment, (ii) boiler, and
pressure vessels, (iii) fire extinguishing systems, including fire alarm
and/or smoke detection, (iv) landscaping and irrigation systems, (v)
roof covering and drains, (vi) driveways and parking lots, (vii)
clarifiers (viii) basic utility feed to the perimeter of the Building,
and (ix) any other equipment, if reasonably required by Lessor.
(c) Replacement. Subject to Lessee's indemnification of Lessor as
set forth in Paragraph 8.7 below, and without relieving Lessee of
liability resulting from Lessee's failure to exercise and perform good
maintenance practices, if the Basic Elements described in Paragraph
7.1(b) cannot be repaired other than at a cost which is in excess of 50%
of the cost of replacing such Basic Elements, then such Basic Elements
shall be replaced by Lessor, and the cost thereof shall be prorated
between the Parties and Lessee shall only be obligated to pay, each
month during the remainder of the term of this Lease, on the date on
which Base Rent is due, an amount equal to the product of multiplying
the cost of such replacement by a fraction, the numerator of which is
one, and the denominator of which is the number of months of the useful
life of such replacement as such useful life is specified pursuant to
generally accepted accounting principles for depreciation thereof
(including interest on the unamortized balance at the Prime Rate (as
defined in Addendum 7.1), with Lessee reserving the right to prepay its
obligation at any time. See Addendum 7.1
7.2 Lessor's Obligations. Subject to the provisions of Addendum 2.2,
and Paragraphs 2.3 (Compliance), 9 (Damage or Destruction) and 14
(Condemnation), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the
Premises, or the equipment therein, all of which obligations are
intended to be that of the Lessee. It is the intention of the Parties
that the terms of this Lease govern the respective obligations of the
Parties as to maintenance and repair of the Premises, and they expressly
waive the benefit of any statute now or hereafter in effect to the
extent it is inconsistent with the terms of this Lease.
7.3 Utility Installations; Trade Fixtures; Alterations. See Addendum
7.3
(a) Definitions; Consent Required. The term "Utility Installations"
refers to all floor and window coverings, air lines, power panels,
electrical distribution, security and fire protection systems,
communication systems, lighting fixtures, HVAC equipment, plumbing, and
fencing in or on the Premises. The term "Trade Fixtures" shall mean
Lessee's machinery and equipment that can be removed without doing
material damage to the Premises. The term "Alterations" shall mean any
modification of the improvements, other than Utility Installations or
Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations
and/or Utility Installations made by Lessee that are not yet owned by
Lessor pursuant to Paragraph 7.4(a) or that Lessee is permitted to
remove pursuant to Addendum 7.4. Lessee shall not make any Alterations
or Utility Installations to the Premises without Lessor's prior written
consent. Lessee may, however, make non-structural Utility Installations
to the interior of the Premises without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not involve
puncturing, relocating or removing any existing walls, and the
cumulative cost thereof during this Lease as extended does not exceed
$100,000 in any one year.
(b) Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall
be presented to Lessor in written form with detailed plans. Consent
shall be deemed conditioned upon Lessee's: (i) acquiring all applicable
governmental permits, (ii) furnishing Lessor with copies of both the
permits and the plans and specifications prior to commencement of the
work, and (iii) compliance with all conditions of said permits and other
Applicable Requirements in a prompt and expeditious manner. Any
Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon
completion furnish Lessor with as-built plans and specifications whether
or not such Alterations or Utility Installations require Lessor's
consent. For work which costs more than $1,000,000 excluding the cost of
any Trade Fixtures, Lessor may condition its consent upon Lessee
providing a lien and completion bond in an amount equal to one and one-
half times the estimated cost of such Alteration or Utility Installation
and/or upon Lessee's posting an additional Security Deposit with Lessor.
(c) Indemnification. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured
by any mechanic's or materialmen's lien against the Premises or any
interest therein. Lessee shall give Lessor not less than ten (10) days'
notice prior to the commencement of any work in, on or about the
Premises, and Lessor shall have the right to post notices of non-
responsibility. If Lessee shall contest the validity of any such lien,
claim or demand, then Lessee shall, at its sole expense defend and
protect itself, Lessor and the Premises against the same and shall pay
and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof. If Lessor shall require, Lessee shall
furnish a surety bond in an amount equal to one and one-half times the
amount of such contested lien, claim or demand, indemnifying Lessor
against liability for the same. If Lessor elects to participate in any
such action, Lessee shall pay Lessor's attorneys' fees and costs.
7.4 Ownership; Removal; Surrender; and Restoration. See Addendum 7.4
(a) Ownership. Subject to Lessor's right to require removal or
elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but
considered a part of the Premises. Lessor may, at any time, elect in
writing to be the owner of all or any specified part of the Lessee Owned
Alterations and Utility Installations. Unless otherwise instructed per
Paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility
Installations shall, at the expiration or termination of this Lease,
become the property of Lessor and be surrendered by Lessee with the
Premises.
(b) Removal. By delivery to Lessee of written notice from Lessor
not earlier than ninety (90) and not later than thirty (30) days prior
to the end of the term of this Lease, Lessor may require that any or all
Lessee Owned Alterations or Utility Installations be removed by the
expiration or termination of this Lease. Lessor may require the removal
at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent.
(c) Surrender/Restoration. Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof (except for those which Lessee
is permitted to remove pursuant to Addendum paragraph 7.4 or required to
remove pursuant to subparagraph 7.4(b) above) broom clean and free of
debris, and in good operating order, condition and state of repair,
ordinary wear and tear excepted. "Ordinary wear and tear" shall not
include any damage or deterioration that would have been prevented by
good maintenance practice. Lessee shall repair any damage occasioned by
the installation, maintenance or removal of Trade Fixtures, Lessee Owned
Alterations and/or Utility Installations, furnishings, and equipment as
well as the removal of any storage tank installed by or for Lessee, and
the removal, replacement, or remediation of any soil, material or
groundwater contaminated by Lessee. Trade Fixtures shall remain the
property of Lessee and shall be removed by Lessee. The failure by Lessee
to timely vacate the Premises pursuant to this Paragraph 7.4(c) without
the express written consent of Lessor shall constitute a holdover under
the provisions of Paragraph 26 below.
8. Insurance; Indemnity.
8.1 Payment For Insurance. Lessee shall pay for all insurance required
under Paragraph 8 except to the extent of the cost attributable to
liability insurance carried by Lessor under Paragraph 8.2(b) in excess
of $10,000,000 per occurrence. Premiums for policy periods commencing
prior to or extending beyond the Lease term shall be prorated to
correspond to the Lease term. Payment shall be made by Lessee to Lessor
within ten (10) days following receipt of an invoice. See Addendum 8.1
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and
Lessor against claims for bodily injury, personal injury and property
damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such
insurance shall be on an occurrence basis providing single limit
coverage in an amount not less than $10,000,000 per occurrence with an
"Additional Insured-Managers or Lessors of Premises Endorsement" and
contain the "Amendment of the Pollution Exclusion Endorsement" for
damage caused by heat, smoke or fumes from a hostile fire. The Policy
shall not contain any intra-insured exclusions as between insured
persons or organizations, but shall include coverage for liability
assumed under this Lease as an "insured contract" for the performance of
Lessee's indemnity obligations under this Lease. The limits of said
insurance shall not, however, limit the liability of Lessee nor relieve
Lessee of any obligation hereunder. All insurance carried by Lessee
shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance
only.
(b) Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named
as an additional insured therein.
8.3 Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor, with loss
payable to Lessor, any groundlessor, and to any Lender(s) insuring loss
or damage to the Premises. The amount of such insurance shall be equal
to the full replacement cost of the Premises, as the same shall exist
from time to time, or the amount required by any Lenders, but in no
event more than the commercially reasonable and available insurable
value thereof. If Lessor is the Insuring Party, however, Lessee Owned
Alterations and Utility Installations, Trade Fixtures, and Lessee's
personal property shall be insured by Lessee under Paragraph 8.4 rather
than by Lessor. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of
direct physical loss or damage (including the perils of flood and/or
earthquake), including coverage for debris removal and the enforcement
of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the
result of a covered loss. Said policy or policies shall also contain an
agreed valuation provision in lieu of any coinsurance clause, waiver of
subrogation, and inflation guard protection causing an increase in the
annual property insurance coverage amount by a factor of not less than
the adjusted U.S. Department of Labor Consumer Price Index for All Urban
Consumers for the city nearest to where the Premises are located. If
such insurance coverage has a deductible clause, the deductible amount
shall not exceed $5,000 per occurrence, and Lessee shall be liable for
such deductible amount in the event of an Insured Loss. See Addendum 8.3
(b) Rental Value. The Insuring Party shall obtain and keep in force
a policy or policies in the name of Lessor with loss payable to Lessor
and any Lender, insuring the loss of the full Rent for one (1) year.
Said insurance shall provide that in the event the Lease is terminated
by reason of an insured loss, the period of indemnity for such coverage
shall be extended beyond the date of the completion of repairs or
replacement of the Premises, to provide for one full year's loss of Rent
from the date of any such loss. Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected Rent
otherwise payable by Lessee, for the next twelve (12) month period.
Lessee shall be liable for any deductible amount in the event of such
loss.
(c) Adjacent Premises. If the Premises are part of a larger
building, or of a group of buildings owned by Lessor which are adjacent
to the Premises, the Lessee shall pay for any increase in the premiums
for the property insurance of such building or buildings if said
increase is caused by Lessee's acts, omissions, use or occupancy of the
Premises.
8.4 Lessee's Property/Business Interruption Insurance.
(a) Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and
Lessee Owned Alterations and Utility Installations. Such insurance shall
be full replacement cost coverage with a deductible of not to exceed
$5,000 per occurrence. The proceeds from any such insurance shall be
used by Lessee for the replacement of personal property, Trade Fixtures
and Lessee Owned Alterations and Utility Installations except in the
case of a casualty occurring during the final year of the term of this
Lease. Lessee shall provide Lessor with written evidence that such
insurance is in force.
(c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance
specified herein are adequate to cover Lessee's property, business
operations or obligations under this Lease.
8.5 Insurance Policies. Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state
where the Premises are located, and maintaining during the policy term a
"General Policyholders Rating" of at least B+, IX, as set forth in the
most current issue of "Best's Insurance Guide", or such other rating as
may be required by a Lender. Lessee shall not do or permit to be done
anything which invalidates the required insurance policies. Lessee
shall, prior to the Start Date, deliver to Lessor certified copies of
policies of such insurance or certificates evidencing the existence and
amounts of the required insurance. No such policy shall be cancelable or
subject to modification except after thirty (30) days prior written
notice to Lessor. Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee to Lessor upon demand. Such policies shall be for a
term of at least one year, or the length of the remaining term of this
Lease, whichever is less. If either Party shall fail to procure and
maintain the insurance required to be carried by it, the other Party
may, but shall not be required to, procure and maintain the same.
8.6 Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other,
and waive their entire right to recover damages against the other, for
loss of or damage to its property arising out of or incident to the
perils required to be insured against herein. The effect of such
releases and waivers is not limited by the amount of insurance carried
or required, or by any deductibles applicable hereto. The Parties agree
to have their respective property damage insurance carriers waive any
right to subrogation that such companies may have against Lessor or
Lessee, as the case may be, so long as the insurance is not invalidated
thereby.
8.7 Indemnity. Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, Lessor's master or ground lessor,
partners and Lenders, from and against any and all claims, loss of rents
and/or damages, liens, judgments, penalties, attorneys' and consultants'
fees, expenses and/or liabilities arising out of, involving, or in
connection with, the use and/or occupancy of the Premises by Lessee. If
any action or proceeding is brought against Lessor by reason of any of
the foregoing matters, Lessee shall upon notice defend the same at
Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first
paid any such claim in order to be defended or indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees,
customers, or any other person in or about the Premises, whether such
damage or injury is caused by or results from fire, steam, electricity,
gas, water or rain, or from the breakage, leakage, obstruction or other
defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or
lighting fixtures, or from any other cause, whether the said injury or
damage results from conditions arising upon the Premises or upon other
portions of the Building of which the Premises are a part, or from other
sources or places. Lessor shall not be liable for any damages arising
from any act or neglect of any other tenant of Lessor. Notwithstanding
Lessor's negligence or breach of this Lease, Lessor shall under no
circumstances be liable for injury to Lessee's business or for any loss
of income or profit therefrom. Nothing in this Paragraph 8.8 is intended
to relieve Lessor from its obligations, if any, under Paragraph 6.2 of
this Lease (including the Addendum).
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to
the improvements on the Premises, other than Lessee Owned Alterations
and Utility Installations, which can reasonably be repaired in six (6)
months or less from the date of the damage or destruction.
Lessor shall notify Lessee in writing within thirty (30) days from the
date of the damage or destruction as to whether or not the damage is
Partial or Total.
(b) "Premises Total Destruction" shall mean damage or destruction
to the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in
six (6) months or less from the date of the damage or destruction.
Lessor shall notify Lessee in writing within thirty (30) days from the
date of the damage or destruction as to whether or not the damage is
Partial or Total.
(c) "Insured Loss" shall mean damage or destruction to improvements
on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required
to be covered by the insurance described in Paragraph 8.3(a),
irrespective of any deductible amounts or coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition,
debris removal and upgrading required by the operation of Applicable
Requirements, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination
by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or
under the Premises.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that
is an Insured Loss occurs, then Lessor shall, at Lessor's expense,
repair such damage (but not Lessee's Trade Fixtures or Lessee Owned
Alterations and Utility Installations) as soon as reasonably possible
and this Lease shall continue in full force and effect; provided,
however, that Lessee shall, at Lessor's election, make the repair of any
damage or destruction the total cost to repair of which is $10,000 or
less, and, in such event, Lessor shall make any applicable insurance
proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such
repair, the Insuring Party shall promptly contribute the shortage in
proceeds (except as to the deductible which is Lessee's responsibility)
as and when required to complete said repairs. In the event, however,
such shortage was due to the fact that, by reason of the unique nature
of the improvements, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation
to pay for the shortage in insurance proceeds or to fully restore the
unique aspects of the Premises unless Lessee provides Lessor with the
funds to cover same, or adequate assurance thereof, within ten (10) days
following receipt of written notice of such shortage and request
therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, the party responsible for making the
repairs shall complete them as soon as reasonably possible and this
Lease shall remain in full force and effect. If such funds or assurance
are not received, Lessor may nevertheless elect by written notice to
Lessee within ten (10) days thereafter to: (i) make such restoration and
repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and
effect, or have this Lease terminate thirty (30) days thereafter. Lessee
shall not be entitled to reimbursement of any funds contributed by
Lessee to repair any such damage or destruction. Premises Partial Damage
due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net
proceeds of any such insurance shall be made available for the repairs
if made by either Party; provided, however, that if Lessor actually
receives proceeds sufficient to cover the full amount of the loss,
excluding any deductible, this Paragraph 9.2 shall govern.
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful
act of Lessee (in which event Lessee shall make the repairs at Lessee's
expense), Lessor may either: (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) terminate this Lease by
giving written notice to Lessee within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such damage. Such termination
shall be effective sixty (60) days following the date of such notice. In
the event Lessor elects to terminate this Lease, Lessee shall have the
right within ten (10) days after receipt of the termination notice to
give written notice to Lessor of Lessee's commitment to pay for the
repair of such damage without reimbursement from Lessor. Lessee shall
provide Lessor with said funds or satisfactory assurance thereof within
thirty (30) days after making such commitment. In such event this Lease
shall continue in full force and effect, and Lessor shall proceed to
make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment,
this Lease shall terminate as of the date specified in the termination
notice. See Addendum 9.3.
9.4 Total Destruction. Notwithstanding any other provision hereof, if
a Premises Total Destruction occurs, this Lease shall terminate sixty
(60) days following such Destruction. If the damage or destruction was
caused by the gross negligence or willful misconduct of Lessee, Lessor
shall have the right to recover Lessor's damages from Lessee, except as
provided in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last six (6)
months of this Lease there is damage for which the cost to repair
exceeds two (2) month's Base Rent, whether or not an Insured Loss,
Lessor may terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving a written termination notice
to Lessee within thirty (30) days after the date of occurrence of such
damage. Notwithstanding the foregoing, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises,
then Lessee may preserve this Lease by, (a) exercising such option and
(b) providing Lessor with any shortage in insurance proceeds (or
adequate assurance thereof) needed to make the repairs on or before the
earlier of (i) the date which is ten days after Lessee's receipt of
Lessor's written notice purporting to terminate this Lease, or (ii) the
day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds
(or adequate assurance thereof) to cover any shortage in insurance
proceeds, Lessor shall, at Lessor's commercially reasonable expense,
repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such
option and provide such funds or assurance during such period, then this
Lease shall terminate on the date specified in the termination notice
and Lessee's option shall be extinguished.
9.6 Abatement of Rent; Lessee's Remedies.
(a) Abatement. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is
not responsible under this Lease, the Rent payable by Lessee for the
period required for the repair, remediation or restoration of such
damage shall be abated in proportion to the degree to which Lessee's use
of the Premises is impaired, but not to exceed the proceeds received
from the Rental Value insurance. All other obligations of Lessee
hereunder shall be performed by Lessee, and Lessor shall have no
liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.
(b) Remedies. If Lessor shall be obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way,
such repair or restoration within ninety (90) days after such obligation
shall accrue, Lessee may, at any time prior to the commencement of such
repair or restoration, give written notice to Lessor and to any Lenders
of which Lessee has actual notice, of Lessee's election to terminate
this Lease on a date not less than sixty (60) days following the giving
of such notice. If Lessee gives such notice and such repair or
restoration is not commenced within thirty (30) days thereafter, this
Lease shall terminate as of the date specified in said notice. If the
repair or restoration is commenced within said thirty (30) days, this
Lease shall continue in full force and effect. "Commence" shall mean the
beginning of the actual work on the Premises. See Addendum 9.6.
9.7 Termination - Advance Payments. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment
shall be made concerning advance Base Rent and any other advance
payments made by Lessee to Lessor. Lessor shall, in addition, return to
Lessee so much of Lessee's Security Deposit as has not been, or is not
then required to be, used by Lessor.
9.8 Waive Statutes. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the
Premises with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent
inconsistent herewith.
10. Real Property Taxes.
10.1 Definition of "Real Property Taxes." As used herein, the term
"Real Property Taxes" shall include any form of assessment; real estate,
general, special, ordinary or extraordinary, or rental levy or tax
(other than inheritance, personal income or estate taxes); improvement
bond; and/or license fee imposed upon or levied against any legal or
equitable interest of Lessor in the Premises, Lessor's right to gross
revenues therefrom, (But not any tax on Lessor's net income from all
sources) and/or Lessor's business of leasing, by any authority having
the direct or indirect power to tax and where the funds are generated
with reference to the Building address and where the proceeds so
generated are to be applied by the city, county or other local taxing
authority of a jurisdiction within which the Premises are located. The
term "Real Property Taxes" shall also include any tax, fee, levy,
assessment or charge, or any increase therein, imposed by reason of
events occurring during the term of this Lease, including but not
limited to, a change in the ownership of the Premises.
10.2 See Addendum 10.2
(a) Payment of Taxes. Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. Subject to
Paragraph 10.2(b), all such payments shall be made at least ten (10)
days prior to any delinquency date. Lessee shall promptly furnish Lessor
with satisfactory evidence that such taxes have been paid. If any such
taxes shall cover any period of time prior to or after the expiration or
termination of this Lease, Lessee's share of such taxes shall be
prorated to cover only that portion of the tax bill applicable to the
period that this Lease is in effect, and Lessor shall reimburse Lessee
for any overpayment. If Lessee shall fail to pay any required Real
Property Taxes, Lessor shall have the right to pay the same, and Lessee
shall reimburse Lessor therefor upon demand.
(b) Advance Payment. In the event Lessee incurs a late charge on any
Rent payment two (2) times during any twelve (12) month period, Lessor
may, at Lessor's option, estimate the current Real Property Taxes, and
require that such taxes be paid in advance to Lessor by Lessee, either:
(i) in a lump sum amount equal to the installment due, at least twenty
(20) days prior to the applicable delinquency date, or (ii) monthly in
advance with the payment of the Base Rent. If Lessor elects to require
payment monthly in advance, the monthly payment shall be an amount equal
to the amount of the estimated installment of taxes divided by the
number of months remaining before the month in which said installment
becomes delinquent. When the actual amount of the applicable tax bill is
known, the amount of such equal monthly advance payments shall be
adjusted as required to provide the funds needed to pay the applicable
taxes. If the amount collected by Lessor is insufficient to pay such
Real Property Taxes when due, Lessee shall pay Lessor, upon demand, such
additional sums as are necessary to pay such obligations. All monies
paid to Lessor under this Paragraph may be intermingled with other
monies of Lessor and shall not bear interest. In the event of a Breach
by Lessee in the performance of its obligations under this Lease, then
any balance of funds paid to Lessor under the provisions of this
Paragraph may, at the option of Lessor, be treated as an additional
Security Deposit.
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property
Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be reasonably determined by Lessor
from the respective valuations assigned in the assessor's work sheets or
such other information as may be reasonably available.
10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency,
all taxes assessed against and levied upon Lessee Owned Alterations,
Utility Installations, Trade Fixtures, furnishings, equipment and all
personal property of Lessee. When possible, Lessee shall cause such
property to be assessed and billed separately from the real property of
Lessor. If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable
to Lessee's property within ten (10) days after receipt of a written
statement.
11. Utilities. Lessee shall pay for all water, gas, heat, light,
power, telephone, trash disposal and other utilities and services
supplied to the Premises, together with any taxes thereon. If any such
services are not separately metered to Lessee, Lessee shall pay a
reasonable proportion, to be determined by Lessor, of all charges
jointly metered.
12. Assignment and Subletting. See Addendum 12
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or
sublet all or any part of Lessee's interest in this Lease or in the
Premises without Lessor's prior written consent, which consent shall not
be unreasonably withheld or delayed.
(b) A change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of
twenty-five percent (25%) or more of the voting control of Lessee shall
constitute a change in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs,
which results or will result in a reduction of the Net Worth of Lessee
by an amount greater than twenty-five percent (25%) of such Net Worth as
it was represented at the time of the execution of this Lease or at the
time of the most recent assignment to which Lessor has consented, or as
it exists immediately prior to said transaction or transactions
constituting such reduction, whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold its
consent. "Net Worth of Lessee" shall mean the net worth of Lessee
(excluding any guarantors) established under generally accepted
accounting principles.
(d) An assignment or subletting without consent shall be a Default
curable after notice per Paragraph 13.1(c). If Lessee fails to cure such
Default within the applicable cure period, Lessor may either: (i)
terminate this Lease, or (ii) upon thirty (30) days written notice,
increase the monthly Base Rent to one hundred ten percent (110%) of the
Base Rent then in effect. Further, in the event of such Breach and
rental adjustment, (i) the purchase price of any option to purchase the
Premises held by Lessee shall be subject to similar adjustment to one
hundred ten percent (110%) of the price previously in effect, and (ii)
all fixed and non-fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased to One Hundred Ten
Percent (110%) of the scheduled adjusted rent.
(e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by
such assignee or sublessee of the obligations of Lessee under this
Lease; (ii) release Lessee of any obligations hereunder; or (iii) alter
the primary liability of Lessee for the payment of Rent or for the
performance of any other obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such
assignment nor the acceptance of Rent or performance shall constitute a
waiver or estoppel of Lessor's right to exercise its remedies for
Lessee's Default or Breach.
(c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else
responsible for the performance of Lessee's obligations under this
Lease, including any assignee or sublessee, without first exhausting
Lessor's remedies against any other person or entity responsible
therefore to Lessor, or any security held by Lessor.
(e) Each request for consent to an assignment or subletting shall
be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not
limited to the intended use and/or required modification of the
Premises, if any, together with a fee of $1,000 or three percent (3%) of
the current monthly Base Rent applicable to the portion of the Premises
which is the subject of the proposed assignment or sublease, whichever
is greater, as consideration for Lessor's considering and processing
said request. Lessee agrees to provide Lessor with such other or
additional information and/or documentation as may be reasonably
requested.
(f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be
deemed to have assumed and agreed to conform and comply with each and
every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease,
other than such obligations as are contrary to or inconsistent with
provisions of an assignment or sublease to which Lessor has specifically
consented to in writing.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee
of all or any part of the Premises and shall be deemed included in all
subleases under this Lease whether or not expressly incorporated
therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect
such Rent and apply same toward Lessee's obligations under this Lease;
provided, however, that until a Breach shall occur in the performance of
Lessee's obligations, Lessee may collect said Rent. Lessor shall not, by
reason of the foregoing or any assignment of such sublease, nor by
reason of the collection of Rent, be deemed liable to the sublessee for
any failure of Lessee to perform and comply with any of Lessee's
obligations to such sublessee. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor
stating that a Breach exists in the performance of Lessee's obligations
under this Lease, to pay to Lessor that portion of the Rent due and to
become due under the sublease demanded in such notice from Lessor,
provided that the amount demanded shall not exceed all amounts then due
and payable by Lessee hereunder, including any past due Rent, as current
Rent. Sublessee shall rely upon any such notice from Lessor and shall
pay all Rents demanded by to Lessor without any obligation or right to
inquire as to whether such Breach exists, notwithstanding any claim from
Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or
security deposit paid by such sublessee to such sublessor or for any
prior Defaults or Breaches of such sublessor.
(c) Any matter requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach
by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and
against Lessee for any such Defaults cured by the sublessee.
13. Default; Breach; Remedies. See Addendum 13.1
13.1 Default; Breach. A "Default" is defined as a failure by the
Lessee to comply with or perform any of the terms, covenants, conditions
or rules under this Lease. A "Breach" is defined as the occurrence of
one or more of the following Defaults, and the failure of Lessee to cure
such Default within any applicable grace period:
(a) The abandonment of the Premises; or the vacating of the Premises
without providing a commercially reasonable level of security, or where
the coverage of the property insurance described in Paragraph 8.3 is
jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to
Lessor or to a third party, when due, to provide reasonable evidence of
insurance or surety bond, or to fulfill any obligation under this Lease
which endangers or threatens life or property, where such failure
continues for a period of three (3) business days following written
notice to Lessee.
(c) The failure by Lessee to provide (i) reasonable written evidence
of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) a
Tenancy Statement, (v) a requested subordination, (vi) any document
requested under Paragraph 42 (easements), or (vii) any other
documentation or information which Lessor may reasonably require of
Lessee under the terms of this Lease, where any such failure continues
for a period of ten (10) or in the case of any of the item set forth in
clauses (i), (ii) or (viii), thirty (30) days following written notice
to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40
hereof, other than those described in subparagraphs 13.1(a), (b) or (c),
above, where such Default continues for a period of thirty (30) days
after written notice; provided, however, that if the nature of Lessee's
Default is such that more than thirty (30) days are reasonably required
for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making of
any general arrangement or assignment for the benefit of creditors; (ii)
becoming a "debtor" as defined in 11 U.S.C. Section 101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee,
the same is dismissed within sixty (60) days); (iii) the appointment of
a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this
Lease, where possession is not restored to Lessee within thirty (30)
days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where such seizure is not discharged
within thirty (30) days; provided, however, in the event that any
provision of this subparagraph 13.1 (e) is contrary to any applicable
law, such provision shall be of no force or effect, and not affect the
validity of the remaining provisions.
(f) The discovery that any financial statement of Lessee given to
Lessor was materially false.
13.2 Remedies. If Lessee fails to perform any of its affirmative
duties or obligations, within ten (10) days after written notice (or in
case of an emergency, without notice), Lessor may, at its option,
perform such duty or obligation on Lessee's behalf, including but not
limited to the obtaining of reasonably required bonds, insurance
policies, or governmental licenses, permits or approvals. The costs and
expenses of any such performance by Lessor shall be due and payable by
Lessee upon receipt of invoice therefor. If any check given to Lessor by
Lessee shall not be honored by the bank upon which it is drawn, Lessor,
at its option, may require all future payments to be made by Lessee to
be by cashier's check. In the event of a Breach, Lessor may, with or
without further notice or demand, and without limiting Lessor in the
exercise of any right or remedy which Lessor may have by reason of such
Breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall
be entitled to recover from Lessee: (i) the unpaid Rent which had been
earned at the time of termination; (ii) the worth at the time of award
of the amount by which the unpaid rent which would have been earned
after termination until the time of award exceeds the amount of such
rental loss that the Lessee proves could have been reasonably avoided;
(iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the
amount of such rental loss that the Lessee proves could be reasonably
avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform
its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including but not limited to
the cost of recovering possession of the Premises, expenses of
reletting, including necessary renovation and alteration of the
Premises, reasonable attorneys' fees, and that portion of any leasing
commission paid by Lessor in connection with this Lease applicable to
the unexpired term of this Lease. The worth at the time of award of the
amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of the District within which the
Premises are located at the time of award plus one percent (1%). Efforts
by Lessor to mitigate damages caused by Lessee's Breach of this Lease
shall not waive Lessor's right to recover damages under Paragraph 12. If
termination of this Lease is obtained through the provisional remedy of
unlawful detainer, Lessor shall have the right to recover in such
proceeding any unpaid Rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph
13.1 was not previously given, a notice to pay rent or quit, or to
perform or quit given to Lessee under the unlawful detainer statute
shall also constitute the notice required by Paragraph 13.1. In such
case, the applicable grace period required by Paragraph 13.1 and the
unlawful detainer statute shall run concurrently, and the failure of
Lessee to cure the Default within the greater of the two such grace
periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or
by said statute.
(b) Continue the Lease and Lessee's right to possession and recover
the Rent as it becomes due, in which event Lessee may sublet or assign,
subject only to reasonable limitations. Acts of maintenance, efforts to
relet, and/or the appointment of a receiver to protect the Lessor's
interests, shall not constitute a termination of the Lessee's right to
possession.
(c) Pursue any other remedy now or hereafter available under the
laws or judicial decisions of the state wherein the Premises are
located. The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee
from liability under any indemnity provisions of this Lease as to
matters occurring or accruing during the term hereof or by reason of
Lessee's occupancy of the Premises.
13.3 Inducement Recapture. Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for Lessee of
any cash or other bonus, inducement or consideration for Lessee's
entering into this Lease, all of which concessions are hereinafter
referred to as "Inducement Provisions," shall be deemed conditioned upon
Lessee's full and faithful performance of all of the terms, covenants
and conditions of this Lease. Upon Breach of this Lease by Lessee, any
such Inducement Provision shall automatically be deemed deleted from
this Lease and of no further force or effect, and any rent, other
charge, bonus, inducement or consideration theretofore abated, given or
paid by Lessor under such an Inducement Provision shall be immediately
due and payable by Lessee to Lessor, notwithstanding any subsequent cure
of said Breach by Lessee. The acceptance by Lessor of Rent or the cure
of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions of this paragraph unless
specifically so stated in writing by Lessor at the time of such
acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult to
ascertain. Such costs include, but are not limited to, processing and
accounting charges, and late charges which may be imposed upon Lessor by
any Lender. Accordingly, if any Rent shall not be received by Lessor
within five (5) days after such amount shall be due, then, without any
requirement for notice to Lessee, Lessee shall pay to Lessor a one-time
late charge equal to six percent (6%) of each such overdue amount. The
Parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such
late payment. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's Default or Breach with respect to such
overdue amount, nor prevent the exercise of 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 Rent, then notwithstanding any provision of this
Lease to the contrary, Base Rent shall, at Lessor's option, become due
and payable quarterly in advance.
13.5 Interest. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments
(such as Base Rent) or within thirty (30) days following the date on
which it was due for non-scheduled payment, shall bear interest from the
date when due, as to scheduled payments, or the thirty-first (31st) day
after it was due as to non-scheduled payments. The interest ("Interest")
charged shall be equal to the prime rate reported in the Wall Street
Journal as published closest prior to the date when due plus four
percent (4%), but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided
for in Paragraph 13.4.
13.6 Breach by Lessor.
(a) Notice of Breach. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an
obligation required to be performed by Lessor. For purposes of this
Paragraph, a reasonable time shall in no event be more than thirty (30)
days after receipt by Lessor, and any Lender whose name and address
shall have been furnished Lessee in writing for such purpose, of written
notice specifying wherein such obligation of Lessor has not been
performed; provided, however, that if the nature of Lessor's obligation
is such that more than thirty (30) days are reasonably required for its
performance, then Lessor shall not be in breach if performance is
commenced within such thirty (30) day period and thereafter diligently
pursued to completion.
(b) Performance by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within thirty (30) days
after receipt of said notice, or if having commenced said cure they do
not diligently pursue it to completion, or in the case of an emergency,
without waiting for the 30 day cure period to expire then Lessee may
elect to cure said breach at Lessee's expense and offset from Rent an
amount equal to two (2) month's Base Rent, and to pay an excess of such
expense under protest, reserving Lessee's right to reimbursement from
Lessor. Lessee shall document the cost of said cure and supply said
documentation to Lessor.
14. Condemnation. If the Premises or any portion thereof are taken
under the power of eminent domain or sold under the threat of the
exercise of said power (collectively "Condemnation"), this Lease shall
terminate as to the part taken as of the date the condemning authority
takes title or possession, whichever first occurs. If more than ten
percent (10%) of any building portion of the Premises, or more than
twenty-five percent (25%) of the land area portion of the Premises not
occupied by any building, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after
Lessor shall have given Lessee written notice of such taking (or in the
absence of such notice, within ten (10) days after Lessee obtains
knowledge that the condemning authority shall have taken possession)
terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with
the foregoing, this Lease shall remain in full force and effect as to
the portion of the Premises remaining, except that the Base Rent shall
be reduced in proportion to the reduction in utility of the Premises
caused by such Condemnation. Condemnation awards and/or payments shall
be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold, the value of the
part taken, or for severance damages; provided, however, that Lessee
shall be entitled to any compensation for Lessee's relocation expenses,
loss of business goodwill and/or Trade Fixtures, without regard to
whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the
Premises by Lessee, for purposes of Condemnation only, shall be
considered the property of the Lessee and Lessee shall be entitled to
any and all compensation which is payable therefor. In the event that
this Lease is not terminated by reason of the Condemnation, Lessor shall
repair any damage to the Premises caused by such Condemnation.
15. Brokers' Fee.
15.3 Representations and Indemnities of Broker Relationships. Lessee
and Lessor each represent and warrant to the other that it has had no
dealings with any person, firm, broker or finder (other than the
Brokers, if any) in connection with this Lease, and that no one other
than said named Brokers is entitled to any commission or finder's fee in
connection herewith. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such
unnamed broker, finder or other similar party by reason of any dealings
or actions of the indemnifying Party, including any costs, expenses,
and/or attorneys' fees reasonably incurred with respect thereto.
16. Estoppel Certificates. See Addendum 16
(a) Each Party (as "Responding Party") shall within ten (10) days
after written notice from the other Party (the "Requesting Party")
execute, acknowledge and deliver to the Requesting Party a statement in
writing in form similar to the then most current "Estoppel Certificate"
form published by the American Industrial Real Estate Association, plus
such additional information, confirmation and/or statements as may be
reasonably requested by the Requesting Party, or by any prospective
purchase of the Premises, or by any existing or prospective lender to
Lessor.
(c) If Lessor desires to finance, refinance, or sell the Premises,
or any part thereof, Lessee shall deliver within five (5) business days
after written request by Lessor, to any potential lender or purchaser
designated by Lessor such financial statements as may be reasonably
required by such lender or purchaser, including, but not limited to,
Lessee's financial statements for the past three (3) years. All such
financial statements shall be received by Lessor and such lender or
purchaser in confidence and shall be used only for the purposes herein
set forth.
17. Definition of Lessor. The term "Lessor" as used herein shall
mean the owner or owners at the time in question of the fee title to the
Premises, or, if this is a sublease, of the Lessee's interest in the
prior lease. In the event of a transfer of Lessor's title or interest in
the Premises or this Lease, Lessor shall deliver to the transferee or
assignee (in cash or by credit) any unused Security Deposit held by
Lessor. Except as provided in Paragraph 15, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior
Lessor shall be relieved of all liability with respect to the
obligations and/or covenants under this Lease thereafter to be performed
by the Lessor, and the transferee or assignee shall be responsible for
the performance of ??? obligations and covenants under this lease from
which the prior Lessor is ????. Subject to the foregoing, the
obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined.
Notwithstanding the above, and subject to the provisions of Paragraph 20
below, the original Lessor under this Lease, and all subsequent holders
of the Lessor's interest in this Lease shall remain liable and
responsible with regard to the potential duties and liabilities of
Lessor pertaining to Hazardous Substances as outlined in Paragraph 6
above.
18. Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect
the validity of any other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary,
the word "days" as used in this Lease shall mean and refer to calendar
days.
20. Limitation on Liability. Subject to the provisions of Paragraph
17 above, the obligations of Lessor under this Lease shall not
constitute personal obligations of Lessor, the individual partners of
Lessor or its or their individual partners, directors, officers or
shareholders, and Lessee shall look to the Premises, and to no other
assets of Lessor, for the satisfaction of any liability of Lessor with
respect to this Lease, and shall not seek recourse against the
individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for
such satisfaction.
21. Time of Essence. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the
Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease
contains all agreements between the Parties with respect to any matter
mentioned herein, and no other prior or contemporaneous agreement or
understanding shall be effective. Lessor and Lessee each represents and
warrants to the Brokers that it has made, and is relying solely upon,
its own investigation as to the nature, quality, character and financial
responsibility of the other Party to this Lease and as to the nature,
quality and character of the Premises. Brokers have no responsibility
with respect thereto or with respect to any default or breach hereof by
either Party. The liability (including court costs and Attorneys' fees),
of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment
or modification hereto shall be limited to an amount up to the fee
received by such Broker pursuant to this Lease; provided, however, that
the foregoing limitation on each Broker's liability shall not be
applicable to any gross negligence or willful misconduct of such Broker.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
courier) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, return receipt requested with postage
prepaid, or by facsimile transmission, and shall be deemed sufficiently
given if served in a manner specified in this Paragraph 23. The
addresses noted adjacent to a Party's signature on this Lease shall be
that Party's address for delivery or mailing of notices. Either Party
may by written notice to the other specify a different address for
notice, except that upon Lessee's taking possession of the Premises, the
Premises shall constitute Lessee's address for notice. A copy of all
notices to Lessor shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time hereafter
designate in writing.
23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery
shown on the receipt card, or if no delivery date is shown, the postmark
thereon. Notices delivered by United States Express Mail or overnight
courier that guarantee next day delivery shall be deemed given on the
next business day after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means
shall be deemed delivered upon completion of legible transmission
provided a copy is also delivered via delivery or mail. If notice is
received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day.
24. Waivers. No waiver by Lessor of the Default or Breach of any
term, covenant or condition hereof by Lessee, shall be deemed a waiver
of any other term, covenant or condition hereof, or of any subsequent
Default or Breach by Lessee of the same or of any other term, covenant
or condition hereof. Lessor's consent to, or approval of, any act shall
not be deemed to render unnecessary the obtaining of Lessor's consent
to, or approval of, any subsequent or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or
provisions of this Lease requiring such consent. The acceptance of Rent
by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of monies or
damages due Lessor, notwithstanding any qualifying statements or
conditions made by Lessee in connection therewith, which such statements
and/or conditions shall be of no force or effect whatsoever unless
specifically agreed to in writing by Lessor at or before the time of
deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the
other, execute, acknowledge and deliver to the other a short form
memorandum of this Lease for recording purposes. The Party requesting
recordation shall be responsible for payment of any fees applicable
thereto.
26. No Right To Holdover. Lessee has no right to retain possession
of the Premises or any part thereof beyond the expiration or termination
of this Lease. In the event that Lessee holds over, then the Base Rent
shall be increased to an amount equal to two times the Base Rent
applicable during the month immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by
Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all
other remedies at law or in equity.
28. Covenants and Conditions; Construction of Agreement. All
provisions of this Lease to be observed or performed by Lessee are both
covenants and conditions. In construing this Lease, all headings and
titles are for the convenience of the Parties only and shall not be
considered a part of this Lease. Whenever required by the context, the
singular shall include the plural and vice versa. This Lease shall not
be construed as if prepared by one of the Parties, but rather according
to its fair meaning as a whole, as if both Parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon
the parties, their personal representatives, successors and assigns and
be governed by the laws of the State in which the Premises are located.
Any litigation between the Parties hereto concerning this Lease shall be
initiated in the county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or
other hypothecation or security device (collectively, "Security
Device"), now or hereafter placed upon the Premises, to any and all
advances made on the security thereof, and to all renewals,
modifications, and extensions thereof. Lessee agrees that the holders of
any such Security Devices (in this Lease together referred to as
"Lessor's Lender") shall have no liability or obligation to perform any
of the obligations of Lessor under this Lease. Any Lender may elect to
have this Lease and/or any Option granted hereby superior to the lien of
its Security Device by giving written notice thereof to Lessee,
whereupon this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation
or recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party
who acquires ownership of the Premises by reason of a foreclosure of a
Security Device, and that in the event of such foreclosure, such new
owner shall not: (i) be liable for any act or omission of any prior
lessor or with respect to events occurring prior to acquisition of
ownership; (ii) be subject to any offsets or defenses which Lessee might
have against any prior lessor; or (iii) be bound by prepayment of more
than one (1) month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this
Lease shall be subject to receiving a commercially reasonable non-
disturbance agreement (a "Non-Disturbance Agreement") from the Lender
which Non-Disturbance Agreement provides that Lessee's possession of the
Premises, and this Lease, including any options to extend the term
hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises. Further, within sixty
(60) days after the execution of this Lease, Lessor shall use its
commercially reasonable efforts to obtain a Non-Disturbance Agreement
from the holder of any pre-existing Security Device which is secured by
the Premises. In the event that Lessor is unable to provide the Non-
Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to
negotiate for the execution and delivery of a Non-Disturbance Agreement.
30.4 Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents;
provided, however, that, upon written request from Lessor or a Lender in
connection with a sale, financing or refinancing of the Premises, Lessee
and Lessor shall execute such further writings as may be reasonably
required to separately document any subordination, attornment and/or
Non-Disturbance Agreement provided for herein.
31. Attorneys' Fees. If any Party or Broker brings an action or
proceeding involving the Premises to enforce the terms hereof or to
declare rights hereunder, the Prevailing Party (as hereafter defined) in
any such proceeding, action, or appeal thereon, shall be entitled to
reasonable attorneys' fees. Such fees may be awarded in the same suit or
recovered in a separate suit, whether or not such action or proceeding
is pursued to decision or judgment. The term, "Prevailing Party" shall
include, without limitation, a Party who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party of its claim
or defense. The attorneys' fees award shall not be computed in
accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys' fees reasonably incurred. In addition, Lessor
shall be entitled to attorneys' fees, costs and expenses incurred in the
preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently
commenced in connection with such Default or resulting Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's
agents and any Lender and its agents shall have the right to enter the
Premises at any time, in the case of an emergency, and otherwise at
reasonable times for the purpose of showing the same to prospective
purchasers, lenders, or lessees, inspecting the Premises, and making
such alterations, repairs, improvements or additions to the Premises as
Lessor may deem necessary. All such activities shall be without
abatement of rent or liability to Lessee. Lessor may at any time place
on the Premises any ordinary "For Sale" signs and Lessor may during the
last six (6) months of the term hereof place on the Premises any
ordinary "For Lease" signs. Lessee may at any time place on or about the
Premises any ordinary "For Sublease" sign. See Addendum 32
33. Auctions. Lessee shall not conduct, nor permit to be conducted,
any auction upon the Premises without Lessor's prior written consent.
Lessor shall not be obligated to exercise any standard of reasonableness
in determining whether to permit an auction.
34. Signs. Except for ordinary "For Sublease" signs, Lessee shall
not place any sign upon the Premises without Lessor's prior written
consent, which consent all not be unreasonably withheld or delayed. All
signs must comply with all Applicable Requirements.
35. Termination; Merger. Unless specifically stated otherwise in
writing by Lessor, the voluntary or other surrender of this Lease by
Lessee, the mutual termination or cancellation hereof, or a termination
hereof by Lessor for Breach by Lessee, shall automatically terminate any
sublease or lesser estate in the Premises; provided, however, that
Lessor may elect to continue any one or all existing subtenancies.
Lessor's failure within ten (10) days following any such event to elect
to the contrary by written notice to the holder of any such lesser
interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.
36. Consents. Except as otherwise provided herein, wherever in this
Lease the consent of a Party is required to an act by or for the other
Party, such consent shall not be unreasonably withheld or delayed.
Lessor's actual reasonable costs and expenses (including, but not
limited to, architects', attorneys', engineers' and other consultants'
fees) incurred in the consideration of, or response to, a request by
Lessee for any Lessor consent, including, but not limited to, consents
to an assignment, a subletting or the presence or use of a Hazardous
Substance, shall be paid by Lessee upon receipt of an invoice and
supporting documentation therefor. Lessor's consent to any act,
assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent
be deemed a waiver of any then existing Default or Breach, except as may
be otherwise specifically stated in writing by Lessor at the time of
such consent. The failure to specify herein any particular condition to
Lessor's consent shall not preclude the imposition by Lessor at the time
of consent of such further or other conditions as are then reasonable
with reference to the particular matter for which consent is being
given. In the event that either Party disagrees with any determination
made by the other hereunder and reasonably requests the reasons for such
determination, the determining party shall furnish its reasons in
writing and in reasonable detail within ten (10) business days following
such request.
38. Quiet Possession. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on
Lessee's part to be observed and performed under this Lease, Lessee
shall have quiet possession and quiet enjoyment of the Premises during
the term hereof.
39. Options. See Addendum 39
39.1 Definition. "Option" shall mean: (a) the right to extend the term
of or renew this Lease or to extend or renew any lease that Lessee has
on other property of Lessor; (b) the right of first refusal or first
offer to lease either the Premises or other property of Lessor; (c) the
right to purchase or the right of first refusal to purchase the Premises
or other property of Lessor.
39.2 Options Personal To Original Lessee. Each Option granted to
Lessee in this Lease is personal to the original Lessee, and cannot be
assigned or exercised by anyone other than said original Lessee and only
while the original Lessee is in full possession of the Premises and, if
requested by Lessor, with Lessee certifying that Lessee has no intention
of thereafter assigning or subletting.
39.3 Multiple Options. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be
exercised unless the prior Options have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option: (i) during the
period commencing with the giving of any notice of Default and
continuing until said Default is cured, (ii) during the period of time
any Rent is unpaid (without regard to whether notice thereof is given
Lessee), (iii) during the time Lessee is in Breach of this Lease, or
(iv) in the event that Lessee has been given three (3) or more notices
of separate Default, whether or not the Defaults are cured, during the
twelve (12) month period immediately preceding the exercise of the
Option.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise
an Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Option, if,
after such exercise and prior to the commencement of the extended term,
(i) Lessee fails to pay Rent for a period of thirty (30) days after such
Rent becomes due (without any necessity of Lessor to give notice
thereof), or (ii) Lessor gives to Lessee three (3) or more notices of
separate Default during any twelve (12) month period, whether or not the
Defaults are cured.
40. Multiple Buildings. If the Premises are a part of a group of
buildings controlled by Lessor, Lessee agrees that it will observe all
reasonable rules and regulations which Lessor may make from time to time
for the management, safety, and care of said properties, including the
care and cleanliness of the grounds and including the parking, loading
and unloading of vehicles, and that Lessee will pay its fair share of
common expenses incurred in connection therewith.
41. Security Measures. Lessee hereby acknowledges that the rental
payable to Lessor hereunder does not include the cost of guard service
or other security measures, and that Lessor shall have no obligation
whatsoever to provide same. Lessee assumes all responsibility for the
protection of the Premises, Lessee, its agents and invitees and their
property from the acts of third parties, except those resulting from
Lessor's willful misconduct or gross negligence.
42. Reservations. Lessor reserves to itself the right, from time to
time, to grant, without the consent or joinder of Lessee, such
easements, rights and dedications that Lessor deems necessary, and to
cause the recordation of parcel maps and restrictions, so long as such
easements, rights, dedications, maps and restrictions do not
unreasonably interfere with the use of the Premises by Lessee. Lessee
agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise
as to any amount or sum of money to be paid by one Party to the other
under the provisions hereof, the Party against whom the obligation to
pay the money is asserted shall have the right to make payment "under
protest" and such payment shall not be regarded as a voluntary payment
and there shall survive the right on the part of said Party to institute
suit for recovery of such sum. If it shall be adjudged that there was no
legal obligation on the part of said Party to pay such sum or any part
thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay.
44. Authority. If either Party hereto is a corporation, trust,
limited liability company, partnership, or similar entity, each
individual executing this Lease on behalf of such entity represents and
warrants that he or she is duly authorized to execute and deliver this
Lease on its behalf. Each Party shall, within thirty (30) days after
request, deliver to the other Party satisfactory evidence of such
authority.
45. Conflict. Any conflict between the printed provisions of this
Lease and the typewritten or handwritten provisions shall be controlled
by the typewritten or handwritten provisions.
46. Offer. Preparation of this Lease by either Party or their agent
and submission of same to the other Party shall not be deemed an offer
to lease to the other Party. This Lease is not intended to be binding
until executed and delivered by all Parties hereto. See Addendum 46.
47. Amendments. This Lease may be modified only in writing, signed
by the Parties in interest at the time of the modification.
48. Multiple Parties. If more than one person or entity is named
herein as either Lessor or Lessee, such multiple Parties shall have
joint and several responsibility to comply with the terms of this Lease.
49. Mediation and Arbitration of Disputes. An Addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties
and/or Brokers arising out of this Lease [ ] is [X] is not attached to
this Lease.
50. See Addendum 50.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE
SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY
AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE
ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF
LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE
CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE
LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF
THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND
OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S
INTENDED USE.
WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA,
CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH
THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED.
The parties hereto have executed this Lease at the place and on the
dates specified above their respective signatures.
Executed at: Executed at:
on: on:
By LESSOR: C&I WALSH LLC, By LESSEE:
a Delaware limited liability company EXODUS COMMUNICATIONS, INC.
By: G&I Investment Walsh LLC, a Delaware corporation
a Delaware limited liability company,
its managing member
By: G&I Investment Walsh Corp., By: /s/ ADAM WEGNER
a Delaware corporation, Name: Adam Wegner
its managing member Title: Vice President and General
Counsel
By: /s/ BRIAN JIMENEZ By: [SIGNATURE ILLEGIBLE]
Name: Brian Jimenez Name: [NAME ILLEGIBLE]
Title: Vice President Title: [TITLE ILLEGIBLE]
Address: Address:
c/o Landmark Asset, Management Group 2831 Mission College Boulevard
23422 Mill Creek Drive, Suite 125, Santa Clara, CA 95051
Laguna Hills, CA 92653 Telephone: (408) 346-2220
Telephone: (949) 830-7616 Facsimile: (408) 346-2206
Facsimile: (949) 472-9342 Federal ID No. Federal ID No.
NOTE: These forms are often modified to meet the changing requirements
of law and industry needs. Always write or call to make sure you
are utilizing the most current form: AMERICAN INDUSTRIAL REAL
ESTATE ASSOCIATION, 700 So. Flower Street, Suite 600, Los Angeles,
California 90017. (213) 687-8777. Fax No. (213) 687-8616
<PAGE>
ADDENDUM TO STANDARD
INDUSTRIAL/COMMERCIAL SINGLE-LESSEE LEASE - NET
THIS ADDENDUM (this "Addendum") is attached to and made a part of that
certain Standard Industrial/Commercial Single-Lessee Lease - Net, dated
June 4, 1999 (the "Lease"), by and between G&I WALSH LLC, a Delaware
limited liability company ("Lessor"), and EXODUS COMMUNICATIONS, INC., a
Delaware corporation ("Lessee"). To the extent any provisions of this
Addendum are inconsistent with the provisions of the Lease, the terms of
this Addendum shall prevail.
1.5 Increases of Base Rent. Effective as of each February 1 during the
Term, commencing with February 1, 2004, the monthly Base Rent payable
under the Lease shall be increased as follows:
Increase Date Monthly Base Rent
2/l/2004 $ 114,345.00
2/1/2005 $ 120,015.00
2/1/2006 $ 126,630.00
2/1/2007 $ 132,300.00
2/l/2008 $ 138,915.00
1.7 Letter of Credit for Security Deposit.
(a) Upon execution of this Lease, Lessee shall deliver to Lessor
the Letter of Credit described below as security for Lessee's
performance of all of Lessee's covenants and obligations under this
Lease; provided, however, that neither the Letter of Credit nor any
Letter of Credit Proceeds (as defined below) shall be deemed an advance
rent deposit or an advance payment of any other kind, or a measure of
Lessor's damages upon Lessee's default. The Letter of Credit shall be
maintained in effect from the date hereof through the date which is one
hundred twenty (120) days after the Expiration Date, as the same may be
extended in accordance with the provisions of this Lease, provided that
upon Lessee's surrender of the Premises at the expiration of the Term,
Lessor and Lessee shall endeavor to determine as soon as practicable any
amounts owing by Lessee on account of its obligation to restore the
Premises, and within five (5) Business Days after payment of such amount
(and any other amounts owing to Lessor) and Lessee's fulfillment of any
other obligations to Lessor, Lessor shall return to Lessee the Letter of
Credit and any Letter of Credit Proceeds then held by Lessor (other than
those held for application by Lessor as provided below). Lessor shall
not be required to segregate the Letter of Credit Proceeds from its
other funds, and in no event shall Letter of Credit Proceeds or any
portion thereof be deemed to be held in trust for Lessee. No interest
shall accrue or be payable to Lessee with respect Letter of Credit
Proceeds. Lessor may (but shall not be required to) draw upon the Letter
of Credit and use the proceeds therefrom (the "Letter of Credit
Proceeds") or any portion thereof to cure any Breach under this Lease or
to compensate Lessor for any damage Lessor incurs as a result of
Lessee's failure to perform any of its obligations hereunder, it being
understood that any use of the Letter of Credit Proceeds shall not
constitute a bar or defense to any of Lessor's remedies set forth in
Paragraph 13 below. In such event and upon written notice from Lessor to
Lessee specifying the amount of the Letter of Credit Proceeds so
utilized by Lessor and the particular purpose for which such amount was
applied, Lessee shall immediately deliver to Lessor an amendment Letter
of Credit or a replacement Letter of Credit in an amount equal to one
hundred percent (100%) of the amount specified below. Lessee's failure
to deliver such replacement Letter of Credit to Lessor within five (5)
business days of Lessor's notice shall constitute a Breach hereunder. If
Lessee is not in default at the expiration or termination of this Lease,
within one hundred twenty (120) days after such expiration or
termination, or such earlier date as provided above, Lessor shall return
to Lessee the Letter of Credit or the balance of the Letter of Credit
Proceeds then held by Lessor; provided, however, that in no event shall
any such return be construed as an admission by Lessor that Lessee has
performed all of its obligations hereunder. No Lender (as defined in
Paragraph 30.1), nor any purchaser at any judicial or private
foreclosure sale of the Premises or any portion thereof, shall be
responsible to Lessee for such Letter of Credit or any Letter of Credit
Proceeds unless such holder or purchaser shall have actually received
the same.
(b) As used herein, Letter of Credit shall mean an unconditional,
irrevocable letter of credit (hereinafter referred to as the "Letter of
Credit") issued by a major "money center" bank satisfactory to Lessor in
its sole and absolute discretion (the "Bank"), drawings under which may
be made at an office of the Bank located in either New York, New York,
or San Francisco, California, or Los Angeles, California, naming Lessor
as beneficiary, in the amounts set forth below, and otherwise in form
and substance satisfactory to Lessor. The initial amount of the Letter
of Credit shall be Two Hundred Thousand Dollars ($200,000.00) during the
period from the execution of this Lease through June 30, 2002; not later
than July 1, 2002, the amount of the Letter of credit shall be increased
to Three Hundred Thousand Dollars ($300,000.00); and not later than July
1, 2003, the amount of the Letter of Credit shall be increased to Six
Hundred Thousand Dollars ($600,000.00), and shall be maintained in said
amount for so long as the Letter of Credit is required to be maintained
pursuant to subparagraph (a), above. In addition, should the Agreed Use
be amended to accommodate a material change in the business of Lessee or
to accommodate a sublessee or assignee, Lessee shall, upon thirty (30)
days' written notice from Lessor, cause the amount of the Letter of
Credit to be "increased to an amount necessary, in Lessor's reasonable
judgment, to account for any increased wear and tear that the Premises
may suffer as a result thereof. Furthermore, if a change in control of
Lessee occurs during the term of this Lease or the Prior Sublease (as
defined in Section 2.2 of this Addendum), and following such change in
control, (1) Lessee is not a publicly traded company, and (2) the
financial condition of Lessee is, in Lessor's reasonable judgment,
significantly reduced, Lessee shall, upon thirty days' written notice
from Lessor, cause the amount of the Letter of Credit to be increased,
effective on the later to occur of the expiration of thirty (30) days
after Lessor gives such notice, or the thirtieth (30th) day prior to the
Commencement Date, to an amount, which, in Lessor's reasonable judgment,
is commercially reasonable based on such change in financial condition.
The Letter of Credit shall be for an initial term of not less than one
year and shall provide: (i) that Lessor may make partial and multiple
draws thereunder, up to the face amount thereof, (ii) that Lessor may
draw upon the Letter of Credit up to the full amount thereof, as
determined by Lessor, and the Bank will pay to Lessor the amount of such
draw upon receipt by the Bank of a sight draft signed by Lessor and
accompanied by a written certification from Lessor to the Bank stating
either: (A) that a Breach has occurred and is continuing under this
Lease or (B) that Lessor has not received notice from the Bank that the
Letter of Credit will be renewed by the Bank for at least one (l) year
beyond the then applicable expiration date and Lessee has not furnished
Lessor with a replacement Letter of Credit as hereinafter provided; and
(iii) that, in the event of Lessor's assignment or other transfer of its
interest in this Lease, the Letter of Credit shall be freely
transferable by Lessor, without charge and without recourse, to the
assignee or transferee of such interest and the Bank shall confirm the
same to Lessor and such assignee or transferee. The Letter of Credit
shall further provide that a draw thereon pursuant to clause (ii)(B)
above may only be made during the thirty (30) day period preceding the
then applicable expiration date of the Letter of Credit. In the event
that no later than thirty (30) days prior to then applicable expiration
date of the Letter of Credit, neither (1) the Bank shall have notified
Lessor that the Letter of Credit will be renewed for at least one (1)
year beyond the then applicable expiration date, nor (2) Lessee shall
have delivered to Lessor a replacement Letter of Credit in the amount
required hereunder and otherwise meeting the requirements set forth
above, then Lessor shall be entitled to draw on the Letter of Credit as
provided above, and shall hold the proceeds of such draw as Letter of
Credit Proceeds pursuant to subparagraph (a) above and Paragraph 5 of
the Lease, provided that such drawing shall not constitute a waiver of
Lessor's right to declare a Breach of the Lease pursuant to subparagraph
13.1(c) of this Addendum.
(c) At any time during the Term, Lessee may replace any Letter of
Credit provided hereunder with another Letter of Credit meeting the
requirements hereunder, and Lessor shall cooperate in arranging a
simultaneous exchange of such Letters of Credit.
2.2 Lessee in Possession Under Sublease; Premises Leased "As-Is." The
parties acknowledge that immediately prior to the Commencement Date of
the Term of this Lease (also referred to sometimes in this Lease as the
"Start Date"), Lessee shall have been in possession of a portion of the
Premises consisting of an agreed rentable area of 82,474 square feet,
since July 1, 1999, pursuant to a sublease agreement between Talus
Corporation, a California corporation, formerly known as Scientific
Custom Metal Products International, Inc. ("Prior Lessee"), as
sublessor, and Lessee, as sublessee, made with the consent of Lessor
(the "Prior Sublease"). In addition, except in the event of commencement
of the Term (including, if applicable, Early Commencement (as defined in
Addendum Paragraph 3.1)) which occurs prior to the termination of the
CAT Sublease (as defined in Addendum Paragraph 3.1), Lessee shall also
have been in possession of the remaining portion of the Premises
(consisting of the CAT Space, as defined in Addendum Paragraph 3.1)
immediately prior to the Commencement Date, pursuant to the Prior
Sublease. The lease pursuant to which Prior Lessee currently leases the
Premises from Lessor, as the same may be amended from time to time, is
referred to herein as the "Prior Master Lease." Accordingly, the lease
of the Premises (including, but not limited to, the CAT Space) to Lessee
pursuant to this Lease shall be on an "As-Is, WITH ALL FAULTS" basis.
Lessor makes no representation or warranty of any nature to Lessee with
respect to the Premises or any part, element or component thereof,
including, but not limited to, electrical, plumbing, fire sprinkler,
life safety, lighting, or heating ventilating and air conditioning
("HVAC") systems, loading doors, roof, exterior walls, foundations or
other structural elements.
3.1 Condition to Commencement.
A. It shall be a condition to the commencement of the Term of
this Lease that Lessee shall not have defaulted under the Prior Sublease
beyond the expiration of any applicable cure period, and that the Prior
Sublease shall not have terminated for any reason prior to the scheduled
expiration date of June 30, 2003, except as provided below in this
Addendum Paragraph 3.1.
B. Notwithstanding the provisions of subparagraph A of this
Addendum Paragraph 3.1, in the event that the Prior Sublease is
terminated solely as a result of the termination of the Prior Master
Lease by Lessor due to a default of the Prior Lessee under the Prior
Master Lease, then so long as Lessee is not then in default under the
terms of the Prior Sublease, and no event shall have occurred and be
continuing which, under the terms of the Prior Sublease would constitute
a default of Lessee thereunder after the giving of notice or passage of
time, or both, then the Original Term of this Lease shall commence
immediately upon the termination of the Prior Master Lease and Prior
Sublease ("Early Commencement"). In the event of Early Commencement, the
Commencement Date hereunder shall be adjusted accordingly, but the
Expiration Date shall not be changed, and the Monthly Base Rent for any
period of the Original Term occurring prior to the originally scheduled
Commencement Date (i.e., July 1, 2003) due to Early Commencement shall
be determined for the applicable period in accordance with the following
schedule, subject to subparagraph C of this Addendum Paragraph 3.1:
Starting Date Ending Date Monthly Base Rent
7/1/1999 1/31/2000 $ 77,065.00
2/l/2000 1/31/2001 $ 80,918.00
2/1/2001 1/31/2002 $ 85,050.00
2/l/2002 1/31/2003 $ 89,775.00
2/1/2003 6/30/2003 $ 94,500.00
C. In addition, in the event of Early Commencement,
notwithstanding the provisions of subparagraph 1.7(b) of this Addendum,
above, Lessee shall cause the amount of the Letter of Credit to be
increased to Six Hundred Thousand Dollars ($600,000.00), within thirty
(30) days after the Commencement Date (as determined pursuant to this
Addendum Paragraph 3.1 based on Early Commencement), and the Letter of
Credit shall be maintained in said amount for so long as the Letter of
Credit is required to be maintained Pursuant to subparagraph 1.7(a) of
this Addendum 1.7.
D. The parties acknowledge that upon the commencement of the
Prior Sublease, and for a term continuing through December 31, 2001,
with an option to extend through December 31, 2006, a portion of the
Premises consisting of an agreed rentable area of 12,026 square feet
(the "CAT Space") is being subleased by Prior Lessee to Computer Access
Technology Corporation ("CAT"), pursuant to a Standard Office Lease--
Gross, between Prior Lessee and CAT, dated October 3, 1996, with
attached First Addendum to Lease Agreement (with attached Exhibits A and
B) (the "CAT Sublease"). If commencement of the Term of this Lease
(including, if applicable, Early Commencement) occurs prior to
termination of the CAT Sublease, then (i) pursuant to an assignment of
Prior Lessee's rights under the CAT Sublease by Prior Lessee to Lessee,
CAT shall remain in possession of the CAT Space as a subtenant of
Lessee, and Lessee shall be deemed to have taken possession of the
entire Premises upon commencement of the Term of this Lease (including,
if applicable, Early Commencement), (ii) there shall be no adjustment of
the amount of Monthly Base Rent or any other sums payable hereunder on
account of CAT remaining in possession of the CAT Space, and (iii)
Lessee shall be entitled to receive all rent payable by CAT under the
CAT sublease, and Addendum Paragraph 12.C shall not be applicable to any
portion of the term of the CAT Sublease occurring prior to December 31,
2006; provided, however, that any extension of the term of the CAT
Sublease beyond December 31, 2006, shall be subject to Paragraph 12 of
the Lease and this Addendum, including, but not limited to, Paragraph
12.C.
6.2(a) Consent to Diesel Fuel Tank(s). Lessor hereby consents to the
installation by Lessee of one or more above-ground diesel fuel tanks at
the Premises, provided that such installation shall be in compliance
with all Applicable Requirements, and Lessee shall obtain Lessor's prior
approval of the precise location thereof, and of the protective
enclosures or encasements thereof, which approval shall not be
unreasonably withheld or delayed.
6.2(g) Limitations on Lessor's Termination Option Under Paragraph
6.2(g); Lessee's Termination Option. Notwithstanding any provision of
subparagraph 6.2(g), Lessor shall not be permitted to exercise the
termination option under clause (ii) of subparagraph 6,2(g), (1) if
Lessor is subject to an order of a governmental agency with jurisdiction
over the Hazardous Substance Condition requiring Lessor to remediate the
same, unless such remediation cannot practicably be accomplished with
Lessee remaining in possession of the Premises, or (2) unless in
Lessor's reasonable judgment, continued occupancy of the Premises by
Lessee without remediation of the Hazardous Substance Condition poses a
risk of potential liability to Lessor. Furthermore, and notwithstanding
any provision of subparagraph 6.2(g), Lessor shall be under no duty to
remediate any Hazardous Substance Condition except to the extent Lessor
is subject to an order of a governmental agency with jurisdiction over
the Hazardous Substance Condition requiring Lessor to remediate the
same. To the extent Lessor is subject to an order of a governmental
agency with jurisdiction over the Hazardous Substance Condition
requiring Lessor to remediate the same, Lessor shall diligently proceed
with such remediation, in accordance with any remedial action plan
approved by the appropriate governmental agency(ies). In the event that
in the opinion of the environmental consultant hired by Lessor to
oversee the remediation, the remediation cannot practicably be completed
without Lessee vacating the Premises for a period which will exceed six
(6) months, Lessee shall have the option to terminate this Lease by
giving notice to Lessor within thirty (30) days after Lessee is notified
by Lessor that the remediation cannot practicably be completed without
Lessee vacating the Premises for a period which will exceed six (6)
months (which notification shall include notice of the date Lessor
requires Lessee to vacate the Premises for such remediation, which date
shall not be earlier than six (6) months after the date of such
notification, except to the extent it is reasonably necessary for Lessor
to commence such remediation on an earlier date in order to comply with
any order of a governmental agency requiring Lessor to remediate the
same, including any remedial action plan approved by the appropriate
governmental agency(ies)), such termination to be effective upon the
date set forth in Lessor's notice that Lessor requires Lessee to vacate
the Premises.
7.1 Additional Provisions Applicable to Paragraph 7.1. As used in the
Lease, the term "Prime Rate" means the prime rate of interest published
in the Wall Street Journal on the first day of the month in which the
applicable replacement Basic Element is installed at the property (or
the first day of such month on which the Wall Street Journal is
published), provided that if a range of interest rates is published for
the prime rate on such day, the highest rate in such range shall be
used. In the event that the generally accepted accounting principles
specifies a range of time for the useful life of any Basic Element which
is replaced, the shortest time allowed under generally accepted
accounting principles shall be used for the amortization period under
Paragraph 7.1 of the Lease.
7.3 Additional Provisions Applicable to Paragraph 7.3(a). The
following sentences are added to the end of Paragraph 7.3(a) of the
Lease: "In addition, Lessee may install satellite dishes, not to exceed
two (2) feet in diameter, on the roof of the Building only, without
Lessor's consent, but upon notice to Lessor, provided that such
satellite dishes are installed behind a roof screen, are not visible
from the street, and are installed in compliance with Applicable Law. If
Lessee wishes to use other satellite dishes and/or install satellite
dishes in any other manner or location, such installation shall be in
compliance with Applicable Law, and shall not be made without Lessor's
prior written approval of such installation, which approval shall not be
unreasonably withheld or delayed." Lessor shall not unreasonably
withhold or delay the granting of its consent (either as Lessor
hereunder, or as Lessor under the Prior Master Lease) to Alterations,
Utility Installations or Trade Fixtures which are consistent with the
types of Alterations, Utility Installations or Trade Fixtures approved
by Lessor in connection with Lessee's occupancy of the adjacent building
located at 2401 Walsh Avenue, Santa Clara. Lessor shall not unreasonably
withhold or delay the granting of its consent to the installation by
Lessee of security fencing which will in part enclose the Building,
provided that such installation shall be in compliance with Applicable
Requirements, and Lessee shall obtain Lessor's prior written approval of
the precise location, height and type thereof. Lessee agrees that
reasonable considerations in determining such approval shall include,
but not be limited to, whether such security fencing unreasonably
interferes with the use or occupancy (including parking, ingress and
egress) of 2401 Walsh Avenue or its marketability to prospective tenants
or subtenants.
7.4 Additional Provisions Applicable to Paragraph 7.4. To the extent
any item installed at, or any alteration or modification made to, the
Premises by Lessee during the term of the Prior Sublease would fall
within the definitions of any of "Utility Installations," "Trade
Fixtures," "Alterations" or "Lessee Owned Alterations and/or Utility
Installations" if the same were installed or made during the term of
this Lease, then for all purposes of this Lease, including but not
limited to, Paragraph 7.4, the same shall be deemed to constitute
"Utility Installations," "Trade Fixtures," "Alterations" or "Lessee
Owned Alterations and/or Utility Installations," as applicable, under
this Lease, except that if Lessor's consent to the same was either
obtained or not required under the terms of the Prior Sublease, then no
further consent to the same shall be required under Paragraph 7.3 of
this Lease. The following provisions are added at the end of Paragraph
7.4(c): "Without limiting the generality of the foregoing, prior to the
last day of the Lease term or any earlier termination date, and
subsequent to the removal of all satellite dishes and other equipment
which Lessee is entitled or required to remove from the roof upon the
termination of this Lease, Lessee shall replace the roof of the
Premises, and the replacement roof shall comply with the specifications
set forth on Exhibit B to this Lease." Notwithstanding any provisions of
subparagraph 7.4(a) to the contrary, but subject to the final sentence
of this Addendum Paragraph 7.4, Lessor acknowledges that the following
items installed at the Premises shall at all times during the term of
this Lease be and remain the Property of Lessee, and Lessee shall have
the right to remove the same upon the expiration of the term of the
Lease, subject to Lessee's obligations under subparagraph 7.4(c):
(a) Permanent and temporary generator systems including enclosures and
fuel tanks with the associated electronic and manual switch gear.
(b) Independent, stand-alone air-conditioning units, provided that
following the removal of such units the Building has a fully
functioning HVAC system adequate in Lessor's sole judgment for
general office purposes.
(c) Raised Flooring, Racking, Cage materials, cabinets and patch
panels.
(d) UPS Battery Systems including electrical switch gear.
(e) FM200 fire suppression canisters, piping and nozzles.
(f) VESDA or smoke sensor stations in ceiling or floor area.
(g) Inside or outside security cameras, access card reader stations,
VCR, multiplexer, monitors and computers.
(h) Partition and conference room furniture systems and freestanding,
cabinets, storage units.
(i) Telephone and voice mail system with desk stations and
receptionist, computers, servers, printers, phone sets.
(j) Fiber Muxes or other Telco equipment installed in MPOE rooms.
(k) Emergency distribution board and telephone backboard with
connectors.
(l) Maintenance bypass electronic and manual switch gear.
(m) Kitchen appliances like microwaves, refrigerators and vending
machines.
(n) Console monitors, screen projection and screens in command center.
(o) Bulletproof/resistant glass, provided that removal of the same
shall be conditioned upon replacement of the openings with other
glazing suitable in Lessor's reasonable judgment.
(p) Satellite dishes or other communications equipment.
(q) Electrical distribution equipment consisting of an automatic
transfer switch, parallel switch and bypass unit, parallel UPS
Units and several power distribution units installed inside the
Building by Lessee, inward from the most inward point(s) of
connection to all transformers, switches, meters and other
electrical distribution equipment installed by the public utility
providing power to the Building. The parties acknowledge that
Lessee intends to request that the City of Santa Clara Power and
Electric Company to add two new 3000 AMP services to the Building,
including two transformers placed on the exterior of the Building
(one for each 3000 AMP service), and one or more power switches and
metering boxes inside the Building, which are not part of the
electrical distribution equipment that Lessee is entitled to remove
pursuant to this Addendum Paragraph 7.4.
(r) Customer and vendor equipment and related materials of the type
listed above in this Addendum Paragraph 7.4.
(s) Lessee, Lessee Customer and Lessee Vendor personal property which
is not attached to the Premises.
(t) Any Trade Fixtures similar or related to the foregoing items that
was installed by or for Lessee pursuant to the terms of the Lease.
Notwithstanding the foregoing, if the Lease terminates prior to the
scheduled Expiration Date (as the same may be extended in accordance
with Addendum Paragraph 39) as a result of a Breach by Lessee under the
Lease, then Lessee shall have no right to remove any of items listed in
subparagraphs (a), (b) or (q), above; provided that Lessor may require
Lessee to remove any of such items (or Lessor may remove such items at
Lessee's sole cost and expense), and any such items which Lessor does
not require Lessee to remove shall become the sole property of Lessor
upon termination of the Lease.
8.1 Additional Provisions Applicable to Paragraph 8.1. Notwithstanding
the provisions of Paragraph 8.1, Lessor, and not Lessee shall pay any
increases in the premiums for the property insurance covering the
Premises carried by Lessor pursuant to Paragraph 8.3 to the extent such
increase results from any acts or omissions occurring on, or the use or
occupancy of, any building(s) owned by Lessor which are adjacent to the
Building, and which arc not occupied by Lessee, either as a direct
tenant of Lessor, or as a subtenant.
8.3 Additional Provisions Applicable to Paragraph 8.3. Notwithstanding
the provisions of subparagraph 8.3(a), the deductible for earthquake
insurance may exceed $5,000, but shall not exceed the greater of
$100,000 or 20% of the replacement cost of the Building, as determined
by the insurer issuing the earthquake insurance policy.
9.3 Additional Provisions Applicable to Paragraph 9.3. In the event
Lessor elects to complete the repairs pursuant to clause (i) of
Paragraph 9.3, and fails to actually complete the same within six (6)
months after the date of damage or destruction, subject to extension for
Force Majeure (as defined below), Lessee shall have the right at any
time after the expiration of such six (6) month period, as the same may
be extended for Force Majeure, but prior to Lessor actually completing
such repairs, to terminate this Lease by giving written notice to
Lessor. As used in this Lease, "Force Majeure" shall mean strikes,
lockouts, labor disputes, shortages of material or labor, fire, flood or
other casualty, acts of God, any delays caused by Lessee or any other
cause beyond the control of Lessor.
9.6 Additional Provisions Applicable to Paragraph 9.6. If Lessor shall
be obligated to repair or restore the Premises pursuant to any provision
of Article 9, and it is possible, at additional cost, to commence such
repair or restoration earlier than ninety (90) days after such
obligation shall accrue and/or to accelerate the work so that the same
shall be completed prior to the deadline for Lessor to complete the same
pursuant to the applicable provision of Article 9, then upon Lessee's
written request, and subject to the conditions set forth below, Lessor
shall use its best efforts to commence such repair or restoration as
soon as is possible, subject to availability of labor and materials;
provided that (1) prior to incurring any additional costs to commence
such repair or restoration earlier than Lessor is obligated to do so or
to accelerate the work, Lessee shall have agreed, in writing, to pay all
such additional costs, and shall have deposited with Lessor, funds equal
to the amount reasonably estimated by Lessor as the total amount of such
additional costs to be incurred (provided that the amount of such
deposit shall not limit Lessee's liability to pay such additional costs,
and Lessor shall refund to Lessee upon completion of the repair and
restoration, the amount of such deposit, if any, in excess of the
additional costs incurred); and (2) in no event will Lessor be obligated
to commence any repair or restoration prior to obtaining all necessary
governmental permits and approvals therefor.
10.2 Contest of Real Property Taxes. Lessee may contest the amount of
Real Property Taxes assessed against the Premises, at its sole cost and
expense, including, but not limited to, any penalties or fees associated
with an unsuccessful contest. In the event Lessee elects to contest the
amount of Real Property Taxes, Lessee must pay the contested Real
Property Taxes under protest, and apply for a refund, or provide such
security as Lessor may require to prevent such taxes from becoming a
delinquent lien upon the Premises. Any refund of Real Property Taxes
paid by Lessee with respect to the term of this Lease shall belong to
Lessee, whether received as a result of a contest by Lessee or
otherwise, and regardless of when received. Lessee shall have no right
to any refund of Property Taxes applicable to any period of time other
than the term of this Lease, even if such refund is received during the
term of this Lease.
12. Additional Provisions Applicable to Assignment and Subletting.
A. The provisions of Paragraph 12 shall be fully operative
immediately upon execution of this Lease, and shall apply to the
occurrence of any transaction or event occurring after the execution of
the Lease, but prior to the commencement of the Term thereof, as well as
any transaction or event occurring during the Term thereof.
B. Notwithstanding any provision of Paragraph 12 of the Lease or
this Addendum, in the event of any change in the control of Lessee, such
change in control shall not constitute an assignment of the Lease so
long as Lessee is a publicly traded company immediately following such
change in control.
C. Notwithstanding any provision of Paragraph 12, Lessor, as a
condition to giving its consent to any assignment or subletting, may
require that Lessee pay to Lessor, as additional Rent under the Lease,
(i) in the case of an assignment where the Lease is the only asset
assigned by Lessee to the assignee, promptly after receipt by Lessee
(or any affiliate thereof or other person or entity designated by
Lessee) seventy-five percent (75%) of the amount, if any, by which
(A) any consideration (including, without limitation, payment for
leasehold improvements) paid by the assignee to Lessee or such
affiliate or other designated person or entity for the assignment or
otherwise attributable to the value of Lessee's interest in the
Lease exceeds (B) the Assignment or Subletting Costs (as defined
below);
(ii) in the case of an assignment where the Lease is not the only
asset assigned by Lessee to the assignee (e.g., an assignment in
connection with a sale of Lessee's operations at the Premises or an
assignment resulting from a change in control of Lessee where Lessee
is not a publicly traded company immediately following such change
in control), on a monthly basis, seventy-five percent (75%) of the
amount, if any, by which (A) the Prevailing Market Rent (as defined
below) for the Premises for each month of the term of the Lease
after the date of the assignment exceeds (B) the total amount of
Rent payable hereunder for each such month; as used herein, the term
"Prevailing Market Rent" for the Premises shall mean the total
monthly Rent that Lessor could obtain for each month of term of the
Lease remaining after the date of the assignment from a third party
desiring to lease the Premises for the remaining term of the Lease
after the date of the assignment, taking into account the age of the
Building, the size of the Premises, the quality of construction of
the Building, the other terms of this Lease, the rental and any
other consideration then being obtained for new leases of space
comparable to the Premises in the locality of the Building and all
other factors that would be relevant to a third party desiring to
lease the Premises for such term in determining the rental such
party would be willing to pay therefor, but excluding any rental
value attributable to any items Lessee is permitted to remove from
the Premises upon expiration of the term of this Lease pursuant to
Paragraph 7.4 of this Addendum; provided that if Lessee and Lessor
are unable to agree upon the Prevailing Market Rent within thirty
(30) days after the date of the assignment, then the Prevailing
Market Rent for the remaining term of this Lease shall be determined
by appraisal following the same procedures as set forth in Paragraph
39(c) of this Addendum for the determination of "Fair Market Rent"
for the first year of a Renewal Option Term; and
(iii) in the case of a sublease, on a monthly basis, seventy-five
percent (75%) of the amount, if any, by which (A) the rent paid to
Lessee (or any affiliate thereof or other person or entity designed
by Lessee) for the sublet space by the sublessee (such rent to
include all consideration paid for the sublet space) for each month
exceeds (B) the total amount of Rent payable under the Lease
attributable to the sublet space for such month; provided, however,
that in the case of a sublease, prior to paying any amounts to
Lessor pursuant to this Paragraph 12.C(iii), Lessee may recover out
of the rent or other consideration payable by the sublessee to
Lessee (or any affiliate thereof or other person or entity
designated by Lessee), and use such recovery to reimburse itself
for, a pro rata share of the Assignment or Subletting Costs incurred
in connection with such sublease, such pro rata share to be
determined by allocating an equal portion of the total amount of
Assignment or Subletting Costs incurred in connection with such
sublease to each month of the term of such sublease; if there is
more than one sublease under this Lease, the amounts (if any) to be
paid by Lessee to Lessor pursuant to this subparagraph (iii) shall
be separately calculated for each sublease and amounts due Lessor
with regard to any one sublease may not be offset against rental and
other consideration pertaining to or due under any other sublease.
As used herein, the term "Assignment or Subletting Costs" means the
total amount of any brokerage commissions paid by Lessee in connection
with a specific subletting or assignment (not to exceed commissions
typically paid in the market at the time of such subletting or
assignment), Lessee's reasonable costs of advertising the space for
sublease or assignment, Lessee's reasonable legal fees and expenses in
connection with such assignment or sublease, and any improvement
allowance or other inducement (such as moving expenses and lease
takeover obligations), paid by Lessee to the sublessee or assignee;
provided that, as a condition to Lessee recovering Assignment or
Subletting Costs pursuant to subparagraph (i) or (iii) of this Paragraph
12.C, Lessee shall provide to Lessor, within sixty (60) days of Lessor's
execution of Lessor's consent to the assignment or subletting, a
detailed accounting of the Assignment or Subletting Costs and supporting
documents, such as receipts and invoices, except that if any Assignment
or Subletting Costs are not determinable by such date, Lessee shall so
state in its accounting, identifying with reasonable specificity the
costs not determinable, and promptly after such costs are determinable,
but in no event later than thirty (30) days after effective date of the
assignment or ninety (90) days after the commencement of the term of
such sublease, as applicable, a supplemental accounting shall be
delivered to Lessor setting forth all Assignment or Subletting Costs and
supporting documents (if not previously delivered).
D. Notwithstanding any provision of Paragraph 12, the granting of a
security interest in the Lease by Lessee in connection with a senior
secured credit facility provided by Goldman, Sachs & Co. ("GS"), shall
not constitute an assignment of the Lease, and shall not require
Lessor's consent under the Lease; provided that GS shall not be entitled
to foreclose such security interest or otherwise take any possessory
interest in the Premises or any portion thereof, unless GS assumes all
of Exodus' obligations under the Lease and the Exodus Sublease (if the
term thereof shall not have expired), and cures all then uncured
defaults (if any) under the Lease and the Exodus Sublease (if the term
thereof shall not have expired).
13.1 Additional Breaches. In addition to the events set forth in
Paragraph 13.1, the occurrence of any of the following events shall
constitute a Breach under this Lease, and Lessor shall have all rights
and remedies available under the Lease in the event of a Breach as
result thereof:
(a) The termination of the Prior Sublease for any reason prior to
June 30, 2003, except under circumstances which, pursuant to Paragraph
3.1 of this Addendum result in Early Commencement of this Lease.
(b) The failure of Lessee to cause the amount of the Letter of
Credit to be increased as and when required in accordance with the
requirements of subparagraph 1.7(b) of this Addendum, or Paragraph 3.1
of this Addendum, if applicable, where such failure continues for a
period of three (3) business days following written notice to Lessee.
(c) Upon the election of Lessor, in the event that no later than
thirty (30) days prior to then applicable expiration date of the Letter
of Credit, neither (1) the Bank shall have notified Lessor that the
Letter of Credit will be renewed for at least one (1) year beyond the
then applicable expiration date, nor (2) Lessee shall have delivered to
Lessor a replacement Letter of Credit in the amount required hereunder
and otherwise meeting the requirements set forth in Paragraph 1.7 of
this Addendum.
(d) The occurrence of any Breach under (and as defined in) that
certain Standard Industrial/Commercial Single-Tenant Lease - Net, dated
as of January 29, 1999, between Lessor and Lessee, covering premises
located at 2401 Walsh Avenue, Santa Clara.
16. Replacement of Paragraph 16(b). The following is substituted for
Paragraph 16(b): "(b) If the Responding Party shall fail to execute or
deliver a proposed Estoppel Certificate which is submitted to the
Responding Party by the Requesting Party within the ten day period set
forth in Paragraph 16(a) of the Lease, then the Responding Party shall
be deemed to have agreed that all matters set forth in such proposed
Estoppel Certificate are true and correct and shall be estopped from
denying the truth of any of the matters set forth in said proposed
Estoppel Certificate."
23.1 Notices. Any notice given to Lessee at the address set forth on
the signature page of the Lease shall be marked "Attention: Chief
Financial Officer." A duplicate of any notice given to Lessee under this
Lease shall be sent, in the manner required under Paragraph 23.1 of this
Lease, to Exodus Communications, Inc., Attention: Kyle Barriger, IDC
Manager, 2403 Walsh Avenue, Santa Clara, CA 95054, Telephone: (408) 346-
1507, Facsimile: (408) 346-2420. A duplicate of any notice given to
Lessor under this Lease shall be sent, in the manner required under
Paragraph 23.1 of this Lease, to Lessor in care of DRA Advisors, Inc.,
1180 Avenue of the Americas, 18th Floor, New York, NY 10036, Telephone:
(212) 764-3210, Facsimile: (212) 764-3571.
32. Lessor's Access to the Premises. Lessor acknowledges that Lessee
intends to operate a secure internet data center facility at the
Premises. Accordingly, except in the case of an emergency, Lessor, its
agents, any Lender or its agents shall give Lessee twenty-four (24)
hours' advance notice prior to entering the Premises, and Lessee shall
have the right to require that a representative of Lessee accompany any
parties entering the Premises. In the case of an emergency, Lessor or
its agents shall make such effort as is deemed appropriate by Lessor or
its agents under the circumstances to contact an on-site representative
of Lessee, if one is present at the Premises, prior to entering the
Premises; provided, however, that if an on-site representative cannot be
located after such effort is made, or if immediate entry to the Premises
without attempting to locate an on-site representative of Lessee is
deemed appropriate by Lessor or its agents due to the nature of the
emergency, Lessor or its agents may enter the Premises unaccompanied by
a representative of Lessee.
39. Option to Renew.
(a) Lessor hereby grants to Lessee two options (each, a "Renewal
Option") to renew the term of this Lease, each for an additional term of
five (5) years (each, a "Renewal Option Term"), upon and subject to the
terms and conditions set forth in this Paragraph 39 of this Addendum and
Paragraph 39 of the Lease. The first Renewal Option Term will commence
immediately following the Expiration Date of the initial term of this
Lease (the "Initial Term") and will terminate on the fifth anniversary
of the Expiration Date of the Initial Term. The first Renewal Option
shall be exercised, if at all, by written notice to Lessor on or before
the date that is twelve (12) months prior to the Expiration Date of the
Initial Term. The second Renewal Option Term will commence immediately
following the expiration date of the first Renewal Option Term and will
terminate on the fifth anniversary of the expiration date of the first
Renewal Option Term. The second Renewal Option shall be exercised, if at
all, by written notice to Lessor on or before the date that is twelve
(12) months prior to the expiration date of the first Renewal Option
Term. If Lessee exercises a Renewal Option, each of the terms, covenants
and conditions of this Lease shall apply during the applicable Renewal
Option Term as though the expiration date of the applicable Renewal
Option Term was the date originally set forth herein as the Expiration
Date of this Lease, provided that: (1) during the first Renewal Option
Term, there shall only be one more Renewal Option under this Paragraph
39, and during the Second Renewal Option Term, there shall be no further
Renewal Options under this Lease, (2) the monthly Base Rent to be paid
during the first year of the Renewal Option Term shall be the greater of
(i) one hundred five percent (105%) of the monthly Base Rent payable for
the month immediately prior to the commencement of the applicable
Renewal Option Term, or (ii) the Fair Market Rent, as hereinafter
defined, for the Premises for the Renewal Option Term, and (3) the
monthly Base Rent to be paid during each year after the first year of
the Renewal Option Term shall be equal to one hundred five percent
(105%) of the monthly Base Rent payable for the preceding year. As used
herein, the term "Fair Market Rent" for the Premises shall mean the
monthly Base Rent that Lessor could obtain for each month of the first
year of the applicable Renewal Option Term from a third party desiring
to lease the Premises for a five (5)-year term commencing at the
commencement of the applicable Renewal Option Term, taking into account
the increases in rent provided under clause (3), above, the age of the
Building, the size of the Premises, the quality of construction of the
Building, the other terms of this Lease, the rental and any other
consideration then being obtained for new leases of space comparable to
the Premises in the locality of the Building and all other factors that
would be relevant to a third party desiring to lease the Premises for a
five (5)-year term commencing at the commencement of the applicable
Renewal Option Term in determining the rental such party would be
willing to pay therefor, but excluding any rental value attributable to
any items Lessee is permitted to remove from the Premises upon
expiration of the term of this Lease pursuant to Paragraph 7.4 of this
Addendum.
(b) If Lessee exercises a Renewal Option, Lessor shall send to
Lessee, on or before the date that is one hundred twenty (120) days
prior to the Expiration Date of the Initial Term, in the case of the
first Renewal Option, or one hundred twenty (120) days prior to the
expiration date of the first Renewal Option Term, in the case of the
second Renewal Option, a notice setting forth the Fair Market Rent for
the Premises for the first year of the applicable Renewal Option Term.
If Lessee disputes Lessor's determination of the Fair Market Rent for
the first year of a Renewal Option Term, Lessee shall, within thirty
(30) days after the date of Lessor's notice setting forth Lessor's
determination thereof, send to Lessor a notice stating that Lessee
disagrees with Lessor's determination of Fair Market Rent for the first
year of the Renewal Option Term and elects to resolve the disagreement
as provided in subparagraph 39(c) below. If Lessee does not send to
Lessor a notice as provided in the previous sentence, Lessor's
determination of the Fair Market Rent shall be the basis for determining
the monthly Base Rent to be paid by Lessee hereunder during the first
year of the applicable Renewal Option Term. If Lessee elects to resolve
the disagreement as provided in subparagraph 39(c) below and such
procedures shall not have been concluded prior to the commencement of
the applicable Renewal Option Term, Lessee shall pay monthly Base Rent
in an amount equal to the greater of (i) one hundred five percent (105%)
of the monthly Base Rent payable for the month immediately prior to the
commencement of the applicable Renewal Option Term or (ii) the Fair
Market Rent (on a monthly basis) as determined by Lessor in the manner
provided above. If the amount of Fair Market Rent for the first year of
the applicable Renewal Option Term as finally determined pursuant to
subparagraph 39(c) is greater than Lessor's determination, Lessee shall
pay to Lessor the difference between the amount paid by Lessee and the
Fair Market Rent as so determined pursuant to subparagraph 39(c) within
thirty (30) days after the determination. If the Fair Market Rent for
the first year of the applicable Renewal Option Term as finally
determined pursuant to subparagraph 39(c) is less than Lessor's
determination, the difference between the amount paid by Lessee and the
Fair Market Rent as so determined pursuant to subparagraph 39(c) shall
be credited against the next installment(s) of monthly Base Rent due
from Lessee to Lessor hereunder.
(c) Any disagreement regarding the Fair Market Rent for the first
year of the applicable Renewal Option Term shall be resolved as follows:
(i) if, within thirty (30) days after Lessee's response to
Lessor's notice to Lessee of the Fair Market Rent, Lessor and Lessee
shall not have reached agreement as to the Fair Market Rent for the
first year of the applicable Renewal Option Term, they shall each select
one appraiser to determine the Fair Market Rent for the first year of
the applicable Renewal Option Term. Each such appraiser shall arrive at
a determination of the Fair Market Rent for the first year of the
applicable Renewal Option Term and submit their conclusions to Lessor
and Lessee within forty-five (45) days after the expiration of the
thirty (30) day period described in this subparagraph (i).
(ii) If only one appraisal is submitted within the requisite
time period, it shall be deemed to be the Fair Market Rent for the first
year of the applicable Renewal Option Term. If both appraisals are
submitted within such time period, and if the two appraisals so
submitted differ by less than five percent (5%) of the lower of the two,
the average of the two shall be the Fair Market Rent for the first year
of the applicable Renewal Option Term. If the two appraisals differ by
more than five percent (5%) of the lower of the two, then the two
appraisers shall immediately select a third appraiser who shall within
thirty (30) days after his or her selection make his or her own
determination of the Fair Market Rent for the first year of the
applicable Renewal Option Term and submit such determination to Lessor
and Lessee simultaneously. Neither Lessor nor Lessee shall advise the
third appraiser of the Fair Market Rent determinations delivered by the
first two appraisers, and Lessor and Lessee shall instruct the first two
appraisers not to advise the third appraiser of such determinations. If
the Fair Market Rent determined by the third appraiser is the average of
the determinations of the Fair Market Rent determined by the first two
appraisers, the third appraiser's determination of Fair Market Rent
shall be the Fair Market Rent. If such is not the case, Fair Market Rent
shall be the Fair Market Rent as determined by Lessor's appraiser or
Lessee's appraiser which is closest to the determination of Fair Market
Rent by the third appraiser.
(iii) All appraisers appointed pursuant to this Lease shall be
members of the American Institute of Real Estate Appraisers with not
less than ten (10) years' experience appraising commercial and
industrial properties in Santa Clara county. Each party shall pay the
cost of the appraiser selected by such party and one-half of the cost
of the third appraiser, if necessary plus one-half of any other costs
incurred in resolving the disagreement pursuant to this subparagraph
39(c).
46. Counterparts; Facsimile Signatures. The Lease and this Addendum
may be signed in counterparts, and delivered by facsimile, and such
facsimile counterparts shall be valid and binding on Lessor and Lessee
with the same effect as if original signatures had been exchanged.
50. Parking. Subject to the rules and regulations promulgated from
time to time by Lessor, Lessee shall be entitled to use 49.7% of the
parking spaces for the 2401/2403 Walsh Avenue complex for use by its
agents, servants, employees and invitees (individually and collectively
referred to as "Lessee's Invitees") for parking of passenger vehicles
with a capacity of 8 persons or less only. If Lessor in its sole
discretion agrees in writing to permit Lessee to use any parking spaces
or areas which could be used for parking spaces for any other purpose
(e.g., temporary storage of materials, satellite dish installation,
etc.), Lessee's then current number of parking spaces will automatically
be reduced by the number of spaces utilized for such purpose plus any
spaces which cannot be reasonably used for normal parking as a result
thereof. Lessee agrees that overnight parking is prohibited. Lessee also
agrees that under no circumstances shall Lessee's Invitees in any manner
interfere with occupancy and/or access to the property known as 2401
Walsh Avenue, including, without limitation, interference with the
ingress or egress to the building, parking lot or shipping and receiving
areas. If Lessee commits, permits or allows any of the prohibited
activities described herein or in the rules and regulations then in
effect, then Lessor shall have the right, without notice, in addition to
such other rights and remedies that it may have, to remove or tow away
the vehicle(s) involved and charge the cost to Lessee, which cost shall
be immediately payable upon demand by Lessor. Lessee agrees that Lessor
or its designee may re-stripe the existing parking lots so as to
reconfigure the same, so long as such re-striping or reconfiguration
does not reduce the number of parking spaces that Lessee is otherwise
entitled to use under the Lease. Subject to the prior written approval
of Lessor, which approval shall not be unreasonably withheld or delayed,
Lessee may re-stripe the existing parking lots so as to reconfigure the
same, so long as such re-striping or reconfiguration does not reduce the
number of total parking spaces for the 2401/2403 Walsh Avenue complex or
unreasonably interfere with the use or occupancy of 2401 Walsh Avenue or
its marketability to prospective tenants and subtenants. Provided that
Lessee shall have obtained Lessor's approval of such restriping as
required under this Paragraph 50, then notwithstanding anything
contained in the Lease, Lessee shall not have any obligation to change
the striping or configuration of the parking lots back to the original
configuration at the termination of the Lease.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Addendum as of the
date of the Lease.
Lessee: EXODUS COMMUNICATIONS, INC.,
a Delaware corporation,
By: /s/ ADAM WEGNER
Name: Adam Wegner
Title: Vice President and General Counsel
Lessor: G&I WALSH LLC,
a Delaware limited liability company
By: G&I Investment Walsh LLC,
a Delaware limited liability company,
its managing member
By: G&I Investment Walsh Corp.,
a Delaware corporation, its
managing member
By: /s/ BRIAN T. SUMMERS
Name: Brian T. Summers
Title: Vice President
EXHIBIT A
[Intentionally omitted]
Exhibit B
SPECIAL CONDITIONS
for
WALSH RESEARCH CENTER
2401 & 2403 Walsh Avenue
Santa Clara, CA
ASBESTOS: The Contractor will conform to all state and local laws
concerning the removal and disposal of materials containing asbestos.
Asbestos may be present in, but not necessarily limited to, the
following areas: roof membrane, parapet flashing.
DECK (LOW AREAS): After the removal of the existing roofing membranes,
the slope of the deck is to be checked and any low areas are to be
filled with the appropriate material at the directions of the Owner's
engineer.
DRAINAGE/DOWNSPOUTS: The Contractor will be responsible for the removal
and reinstallation of all drains, screens, downspouts, gutters and
related drainage details. The Contractor will be responsible for the
contracting of plumbing and related work for all drains.
The Contractor shall be sure that all drains are open and have proper
fitting screens and that downspouts and gutters have been reinstalled
with proper water sealed attachments.
ELECTRICAL EQUIPMENT: The Contractor will be responsible for the removal
and reinstallation of all electrical jacks, conduits and related work
including the blocking and clamping of conduit pipes. The reroofing bids
shall include the cost of this work. The Contractor will be responsible
for confirming schedules of electrical users in the event interruptions
are necessary.
EXTRA PLY IN DRAINAGE CHANNELS: Contractor will be responsible for the
installation of an additional ply of roofing material in the drainage
channels. Bids will include this work.
HVAC CURB COUNTERFLASHING: The Contractor will be responsible for the
installation of counterflashing at the top of all HVAC curbs. The
flashing will be 26 Ga. Galvanized sheet metal flashing. The flashing
will counterflash the curb flashing (roofing material) a minimum of 3".
HVAC/DUCTWORK: The Contractor will be responsible for the removal and
reinstallation of all movable HVAC units and duct work if needed to
install the new roof membrane. If the Contractor must move units and
ductwork, the Contractor will be responsible for the alignment/leveling
of the unit, the proper attachment of the unit to the sleepers/curbing
and insure that the units/ductwork are reinstalled in a watertight
manner. All caulking, sealants, hardcasting and flex duct connectors
disturbed will be the responsibility of the Contractor to replace. The
cost of this work will be included in the base bid.
The Contractor will also be responsible for coordinating schedules of
mechanical equipment with users in the event shutdowns are necessary.
LOADING OF EQUIPMENT AND MATERIALS ONTO THE ROOF: It will be the
responsibility of the roofing contractor to load and store materials and
equipment onto the roof in manner that will not cause damage to the
beams, glulams, purlins, subpurlins, columns or deck sheathing, etc. IF
damages does occur, the contractor will be responsible for all damages.
INTERIOR DRAIN SUMPS: The Contractor will be responsible for the sumping
of the existing interior drains. The price for this work shall be
included in the base bid. The price will include labor and material cost
(framing materials, plywood, hardware, etc.) to install the sumps at a
depth of 2" (two inches) at each interior drain. The price shall include
drain plumbing.
METAL COPING: The existing parapet metal coping is to be saved and
reused.
PARAPET FLASHING (Concrete): The existing parapet flashing will be
removed, the parapet cleaned and primed with undiluted asphalt primer.
Install 2 (two) plies of Type IV felt in full mopping of Type III
asphalt to the parapet, then install the capsheet in a full mopping of
Type III asphalt, staggering the SBS laps from the plysheet laps.
"Blankets" will not be permitted. The flashing will be mechanically
fastened at the parapet top, with the appropriate fasteners. Reuse
parapet coping metal.
PERIMETER META: The existing gravel stop will be removed and replaced
with new metal of equal grade and dimensions. The new metal will be set
in mastic on top of the ply sheets. The flange will be nailed every 3"
staggered. The flange will be primed and flashed with 2 (two) additional
plies before the cap sheet is installed.
SANITARY FACILITIES: The contractor will provide portable toilet
facilities for their employees.
SITE MAINTENANCE: The Contractor is responsible to remove all
construction debris, nails, and trash each day. The Contractor is
responsible to open and keep drains clear of all debris.
SLEEPER/LEVELING BLOCK REPLACEMENT: The Contractor will be responsible
for the replacement of all HVAC sleepers and leveling blocks. The
sleeper and block material will be #2 Redwood. Wood dimensions will
equal existing materials. All pipe support blocks will be replaced with
#2 Redwood and set on All sleepers will be lag bolted to the substrate
with 5/8" lag screws. The screws will penetrate the Purlin or Gluelam
beam a minimum 4 1/2". Lag screws will be counter sunk.
SLEEPER, MECHANICAL EQUIPMENT SUPPORTS: The Contractor will be
responsible for the lag bolting of all roof mounted sleepers to the
substrate. All roof mounted sleepers will be flashed with 2 plies of
Type IV felt and SBS modified bitumen flashing sheets installed in full
moppings of Type III asphalt. Finished cuts will be sealed with flashing
cement. The price of this work will be included in the base bid.
UNSECURED SLEEPER/MECHANICAL EQUIPMENT SUPPORTS: The Contractor will be
responsible for the lag bolting of all unbolted roof-mounted sleepers to
the substrate. The Contractor will also be responsible for the
installation of flashing on all roof-mounted sleepers. The sleeper
flashing will consist of 2 plies of Type IV felts and SBS modified
bitumen flashing sheets, installed in full mopping of Type III asphalt.
The Contractor's base bid will include the cost of this work.
VENTS, STACKS: The Contractor will be responsible for the proper
reinstallation and alignment of all vents, stacks, fans, etc. that are
related to any interior plumbing, heating or cooling equipment and
replacement of any missing vent or stack tops. Any metal found to be
rusted or damaged beyond repair shall be replaced and all bids should
include this.
Exhaust stacks must be realigned with interior ducts, so that original
service may be continued. The Contractor will be responsible for damages
incurred by Owner for alterations of performance in heating, cooling or
ventilation.
WATER TESTING: Contractor shall provide necessary labor and equipment to
water test any part of/or complete roof as directed by the Owners
Consultant.
THE CONTRACTOR WILL CONFORM TO ALL STATE AND LOCAL LAWS CONCERNING THE
REMOVAL, DISPOSAL OR USE OF ANY HAZARDOUS MATERIAL.
GENERAL CONDITIONS
SUBMITTALS
Product Data - Submit complete manufacturer's product data of all
material and systems to Owner for approval, consisting of complete
product description and specifications, complete performance test data,
Material Safety Data Sheet, complete preparation and installation
instructions, and other pertinent technical data required for complete
product and product use information.
Contractor is to submit written certification to the Owner by the
producer of the roofing materials to indicate that all materials
supplied will comply with all requirements of the appropriate ASTM
Standards and that all materials are suitable for roofing.
Contractor shall obtain all necessary permits and submit copies of the
same to Owner. Insurance binders for the following limits must be
received and on file at the project office prior to the commencement of
any work by your firm.
A. INSURANCE COVERAGE
1. Comprehensive General Liability Insurance, including Broad Form
Property Damage and Blanket Contractual Liability, for limit of
liability of no less than $2,000,000 combined single limits is
required.
2. Automobile Liability Insurance for $1,000,000 per accident,
Worker's Compensation and Employee's Liability must be verified
in writing and on file in the project office.
3. Additional Insured Endorsement. Hard Copy must be attached to
certificate Naming the following Additional Insureds as respects
to General Liability.
Additional Insureds: M. J. Kelleher & Associates, Inc.
B. LIEN RELEASES
1. Signed lien releases and copies of invoices for material
purchased for delivery to this project by the supplier or his
agent, must accompany the request for payment for same.
2. Lien releases will be required to be completed at the project
office prior to the release of any funds. Payment of all funds
will be made through the general offices by the Owner on approved
invoices less 10% retention.
QUALITY ASSURANCE
All work shall conform to the governing laws and the following building
codes: Uniform Building codes and local city and county codes.
In addition, the work shall strictly conform to the approved roofing
material manufacturer's written requirements, instructions and
specifications for this particular rook deck type and projection
conditions.
A licensed Roofing Inspector may be retained by the Owner under a
separate contract to inspect all materials and workmanship for roof
installation. Contractor shall provide this inspector free access to
materials and work areas for the purpose of performing his duties.
COORDINATION
The Contractor shall notify the Owner whenever roofing work is to be
done in sufficient time to arrange for inspection. The Contractor is
responsible for contacting the inspector when the work is done on
weekends, holidays or other such times. Work done without such
acknowledgment is subject to the Inspector's discretion concerning the
removal of said work.
Prior to the commencement of the built-up roofing work, a conference is
to be held at the site, attended by the Owner or his representative, the
Roofing Contractor, the Roofing Inspector and other parties who may have
an interest. The purpose of this conference shall be to review the
specifications, details, application requirements and other pertinent
aspects of the work.
Prior to beginning the work, the Contractor shall inspect all mechanical
and electrical equipment that may be affected by the roofing work.
It shall be the responsibility of the Roofing Contractor to ensure that
all the Owner's or Tenant's property shall be operating and in the same
condition upon completion of the roofing work as it was prior to
reroofing operations.
This inspection shall include the inside of the building as to fixtures,
insulation, etc., that may be affected by roofing operations.
If the contractor determines that defects exist prior to the start of
his roofing construction, he shall bring this to the Owners's attention
in writing. Otherwise, the Roofing Contractor shall be considered
responsible for any damage incurred.
PRODUCT DELIVERY, STORAGE AND HANDLING
Deliver, store and handle all materials in such a manner as to avoid all
types of damage. Keep all materials in factory wrappings and containers
until ready for use.
Handle all materials to avoid damage, store rolled goods on ends only,
and discard rolls which have been flattened, creased or otherwise
damaged.
Do not dilute primers, roofing cements or asphalt. Keep containers
closed until material is used. Do not allow mixing of various bituminous
classes.
Insulation, ply sheets, etc. shall be dry when applied and shall be
protected from the weather during installation. Any materials damaged by
exposure to the elements or other cause shall be rejected and promptly
removed from the site.
CLEAN-UP
Remove smears and asphalt runs from adjacent surfaces immediately, as
the work progresses. Exercise particular care to prevent smearing or
staining of surrounding surfaces which will be exposed in the finished
work, and repair any damage done to same as a result of this work
without additional cost to Owner.
Remove all cartons, debris, debris from removal process, emptied
containers, etc., as the work progresses, but not less than daily and
finally at completion of work of this section. Legally dispose of same
off the site.
GUARANTEE
The Manufacturer of the roofing materials shall be liable for any of
their defective materials.
The Roofing Contractor will provide the Owner a 3-year, labor and
materials warranty.
The Owner shall have the roof inspected by an independent professional
on an annual basis and shall perform all necessary maintenance.
**END OF SECTION**
DEMOLITION SECTION 02120
PART 1 -- GENERAL
1.1 RELATED DOCUMENTS
The Standard Provisions of LANDMARK ASSET MANAGEMENT GROUP and Special
Provisions shall apply to all work of this section.
1.2 DESCRIPTION OF WORK
A. The work consists of furnishing all labor, materials, equipment,
services and Transportation required to complete the removal of
existing membrane, flashing, sheet metal and related items as
specified herein. Access to the roof will also be designated by the
Owner's Agent.
B. Related Work Specified Elsewhere
Built-up Roofing: Section 07500
Flashing and Sheet Metal: Section 07600
1.3 JOB CONDITIONS
The removal of existing roof shall be by an approved method. Any damage
to the deck due to negligence shall be reported and repaired at the
Contractor's expense. All work requiring the removal, disconnection or
handling of electrical and mechanical equipment shall be done by a
licensed electrical and mechanical Contractor and shall be part of this
contract. Mechanical and electrical equipment damaged by the Contractor
shall be repaired at the Contractor's expense.
1.4 DEMOLITION AND REMOVAL
All work shall be performed in accordance with the requirements of the
Owner as to location of equipment and movement and storage of materials
and debris. All materials shall be handled at the location designated by
the Owner and shall be done so via closed chutes and closed containers
so as to cause as little dust and pollution as possible. The Contractor
shall not remove more roofing than can be replaced in the same day.
** END OF SECTION **
BUILT-UP ROOFING SECTION 07500
PART 1 - GENERAL
1.1 RELATED DOCUMENTS
The Standard Provisions of LANDMARK ASSET MANAGEMENT GROUP and Special
Provisions shall apply to all work of this section.
1.2 DESCRIPTION OF WORK
A. The work consists of furnishing all labor, materials, equipment,
services and transportation required to complete the installation of
new built-up roofing over kraft paper, flashings, sheet metal,
jacks, drains and the reinstallation of drains and related items as
specified in the contract documents.
B. Related Work Specified Elsewhere
Demolition and Romoval: Section 02120
Flashing and Sheet Metal: Section 07600
1.3 STANDARDS
UL-Listed Products: Provide felts and bitumens which have been tested
and listed by UL and bear the UL label on each package, or are shipped
to the Project with a UL certification of compliance.
1.4 SUBMITTALS
Manufacturer's Data: Submit to the Owner 3 copies each of
specifications, installation instructions, Material Safety Data Sheets,
and general recommendations from the roofing materials manufacturer, for
each type of roofing product required, including sheet metal work and
miscellaneous products. Include manufacturer's data substantiating that
the materials comply with the requirements and those of SMACNA for metal
work.
1.5 GUARANTEE-WARRANTY
The manufacturer of the roofing materials shall be liable for any of
their defective materials.
The Roofing Contractor will provide the Owner a 3-year, labor and
materials warranty.
The Owner shall have the roof inspected by an independent professional
on an annual basis and shall perform all necessary maintenance.
1.6 PRODUCT HANDLING
Deliver, store and handle all materials in such a manner as to avoid all
types of damage. Keep all materials in factory wrappings and containers
until ready for use. If the materials are stored on site, they shall be
kept on pallets and protected by tarpaulins.
Handle all materials to avoid damage, store rolled goods on ends only,
discard rolls which have been flattened, creased or otherwise damaged.
Do not dilute primers, roofing cements, or asphalt. Keep containers
closed until material is used. Do not allow mixing of various bituminum
classes.
BUILT-UP ROOFING SECTION 07500
PART 2 - PRODUCTS
2.1 MATERIALS
A. Basic Bid Only:
Built-up roofing system shall be a 4-ply ASTM D-2178-Type VI glass
reinforced system over kraft paper all in accordance with the standards
established by these specifications or equivalent by another
manufacturer approved by the Owner, prior to the bid date.
Manufacturer Specification Number
------------ --------------------
GAF N-B-4-M(ASTM TYPE VI)
Manville 4 GNC (ASTM TYPE VI)
1. Base Sheet. ASTM D-4601, Type II
2. Ply Sheets: ASTM D-2718, Type VI
3. Mineral Surfaced Cap Sheet, ASTM D-3909
B. Cant Strips: Fiber board, nominal 4" face.
C. Asphalt: Steep Asphalt ASTM D-312-III
D. Flashing Materials:
1. Asphalt Primer: ASTM No. D41-70
2. Base Flashing: Ruberoid Mop (granule), DynaFlex (granule), ASTM
No. D-412
3. Plastic Cement: ASTM NO. D2822-69
4. Fibrated Aluminum Roof Coating ASTM D2824-85 Type III
PART 3-EXECUTION
3.1 PREPARATION OF ROOF DECKS
Decks shall be smooth, dry, and have a firm surface and be swept clean
of all dust. All foreign material and coatings shall be removed. Roofing
shall be applied only during dry weather.
3.2 ROOFING APPLICATION
Kraft paper shall be spot nailed prior to placement of the first ply
sheet. Base ply shall be mechanically secured 9" on center at side laps
and 18" on center on two lines 12" from each edge (staggered).
Berryfast, Bostitch and Senco systems may be used in accordance with the
manufacturer's and Factory Mutual recommendations.
Ply sheet may be applied by a mechanical felt layer or rolled into hand
mopping of hot bitumen. It shall be shingled in, free of buckles and
fishmouths. Each ply shall be so laid so that the flow of water is over
or parallel to (but never against) the lap. End laps shall be a minimum
of 12 inches apart. Embed the full 36 inch width of each ply in hot
bitumen. The hot bitumen shall be applied at a nominal rate of 25
lb./100 square feet (minimum of 20 pounds and maximum of 35 pounds) of
ply sheet on this slope.
BUILT-UP ROOFING SECTION 07500
The asphalt shall be sufficiently hot to insure a complete bond of ply
to ply High melt = 375 (degrees) Fahrenheit minimum and 500 degree
Fahrenheit maximum. Low melt 350 degree Fahrenheit minimum and 450
(degrees) Fahrenheit maximum) hand mopping. Brooming is required for
both felt layers and hand mopping. Brooming is essential and must be
done promptly and effectively to eliminate voids and insure adequate
adhesion. A moderately soft, commercial type push-broom should be used
for this purpose. When "rolling in" by hand, the mopping asphalt shall
be kept within 6 feet of the roll. Keep the mop full and flow the
asphalt on the roof. Do not scrub with mop.
Capsheet shall be applied over and parallel to the underlying roofing
and lapped, so that the flow of water is over or parallel to but never
against the laps. Embed capsheet into hot asphalt applied at a nominal
rate of 25 lbs./100 square feet with 2" side and end laps. End laps to
be broken not less than 3 feet apart. The capsheet shall be applied free
of buckles, wrinkles, blisters, fishmouths or voids of any description
between it and the mopping asphalt.
Tension shall be placed on the ends of capsheet lengths as they are
placed to insure that the sheet lies flat in the asphalt.
Weather conditions, such as temperature, wind, sun, etc., must be given
consideration when the temperature gets below 50 F. as cracks, non-
adhesion, and fishmouths are more likely to occur. Loose granules shall
be embedded into overrun of hot asphalt at side and end laps.
3.3 ASPHALT
The appropriate temperature of asphalt at the point of application is
critical to the construction of a good waterproofing membrane. For best
results in application, asphalt should be at the Equiviscous
Temperature, at the point of application (mop bucket, mechanical mopper
or felt layer).
If this approximate temperature cannot be maintained at the point of
application, operations shall be discontinued. In order to achieve this
EVT temperature at the point of application, the asphalt must be heated
to a higher temperature in the kettle or tanker.
Overheating of asphalts for extended periods of time (i.e. overnight)
can modify their physical properties and thus their ability to perform
the waterproofing function. Periodically, roof samples will be tested
for conformances to ASTM standards by Owner's Engineer.
Asphalt shall not be heated above the following maximum temperature:
Steep Type III Kettle Temperature 500 F
3.4 FLASHINGS
A. Materials for metal flashings and galvanized sheet metal gravel
stops are specified in Section 07600.
B. Flashing of roofing shall conform to the following requirements:
1. Apply asphalt primer to vertical wall surfaces, to which the
flashing is to be applied, to 4" above top edge of cant strip.
C. Roof Penetrations: Turn back edges of first roofing sheet over
succeeding sheets at penetrations through roof to form a dam against
flow of asphalt through hole in deck. Place galvanized metal roof
jacks on top layer of felts set in mastic. Seal flanges by layering
with 1 (8") strip of ply set in hot asphalt then overlay with a 10"
strip of roofing ply set in hot asphalt. Extend capsheet to edge of
penetrations and seal with mastic at joint.
D. Ring-Type Drains: Remove ring, clamps and flashing. Thoroughly clean
drains and apply flashing compound 1/8 inch thick in ring groove
base of outlet. Apply base and ply sheets per specifications,
extending all plies
BUILT-UP ROOFING SECTION 07500
and moppings over the surface of the drain base (under clamping
ring). Metal shall be a minimum 30" square lead (2 1/2 lb. to 4
lb.).
Metal flashing shall be primed on both sides and allow to dry prior to
embedment in a solid uniform layer of flashing cement metal and flashing
cement shall extend over the drain base (under the clamping ring). Apply
two stripping plies of felt over the built-up plies and clamping ring
with the first ply extending at least 4" beyond the outer edge of the
flange. The second ply shall extend beyond the first ply a minimum of
2". Install cap sheet as specified. Set the clamping ring in a solid
uniform layer of plastic cement and tighten.
3.5 CLEANUP
A. At completion of roofing, remove all tools and implements from the
site.
B. Remove all excess materials, cartons, and wrappings from site; clean
off spattering from adjacent surfaces.
If spatterings cannot be cleaned off, Contractor shall be
responsible for having a contractor specializing in the damaged
finish repair the surface to its specified condition.
**END OF SECTION**
FLASHING AND SHEET METAL Section 07600
PART 1 - General
1.1 RELATED DOCUMENTS
The standard provisions of LANDMARK ASSET MANAGEMENT GROUP and Special
Provisions shall apply to all work of this section.
1.2 DESCRIPTION OF WORK
Flashing details shall be in accordance with the approved roofing system
manufacturer's recommendations for the wall, edge and projection
conditions. Metal shall be primed with cut-back primer prior to the
installation.
Collars and flanges shall be flashed as per the roofing system. All
walls shall be completely cleaned and primed to receive new flashings.
Cant strips shall be installed at all angles.
1.3 JOB CONDITIONS
Do not proceed with the installation of flashing and sheet metal work
until curb and substrate construction, cant strips, blocking, reglets
and other construction to receive the work are completed and inspected
by the on site inspector or the Owner's representation.
PART 2 - PRODUCTS
2.1 MATERIALS (WHERE NEW MATERIALS ARE REQUIRED)
A. Metal Flashing (and Counter Flashing):
1. Zinc-Coated Steel Sheet: Commercial quality carbon steel
sheets with minimum 0.20 percent copper content, complying with
ASTM A526; hotdip galvanized to comply with ASTM A525, G90, mill
phosphatized to receive paint finish, 24 gauge thickness, except
as otherwise indicated.
B. Miscellaneous Materials:
1. For metal work, provide the type of solder and fasteners
recommended by the producer of the metal sheets, for fabrication
and installation.
2. Roofing Cement: FS-SS-C-153, Type I asphaltic base.
3. Bituminous Coating: FS-TT-C-494, or Mil-C-18480, or SSPC-
Paint 12, cold applied bituminous mastic, compounded for 15-mil,
dry-film-thickness coating.
Comply with metal producer's recommendations for tinning, soldering,
and cleaning flux from metal.
2.2 FABRICATED PRODUCTS
A. Fabricated Metal Flashing and Trim:
1. Shop-fabricate metal flashing, trim, expansion joints and
similar items to comply with profiles and sizes existing and to
comply with standard industry details as shown by SMACNA in the
"Architectural Sheet Metal Manual." Except as otherwise indicated,
provide soldered, flatlock seams and fold back metal to form a hem
on the concealed side of exposed edges. Comply with metal
producer's recommendations for tinning, soldering, and cleaning
flux from metal.
FLASHING AND SHEET METAL Section 07600
PART 3 -- EXECUTION
3.1 GENERAL INSTALLATION REQUIREMENTS
A. Comply with Manufacturer's instructions and recommendations for
handling and installation of flashing and sheet metal work.
B. Performance: Coordinate the work with other work for the correct
sequencing of items which make up the entire membrane or system of
weatherproofing or waterproofing and rain drainage. It is required
that the flashing and sheet metal work be permanently watertight,
and that flashing meet the requirements for the flashing endorsement
specified in Section 07500.
3.2 INSTALLATION OF METAL WORK
A. Comply with details and profiles as existing and comply with SMACNA.
"Architectural Sheet Metal Manual" recommendations for installation
of the work, where practical, or as directed by the Owner's Agent.
B. Comply with metal producer's recommendations for tinning, soldering
and cleaning the joints.
C. To provide for thermal expansion, all exposed sheet metal work shall
not exceed 10 feet in length. Nailing of sheet metal shall be
accordance with SMACNA, where practical, or as directed by the
Owners Agent.
D. Conceal fasteners and expansion provisions wherever possible. Fold
back edges on concealed side of exposed edges to form a hem.
E. Unless noted otherwise, separate dissimilar metals with a coating of
neoprene base paint or approved neoprene or rubber tape.
1. Painting by other contractors.
**END OF SECTION**
<PAGE>
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this "Amendment") is made as of June 4,
1999, by and between G&I WALSH LLC, a Delaware limited liability company
("Lessor"), and EXODUS COMMUNICATIONS, INC., a Delaware corporation
("Lessee").
R E C I T A L S
A. Lessor and Lessee have previously entered into that certain
Standard Industrial/Commercial Single-Tenant Lease-Net, dated as of
January 29, 1999, with attached Addendum (the "Original Lease"),
covering certain premises commonly known as 2401 Walsh Avenue, Santa
Clara, California (the "Premises").
B. Lessor and Lessee are also concurrently with the execution of this
Amendment entering into a Standard Industrial/Commercial Single-Tenant
Lease-Net, covering certain premises commonly known as 2403 Walsh
Avenue, Santa Clara, California (the "2403 Walsh Lease").
C. Lessor and Lessee desire to amend the Original Lease in connection
with entering into the 2403 Walsh Lease, in order to add a cross-default
provision and certain other technical amendments, as more fully set
forth hereinbelow.
NOW THEREFORE, in consideration of the agreements of Lessor and Lessee
herein contained and other valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Lessor and Lessee hereby
agree as follows:
1. Use of Terms. As used herein, terms shall have the same meanings as
in the Original Lease. The term "Lease" as used in the Original Lease
and in this Amendment shall mean the Original Lease as modified by this
Amendment.
2. Cross-Default Provision. In addition to the events set forth in
Paragraph 13.1 of the Original Lease (including Paragraph 13.1 of the
Addendum thereto), the occurrence of any Breach under (and as defined
in) the 2403 Walsh Lease shall constitute a Breach under the Lease, and
Lessor shall have all rights and remedies available under the Lease in
the event of a Breach as result thereof.
3. Technical Amendments.
(a) Paragraph 7.1(a) of the Original Lease is amended by adding the
words "and Paragraphs" in the first line thereof, immediately following
the interlineated words "Addendum 2.2" and preceding the words "2.3
(Compliance)".
(b) Paragraph 39(b) of the Addendum to the Original Lease is amended
by deleting the words "one hundred fifty (150)", appearing at the end of
the third line and beginning of the fourth line thereof, and
substituting the words "one hundred twenty (120)" therefor.
(c) Paragraph 50 of the Addendum to the Original Lease is amended
by: (i) adding the words "or its designee" on the 20th line thereof,
immediately following the words "Lessee agrees that Lessor" and
preceding the word "may", and (ii) deleting the words "Paragraph 29"
appearing on the fourth line from the end of Paragraph 50, and
substituting the words "Paragraph 50" therefor.
4. Counterparts; Facsimile Signatures. This Amendment may be signed in
counterparts, and delivered by facsimile, and such facsimile
counterparts shall be valid and binding on Lessor and Lessee with the
same effect as if original signatures had been exchanged.
5. Ratification. The Original Lease, as modified hereby, is hereby
ratified and confirmed in all respects.
6. Successors and Assigns. This Amendment shall bind and inure to the
benefit of Lessor and Lessee and their respective legal representatives
and successors and assigns.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment as of
the date first above written.
Lessee: EXODUS COMMUNICATIONS, INC.
a Delaware corporation,
By: /s/ ADAM WEGNER
Name: Adam Wegner
Title: Vice President and General Counsel
Lessor: G&I WALSH LLC,
a Delaware limited liability company
By: G&I Investment Walsh LLC,
a Delaware limited liability company, its
managing member
By: G&I Investment Walsh Corp.,
a Delaware corporation, its
managing member
By: /s/ BRIAN T. SUMMERS
Name: Brian T. Summers
Title: Vice President
EXHIBIT 10.60
TABLE OF CONTENTS
-----------------
Page
1. Definitions 1
2. Lease Grant 2
3. Adjustment of Base Rental 3
4. Use 4
5. Base Rental and Operating Expense Rental 4
6. Security Deposit 5
7. Landlord's Maintenance 5
8. Tenant's Maintenance and Repair Obligations 6
9. Alterations 6
10. Signs 7
11. Utilities 8
12. Entry by Landlord 8
13. Assignment and Subletting 8
14. Mechanic's Liens 9
15. Property Insurance 10
16. Liability Insurance 10
17. Forms of Policies; Increase in Premiums, Waiver of Claims 11
18. Indemnity 11
19. Casualty Damage 11
20. Damages from Certain Causes 13
21. Condemnation 13
22. Hazardous Substances 14
23. Americans with Disabilities Act 15
24. Events of Default/Remedies 15
25. Tenant Remedies 17
26. No Waiver 18
27. Event of Bankruptcy 19
28. Peaceful Enjoyment 19
29. Parking 19
30. Removal of Property at Expiration of Lease; Holding Over 19
31. Subordination to Mortgage 20
32. Estoppel Certificate 20
33. Attorney's Fees 20
34. Notice 20
35. Severability 21
36. Recordation 21
37. Governing Law 21
38. Force Majeure 21
39. Time of Performance 21
40. Transfers by Landlord 21
41. Commissions 21
42. Joint and Several Liability 21
43. Authority 21
44. Financial Condition of Tenant 21
45. Effect of Delivery of This Lease 21
46. Entire Agreement 21
47. No Presumption Against Drafter 22
48. Landlord's Lien 22
49. Warranty Waiver 22
50. Substitution. 22
51. Tax Protest 22
52. Waiver of Deceptive Trade Practices Act 22
53. Letter of Credit 22
54. Third Party Equipment. 22
Exhibit "A" - Property Description
Exhibit "B" - Outline and Location of Premises
Exhibit "C" - Operating Expense Rental
Exhibit "D" - Work Letter
Exhibit "E" - Rules and Regulations
Exhibit "F" - Parking Agreement
Exhibit "G" - Renewal Option
Exhibit "H" - Form of Letter of Credit
Exhibit "I" - Purchase Option
Exhibit "J" - Right of Opportunity
Exhibit "K" - Base Building Work
Exhibit "L" - Intentionally Omitted
Exhibit "M-1" - Property Owned by Tenant
Exhibit "M-2" - Improvements to Remain in the Premises or on the
Property
Exhibit "N" - Form of Subordination, Non-Disturbance and Attornment
Agreement
Exhibit "O" - Form of Memorandum of Lease
Exhibit "P" - Tenant's Form of Confidentiality Agreement
Exhibit "Q" - List of Encumbrances Affecting the Property
Exhibit "R" - Removal Area
LEASE AGREEMENT
---------------
This Lease Agreement (the "Lease") is made and entered effective as
of June ______, 1999 between Cameron Road Corporate Park, Ltd., a Texas
limited partnership ("Landlord") and Exodus Communications, Inc., a Delaware
corporation ("Tenant").
W I T N E S S E T H :
- - - - - - - - - - -
1. Definitions: The following are definitions of some of the
defined terms used in this Lease. The definition of other defined terms are
found throughout this Lease.
(a) "Building" shall mean collectively, the two (2)
industrial buildings located upon the real property (the "Property")
described in Exhibit "A" attached hereto and incorporated herein
together with all appurtenances thereto.
(b) "Base Rental" shall mean the following:
Commencing on the Rent Commencement Date, Base Rental shall
mean the following, as adjusted pursuant to Paragraph 3 below:
Rate Per Total Square Footage Monthly
Period Square Foot of the Premises Base Rental
Months 1 - 5 $9.00 35,750 $ 26,812.50
Months 6 - 10 $9.00 71,500 $ 53,625.00
Months 11 - 15 $9.00 107,250 $ 80,437.50
Months 16 - 20 $9.00 142,950 $107,212.50
Months 21 - 60 $9.00 178,650 $133,987.50
Months 61 - 120 $10.70 178,650 $159,296.25
Months 121 - 144 $12.70 178,650 $189,071.25
For purposes hereof, a Month shall mean a period of time commencing
on the same numeric day as the Rent Commencement Date and ending on
(but not including) the day in the next calendar month that is the
same numeric date as the Rent Commencement Date. The first Month
shall commence on the Rent Commencement Date. Notwithstanding the
foregoing, Base Rental shall be payable on the first day of each
calendar month of the "Lease Term" (hereinafter defined), in
accordance with Paragraph 5(a) of the Lease.
Tenant shall pay the Base Rental due for the first full Month during
the Lease Term to Landlord contemporaneously with the execution
hereof.
(c) "Operating Expenses" shall mean all direct and indirect
costs and expenses incurred in connection with the Project as more
fully defined in Exhibit "C" attached hereto.
(d) "Security Deposit" shall mean the sum of $26,812.50, as
increased pursuant to Paragraph 6 below.
(e) "Commencement Date" shall mean the date that Landlord
delivers the Phase I Premises to Tenant.
(f) "Lease Term": A period of one hundred forty-four (144)
months from the Rent Commencement Date; provided that if the Rent
Commencement Date is a date other than the first day of a calendar
month, the Lease Term shall consist of one hundred forty-four (144)
calendar months in addition to the remainder of the calendar month in
which the Rent Commencement Date occurs.
(g) "Premises" shall mean the space located within the
Building and outlined on Exhibit "B" to this Lease. The Premises are
stipulated for all purposes to contain approximately 178,650 square
feet of "Rentable Area" (as defined below). The Premises shall be
leased by Tenant in stages in accordance with Paragraph 2 below.
(h) Intentionally Omitted.
(i) Intentionally Omitted.
(j) Intentionally Omitted.
(k) "Maximum Rate", when used herein, shall mean the greatest
of the rates of interest from time to time permitted under applicable
federal and state law. To the extent of the applicable state and
federal law, the Maximum Rate shall be the highest permitted rate
based upon the "indicated rate ceiling", but to the extent now or
hereafter permitted by law, Landlord may from time to time implement,
withdraw and reinstate any ceiling as an alternative to the indicated
rate ceiling, including the right to reinstate the indicated rate
ceiling.
(l) "Prime Rate" shall mean the per annum interest rate
announced by and quoted by Chase Bank (or another money center bank
selected by Landlord) from time to time (whether or not charged in
each instance) as its prime or base rate.
(m) "Rentable Area in the Premises" shall mean the area
contained within the demising walls of the Premises. For purposes of
the Lease it is agreed and stipulated by both Landlord and Tenant
that the Rentable Area in the Premises is 178,650 square feet, with
Building I containing 107,250 rentable square feet and Building II
containing 71,400 rentable square feet.
As of the date of the Lease, the Rentable Area in the Project is
stipulated by both Landlord and Tenant to be 178,650 square feet.
(n) "Project" means the Property and all improvements on the
Property including without limitation the Building and any parking
area or facilities thereon.
(o) "Default Rate" means the lower of (i) the Prime Rate plus
six percent (6%) or (ii) the Maximum Rate.
(p) "State" means the state in which the Project is located.
(q) "Tenant's Pro Rata Share" means the fraction, the
numerator of which is the Rentable Area of the Premises and the
denominator of which is the Rentable Area of the Project, expressed
as a percentage.
(r) "Rent Commencement Date" means the earlier to occur of
(i) the later to occur of (x) seventy-five (75) days after Landlord's
delivery of the Phase I Premises to Tenant, or (y) October 1, 1999,
or (ii) the date Tenant commences business operations in the Phase I
Premises. The "Phase II Rent Commencement Date" means the date
which is five (5) months after the Rent Commencement Date. The
"Phase III Rent Commencement Date" means the date which is the ten
(10) months after the Rent Commencement Date. The "Phase IV Rent
Commencement Date" means the date which is fifteen (15) months after
the Rent Commencement Date. The "Phase V Rent Commencement Date"
means the date which is twenty (20) months after the Rent
Commencement Date.
(s) "Base Building Work" means all of the work, materials and
equipment necessary to construct the Building substantially in
accordance with the plans and specifications described on Exhibit K
attached hereto.
2. Lease Grant.
(a) Subject to and upon the terms herein set forth, Landlord
leases to Tenant and Tenant leases from Landlord the Premises in
accordance with the following takedown schedule:
(i) That portion of the Premises containing 35,750
square feet and shown on Exhibit "B" as the Phase I Premises
(hereinafter so called) shall be delivered to and leased by
Tenant on or about July 15, 1999 (such actual delivery date,
the "Phase I Commencement Date").
(ii) That portion of the Premises containing 35,750
square feet and shown on Exhibit "B" as the Phase II Premises
(hereinafter so called) shall be delivered to and leased by
Tenant on the date which is the earlier to occur of (x) five
(5) months after the Phase I Commencement Date and (y) five (5)
days after Landlord's receipt of written request for delivery
of such space from Tenant, which request shall not be delivered
prior to July 15, 1999 (such actual delivery date, the "Phase
II Commencement Date").
(iii) That portion of the Premises containing 35,750
square feet and shown on Exhibit "B" as the Phase III Premises
(hereinafter so called) shall be delivered to and leased by
Tenant on the date which is the earlier to occur of (x) ten
(10) months after the Phase I Commencement Date and (y) five
(5) days after Landlord's receipt of written request for
delivery of such space from Tenant, which request shall not be
delivered prior to July 15, 1999 (such actual delivery date,
the "Phase III Commencement Date").
(iv) That portion of the Premises containing 35,700
square feet and shown on Exhibit "B" as the Phase IV Premises
(hereinafter so called) shall be delivered to and leased by
Tenant on the date which is the earlier to occur of (x) fifteen
(15) months after the Phase I Commencement Date and (y) five
(5) days after Landlord's receipt of written request for
delivery of such space from Tenant, which request shall not be
delivered prior to September 1, 1999 (such actual delivery
date, the "Phase IV Commencement Date").
(v) That portion of the Premises containing 35,700
square feet and shown on Exhibit "B" as the Phase V Premises
(hereinafter so called) shall be delivered to and leased by
Tenant on the date which is the earlier to occur of (x) twenty
(20) months after the Phase I Commencement Date and (y) five
(5) days after Landlord's receipt of written request for
delivery of such space from Tenant, which request shall not be
delivered prior to September 1, 1999 (such actual delivery
date, the "Phase V Commencement Date").
(b) Tenant acknowledges that the Base Building Work will not
be complete on the Phase I Commencement Date and the Base Building
Work for Building II will not be complete until approximately
September 15, 1999. Landlord agrees to use reasonable efforts to
substantially complete the Base Building Work with respect to the
structure of Building I only (i.e., excluding any landscaping and
other work not associated with the actual structure of Building I) on
or before August 6, 1999. In the event the Base Building Work with
respect to the structure of Building I is not substantially complete
on or before August 6, 1999 (as adjusted pursuant to the remainder of
this subpart (b)), the Rent Commencement Date shall be adjusted
forward (i.e., to a later date) by one day for each day after August
6, 1999 that the Base Building Work with respect to the structure of
Building I is not substantially complete, but such adjustment period
shall not exceed the number of days Tenant's Work is delayed as a
result of Landlord's failure to substantially complete the Base
Building Work with respect to the Structure of Building I on or
before August 6, 1999. Notwithstanding the foregoing, the August 6,
1999 date shall adjusted forward (i.e., to a later date) by one day
for each day that Landlord is delayed in substantially completing the
Base Building Work with respect to the structure of Building I as a
result of Tenant requested changes to the Base Building Work or other
delays caused by Tenant. The foregoing adjustment of the Rent
Commencement Date shall be Tenant's sole and exclusive remedy in the
event Landlord fails to substantially complete the Base Building Work
with respect to the structure of Building I by August 6, 1999, as
such date may be adjusted as set forth above for Tenant caused
delays. Tenant agrees to use reasonable efforts to substantially
complete the Base Building Work with respect to the structure of
Building II on or before October 1, 1999. For purposes of this
subpart (b), substantially complete shall mean that the work is
completed in accordance with the plans and specifications therefor
except for any punch list type items.
3. Adjustment of Base Rental.
(a) Subject to and upon the terms and conditions set forth in
this Lease, this Lease shall continue in force commencing on the date
hereof and extending throughout the Lease Term. The actual Rent
Commencement Date, Phase II Rent Commencement Date, Phase III Rent
Commencement Date, Phase IV Rent Commencement Date, and the Phase V
Rent Commencement Date shall be set forth in a confirmation letter or
letters to be prepared by Landlord and sent to Tenant.
(b) Except as set forth in Paragraph 3(d) below, the taking
of possession of the Premises by Tenant shall be conclusive evidence
against Tenant that, (i) Tenant warrants and represents to Landlord
that it has conducted its own independent investigation of the
Premises and the Project and that the Premises and the Project are
suitable for the purpose for which the same are leased, subject to
any latent defect in the Base Building Work which is not discoverable
upon reasonable inspection and subject to the Base Building Punch
List Items (hereinafter defined); provided that the foregoing
warranty does not cover the zoning of the Property, (ii) the Premises
and the Project and each and every part and appurtenance thereof are
in good and satisfactory condition, except for (w) any latent defect
in the Base Building Work which is not discoverable upon a reasonable
inspection, and (x) completion of the Base Building Punch List Items,
and (iii) Tenant waives any defects in the Premises and its
appurtenances and in all other parts of the Project and the
appurtenances thereto, except for (y) any latent defect in the Base
Building Work which is not discoverable upon a reasonable inspection,
and (z) the Base Building Punch List Items.
(c) When Landlord considers the Base Building Work to be
substantially complete in each Building comprising the Premises,
Landlord will notify Tenant and within ten (10) business days
thereafter, Landlord's representative and Tenant's representative
shall conduct a walk-through of the applicable Building and identify
any necessary touch-up work, repairs and minor completion items as
are necessary for final completion of the Base Building Work (the
"Base Building Punch List Items"). Neither Landlord's
representative nor Tenant's representative shall unreasonably
withhold his agreement on punch list items. Landlord will use
reasonable efforts to cause the contractor to complete all Base
Building Punch List Items as soon as reasonably practicable after
agreement thereon.
(d) Landlord represents to Tenant that the construction of
the Building and the Parking Areas (as defined in Exhibit "F") on
the Property has been and shall continue to be undertaken in
accordance with all applicable laws, codes and ordinances applicable
thereto. The foregoing representation does not apply to the use to
which Tenant will put the Premises or to any of Tenant's improvements
or alterations. In the event of a non-compliance of such warranty or
Tenant's discovery of a latent defect in the Base Building Work
reported to Landlord (i) with respect to Building I, within one
hundred eighty (180) days after substantial completion of the Base
Building Work with respect to Building I, and (ii) with respect to
Building II, within one hundred eighty (180) days after substantial
completion of the Base Building work with respect to Building II, or
such longer period if such defect is then covered by a contractor's
or manufacturer's warranty, Landlord shall promptly, after receipt of
written notice from Tenant setting forth the nature and extent of
such non-compliance or defect, rectify the same at Landlord's sole
cost and expense. Further, in connection with the construction of
the Base Building Work, Landlord shall obtain customary warranties
and guaranties from the contractors performing such work and/or the
manufacturers of equipment installed therein, but shall be under no
obligation to incur additional expense in order to obtain or extend
such warranties. If Tenant is required to make repairs to any
component of the Premises or any of its systems not covered by the
Landlord's warranty contained in this Paragraph 3(d) but for which
Landlord has obtained a contractor's or manufacturer's warranty, then
Landlord shall, upon request by Tenant, use its good faith efforts to
pursue its rights under any such warranties for the benefit of
Tenant.
4. Use.
(a) The Premises shall be used for the Permitted Use and for
no other purpose. No retail sales may be made from the Premises
(other than incidental retail sales from a showroom area). Sales by
Tenant from the Premises with respect to use of the Premises as an
internet data center shall not be considered retail sales for
purposes of this Lease. Except as permitted in this Lease, Tenant
shall not use the Premises or the Project to receive, store or handle
any product, material or merchandise that is explosive or highly
inflammable or hazardous. Except storage within the corridor to be
constructed by Tenant between the two (2) buildings in which the
Premises are located (the "Storage Corridor"), outside storage is
prohibited. Tenant shall be solely responsible (at Tenant's sole
cost and expense) for complying with all laws applicable to the use,
occupancy, and condition of the Premises, including without
limitation obtaining all required building permits and/or
certificates of occupancy. Tenant shall not permit any objectionable
or unpleasant odors, smoke, dust, gas, light, noise or vibrations to
emanate from the Premises; nor take any other action that would in
Landlord's reasonable judgment constitute a nuisance or would
disturb, unreasonably interfere with, or endanger Landlord or any
other person; nor permit the Premises to be used for any purpose or
in any manner that would (1) void the insurance thereon, (2)
materially increase the insurance risk, or (3) cause the disallowance
of any sprinkler credits. Tenant shall pay to Landlord on demand any
increase in the cost of any insurance on the Premises or the Building
incurred by Landlord which is caused by Tenant's use of the Premises
or because Tenant vacates the Premises. Tenant agrees not to use or
permit the use of the Premises for any purpose which is illegal or
dangerous to life, limb or property.
(b) Tenant will conduct its business and control its agents,
servants, employees, customers, licensees, and invitees in such a
manner as not to interfere with, unreasonably annoy or disturb other
tenants or Landlord. Tenant will maintain the Premises in a clean
and healthful condition, and comply with all laws, ordinances,
orders, rules and regulations of any governmental entity with
reference to the use, condition or occupancy of the Premises.
Tenant, at his expense, will comply with the rules and regulations of
the Building adopted and altered by Landlord from time to time and
will cause all of its agents, employees, invitees and visitors to do
so; provided that such rules and regulations are non-discriminatory
and further provided that any such modifications to the rules and
regulations do not materially interfere with Tenant's use and
occupancy of the Premises or materially increase Tenant's liabilities
under this Lease. A copy of the existing rules and regulations is
attached hereto as Exhibit "E" and made a part hereof. Tenant
agrees not to commit or allow any waste to be committed on any
portion of the Premises or the Project, and at the termination of
this Lease to deliver up the Premises to Landlord in good working
order as required under Paragraph 30 hereof, ordinary wear and tear
excepted.
5. Base Rental and Operating Expense Rental.
(a) Tenant covenants and agrees to pay to Landlord during the
Lease Term, without any setoff or deduction except as otherwise
expressly provided herein, the Base Rental, and all such other sums
of money as shall become due hereunder as additional rent, all of
which are sometimes herein collectively called "rent." In the event
of nonpayment of any such rent beyond the applicable notice and cure
period, if any, Landlord shall be entitled to exercise all such
rights and remedies as are herein provided in the case of the
nonpayment of Base Rental. Except as otherwise provided herein, the
annual Base Rental for each calendar year or portion thereof during
the Lease Term, together with any estimated Operating Expense Rental
pursuant to Exhibit "C" hereof then in effect, shall be due and
payable in advance in twelve (12) equal installments on the first day
of each calendar month during the initial term of this Lease and any
extensions or renewals hereof, and Tenant hereby agrees to pay such
Base Rental and Operating Expense Rental to Landlord at Landlord's
address provided herein (or such other address as may be designated
by Landlord in writing from time to time) monthly, in advance, and
without demand. If the Rent Commencement Date occurs on a day other
than the first day of a month or the Lease Term terminates on a day
other than the last day of a month, then the installments of Base
Rental and Operating Expense Rental for such month or months shall be
prorated, based on the number of days in such month. The Base Rental
and Operating Expense Rental for the first partial month, if any,
shall be payable at the beginning of said period. All such payments
shall be by a good and sufficient check (subject to collection) or
wire transfer. No payment by Tenant or receipt or acceptance by
Landlord of a lesser amount than the correct installment of rent due
under this Lease shall be deemed to be other than a payment on
account of the earliest rent due hereunder, nor shall any endorsement
or statement on any check or any letter accompanying any check or
payment be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to
recover the balance or pursue any other remedy provided by this Lease
or applicable law. The acceptance by Landlord of an installment of
rent on a date after the due date of such payment shall not be
construed to be a waiver of Landlord's right to declare a default for
any other late payment. If Tenant fails to timely pay any two (2)
installments of rent during any twelve (12) month period during the
first two (2) years of the Lease Term, or if any time thereafter
during the Lease Term, Tenant fails to timely pay any two (2)
installments of rent, Landlord at its sole option may require Tenant
to pay rent (as estimated by Landlord, if necessary) quarterly in
advance, and, in such event, all future payments shall be made on or
before the due date in cash or by cashier's check or money order, and
the delivery of Tenant's collectible personal or corporate check
shall no longer constitute payment thereof. Nothing in this
paragraph shall relieve Tenant from its duties to pay Late Charges as
hereinafter provided. Any acceptance of Tenant's collectible
personal or corporate check thereafter by Landlord shall not be
construed as a waiver of the requirement that such payments be made
in cash or by cashier's check or money order. All amounts received
by Landlord from Tenant hereunder shall be applied first to the
earliest accrued and unpaid rent then outstanding. Landlord shall
use reasonable efforts to provide Tenant with twenty-one (21) days
prior written notice of any change in Base Rental payable hereunder;
provided that Landlord's failure to provide such notice shall not
affect Tenant's obligation to pay such Base Rental or constitute a
default by Landlord.
(b) To the extent allowed by law, all installments of rent
not paid when due shall bear interest at the Default Rate from the
date due until paid; and, in addition, all installments of rent not
paid within seven (7) days of when due and payable shall incur a Late
Charge equal to five percent (5%) of the outstanding balance due.
(c) Tenant agrees to pay Operating Expense Rental (as defined
in Exhibit "C") in accordance with such Exhibit and subparagraph 5(a)
above.
6. Security Deposit. Tenant shall pay to Landlord as additional
Security Deposits the following amounts on the following dates: on the
Phase II Commencement Date, the sum of $26,812.50; on the Phase III
Commencement Date, the sum of $26,812.50, on the Phase IV Commencement Date,
the sum of $26,775.00 and on the Phase V Commencement Date, the sum of
$26,775.00. Landlord shall use reasonable efforts to provide Tenant with
twenty-one (21) days prior written notice of the foregoing required
increases in the Security Deposit; provided that Landlord's failure to
provide such notice shall not affect Tenant's obligation to pay such
increases in the Security Deposit or constitute a default by Landlord. The
Security Deposit shall be held by Landlord without liability for interest
and as security for the performance by Tenant of Tenant's covenants and
obligations under this Lease, it being expressly understood that the
Security Deposit shall not be considered an advance payment of rent or a
measure of Tenant's liability for damages in case of default by Tenant.
Landlord will deposit the Security Deposit in an interest bearing account
and all interest paid thereon, less all applicable expenses of maintaining
such account, shall become part of the Security Deposit. Landlord may, from
time to time, without prejudice to any other remedy and without waiving such
default, use the Security Deposit to the extent necessary to cure any
default of Tenant hereunder. Following any such application of the Security
Deposit, if the remaining Security Deposit is less than $133,987.50 plus the
Additional Security Deposit, if any, Tenant shall promptly pay to Landlord
upon demand the amount necessary to restore the Security Deposit to
$133,987.50 plus the Additional Security Deposit, if any. If Tenant is not
in default at the termination of this Lease, the balance of the Security
Deposit remaining after any such application shall be returned by Landlord
to Tenant. If Landlord transfers its interest in the Premises during the
term of this Lease, Landlord agrees to assign the Security Deposit to the
transferee and upon such assignment, Landlord shall have no further
liability for the return of such Security Deposit. Tenant agrees to look
solely to such transferee or assignee or successor thereof for the return
of the Security Deposit. Landlord and its successors and assigns shall not
be bound by any actual or attempted assignment or encumbrance of the
Security Deposit by Tenant. If Tenant is in default under this Lease more
than two (2) times within any twelve-month period, irrespective of whether
or not such default is cured, then, without limiting Landlord's other rights
and remedies provided for in the Lease or at law or equity, the Security
Deposit shall automatically be increased by an amount equal to the greater
of (i) three times the original Security Deposit of $133,987.50, or (ii) the
sum of three months' Base Rental and Operating Expense Rental. Such
additional Security Deposit shall be paid by Tenant to Landlord forthwith
on demand.
7. Landlord's Maintenance.
(a) This Lease is intended to be a net lease; accordingly,
Landlord's maintenance obligations are limited to the repair, maintenance
and replacement of the Building's roof and maintenance and repair of the
foundation, footings and structural members of the exterior walls of the
Building (collectively, the "Building's Structure"); the cost of such
maintenance and repair to be included in Operating Expenses as provided in
Exhibit "C", however, Landlord shall not be responsible (i) for any such
work until Tenant delivers to Landlord written notice of the need therefor
or (ii) for alterations to the Building's Structure required by Law because
of Tenant's use of the Premises (which alterations shall be performed by
Tenant). The Building's Structure does not include skylights, windows,
glass or plate glass, doors, special store fronts or office entries, all of
which shall be maintained by Tenant. Landlord shall obtain customary
warranties and guarantees from all contractors performing maintenance and
repair work on the Building on Landlord's behalf and shall, upon request by
Tenant, use reasonable efforts to pursue its rights under any such
warranties for the benefit of Tenant.
(b) If Landlord fails (i) to perform any of its repair and
maintenance obligations under this Paragraph 7 or as otherwise as required
in this Lease or (ii) to reasonably act to restore any utilities interrupted
as a result of Landlord's or its agent's, employee's or contractor's gross
negligence or willful misconduct and any such failure materially and
adversely affects Tenant's ability to use and occupy the Premises for the
purposes permitted herein, Tenant shall have the right, but not the
obligation, to perform such repairs and/or maintenance if such failure
continues for more than fifteen (15) days after written notice from Tenant;
provided, however, that if the nature of the repairs and/or maintenance to
be completed by Landlord is such that more than fifteen (15) days are
required to complete such repairs and/or maintenance, Landlord shall have
such additional time as is reasonably necessary to complete such repairs
and/or maintenance so long as Landlord takes appropriate action to commence
such repairs and/or maintenance within such fifteen (15) day period and
thereafter diligently pursues such repairs and/or maintenance to completion.
In such event, Landlord shall reimburse Tenant for the reasonable costs
incurred by Tenant to complete such repairs and/or maintenance within thirty
(30) days after receipt of Tenant's written demand therefor, together with
copies of the paid invoices evidencing the costs incurred by Tenant. Any
repairs and/or maintenance permitted herein shall be performed in a good
workmanlike manner by licensed contractors; provided that any roof repair
shall be performed by Landlord's roofing contractor in a manner that will
not void any roof warranty held by Landlord. If Landlord objects to the
repairs and/or maintenance performed or the expenses incurred by Tenant in
performing such work, Landlord shall deliver a written notice of Landlord's
objection to Tenant within thirty (30) days after Landlord's receipt of
Tenant's invoice evidencing the expenses incurred by Tenant. Landlord's
notice shall set forth in reasonable detail Landlord's reasons for its claim
that such repairs and/or maintenance were not required or were not
Landlord's obligation under the terms of this Lease and/or the reasons for
Landlord's dispute of the expenses incurred by Tenant in performing such
work. The parties shall thereafter work in good faith to resolve such
dispute.
(c) If Tenant fails to perform its obligations under Paragraph 8
below, Landlord may perform Tenant's maintenance, repair and replacement
obligations and any other items that are otherwise Tenant's obligations
under Paragraph 8, in which event Tenant shall pay to Landlord any cost
incurred by Landlord in performing such obligations, together with ten
percent (10%) thereof to cover Landlord's overhead, within ten (10) days
after Landlord's request therefor. In performing such work under this
Paragraph 7(c), Landlord will comply with the requirements of Paragraph 12
below.
8. Tenant's Maintenance and Repair Obligations.
(a) Tenant shall maintain all parts of the Premises (except
for maintenance work which Landlord is expressly responsible for under
Paragraph 7), including plumbing work and fixtures in good condition and
promptly make all necessary repairs and replacements to the Premises.
(b) Tenant shall maintain and repair the Parking Areas and
other exterior areas of the Project, including but not limited to driveways,
alleys, landscape and grounds within the Project, in a clean and sanitary
condition, consistent with the operation of a first-class research and
development/light industrial/warehouse project, including prompt
maintenance, repairs and replacements of the exterior of the Building
(including painting), sewage lines and other items normally associated with
the foregoing.
(c) Tenant shall maintain the hot water equipment and the
heating, air conditioning, and ventilation equipment and system (the "HVAC
System") in good repair and condition and in accordance with applicable law
and with such equipment manufacturers' suggested operation/maintenance
service program. Within thirty (30) days after the Rent Commencement Date,
Tenant shall enter into regularly scheduled preventive maintenance/service
contracts for such equipment, and upon request from Landlord from time to
time, Tenant shall deliver copies of such maintenance/service contracts for
such equipment to Landlord. At least 14 days before the end of the Lease
Term, Tenant shall deliver to Landlord a certificate from an engineer
reasonably acceptable to Landlord certifying that the hot water equipment
and the HVAC System remaining in the Premises are then in good repair and
working order. Upon request by Tenant, Landlord shall promptly deliver
Tenant a copy of Landlord's roof warranty applicable to the Building.
9. Alterations.
(a) Except as otherwise provided in the Work Letter Agreement
attached hereto as Exhibit "D", all installations and improvements
now or hereafter placed on or in the Premises shall be subject to the
provisions of this Paragraph 9 hereof and shall be for Tenant's
account and at Tenant's cost (and Tenant shall pay ad valorem taxes
and increased insurance thereon or attributable thereto), which cost
shall be payable by Tenant to Landlord upon demand as additional
rent. Such additional rent shall not be construed as including taxes
assessed against improvements in the Premises which are subject to
personal property taxes. Such personal property taxes shall remain
the sole responsibility of the Tenant.
(b) Except as set forth in Paragraph 9(c) below, Tenant shall
not make any alterations, additions or improvements to the Premises
without the prior written consent of Landlord, which consent shall
not be unreasonably withheld or delayed. Landlord shall notify
Tenant whether it consents to any alteration, addition or improvement
within ten (10) business days after Landlord has received plans and
specifications therefor which are sufficiently detailed to allow
construction of the work depicted thereon to be performed in a good
and workmanlike manner. If the alteration, addition or improvement
will affect the Building's Structure, HVAC System, or mechanical,
electrical, or plumbing systems or fire protection systems
(collectively, the "Building Structure"), then the plans and
specifications therefor must be prepared by a licensed engineer
reasonably acceptable to Landlord. All installations described in
Paragraphs 9 and 10 of the Work Letter Agreement attached hereto as
Exhibit "D" shall require the approval of Landlord in accordance
with the terms of this Paragraph 9(b). At the time Landlord grants
its consent to any alteration, addition or improvement, Landlord
shall inform Tenant whether or not such alteration, addition or
improvement must be removed at the expiration or earlier termination
of this Lease. Landlord's approval of any plans and specifications
shall not be a representation that the plans or the work depicted
thereon will comply with law or be adequate for any purpose, but
shall merely be Landlord's consent to performance of the work. If
Landlord fails to notify Tenant of its approval or disapproval of
such alteration, addition or improvement within the foregoing
described ten (10) business day period, Landlord shall be deemed to
have approved such requested alteration, addition or improvement.
Upon completion of any alteration, addition, or improvement, Tenant
shall deliver to Landlord accurate, reproducible as-built plans
therefor as provided in Paragraph 9(c) below. Tenant may erect
shelves, bins, machinery and trade fixtures without obtaining
Landlord's prior written consent provided that such items (i) do not
alter the basic character of the Premises or the Building; (ii) do
not overload or damage the same; and (iii) may be removed without
damage to the Premises. All work performed by a Tenant Party in the
Premises (including that relating to the installations, repair,
replacement, or removal of any item) shall be performed in accordance
with applicable law and with Landlord's specifications and
requirements, in a good and workmanlike manner, and so as not to
damage or alter the Building's Structure or the Premises. Prior to
the commencement of any work on any such alteration, addition or
improvement to which Landlord has consented, the same shall have been
submitted to and approved by all municipal or other governmental
departments or agencies having jurisdiction over the subject matter
thereof (all of which shall have issued any required permits and
approvals). Throughout the performance of alterations, additions or
improvements, Tenant, at its expense, shall carry, or cause to be
carried, construction risk insurance under which Landlord shall be
named as an additional insured.
(c) Notwithstanding the foregoing provisions of Paragraph 9,
Landlord's consent shall not be required for (i) the movement,
installation or modification of trade fixtures (including, without
limitation, ballistic treatments, risers, utility feeds and related
conduits and interior fresh air/exhaust louvers, but excluding any
trade fixture to be installed on the outside of the Premises or the
Building), furniture (including, without limitation, kitchen
appliances, demountable partitions and items used to block windows,
computer racking and similar demountable fixtures) and trade
equipment to be installed on the inside of the Premises or the
Building; provided, however, that all of the foregoing items may be
removed from the Premises without material injury thereto (the
foregoing trade fixtures, furniture and trade equipment are
collectively referred to herein as "Trade Fixtures"), or (ii) any
alterations and improvements to the interior of the Building which
do not affect the Building Structure not covered by subparagraph
(c)(i) above; provided that Tenant shall provide Landlord with five
(5) business days prior written notice of any proposed alterations or
improvements to the interior of the Building which do not affect the
Building Structure. In the event Landlord reasonably believes that
such proposed non-structural alteration or improvement will affect
the Building Structure, Landlord will notify Tenant of such belief
within five (5) business days after receipt of Tenant's notice and
Tenant shall not proceed with such alteration or improvement prior to
Landlord's approval thereof, which shall be given or withheld within
ten (10) business days after Landlord has received plans and
specifications therefor which are sufficiently detailed to allow
construction of the work depicted thereon to be performed in a good
and workmanlike manner. Pursuant to the foregoing alteration rights
of Tenant hereunder, at least once every six months during the Lease
Term therein, Tenant shall report in writing, in detail (including,
without limitation, accurate, re-producible as-built plans)
reasonably satisfactory to Landlord, all alterations, additions and
improvements to the Premises made by Tenant since the last such
report (except that Tenant shall not be obligated to report
alterations covered by Paragraph 9(c)(i) above), unless plans and
specifications for the same have theretofore been furnished to
Landlord. If in or at the time of such report Tenant requests in
writing that Landlord do so with respect to specific items designated
in such report, Landlord will advise Tenant, in writing, as to which
of the designated alterations, additions and improvements made by
Tenant since the last such report, which did not require Landlord's
consent, Landlord will require Tenant to remove and restore at the
expiration or earlier termination of this Lease; and Landlord will be
bound by such written advice. Prior to the commencement of any work
on any such alteration, addition or improvement not requiring
Landlord's consent hereunder, the same shall have been submitted to
and approved by all municipal or other governmental departments or
agencies having jurisdiction over the subject matter thereof (all of
which shall have issued any required permits and approvals).
Throughout the performance of alterations, additions or improvements,
Tenant, at its expense, shall carry, or cause to be carried,
construction risk insurance under which Landlord shall be named as an
additional insured.
(d) In the event Tenant needs to alter or modify any
structural portion of the Premises on an emergency basis, Landlord
will use reasonable efforts to notify Tenant of its approval or
disapproval of such requested alteration or modification as soon as
reasonably practicable.
(e) Except for items described on Exhibit "M-2" attached
hereto, title to any alterations, additions or improvements to the
Premises made by Tenant pursuant to this Paragraph 9 shall vest in
Tenant to the extent any such improvements are not fixtures or other
real estate interests.
10. Signs. Tenant shall not place, install or attach any signage,
decorations, advertising media, blinds, draperies, window treatments, bars,
or security installations to the Premises or the Building without Landlord's
prior written approval. Subject to Landlord's approval, which will not be
unreasonably withheld or delayed, and the remaining provisions of this
Paragraph 10, Tenant shall be entitled to install, at Tenant's sole cost and
expense, up to two (2) corporate identification signs on the exterior of the
Building and one (1) monument on the Property, all in locations approved by
Landlord. Upon the expiration or earlier termination of this Lease,
Tenant shall remove the two (2) corporate identification signs on the
exterior of the Building. Tenant shall repair, paint, and/or replace any
portion of the Premises or the Building damaged or altered as a result of
its signage when it is removed (including, without limitation, any
discoloration of the Building). Tenant shall not (a) make any changes to
the exterior of the Premises or the Building, (b) install any exterior
lights, decorations, balloons, flags, pennants, banners or paintings, or (c)
erect or install any signs, windows or door lettering, decals, window or
storefront stickers, placards, decorations or advertising media of any type
that is visible from the exterior of the Premises without Landlord's prior
written consent. Landlord shall not unreasonably withhold its consent to
any proposed exterior lighting or proposed exterior cameras. Landlord shall
notify Tenant whether it consents to any exterior lighting, exterior cameras
or other change or alteration to the exterior of the Premises or the
Building within ten (10) business days after Landlord has received plans and
specifications therefor, which detail, without limitation, the method of
attachment and location thereof. If Landlord fails to notify Tenant of its
approval or disapproval of any requested exterior lighting, exterior cameras
or other exterior installation within such ten (10) business day period,
Landlord shall be deemed to have approved the installation of such requested
lighting and/or cameras. Landlord shall not be required to notify Tenant
of whether it consents to any sign until it (i) has received detailed, to-
scale drawings thereof specifying design, material composition, color
scheme, and method of installation, and (ii) has had a reasonable
opportunity to review them. All exterior signage must comply with the sign
criteria and standards applicable to the Project, which criteria shall be
mutually agreed by Landlord and Tenant; provided that in no event shall any
neon or flashing exterior signage be permitted in the Project.
11. Utilities. Tenant shall obtain and pay for all water, gas,
electricity, heat, telephone, sewer, sprinkler charges and other utilities
and services used at the Premises, together with any taxes, penalties,
surcharges, maintenance charges, and the like pertaining to the Tenant's use
of the Premises. Landlord may, at Tenant's expense, separately meter and
bill Tenant directly for its use of any such utility service, in which case,
the amount separately billed to Tenant for Building-standard utility service
shall reflect the actual cost of such service (without any service charged
added by Landlord) and shall not be duplicated in Tenant's obligation to pay
Operating Expense Rental. Landlord shall not be liable for any interruption
or failure of utility service to the Premises unless such interruption or
failure is caused by the gross negligence or willful misconduct of Landlord
or Landlord's employees, agents or contractors, EVEN IF SUCH FAILURE IS
CAUSED BY THE NEGLIGENCE OF LANDLORD OR LANDLORD'S EMPLOYEES, AGENTS OR
CONTRACTORS. All amounts due from Tenant under this Paragraph 11 shall be
payable within ten (10) days after Tenant's receipt of an invoice and
supporting documentation therefor.
12. Entry by Landlord. Landlord and Landlord's agents and
representatives may enter the Premises during business hours to inspect the
Premises; to make such repairs as may be required or permitted under this
Lease; to perform any unperformed obligations of Tenant hereunder; and to
show the Premises to prospective purchasers, mortgagees, ground lessors, and
(during the last twelve (12) months of the Term) tenants. Notwithstanding
the foregoing, Landlord and Landlord's agents and representatives may only
enter the Premises upon twenty-four (24) hours prior notice and accompanied
by Tenant's personnel or representative. The foregoing notice requirements
shall not apply to an emergency which if not responded to immediately poses
an imminent risk of injury to persons or damage to property. During the last
twelve (12) months of the Lease Term, Landlord may erect a sign on the
Premises indicating that the Premises are available. Landlord and
Landlord's agents and representatives shall, as a condition of entry,
execute Tenant's standard confidentiality and non-disclosure agreement,
which Tenant requires all visitors to its facilities to execute, in the form
of Exhibit "P" attached hereto. Tenant shall notify Landlord in writing
of its intention to vacate the Premises at least sixty (60) days before
Tenant will vacate the Premises; such notice shall specify the date on which
Tenant intends to vacate the Premises (the "Vacation Date"). At least
thirty (30) days before the Vacation Date, Tenant shall arrange to meet with
Landlord for a joint inspection of the Premises. After such inspection,
Landlord shall prepare a list of items that Tenant must perform before the
Vacation Date. If Tenant fails to arrange for such inspection, then
Landlord may conduct such inspection and Landlord's reasonable
determination of the work Tenant is required to perform before the Vacation
Date shall be conclusive. If Tenant fails to perform such work before the
Vacation Date, then Landlord may perform such work at Tenant's cost. Tenant
shall pay all reasonable costs incurred by Landlord in performing such work
within ten (10) days after Landlord's request therefor.
13. Assignment and Subletting.
(a) Tenant shall not assign, sublease, transfer or encumber
this Lease or any interest therein or grant any license, concession,
or other right of occupancy of the Premises or any portion thereof or
otherwise permit the use of the Premises or any portion thereof by
any party other than Tenant (any of which events is hereinafter
called an "assignment") without the prior written consent of
Landlord, which consent shall not be unreasonably withheld so long as
Landlord does not exercise its right to recapture the Premises. Any
such attempted assignment in violation of the terms and covenants of
this Paragraph shall, exercisable in Landlord's sole and absolute
discretion, be voidable. Consent by Landlord to one or more
assignments shall not operate as a waiver of Landlord's rights as to
any subsequent assignments. In addition, Tenant shall not, without
Landlord's consent, which consent shall not be unreasonably withheld,
publicly offer to assign the Lease nor advertise the Lease for
assignment in any media, including but not limited to newspapers,
periodicals, radio, television, circulars or brochures. In the event
Tenant or any agent, representative or broker acting on behalf of
Tenant or with Tenant's knowledge violates the provisions of the
foregoing sentence, in addition to all of the remedies which Landlord
may have at law, in equity, or pursuant to the terms of this Lease,
Landlord shall be entitled to seek injunctive relief preventing such
action and Tenant shall be responsible for all costs incurred by
Landlord in connection with seeking such injunctive relief.
Notwithstanding the foregoing, Tenant shall be permitted to grant
licenses to Tenant's customers for placement of equipment in the
Premises in the normal course of Tenant's business and the same shall
not constitute an assignment hereunder. Landlord shall be deemed to
have reasonably withheld its consent to any assignment if the refusal
is based on (i) Landlord's determination (in its reasonable
discretion) that such subtenant or assignee is not of the character
or quality of a tenant to whom Landlord would generally lease space
in the Building, (ii) the fact that such assignment is not in form
and of substance reasonably satisfactory to Landlord, (iii) such
assignment conflicts in any manner with this Lease, including, but
not limited to, the Permitted Use, (iv) the proposed subtenant or
assignee is a governmental entity or a medical office, (v) the
proposed subtenant's or assignee's primary business is prohibited by
any non-compete clause then affecting the Project, (vi) the proposed
subtenant or assignee is a tenant of the Project or Landlord is
negotiating with the proposed subtenant or assignee to become a
tenant of any building owned by Landlord or an affiliate of Landlord
in vicinity of the Project, (vii) the character of the business to be
conducted within the Premises by the proposed subtenant or assignee
is likely to substantially increase the burden on parking beyond the
number of spaces provided to Tenant under this Lease for such space,
(viii) the assignment would cause Landlord to breach any recorded
covenants or contractual obligations to which the Project or Landlord
is subject or (ix) in Landlord's reasonable opinion, such sublessee
or assignee does not have an adequate net worth relative to the
obligations such proposed sublessee or assignee is assuming under
such proposed assignment.
(b) If Tenant requests Landlord's consent to an assignment,
Tenant shall submit to Landlord, in writing, the name of the proposed
assignee or subtenant and the nature and character of the business of
the proposed assignee or subtenant, the term, use, rental rate and
all other material terms and conditions of the proposed assignment
including, without limitation, evidence satisfactory to Landlord that
the proposed assignee or subtenant is financially responsible.
Landlord shall within ten (10) days after Landlord's receipt of such
written request and information either (i) consent to or refuse to
consent (explaining the basis for such refusal) such assignment in
writing (but no such consent to an assignment shall relieve Tenant of
Tenant's obligations under this Lease of any liability hereunder) or
(ii) in the event of a proposed assignment of Tenant's entire
interest under this Lease to a party other than a Tenant Affiliate
(hereinafter defined) or a proposed sublease of the entire Premises
for the entire remaining term of this Lease, terminate this Lease
effective the first to occur of ninety (90) days following written
notice of such termination or the date that the proposed assignment
or proposed sublease would have come into effect. If Landlord should
fail to notify Tenant in writing of its decision within such ten (10)
day period after the later of the date Landlord is notified in
writing of the proposed assignment or sublease or the date Landlord
has received all required information concerning the proposed
assignee or subtenant and the proposed assignment, Landlord shall be
deemed to have disapproved such assignment, provided, that if,
following Landlord's failure to respond to Tenant's request for
approval within such ten (10) day period, Tenant may send a second
request for consent (which request shall be sent by registered or
certified mail, return receipt requested, but which need not contain
the additional supporting material provided to Landlord with the
initial request) stating in bold print that Landlord has failed to
timely respond to Tenant's first request for approval of a proposed
assignment and that failure to respond to Tenant within five (5) days
after receipt of such request shall result in a deemed approval of
such request. Within five (5) days after receipt of Tenant's second
written request for Landlord's consent to a proposed assignment,
Landlord shall notify Tenant in writing of its decision to consent or
withhold its consent to such proposed assignment. If Landlord fails
to notify Tenant in writing of its decision within such five (5) day
period, Landlord shall be deemed to have approved such assignment.
In the event Landlord consents to any such assignment, the
assignment shall be on a form approved by Landlord in its reasonable
discretion, and Tenant shall bear all reasonable costs and expenses
incurred by Landlord in connection with the review and approval of
such documentation.
(c) In addition to the rent hereunder, Tenant hereby
covenants and agrees to pay to Landlord forty percent (40%) of all
rent and other consideration which it receives in connection with an
assignment which is in excess of the rent payable hereunder, after
deduction of all actual out-of-pocket expenses incurred by Tenant in
connection with such assignment, within ten (10) days following
receipt thereof by Tenant. This covenant and assignment shall
benefit Landlord and its successors in ownership of the Building and
shall bind Tenant and Tenant's heirs, executors, administrators,
personal representatives, successors and assigns. In addition to any
other rights and remedies which Landlord may have hereunder, at law
or in equity, in the event Tenant has failed to pay any rent due
hereunder on or before five (5) days following the date on which it
is due, Landlord shall have the right to contact any assignee and
require that from that time forward all payments made pursuant to the
assignment shall be made directly to the Landlord. Any assignee of
Tenant's interest in this Lease (all such assignees being hereinafter
referred to as "Successors"), by occupying the Premises and/or
assuming Tenant's obligations hereunder, shall be deemed to have
assumed liability to Landlord for all amounts paid to persons other
than Landlord by such Successors in consideration of any such
assignment in violation of the provisions hereof.
(d) Any provision in this Lease to the contrary
notwithstanding, Landlord's consent shall not be required for any of
the following transfers (each of which shall be a "Permitted
Transfer"): (a) to any persons or entity who controls, is controlled
by or is under common control with Tenant, (b) to any entity
resulting from the merger, consolidation or other reorganization with
Tenant, whether or not Tenant is the surviving entity or (c) to any
person or legal entity which acquires all or substantially all of the
assets or stock of Tenant (each of the foregoing is hereinafter
referred to as a "Tenant Affiliate"); provided that before such
assignment shall be effective, (x) said Tenant Affiliate shall
assume, in full, the obligations of Tenant under this Lease, (y)
Landlord shall be given written notice of such assignment and
assumption and (z) the use of the Premises by the Tenant Affiliate
shall be as set forth in Paragraph 4. For purposes of this
paragraph, a public or private offering of Tenant stock is a
Permitted Transfer and the term "control" means possession, directly
or indirectly, of the power to direct or cause the direction of the
management, affairs and policies of anyone, whether through the
ownership of voting securities, by contract or otherwise.
Notwithstanding anything to the contrary contained herein, Tenant
shall be entitled to keep any and all rent received from a Tenant
Affiliate in excess of that due under this Lease.
(e) Tenant shall, despite any permitted assignment, remain
directly and primarily liable for the performance of all of the
covenants, duties, and obligations of Tenant hereunder and Landlord
shall be permitted to enforce the provisions of this Lease against
Tenant or any assignee or sublessee without demand upon or proceeding
in any way against any other person.
14. Mechanic's Liens. Tenant will not permit any mechanic's liens
or other liens to be placed upon the Premises, the Building, or the Property
and nothing in this Lease shall be deemed or construed in any way as
constituting the consent or request of Landlord, express or implied, by
inference or otherwise, to any person for the performance of any labor or
the finishing of any materials to the Premises, the Building, or the
Property or any part thereof, nor as giving Tenant any right, power, or
authority to contract for or permit the rendering of any services or the
furnishing of any materials that would give rise to any mechanic's or other
liens against the Premises, the Building, or the Property. In the event any
such lien is attached to the Premises, the Building, or the Property, then,
in addition to any other right or remedy of Landlord, Landlord may, but
shall not be obligated to, discharge the same. Any amount paid by Landlord
for any of the aforesaid purposes including, but not limited to, reasonable
attorneys fees, shall be paid by Tenant to Landlord promptly on demand as
additional rent. In the event Landlord does consent to the performance of
any labor or the furnishing of any materials to the Premises, the Building,
or the Property by any party, which consent must be in writing, Tenant shall
be responsible for insuring that all such persons procure and maintain
insurance coverage against such risks, in such amounts and with such
companies as Landlord may require, including, but not limited to, Builder's
Risk and Worker's Compensation insurance. Tenant shall within ten (10) days
of receiving such notice of lien or claim (a) have such lien or claim
released, (b) contest any claim or lien as long as such contest prevents
foreclosure of the lien and Tenant causes such lien to be bonded or insured
over in a manner satisfactory to Landlord and the holder or any mortgage or
deed of trust covering the Project and Tenant promptly causes to be paid any
amount determined to be due, with all costs, penalties and interest thereon,
or (c) deliver to Landlord a bond in form, content, amount and issued by a
surety reasonably satisfactory to Landlord, indemnifying, protecting,
defending and holding harmless the Indemnities against all costs and
liabilities resulting from such lien or claim and the foreclosure or
attempted foreclosure thereof.
15. Property Insurance.
(a) Landlord shall maintain fire and extended coverage
insurance on the Building in an amount sufficient to cover the full
replacement cost of the Building, excluding the costs of the Tenant's
Work and all other Tenant improvements. The cost of such insurance
shall be included as a part of Operating Expenses and payments for
losses thereunder shall be made solely to Landlord or the mortgagees
of Landlord as their interests shall appear.
(b) Tenant shall maintain at its expense, in an amount equal
to full replacement cost, fire and extended coverage insurance on all
of its personal property, including removable trade fixtures and
leasehold and tenant improvements, located in the Premises and in
such additional amounts as are required to meet Tenant's obligations
pursuant to Paragraph 19 hereof and with deductibles in an amount not
to exceed $10,000.00. Tenant shall furnish evidence satisfactory to
Landlord of the maintenance and timely renewal of such insurance, and
such insurance shall provided that Landlord shall be notified at
least thirty (30) days prior to the modification, cancellation or
expiration of such insurance policies. In the event Tenant shall not
have delivered to Landlord a policy or certificate evidencing such
insurance at least thirty (30) days prior to the expiration date of
each expiring policy, Landlord may, after giving Tenant five (5) days
prior written notice, obtain such insurance as Landlord may
reasonably require to protect Landlord's interest (which obtaining of
insurance shall not be deemed to be a waiver of Tenant's default
hereunder). The cost to Landlord of obtaining such policies, plus an
administrative fee in the amount of ten percent (10%) of the cost of
such policies shall be paid by Tenant to Landlord as additional rent
upon demand.
16. Liability Insurance.
Tenant and Landlord shall each maintain during the term of this
Lease a policy or policies of commercial general liability insurance
(including endorsement or separate policy for owned or non-owned
automobile liability) with respect to the respective activities of
each in the Building and on the Property, with the premiums thereon
fully paid on or before the due date, issued by and binding upon an
insurance company or companies approved by Landlord. Such insurance
shall afford minimum protection of not less than $1,000,000.00 per
occurrence per person coverage for bodily injury, property damage,
personal injury, or combination thereof. The term "personal injury"
herein used means false arrest, detention or imprisonment, malicious
prosecution, wrongful entry, libel and slander. If only a combined
single limit coverage is available, it shall be for at least
$1,000,000.00 per occurrence with an umbrella policy of at least
$3,000,000.00 combined single limit per occurrence. Tenant's
insurance policy shall name Landlord as an additional insured and
shall include coverage for the contractual liability of Tenant to
indemnify Landlord pursuant to Paragraph 18 of this Lease and shall
have deductibles in an amount not greater than $10,000.00. Tenant
shall furnish certificates of such insurance and such other evidence
satisfactory to Landlord of the maintenance of all insurance
coverages required hereunder, and Tenant shall obtain a written
obligation on the part of each insurance company to notify Landlord
at least 30 days before cancellation of a material change of any such
insurance. All such insurance policies shall be in form and issued
by companies reasonably satisfactory to Landlord. The insurance
carried by Tenant pursuant to this Paragraph shall be at Tenant's
sole cost and expense; and the insurance carried by Landlord pursuant
to this Paragraph shall be included in Operating Expenses; provided
that in the event such insurance covers more than one property, only
that portion of the costs reasonably allocable to the Project shall
be included in Operating Expenses.
17. Forms of Policies; Increase in Premiums, Waiver of Claims.
(a) The insurance requirements set forth in Paragraphs 15 and
16 are independent of the waiver, indemnification, and other
obligations under this Lease and will not be construed or interpreted
in any way to restrict, limit or modify the waiver, indemnification
and other obligations or to in any way limit any party's liability
under this Lease. In addition to the requirements set forth in
Paragraphs 15 and 16, the insurance required of Tenant and Landlord
under this Lease must be issued by an insurance company with a rating
of no less than A-VIII in the current Best's Insurance Guide, or A-
in the current Standard & Poor Insurance Solvency Review, or that is
otherwise acceptable to Landlord, and admitted to engage in the
business of insurance in the State; be primary insurance for all
claims under it and provide that any insurance carried by Landlord
and Landlord's lenders is strictly excess, secondary and
noncontributing with any insurance carried by Tenant; and provide
that insurance may not be canceled, nonrenewed or the subject of
material change in coverage or available limits of coverage, except
upon thirty (30) days' prior written notice to Landlord and
Landlord's lenders. Tenant will deliver either a duplicate original
or a legally enforceable certificate of insurance on all policies
procured by Tenant in compliance with Tenant's obligations under this
Lease to Landlord on or before the date Tenant first occupies any
portion of the Premises, at least thirty (30) days before the
expiration date of any policy and upon the renewal of any policy.
Landlord must give its prior written approval to all deductibles and
self-insured retentions under Tenant's policies. Tenant may comply
with its insurance coverage requirements through a blanket policy,
provided Tenant, at Tenant's sole expense, procures a "per location"
endorsement, or equivalent reasonably acceptable to Landlord, so that
the general aggregate and other limits apply separately and
specifically to the Premises.
(b) If Tenant's business operations, conduct or use of the
Premises or any other part of the Project causes an increase in the
premium for any insurance policy carried by Landlord, Tenant will,
within ten (10) days after receipt of notice from Landlord, reimburse
Landlord for the entire increase.
(c) Notwithstanding anything herein to the contrary, each of
Landlord and Tenant hereby waives all claims and causes of action
(including claims of subrogation on behalf of its insurer) against
the other and the other's agents, officers and employees to the
extent that the loss or damage to any property, or bodily injury or
personal injury, to which such claim or cause of action relates is
covered by insurance carried or coverable under insurance required to
be carried by such waiving party. THE PARTIES EXPRESSLY ACKNOWLEDGE
AND AGREE THAT SUCH WAIVER EXTENDS TO CLAIMS OF NEGLIGENCE BY SUCH
OTHER PARTY, ITS AGENTS, OFFICERS AND EMPLOYEES (AND WITH RESPECT TO
LANDLORD, THE PROJECT MANAGER).
18. Indemnity. Neither Landlord nor any of its officers,
directors, employees, or agents shall be liable to Tenant, or to Tenant's
agents, servants, employees, customers, licensees, or invitees for any
injury to person or damage to property caused by any act, omission, or
neglect of Tenant, its agents, servants, employees, customers, invitees,
licensees or any other person entering the Building or upon the Project
under the invitation of Tenant (each, a "Tenant Party") or arising out of
the use of the Project, Building or Premises by Tenant and the conduct of
its business or out of a default by Tenant in the performance of its
obligations hereunder. Tenant hereby indemnifies and holds Landlord and its
officers, directors, employees and agents ("Landlord Indemnitees"), harmless
from all liability and claims for any property damage, or bodily injury or
death of, or personal injury to, a person in or on the Premises, or at any
other place, including the Project or the Building, caused, in whole or in
part, by Tenant or any Tenant Party and this indemnity shall be enforceable
to the full extent whether or not such liability and claims are the result
of the sole, joint or concurrent acts, negligent or intentional, or
otherwise, of Tenant, or any Tenant Party. SUCH INDEMNITY FOR THE BENEFIT
OF LANDLORD INDEMNITEES SHALL BE ENFORCEABLE EVEN IF LANDLORD INDEMNITEES,
OR ANY ONE OR MORE OF THEM HAVE OR HAS CAUSED OR PARTICIPATED IN CAUSING
SUCH LIABILITY AND CLAIMS BY THEIR JOINT OR CONCURRENT ACTS, NEGLIGENT OR
INTENTIONAL, OR OTHERWISE. Notwithstanding the terms of this Lease to the
contrary, the terms of this paragraph shall survive the expiration or
earlier termination of this Lease.
19. Casualty Damage.
(a) If the Premises or any part thereof shall be damaged by
fire or other casualty, Tenant shall give prompt written notice
thereof to Landlord. If the Building is not so damaged that
substantial alteration or reconstruction of the Building, in
Landlord's reasonable and good faith opinion, is required, subject to
the remaining provisions of this Paragraph 19, this Lease shall
remain in full force and effect and the damage to the Building shall
be repaired by Landlord. In case the Building shall be so damaged
that substantial alteration or reconstruction of the Building shall,
in Landlord's reasonable and good faith opinion, be required (whether
or not the Premises shall have been damaged by such casualty) or in
the event any mortgagee of Landlord's should require that the
insurance proceeds payable as a result of a casualty be applied to
the payment of the mortgage debt, Landlord may, at its option,
terminate this Lease by notifying Tenant in writing of such
termination within sixty (60) days after the date of such casualty.
If Landlord does not thus elect to terminate this Lease, and the
Lease is not terminated pursuant to subparagraph (c) below, Landlord
shall promptly commence and proceed with reasonable diligence to
restore the Base Building Work (but not any leasehold improvements,
alterations, additions or improvements made by or for Tenant), at
Landlord's sole cost and expense, to substantially the same condition
its was in immediately prior to such damage or destruction with any
necessary changes required by then applicable zoning and building
laws. Landlord shall not be responsible for delays not within the
control of Landlord. Notwithstanding the foregoing, Landlord's
obligation to restore the Base Building Work (excluding any leasehold
improvements, alterations, additions or improvements made by or for
Tenant) shall not require Landlord to expend for such repair and
restoration work more than the insurance proceeds actually received
by the Landlord as a result of the casualty. When the repairs
described in the preceding two sentences have been completed by
Landlord, Tenant shall complete the restoration of all improvements,
including trade fixtures and equipment, which are necessary to permit
Tenant's re-occupancy of the Premises. Except as set forth above,
all cost and expense of reconstructing the Premises shall be borne by
Tenant, and Tenant shall present Landlord with evidence reasonably
satisfactory to Landlord of Tenant's ability to pay such costs prior
to Landlord's commencement of repair and restoration of the Premises.
(b) Landlord shall not be liable for any inconvenience or
annoyance to Tenant or injury to the business of Tenant resulting in
any way from such damage or the repair thereof, except that, subject
to the provisions of the next sentence, Landlord shall allow Tenant
a fair diminution of rent during the time and to the extent the
Premises are unfit for occupancy. If the Premises or any other
portion of the Building is damaged by fire or other casualty
resulting from the fault or negligence of Tenant or any Tenant Party,
the rent hereunder shall not be diminished during the repair of such
damage and Tenant shall be liable to Landlord for the cost of the
repair and restoration of the Building caused thereby to the extent
such cost and expense is not covered by insurance proceeds.
(c) Notwithstanding anything in the Paragraph 19 to the
contrary, if all or any portion of the Premises shall be made
untenantable by a fire or other casualty, Landlord shall with
reasonable promptness, cause an architect or general contractor
selected by Landlord to estimate the amount of time required to
substantially complete repair and restoration of the Base Building
Work, using standard working methods (the "Completion Estimate"). If
the Completion Estimate indicates that the Base Building Work cannot
be restored within six (6) months from the date the repair and
restoration is started, either party shall have the right to
terminate this Lease by giving written notice to the other of such
election within ten (10) days after its receipt of the Completion
Estimate. Tenant, however, shall not have the right to terminate
this Lease in the event that the fire or casualty in question was
caused by the negligence or intentional misconduct of Tenant or any
Tenant Party or if an event of default (as defined in Paragraph 24)
is then continuing. If the Completion Estimate indicates that the
Base Building Work can be restored with six (6) months from the date
the repair and restoration is started and Landlord has not otherwise
exercised its right to terminate the Lease pursuant to the terms
hereof, or if the Completion Estimate indicates that the Premises
cannot be made tenantable with six (6) months but neither party
terminates this Lease pursuant to this Paragraph 19, Landlord shall
proceed with reasonable promptness to repair and restore the
Premises. Notwithstanding anything to the contrary in this Paragraph
19, Tenant may prevent Landlord from terminating this Lease as set
forth herein (or render any termination notice by Landlord of no
effect) by agreeing in writing with Landlord, in form reasonably
satisfactory to Landlord, within fifteen (15) days after Tenant's
receipt of Landlord's termination notice, to pay to Landlord, on
demand, the amount by which the cost of repairs and/or restoration
exceed net insurance proceeds available to Landlord, and to provide
such amount prior to the commencement of repair or reconstruction by
the Landlord; such agreement shall provide, if Landlord so requires,
security reasonably satisfactory to Landlord for the performance by
Tenant of its obligations to pay and provide such amounts. For
purposes of this Paragraph 19, any insurance proceeds required by any
mortgagee of Landlord to be applied to the payment of the mortgage
debt shall be deemed "not available to Landlord". Notwithstanding
the foregoing, in the event Tenant desires to prevent termination of
this Lease as set forth above in this Paragraph 19(c), Landlord shall
request the holder of the mortgage on the Property permit Landlord to
receive all insurance proceeds for the purpose of rebuilding the
Building.
(d) If pursuant to subparagraph (c) Tenant was entitled to
but elected not to exercise its right to terminate the Lease and
Landlord does not substantially complete the repair and restoration
of the Base Building Work within two (2) months after the expiration
of the estimated period of time set forth in the Completion Estimate,
which period shall be extended to the extent of any Reconstruction
Delays, then (provided no event of default is then continuing) Tenant
may terminate this Lease by written notice to Landlord within fifteen
(15) days after the expiration of such period, as the same may be
extended (but in all events prior to substantial completion of such
repair and restoration). For purposes of this Lease, the term
"Reconstruction Delays" shall mean: (i) any delays caused by the
insurance adjustment process; (ii) any delays caused by Tenant; and
(iii) any delays caused by events of Force Majeure.
(e) If the Premises shall, within the last year of the Lease
Term or the Renewal Term, be damaged or destroyed by any cause to
such extent that the same, in the reasonable and good faith judgment
of Landlord, the Base Building Work and Tenant's improvements cannot
be reasonably expected to be restored to substantially the same
condition as prior to such damage or destruction within ninety (90)
days (or such shorter period to the date of expiration of the Lease
Term or Renewal Term), from the time that such repair or restoration
work would be commenced, then Landlord or Tenant shall have the right
to terminate this Lease by notice to the other given within thirty
(30) days after the occurrence of such damage or destruction
provided, however, that Tenant may prevent Landlord from terminating
this Lease during the last year of the Lease Term (or render any such
termination notice by Landlord of no effect) if within thirty (30)
days following such damage or destruction, Tenant elects to extend
the Term hereof pursuant to the provisions of Exhibit "G" attached
hereto, if it has the right to do so.
(f) In the event this Lease is terminated by Landlord
pursuant to the provisions of this Paragraph 19, and thereafter
Landlord restores the Base Building Work substantially to its former
condition, size and configuration within the period which is three-
fourths (3/4) or less than the estimated time to complete the
restoration set forth in the Completion Estimate (but in all events
at least three (3) months earlier than the date set forth in the
Completion Estimate), and provided that either (i) the amount of the
insurance proceeds received by Landlord on account of the damage or
destruction was at least equal to the cost of such restoration and
such proceeds are available to Landlord or (ii) Tenant has paid to
Landlord or pays to Landlord, on demand, the amount by which such
cost of such restoration exceeds such net proceeds available to
Landlord, Landlord shall, at the time after such termination, up to
the date thirty (30) days after completion of such restoration, offer
(it being understood that such offer can be made at any time during
such period whether or not such restoration has been completed) the
Premises to Tenant for lease upon the same terms and conditions
(except as provided below in this sentence) in effect under this
Lease immediately prior to the date of termination of this Lease, for
a term equal to the balance of the Lease Term (including any
available Renewal Option) which would have been remaining if this
Lease had not been terminated and at the Base Rental that would have
been applicable had this Lease not been terminated. If Tenant does
not accept said offer, in writing, within twenty (20) days after it
is made or fails to execute and deliver to Landlord the new Lease
prepared by Landlord, such Lease to be prepared in accordance with
the foregoing provisions, within twenty (20) days after delivery of
such Lease by Landlord, then Landlord shall have no further
obligations under this Section 19(f). If a new Lease is entered into
pursuant to this Section 19(f), then the Rent Commencement Date of
the Lease Term of such new Lease shall be the date upon which the
Premises are substantially completed with leasehold improvements
similar to those constructed by Tenant pursuant to Exhibit "D" of
this Lease, but in no event more than seventy-five (75) days after
delivery of the Premises to Tenant.
(g) Notwithstanding any inference to the contrary in this
Paragraph 19, if one Building comprising the Premises is damaged by
fire or other casualty which would permit either Landlord or Tenant
to terminate this Lease pursuant to the foregoing provisions (the
"Damaged Building"), but the other Building comprising the Premises
is not so damaged, either party, as applicable, shall be entitled to
elect to terminate this Lease only as to the Damaged Building. In
the event that this Lease is terminated only as to one Building
comprising the Premises, Tenant shall not be entitled to occupy any
portion of the Parking Area or the Property associated with such
Building, which Parking Area and Property associated with each
Building is approximately shown on Exhibit "R" attached hereto and
the Storage Corridor shall not extend more than ninety (90) feet from
the exterior of the Building that Tenant continues to lease
hereunder, and Tenant shall promptly remove all improvements
installed by Tenant on such Parking Area or Property associated with
the Damaged Building, including without limitation, the fence located
on such property. Subject to Landlord's approval of the location of
such fence, which approval shall not be unreasonably withheld, Tenant
shall promptly relocate such fence to encompass only the Property
associated with the non-damaged Building. Immediately after such
termination, Landlord and Tenant shall enter into an amendment of
this Lease reducing the square footage of the Premises,
proportionately reducing Base Rental and Tenant's Pro Rata Share and
incorporating such other amendments as are necessary to reflect the
reduction of the Premises. In the event the Storage Corridor or
Tenant's equipment located therein is damaged or following the
termination of this Lease with respect to only one Building, Tenant
shall have the right to install the equipment described in Paragraph
9 of Exhibit "D" attached hereto in other locations on the Property
which is not associated with the Damaged Building, subject to and in
accordance with the terms and conditions set forth in Paragraph 9 of
Exhibit "D".
. 20. Damages from Certain Causes. Unless caused by the gross
negligence or willful misconduct of Landlord or any Landlord Party, Landlord
shall not be liable to Tenant for any injury to person or damage to property
sustained by Tenant or any person claiming through Tenant resulting from any
accident or occurrence in the Premises or any other portion of the Project
caused by the Premises or any other portion of the Building becoming out of
repair or by defect in or failure of equipment, pipes, or wiring, or by
broken glass, or by the backing up of drains, or by gas, water, steam,
electricity, or oil leaking, escaping or flowing into the Premises, EVEN IF
THE SAME IS CAUSED BY LANDLORD'S NEGLIGENCE OR THE NEGLIGENCE OF ANY
LANDLORD PARTY, nor shall Landlord be liable to Tenant for any loss or
damage that may be occasioned by or through the acts or omissions of other
tenants of the Building or of any other persons whomsoever, including, but
not limited to riot, strike, insurrection, war, court order, requisition,
order of any governmental body or authority, acts of God, fire or theft.
21. Condemnation.
(a) If more than 50% of the Premises is taken for any public
or quasi-public use by right of eminent domain or private purchase in
lieu thereof (a "Taking"), and the Taking prevents or materially
interferes with Tenant's intended use of the Premises, either party
may terminate this Lease by delivering to the other written notice
thereof within thirty (30) days after the Taking, in which case rent
shall be abated during the unexpired portion of the Term, effective
on the date of such Taking. If (a) less than 50% of the Premises are
subject to a Taking or (b) more than 50% of the Premises are subject
to a Taking, but the Taking does not prevent or materially interfere
with Tenant's intended use of the remainder of the Premises, then
neither party may terminate this Lease, but the rent payable during
the unexpired portion of the Term shall be reduced to such extent as
may be fair and reasonable under the circumstances. Except as
provided herein, all compensation awarded for any Taking shall be the
property of Landlord and Tenant assigns any interest it may have in
any such award to Landlord.
(b) Notwithstanding the foregoing, Tenant does not assign to
Landlord and Tenant hereby retains, and Landlord grants to Tenant,
all right, title and interest in and to any and all amounts awarded
or paid by reason of appropriation, condemnation or taking of
Tenant's personal property and Trade Fixtures (but not other
fixtures), which Tenant is entitled by the provisions of this Lease
to remove from the Premises upon the termination of this Lease.
Provided that Landlord reasonably agrees with Tenant's valuation of
Tenant's leasehold improvements, Landlord shall submit Tenant's
valuation of Tenant's improvements in connection with any
condemnation proceeding and keep Tenant informed with respect to any
proceedings relative to any such awards (but Tenant shall not appear
in any proceeding affecting Landlord's award), and notwithstanding
the provisions of this Paragraph 21, Tenant may receive from such
compensation awarded for any Taking, such portion thereof as
represents the value of those leasehold improvements taken which were
initially made by Tenant as part of its initial tenant improvements
of the Premises (but as to those leasehold improvements which were
paid for by Landlord, only that part of the value thereof represented
in the award, which is proportionate to the proportion of the cost
thereof contributed by Tenant) appearing on the books of Tenant named
herein maintained in accordance with generally accepted accounting
principles and applying accelerated depreciation and cost recovery to
the maximum extent available; and if at the time of such taking the
Tenant named herein is not the holder of Tenant's interest, it shall
be deemed that the then tenant originally carried said leasehold
improvements at the same book value (less all depreciation and cost
recovery) as it appeared on the books of the Tenant named herein at
the time of acquisition of Tenant's interest and continue to amortize
same as the Tenant named herein would have done if it were still the
holder of Tenant's interest (and had continued the same depreciation
and cost recovery methods) of the expenditures by Tenant for such
initial leasehold improvements so taken. In the event Landlord does
not reasonably agree with Tenant's valuation of Tenant's leasehold
improvements, Landlord and Tenant shall negotiate in good faith to
reach an mutually acceptable valuation of such improvements for
purposes of any condemnation award. Notwithstanding any other
provision of this Paragraph 21, no award to Tenant shall be allowed
(and Tenant shall not share in any award) to the extent that the same
would reduce any award that Landlord would have received if such
leasehold improvements had not been made by Tenant.
(c) If any taking results in the loss of the Building's parking
spaces by more than twenty-five percent (25%) of the number of
parking spaces existing on the Phase V Rent Commencement Date, Tenant
shall have the right to terminate this Lease by providing written
notice to Landlord of Tenant's election to terminate within fifteen
(15) business days after the taking. Tenant's failure to terminate
this Lease in the manner and within the time period specified in the
immediately preceding sentence shall be deemed to be an irrevocable
waiver of that termination right. Notwithstanding the foregoing,
Tenant shall not be entitled to terminate this Lease if, within
fifteen (15) business days after the taking, the Landlord provides
parking spaces at the ratio of three (3) parking spaces per 1,000
square feet of the Premises within a reasonable distance from the
Building. If less than the entire Premises is taken, then Landlord
shall do such work as may be required to put what may remain of the
Building into the same condition as immediately prior to such taking
(excluding any work in connection with any improvements installed by
or on behalf of Tenant), insofar as possible, and rent shall be
abated until Landlord substantially completes such restoration work,
and thereafter Base Rent shall be reduced in the proportion that the
floor area of the portion of the Premises so taken bears the total
floor area of the Premises prior to such taking.
22. Hazardous Substances. Tenant hereby represents and warrants to
Landlord the following:
(a) No toxic or hazardous substances or wastes, pollutants or
contaminants (including, without limitation, asbestos, urea
formaldehyde, the group of organic compounds known as polychlorinated
biphenyls, petroleum products including gasoline, fuel oil, crude oil
and various constituents of such products, radon, and any hazardous
substance as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. 9601-9657, as
amended ("CERCLA") (collectively, "Environmental Pollutants") other
than customary office supplies, cleaning supplies and fuel supplies
for Tenant's emergency generators stored and handled within the
Premises or on the Property in accordance with all applicable laws,
will be generated, treated, stored, released or disposed of, or
otherwise placed, deposited in or located on the Project, and no
activity shall be taken on the Project, by Tenant or any Tenant Party
that would cause or contribute to (i) the Project or any part thereof
to become a generation, treatment, storage or disposal facility
within the meaning of or otherwise bring the Premised within the
ambit of the Resource Conservation and Recovery Act of 1976 ("RCRA"),
42 U.S.C. 5901 et. seq., or any similar state law or local ordinance,
(ii) a release or threatened release of toxic or hazardous wastes or
substances, pollutants or contaminants, from the Project or any part
thereof within the meaning of, or otherwise result in liability in
connection with the Premises within the ambit of CERCLA, or any
similar state law or local ordinance, or (iii) the discharge of
pollutants or effluents into any water source or system, the dredging
or filling of any waters, or the discharge into the air of any
emissions, that would require a permit under the Federal Water
Pollution Control Act, 33 U.S.C. 1251 et. seq., or the Clean Air Act,
42 U.S.C. 7401 et. seq. or any similar state law or local ordinance.
(b) Tenant agrees to indemnify and hold Landlord Indemnitees
(as defined in Paragraph 17 herein) harmless from and against and to
reimburse Landlord Indemnitees with respect to, any and all claims,
demands, causes of action, loss, damage, liabilities, costs and
expenses (including reasonable attorneys' fees and court costs) of
any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Landlord at any time and
from time to time by reason of or arising out of the breach of any
representation or warranty contained in Paragraph 22. (a) above.
(c) Tenant shall immediately notify Landlord in writing of
any release or threatened release of toxic or hazardous wastes or
substances, pollutants or contaminants of which Tenant has knowledge
whether or not the release is in quantities that would require under
law the reporting of such release to a governmental or regulatory
agency.
(d) Tenant shall also immediately notify Landlord in writing
of, and shall contemporaneously provide Landlord with a copy of:
Any written notice of release of hazardous wastes
or substances, pollutants or contaminants on the
Project that is provided by Tenant or any subtenant
or other occupant of the Premises to a governmental
or regulatory agency;
Any notice of a violation, or a potential or
alleged violation, of any Environmental Law that is
received by Tenant or any subtenant or other
occupant of the Premises from any governmental or
regulatory agency;
Any inquiry, investigation, enforcement, cleanup,
removal, or other action that is instituted or
threatened by a governmental or regulatory agency
against Tenant or any subtenant or other occupant
of the Premises and that relates to the release or
discharge of hazardous wastes or substances,
pollutants or contaminants on or from the Project;
Any claim that is instituted or threatened by any
third party against Tenant or any subtenant or
other occupant of the premises and that relates to
any release or discharge of hazardous wastes or
substances, pollutants or contaminants on or from
the Premises; and
Any notice of the loss of any environmental
operating permit by Tenant or any subtenant or
other occupant of the Premises.
Failure to comply with this paragraph shall constitute a material
default under the Lease. Notwithstanding the terms of this Lease to the
contrary, the terms of this paragraph shall survive the expiration or
earlier termination of this Lease.
(e) Landlord has provided Tenant with a copy of that certain
Environmental Site Assessment Cameron Road at Rutherford Lane,
Austin, Texas HBC Report No. 61-1928.96 dated June 13, 1996, prepared
by HBC Engineering, Inc., as updated by that certain Environmental
Site Assessment dated May 5, 1998 prepared by HBC Engineering, Inc.
(collectively, the "Environmental Report"), which is the only report
in Landlord's possession relating to the Property. Landlord makes no
representations or warranties whatsoever (express or implied) to
Tenant regarding (x) the Environmental Report (including, without
limitation, the contents, accuracy and/or scope thereof) or (y) the
presence or absence of hazardous or toxic materials or wastes in, at,
or under the Premises or the Project. Notwithstanding any other
provision of this Lease, Landlord represents that, to its current
actual knowledge, there are no hazardous wastes or substances,
including but not limited to, any solvents, metals, petroleum, PCBs
or asbestos in, on, under or about the Project or the Premises. For
purposes of this Paragraph 22(f), the current actual knowledge of
Landlord shall be limited to the matters disclosed in the
Environmental Report. Landlord shall indemnify, protect, hold
harmless and defend Tenant from and against any liabilities, claims,
demands, costs, expenses (including without limitation attorneys fees
and disbursements) and damages arising in connection with hazardous
wastes or substances disclosed in the Environmental Report to be
existing in, or about the Premises and the Project.
23. Americans with Disabilities Act. Tenant agrees to comply with
all requirements of the Americans with Disabilities Act applicable to the
Premises and such other current acts or other subsequent acts, (whether
federal or state) addressing like issues as are enacted or amended. Tenant
agrees to indemnify and hold Landlord harmless from any and all expenses,
liabilities, costs or damages suffered by Landlord as a result of additional
obligations which may be imposed on the Building or the Project under of
such acts by virtue of Tenant's operations and/or occupancy, EVEN IF THE
SAME RESULT FROM THE ALLEGED NEGLIGENCE OF LANDLORD, provided that in the
event Landlord is found to be negligent, such indemnity shall not apply to
any expenses, cost of damages resulting from the actual negligence of
Landlord. Tenant acknowledges that it will be wholly responsible for any
provision of the Lease which could arguably be construed as authorizing a
violation of either Act. Any such provision shall be interpreted in a
manner which permits compliance with such Act and is hereby amended to
permit such compliance.
24. Events of Default/Remedies.
(a) The following events shall be deemed to be events of
default under this Lease:
(i) With respect to the first two (2) failures within
any twelve (12) month period during the first two (2) years of
the Lease Term of Tenant to pay to Landlord when due any Base
Rental, Operating Expense Rental or any other rent payable by
Tenant to Landlord under this Lease, the continuance of such
failure for five (5) business days after receipt of notice from
Landlord that such amount was not paid when due. With respect
to the first two (2) failures within the remaining Lease Term
(after the first two (2) years of the Lease Term) of Tenant to
pay to Landlord when due any Base Rental, Operating Expense
Rental or other rent payable by Tenant to Landlord under this
Lease, the continuance of such failure for five (5) business
days after receipt of notice from Landlord that such amount was
not paid when due. With respect to any other payment of Base
Rental, Operating Expense Rental or other rent payable by
Tenant to Landlord under this Lease, the failure of Tenant to
pay Landlord such amount when due (collectively, hereinafter
sometimes referred to as a "Monetary Default").
(ii) Any failure by Tenant (other than a Monetary
Default) to comply with any term, provision or covenant of this
Lease, which failure is not cured within ten (10) days after
delivery to Tenant of notice of the occurrence of such failure;
provided that if such failure cannot reasonably be cured within
ten (10) days, Tenant shall not be in default hereunder so long
as Tenant commences curative action within such ten (10) day
period and thereafter diligently and continuously pursues the
curative action and fully and completely cures the failure
within forty-five (45) days after such written notice to
Tenant.
(iii) Tenant shall become insolvent, or shall make a
transfer in fraud of creditors, or shall commit an act of
bankruptcy or shall make an assignment for the benefit of
creditors, or Tenant shall admit in writing its inability to
pay its debts as they become due.
(iv) Tenant shall file a petition under any section or
chapter of the United States Bankruptcy Code, as amended,
pertaining to bankruptcy, or under any similar law or statute
of the United States or any State thereof, or Tenant or shall
be adjudged bankrupt or insolvent in proceedings filed against
Tenant thereunder; or a petition or answer proposing the
adjudication of Tenant as a bankrupt or its reorganization
under any present or future federal or state bankruptcy or
similar law shall be filed in any court and such petition or
answer shall not be discharged or denied within sixty (60) days
after the filing thereof.
(v) A receiver or trustee shall be appointed for all or
substantially all of the assets of Tenant or of the Premises or
of any of Tenant's property located thereon in any proceeding
brought by Tenant, or any such receiver or trustee shall be
appointed in any proceeding brought against Tenant and shall
not be discharged within sixty (60) days after such appointment
or Tenant shall consent to or acquiesce in such appointment.
(vi) The leasehold estate hereunder shall be taken on
execution or other process of law in any action against Tenant.
(vii) Tenant shall abandon or vacate any substantial
portion of the Premises for a period in excess of two (2) years
without the prior written permission of Landlord. If Tenant or
any other person acting on Tenant's behalf has removed, is
removing or has made preparations to remove (other than in the
normal course of business) goods, equipment, fixtures or other
property from the Premises in amounts substantial enough to
indicate a probable intent to abandon or vacate the Premises
without the prior written permission of Landlord, Tenant's
abandonment of the Premises shall be deemed conclusively
established for all purposes.
(viii) Tenant shall fail to take possession of and occupy
any portion of the Premises within thirty (30) days following
substantial completion of the Tenant's improvements in such
portion of the Premises.
(ix) The liquidation, termination, dissolution, or
forfeiture of right to do business of Tenant.
(b) Upon the occurrence of any event or events of default
under this Lease, whether enumerated in this Paragraph or not,
Landlord shall have the option to pursue any one or more of the
following remedies without any notice (except as expressly prescribed
herein) or demand for possession whatsoever (and without limiting the
generality of the foregoing, Tenant hereby specifically waives notice
and demand for payment of rent or other obligations due and waives
any and all other notices or demand requirements imposed by
applicable law):
(i) Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord. If Tenant
fails to surrender the Premises upon termination of the Lease
hereunder, Landlord may without prejudice to any other remedy
which it may have for possession or arrearages in rent, enter
upon and take possession of the Premises and expel or remove
Tenant and any other person who may be occupying said Premises,
or any part thereof, by force, if necessary, without being
liable for prosecution or any claim of damages therefor, and
Tenant hereby agrees to pay to Landlord on demand the amount of
all loss and damage which Landlord may suffer by reason of such
termination, whether through inability to relet the Premises on
satisfactory terms or otherwise, specifically including but not
limited to all Costs of Reletting (hereinafter defined) and any
deficiency that may arise by reason of any reletting. If such
termination is caused by the failure to pay rent and/or the
abandonment of any substantial portion of the Premises,
Landlord may elect, by sending written notice thereof to
Tenant, to receive liquidated damages in an amount equal to the
sum of the Base Rental, Operating Expense Rental and other rent
payable hereunder for the month during which the Lease is
terminated times the lesser of (A) twelve (12) or (B) the
number of months remaining in the Lease Term as of the date of
such failure to pay rent and/or abandonment of any substantial
portion of the Premises. Such liquidated damages shall be in
lieu of the payment of loss and damage Landlord may suffer by
reason of such termination as provided in the preceding
sentence but shall not be in lieu of or reduce in any way any
amount (including accrued rent) or damages due to breach of
covenant (whether or not liquidated) payable by Tenant to
Landlord which is accrued and outstanding at the time of the
termination of the Lease.
(ii) Enter upon and take possession of the Premises and
expel or remove Tenant or any other person who may be occupying
said Premises, or any part thereof, by force, if necessary,
without having any civil or criminal liability therefor and
without terminating this Lease. Landlord may (but shall be
under no obligation to) relet the Premises or any part thereof
for the account of Tenant, in the name of Tenant or Landlord or
otherwise, without notice to Tenant for such term or terms
which may be greater or less than the period which would
otherwise have constituted the balance of the Lease Term and on
such conditions (which may include concessions or free rent)
and for such uses as Landlord in its reasonable discretion may
determine, and Landlord may collect and receive any rents
payable by reason of such reletting. Tenant agrees to pay
Landlord on demand all Costs of Reletting and any deficiency
that may arise by reason of such reletting. Landlord shall not
be responsible or liable for any failure to relet the Premises
or any part thereof or for any failure to collect any rent due
upon any such reletting. No such re-entry or taking of
possession of the Premises by Landlord shall be construed as an
election on Landlord's part to terminate this Lease unless a
written notice of such termination is given to Tenant. If
Landlord elects to terminate Tenant's right to possession of
the Premises without terminating this Lease, Tenant shall
continue to be liable for all rent and Landlord shall use
reasonable efforts to relet the Premises or any part thereof to
a substitute tenant or tenants for a period of time equal to or
lesser or greater than the remainder of the Term on whatever
terms and conditions Landlord, in Landlord's good faith and
reasonable discretion, deems advisable. For purposes hereof,
Landlord shall be deemed to have used "reasonable efforts" to
relet if Landlord places its customary "For Lease" sign upon
the Premises and places the Premises for lease with a reputable
broker. In no event shall Landlord be obligated to lease the
Premises in priority to other space within the Project.
(iii) Enter upon the Premises by force if necessary
without having any civil or criminal liability therefor, and do
whatever Tenant is obligated to do under the terms of this
Lease and Tenant agrees to reimburse Landlord on demand for any
reasonable expense which Landlord may incur in thus affecting
compliance with Tenant's obligations under this Lease together
with interest at the Default Rate and Tenant further agrees
that Landlord shall not be liable for any damages resulting to
Tenant from such action, whether caused by the negligence of
Landlord or otherwise.
(iv) Terminate this Lease by giving Tenant written
notice thereof, in which event, Tenant shall pay to Landlord
the sum of (i) all rent accrued hereunder through the date of
termination, (ii) all Costs of Reletting, and (iii) an amount
equal to (A) the total rent that Tenant would have been
required to pay for the remainder of the Lease Term discounted
to present value minus (B) the then present fair rental value
of the Premises for such period, similarly discounted.
In order to regain possession of the Premises and to deny Tenant
access thereto, Landlord or its agent may, at the expense and
liability of the Tenant, alter or change any or all locks or other
security devices controlling access to the Premises without posting
or giving notice of any kind to Tenant and Landlord shall have no
obligation to provide Tenant a key to new locks installed in the
Premises or grant Tenant access to the Premises. Tenant shall not be
entitled to recover possession of the Premises, terminate this Lease,
or recover any actual, incidental, consequential, punitive, statutory
or other damages or award of attorneys' fees, by reason of Landlord's
alteration or change of any lock or other security device and the
resulting exclusion from the Premises of the Tenant or Tenant's
agents, servants, employees, customers, licensees, invitees or any
other persons from the Premises. Landlord may, without notice,
remove and either dispose of or store, at Tenant's expense, any
property belonging to Tenant that remains in the Premises after
Landlord has regained possession thereof.
(c) For purposes of this Lease, the term "Costs of Reletting"
shall mean all reasonable costs and expenses incurred by Landlord in
connection with the reletting of the Premises, including without
limitation the cost of cleaning, renovation, and repair of the
Premises for a new tenant or tenants, advertisement, marketing,
brokerage and legal fees, the cost of protecting or caring for the
Premises while vacant, the cost of removing and storing any property
located on the Premises, any increase in insurance premiums caused by
the vacancy of the Premises and any other out-of-pocket expenses
incurred by Landlord including tenant inducements such as the cost of
moving the new tenant or tenants and the cost of assuming any portion
of the existing lease(s) of the new tenant(s).
(d) Except as otherwise herein provided, no repossession or
re-entering on the Premises or any part thereof pursuant to
subparagraph (b) hereof or otherwise shall relieve Tenant of its
liabilities and obligations hereunder, all of which shall survive
such repossession or re-entering. Notwithstanding any such
repossession or re-entering on the Premises or any part thereof by
reason of the occurrence of an event of default, Tenant will pay to
Landlord the Base Rental, Operating Expense Rental and other rent or
other sum required to be paid by Tenant pursuant to this Lease.
(e) No right or remedy herein conferred upon or reserved to
Landlord is intended to be exclusive of any other right or remedy,
and each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder or now or
hereafter existing by agreement, applicable law or in equity. In
addition to other remedies provided in this Lease, Landlord shall be
entitled, to the extent permitted by applicable law, to injunctive
relief in case of the violation, or attempted or threatened
violation, of any of the covenants, agreements, conditions or
provisions of this Lease, or to a decree compelling performance of
any of the other covenants, agreements, conditions or provisions of
this Lease, or to any other remedy allowed to Landlord at law or in
equity. Forbearance by Landlord to enforce one or more of the
remedies herein provided upon an event of default shall not be deemed
or construed to constitute a waiver of such default.
(f) This Paragraph 24 shall be enforceable to the maximum
extent such enforcement is not prohibited by applicable law, and the
unenforceability of any portion thereof shall not thereby render
unenforceable any other portion. To the extent permitted by
applicable law, Tenant waives any statutory rights which conflict
with this Paragraph 24.
25. Tenant Remedies. Except to the extent specifically provided
herein, Tenant shall not have the right to an abatement of rent or to
terminate this Lease as a result of Landlord's default as to any covenant
or agreement contained in this Lease or as a result of the breach of any
promise or inducement in connection herewith, whether in this Lease or
elsewhere and Tenant hereby waives such remedies of abatement of rent and
termination. Tenant hereby agrees that Tenant's remedies for default
hereunder or in any way arising in connection with this Lease including any
breach of any promise or inducement or warranty, express or implied, shall
be limited to suit for direct and proximate damages provided that Tenant has
given the notices as hereinafter required. Notwithstanding anything to the
contrary contained in this Lease, the liability of Landlord to Tenant for
any default by Landlord under the terms of this Lease shall be limited to
the interest of Landlord in the Building and the Property (and the proceeds
thereof received by Landlord after entry of a judgment against Landlord in
favor of Tenant), and Tenant agrees to look solely to Landlord's interest
in the Building and the Property (and the proceeds thereof received by
Landlord after entry of a judgment against Landlord in favor of Tenant) for
the recovery of any judgment against the Landlord, it being intended that
Landlord shall not be personally liable for any judgment or deficiency.
Tenant hereby covenants that, prior to the filing of any suit for direct and
proximate damages, it shall give Landlord and all mortgagees whom Tenant has
been notified hold mortgages or deed of trust liens on the Property,
Building or Premises and given an address for ("Landlord's mortgagees")
notice and reasonable time to cure any alleged default by Landlord, not to
exceed thirty (30) days following such notice.
26. No Waiver. Failure of Landlord to declare any default
immediately upon its occurrence, or delay in taking any action in connection
with an event of default, shall not constitute a waiver of such default, nor
shall it constitute an estoppel against Landlord, but Landlord shall have
the right to declare the default at any time prior to the expiration of the
applicable statute of limitation and take such action as is lawful or
authorized under this Lease. Failure by Landlord to enforce its rights with
respect to any one default shall not constitute a waiver of its rights with
respect to any subsequent default. Receipt by Landlord of Tenant's keys to
the Premises shall not constitute an acceptance of surrender of the
Premises.
27. Event of Bankruptcy. In addition to, and in no way limiting
the other remedies set forth herein Landlord and Tenant agree that if Tenant
ever becomes the subject of a voluntary or involuntary bankruptcy,
reorganization, composition, or other similar type proceeding under the
federal bankruptcy laws, as now enacted or hereinafter amended beyond the
applicable cure period in Paragraph 24(a)(iv) for discharge or dismissal of
such proceeding, then:
(a) "Adequate protection" of Landlord's interest in the
Premises pursuant to the provisions of Section 361 and 363 (or their
successor sections) of the Bankruptcy Code, 11 U.S.C. Paragraph 101,
et seq. (such Bankruptcy Code as amended from time to time being
herein referred to as the "Bankruptcy Code"), prior to assumption
and/or assignment of the Lease by Tenant shall include, but not be
limited to all (or any part) of the following:
(i) the continued payment by Tenant of the Base Rental,
Operating Expense Rental and all other rent due and owing
hereunder and the performance of all other covenants and
obligations hereunder by Tenant;
(ii) the hiring of security guards to protect the
Premises if Tenant abandons and/or ceases operations; such
obligation of Tenant only to be effective so long as Tenant
remains in possession and control of the Premises to the
exclusion of Landlord;
(iii) the furnishing of an additional/new Security
Deposit by Tenant in the amount of three (3) times the then-
current monthly Base Rental, Operating Expense Rental and other
rent payable hereunder.
(b) "Adequate assurance of future performance" by Tenant
and/or any assignee of Tenant pursuant to Bankruptcy Code Section 365
will include (but not be limited to) payment of an additional/new
Security Deposit in the amount of three (3) times the then-current
Base Rental and Operating Expense Rental payable hereunder.
(c) Any person or entity to which this Lease is assigned
pursuant to the provisions of the Bankruptcy Code, shall be deemed
without further act or deed to have assumed all of the obligations of
Tenant arising under this Lease on and after the effective date of
such assignment. Any such assignee shall, upon demand by Landlord,
execute and deliver to Landlord an instrument confirming such
assumption of liability.
(d) Notwithstanding anything in this Lease to the contrary,
all amounts payable by Tenant to or on behalf of the Landlord under
this Lease, whether or not expressly denominated as "rent", shall
constitute "rent" for the purposes of Section 502(b)(6) of the
Bankruptcy Code.
(e) If this Lease is assigned to any person or entity
pursuant to the provisions of the Bankruptcy Code, any and all monies
or other considerations payable or otherwise to be delivered to
Landlord (including Base Rental, Operating Expense Rental and other
rent hereunder), shall be and remain the exclusive property of
Landlord and shall not constitute property of Tenant or of the
bankruptcy estate of Tenant. Any and all monies or other
considerations constituting Landlord's property under the preceding
sentence not paid or delivered to Landlord shall be held in trust by
Tenant or Tenant's bankruptcy estate for the benefit of Landlord and
shall be promptly paid to or turned over to Landlord.
(f) If Tenant assumes this Lease and proposes to assign the
same pursuant to the provisions of the Bankruptcy Code to any person
or entity who shall have made a bona fide offer to accept an
assignment of this Lease on terms acceptable to the Tenant, then
notice of such proposed offer/assignment, setting forth (i) the name
and address of such person or entity; (ii) all of the terms and
conditions of such offer, and (iii) the adequate assurance to be
provided Landlord to assure such person's or entity's future
performance under the Lease, shall be given to Landlord by Tenant no
later than twenty (20) days after receipt by Tenant, but in any event
no later than ten (10) days prior to the date that Tenant shall make
application to a court of competent jurisdiction for authority and
approval to enter into such assumption and assignment, and Landlord
shall thereupon have the prior right and option, to be exercised by
notice to Tenant given at any time prior to the effective date of
such proposed assignment, to accept an assignment of this Lease upon
the same terms and conditions and for the same consideration, if any,
as the bona fide offer made by such persons or entity, less any
brokerage commission which may be payable out of the consideration to
be paid by such person for the assignment of this Lease.
(g) To the extent permitted by law, Landlord and Tenant agree
that this Lease is a contract under which applicable law excuses
Landlord from accepting performance from (or rendering performance
to) any person or entity other than Tenant within the meaning of
Sections 365(c) and 365(e)(2) of the Bankruptcy Code.
28. Peaceful Enjoyment. Tenant shall, and may peacefully have,
hold, and enjoy the Premises, subject to the other terms hereof, provided
that Tenant pays the rent and other sums herein recited to be paid by Tenant
and performs all of Tenant's covenants and agreements herein contained,
subject to all rights to notice and the ability to cure any failure to do
so contained herein.
29. Parking. Tenant and its employees and invitees shall have the
non-exclusive right to use, in common with other tenants of the Project, any
parking areas associated with the Premises which Landlord has designated for
such use, subject to (a) such reasonable rules and regulations as Landlord
may promulgate from time to time and (b) rights of ingress and egress of
other tenants and their employees, agents and invitees. Landlord shall not
be responsible for enforcing Tenant's parking rights against third parties.
If Exhibit "F" "Parking Agreement" is attached hereto, the rights of Tenant
and its employees and invitees to use the parking areas within the Project
are subject to the provisions of such exhibit. Notwithstanding the
foregoing, so long as the Premises include all of the rentable area of the
buildings located on the Property, the foregoing parking rights shall be
exclusive to Tenant.
30. Removal of Property at Expiration of Lease; Holding Over.
(a) Except as set forth in Paragraph 9(e), any and all
alterations, additions, improvements, including all alterations and
improvements installed pursuant to Exhibit "D" attached hereto,
which constitute fixtures or which constitute Building systems,
including all HVAC systems, become the property of Landlord upon
termination of this Lease; provided that Tenant may be required to
relocate the foregoing pursuant to Tenant's obligations under
Exhibit "M-2" attached hereto. Tenant shall retain title to any and
all Trade Fixtures, attached furniture, as well as those improvements
listed on Exhibit "M-1" attached hereto and incorporated herein by
this reference; provided that notwithstanding the foregoing, at the
expiration or earlier termination of this Lease, Tenant surrender the
Premises in the condition described on Exhibit "M-2" attached hereto.
Within ten (10) days after the expiration or earlier termination of
this Lease, unless otherwise requested by Landlord, Tenant shall, at
its sole cost and expense, remove all installations and improvements
made on the Property outside of the Premises, including without
limitation, all generators, the Storage Corridor, all exterior
lighting, cameras, fuel tanks, satellite dishes and equipment and
exterior fences, and deliver the Property in the condition described
in Exhibit "M-2" attached hereto; provided that Tenant shall not
remove any of the installations described on Exhibit "M-2" attached
hereto. For purposes of this Paragraph 30, all of the foregoing
improvements required to be removed by Tenant shall be deemed to
constitute Required Removables (hereinafter defined). Tenant, at its
sole cost and expense, shall repair in a good and workmanlike manner
any and all damage done to the Project due to the removal,
detachment, attempted removal or attempted detachment of any of
Tenant's improvements from the Property and all such repairs shall be
completed by the earlier of (i) thirty (30) days after such removal,
detachment, attempted removal or attempted detachment of the
applicable improvements from the Property or (ii) the expiration or
earlier termination of this Lease. Tenant shall not remove, detach
or attempt to remove or detach any improvements from the Property
except in accordance with the provisions of this Paragraph 30(a). In
the event Tenant fails to remove said articles prior to or upon the
expiration or earlier termination, they shall be deemed abandoned and
may be disposed of by Landlord, at Tenant's sole cost and expense, in
any way Landlord sees fit. In addition, all other personal property
which shall remain in the Premises for more than five (5) days
following either the termination of this Lease or the entry of the
Premises by Landlord following Tenant's default hereunder shall, at
Landlord's option, become property of Landlord. Landlord may require
Tenant to remove such fixtures and improvements, alterations,
additions owned by Landlord, including but not limited to telephone,
data, and/or network cabling, installed on or located in the Premises
or on the Project (whether or not within the Premises) as are
designated by Landlord (the "Required Removables") at Tenant's sole
cost within ten (10) days after the expiration or earlier termination
of this Lease or Tenant's right to possession of the Premises. In
the event that Landlord so elects, and Tenant fails to timely remove
the Required Removables, Landlord may remove the Required Removables
at Tenant's cost, and Tenant shall pay Landlord on demand, or
Landlord may deduct from Tenant's Security Deposit, all costs
incurred in removing, storing and/or disposing of the Required
Removables. Landlord, at is sole option, shall inspect any and all
alterations and repairs made by or on behalf of the Tenant. All
costs associated with the inspection and testing of such alterations
or repairs shall be reimbursed to Landlord by Tenant within ten (10)
days of such demand. Notwithstanding the terms of this lease to the
contrary, the terms of this paragraph shall survive the expiration or
earlier termination of this Lease.
(b) In the event of holding over by Tenant after expiration
or other termination of this Lease or in the event Tenant continues
to occupy the Premises after the termination of Tenant's right of
possession pursuant to Paragraph 24(b) hereof, Tenant shall become a
Tenant at sufferance and, throughout the entire holdover period,
Tenant shall pay rent on a per diem basis equal to one hundred twenty
percent (120%) of the sum of the Base Rental and Operating Expense
Rental which would otherwise have been applicable had the term of
this Lease continued through the period of such holding over by
Tenant for the first month of any holdover and one hundred fifty
percent (150%) of the same thereafter. No holding over by Tenant or
payments of money by Tenant to Landlord after the expiration of the
term of this Lease shall be construed to extend the term of this
Lease or prevent Landlord from recovery of immediate possession of
the Premises by summary proceedings or otherwise unless Landlord has
sent written notice to Tenant that Landlord has elected to extend the
term of the Lease. Tenant shall be liable to Landlord for all
damage, including any consequential damage, which Landlord may suffer
by reason of any holding over by Tenant, and Tenant shall indemnify
Landlord against any and all claims made by any other tenant or
prospective tenant against Landlord for delay by Landlord in
delivering possession of the Premises to such other tenant or
prospective tenant.
31. Subordination to Mortgage.
(a) Tenant accepts this Lease subject and subordinate to any
mortgage, deed of trust or other lien presently existing or hereafter
arising upon the Premises, or upon the Building and/or the Property
and to any renewals, modifications, refinancings and extensions
thereof, but Tenant agrees that any such mortgagee shall have the
right at any time to subordinate such mortgage, deed of trust or
other lien to this Lease on such terms and subject to such conditions
as such mortgagee may deem appropriate in its discretion. This
clause shall be self-operative and no further instrument of
subordination shall be required. However, Landlord is hereby
irrevocably vested with full power and authority to subordinate this
Lease to any mortgage, deed of trust or other lien now existing or
hereafter placed upon the Premises, or the Building and/or the
Property and Tenant agrees to execute within fourteen (14) days of
its receipt of the same such further instruments subordinating this
Lease or attorning to the holder of any such liens as Landlord may
reasonably request. In the event that Tenant should fail to timely
execute any subordination or other agreement required by this
Paragraph, Tenant hereby irrevocably constitutes Landlord as its
attorney-in-fact to execute such instrument in Tenant's name, place
and stead, it being agreed that such power is one coupled with an
interest in Landlord and is accordingly irrevocable.
(b) Within five (5) business days after the full execution of
this Lease, Landlord shall deliver to Tenant a Subordination, Non-
Disturbance and Attornment Agreement executed by the current holder
of a mortgage on the Property in the form of Exhibit "N" attached
hereto (the "Lender Non-Disturbance Agreement"). Landlord shall
also execute the Lender Non-Disturbance Agreement in the form of
Exhibit "N". In the event Landlord fails to deliver to Tenant the
foregoing described Subordination, Non-Disturbance and Attornment
Agreement within such five (5) business day period, Tenant shall have
the right to terminate this Lease by providing written notice to
Landlord of Tenant's election to terminate at any time after the
expiration of such five (5) business day period and prior to
Landlord's delivery of such Subordination, Non-Disturbance and
Attornment Agreement. As of the date of this Lease, Mellon Bank,
N.A. is the only holder of a mortgage or deed of trust on the
Property and there are no ground leases affecting the Property. To
the best of Landlord's knowledge, there are no restrictive covenants
applicable to the Property other than those listed on Exhibit "Q"
hereto. Notwithstanding the foregoing, Tenant shall not have any
obligation to pay the Security Deposit or any payment of Base Rental
hereunder until Tenant has received the Lender Non-Disturbance
Agreement which has been executed by the current holder of a mortgage
on the Property. The Security Deposit and any pre-payments of Base
Rental due upon execution of this Lease shall be due within three (3)
business days after Tenant's receipt of the executed Lender Non-
Disturbance Agreement.
32. Estoppel Certificate. Tenant agrees periodically to furnish
within ten (10) business days after so requested by Landlord, ground lessor
or the holder of any deed of trust, mortgage or security agreement covering
the Building, the Land, or any interest of Landlord therein, a certificate
signed by a Tenant certifying (a) that this Lease is in full force and
effect and unmodified (or if there have been modifications, that the same
is in full force and effect as modified and stating the modifications), (b)
as to the Commencement Date and the date through which Base Rental and
estimated Operating Expense Rental have been paid, (c) that Tenant has
accepted possession of the Premises and that any improvements required by
the terms of this Lease to be made by Landlord have been completed to the
satisfaction of Tenant, (d) that except as stated in the certificate no rent
has been paid more than thirty (30) days in advance of its due date, (e)
that the address for notices to be sent to Tenant is as set forth in this
Lease (or has been changed by notice duly given and is as set forth in the
certificate), (f) that except as stated in the certificate, Tenant, as of
the date of such certificate, has no charge, lien, or claim of offset
against rent due or to become due, (g) that except as stated in the
certificate, Landlord is not then in default under this Lease, (h) as to the
amount of Rentable Area then occupied by Tenant, (1) that there are no
renewal or extension options, purchase options, rights of first refusal or
the like in favor of Tenant except as set forth in this Lease, (j) the
amount and nature of accounts payable to Landlord under terms of this Lease
and (k) as to such other matters as may be reasonably requested by Landlord
or ground lessor or the holder of any such deed of trust, mortgage or
security agreement. Any such certificate may be relied upon by any ground
lessor, prospective purchaser, secured party, mortgagee or any beneficiary
under any mortgage, deed of trust on the Building or the Land or any part
thereof or interest of Landlord therein.
33. Attorney's Fees. In the event either party defaults in the
performance of any of the terms of this Lease and the other party employs
an attorney in connection therewith, the defaulting party agrees to pay the
prevailing party's reasonable attorneys' fees.
34. Notice. Any notice in this Lease provided for must, unless
otherwise expressly provided herein, be in writing, and may, unless
otherwise in this Lease expressly provided, be given or be served by
depositing the same in the United States mail, postage paid and certified
with return receipt requested, or by prepaid telegram, when appropriate,
addressed to the party to be notified at the address stated in this Lease
or such other address notice of which has been given to the other party or
by delivering the same in person to such party or an officer or partner of
such party. Notice deposited in the mail in the manner hereinabove
described shall be effective upon the recipient's receipt or refusal to
accept such notice. Neither party hereto shall be required to send any
notice, request, demand, consent, approval, or other communication required
or permitted under this lease to more than two (2) other addresses in
addition to the premises.
35. Severability. If any term or provision of this Lease, or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application
of such term or provision to persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected thereby,
and each term and provision of this Lease shall be valid and enforced to the
fullest extent permitted by law.
36. Recordation. Tenant agrees not to record this Lease. The
parties agree to record a Memorandum of Lease substantially in the form of
Exhibit "O" promptly following execution of this Lease.
37. Governing Law. This Lease and the rights and obligations of
the parties hereto shall be interpreted, construed, and enforced in
accordance with the laws of the State.
38. Force Majeure. Whenever a period of time is herein prescribed
for the taking of any action by Landlord or Tenant, such party shall not be
liable or responsible for, and there shall be excluded from the computation
of such period of time, any delays due to strikes, riots, acts of God,
shortages of labor or materials, war, governmental laws, regulations or
restrictions, or any other cause whatsoever beyond the control of such
party; provided that this paragraph shall not apply to the payment of rent
or other monies by Landlord or Tenant, nor shall the provisions of this
paragraph postpone the date that rent is payable pursuant to this Lease.
39. Time of Performance. Except as expressly otherwise herein
provided, with respect to all required acts of Tenant, time is of the
essence of this Lease.
40. Transfers by Landlord. Landlord shall have the right to
transfer and assign, in whole or in part, all of its rights and obligations
hereunder and in the Building and Project referred to herein, and in such
event and upon such transfer Landlord shall be released from all
obligations on the part of Landlord accruing under this Lease from and after
the date of the transfer (but shall not be relieved of any obligations
occurring during its period of ownership of the Building); provided that (i)
any funds held by the transferor in which Tenant has an interest (including,
without limitation, the Security Deposit) shall be turned over by credit to
the purchase price or otherwise and (ii) any such transferee shall assume,
in writing, all non-accrued obligations of Landlord under this Lease.
Tenant agrees to look solely to such successor in interest of Landlord for
the performance of such obligations. Any and all covenants of Landlord
shall be binding upon Landlord and its successors only with respect to
breaches occurring during its or their respective periods of ownership of
the Landlord's interest hereunder.
41. Commissions. Landlord and Tenant hereby indemnify and hold
each other harmless against any loss, claim, expense or liability with
respect to any commissions or brokerage fees claimed on account of the
execution and/or renewal of this Lease due to any action of the indemnifying
party except with respect to any commissions or brokerage fees due to The
Commercial Property Services Company ("Tenant's Broker") and Transwestern
Commercial Services ("Landlord's Broker"). Landlord has agreed to pay the
fees of Tenant's Broker and Landlord's Broker pursuant to the terms of
separate written agreements with such brokers.
42. Joint and Several Liability. If there is more than one Tenant,
or if the Tenant as such is comprised of more than one person or entity, the
obligations hereunder imposed upon Tenant shall be joint and several
obligations of all such parties.
43. Authority. In the event Tenant is a corporation (including any
form of professional association), partnership (general or limited), or
other form of organization other than an individual, then each individual
executing or attesting this Lease on behalf of Tenant hereby covenants,
warrants and represents: (i) that such individual is duly authorized to
execute or attest and deliver this Lease on behalf of Tenant in accordance
with the organizational documents of Tenant; (ii) that this Lease is binding
upon Tenant; (iii) that Tenant is duly organized and legally existing in the
state of its organization, and is qualified to do business in the State;
(iv) that upon request, Tenant will provide Landlord with true and correct
copies of all organizational documents of Tenant, and any amendments
thereto; and (v) that the execution and delivery of this Lease by Tenant
will not result in any breach of, or constitute a default under any
mortgage, deed of trust, lease, loan, credit agreement, partnership
agreement or other contract or instrument to which Tenant is a party or by
which Tenant may be bound. If Tenant is a corporation, Tenant will, prior
to the Commencement Date, deliver to Landlord a Secretary's Certificate
executed by the Secretary of the Tenant certifying the signature of the
person executing this Lease on behalf of Tenant and further certifying that
such person is an officer of Tenant and authorized to execute this Lease.
44. Financial Condition of Tenant. Tenant acknowledges that the
financial capability of Tenant to perform its obligations hereunder is
material to Landlord and that Landlord would not enter into this Lease but
for its belief, based on its review of Tenant's financial statements, that
Tenant is capable of performing such financial obligations. Tenant hereby
represents, warrants and certifies to Landlord that its financial statements
are true and correct in all material respects.
45. Effect of Delivery of This Lease. Landlord has delivered a
copy of this Lease to Tenant for Tenant's review only, and the delivery
hereof does not constitute an offer to Tenant or option. This Lease shall
not be effective until an original of this Lease executed by both Landlord
and Tenant, and this Lease has been approved by Landlord's mortgagee.
46. Entire Agreement. This Lease Agreement, including the
following Exhibits:
Exhibit "A" - Property Description
Exhibit "B" - Outline and Location of Premises
Exhibit "C" - Operating Expense Rental
Exhibit "D" - Work Letter
Exhibit "E" - Rules and Regulations
Exhibit "F" - Parking Agreement
Exhibit "G" - Renewal Option
Exhibit "H" - Form of Letter of Credit
Exhibit "I" - Purchase Option
Exhibit "J" - Right of Opportunity
Exhibit "K" - Base Building Work
Exhibit "L" - Intentionally Omitted
Exhibit "M-1" - Property Owned by Tenant
Exhibit "M-2" - Improvements to Remain in the Premises or on the
Property
Exhibit "N" - Form of Subordination, Non-Disturbance
Exhibit "O" - Form of Memorandum of Lease
and Attornment Agreement
Exhibit "P" - Tenant's Form of Confidentiality Agreement
Exhibit "Q" - List of Encumbrances Applicable to the Property
Exhibit "R" - Removal Area
constitute the entire agreement between the parties hereto with respect to
the subject matter of this Lease. Tenant expressly acknowledges and agrees
that Landlord has not made and is not making, and Tenant, in executing and
delivering this Lease, is not relying upon, any warranties, representations,
promises or statements, except to the extent that the same are expressly set
forth in this Lease. All understandings and agreements heretofore had
between the parties are merged in this Lease which alone fully and
completely expresses the agreement of the parties, neither party relying
upon any statement or representation not embodied in this Lease.
47. No Presumption Against Drafter. Landlord and Tenant
understand, agree and acknowledge that (i) this Lease has been freely
negotiated by both parties; and (ii) in any controversy, dispute or contest
over the meaning, interpretation, validity, or enforceability of this Lease
or any of its terms or conditions, there shall be not inference,
presumption, or conclusion drawn whatsoever against either party by virtue
of that party having drafted this Lease or any portion thereof.
48. Landlord's Lien. Landlord hereby waives any and all landlord's
liens (whether statutory, constitutional or arising under the common law or
otherwise) on all property in the Premises and hereby agrees to execute such
additional instruments as may be reasonably requested by Tenant to evidence
such waiver. In addition, Landlord acknowledges Tenant's right to finance
and to secure under the Uniform Commercial Code, inventory, furnishings,
furniture, equipment, machinery, leasehold improvements and other personal
property located in or at the Premises; provided that no security interest
shall attach to any leasehold improvement constituting a fixture or becoming
property of Landlord, and Landlord agrees to execute reasonable waiver forms
releasing liens in favor of any purchase money seller, lessor or lender who
has financed or may finance in the future such items.
49. Warranty Waiver: EXCEPT AS EXPRESSLY PROVIDED IN THIS LEASE,
LANDLORD, ITS OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, ATTORNEYS AND
CONTRACTORS, MAKE NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PROJECT, PROPERTY, BUILDING OR THE PREMISES OR ITS CONDITION. NO WARRANTY
OF MATERIALS, WORKMANSHIP OR APPLIANCES HAS BEEN MADE OR IS EXPRESSED OR
IMPLIED BY THIS LEASE. LANDLORD, ITS OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES, ATTORNEYS AND CONTRACTORS EXPRESSLY DISCLAIM AND TENANT EXPRESSLY
WAIVES ANY WARRANTY OF HABITABILITY, GOOD AND WORKMANLIKE CONSTRUCTION,
SUITABILITY, OF DESIGN OR FITNESS FOR A PARTICULAR PURPOSE AND EXPRESSLY
DISCLAIM AND TENANT EXPRESSLY WAIVES ANY WARRANTY AS TO THE ENVIRONMENTAL
CONDITION OF THE PROJECT, PROPERTY, BUILDING OR PREMISES AND THE PRESENCE
OR CONTAMINATION BY HAZARDOUS MATERIALS. TENANT IS NOT RELYING ON ANY
REPRESENTATIONS BY LANDLORD OR LANDLORD'S OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES, ATTORNEYS AND CONTRACTORS. TENANT EXPRESSLY WAIVES, TO THE
EXTENT ALLOWED BY LAW, ANY CLAIMS UNDER FEDERAL, STATE OR OTHER LAW THAT
TENANT MIGHT OTHERWISE HAVE AGAINST LANDLORD, ITS OFFICERS, DIRECTORS,
AGENTS, EMPLOYEES, ATTORNEYS AND CONTRACTORS RELATING TO THE CONDITION OF
THE PROJECT, PROPERTY, BUILDING OR PREMISES OR THE IMPROVEMENTS OR PERSONAL
PROPERTY LOCATED THEREON OR THE PRESENCE IN OR CONTAMINATION OF THE PROJECT
OR THE PREMISES BY HAZARDOUS MATERIALS.
50. Substitution. Intentionally Omitted.
51. Tax Protest. TENANT HEREBY WAIVES ALL RIGHTS TO PROTEST THE
APPRAISED VALUE OF THE PROJECT OR TO APPEAL THE SAME AND ALL RIGHTS TO
RECEIVE NOTICES OF REAPPRAISALS AS SET FORTH IN SECTIONS 41.413 AND 42.015
OF THE TEXAS TAX CODE.
52. Waiver of Deceptive Trade Practices Act. TENANT HEREBY WAIVES
ALL ITS RIGHTS UNDER THE TEXAS DECEPTIVE TRADE PRACTICES - CONSUMER
PROTECTION ACT, SECTION 17.41 ET. SEQ. OF THE TEXAS BUSINESS AND COMMERCE
CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER
CONSULTATION WITH AN ATTORNEY OF TENANT'S OWN SELECTION, TENANT VOLUNTARILY
CONSENTS TO THIS WAIVER.
53. Letter of Credit. Within three (3) business days after
Tenant's receipt of the executed Lender Non-Disturbance Agreement from the
current holder of a mortgage on the Property, Tenant shall present to
Landlord an irrevocable Letter of Credit (the "Letter of Credit"), which
Letter of Credit shall: (a) be in the amount of $800,000.00; (b) be issued
on the form attached hereto as Exhibit "H"; (c) name Landlord as its
beneficiary; (d) be drawn on an FDIC insured financial institution
reasonably satisfactory to the Landlord; and (e) expire no earlier than
sixty (60) days after the second anniversary of the Rent Commencement Date
of this Lease. Notwithstanding anything herein to the contrary, provided
Tenant is not in default under this Lease as of the effective date of any
reduction of the Letter of Credit, Tenant shall have the right to reduce the
amount of the Letter of Credit to be as follows: (i) $683,333.00 effective
as of the second anniversary of the Rent Commencement Date; (ii) $566,666.00
effective as of the third anniversary of the Rent Commencement Date; (iii)
$449,999.00 effective as of the fourth anniversary of the Rent Commencement
Date; (iv) $333,332.00 effective as of the fifth anniversary of the Rent
Commencement Date, and $216,665.00 effective as of sixth anniversary of the
Rent Commencement Date. Such reduction shall be accomplished by having
Tenant provide Landlord with a substitute letter of credit in the reduced
amount. All renewals and/or replacements of the Letter of Credit shall be
for a term of not less than one (1) year. Tenant agrees that it shall from
time to time, as necessary, whether as a result of a draw on the Letter of
Credit by Landlord pursuant to the terms hereof or as a result of the
expiration of the Letter of Credit then in effect, renew or replace the
original and any subsequent Letter of Credit so that a Letter of Credit, in
the amount required hereunder, is in effect until a date which is at least
sixty (60) days after the seventh anniversary of the Rent Commencement Date.
If Tenant fails to furnish such renewal or replacement at least sixty (60)
days prior to the stated expiration date of the Letter of Credit then held
by Landlord, such failure shall automatically, without notice to Tenant,
constitute an event of default hereunder and Landlord may draw upon such
Letter of Credit and hold the proceeds thereof (and such proceeds need not
be segregated) as a Security Deposit pursuant to the terms of this Paragraph
53. Notwithstanding the foregoing, in the event Tenant fails to furnish a
renewal or replacement letter of credit within the sixty (60) day period
referenced above, Landlord shall notify Tenant at least five (5) days prior
to drawing on the Letter of Credit of such failure unless at the time
Landlord discovers such failure, there are less than five (5) days prior to
the expiry date of the letter of credit, in which case, Landlord shall not
be obligated to provide Tenant with any notice prior to such drawing. Any
renewal of or replacement for the original or any subsequent Letter of
Credit shall meet the requirements for the original Letter of Credit as set
forth above. Notwithstanding anything to the contrary set forth in this
Paragraph 53, in the event Tenant obtains a credit rating by Standard &
Poor's of BB or better, Tenant shall not be required to provide Landlord
with the Letter of Credit and Landlord shall release the Letter of Credit
held by Landlord at such time. In addition, Tenant may, from time to time,
replace any existing Letter of Credit with a new Letter of Credit if the new
Letter of Credit (a) becomes effective at least thirty (30) days before
expiration of the Letter of Credit that it replaces; (b) is in the required
amount; (c) is issued by an FDIC insured bank reasonably acceptable to
Landlord; and (d) otherwise complies with the requirements of this Paragraph
53.
54. Third Party Equipment. Landlord acknowledges that certain
equipment within the Premises shall be owned by third parties. Landlord
shall permit Tenant to keep such equipment and property within the Premises
without the need for Tenant to obtain any consent from or pay any fee to
Landlord.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in
multiple original counterparts as of the day and year first above written.
LANDLORD:
---------
CAMERON ROAD CORPORATE PARK, LTD., a
Texas limited partnership
Address:
150 North Wacker Drive, Suite 180
Chicago, Illinois 60606 By: Transwestern Cameron L.P.,
Attention: William A. Purdy a Delaware limited partnership,
a general partner
By: Transwestern Cameron GPI, L.L.C.,
a Delaware limited liability
company, its
With a copy to: general partner
Transwestern Investment Company
150 North Wacker Drive, Suite 180
Chicago, Illinois 60606
Attention: General Counsel By: /s/ William A. Purdy
----------------------------------
Name: William A. Purdy
and to: Title: Managing Director
Susan E. Coleman, Esq.
Thompson & Knight, P.C.
801 Cherry Street, Suite 1600
Fort Worth, Texas 76102
TENANT:
-------
Address: EXODUS COMMUNICATIONS, INC., a Delaware
corporation
/s/ Adam Wegner
-----------------------------------------
Name(print): Adam Wegner
-----------------------------
Title: Vice President and General
Counsel
-----------------------------------
<PAGE>
EXHIBIT "A"
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PROPERTY DESCRIPTION
Lots Three (3) and Four (4), Block "B", CAMERON ROAD CORPORATE PARK PHASE
I, a subdivision in Travis County, Texas, according to the map or plat
thereof, recorded in Volume 100, Page(s) 303-305 of the Plat Records of
Travis County, Texas.
Together with and including the following easement estates and interests:
(i) That easement created under or pursuant to that certain
document recorded in Volume 13236, Page 3730 of the Real Property Records
of Travis County, Texas, such easement upon the property more particularly
described in that certain Shared Detention Restrictive Covenant and Flood
Detention Easement recorded in Volume 13226, Page 0471 of the Real
Property Records of Travis County, Texas.
(ii) All of that certain tract or parcel of land containing 1.821
acres, more or less, situated in the James P. Wallace Survey No. 57,
Travis County, Texas said tract being more particularly described by
metes and bounds as follows:
BEGINNING FOR REFERENCE at a capped iron rod found in the South line
of that certain tract of land dedicated for Street in Volume 3873, Page 1021
of the Deed of Records of Travis County, Texas, for the Northeast corner of
that certain (2.0 acre) tract of land as conveyed to Trinity Chapel by deed
recorded in Volume 4824, Page 480 of the Deed of Records of Travis County,
Texas and for the Northwest corner of Lot 1, Block A, Cameron Road
Corporate Park Phase I, a subdivision in Travis County, Texas according to
the map or plat thereof recorded in Volume 100, Page 303 of the Plat of
Records of Travis County, Texas;
THENCE with the common line of said Lot 1 and said Street Dedication
tract, S 88? 42? 43? E 374.22 feet to a point for the Southwest corner and
PLACE OF BEGINNING of the herein described easement;
THENCE crossing said Street Dedication tract and that certain tract
of land as conveyed to Austin Independent School District by deeds recorded
in Volume 3871, Page 3251 and Volume 3872, Page 53 of the Deed Records of
Travis County, Texas with the westerly line of this easement, the following
three (3) courses and distances;
1. N 29? 06? 17? E 20.00 feet to a point;
2. N 71? 31? 48? E 66.00 feet to a point;
3. N 37? 18? 26? E 481.00 feet to a point in the Easterly line
of said Street Dedication tract and in the Westerly line of Lot 4,
Block A, of said Cameron Road Corporate Park Phase I, for the
most Northerly corner of this easement and from which a capped
iron rod found for a point of curvature in the East line of
said Street Dedication tract bears N 05? 09? 14? W 108.65 feet;
THENCE with the common line of said Street Dedication tract and said
Lot 4, S 05? 09? 14? E 440.0 feet to a point for a common angle corner of
Lot 3 and Lot 4, Block A, of said Cameron Road Corporate Park Phase I, and
for an angle corner of said Street Dedication tract, and being the
Southeasterly corner of this easement;
THENCE with the common line of said Street Dedication tract and said
Lot 3, the following three (3) courses and distances;
1. S 84? 51? 15? W 60.00 feet to a point for a non-tangent point
of curvature;
2. along a curve to the left with a radius of 16.79 feet for an
arc length of 24.48 feet and which chord bears N 46? 55? 43? W
22.37 feet to a capped iron rod found for a point of tangency;
3. N 88? 42? 43? W 327.36 feet to the PLACE OF BEGINNING,
containing 1.821 acres of land.
<PAGE>
EXHIBIT "C"
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OPERATING EXPENSE RENTAL
1. In addition to Base Rental, Tenant shall pay to Landlord
Tenant's Pro Rata Share of Operating Expenses for the Project ("Operating
Expense Rental"). During each month of the Lease Term, on the same date
that installments of Base Rental are due, Tenant shall pay to Landlord in
the amount equal to 1/12th of the annual amount, as estimated by Landlord,
of Tenant's Prorata Share of Operating Expenses. Payments thereof for any
fractional calendar month shall be prorated. Notwithstanding any language
in the Lease seemingly to the contrary, if the Project is not fully occupied
during any calendar year of the Lease Term, actual Operating Expenses for
purposes of this Exhibit "C" shall be determined as if the Project had been
fully occupied during such year. Prior to January 1 of each calendar year
during Tenant's occupancy or as soon thereafter as practical, Landlord shall
make a good faith estimate of the Operating Expense Rental for each upcoming
calendar year and, upon prior written notice to Tenant, shall require the
monthly payment of Operating Expense Rental to be adjusted in accordance
with such estimate. Landlord shall have the right from time to time during
any such calendar year to revise the estimate of the Operating Expense
Rental for such year and provide Tenant with a revised statement therefor,
and thereafter the amount Tenant shall pay each month shall be based upon
such revised estimate. Any amounts paid based on any estimate shall be
subject to adjustment pursuant to Paragraph 2 below when actual Operating
Expenses are available for such calendar year.
2. As soon as is practical following the end of each calendar year
during which Tenant has occupied the Premises, Landlord shall furnish to
Tenant a statement of Landlord's actual Operating Expenses for the previous
calendar year. If for any calendar year Operating Expense Rental collected
for the prior year, as a result of Landlord's estimate of Operating
Expenses, is in excess of the Operating Expense Rental actually due during
such prior year, then Landlord shall promptly refund to Tenant any
overpayment (or at Landlord's option, unless this Lease has terminated,
apply such amount against rentals next due or to become due hereunder).
Likewise, Tenant shall promptly pay to Landlord any underpayment with
respect to the prior year whether or not the Lease has terminated prior to
receipt by Tenant of a statement for such underpayment.
3. "Operating Expenses" shall mean all costs, expenses and
disbursements of every kind (subject to the limitations set forth below)
which Landlord incurs, pays or becomes obligated to pay in connection with
the ownership, lease, operation, repair, control of access and maintenance
of the Project. Operating Expenses shall be computed on an accrual basis
and shall be determined in accordance with generally accepted real estate
accounting practices, as more fully described in this paragraph, which shall
be consistently applied. Operating Expenses shall include, but shall not
be limited to, the following:
(a) All labor costs for Landlord's non-executive employees
performing services required or utilized in connection with the
operation, repair, maintenance and landscaping of the Project (to the
extent such employee's time is devoted to the Project), including but
not limited to amounts incurred for professional training, wages,
salaries and other compensation for services, payroll, social
security, unemployment and other similar taxes, workmen's
compensation insurance, disability benefits, pensions,
hospitalization, and retirement plans and group insurance.
(b) All management fees, including those paid to any
affiliate of Landlord (but not fees paid to an affiliate of Landlord
which are in excess of market management fees), or if there is no
specific manager and management fees, an administration fee of (i)
$2,500 per month during the first 24 Months of the Lease Term, and
(ii) $1,666.67 per month during the remainder of the Lease Term;
provided that in the event $1,666.67 is below market as of the date
Tenant exercises the Renewal Option, if at all, the determination of
Base Rental payable during the Renewal Term shall take into account
such below market management fees.
(c) All rental and/or purchase costs of materials, supplies,
hand tools and equipment used in the operation, repair, replacement
and maintenance of the Project.
(d) All amounts charged to Landlord by contractors and/or
suppliers for services, materials, equipment and supplies furnished
in connection with the operation, repair, maintenance and replacement
of any part of the Project.
(e) All premiums and deductible costs (to the extent such
deductible costs are commercially reasonable for properties
comparable to the Project) paid by Landlord associated with fire and
extended coverage insurance, earthquake and extended coverage
insurance, liability and extended coverage insurance, rental loss
insurance, and other insurance customarily carried from time to time
by lessors of comparable projects or required to be carried by
Landlord.
(f) Charges for all utilities, but excluding those charges
for which tenants are individually responsible.
(g) Taxes and all professional fees associated with the
monitoring and payment of such taxes, including (i) all real estate
taxes and assessments on the Project or the Premises, and taxes and
assessments levied in substitution or supplementation in whole or in
part of such taxes, (ii) intentionally omitted, (iii) all franchise
fees, (iv) all taxes imposed on services of Landlord's agents and
employees, and (v) all other taxes, fees or assessments now or
hereafter levied by any governmental authority on the Project or its
contents or on the operation and use thereof (except as relate to
specific tenants), but excluding income taxes.
(h) Cost of all maintenance, service and/or landscaping
agreements, if any, entered into by Landlord with respect to the
Project.
(i) Cost of all other repairs, replacements and general
maintenance of the Project incurred by Landlord and neither specified
above nor directly billed to tenants.
(j) Amortization of all capital improvements or repairs made
to the Project (other than capital improvements to the Building
structure) subsequent to the Commencement Date to maintain, repair or
replace portions of the Project including without limitation paving
and parking areas, roads, roofs, alleys and driveways and/or which
are otherwise for purpose of reducing Operating Expenses or
improving the operating efficiency of the Project or which will
extend the life of the Building, and amortization of all capital
improvements or repairs made to the Project subsequent to the
Commencement Date to maintain, repair or replace portions of the
Project including without limitation paving and parking areas, roads,
roofs, alleys and driveways and/or which are required to comply with
any change in the laws, rules or regulations of any governmental
authority. At Landlord's sole election, these costs shall be
amortized over the useful economic life of such improvements without
regard to the period over which such improvements may be depreciated
for federal income tax purposes, or shall be amortized up to the
extent that the capital improvements reduce operating expenses for
that year.
Operating Expenses shall not include repairs and general maintenance paid
from proceeds of insurance or by a tenant or other third parties, and
alterations attributable solely to individual tenants of the Project.
Further, Operating Expenses shall not include (i) depreciation; (ii)
interest; (iii) lease commissions, advertising and marketing costs; (iv)
principal payments on mortgage and other non-operating debts of Landlord;
(v) any ground lease rental; (vi) costs incurred by the Landlord for the
repair of damage to the Project to the extent that the Landlord is
reimbursed by insurance or condemnation proceeds or by other occupants of
the Property (other than as a share of their Operating Expense), guarantors
or any third parties (except that insurance deductibles paid by Landlord
maybe included as an Operating Expense); (vii) costs, including permit,
license and inspection costs, incurred with respect to the construction or
installation of tenant improvements or tenants in the Building, or incurred
in renovating or otherwise improving, decorating, painting or redecorating
space for other occupants of the Project, including space planning and
interior design costs and fees; (viii) finder's fees, attorney's fees, space
planning costs, advertising costs, and other costs incurred by Landlord in
leasing or attempting to lease other space in the Building; (ix) attorney's
fees and other costs and expenses incurred in connection with proposals,
negotiations or disputes with other present or prospective tenants or other
occupants of the Building; (xi) any improvements, alterations or
expenditures of a capital nature, except as expressly permitted herein;
(xii) any personal property taxes payable by Tenant or by other occupants
of the Building; (xiii) except as specifically set forth in this Lease,
damages incurred due to a violation by Landlord or any tenant of the terms
and conditions of any lease of space in the Building, or penalties or fines
arising from Landlord's violation of any governmental Landlord's violation
of any governmental rule or authority costs incurred in correcting any
building code violations existing as of the Commencement Date; (xiv) except
as specifically set forth in this Lease, Landlord's general corporate
overhead and general administrative expenses; (xv) rentals and other related
expenses incurred in leasing equipment ordinarily considered to be of a
capital nature, except equipment that is presently leased for use in, or
providing services to the Property, or that is used in providing security,
operational, and maintenance services, and equipment; (xvi) costs arising
from Landlord's charitable or political contributions or from costs or fees
associated with Landlord's membership in a trade association; (xvii) legal
expenses incurred in order for Landlord to resolve disputes with contractors
regarding defects in the design, materials or workmanship of the Property,
or as a result of Landlord's defending the implied covenant of quiet
enjoyment in favor of any occupant of the Building; (xviii) any late fees,
penalties, or similar charges assessed pursuant to covenants, conditions and
restrictions applicable to the Property resulting from Landlord's negligence
or willful misconduct; (xix) expenses incurred by Landlord in connection
with services or other benefits which are not offered to Tenant or items and
services for which Tenant or any other occupant of the Building reimburses
Landlord (other than through its share of Operating Expenses), or which
Landlord provides selectively to one or more tenants, other than Tenant,
without reimbursement, and the cost of which is included as Operating
Expenses, or (xx) costs incurred to remove or otherwise abate asbestos or
asbestos containing materials from the Building or costs incurred in
connection with any hazardous wastes or substances on the Project (provided
that the foregoing shall not reduce or limit the scope of Tenant's
obligations under Paragraph 22 of the Lease). Notwithstanding the specific
itemization elsewhere in this Lease as to certain components of Operating
Expenses, Landlord shall not be entitled to recover from all tenants of the
Project more than one hundred percent (100%) of Operating Expenses.
4.(a) Notwithstanding the foregoing, nothing herein contained shall
otherwise require or be construed to require Tenant to reimburse Landlord
for any inheritance, estate, succession, transfer, gift, franchise, income
or earnings, profit, excess profit, capital stock, capital levy or corporate
or other similar tax which is or may be imposed upon Landlord or upon
Landlord's business, except any rental, excise, sales, transaction,
privilege or other tax or levy, however denominated, imposed upon or
measured by the rental reserved hereunder or on Landlord's business of
leasing the Premises. Real estate taxes and assessments subject to
reimbursement by Tenant shall not include (i) any item to the extent
otherwise included in Landlord's Operating Expenses, (ii) any environmental
assessments, charges or liens arising in connection with the remediation of
Hazardous Materials from the Project which existed prior to the Commencement
Date or which were introduced onto the property by Landlord or its
representatives, (iii) costs or fees payable to public authorities in
connection with any future construction, renovation and/or improvements to
the Property (other than Tenant's improvements, which shall be Tenant's sole
obligation), including fees for transit, housing, schools, open space, child
care, arts programs, traffic mitigation measures, environmental impact
reports, traffic studies, and transportation system management plans, (iv)
reserves for taxes or assessments, or (v) any of Landlord's personal
property taxes, or (vi) any transfer taxes caused by any change in ownership
of the Property or any part thereof. If a reduction in property taxes
and/or assessments is obtained for any year of the Term during which Tenant
paid tenant's percentage of taxes and assessments, then Landlord shall
provide Tenant with a credit against Tenant's next due obligations for rent
and Tenant's Pro Rata Share of Operating Expenses or, if none, refund such
amount to Tenant within thirty (30) days based on such adjustment.
Landlord shall take such action as would be taken by a prudent and similarly
situated landlord in order to obtain the maximum reduction of real estate
taxes or assessed valuation of the Building that is reasonably obtainable
for any year. Landlord shall promptly furnish Tenant with copies of any
notice of an increase in real estate taxes, whether resulting from an
assessment increase or otherwise. Tenant shall have the right at any time
during the Term to notify Landlord that Tenant reasonably believes that the
assessment upon which the real estate are based is excessive. Within thirty
(30) days after its receipt of any such notice, Landlord notify Tenant
whether Landlord elects to pursue an assessment reduction. If Landlord
fails to timely notify Tenant of its election, Landlord will be deemed to
have elected not to pursue an assessment reduction. If Landlord does not
elect to pursue an assessment reduction, Tenant shall have the right to
require Landlord to pursue such reduction if Tenant delivers to Landlord,
prior to the expiration of the date for contesting the applicable
assessment, the report of a reputable real estate tax consultant in the
Austin, Texas area reasonably acceptable to Landlord, which recommends
pursuing such reduction. If Tenant fails to timely deliver such report,
Landlord shall have no obligation to pursue such reduction.
<PAGE>
EXHIBIT "D"
-----------
WORK LETTER AGREEMENT
(Tenant Buildout)
This Work Letter Agreement supplements and is hereby incorporated in
that certain lease (hereinafter referred to as the "Lease") dated and
executed concurrently herewith by and between Cameron Road Corporate Park,
Ltd., a Texas limited partnership (hereinafter referred to as "Landlord")
and Exodus Communications, Inc., a Delaware corporation (hereinafter
referred to as "Tenant") with the terms defined in the Lease to have the
same definition where used herein.
1. Except as expressly set forth in the Lease, the Premises are
leased to Tenant in their "AS IS" condition and this Work Letter Agreement
is intended to set forth the obligations of Landlord and Tenant with respect
to the preparation of the Premises for Tenant's occupancy. All improvements
described in this Work Letter Agreement to be constructed in and upon the
Premises are hereinafter referred to as the "Tenant Improvements." It is
agreed that construction of the Tenant Improvements will be completed in
accordance with the procedures set forth in this Work Letter Agreement. All
work required to construct and install the Tenant Improvements is referred
to herein as "Tenant's Work".
2. Tenant shall provide to Landlord the plans and specifications
for Tenant's Work which are sufficiently detailed to allow construction of
the work depicted thereon to be performed in a good and workmanlike manner.
Landlord shall notify Tenant of its approval, which shall not be
unreasonably withheld, or disapproval of such plans and specifications
within 10 days after its receipt of same; provided that Landlord shall
promptly communicate to Tenant prior to such 10 day period any concerns of
Landlord with respect to Tenant's Work as soon as Landlord is aware of such
concerns. Tenant acknowledges and agrees that, except with respect to the
Storage Corridor, it will not be unreasonable for Landlord to withhold its
approval to any proposed improvement or installation (i) which would have
to be relocated or removed if the Project was operated as two (2) multi-
tenant warehouse/distribution buildings, or (ii) which would require
material alteration in order for Landlord to provide services to the
Building if the Project was operated as two (2) multi-tenant
warehouse/distribution buildings. In the event Landlord disapproves of such
plans, Tenant shall modify such plans in accordance with Landlord's comments
and resubmit them for Landlord's approval within 10 days after Tenant's
receipt of Landlord's disapproval. Tenant shall cause the general
contractor chosen by Tenant and approved in writing by Landlord ("Tenant's
Contractor"), which approval shall not be unreasonably withheld, to
construct Tenant's Work in substantial accordance with the plans and
specifications approved by Landlord in accordance with this Work Letter (the
"Plans"), and shall not make or agree to any material changes in the
Tenant's Work as described therein without obtaining the prior written
approval of Landlord, which approval shall not be unreasonably withheld and
shall be granted or denied within five (5) business days after Landlord's
receipt of the same. Tenant acknowledges and agrees that (i) Landlord's
prior approval of the Plans is solely for the protection of Landlord's
interest in the Premises and is not a warranty or representation of any kind
including, without limitation, that the Plans comply with any or all
applicable laws, ordinances, rules or regulations or that the Plans
represent good or workmanlike quality and (ii) that Tenant may not rely on
Landlord's approval of such Plans in order to satisfy any or all of its
obligations under the Lease to which this Work Letter relates.
3. Tenant shall be responsible for obtaining at its expense any
required building permit, and shall furnish to Landlord a copy of same
before Tenant's Contractor commences construction of Tenant's Work, unless
Tenant is permitted by law to commence construction without a permit.
4. Subject to compliance with the provisions of this Work Letter,
Landlord shall provide to Tenant an allowance equal to $9.00 per square foot
of Rentable Area in the Premises (the "Allowance"), to construct and
install only the Tenant Improvements. The Allowance shall be used to design,
prepare, plan, obtain the approval of, construct and install the Tenant
Improvements and for no other purpose. Landlord will make payments to
Tenant from the Allowance to reimburse Tenant for the cost of the Tenant's
Work incurred by Tenant, by progress payments no more frequently than once
per month and only after satisfaction of the following conditions precedent:
(i) receipt by Landlord of mechanics' lien releases for the Tenant's Work
completed and sought to be reimbursed by Tenant, executed by the applicable
Tenant's Contractor's performing the Tenant's Work, and (ii) receipt by
Landlord of any and all documentation reasonably required by Landlord
detailing the work that has been completed and supplies used as of the date
of Tenant's request for progress payment, including without limitation,
invoices, bills, or statements for the work completed and the materials and
supplies used. Notwithstanding the foregoing, Tenant shall not be entitled
to receive in excess of $9.00 per square foot of Rentable Area of the Phase
I Premises in connection with Tenant's Work performed in the Phase I
Premises and likewise, Tenant shall not be entitled to receive in excess of
$9.00 per square foot of Rentable Area of the Phase II Premises, the Phase
III Premises, the Phase IV Premises or the Phase V Premises, respectively
for Tenant's Work perform in each of the foregoing described portions of the
Premises. Tenant shall not be entitled to any allowance with respect to the
Phase I Premises until the occurrence of the Rent Commencement Date.
Further, Tenant shall not be entitled to any Allowance with respect to (w)
the Phase II Premises until the occurrence of the Phase II Rent Commencement
Date, (x) the Phase III Premises until the occurrence of the Phase III Rent
Commencement Date, (y) the Phase IV Premises until the occurrence of the
Phase IV Commencement Rent Date or (z) the Phase V Premises until the Phase
V Rent Commencement Date. Landlord shall not be obligated to pay any
Allowance if on the date Tenant is entitled to receive the Allowance an
event of default (as defined in Paragraph 24 of the Lease) is continuing or
if Tenant's Contractor or its respective subcontractors, suppliers and
materialmen have filed or have given notice of intent to file a lien against
the Premises and/or the Building. Landlord shall promptly pay the Tenant
Allowance if such payment is delayed pursuant to the previous sentence, upon
the cure of any such event of default or resolution of such claim.
The cost to design and construct any change to the Base Building Work
required to accommodate Tenant's Work (including without limitation, the
concrete infill of exterior wall openings for overhead doors) shall be (i)
deducted from the Allowance, to the extent it is available, or (ii) paid
by Tenant if no Allowance is available at such time, even if the work is
performed by the Landlord's contractor. Upon the expiration or earlier
termination of the Lease, Tenant shall remove the concrete infills of the
exterior wall openings for overhead doors originally designed in the Base
Building Work and make such other changes as are necessary to restore the
Building to the original design as set forth in the Base Building Plans.
In the event Landlord achieves any cost savings in connection with the Base
Building Work as a result of modifications requested by Tenant or made to
accommodate Tenant's design needs, Landlord shall be entitled to all such
savings.
5. The Tenant's Work shall be performed in compliance with all
applicable laws, orders, regulations and requirements of all governmental
authorities, Landlord's insurance carriers, and the board of fire
underwriters having jurisdiction.
6. Tenant's Contractor shall comply at all times with the
following construction rules, as same may be modified from time to time upon
notice from Landlord:
(i) Check-in
--------
Tenant's Contractor and all of its subcontractors shall
check-in with the project coordinator from time to time designated by
Landlord (hereinafter referred to as the "Project Coordinator") and
shall not start work until it has:
(A) delivered to the Project Coordinator proper
evidence of required insurance coverage;
(B) delivered to the Project Coordinator names and
phone numbers (office and home) of its supervisory personnel;
(C) delivered to the Project Coordinator names and
phone numbers of prime subcontractors;
(D) acknowledged receipt of information concerning all
concealed piping, conduit, etc., which is installed within or
about the Premises; and
(E) acknowledged receipt of and agreed to abide by the
provisions of these Work Rules.
(ii) Insurance Requirements
(A) Tenant's Contractor shall provide evidence of the
following in-force insurance coverage with insurance companies
authorized to do business in Texas with a rating of no less
than A-VIII in the current Best's Insurance Guide before
commencing any work in the Building:
Commercial General Liability Insurance (including Premiss and
Completed Operations):
Bodily Injury 1,000,000/3,000,000 (per occurrence) and
aggregate
Property Damage 1,000,000 (per occurrence)
Umbrella $5,000,000
Worker's Compensation/Employer's Liability:
Insuring Tenant's Contractor against liability under the
Worker's Compensation and Occupational Disease Laws of
the State of Texas and Employer's Liability coverage with
a $1,000,000 limit for
(i) claims under workers' or workmen's
compensation, disability benefit and other similar
employee benefit acts; and
(ii) claims for damages because of bodily
injury, occupational sickness or disease, or death
of Tenant's Contractor' employees.
Builder's Risk Insurance:
All Risk/Special Peril, in full amount of the Tenant's
Work
(B) All policies shall name the Landlord, the property
manager, and upon request, Landlord's mortgagee as "additional
insureds" as their interests appear.
(C) All policies shall provide for thirty days prior
written notice of expiration, cancellation or material change
to the additional insureds.
(D) All policies shall contain an express waiver of
subrogation by the insurer against Landlord, its agents,
employees, affiliates and contractors.
(iii) Work Area
---------
Tenant's Contractor shall confine their work, storage of
materials, construction office, etc., to the Premises or such other
areas as may be designated by the Project Coordinator from time to
time.
(iv) Deliveries
----------
Deliveries will be made through designated entrances and routes
only. The Project Coordinator will establish delivery routes and
storage areas which may be changed from time to time.
(v) Service Areas
-------------
Service areas shall be kept clear of materials, equipment,
debris, and trash at all times.
(vi) Trash Removal
-------------
Tenant, Tenant's Contractor and all subcontractors and
suppliers shall remove trash and construction debris from the
Premises daily. If Landlord so elects, accumulations of Tenant trash
and debris within the Premises, or elsewhere in the Building will be
removed by the Landlord at Tenant's expense.
(vii) Parking
-------
Parking for construction personnel will be permitted only in
areas designated by the Project Coordinator.
(viii) Fire Protection
---------------
Tenant's Contractor shall provide fire extinguishers within the
Premises as required by Landlord's insurance company and/or public
safety officials and as approved by the Project Coordinator.
(ix) Work Practices
--------------
All work practices of and personnel performing work for
Tenant's Contractor must be compatible with the practices and
coordinated with the personnel employed by Landlord and its
contractors as reasonable under the circumstances. Upon notice that
any work practices are not compatible or personnel not coordinated
the Tenant shall be responsible for either the immediate termination
of said practices and removal of said personnel from the Building, or
for the immediate coordination of such practices and personnel with
those of Landlord and its contractors.
(x) Protection of Work and Property
-------------------------------
Tenant and Tenant's Contractor shall protect their work from
damage and shall protect the work of other tenants and Landlord from
damage by Tenant, Tenant's Contractor and their employees and
subcontractors.
(xi) Strictly Prohibited Work and Practices:
---------------------------------------
(A) Any combustible materials above finished ceiling or
in any other concealed, non-sprinklered space;
(B) Imposing any structural load, temporary or
permanent, on any part of the Landlord's Work or structure
without the prior written consent of Landlord's Project
Coordinator;
(C) Cutting any holes in Landlord-installed floor
slabs, roof, or walls.
(D) Welding to or burning of structural steel roof
beams or trusses.
7. Upon completion of the Tenant's Work, the Tenant shall provide
to Landlord an affidavit executed by an officer of Tenant that all bills in
connection with Tenant's Work have been paid and a waiver of lien from each
Tenant's Contractor, materialman and subcontractor pertaining to the
Tenant's Work, in form approved by Landlord.
8. Tenant shall indemnify and hold harmless Landlord and
Landlord's property manager from all claims, causes of action, liens,
costs, losses, damages and reasonable attorney's fees incurred by Landlord
in connection with or arising out of the performance of the Tenant's Work,
but only to the extent caused in whole or in party by the negligent acts or
omissions or willful misconduct of Tenant, the Tenant Contractor, a
subcontractor, anyone directly or indirectly employed by them or anyone for
whose acts they may be liable. Without limitation of the foregoing, Tenant
shall indemnify and hold harmless Landlord and Landlord's property manager
from all claims, causes of action, costs, losses, damages and reasonable
attorneys fees incurred by Landlord or Landlord's property manager as a
result of or in connection with a failure of Tenant's Contractor or its
subcontractors to comply with the requirements of this Work Letter. If,
because of any actual or alleged act or omission of Tenant or Tenant's
Contractor any lien, affidavit, charge or order for the payment of money
shall be filed against the Landlord, the Building, the Premises or any
portion thereof or interest therein, whether or not same is valid or
enforceable, Tenant shall, at its own cost and expense, cause same to be
discharged of record by payment, bonding or otherwise, at the option of
Landlord, no later than ten days after notice to Tenant of the filing
thereof, but in all events prior to foreclosure thereof. In the event that
Tenant shall fail to comply with the foregoing sentence, Landlord shall have
the right, but not the obligation to discharge such lien, affidavit, charge
or order in any manner which it deems appropriate in its sole discretion,
and any reasonable costs incurred by Landlord in connection therewith shall
be deemed to be Rent for all purposes under the Lease to which this Work
Letter relates, and shall be due and payable by Tenant to Landlord
immediately upon written notice from Landlord to Tenant of any such amounts
so expended by Landlord.
9. Subject to Landlord's approval, not to be unreasonably
withheld, and further subject to Tenant's compliance with all restrictive
covenants applicable to the Property, which restrictive covenants currently
applicable to the Property are listed on Exhibit "Q" attached hereto,
Tenant shall have the right, at Tenant's sole cost and expense, to (i)
construct a fence around the Property, (ii) install satellite dishes of
various sizes on the Building and around the Property, (iii) install HVAC
equipment suitable for Tenant's anticipated use of the Premises as an
internet data center, (iv) install non-building standard electrical and
telephone equipment as well as fiber optic cable, (v) install generators
(both electrical and fossil fuel) and (vi) install diesel fuel storage tanks
on the Property as required by Tenant's permitted use of the Premises, all
in locations approved by Landlord, which approval shall not be unreasonably
withheld, provided that (i) Tenant obtains all necessary approvals from the
City of Austin and all other governmental authorities having jurisdiction
over Tenant, the Property and the installations. Notwithstanding the
foregoing, Tenant shall not be permitted to install a chain-link fence or
to place barbed-wire on or around the fence. The foregoing installations
shall be subject to the provisions of Paragraph 9 of the Lease and shall
not be considered Trade Fixtures or alterations which do not affect the
Building Structure. Tenant shall, at its sole cost and expense, be
responsible for installation of the following in connection with all
generators installed by Tenant, all of which shall be subject to the
reasonable approval of Landlord: (w) reasonable visual screening of the
generators, (x) environmental hazard protection, (y) pollution prevention
and, (z) if required to comply with applicable law, silence mufflers.
Except as otherwise requested by Landlord, Tenant shall remove the foregoing
described installations and all associated equipment, including without
limitation, generator pads and all buried wiring, at the end of the Lease
Term and shall repair all damage to the Project caused by such removal.
Tenant shall at its expense, maintain the installations in good and operable
condition and shall be responsible for the maintenance, repair, replacement
and removal thereof, as necessary. Tenant shall indemnify and hold Landlord
harmless from and against any and all claims, demands, fines, liabilities,
costs, expenses, damages and causes of action accruing from or related to
the foregoing installations.
10. Subject to Landlord's approval, not to be unreasonably
withheld, and compliance with all restrictive covenants applicable to the
Property, Tenant shall have the right to install and operate certain
satellite dishes, communication antennas and related equipment on the roof
of the Building and around the Property. Prior to installation of the
satellite dishes and/or communication antennas, Landlord shall have the
right to approve the type, size, height, weight and location thereof, and
the manner and method of installation and removal of the dishes and related
equipment. If Landlord elects to hire structural, mechanical, roofing
and/or other engineers or consultants to review such plans and
specifications, Tenant shall reimburse Landlord for the reasonable costs
thereof within thirty (30) days after demand from Landlord. Installation
of the satellite dishes, communication antennas and related equipment shall
be subject to the provisions of Paragraph 9 of the Lease and such
installations shall not be considered Trade Fixtures or alterations which
do not affect the Building Structure.
Further, prior to the installation of the satellite dishes,
communication antennas and related equipment, Tenant shall secure and shall
at all times thereafter maintain all required approvals and permits of the
Federal Communications Commission and all other government authorities
having jurisdiction over the dishes, the Property and/or Tenant's business,
including it communications, operations and facilities. Tenant shall at all
time comply with all laws and ordinances and all rules and regulations of
municipal, state and federal governmental authorities relating to the
installation, maintenance, height, location, use, operations, and removal
of the satellite dishes, communication antennas and related equipment and
shall fully indemnify Landlord against any loss, cost, or expense which may
be sustained or incurred by its as a result of the installation,
maintenance, operation, or removal of the satellite dishes, communication
equipment and related equipment. Landlord makes no representation that
applicable laws, ordinances or regulations permit the installation or
operation of the satellite dishes or communication antennas at the Property.
At the expiration or earlier termination of the Lease, the satellite
dishes and the related equipment installed by Tenant shall be removed by
Tenant, at Tenant's sole cost and expense, and Tenant shall restore the
Building and the Property to as good condition as existed immediately prior
to installation of the satellite dishes and related equipment.
11. Landlord and Tenant agree to work together in order to save
costs in connection with the construction and add value to the design of the
Base Building Work in order to prepare the Property for Tenant's
requirements for additional security, additional structural support, and
additional electrical capacity.
EXHIBIT "E"
-----------
RULES AND REGULATIONS
---------------------
1. No birds, animals, reptiles, or any other creatures may be brought
into or about the Building except for animals used to assist a disabled
person.
2. Nothing may be swept or thrown into any exterior areas.
3. Tenant shall cooperate with Landlord's agents and/or employees in
keeping the Premises neat and clean.
4. Driveways, sidewalks, doorways, vestibules, halls, stairways, and
similar areas may not be obstructed by any Tenant or Tenant's employees,
agents attorneys, contractors, licensees or invitees (each, a "Tenant Party"),
or used for any purpose other than ingress and egress to and from the
Premises, or for going from one part of the Building to another part of the
Building.
5. Subject to the terms of the Lease, Landlord or its agents or employees
may enter the Premises to examine the same or to make repairs, alterations,
or additions as Landlord deems necessary for the safety, preservation, or
improvement of the Building.
6. Except as otherwise permitted in the Lease, Tenant may not do anything,
or permit anything to be done, in or about the Building, or bring or keep
anything in the Building that in any way increases the possibility of fire
or other casualty, or do anything in conflict with the valid laws, rules,
or regulations of any governmental authority.
7. The floor load for the Building is 500 pounds per square foot. Tenant
shall not overstress any portion of the floor in excess of such floor load.
All damage done to the Building by the improper placing of heavy items that
overstress the floor will be repaired at the sole expense of the Tenant.
8. Provided that Tenant has personnel at the Premises 24 hours per day,
every day of the year, Tenant shall not be required to furnish Landlord with
keys to the Premises for emergency access. In the event Tenant does not
have personnel at the Premises 24 hours per day, every day of the year, all
necessary keys for emergency access to the Premises shall be furnished to
Landlord by Tenant. All keys to the Premises and all locks located therein
must be surrendered to Landlord upon termination of this Lease. Landlord
shall supply Tenant at no cost one set of all keys for the Premises. Tenant
shall pay Landlord for all additional keys to the Premises requested by
Tenant. Tenant shall give Landlord the combination for all locks on the
doors and vaults at the termination of this Lease.
9. Tenant shall comply with parking rules and regulations as may be posted
and distributed from time to time.
10. Plumbing and appliances may be used only for the purposes for which
constructed. No sweeping, rubbish, rags, or other unsuitable material may
be thrown or placed therein. Any stoppage or damage resulting to any
fixtures or appliances from misuse by any Tenant Party is payable by Tenant.
11. No signs, posters, advertisements, or notices may be painted or
affixed on any windows, doors, or other parts of the Building, except as
expressly permitted by the Lease or in colors, sizes, and styles, and in
places, approved in advance by Landlord. Landlord has no obligation or duty
to give this approval. Landlord may remove all unapproved signs without
notice to Tenant, at the expense of Tenant.
12. No portion of the Building may be used as lodging rooms or for any
unlawful purposes.
13. Landlord may control all internal lighting that is visible from the
exterior and may change any unapproved lighting without notice to Tenant,
at Tenant's expense.
14. Landlord may rescind any of these Rules and Regulations and make other
future Rules and Regulations as in the judgment of Landlord are from time
to time needed for the safety, protection, care, and cleanliness of the
Building. Those rules, when made and notice thereof given to Tenant, are
binding upon Tenant in the same manner as the original rules.
15. Tenant shall not permit any Tenant Party to hold, carry, smoke, or
dispose of a lighted cigar, cigarette, pipe, or any other lighted smoking
equipment in the Building.
EXHIBIT "F"
-----------
PARKING
-------
Landlord shall make available to Tenant at the commencement of the Lease
Term the use of approximately 638 parking spaces (the "Spaces") in the
surface parking lots of the Project located on the Property (the "Parking
Area") on an unreserved basis.
It is hereby agreed and understood that Landlord's sole obligation
hereunder is to make the Spaces available to Tenant. Tenant's right to the
use of such Spaces shall be subject to compliance with the rules and
regulations promulgated from time-to-time by the manager of such Parking
Area, if any. Unless caused by the gross negligence or willful misconduct
of Landlord or Landlord's agents, employees or contractors, Landlord shall
have no liability whatsoever for any property damage, loss or theft and/or
personal injury which might occur as a result of or in connection with the
use of the Spaces by Tenant, its employees, agents, servants, customers,
invitees and licensees EVEN IF THE SAME IS CAUSED BY THE NEGLIGENCE OF
LANDLORD OR LANDLORD'S AGENTS, EMPLOYEES OR CONTRACTORS, and Tenant hereby
agrees to indemnify and hold Landlord harmless from and against any and all
costs, claims, expenses, and/or causes of action which Landlord may incur
in connection with or arising out of Tenant's use of the Spaces.
EXHIBIT "G"
-----------
RENEWAL OPTION
--------------
Provided that no event of default is continuing and no condition exists
which with the passage of time or the giving of notice or both would
constitute an event of default pursuant to this Lease and provided that
Tenant has not sublet the entire Premises during the Lease Term to a party
other than a Tenant Affiliate, and Tenant (or its subtenants) has
continuously occupied the Premises for the Permitted Use during the Lease
Term, Tenant (but not any assignee, other than a Tenant Affiliate, or
subtenant) shall have the right and option (the "Renewal Option") to renew
this Lease, by written notice delivered to Landlord no later than twelve
(12) months prior to the expiration of the initial Lease Term, for an
additional term (the "Renewal Term") of ten (10) years under the same terms,
conditions and covenants contained in the Lease, except that (a) no
abatements or other concessions, if any, applicable to the initial Lease
Term shall apply to the Renewal Term; (b) the Base Rental shall be equal to
ninety-five percent (95%) of the market rate (the "Fair Rental Value") for
comparable industrial/service space located in the relevant market area as
of the end of the initial Lease Term, taking into consideration all relevant
factors, including length of term, permitted uses, the quality, size design
and location of the Premises, including the condition and value of the
existing improvements owned by Landlord, as determined pursuant to the
process described below, (c) Tenant shall have no option to renew this Lease
beyond the expiration of the Renewal Term; and (d) all leasehold
improvements within the Premises shall be provided in their then existing
condition (on an "as is" basis) at the time the Renewal Term commences.
Failure by Tenant to notify Landlord in writing of Tenant's election to
exercise the Renewal Option herein granted within the time limits set forth
for such exercise shall constitute a waiver of such Renewal Option. In the
event Tenant elects to exercise the Renewal Option as set forth above,
Landlord shall, within thirty (30) days thereafter, notify Tenant in writing
of the proposed rental rate for the Renewal Term (the "Proposed Renewal
Rental"). Tenant shall within thirty (30) days following delivery of the
Proposed Renewal Rental by Landlord notify Landlord in writing of the
acceptance or rejection of the Proposed Renewal Rental. If Tenant accepts
Landlord's proposal, then the Proposed Renewal Rental shall be the rental
rate in effect during the Renewal Term. Failure of Tenant to respond in
writing during the aforementioned thirty (30) day period shall be deemed an
acceptance by Tenant of the Proposed Renewal Rental. Should Tenant reject
Landlord's Proposed Renewal Rental during such thirty (30) day period, then
Landlord and Tenant shall negotiate during the thirty (30) day period
commencing upon Tenant's rejection of Landlord's Proposed Renewal Rental to
determine the rental for the Renewal Term. In the event Landlord and Tenant
do not agree in writing to a rental for the Renewal Term during said thirty
(30) day period, as provided above, they each shall, not later than ten (10)
days after the end of the period for attempting to agree upon Base Rental,
appoint an independent M.A.I. appraiser who shall have at least ten (10)
years experience in the commercial real estate market in which the Premises
is located and shall be familiar with the valuation of comparable property
in such area and otherwise qualified to act as an expert witness over
objection to give opinion testimony addressed to the issue in a court of
competent jurisdiction. Within said ten (10) day period, each party shall
notify the other party in writing of the name, address, telephone number and
qualifications of its appraiser so appointed. If either party shall fail
to notify the other party of its named appraiser within said ten (10) day
period, the determination of Base Rental by the single appraiser appointed
shall be conclusive and binding upon both Landlord and Tenant. In the event
a Tenant Affiliate exercises the Renewal Option, Tenant shall remain liable
under this Lease during the Renewal Term.
(i) The appraisers appointed hereunder shall determine the Fair
Rental Value for the Premises as of the date of calculation thereof.
(ii) The appraisers shall report in writing within thirty (30) of
his/her appointment to the party appointing him/her their opinion as to
the Fair Rental Value. Each party shall, promptly upon receipt of the
appraisal report from its appraiser, provide the other party with a copy
thereof. As soon as practicable thereafter, Landlord and Tenant shall
meet at such times as they shall mutually agree and endeavor in good
faith to agree upon the Base Rental based upon the reports of the
appraisers. If Landlord and Tenant are unable to agree on the Base
Rental, the appraisers shall appoint a third appraiser, qualified as
aforesaid, who shall, within thirty (30) days of his/her appointment,
determine the Fair Rental Value to be the rental rate set forth in one
of the two appraisal reports previously prepared. In the event that
the two originally appointed appraisers cannot for any reason agree on
a third M.A.I. appraiser, then either Landlord or Tenant, on behalf of
both, may request appointment of such third M.A.I. appraiser by the then
Chief Judge of the United States District Court having jurisdiction over
the Premises, and neither party shall raise any question as to such
Judge's full power and jurisdiction to entertain the application for and
make such appointment hereunder.
(iii) In the use of appraisers hereunder, each party shall pay the
fees and expenses of its own appraiser and shall share equally the fees
and expenses of any third appraiser appointed hereunder.
Upon exercise of the Renewal Option by Tenant and subject to the
conditions set forth hereinabove, the Lease shall be extended for the period
of such Renewal Term without the necessity of the execution of any further
instrument or document, although if requested by either party, Landlord and
Tenant shall enter into a written agreement modifying and supplementing the
Lease in accordance with the provisions hereof. Any termination of the
Lease during the initial Lease Term shall terminate all renewal rights
hereunder. The renewal rights of Tenant hereunder shall not be severable
from the Lease, nor may such rights be assigned or otherwise conveyed in
connection with any permitted assignment of the Lease except to a Tenant
Affiliate. Landlord's consent to any assignment of the Lease shall not be
construed as allowing an assignment of such rights to any assignee.
EXHIBIT "H"
----------
FORM OF LETTER OF CREDIT
------------------------
SILICON VALLEY BANK 3003 Tasman Drive, Santa Clara, CA 95054, U.S.A.
International Division Swiss Address: SVBKUS6S
Telex No. 8732587 Answer Back: 5V8 TF
TRANSFERABLE, ASSIGNABLE, IRREVOCABLE STANDBY LETTER OF CREDIT NO.
___________
DATE: ___________
BENEFICIARY: Cameron Road Corporate Park Ltd., its successors and/or
transferees and/or assigns
c/o Transwestern Property Company
Barton Oaks Plaza
901 MoPac Expressway, Suite 250
Austin, Texas 78746
Attn: Controller
APPLICANT: Exodus Communications, Inc.
2831 Mission College Blvd.
Santa Clara, CA 95054
As "Tenant"
AMOUNT: $800,000.00
EXPIRY DATE: January 1, 2000
LOCATION: At our counter in Santa Clara
Dear Sir/Madam:
We hereby establish our Irrevocable Standby Letter of Credit No.
__________ in your favor, available for negotiation with any bank of
Beneficiary's Draft at sight drawn on us, and accompanied
by the following documents:
1. The original of this Letter of Credit and all amendments if any.
2. A signed and dated certification from a duly authorized officer or
member of the Beneficiary followed by its designated title stating the
following:
"An event of default (as defined in the Lease) has occurred by
Exodus Communications, Inc., as Tenant under that certain Lease
Agreement between Tenant and Cameron Road Corporate Park Ltd., as
Landlord. Furthermore this is to certify that: (i) Landlord has
given written notice to Tenant to cure the default, if required
pursuant to the terms of the Lease; (ii) such default has not been
cured up to this date of drawing under this Letter of Credit; and
(iii) the terms and conditions of the Lease authorize Landlord to
now draw down on this Letter of Credit."
Special Condition:
It is a condition of this Letter of Credit that it will be deemed
automatically renewed without an amendment for a period of one year from
the present or each future expiration date unless at least thirty (30)
days prior to such Expiry Date we notify you in writing sent by overnight
mail that we elect not to renew this Letter of Credit and thereafter
treat such case as a portion of the security deposit.
In no event shall this Letter of Credit be automatically extend beyond
January 1, 2002.
All documents including draft(s) must indicate the number and date of
this credit. Each draft presented hereunder must be accompanied by this
original Letter of credit for our endorsement thereon of the amount of
such draft(s).
Documents must be sent to us via overnight courier (i.e., Federal
Express, UPS, DHL or any other express courier) at our address:
Silicon Valley Bank
3003 Tasman Drive
Santa Clara, CA 95054
Attn: International Division
We hereby engage with drawers and/or bonafide holders that draft(s) drawn
under and negotiated in conformance with the terms and conditions of the
subject credit will be duly honored on presentation.
This credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication 500.
Authorized Signature Authorized Signature
EXHIBIT "I"
-----------
PURCHASE OPTION
---------------
Provided Tenant is not in default of any of the terms, covenants and
conditions of this Lease, Tenant shall have a one time option to purchase
the Project provided Tenant notifies Landlord of its intent to purchase
the Project no later than December 1, 2000. In the event Tenant timely
exercises its right purchase the Project, Landlord and Tenant agree to
enter into a binding purchase and sale agreement, in a form reasonably
acceptable to Landlord and Tenant, within thirty (30) days after
notifying Landlord of Tenant's intent to purchase the Project, which
purchase and sale agreement shall provide for the closing of the
transaction during the calendar month of March, 2001. The sale of the
Project by Landlord to Tenant shall be on an "AS-IS, WHERE-IS" basis
and condition. Landlord and Tenant will enter into good faith
negotiations to finalize the form of the sale and purchase agreement on
or before July 31, 1999. The purchase and sale agreement executed by
Landlord and Tenant shall provide for the assignment by Landlord to
Tenant of all assignable warranties and guaranties relating to the
construction of the Building, together with the assignment by Landlord to
Tenant of all leases and other occupancy agreements affecting the
Project. All costs of the closing of Tenant's acquisition of the Project
shall be paid by Tenant, except that Landlord shall pay Landlord's
attorneys' fees. Landlord shall have no obligation to provide title
insurance to Tenant, but rather it shall be the obligation of Tenant to
obtain such assurances with respect to the status of title to the Project
as Tenant may required. If Tenant timely exercises its right to purchase
the Project, the closing of Tenant's acquisition of the Project shall
occur during the calendar month of March, 2001. If Tenant does not
exercise its option by December 1, 2000, such purchase option shall
terminate.
Tenant shall have the unconditional right to assign its right to
purchase the Project to (i) a Tenant Affiliate (as defined in Paragraph
13(d) of the Lease) and (ii) a third party as part of a sale/leaseback,
operating lease or similar transaction pursuant to which Tenant (or a
Tenant Affiliate) leases the Project from such third party pursuant to a
written lease.
The purchase price for the Project is $16,937,000.
EXHIBIT "J"
-----------
RIGHT OF OPPORTUNITY
--------------------
In the event Landlord acquires land adjacent to the Property and desires
to construct an industrial warehouse building thereon (the "Adjacent
Land"), then, provided that Tenant is not in default of any of the
terms, covenants and conditions of this Lease, prior to leasing to a
third party any of the area within the building to be constructed on the
Adjacent Land (the "Opportunity Space"), Landlord shall deliver to
Tenant a written statement ("Statement") (i) granting Tenant the
opportunity to lease all or a portion of the Opportunity Space (the
"Right of Opportunity") and (ii) including a general description of
such Opportunity Space. Tenant shall have ten (10) business days after
receipt of the Statement within which to notify Landlord in writing that
it elects to lease all or a portion of the Opportunity Space and
designating the amount of space desired by Tenant. Failure by Tenant to
notify Landlord in writing of Tenant's election to exercise the Right of
Opportunity herein granted within the time limits set forth for such
exercise shall constitute a waiver of such Right of Opportunity. In the
event Tenant elects to exercise the Right of Opportunity as set forth
above, Landlord and Tenant shall negotiate in good faith for a period of
thirty (30) days after Landlord's receipt of Tenant's notice electing to
lease all or a portion of the Opportunity Space, the business terms of
such lease, including without limitation the Base Renal for such
Opportunity Space, the finish allowance, if any, to be provided by
Landlord in connection with the Opportunity Space, the rent commencement
date of the lease of the Opportunity Space, the expansion and/or renewal
options, if any, applicable to the Opportunity Space, the parking to be
provided in connection with the Opportunity Space, and the security
deposit and other collateral to be paid in connection with the
Opportunity Space. In the event Landlord and Tenant reach an agreement
on the business terms for the Opportunity Space within such thirty (30)
day period, Landlord and Tenant shall promptly enter into a lease for the
Opportunity Space, which lease shall be substantially upon the terms and
conditions set forth in this Lease, except for the specific business
terms applicable to the Opportunity Space. In the event Landlord and
Tenant fail to reach an agreement regarding the business terms applicable
to the Opportunity Space, Tenant shall have no further rights hereunder
with respect to such space and Landlord shall be entitled to lease such
space to any third party upon such terms and conditions as Landlord shall
elect, in its sole discretion.
EXHIBIT "M-1"
-------------
CERTAIN IMPROVEMENTS OWNED BY TENANT
------------------------------------
Notwithstanding anything to the contrary in this Lease and provided
that Tenant is not in default under the Lease, at the expiration or
earlier termination of this Lease, Tenant shall have the right to remove
the following items from the Premises and other areas related thereto
subject to Tenant's surrender obligations relating to restoration of the
Premises as set forth in Paragraphs 9 and 30 of the Lease:
3. Permanent and temporary generator systems including enclosures and
fuel tanks with the associated electronic and manual switch gear.
4. Intentionally Omitted.
5. Raised Flooring, racking, cage materials, cabinets and patch
panels.
6. UPS Battery Systems including related electrical switch gear.
7. Any customer satellite dishes installed on roof or parking lot
areas.
8. FM200 fire suppression canisters, piping and nozzles; provided that
the sprinkler system installed as part of the Base Building Work is
in good working order.
9. VESDA or smoke sensor stations in ceiling or floor area.
10. Inside or outside security cameras, access card reader stations,
VCR, multiplexer, monitors and computers.
11. Partition and conference room furniture systems and freestanding,
cabinets, storage units.
12. Telephone and voice mail system with desk stations and
receptionist, computers, servers, printers, phone sets.
13. Fiber Muxes or other Telco equipment installed in MPOE rooms.
14. Emergency distribution board and telephone backboard with
connectors.
15. Maintenance bypass electronic and manual switch gear.
16. Power Distributions Units installed by or for Tenant on the
Premises.
17. Kitchen appliances like microwaves, refrigerators and vending
machines.
18. Console monitors, screen projection and screens in command center.
19. Bulletproof/resistant glass installed by or for Tenant on the
Premises.
20. Satellite dishes or other communications equipment installed by or
for Tenant on roof, in the Parking Areas or elsewhere on the
Property.
21. Customer and vendor equipment and related materials.
22. Tenant, Tenant Customer and Tenant Vendor personal property.
EXHIBIT "M-2"
-------------
IMPROVEMENTS TO REMAIN IN THE PREMISES
--------------------------------------
Unless otherwise requested by Landlord to remove such improvements,
the following is a description of the minimum Building improvements
which Tenant shall deliver to Landlord upon expiration or
termination of the Lease, such improvements shall be in a good and
working condition and in locations which shall not require
relocation or alteration in order for Landlord to operate the
Project as two (2) multi-tenant warehouse/distribution buildings:
UTILITIES:
ELECTRICAL: 3 Phase 480/277 volts provided into the Buildings with at
least two (2) transformers per Building.
Underground electrical conduit shall remain to connect each
building for joint building users.
Building I = A minimum of 1674 KVA in 2 services (1000 amps each)
Building II = A minimum of 1052 KVA in 2 services ( 633 amps each)
Building I - at least two 1000 amp services, one at each rear
corner of the Building. Building II - at least two 633 amp
services, one at each rear corner of the Building.
The electric service shall be brought into Tenant's space from the
electrical service gutters on the exterior of the Building.
FIBEROPTICS: Fiberoptic cabling and conduit shall remain in place to the
Building as installed.
PLUMBING: All plumbing systems in the Building will be left intact
including rest rooms, break rooms, kitchens and drinking fountains.
LANDSCAPING & FENCING: Landscaping shall be left fully irrigated with
automatic timer. Perimeter fence, gating and gate opening system
left in place.
SPRINKLER SYSTEM (FIRE CONTROL): Water System in place in accordance
with original design pursuant to the Base Building Plans. Lines
run every 5' 0". Roof smoke vents to remain. Nine (9) on-site
fire hydrants.
AIR CONDITIONING: Tenant shall leave the Buildings with a minimum air
conditioning service of 390 tons of cooling to Building I and 260
tons of cooling to Building II (one ton per 275 SF) configured to
allow operation of each Building as a multi-tenant
warehouse/distribution building.
LOADING DOCKS: 4'0" high, 1 per bay. All docks are to be opened as
originally designed in the Base Building Plans.
OVERHEAD DOORS AT EACH DOCK: 9'0" wide x 10'0" high overhead doors
shall be reinstalled as originally designed in the Base Building
Plans, including stairs and other dock equipment.
FIRE EXITS & STAIRS IN DOCK AREA: one (1) 3' x 7' exit every 100 feet as
per the Base Building Plans.
OTHER FIRE EXITS: 3' x 7' as per the Base Building Plans
ROOFS: The R factor for the roof insulation shall be R-19 or better.
All roof penetrations shall be repaired per original manufacturer's
roof specifications existing at the time.
BUILDING FRONT WINDOWS: The view out the glass windows of both buildings
will be restored as originally designed in the Base Building Plans.
TRUCK COURT: The truck court will be cleared of all structures and
materials. In addition, any damage due to Tenant use such as
drilling, fastening, equipment vibration, cracking due to weight of
generators and other Tenant equipment, shall be repaired and the
area on which the Storage Corridor was located and any other
portion of the truck court which is not paved with concrete shall
be paved with concrete.
BASE BUILDING: The Building(s) exterior and interior base Building walls
shall be restored to their original condition, normal wear and tear
excepted.
EXHIBIT "N"
-----------
FORM OF SUBORDINATION, NON-DISTURBANCE
--------------------------------------
AND ATTORNMENT AGREEMENT
------------------------
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT (this
"Agreement"), made this __________ day of _______________, 1999,
by and among EXODUS COMMUNICATIONS, Inc., a Delaware corporation
("Tenant"), MELLON BANK, N.A., a national banking association
("Mortgagee"), and CAMERON ROAD CORPORATE PARK, LTD., Texas
limited partnership ("Owner").
WITNESSETH THAT:
----------------
WHEREAS, Owner owns certain land located in Travis
County, Texas, as more particularly described on Exhibit A attached
hereto;
WHEREAS, pursuant to the Mortgage (hereinafter
defined), Owner has granted to Mortgagee a first mortgage lien on,
among other things, said land and all improvements now existing or
hereafter constructed thereon (the "Mortgaged Property"), as
security for the Note (as defined in the Mortgage): and
WHEREAS, pursuant to the Lease (hereinafter defined),
Owner leased to Tenant a portion of the Mortgaged Property;
NOW, THEREFORE, in consideration of the mutual
covenants and agreements therein contained, and for other good and
valuable consideration the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
1. Definitions. In addition to other words and terms
defined elsewhere in this Agreement, as used herein the
following words and terms shall have the indicated meanings,
respectively, unless the context hereof otherwise clearly
requires:
(a) "Assignment" shall mean the Assignment of Leases and
Rents dated as of March 2, 1999 made by Owner in favor
of Mortgagee, as the same may be amended, modified or
supplemented from time to time.
(b) "Foreclosure Sale" shall mean any sale or transfer of
the Mortgaged Property pursuant to any foreclosure of
or any power of sale under the Mortgage or pursuant to
a deed in lieu of foreclosure.
(c) "Foreclosure Successor" shall mean the Mortgagee or
other Person succeeding to the interest of Owner in the
Mortgaged Property as a result of a Foreclosure Sale.
(d) "Lease" shall mean the Lease Agreement dated June
____, 1999 between Owner and Tenant, pursuant to which
Owner leased a portion of the Mortgaged Property to
Tenant, as the same may be amended, modified,
supplemented, extended or renewed from time to time.
(e) "Mortgage" shall mean the Deed of Trust and Security
Agreement dated as of March 2, 1999, made by Owner in
favor of Mortgagee and recorded in Volume 13383, Page
1009 in the Real Property Records of Travis County,
Texas, as the same may be amended, modified,
supplemented, increased, extended, renewed or
consolidated from time to time.
(f) "Person" shall mean an individual, corporation,
partnership, trust, unincorporated association, joint
venture, joint-stock company, government (including
political subdivisions), governmental authority or agency,
or any other entity.
2. Subordination. Tenant and Owner confirm and agree that the
Lease and the terms and provisions thereof now are, and shall
at all times continue to be subject and subordinate in each
and every respect to the Mortgage and the terms, provisions
and lien thereof.
3. Non-Disturbance. So long as Tenant is not in default under
the Lease beyond any applicable cure period, neither the
Lease nor the estate created thereby, nor any rights of
Tenant under the Lease, will be discharged by a Foreclosure
Sale, but the estate and all rights of Tenant under the Lease
(subject to the provisions hereof) will remain undisturbed
and unaffected thereby.
4. Attornment. Tenant hereby agrees that, in the event of a
Foreclosure Sale, Tenant will and does hereby attorn to the
Foreclosure Successor so that the relationship of landlord
and tenant shall exist between such Foreclosure Successor and
Tenant, provided that such Foreclosure Successor shall not
(a) be bound by the payment of rent to any prior landlord
(including Owner) made more than one calendar month in
advance of accrual thereof, (b) be subject to any offsets or
defenses Tenant might have against any prior landlord
(including Owner), (c) be liable for the refund of any
security deposit made by Tenant to any prior landlord
(including Owner) unless such security deposit or portion
thereof is assigned or transferred to such Foreclosure
Successor, (d) be liable for any act or omission of any prior
landlord (including Owner), (e) be bound by any provision in
the Lease which obligates the landlord to complete the
initial construction of any building or structure (including
any work necessary to prepare the leased premises for
Tenant's occupancy), provided, however, that if Mortgagee
shall foreclose before such initial construction is
completed, Tenant shall, for thirty (30) days following
foreclosure, have the right to purchase the Mortgaged
Property for an amount which would satisfy the then
outstanding Loan balance and all related Loan costs, or (f)
be bound by any amendment or modification to the Lease
entered into without the consent of Mortgagee.
5. Casualty, Condemnation. The parties hereto hereby agree that
the terms, covenants and agreements of Sections 2.05 and 2.06
of the Mortgage shall apply in the event of any casualty to
the Mortgaged Property or any taking by eminent domain of the
Mortgaged Property.
6. Consent to Assignment of Lease; Payment of Rents. Tenant
hereby consents to the assignment by Owner to Mortgagee of
all the right, title and interest of Owner in and to the
Lease pursuant to the Assignment and to the terms and
provisions of the Assignment. Said Assignment includes,
among other things, the full and complete assignment by Owner
to Mortgagee of all right, power and privilege of Owner to
direct the party to whom rents and other payments under the
Lease are to be paid, which right to direct payment is
unconditional and unrestricted and may be exercised by
Mortgagee at any time, both before and after the occurrence
of any default under the Mortgage. Pursuant to such right to
direct payment, Mortgagee hereby directs Tenant, until
further notification by Mortgagee, to pay all rents and other
amounts payable by Tenant under the Lease to Owner. Upon
request by Mortgagee that Tenant pay all rents and other
amounts payable by Tenant under the Lease directly to
Mortgagee or any other Person, Tenant thereafter shall make
all such payments directly to Mortgagee or such other Person
at the address set forth in such request, until further
notification by Mortgagee.
7. Mortgagee Right to Cure Lease Defaults. If Owner fails to
cure a default under the Lease within the applicable cure
period thereunder, Tenant shall give written notice to
Mortgagee specifying the default, specifying that Owner has
failed to cure the default within the applicable cure period
and specifying the steps necessary to cure the default and
Mortgagee shall have the right (but not the obligation) to
cure such default. Mortgagee shall have 30 days after
receipt of such notice (or such longer period of time as may
be reasonably necessary, but no more than 90 days) to cure
such default or cause it to be cured, if Mortgagee elects to
do so. During such cure period, Tenant shall not terminate
the Lease or exercise any other remedy thereunder with
respect to such default.
8. No Assumption by Mortgagee. Tenant acknowledges and agrees
that Mortgagee has not assumed and does not have any
obligation or liability under or pursuant to the Lease by
reason of the Mortgage or the Assignment.
9. Tenant Representations. Tenant represents and warrants to
Mortgagee that (a) the Lease is in full force and effect, is
valid and binding upon the parties hereto in accordance with
its terms and has not been amended, modified or supplemented
(orally or in writing), (b) neither Tenant nor Owner is in
default under the Lease, (c) all rent and other payments
payable by Tenant under the Lease and due on or prior to the
date hereof have been paid, no rent or other payment under
the Lease has been paid more than one calendar month in
advance of the accrual thereof and Tenant has no offsets or
defenses to the payment of rent or other payments under the
Lease.
10. Tenant Covenants. Tenant covenants and agrees with Mortgagee
that, without the prior written consent of Mortgagee, (a)
Tenant will not pay rent under the Lease more than one
calendar month in advance of the accrual thereof, (b) Tenant
will not amend, modify or (by agreement with Owner) terminate
the Lease, (c) Tenant will not assign or pledge the Lease or
the rights or obligations thereunder (an assignment to a
Tenant Affiliate, as defined in the Lease, shall not be
subject to Mortgagee's prior consent), and (d) no waiver by
Owner of any of the obligations of Tenant under the Lease, no
consent, approval or election made by Owner in connection
with the Lease and no termination of the Lease by Owner shall
be effective as against Mortgagee.
11. Notices. Tenant shall mail or transmit copies of all written
notices (other than routine notices transmitted in the ordinary
course of business) it may give Owner with respect to the Lease to
Mortgagee simultaneously with the delivery or mailing of such
notices to Owner. All notices or other communications which are
required or permitted hereunder to be given to any party shall be
in writing and shall be deemed sufficiently given if delivered
personally or by registered or certified mail, return receipt
requested, to the address of such party specified below, or to
such other address as the addressee may have specified in a notice
duly given to the sender as provided herein:
(a) If to Mortgagee, at Mellon Bank, N.A.; One Mellon Bank
Center; Suite 5325; Pittsburgh,
Pennsylvania 15258.
(b) If to Tenant, at: 2831 Mission College Blvd., Santa
Clara, California 95054-1838.
(c) If to Owner, at: Barton Oaks Plaza One, Suite 520; 901
MoPac Expressway South; Austin, Texas 78746.
12. Miscellaneous:
(a) This Consent shall be governed by, and construed in
accordance with, the laws of the State where the Mortgaged
Property is located. This Consent may be executed in any
number of counterparts and all of such counterparts shall
together constitute one and the same instrument.
(b) Tenant hereby acknowledges and agrees that (i) any
Foreclosure Successor shall have the right to assign
its rights and obligations under the Lease to any other
Person to whom the Mortgaged Property is transferred,
and upon such assignment such Foreclosure Successor
shall have no further obligation or liability under the
Lease (but shall not be relieved of any obligations
occurring during its ownership of the Mortgaged
Property), and (ii) the obligations of any Foreclosure
Successor under the Lease shall not be personal
obligations of such Foreclosure Successor, and recourse
on such obligations may be had only against the right,
title and interest of such Foreclosure Successor in and
to the Mortgaged Property, and the proceeds of any sale
of the same.
(c) Tenant agrees to execute and deliver all such
instruments and documents and take all such action as
Mortgagee may from time to time reasonably request in
order to effectuate fully the purposes of this
Agreement. Without limiting the generality of the
foregoing, Tenant agrees that, within ten (10) business
days after receipt of request therefor from Owner or
Mortgagee, Tenant will execute and deliver to Owner and
Mortgagee a tenant estoppel certificate in the form
attached as Exhibit B hereto.
(d) This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective
successors and assigns.
EXECUTED as of the day and year first above written.
EXODUS COMMUNICATIONS, INC.
By:____________________________
Name:__________________________
Title:____________________________
MELLON BANK, N.A.
By:____________________________
Name:__________________________
Title:____________________________
CAMERON ROAD CORPORATE PARK,
LTD.
By: Transwestern Cameron L.P.,
general partner
By: Transwestern Cameron GPI,
L.L.C.
By:_______________________Name
:_____________________
Title:_______________________
Exhibit B
---------
TO: MELLON BANK, N.A. and/or whom else it may concern:
THIS IS TO CERTIFY THAT:
1. The undersigned is the lessee (Tenant)under that certain
Lease (Lease) dated _____________________ by and between
__________________ as lessor (Landlord) and _____________
as lessee, covering the _________________ in those certain
premises commonly known as _______________________________
__________________________________________________________
2 The Lease is in full force and effect and has not been
modified, changed, altered or amended in any respect (except
as indicated following this sentence) and is the only Lease or
agreement between the undersigned and the Lessor affecting
said premises. If none, state "none."
___________________________________________________________
___________________________________________________________
3 Neither the undersigned nor, to the undersigned's best
knowledge, the Lessor is in default in the performance or
observance of any of its obligations under the Lease, the
undersigned is not aware of any event or condition which, with
notice or the lapse of time or both, would constitute such a
default, and the undersigned is entitled to no credit, free
rent or deduction from rent and has no offsets or defenses to,
or counterclaims in respect of, its obligations under the
Lease (except as indicated following this sentence). If none,
state "none." ____________________________________________
____________________________________________________________
4 The undersigned has made no agreements with Lessor or its
agents or employees concerning free rent, partial rent, rebate
of rental payments or any other type of rental concession
(except as indicated following this sentence). If none, state
"none." ___________________________________________________
_____________________________________________________________
5. The undersigned has accepted and now occupies the premises,
and is and has been open for business since _______________,
19__. No rent has been prepaid for more than one (1) month
and all rent has been paid up to and including the installment
due _____________, 19__. The fixed minimum rent being paid
as above is $_____________ per month.
6. The undersigned has received or will receive payment or credit
for tenant improvement work in the total amount of $_________
(or if other than cash, describe below). If none, state
"none." ___________________________________________________
______________________________________________________________
7. The Lease contains an option to purchase the premises (such
option to be exercised no later than December 1, 2000) which
option [has] [has not] been exercised by Tenant.
8. No actions, whether voluntary or otherwise, are pending
against the undersigned under the bankruptcy or other
insolvency laws of the United States or of any state thereof.
9. Upon receipt of notice from Mellon Bank, N.A. or any successor
mortgagee under any mortgage encumbering Lessor's interest in
the premises demised by the Lease (Mortgagee) directing the
undersigned to pay all rent, additional rent and other charges
payable under the Lease to such Mortgagee, the undersigned
will thereafter make all such payments directly to such
Mortgagee until notified to the contrary by such Mortgagee.
Dated this __________ day of ___________, 19___.
_________________________, LESSEE
By:______________________________
Its______________________________
EXHIBIT "P
----------
TENANT'S CONFIDENTIALITY AGREEMENT
----------------------------------
CONFIDENTIAL NONDISCLOSURE AGREEMENT
------------------------------------
Proprietary Information is technical or business information (1)
concerning the operation of an internet data center ("IDC"), including,
without limitation, the type of equipment used and the configuration of such
equipment in an IDC, and the identity of any customers of Exodus
Communications, Inc. ("Exodus") and (2) information Exodus has received from
third parties under an obligation to maintain as confidential.
Visitor agrees not to disclose the Proprietary Information to any third
party. Visitor agrees to use the Proprietary Information only for purposes
expressly authorized in writing by Exodus and not to use it for Visitor's own
use.
The Visitor agrees that disclosure of Proprietary Information received
from Exodus shall be limited only to those of Visitor's (or Visitor's
employers) employees with a strict need to know for purposes expressly
authorized in writing by Exodus.
The obligations and duties set forth thereunder shall continue for a
period of three (3) years from the date hereof.
Visitor shall not expose Exodus to any of Visitor's proprietary or
confidential information, or to the confidential or proprietary information of
any third party.
The terms of a confidential nondisclosure agreement previously executed
by Exodus and Visitor (or Visitor's employer), if any, will supersede the
terms of this agreement.
Your signature on this line indicates that you have read the above
confidential nondisclosure agreement and have agreed to abide by its contents.
Signature:
Name:
Title:
Date:
EXHIBIT "Q"
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ENCUMBRANCES AFFECTING THE PROPERTY
-----------------------------------
1. Restrictive Covenant dated December 17, 1998, recorded in Volume 10850,
Page 65 of the Real Property Records of Travis County, Texas.
2. Restrictive Covenant dated March 10, 1998, recorded in Volume 13204,
Page 13 of the Real Property Records of Travis County, Texas.
3. Construction Easement recorded in Volume 13204, Page 17 of the Real
Property Records of Travis County, Texas.
4. Covenants, conditions and restrictions as shown in Volume 100, Page 303-
305 of the Plat Records of Travis County, Texas.
5. Standby fees, taxes and assessments by any taxing authority for the year
1999 and subsequent years not yet due and payable.
6. Electric transmission and distributing line and appurtenances easement
granted to Texas Power & Light Company, by instrument dated September
26, 1927, recorded in Volume 408, Page 265 of the Deed Records of Travis
County, Texas.
7. Electric transmission and distributing line and appurtenances easement
granted to Texas Power & Light Company, by instrument dated December 6,
1927, recorded in Volume 413, Page 185 of the Deed Records of Travis
County, Texas.
8. Electric transmission and distributing line and appurtenances easement
granted to Texas Power and Light Company, by instrument dated January
13, 1930, recorded in Volume 446, Page 551 of the Deed Records of Travis
County, Texas.
9. Electric transmission and distributing line and appurtenances easement
granted to Texas Power & Light Company, by instrument dated January 13,
1930, recorded in Volume 446, Page 552 of the Deed Records of Travis
County, Texas.
10. Electric transmission and distributing line and appurtenances easement
granted to Texas Power & Light Company, by instrument dated May 12,
1936, recorded in Volume 544, Page 193 of the Deed Records of Travis
County, Texas.
11. Covenant to dedicate the south 40 feet of an 80 foot wide road
right-of-way as set forth in instrument dated June 24, 1966 and recorded in
Volume 3147, Page 479 of the Deed Records of Travis County, Texas.
12. Electric transmission and distribution circuits line easement granted
to the City of Austin by instrument dated January 14, 1987, recorded in
Volume 10067, Page 174 of the Real Property Records of Travis County,
Texas, as corrected by instrument recorded in Volume 10938, Page 1074 of
the Real Property Records of Travis County, Texas.
13. Electric lines and systems and telephone line easement granted to the
City of Austin, by instrument dated October 9, 1989, recorded in Volume
11132, Page 429 of the Real Property Records of Travis County, Texas.
14. Wastewater line easements granted to the City of Austin, each by
instrument dated February 23, 1998, recorded in Volume 13129, Pages 389
and 399 of the Real Property Records of Travis County, Texas.
15. Wastewater line easement granted to the City of Austin, by instrument
dated March 10, 1998, recorded in Volume 13204, Page 7 of the Real
Property Records of Travis County, Texas.
16. Drainage easements granted to the City of Austin, each by instrument
dated June 11, 1998, recorded in Volume 13204, Page 22 and 35 of the
Real Property Records of Travis County, Texas.
17. The terms, conditions and stipulations set out in that certain
Subdivision Construction Agreement dated January 8, 1998, recorded in
Volume 13117, Page 539 of the Real Property Records of Travis County,
Texas.
18. Public utilities, emergency access and electric easements as shown by
the Plat recorded in Volume 100, Pages 303-305 of the Plat Records of
Travis County, Texas.
19. Building setback line 25 feet in width along the street property line(s)
as shown on the Plat recorded in Volume 100, Pages 303-305 of the Plat
Records of Travis County, Texas.
20. Dedication to the public of the subject property as a detention basin
easement, as shown by the Plat recorded in Volume 100, Pages 303-305 of
the Plat Records of Travis County, Texas.
21. Terms, conditions and stipulations of the instrument recorded in Volume
13236, Page 3730 of the Real Property Records of Travis County, Texas.
22. Terms, conditions and stipulations of the instrument recorded in Volume
13226, Page 471 of the Real Property Records of Travis County, Texas.
23. Obligation to grant additional easements to the City of Austin Electric
Utility Department as set forth on the Plat recorded in Volume 100,
Pages 303-305 of the Plat Records of Travis County, Texas.
24. Vendor's Lien retained in Deed dated March 2, 1999, recorded in Volume
13383, Page 999, Real Property Records of Travis County, Texas, executed
by Transwestern Cameron L.P., a Delaware limited partnership to Cameron
Road Corporate Park, Ltd., securing the payment of one note of even date
therewith in the sum of $7,035,237.00, payable to Mellon Bank, N.A., and
additionally secured by Deed of Trust of even date therewith to Bruce R.
May, Trustee, recorded in Volume 13383, Page 1009, Real Property Records
of Travis County, Texas.
25. Assignment of Leases and Rents dated March 2, 1999, recorded in Volume
13383, Page 1049, Real Property Records of Travis County, Texas,
executed by Cameron Road Corporate Park, Ltd., to Mellon Bank, N.A.
26. Financing Statement filed March 5, 1999, recorded in Volume 13383, Page
1059, Real Property Records of Travis County, Texas, executed by Cameron
Road Corporate Park, Ltd., as debtor to Mellon Bank, N.A., as secured
party.
27. Wastewater Easement dated April 1, 1999, recorded under Document No.
1999033800, Official Public Records of Travis County, Texas, executed by
Cameron Road Corporate Park, Ltd., to the City of Austin.
EXHIBIT "R"
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REMOVAL AREA
------------
BASIC LEASE INFORMATION
-----------------------
(Industrial Service Center Lease Agreement-Net)
-----------------------------------------------
Landlord :Cameron Road Corporate Park, Ltd.
A. Building: Cameron Road Office Park Buildings I and II
B. Address (for notices): c/o Transwestern Property Company,
Barton Oaks Plaza One, Suite 520,
901 MoPac Expressway South,
Austin, Texas 78746
Attn:
C. Telephone: (512) 328-5600
Tenant: Exodus Communications, Inc.
A. Premises: The space containing approximately 178,650 square
feet, as shown on Exhibit "B" hereto.
B. Address (for notices):
Exodus Communications, Inc.
2831 Mission College Blvd.
Santa Clara, California 95054
Attn: General Counsel
Telephone:________________________
Base Rental: See Paragraph 1(b) of the Lease
Initial Estimated
Operating Expense Rental: $1.5079 per square foot per year;
comprised of the following (estimated) components:
taxes: $1.26 per square foot per year;
insurance: $0.08 per square foot per year;
management fees: $0.1679 per square foot per year
Security Deposit: $26,812.50 due and payable upon execution of the Lease.
Prepaid Rental: $ 26,812.50 due and payable upon execution of the
Lease.
Tenant's Pro Rata Share: One Hundred percent (100%)
Commencement Date: The date Landlord delivers the Phase I Premises to Tenant.
Lease Term: A period of one hundred forty-four (144) months from the Rent
Commencement Date; provided that if the Rent Commencement Date is a date other
than the first day of a calendar month the Lease Term shall consist of one
hundred forty-four (144) calendar months in addition to the remainder of the
calendar month in which the Rent Commencement Date occurs, subject to renewal
as provided in Exhibit "G" to the Lease.
Approximate Rentable Area in the Premises: 178,650 square feet of Rentable
Area
Approximate Rentable Area in the Project: 178,650 square feet of Rentable Area
Landlord's Agent(s): Transwestern Commercial Services
Guarantor(s): None
Permitted Use: Warehouse and distribution, office, research and development,
light industrial, internet data center and all legal uses related to the
foregoing.
The foregoing Basic Lease Information shall be construed in conjunction
with the references thereto contained in other provisions of the Lease and
shall be limited by such other provisions. Each reference in the Lease to any
of the foregoing Basic Lease Information shall be construed to incorporate
each term set forth hereinabove as so limited. In the event of any conflict
between any Basic Lease Information and the Lease, the terms of the Lease
shall control.
ADDENDUM TO EXHIBIT "D"
TO LEASE AGREEMENT DATED JUNE __, 1999 BETWEEN EXODUS COMMUNICATIONS,
INC. AND CAMERON ROAD CORPORATE PARK, LTD.
The parties acknowledge that the Tenant shall (1) request change
orders that will reconfigure or delete items from the Base Building Work
which, in turn, will result in cost savings to Landlord (the "Shell
Savings") and (2) request change orders that will reconfigure or add
items to the Base Building Work which, in turn, will result in
additional costs to Landlord (the "Shell Expenses"). The amount of the
Shell Savings and the Shell Expenses shall be calculated in good faith
by the parties as soon as practicable after the parties obtain the
information necessary to make such calculations.
Notwithstanding anything to the contrary in the Lease, Landlord
shall deposit the Shell Savings into escrow, provided, however, that the
Landlord shall have no obligation to deposit into such escrow an amount
greater than the Shell Expenses. Furthermore, the Shell Expenses shall
be deducted from the Allowance as set forth with more particularity in
the second full paragraph of Section 4 of the Work Letter Agreement. By
way of example, if the Shell Expenses are $200,000 and the Shell Savings
are $220,000, Landlord will only be obligated to deposit $200,000 into
escrow and will be entitled to deduct $200,000 from the Allowance as
described in Section 4 of the Work Letter Agreement. Similarly, if the
Shell Expenses are $250,000 and the Shell Savings are $220,000, Landlord
shall deposit $220,000 into escrow and will be entitled to deduct
$250,000 from the Allowance as described in Section 4 of the Work Letter
Agreement.
The escrow for the Shell Savings shall be an interest bearing
escrow account with an escrow holder reasonably acceptable to Landlord
and Tenant, and shall have a term equal to four years from the Rent
Commencement Date, unless the Shell Savings are earlier disbursed in
full in accordance with the terms of the escrow. If Tenant defaults
under this Lease and fails to cure such default within the applicable
cure period, if any, Landlord may, without prejudice to any other remedy
Landlord may have, use the Shell Savings to the extent necessary to cure
such default. If Tenant purchases the Project as set forth in Exhibit
I, the Shell Savings shall (i) be released to Tenant at the closing of
such sale, and Landlord shall thereafter have no claim or right to the
Shell Savings, or, (ii) at Tenant's option, be released to Landlord as a
credit against the purchase price. Except as set forth above, upon
expiration of the four year term of the escrow account, the Shell
Savings shall be (i) released to Tenant, provided that Tenant is then in
occupancy of both Building I and Building II in their entirety, or (ii)
released to Landlord if Tenant is not then in occupancy of Building I
and Building II in their entirety. Landlord and Tenant shall work
together in good faith in the preparation of escrow instructions to
implement the foregoing. The parties shall use commercially reasonable
efforts to ensure that such instructions are executed by the parties on
or before July 31, 1999.
EXHIBIT 10.61
LEASE PRIVATE
FROM
100 TCD ASSOCIATES LIMITED PARTNERSHIP AND
TW CONROY 2 LLC
TO
EXODUS COMMUNICATIONS, INC.
580 WINTER STREET, WALTHAM, MA
Section Table of Contents Page
1.1 REFERENCE DATA 1
2. PREMISES 3
2.1 Premises 3
2.2 Right of First Refusal For Additional
Space 3
2.3 Landlord's Reservations 4
3. COMMENCEMENT, TERM OF LEASE AND TERMINATION 4
3.1 Condition And Delivery Of Premises 4
3.2 Termination Date 4
3.3 Option To Extend 5
4. IMPROVEMENTS 5
4.1 New Roof Installation 5
4.2 Tenant's Fixturing And Improvements 6
5. USE OF PREMISES 8
5.1 Permitted Use 8
5.2 Prohibited Uses 8
5.3 Licenses And Permits 8
5.4 Signs 8
6. RENT 8
6.1 Annual Fixed Rent 8
6.2 Additional Rent, Taxes and Other Expenses 12
6.3 Late Charges 14
6.4 Security Deposit 14
7. SERVICES 15
7.1 Utility Expenses 15
7.2 Operating Cost 15
7.3 Repairs For Account Of Tenant 18
7.4 Curtailed Services 18
7.5 Payment For Tenant's Work 19
7.6 Cleaning Of Premises 19
7.7 Landlord's Maintenance 19
8. TENANT'S ADDITIONAL COVENANTS 19
8.1 Compliance With Law 19
8.2 Tenant's Indemnity 19
8.3 Tenant's Property Is Tenant's Risk 20
8.4 Overloading, Nuisance; Volatile Or
Dangerous Substances 20
8.5 Maintenance Of Premises 20
8.6 Yield Up 21
8.7 Alterations And Improvements By Tenant
After Term Commencement 22
8.8 Floor Load; Heavy Machinery 23
8.9 Assignment And Subletting 23
8.10 Landlord's Access To Premises 24
9. INSURANCE 24
9.1 Public Liability Insurance 24
9.2 Casualty Insurance 25
9.3 Workmen's Compensation 25
9.4 Certificate Of Insurance 25
9.5 Landlord's Insurance 25
9.6 Waiver of Subrogation 25
9.7 Increase In Insurance Risk 26
10. DAMAGE TO PREMISES AND CONSEQUENCES 26
OF EMINENT DOMAIN
10.1 Untenantability 26
10.2 Eminent Domain 27
11. DEFAULT AND REMEDIES 28
11.1 Events of Default 28
11.2 Damages - Termination 29
11.3 Effect Of Tax And Operating Expenses
On Damages 30
11.4 Landlord's Expenses In Performing
Obligations Of Tenant 31
11.5 Landlord's Remedies Not Exclusive 31
11.6 Effect Of Waivers Of Default 31
11.7 Repeated Defaults 31
12. LANDLORD'S FINANCING 31
12.1 Subordination 31
12.2 Estoppel Certificate 32
12.3 Assignment of Rents 32
13. TENANT'S FIRST OFFER OPTION 32
13.1 Option To Purchase 32
14. HOLDING OVER 33
14.1 Holding Over 33
15. RESPONSIBILITY REGARDING
HAZARDOUS SUBSTANCES 33
15.1 Hazardous Substances 33
15.2 Prior Remedial Action 34
15.3 Lessee's Responsibility 34
15.4 Environmental Clean-Up 34
15.5 Tenant's Indemnity 35
15.6 Landlord's Indemnity 35
16. MISCELLANEOUS PROVISIONS 35
16.1 Notices 35
16.2 Quiet Enjoyment 35
16.3 Limitation Of Landlord's Liability 35
16.4 Acts of God 36
16.5 Applicable Law And Construction 36
16.6 Broker 36
16.7 Financing Requirements 36
16.8 Agreement Made Only When Lease Signed 37
16.9 Recording 37
16.10 Governing Law 37
16.11 Warranty of Authority 37
16.12 Attorney's Fees 37
16.13 Satellite Dish 38
16.14 Mortgagee's Approval 38
EXHIBIT A - Floor Plan of Premises
EXHIBIT B - Plan of Exclusive Area for MFS
EXHIBIT C - Plan of Parking
EXHIBIT D - Description of Property
EXHIBIT E - Amortization Schedule And Formula
EXHIBIT F - Non-Disturbance, Attornment And
Subordination Agreement
EXHIBIT G - Work Letter
EXHIBIT H - Tenant's Rules And Regulations For
Access To The Premises
SCHEDULE A- Landlord Allowance
SCHEDULE B- Tenant's Improvements Owned by Tenant
LEASE
1.1 REFERENCE DATA. Each reference in this Lease to the following
subjects shall be construed to incorporate the data stated in this
Section 1.
DATE: June , 1999
PREMISES: A portion of the single story building now known and numbered
580 Winter Street in Waltham, Massachusetts ("Building") containing 64,568
rentable square feet, as outlined on the floor plan attached hereto on
Exhibit A (the "Premises").
LANDLORD: 100 TCD Associates Limited Partnership and TW Conroy 2
LLC
ADDRESS OF LANDLORD: 5 Campanelli Circle, Canton, MA 02021
TENANT: Exodus Communications, Inc., a corporation duly organized under
the laws of the State of Delaware.
ADDRESS OF TENANT: 2831 Mission College Blvd., Santa Clara, California
95054
ORIGINAL TERM: Twelve (12) years
COMMENCEMENT DATE: September 16, 1999.
TERMINATION DATE: September 15, 2011.
LEASE YEAR: Successive 12 month periods beginning on the Commencement
Date.
TWO (2) OPTIONS TO EXTEND: September 16, 2011 to September 15, 2016;
September 16, 2016 to September 15, 2021.
ANNUAL FIXED RENT FOR ORIGINAL TERM: see Section 6.1
First Lease Year: 1,291,360
Second Lease Year: 1,291,360
Third Lease Year: 1,291,360
Fourth Lease Year: 1,291,360
Fifth Lease Year: 1,388,212
Sixth Lease Year: 1,388,212
Seventh Lease Year: 1,388,212
Eighth Lease Year: 1,388,212
Ninth Lease Year: 1,517,348
Tenth Lease Year: 1,517,348
Eleventh Lease Year: 1,517,348
Twelfth Lease Year: 1,517,348
TENANT'S PERCENTAGE OF REAL ESTATE TAXES: 80.9%.
TENANT'S PERCENTAGE OF OPERATING EXPENSES: 80.9%.
PERMITTED USES: Offices and data center and other related uses and all
other uses permitted under the applicable zoning laws of the City of
Waltham, and not in violation of Section 8.1.
SECURITY DEPOSIT: $450,000 at the time of execution of this Lease in the
form of cash or in the form of an unconditional letter of credit from a
national banking institution. Provided Tenant is not in default beyond any
and all applicable notice and cure periods under the terms, covenants and
conditions of this Lease at the time of such reduction, then the Security
Deposit (either the cash or unconditional letter of credit) shall be
reduced in each Lease Year, as follows:
Lease Year Amount
First $450,000
Second 450,000
Third 300,000
Fourth 250,000
Fifth 150,000
Sixth through Twelfth 150,000
Notwithstanding the foregoing, if Tenant has four (4) consecutive quarters
of reporting a profit and has a net worth in excess of $50 million, all as
certified to by a nationally recognized certified public accounting firm,
then the Security Deposit shall be reduced to one (1) months rent then in
effect.
BROKER: Fallon Hines & O'Connor and CB Richard Ellis/Whittier Partners.
LIST OF EXHIBITS: Exhibit A - Floor Plan of Premises
Exhibit B - Plan of Exclusive Area For MFS
Exhibit C - Plan of Parking
Exhibit D - Description of Property
Exhibit E - Amortization Schedule And Formula
Exhibit F - Non-Disturbance, Attornment And
Subordination Agreement
Exhibit G - Work Letter
Exhibit H - Tenant's Rules And Regulations For
Access to The Premises
Schedule A - Landlord Allowance
Schedule B - Tenant's Improvements Owned By
Tenant
2. PREMISES.
2.1 PREMISES. The Premises are located on the ground floor of the
Building and contain 64,568 rentable square feet, as more particularly set
forth in Section 1.1, and as more particularly shown on the floor plan
attached hereto as Exhibit A and the right to use the roof (except as
hereinafter set forth) and the portion of the Property exterior to the
Building for Tenant's right to install Tenant's improvements described in
Section 4.2 hereof, together with the right to use in common with others
entitled thereto (i) any common hallways and entranceways necessary for
access to said Premises and the lavatories nearest thereto (ii) the loading
dock with MFS Intelenet of Massachusetts, Inc. ("MFS") and (iii) all common
areas of the Property exterior to the Building, except the common area used
exclusively by MFS and the 2500 square foot area of the roof used
exclusively by MFS, as shown on the plan attached as Exhibit B, and the
right to use 189 parking spaces on the Property [less any parking spaces
used by Tenant for installation of any above ground diesel fuel storage
tank(s)] of which, Tenant shall be entitled to at least 4 reserved parking
spaces, as shown on the plan attached as Exhibit C.
2.2 RIGHT OF FIRST REFUSAL FOR ADDITIONAL SPACE. Provided Tenant is not
in default beyond any and all notice and cure periods of any terms,
covenants or conditions contained in this Lease, in the event that Landlord
receives a bona-fide offer from any prospective tenant(s) to lease any
portion of the approximately 15,250 rentable square feet of office space
currently occupied by MFS Intelenet of Massachusetts, Inc., then Landlord
shall, upon receipt of such a bona-fide offer, and any time such an offer
is received, immediately notify Tenant in writing of the full details of
such an offer, whereupon Tenant shall have fifteen (15) business days after
receipt of such written notice to exercise Tenant's prior right of first
refusal to lease such space on the same terms and conditions as described
below. In the event that Tenant declines or fails to timely exercise
Tenant's prior right of first refusal, as aforesaid, then Landlord shall be
free to lease such space to the prospective third party tenant(s) and, if
requested by Landlord, Tenant shall confirm in writing such declination or
failure to exercise such right of first refusal. In the event that Tenant
exercises the aforesaid right of first refusal, then the same terms,
covenants and conditions in this Lease contained shall apply to said
additional office space, except for the rent and Tenant's percentage of
real estate taxes and operating expenses, and said office space shall be
deemed part of the Premises. Following Tenant's failure to exercise and
Landlord's entering into a lease of such space on substantially the same
terms and conditions as those offered to Tenant in its prior right of first
refusal, as hereinabove set forth, Tenant's prior right of first refusal
with respect to such offered space shall not be reinstated, and Landlord
shall not be obligated to again offer the offered space to Tenant as set
forth above in this Paragraph 2.2.
2.3 LANDLORD'S RESERVATIONS. Landlord reserves access to the Premises, as
more particularly set forth in Section 8.10 hereof.
3. COMMENCEMENT, TERM OF LEASE AND TERMINATION.
3.1 CONDITION AND DELIVERY OF PREMISES. The Premises are leased to Tenant
in their existing "as is" condition without warranty or representations,
except as otherwise specifically set forth in this Lease and except further
that the Premises shall be vacant and in broom clean condition with all
existing building systems, structure, exterior parking areas and walkways
in good working order. Landlord shall deliver access to the Premises to
Tenant no later than June 14, 1999, in order to support Tenant's ability to
install its initial Tenant improvements prior to the Commencement Date, as
more particularly set forth in Section 1.1 hereof. If the Premises are not
available for Tenant's access for Tenant's fixturing and improvements
pursuant to Section 4.2 in the condition required by this Section 3.1 by
June 14, 1999, to support Tenant's construction of its initial improvements
to the Premises (as described in Section 4.2 hereof) prior to the
Commencement Date set forth in Section 1.1, then notwithstanding the
Commencement Date, rent shall be abated on a day-for-day basis for the
initial portion of the Term equal to such period of Landlord's delay. If
access for Tenant's fixturing and improvements pursuant to Section 4.2 in
such condition is not delivered to Tenant by December 14, 1999, Tenant
shall have the right to terminate this Lease and Landlord shall return any
payments made by Tenant to Landlord. In addition, if the cause for such
delays results solely from Landlord's gross negligence or willful
misconduct, Landlord shall be liable for any holdover rent incurred by
Tenant arising from its inability to vacate its existing premises due to
such unavailability.
Notwithstanding the foregoing, to the extent MFS's obligations under the
MFS Lease, Landlord shall use its best efforts to cause MFS to correct any
existing building code violations on record with the City of Waltham as of
the date of this Lease relating to the 15,250 square feet in the Building
occupied by MFS, otherwise Landlord shall correct such building code
violations, which code violations either prevent Tenant from completing
Tenant Improvements or occupying the Premises.
3.2 TERMINATION DATE. To have and to hold the Premises for the term
commencing on the Commencement Date and ending on the Termination Date or
such earlier date upon which said term may expire or be terminated pursuant
to this Lease or pursuant to law (collectively, the "Termination Date").
3.3 OPTION TO EXTEND. Provided Tenant is not in default of any material
terms, covenants or conditions contained in this Lease beyond any and all
applicable notice and cure periods at the time of Tenant's exercise of its
option to extend the Original Term, as hereinafter set forth, and provided
further that the Tenant is not in default of any material terms, covenants
or conditions contained in this Lease beyond any and all applicable notice
and cure periods at the time of the commencement of each extended term,
Tenant shall have the right at its election to extend the Original Term of
this Lease for two (2) additional periods, the first option period shall
commence September 16, 2011 and terminate September 15, 2016 (hereinafter
referred to as "First Option" or "First Option Period", as case may be) and
the second option period shall commence September 16, 2016 and terminate
September 15, 2021 (hereinafter referred to as "Second Option" or "Section
Option Period", as the case may be), said First Option Period and Second
Option Period shall be collectively referred to as the "extended term",
provided further that Tenant gives to Landlord written notice of the
exercise of the election of the First Option and the Second Option,
respectively, at least nine (9) months prior to the expiration of the
Original Term in the case of the First Option and at least nine (9) months
prior to the expiration of the First Option Period in the case of the
Second Option. All the same terms, covenants and conditions in this Lease
contained shall apply to the Extended Term, except that the rent shall be
adjusted as provided in Article 6, Section 6.1.2 and that the Tenant shall
not have any further option to again extend the term of this Lease beyond
the extended term. If the Tenant shall give notice of the exercise of an
election in the manner and within the time provided herein, the Term shall
be extended upon the giving of notice without the requirements of any
action or the execution of further instruments on the part of Landlord and
Tenant, except only to the extent to confirm Annual Fixed Rent and
percentage of Tenant's obligation for real estate taxes and operating
expenses and the like. The Original Term and Extended Term shall be
collectively referred to as the "Term".
4. IMPROVEMENTS.
4.1 NEW ROOF INSTALLATION. Tenant shall, prior to the Commencement Date,
cause a new roof to be installed over the entire Building by G. Broilette
Sons, Inc., as a sub-contractor of Tenant's general contractor responsible
for Tenant's improvements described in Section 4.2. The roof
specifications shall be EPDM rubber membrane roof with overlapping seams
(brand to be Carlyle or Firestone Commercial 60 Ply.). Tenant warrants
that Tenant shall obtain from Tenant's roofing contractor for the Building,
a warranty of the roof guarantying that the roof installed pursuant to this
Section 4.1 shall be watertight for a period of at least ten (10) years,
and Tenant agrees to use reasonable efforts to enforce said warranty.
Landlord agrees to pay $199,045.00 towards the cost of the new roof; and
Tenant agrees that $49,045.00 of said cost shall be funded by means of a
reduction of Landlord's allowance, as set forth in Schedule A attached
hereto.
4.2 TENANT'S FIXTURING AND IMPROVEMENTS. Provided Tenant obtains all
insurance coverage required in this Lease, Landlord shall tender access of
the Premises to Tenant on or before June 14, 1999, Tenant may from and
after said date and over the course of the term enter upon the Premises at
Tenant's own risk at such times as it deems appropriate at Tenant's sole
cost and expense, (except for Landlord's obligation to fund certain costs
and expenses in the amount of Landlord's allowance set forth in Schedule A
attached hereto), make various Tenant improvements thereon, install
fixtures and other equipment, including without limitation telephone
installation and data cabling, all without unreasonably interfering with
Landlord's improvements in the Building and without unreasonable
interference with the other Tenant in the Building. All Tenant's work
shall be done in a good and workmanlike manner in full compliance with all
laws and ordinances applicable thereto and in accordance with plans and
specifications prepared by Tenant, which plans and specifications shall be
submitted to Landlord for Landlord's prior written approval, which approval
shall not be unreasonably withheld or delayed. In addition to the
foregoing, Tenant shall have the right prior to the Commencement Date and
at any time during the term at Tenant's sole cost and expense, subject to
Tenant's right to receive reimbursement from Landlord's allowance set forth
in Schedule A, to (i) install, maintain, repair, replace and remove a fence
with electronic gates around the perimeter of the Building with access for
other tenants in the Building, subject to the prior written approval of
Landlord, which approval shall not be unreasonably withheld, conditioned or
delayed; (ii) install, maintain, repair, replace and remove a connector
passage (non-pedestrian) and/or a trench below grade level for a conduit
pipe with electronic cabling connecting the Premises to the adjacent
building now known and numbered 600 Winter Street, subject to the consent
of the owner of 600 Winter Street and provided the same shall not interfere
with the access or use of the area between 580 and 600 Winter Street; (iii)
install, maintain, repair, replace and remove various sized satellite
dishes (4 feet to 10 feet in diameter) and HVAC equipment on the roof,
subject to the repair and indemnification provisions of Section 16.13; (iv)
install, maintain, repair, replace and remove fiber optic, telephone or
electric capacity to the Premises; and (v) install generators and have
above-ground tanks for the storage of diesel fuel within a fenced in area
approved by Landlord, as depicted on Exhibit C outside the Building in an
area that will not interfere with the use of the Property, all of the
foregoing (i.e. (i) through (v) above) being subject to compliance with the
laws, rules and regulations of the applicable governmental authorities
having jurisdiction. Title to the improvements to the Premises made by
Tenant pursuant to this Section 4.2 and more particularly identified in
Schedule B attached hereto shall vest in Tenant, as permitted by the terms
and conditions of Section 8.6.1 hereof. Title to all other improvements
shall immediately and without further action upon their incorporation into
the applicable Property (1) become property of Landlord, (2) be subject to
this Lease, (3) be titled in the name of Landlord, and (4) shall remain a
part of the Premises following the expiration or earlier termination of
this Lease. Tenant, at its sole cost and expense, shall repair in a good
and workmanlike manner any and all damage done to the Property due to the
removal, detachment, attempted removal or attempted detachment of any of
Tenant's improvements from the Property and all such repairs shall be
completed by the earlier of (a) thirty (30) days after such removal,
detachment, attempted removal or attempted detachment of the applicable
improvements from the Property and (b) the Expiration Date. Tenant shall
not remove, detach or attempt to remove or detach any improvements from the
Property except in accordance with the provisions of this Section 4.2. The
Landlord acknowledges Tenant's right to finance and to secure under the
Uniform Commercial Code, Tenant's inventory, furnishings, furniture,
equipment, machinery, leasehold improvements and other personal property
located at the Property, other than the fixtures, equipment and other
improvements required to be titled in the name of Landlord, and Landlord
agrees, at Tenant's cost and expenses, to execute Landlord's waiver forms
and other similar documentation (in form and substance reasonably
satisfactory to Landlord) in favor or any purchase money seller, Landlord
or lender who has financed or may finance in the future such items.
The construction process provided for in the work letter attached hereto as
Exhibit G is acknowledged by Landlord and Tenant to be the process for
approval and construction of Tenant's improvements pursuant to this Section
4.2.
Landlord hereby agrees that, so long as no Lease event of default shall
have occurred and be continuing, the Landlord shall, from time to time at
the request of the Tenant, in connection with the work contemplated by this
Section 4.2, (i) grant temporary easements and other rights in the nature
of easements to public utilities with respect to the Property, (ii) release
existing easements or other rights in the nature of easements which are for
the benefit of the Property, (iii) execute and deliver to any person any
instrument appropriate to confirm or effect such grants or releases, and
(iv) execute and deliver to any person such other documents or materials in
connection with the development, construction, testing or operation of the
Tenant improvements anticipated in this Section 4.2, including reciprocal
easement agreements, provided, that each of the agreements referred to in
this Section 4.2(a) shall be commercially reasonable terms so as not to
diminish the value of the Property, the Building and/or the Premises in any
material respect, (b) shall not interfere with the use and occupancy of the
Property and/or Building by other tenant(s) and those claiming by through
and under such tenant(s) and (c) shall be automatically cancelled and
terminated upon the cancellation and/or termination of the Lease by
instrument duly recorded in the Middlesex South Registry of Deeds, as
specifically set forth in the Notice of Lease to be recorded in said
Registry.
5. USE OF PREMISES
5.1 PERMITTED USE. Tenant shall use the Premises only for the purposes
set forth in Section 1 and for no other purposes or purposes.
5.2 PROHIBITED USES. Without limiting the generality of Section 5.1,
Tenant shall not use any part of the Premises (a) in any manner which would
violate this Lease, (b) for any unlawful purpose, or (c) in any manner
which in Landlord's reasonable judgment impairs the appearance or
reputation of the Building.
5.3 LICENSES AND PERMITS. Tenants shall obtain at its expense all licenses
or permits required for the lawful conduct of Tenant's business.
5.4 SIGNS. Tenant shall not place signs on the Premises or on the
exterior of the Building, in any window or in any common or public area
without Landlord's prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. Tenant's signs shall be
purchased and installed at Tenant's sole cost and expense and shall comply
with applicable law. Landlord acknowledges and agrees that Tenant shall be
permitted by Landlord to identify its occupancy of the Premises by exterior
signage on the Building and install an exterior flag, all if permitted by
local ordinance or variance thereof.
6. RENT
6.1 ANNUAL FIXED RENT. In consideration of the demising and leasing of
the Premises by Landlord, Tenant covenants to pay to Landlord in lawful
money of the United States as annual rent for the Premises in monthly
installments commencing on the Commencement Date and on the 1st day of each
and every month thereafter, as follows:
Lease Year Annual Monthly
First Lease Year
(9/16/99 to 9/15/00) 1,291,360 107,613.33
Second Lease Year
(9/16/00 to 9/15/01) 1,291,360 107,613.33
Third Lease Year
(9/16/01 to 9/15/02) 1,291,360 107,613.33
Fourth Lease Year
(9/16/02 to 9/15/03) 1,291,360 107,613.33
Fifth Lease Year
(9/16/03 to 9/15/04) 1,388,212 115,684.33
Sixth Lease Year
(9/16/04 to 9/15/05) 1,388,212 115,684.33
Seventh Lease Year
(9/16/05 to 9/15/06) 1,388,212 115,684.33
Eighth Lease Year
(9/16/06 to 9/15/07) 1,388,212 115,684.33
Ninth Lease Year
(9/16/07 to 9/15/08) 1,517,348 126,445.66
Tenth Lease Year
(9/16/08 to 9/15/09) 1,517,348 126,445.66
Eleventh Lease Year
(9/16/09 to 9/15/10) 1,517,348 126,445.66
Twelfth Lease Year
(9/16/10 to 9/15/11) 1,517,348 126,445.66
6.1.2 In the event that Tenant exercises its right to extend the Original
Term of this Lease, as set forth in Section 3.3 hereof, Tenant agrees to
pay during the extended term 95% of the current market rent charged for
similar office space in the Route 128 central market (i.e. Waltham,
Lexington, Newton, Needham and Wellesley) at the time of the commencement
of the First Option Period and the Second Option Period, respectively. In
the event that Landlord and Tenant, after acting reasonably and in good
faith, cannot agree upon the aforesaid current market value within a thirty
(30) day period ending eight (8) months prior to the expiration of the
Original Term in the case of the First Option and eight (8) months prior to
the expiration of the First Option Period in the case of the Second Option,
then, and in such an event, Landlord and Tenant shall select an independent
commercial real estate broker or real estate appraiser to determine the
fair market rental value of the Premises based on the then fair market
value of similar office space in the Route 128 central market (i.e.
Waltham, Lexington, Newton, Needham and Wellesley). If Landlord and Tenant
are unable to agree upon a mutually acceptable broker to make such
determination within five (5) business days after Tenant exercises such
right, or if a broker is unable to render an opinion with knowledge of the
office rental market in the area around the Building, then the parties
shall resort to arbitration of the determination of fair market rental
value as provided herein. In determining the fair market rental value, the
arbitrators shall consider only buildings of comparable location, age and
type of construction in the Route 128 central market, as identified above,
without consideration for the Tenant Improvements to the extent said Tenant
Improvements are in excess of tenant improvements generally allowed for
office buildings in the Route 128 Central Market at the time of such
determination of fair market rental value.
Arbitration of Fair Market Rental Value. If the purpose of the
arbitration is to determine the fair market rental value of the Premises,
then the following rules shall apply:
(a) All arbitration shall occur at a location in Boston,
Massachusetts, chosen by the arbitrators and shall be conducted pursuant to
the rules of the American Arbitration Association. The party desiring such
arbitration shall give written notice to that effect to the other party and
simultaneously therewith also shall give written notice to the American
Arbitration Association, requesting such organization to select, as soon as
possible but in any event within the next thirty (30) days, three
arbitrators with expertise in the subject matter of the arbitration. Each
arbitrator shall be a member of the American Institute of Real Estate
Appraisers (or successor organization, or if no such organization exists,
then from persons of similar professional qualifications), with the
designation M.A.I. and with at least ten (10) years of experience
appraising commercial properties in the Boston metropolitan area;
(b) The hearing shall be conducted such that each of Landlord and
Tenant shall have two (2) hours only to present oral evidence or argument,
but either party may present whatever written evidence or argument it deems
appropriate prior to the hearing (with copies of such written evidence
being delivered concurrently to the other party); and
(c) Within 30 days after the conclusion of the hearing, the
arbitrators shall again meet and simultaneously disclose in writing their
respective determinations of the fair market rental value. If the
determination of at least two of the arbitrators shall be identical in
amount, said amount shall be the fair market rental value. If the
determinations of at least two of the arbitrators shall not be identical in
amount, the fair market rental value, shall be determined as follows: (a)
if neither the highest nor the lowest determination differs from the middle
determination by more than ten percent (10%) of such middle determination,
then the Fair market rental value shall be the average of all three
determinations, and (b), if clause (a) does not apply, then the fair market
rental value shall be the average of the middle determination and the
determination closest in amount to said middle determination.
Landlord and Tenant shall split the cost of determining the fair market
value of the Premises. The decision of the appointed broker or appraiser,
as the case may be, shall be final and binding, which decision shall be
made within a thirty (30) day period ending seven (7) months prior the
expiration of the Original Term in the case of the First Option and seven
(7) months prior to the expiration of the First Option Period in the case
of the Second Option.
6.1.3 All rent and other payments required to be made by Tenant pursuant
hereof shall be paid and made payable to Landlord at 5 Campanelli Circle,
Canton, Massachusetts until Tenant is otherwise notified by Landlord. All
payments shall be made monthly in advance on the 1st day of each calendar
month during the term of this Lease unless such other date is specified by
Landlord upon written notice to Tenant. If the term shall commence or
terminate upon a day other than the 1st day of a calendar month, then
Tenant shall pay, upon the commencement date of the Term, a pro rata
portion of the fixed monthly rent described above and pro rata on a per
diem basis with respect to any such fractional calendar month. The rent
shall be payable on the 1st of each calendar month in advance, at such
place as shall be designated by Landlord from time to time by written
notice to Tenant.
6.1.4 If the due date of any amount payable under this Lease is a
Saturday, Sunday or legal holiday at the location of the principal business
office of Landlord or the holder of the Mortgage, such amount shall be
deemed to be due on the nearest business day.
6.1.5 The obligation of Tenant to make the payments required by this
Lease, and to perform and observe the other agreements on its part
contained in this Lease, shall be absolute and unconditional and shall not
be subject to any right of recoupment, set off, counterclaim, abatement
(except as hereinafter specifically set forth), suspension, deduction or
defense. Tenant shall not (i) suspend or discontinue payment of any rent
or additional rent pursuant to this Lease or (ii) fail to perform and
observe any of its other agreements contained in this Lease for any cause
or reason including, but not limited to, the occurrence of any acts or
circumstances that may constitute failure of consideration, destruction of
or damage to the Premises (except as specifically provided in Sections 10.1
and 10.2 hereof), commercial frustration of purposes, any change in the tax
or other laws or administrative rulings of or administrative actions by or
under authority of the United States of America or the Commonwealth of
Massachusetts.
6.1.6 Except only as hereinafter specifically set forth in this Lease, it
is understood and agreed that this is a totally triple net lease, meaning
and intending to mean that with the exception of the Landlord's maintenance
obligations set forth in Section 7.7, Landlord shall not be responsible for
expenses of any kind or nature arising out of or in connection with the
Premises and Tenant shall be responsible for Tenant's pro rate share of any
and all such expenses, including without limitation, any and all real
estate taxes, municipal charges and betterments, non-structural repairs,
maintenance, replacements, renovations, operating expenses, insurance,
licenses and utilities (e.g. gas, electricity, water, sewer, fuel, heating,
lighting, air conditioning, telephone, cable and the like).
6.2 ADDITIONAL RENT, TAXES AND OTHER EXPENSES.
6.2.1 TAXES AND ASSESSMENTS. Commencing on the day Landlord delivers
access to the Premises to Tenant for Tenant to install Tenant improvements,
the Tenant shall pay, within ten (10) days after receipt by Tenant of
Landlord's bill, as additional rent hereunder, in each year during the term
Tenant's pro rata percentage as set forth in Section 1.1 of the real estate
taxes (meaning all general and special taxes and assessments imposed by
governmental authorities of the City of Waltham having jurisdiction over
the land, buildings and improvements of which the Premises forms a part and
assessed against the owners of the real property; provided, however, with
regard to special assessments, Tenant shall only be responsible for a
reasonable allocation thereof based on the term of the Lease). In
addition, Tenant shall pay all ad valorem taxes, if any, allocable to
Tenant's signs and business equipment in the Premises. If some method or
type of taxation replaces the current method of assessment of real estate
taxes, or the type thereof by the City of Waltham, Tenant agrees that
Tenant shall pay its pro rata share of the same; and if a tax (other than a
Federal or State net income tax) is assessed on account of the rents or
other charges payable by Tenant to Landlord under the Lease, Tenant agrees
to pay its pro rata share of the same unless applicable law prohibits the
payment of such tax by Tenant. Tenant's liability under this paragraph for
any tax year which does not fall entirely within the term of this Lease
shall be apportionately prorated. Notwithstanding the foregoing, nothing
herein contained shall otherwise require or be construed to require Tenant
to reimburse Landlord for any inheritance, estate, succession, transfer,
gift, franchise income or earnings, profit, excess profit, capital stock,
capital levy or corporate or other similar tax which is or may be imposed
upon Landlord or upon Landlord's business. Real estate taxes and
assessments subject to reimbursement by Tenant shall not include (i) any
item to the extent otherwise included in Landlord's Operating Expenses,
(ii) any environmental assessments, charges or liens arising in connection
with the remediation of Hazardous Materials from the Property which existed
prior to the Commencement Date or which was introduced onto the property by
Landlord or its representatives, (iii) any of Landlord's personal property
taxes, or (iv) any excise transfer taxes caused by any change in ownership
of the Property or any part thereof. If a reduction in property taxes
and/or assessments is obtained for any year of the Term during which Tenant
paid tenant's percentage of taxes and assessments, then Landlord shall
provide Tenant with a credit against Tenant's next due obligations for Rent
and Tenant's Percentage of Operating Expenses or, if none, refund such
amounts to Tenant within thirty (30) days based on such adjustment.
If at least twenty (20) days prior to the last day for filing
application for abatement of real estate taxes for any tax year, Tenant
shall give notice to Landlord that Tenant desires to file an application or
abatement of real estate taxes for said tax year and, if within ten (10)
days after the receipt of said notice, Landlord shall not give notice to
Tenant that it shall file such application, Tenant shall have the right
either in its own name or in the name of Landlord, but at its own cost and
expense to file such application. If within ten (10) days after receipt by
Landlord of such notice by Tenant, Landlord shall give Tenant notice that
Landlord shall file such application, Landlord shall file the same prior to
the expiration of the time for filing of the same, at its own cost and
expense. In the event, notwithstanding the foregoing, if any abatement by
whomever prosecuted shall be obtained, the cost and expense of obtaining
the same shall be a first charge upon the said abatement. If Tenant shall
file an application for abatement pursuant to the provisions of this
paragraph, Tenant will prosecute the same to final determination with due
diligence and shall not, without Landlord's written consent (which consent
will not be unreasonably withheld, conditioned or delayed) settle,
compromise or discontinue the same, except, however, Tenant may discontinue
the prosecution of the same at any time after giving Landlord notice
thereof and an opportunity to take over the prosecution of the same. If
Landlord shall file an application for abatement for any tax year after
having received notice from Tenant that Tenant desires to file an
application for abatement for said tax year, Landlord shall prosecute the
same to final determination with due diligence and shall not, without
Tenant's written consent (which consent will not be unreasonably withheld,
conditioned or delayed), settle, compromise or discontinue the same,
except, however, Landlord may discontinue the prosecution of the same at
any time after giving Tenant notice thereof and an opportunity to take over
the prosecution of the same. If either party shall prosecute an
application for abatement, the other party will cooperate and furnish any
pertinent information in its files reasonably required by the prosecuting
party.
Neither the filing of an application for abatement of real estate
taxes, nor the prosecution of any other proceedings contesting the amount
or validity of any real estate taxes, shall relieve Tenant of its
obligations to pay real estate taxes as and when provided herein. All
abatements of real estate taxes previously paid by Tenant shall belong to
Tenant less the costs and expenses reasonably incurred in obtaining such
abatement.
6.2.2 BILLING OF TAXES. Landlord shall provide Tenant with a statement
showing Tenant's actual tax liability for the preceding year. Tenant will
be credited or debited with any difference between actual and estimated tax
liability, which shall be adjusted annually. If Tenant is late in any tax
payment or Utility Expense or Operating Expense, Tenant shall pay Landlord
any interest required of Landlord by the taxing authority, or if Landlord
advances the Taxes, Tenant shall pay Landlord interest as stated in Section
6.3.
6.3 LATE CHARGES. Rent and additional rent not paid within five (5) days
of the date due shall bear interest at the rate of five percentage points
over the prime rate of BankBoston, but in no event more than eighteen
percent per annum (or at any lower maximum rate permitted by law) from the
date first due until paid.
6.4 SECURITY DEPOSIT. On the Commencement Date, Tenant shall deposit and
maintain with Landlord the Security Deposit set forth in Section 1.1 of
this Lease, which if in the form of money, Landlord may commingle with
Landlord's other funds with interest to Tenant as calculated at applicable
money market interest rates of BankBoston. If the Security Deposit is
funded by Tenant in the form of a letter of credit, then on or before the
Commencement Date, Tenant shall provide Landlord with one or more letter(s)
of credit (individually and, if more than one, collectively, the "Letter of
Credit") in a form reasonably satisfactory to Landlord and in the aggregate
amount of Four Hundred Fifty Thousand Dollars ($450,000.00), payable
pursuant to the terms and conditions set forth herein and issued by a
Boston branch of a national banking association. The Letter of credit
shall have an initial term of not less than twelve (12) months and shall be
renewable for successive twelve (12) month periods; provided, however, that
the aggregate amount of the Letter of Credit may be reduced in accordance
with Section 1.1 hereof. Landlord shall have the right to draw on the
Letter of Credit in the event that: (a) Landlord applies all or part of
the Security Deposit to any unpaid rent or other charges due from Tenant or
to cure any other defaults of Tenant as set forth herein; (b) Tenant is in
default under the Lease after expiration of any grace period; or (c) Tenant
fails to renew the Letter of Credit for the Letter of Credit to conform to
the aggregate amount requirements set forth in Section 1.1 hereof and fails
to provide to Landlord written notice of the renewal of the Letter of
Credit at least (1) month prior to its expiration date. Tenant's failure to
maintain the Security Deposit, as herein set forth shall constitute a
default of this Lease. Landlord from time to time in its discretion may
apply the Security Deposit in total or partial satisfaction of any default
by Tenant, without affecting or waiving any other rights or remedies
provided for under this Lease and in such event Tenant shall forthwith upon
demand restore the Security Deposit to the original sum deposited, subject
to the reduction set forth in Section 1.1. In the event any bankruptcy,
insolvency, reorganization or other creditor-debtor proceedings shall be
instituted by or against Tenant, or its successors or assigns, or any
guarantor of Tenant hereunder, the Security Deposit shall be deemed to be
applied first to the payment of any Rent due Landlord for all periods prior
to the institution of such proceedings and the balance, if any, of the
Security Deposit may be retained by Landlord in partial liquidation of
Landlord's damages. Landlord shall deliver the Security Deposit to the
purchaser of Landlord's interest in the Property in the event that such
interest be sold, transferred or assigned or to Landlord's lender in the
event of foreclosure and upon such transferee's delivery of written
acknowledgment of its receipt of the Security Deposit, Landlord shall be
discharged and released from all further liability with respect to the
Security Deposit or
the return thereof to Tenant, and Tenant agrees to look solely to the new
landlord for the return of the Security Deposit, and this provision shall
also apply to any subsequent transferees. Landlord shall have the right to
assign the Security Deposit to Landlord's mortgage lender, subject to the
rights of Tenant provided in this Section 6.4, in connection with financing
or refinancing of the Property if so requested by the Lender. No holder of
a mortgage or deed of trust or lessor under a ground or underlying lease to
which this Lease is or may be superior or subordinate shall be responsible
in connection with the Security Deposit, unless such mortgagee or holder of
such deed of trust or lessor shall have actually received the Security
Deposit.
7. SERVICES.
7.1 UTILITY EXPENSES. Commencing on the day Landlord delivers access to
the Premises to Tenant for Tenant to install Tenant improvements, Tenant
agrees to pay or cause to be paid as additional rent directly to the
appropriate supplier or party charged with the collection thereof all
charges for electricity and telephone service (collectively "Utility
Expenses") used, rendered or supplied by or for the Tenant upon or in
connection with the Premises during the Term, including any extensions, and
to indemnify Landlord and save it harmless against any liability or damages
on such account.
7.2 OPERATING COST. To the extent paid by Landlord and not Tenant, the
Tenant shall pay to the Landlord commencing on the day Landlord delivers
access to the Premises to Tenant for Tenant to install Tenant improvements,
as additional rent hereunder within ten (10) days after notice in writing
by Landlord, the percentage set forth in Section 1.1 for Operating
Expenses. This cost shall be prorated should this Lease be in effect with
respect to only a portion of any lease year covered by a portion of the
cost period. Operating Expenses are defined for the purpose of this Lease
as including the total cost and expense incurred in operating, repairing,
maintaining, replacing and managing the Building of which the Premises
forms a part, including without limitation, security, insurance, water and
sewer use charges, roof repairs (excluding of repairs under Section 4.1),
lighting, electrical, mechanical, utility and other systems and services,
removal of snow, trash, rubbish and other refuse, sweeping, cleaning,
routine maintenance and service of utility, heating and cooling systems,
maintenance and depreciation of machinery and equipment used in operating
and maintenance and the cost of personnel to implement such services and a
management fee equal to three (3%) percent
of the aggregate Annual Fixed Rents of the Building. Notwithstanding the
provisions in this Section 7.2, the following shall not be included within
Operating Expenses: (i) any ground lease rental; (ii) costs incurred by the
Landlord for the repair of damage to the Premises to the extent that the
Landlord is reimbursed by insurance or condemnation proceeds or by other
occupants of the Building (other than a share of their Operating Expense),
guarantors or any third parties (except that insurance deductibles paid by
Landlord may be included as an Operating Expense); (iii) costs, including
permit, license and inspection costs, incurred with respect to the
construction or installation of improvements for other tenants in the
Building, are incurred in renovating or otherwise improving, decorating,
painting or redecorating space for other occupants of the Building,
including space planning and interior design costs and fees; (iv)
depreciation, amortization and interest payments; (v) brokerage
commissions, finder's fees, attorney's fees, space planning costs,
advertising costs, and other cost incurred by Landlord in leasing or
attempting to lease other space in the Building; (vi) attorney's fees and
other costs and expenses incurred in connection with proposals,
negotiations or disputes with other present or prospective tenants or other
occupants of the Building; (vii) interest, principle, points and fees on
debt or amortization on any mortgage, deed of trust or other debt
encumbering the Property, or any part thereof; (viii) repairs, alterations,
additions, improvements or replacements made to rectify or correct any
defect in the design, materials, workmanship of the Premises or Building
not a result of any improvements or renovations undertaken by Tenant; (ix)
any improvements, alterations or expenditures of a capital nature, except
to the extent the same are amortized over the useful life of the same; (x)
damage and repairs necessitated by the negligence or willful misconduct of
Landlord or Landlord's employees, contractors or agents; (xi) any personal
property taxes payable by Tenant or by other occupants of the Building;
(xii) except as specifically set forth in this Lease, costs incurred due to
a violation by Landlord or any tenant of the terms and conditions of any
lease of space in the Building, or costs, penalties or fines arising from
Landlord's violation of any governmental Landlord's violation of any
governmental rule or authority costs incurred in correcting any building
code violations existing as of the Commencement Date not a result of
improvements or renovations undertaken by Tenant; (xiii) rule or authority
costs incurred in correcting any building code violations existing as of
the Commencement Date; (xiv) except as specifically set forth in this
Lease, Landlord's general corporate overhead and general administrative
expenses; (xv) rentals and other related expenses incurred in leasing
equipment ordinarily considered to be of a capital nature, except equipment
that is presently leased for use in, or providing services to the Property,
or that is used in providing security, operational, and maintenance
services, and equipment; (xvi) costs arising from Landlord's charitable or
political contributions or from costs or fees associated with Landlord's
membership in a trade association; (xvii) legal expenses incurred in order
for Landlord to resolve disputes with contractors regarding latent defects
in the design, materials or workmanship of the Property, or as a result of
Landlord's defending the implied covenant of quiet enjoyment in favor of
any occupant of the Building; (xviii) any late fees, assessments,
penalties, or similar charges assessed pursuant to covenants, conditions
and restrictions applicable to the Property resulting from Landlord's
negligence or willful misconduct; and (xix) expenses incurred by Landlord
in connection with services or other benefits which are not offered to
Tenant or items and services for which Tenant or any other occupants of the
Building reimburses Landlord (other than through its share of Operating
Expenses), or which Landlord provides selectively to one or more tenants,
other than Tenant, without reimbursement, and the cost of which is included
as Operating Expenses; and (xx) the costs of repairs and/or replacements of
the roof structure, foundations and structural supports of the Building not
caused by Tenant, as specifically set forth in Section 7.7 hereof.
Notwithstanding the specific itemization elsewhere in this Lease as to
certain components of Operating Expenses, Landlord shall not be entitled to
recover from all tenants of the Building more than its actual costs and
expenses of Operating Expenses.
At any time within six (6) months of Tenant's receipt of any statement from
Landlord relating to Landlord's reimbursable expenses, Landlord shall
furnish Tenant following Tenant's written request therefor, but no more
than once in any calendar year, including invoices and other source
documents relating to such reimbursable expenses. Such audit shall be
limited to the items necessary to a determination of the applicable
reimbursable expenses. In any event, if it is determined that Tenant was
overcharged by more than five percent (5%), such overcharge shall entitle
Tenant to credit against its next payment of Landlord's reimbursable
expenses the amount of the overcharge and the costs associated with the
audit (and, if such credit occurs following the expiration of the Term,
Landlord shall promptly pay the amount of such credit to Tenant). If the
audit determines that the Tenant was overcharged less than five percent
(5%), such overcharge shall entitle Tenant to credit against its next
payment of Landlord's reimbursable expenses the amount of the overcharge
and Tenant shall pay for all costs associated with the audit. If the audit
shall determine that Tenant was undercharged for the Landlord's
reimbursable expenses, Tenant shall promptly pay the amount of such
undercharge to Landlord and Tenant shall pay all costs associated with the
audit.
7.3 REPAIRS FOR ACCOUNT OF TENANT. If within a reasonable time after
written or oral notice in the case of an emergency Tenant fails to promptly
make needed repairs to the Premises, as set forth in Section 8.5, Landlord
may, but shall not be obligated to do so, at Tenant's expense, make any
such repairs, without waiving any right or remedy for Tenant's failure to
make such repairs. If Tenant fails to pay, Landlord may add said amount to
the rent due hereunder, together with interest thereon at the rate of five
percentage points over the prime rate of BankBoston, but in no event more
than eighteen (18%) percent per annum (or at any lower maximum rate
permitted by law).
7.4 CURTAILED SERVICES. If any of Landlord's services are curtailed by
any reason or cause beyond Landlord's reasonable control, there shall be no
abatement of rent or other compensation due Landlord, nor shall Tenant's
obligations hereunder be reduced.
If Landlord fails to reasonably act to perform its repair obligations of
Section 7.7 hereof or to restore any existing utilities interrupted between
the street and the Building caused by Landlord or its agents, employees or
contractors actions or omissions, and such failure materially affects
Tenant's ability to use and occupy the Premises for the purposes permitted
herein, Tenant shall have the right, but not the obligation, to perform
such repairs and/or maintenance if such failure continues for more than
five (5) business days after written notice from Tenant; provided, however,
that if the nature of the repairs and/or maintenance to be completed by
Landlord is such that more than five (5) business days are required to
complete such repairs and/or maintenance, Landlord shall have such
additional time as is reasonably necessary to complete such repairs and/or
maintenance and thereafter diligently pursues such repairs and/or
maintenance to completion. In such event, Landlord shall reimburse Tenant
for the reasonable costs incurred by Tenant to complete such repairs and/or
maintenance within thirty (30) days after receipt of Tenant's written
demand therefore, together with copies of the paid invoices evidencing the
costs incurred by Tenant. Any repairs and/or maintenance permitted herein
shall be performed in a good and workmanlike manner by licensed
contractors. If Landlord objects to the repairs and/or maintenance
performed or the expenses incurred by Tenant in performing such work,
Landlord shall deliver a written notice of Landlord's objection to Tenant
within thirty (30) days after Landlord's receipt of Tenant's invoice
evidencing the expenses incurred by Tenant. Landlord's notice shall set
forth in reasonable detail Landlord's reasons for its claim that such
repairs and/or maintenance were not required or were not Landlord's
obligations in the terms of this lease and/or the reasons for Landlord's
dispute of the expenses incurred by Tenant in performing such work. If
Landlord and Tenant fail to resolve any such dispute within said thirty
(30) day period, after Landlord has notified Tenant of Landlord's
objections, the matter shall be resolved by binding arbitration.
7.5 PAYMENT FOR TENANT'S WORK. The Premises shall at all times be free of
liens for labor and materials. To that end, Tenant shall pay promptly for
all work or services with respect to the Premises undertaken on behalf of
Tenant. Except as otherwise set forth in this Lease, Landlord shall
receive a reasonable service fee, determined by Landlord, for work
performed for Tenant by or under the supervision of Landlord. None of the
foregoing requirements shall prevent Tenant from contesting any claim of
lien or lien or against the Premises or Property, as long as such contest
prevents foreclosure of the lien and Tenant causes such lien to be bonded
or insured over in a manner satisfactory to Landlord.
7.6 CLEANING OF PREMISES. Tenant, at Tenant's sole cost and expense,
shall provide cleaning services to the Premises.
7.7 LANDLORD'S MAINTENANCE. Subject to the provisions of Section 7.2,
and subject to any replacement, repair and maintenance due to the wilful or
negligent acts of the Tenant, its agents, servants, contractors or
employments, which in such event shall be made by Tenant at Tenant's
expense, Landlord shall, at Landlord's sole cost and expense, replace,
repair and maintain all structural portions of the Building of which the
Premises forms a part, which may be required in order to keep the Premises
presentable and in good repair and tenantable condition, including exterior
walls, structural floor slabs and columns, but specifically excluding the
non-structural components of the roof, subject to Landlord's obligation to
fund the roof improvements set forth in Section 4.1. As used in this
Lease, non-structural components of the roof shall mean the roof membrane,
flashing, and non-roof covering and structural components of the roof shall
mean the trusses and steel.
8. TENANT'S ADDITIONAL COVENANTS. Tenant covenants at its expense at all
times during the Lease Term and such further time as Tenant occupies the
Premises or any part thereof the following:
8.1 COMPLIANCE WITH LAW. Tenant, at its sole expense, shall comply with
all applicable laws and insurance requirements with respect to Tenant's use
and occupancy of the Premises.
8.2 TENANT'S INDEMNITY. Tenant shall defend, indemnify and save harmless
(including without limitation all costs and expenses, including attorneys'
fees) the Landlord and any other persons claiming by, through or under
Landlord against any and all liability or claims of any kind or nature,
including without limitation injury to persons, including death, or damage
to property: (i) occurring on or arising out of the use of the Premises,
Building and/or Property (including without limitation the Tenant's
alterations to the sprinkler system, the Tenant's storage of diesel fuel in
above ground tanks, and the use of the roof of the Building for
installation of Tenant's equipment such as satellite dishes and heating and
air conditioning equipment) during the term hereof by Tenant or any persons
claiming by, through or under Tenant; (ii) occurring or arising out of any
Tenant improvements to the Premises, Building, and/or Property (including
without limitation any claim(s) of any kind or nature by MFS [or any other
tenant(s)] in connection with interference with any/or interruption of the
use and/or occupancy of MFS's [or any other tenant(s)] leased premises,
Building and/or Property; (iii) arising out of any default by Tenant
hereunder; or (iv) arising out of any act or omission to act by Tenant, its
agents, employees, licensees, franchisees, invitees, subtenants or any
other person for whom Tenant is responsible on or about the Premises,
Building and/or Property at any time, unless such claims result from
Landlord's or its agents negligence.
8.3 TENANT'S PROPERTY IS TENANT'S RISK. All property of Tenant and
persons claiming by, through, or under Tenant at any time on the Premises,
shall be at the sole risk of Tenant or such persons and if the whole or any
part thereof shall be destroyed or damaged by any cause whatever, no part
of said loss or damage shall be borne by Landlord; except that to the
extent required by Massachusetts law, the foregoing shall not exculpate the
Landlord from liability for its own negligence or willful act.
8.4 OVERLOADING, NUISANCE; VOLATILE OR DANGEROUS SUBSTANCES. Tenant shall
not injure, overload, deface, or otherwise harm the Premises, nor commit
any nuisance, not permit the emission of any objectionable noise, noxious
or objectionable odor or of any particulate residue; nor make, allow or
suffer any waste; nor make any use of the Premises which is contrary to any
law, ordinance, order or regulation of any public authority or which will
invalidate any insurance. All dangerous substances shall be stored safely
and securely in compliance with law and applicable government and insurance
requirements and guidelines.
8.5 MAINTENANCE OF PREMISES. Tenant, at Tenant's sole cost and expense,
shall maintain the Premises and the Building, improvements and
appurtenances thereto in a good state of repair, both inside and outside,
including without limiting the generality of the foregoing, the non-
structural components of the roof, floors, sidewalks, curbs, landscaping,
parking area, water and sewer connections, windows, plumbing, water, gas
and electric fixtures, pipes, wires, and conduits, machinery, on or
connected with the Premises or used in the operation thereof, together with
any and all alterations, additions and improvements therein or thereto, in
good, clean, healthful and safe order and condition, including the removal
of snow, all in accordance with applicable municipal ordinances and the
direction proper public officers, suffering no waste or injury, and shall
promptly make or acquire all needed repairs, replacements, renewals and
additions (other than Landlord's required repair and maintenance
obligations set forth in Section 7.7), whether ordinary or extraordinary,
foreseen or unforeseen, in and to any of the foregoing throughout the Term
of this lease. To the extent any of the foregoing maintenance obligations
benefit the tenant occupying the approximate 15,250 square feet adjacent to
the Premises, such as snow removal, Tenant shall first seek to obtain
reimbursement from such tenant equal to 19.1% of the maintenance total
cost, and if Tenant is not able to obtain such reimbursement directly from
such tenant, after reasonable effort by Tenant, any failure by such tenant
to reimburse Tenant for such tenant's proportionate share of such costs and
expenses shall be a monetary default under such tenant's lease, which
Landlord shall promptly and diligently seek to remedy in accordance with
Landlord's rights under such tenant's lease.
8.6 YIELD UP. At the expiration or earlier termination of this Lease,
Tenant shall surrender all keys to the Premises, remove all personal
property, and all Tenant's signs and yield up the Premises broom clean and
in good order, repair and condition, as the same were in on the
Commencement Date or had been put in thereafter, excepting and excluding
damage arising from Landlord's failure to perform its obligations under
Section 7.7 hereof or under Section 4.1 hereof, or by unavoidable casualty
or reasonable wear and tear excepted. Tenant's property not removed within
fifteen (15) days may be disposed of by Landlord, as Landlord shall
determine. Tenant indemnifies Landlord against all loss, cost and damage
resulting from Tenant's failure and delay in surrendering the Premises.
8.6.1 WHAT ARE INTENDED TO BE FIXTURES. Equipment, improvements and
appurtenances other than Tenant's Trade Fixtures, furnishings and trade
equipment (as described below) attached to or built into the Premises prior
to or during the Term shall be and remain part of the Premises and are
intended as real estate fixtures and shall not be removed by Tenant, unless
otherwise instructed by Landlord to remove the same. All wiring, circuit
breakers, transformers, cabling, plumbing, heating and sprinkling systems,
fixtures and outlets, vaults, panelling, molding, shelving, radiator
enclosures, flooring, HVAC equipment and HVAC ducts shall be deemed to be
real estate fixtures, whether or not attached to or built into the
Premises. Any trade fixtures, furniture and trade equipment installed by
the Tenant which may be removed from the Premises without injury thereto
(including, without limitation, demountable partitions, refrigerators and
other kitchen appliances, computer racking and similar demountable
fixtures) (collectively, "Trade Fixtures") shall remain the property of the
Tenant and shall be removed by the Tenant, at the Tenant's sole cost and
expense, from the Premises upon the expiration or earlier termination of
this Lease. In the event Tenant fails to remove said articles prior to or
upon the expiration or earlier termination, they shall be deemed abandoned
and may be disposed of by Landlord in any way it sees fit, all at Tenant's
sole cost and expense. All alterations and improvements to the Premises
(except for the Tenant Improvements, as defined below), put in at the
expense of Tenant shall become the property of Landlord and shall remain
upon and surrendered with the Premises as part thereof at the termination
of this Lease, or at Landlord's option, provided Landlord shall have
advised Tenant in writing at the time of its consent to said alterations
and improvements that the same must be removed and restored to its original
condition. Notwithstanding the foregoing, Tenant shall, unless Landlord
and Tenant agree otherwise, remove the items described on Exhibit B
attached hereto and by this reference made a part hereof (the "Tenant
Improvements") upon the termination of this Lease and shall repair all
damage to the Premises caused by such removal. Such repairs shall include,
but are not limited to, replacing and/or restoring those Building Systems
(e.g. heating, ventilation, air conditioning, electrical, sprinkler etc.)
with Building Systems of like or similar quality existing as of the date
hereof, which are removed or disconnected as part of the work of installing
the Tenant Improvements, such that the Building Systems are in good
operational condition as of the date of Tenant's surrender of the Premises.
8.7 ALTERATIONS AND IMPROVEMENTS BY TENANT AFTER TERM COMMENCEMENT. With
the exception of the improvements described in Section 4.2, the Tenant
shall not make any alterations, improvements and/or additions to the
interior or exterior of the Premises, except at Tenant's own expense,
subject to first obtaining, in each instance, the prior written consent of
the Landlord, which consent shall not be unreasonably withheld, conditioned
or delayed and provided the same are in accordance with all applicable laws
and performed in a good and first-class workmanlike manner.
Notwithstanding the foregoing provisions of this Section 8.7, but subject
to all of the provisions of this Article 8, Landlord's consent will not be
required for the installation or modification of Trade Fixtures, nor for
any non-structural alterations and improvements to the interior of the
Building in connection with any project costing less than $150,000 in any
twelve (12) month period; and if the cost of said project exceeds $150,000,
Landlord's approval of the non-structural alterations and improvements to
the interior of the Premises involved in said project shall not be
unreasonably withheld, conditioned or delayed. For purposes of determining
the cost of a project, work done in phases or stages shall be considered
part of the same project, any project shall be deemed to include all trades
and materials involved in accomplishing a particular result. For purposes
of determining the cost of a project, the costs of installation or
modification removal of Trade Fixtures shall be excluded. Pursuant to the
foregoing alteration rights of Tenant hereunder, at least once every six
months during the Term therein, Tenant shall report in writing, in detail
(including without limitation plans and specifications) reasonably
satisfactory to Landlord, all alterations, additions, and improvements to
the Premises made by Tenant since the last such report, unless plans and
specifications for the same have theretofore been furnished to Landlord.
If in or at the time of such report Tenant requests in writing, Landlord to
do so with respect to specific items designated in such report, Landlord
will advise Tenant, in writing, as to which of the alterations, additions
and improvements, so designated, made by Tenant since the last such report,
which did not require Landlord's consent, Landlord will require Tenant to
remove and restore at the expiration or earlier termination of this Lease;
and Landlord will be bound by such written advice. Prior to the
commencement of any work on any such alteration, addition or improvement
not requiring Landlord's consent hereunder, the same shall have been
submitted to and approved by all municipal or other governmental
departments or agencies having jurisdiction over the subject matter thereof
(all of which shall have issued any required permits and approvals).
Throughout the performance of alterations, additions or improvements,
Tenant, at its expense, shall carry, or cause to be carried, construction
risk insurance under which Landlord shall be named as an additional
insured.
8.8 FLOOR LOAD; HEAVY MACHINERY. Tenant shall place no load upon any
floor of the Premises exceeding the floor load per square foot of area
which such floor in its then-present condition is capable of carrying
without damage and which is allowed by law.
8.9 ASSIGNMENT AND SUBLETTING. Tenant covenants and agrees that Tenant
shall not assign this Lease or sublet (which term, without limitation,
shall include the granting of concessions, licenses, and the like) without
in each instance having first received the express written consent of
Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed, and in any case where Landlord shall consent to such assignment or
subletting, the Tenant named herein shall (i) remain fully liable for the
obligations of Tenant hereunder, including without limitation, the
obligation to pay the rents and other amounts provided under this Lease,
and (ii) pay over to Landlord one half of any rent or additional rent or
other income received from any sub-tenant or assignee in excess of Tenant's
obligations to Landlord, as set forth in this Lease, after deducting
therefrom all transaction costs (i.e. leasing commission and legal
expenses), and after amortizing Tenant's initial improvements made to the
Premises based upon the specific amortization schedule attached hereto as
Exhibit E. Notwithstanding the foregoing or anything to the contrary
herein contained, Tenant may assign this Lease or sublease a portion of the
Premises to any parent company or wholly owned subsidiary company of
Tenant, or a joint venture controlled by Tenant, or to any corporation
resulting from an acquisition, merger or consolidation of Tenant provided
(i) the successor corporation or Tenant as guarantor of such successor
corporation's obligations has a capitalization sufficient in Landlord's
reasonable opinion to support Tenant's obligations under this Lease (ii)
sufficient documentation and verifiable information supporting the
successor's corporation compliance with condition (i) above shall be
submitted to Landlord for Landlord's review and approval, which approval
shall not be unreasonably withheld, conditioned or delayed and (iii) the
assignee or sublessee shall agree directly with Landlord, by written
instrument in form reasonably satisfactory to Landlord, to be bound by all
of the terms, covenants and conditions to be observed by Tenant under this
Lease.
Tenant shall pay to Landlord, as additional rent, Landlord's reasonable
legal fees and other expenses incurred in connection with any proposed
assignment or sublet, including without limitation, fees for review of
documents.
8.10 LANDLORD'S ACCESS TO PREMISES. Tenant agrees that it will permit
Landlord, the holder of any mortgage, and its agents to enter the Premises
at reasonable times upon at least twenty-four (24) hours prior notice
(except in the case of emergencies), subject to the Tenant's Rules And
Regulations attached hereto as Exhibit H to (i) show the same to
prospective tenants (during the last 6 months of the Term), purchasers and
lenders; (ii) for the purpose of inspection, repairs, alterations,
improvements or additions of, or to the Premises or the Building, as
Landlord may deem necessary or desirable; (iii) for the purpose of assuring
Tenant's compliance with its obligations hereunder; (iv) to exercise
Landlord's rights and discharge Landlord's obligations under this Lease and
(v) for any purpose whatsoever related to the safety, protection,
preservation or improvements of the Premises or of the Building or of the
Landlord's interest. Landlord agrees that no entry by it shall result in
unreasonable interference with the conduct of Tenant's business in the
Premises. Landlord further agrees that no forcible entry will be made
except to prevent injury to persons or substantial damage to property.
9. INSURANCE
9.1 PUBLIC LIABILITY INSURANCE. Tenant shall take out and maintain in
force throughout the Term comprehensive general liability insurance naming
Tenant, as the insured and Landlord as additional insured according to the
Lease provisions against all claims and demands for any injury to person or
property which may be claimed to have occurred on the Premises in an amount
which at the beginning of the Term shall not be less than $1,000,000 for
injury or death of one person, $2,000,000 for injury or death of more than
one person, $1,000,000 umbrella liability policy and $1,000,000 for
property damage or such higher amounts as Landlord determines are required
by reason of Tenant's use of the Premises and which thereafter, if Landlord
requires, shall be in such higher amounts as are then consistent with sound
commercial practice in the greater Boston area, but in no event shall such
insurance increase more than two (2) times during the initial Term and more
than one (1) time during each Extended Term.
9.2 CASUALTY INSURANCE. Tenant shall take out and maintain throughout the
Term a policy of fire, vandalism, malicious mischief, extended coverage and
so-called all risk coverage insurance insuring Tenant's improvements in the
Premises and Tenant's fixtures, furnishing and equipment to the extent of
full replacement cost coverage with a deductible not to exceed $10,000.00
except that such insurance may be written with an 80% co-insurance clause,
provided such policy has a replacement cost endorsement.
9.3 WORKMEN'S COMPENSATION. Tenant shall maintain policies of Workmen's
Compensation Insurance covering all employees, and if Tenant shall contract
with any independent contractor for the furnishing of labor, materials or
services to Tenant, Tenant shall require such independent contractor to
maintain Workmen's Compensation Insurance covering all its employees and
all the employees of any subcontractors.
9.4 CERTIFICATE OF INSURANCE. Such insurance shall be placed with
insurance satisfactory to Landlord and authorized to do business in
Massachusetts. Such insurance shall provide that it shall not be cancelled
without at least ten (10) days prior written notice to each insured named
therein. Upon Landlord's request, Tenant shall furnish Landlord with
Certificates of Insurance for all such insurance and, at Landlord's
request, shall furnish the holder of any mortgage on the Building with
Certificates of Insurance, together with evidence satisfactory to Landlord
of the payment of all premiums.
9.5 LANDLORD'S INSURANCE. Landlord shall maintain during the Term such
policies of fire and extended casualty to the extent of full replacement
cost coverage on the Building (but not including Tenant Improvements or
Trade Fixtures), liability with limits not less than those set forth in
Section 9.1 hereof, and other insurance, as Landlord shall reasonably
determine. Tenant agrees to reasonably cooperate with Landlord in
obtaining and maintaining such insurance.
9.6 WAIVER OF SUBROGATION. Landlord and Tenant hereby release each other,
to the extent of their respective insurance coverage, from any and all
liability for any loss or damage caused by fire or any of the extended
coverage casualties, even if such fire or other casualty shall be brought
about by the fault or negligence of the party benefited by the release or
its agents; provided, however, this release shall be in force and effect
only with respect to loss or damage occurring during such time as the
policies of fire and extended coverage insurance maintained by the
releasing party shall contain a clause to the effect that such release
shall not affect said policies or the right of the releasing party to
recover thereunder. Landlord and Tenant each agree to make best efforts to
have their respective fire and extended coverage insurance policies include
such a clause so long as the same is obtainable without extra cost, or if
extra cost is chargeable therefor, so long as the party benefited by such
clause in its discretion chooses to pay such extra cost.
9.7 INCREASE IN INSURANCE RISK. If Tenant's particular and unique use of
the Premises results in any increase in Landlord's insurance rates on the
Building, Tenant shall reimburse Landlord for such increase in insurance
charges.
10. DAMAGE TO PREMISES AND CONSEQUENCES OF EMINENT DOMAIN.
10.1 UNTENANTABILITY. Except as otherwise provided herein, if the
Premises or the Building shall be partially damaged by fire or other
casualty, this Lease shall remain in full force and effect and the damage
to the Premises or the Building shall be repaired by Landlord. Until such
repairs are made, Rent shall be abated on a per diem basis proportionate to
the extent to which the rentable square footage of the Premises is rendered
unfit for occupancy; provided, however, that there shall be no abatement of
Rent or obligation on the part of Landlord to repair if the damage shall
have been caused by the gross neglect of Tenant or its agents, contractors,
servants, employees, licensees or invitees, which shall be without
prejudice to any other rights or remedies of Landlord. Landlord shall
incur no liability on account of any delay in the completion of such
repairs which may arise by reason of adjustment of insurance, labor
difficulties or other cause beyond Landlord's reasonable control. If all
or any portion of the Premises or the Building is destroyed by fire or
other casualty, acts of God or other cause, Landlord may elect, by written
notice to Tenant within thirty (30) days after the date of casualty:
(a) to terminate this Lease as of the date when the Premises or the
Building are so destroyed or made unfit for occupancy, if the amount of
insurance proceeds is inadequate to cover the costs of repair or
restoration of the Premises, or if the duration of such work of repairs or
restoration is reasonably estimated by Landlord to exceed six (6) months
after Landlord is able to take possession of the damaged Premises to make
such repairs or undertake such restoration or
(b) to repair, restore or rehabilitate the Premises or the Building
at Landlord's expense within six (6) months after Landlord is enabled to
take possession of the damaged Premises or the Building and undertake
reconstruction or repairs; and if Landlord elects to so repair, restore or
rehabilitate the Premises or the Building, this Lease shall not terminate,
Landlord in good faith shall attempt to complete its work as promptly as
reasonably possible, and Rent shall be abated on a per diem basis
proportionate to the extent and for the period during which the Premises
are unfit for occupancy. Landlord's failure to elect to terminate this
Lease in a timely fashion shall constitute its election to proceed to
repair the Premises. In the event Landlord shall proceed pursuant to the
provisions of this subparagraph 10.1, and shall not substantially complete
the work within said six (6) months period (excluding from said period loss
or time resulting from adjustment of insurance, labor difficulties or other
Acts of God) either Landlord or Tenant may then terminate this Lease, as of
the date when the Premises or the Building were made unfit for occupancy,
by written notice to the other not later than thirty (30) days after the
expiration of said six (6) month period, computed as herein provided. In
the event of termination of this Lease pursuant to this Section 10.1, Rent
shall be apportioned on a per diem basis to and including the effective
date of such termination, and Tenant shall promptly vacate the Premises and
surrender the same to Landlord. In the event Landlord elects to terminate
this Lease pursuant to clause (a) above, Tenant may elect to preserve this
Lease without modification or amendment by timely notification thereof to
Landlord, whereby Tenant agrees to timely undertake such reconstruction or
repairs at Tenant's sole cost and expense, except only to the extent such
insurance is available to Landlord for such reconstruction or repairs, such
insurance proceeds shall be made available to Tenant for such purpose, all
such reconstruction or repairs shall be performed by Tenant in accordance
with Section 8.7.
10.2 EMINENT DOMAIN. If the whole or any part of the Premises shall be
taken, condemned or otherwise acquired by any public or quasi-public
authority under the power of eminent domain, condemnation or other
proceedings (each, a "Taking") so as to render the Premises untenantable,
or such that the Premises cannot reasonably be used by Tenant for the same
purposes and with the same utility as before such Taking, this Lease and
the estate hereby created shall terminate and wholly expire on the date
title shall vest in the acquiring authority, and all Rent shall be prorated
and adjusted as of said date. If this Lease is not terminated as a result
of any such taking, Landlord shall repair, restore or rehabilitate the
remainder of the Premises to place the Premises in substantially the same
condition as existed prior to such taking. In no event whatsoever shall
Tenant have any claim against Landlord by reason of any appropriation,
condemnation or taking of the whole or any part of the Premises or the
Building, nor shall Tenant have any claim to the amount, or any portion
thereof, that may be awarded as damages or paid as a result of said
appropriation, condemnation or taking. Except as provided herein, Tenant
hereby assigns to Landlord all Tenant's rights, title and interest in and
to any and all amounts awarded or paid by reason of such appropriation,
condemnation or taking, provided, however, that none of the foregoing is
meant to deprive the Tenant from claiming moving expenses, displacement
expenses or the like solely from the acquiring authority. Notwithstanding
the foregoing, Tenant does not assign to Landlord and Tenant hereby
retains, and Landlord grants to Tenant, all right, title and interest in
and to any and all amounts awarded or paid by reason of appropriation,
condemnation or taking of the Tenant Improvements and Trade Fixtures (but
not other fixtures), which Tenant is entitled by the provisions of this
Lease to remove from the Premises upon the termination of this Lease.
Provided Tenant has sublet or assigned or is then attempting to sublet or
assign, as evidenced by a written proposal pre-dating the taking, this
Lease to a person(s) or entity unrelated to Lessee for office use, if any
taking results in the loss of the Building's parking spaces by more than
twenty-five (25%) percent of the number of parking spaces existing on the
Commencement Date, and or if any taking results in the loss of the
Building's parking spaces for Tenant's use by more than seventy-five (75%)
percent of the number of parking spaces existing on the Commencement Date,
Tenant shall have the right to terminate this Lease unless the Landlord
provides substitute parking spaces at the Property or any property
adjoining the Property. If less than the entire Premises is taken then
Landlord shall do such work as may be required to put what may remain of
the Premises into substantially the same condition as immediately prior to
such taking, insofar as possible, and rent shall be abated on a per diem
basis proportionate to the extent to which the rentable square footage of
the Premises is rendered unfit for occupancy until Landlord substantially
completes such restoration work, and thereafter Base Rent shall be reduced
in the proportion that the floor area of the portion of the Premises so
taken bears the total floor area of the Premises prior to such taking.
11. DEFAULT AND REMEDIES.
11.1 EVENTS OF DEFAULT. (a) If Tenant shall default in the performance of
any of its obligations to pay the Annual Fixed Rent or additional rent
hereunder when due and Tenant does not cure such default within five (5)
days after written notice from Landlord, or (b) if, within thirty (30) days
after written notice from Landlord to Tenant specifying any other default
or defaults, Tenant has not commenced diligently to correct the default or
defaults so specified or has not thereafter diligently pursued such
correction to completion or (c) if any assignment shall be made by Tenant
for the benefit of creditors, or (d) if Tenant's leasehold interest shall
be taken on execution, or (e) if a petition is filed by Tenant or any
guarantor of Tenant's obligations under this Lease for adjudication as a
bankrupt, or for reorganization or any arrangement under any provision of
the Bankruptcy Act, as then in force and effect, or (f) if an involuntary
petition under any of the provisions of said Bankruptcy Act is filed
against Tenant or any such guarantor of Tenant's obligations and such
involuntary petition is not dismissed within sixty (60) days thereafter, or
(g) if Tenant or any such guarantor shall be declared bankrupt or insolvent
according to law, or (h) if a receiver, trustee or assignee shall be
appointed for the whole or any part of Tenant's property or the property of
any such guarantor and shall not be removed within sixty (60) days
thereafter, then, and in any such cases, if such default shall not have
been cured, Landlord and its agents lawfully may, in addition to and not in
derogation of any remedies for any preceding breach of covenant,
immediately or at any time thereafter and without demand or notice and with
or without due process of law (forcible, if necessary) enter into and upon
the Premises or any part thereof in the name of the whole or mail a notice
of termination addressed to Tenant at the Premises, and repossess the same
as of Landlord's former estate and expel Tenant and those claiming through
or under Tenant and remove its and their effects (forcible, if necessary)
without being deemed guilty of any manner of trespass and without prejudice
or prior breach of covenant, and upon such entry or mailing, as aforesaid,
this Lease shall terminate, Tenant hereby waiving all statutory rights
(including without limitation rights of redemption, if any) to the extent
such rights may lawfully waived, and Landlord, without notice of Tenant,
may store Tenant's effects, and those of any person claiming through or
under Tenant at the expense and risk of Tenant, and, if Landlord so elects,
may sell such effects at public auction and apply the net proceeds to the
payment of all sums due to Landlord from Tenant, if any, and pay over the
balance, if any, to Tenant. For purposes of this Section 11.1 and all
sections under Section 11, "Tenant" shall include any guarantor of any of
Tenant's obligations under this Lease and any corporation of which Tenant
is a controlled subsidiary. Landlord agrees that, following a termination
of the Lease or a termination of Tenant's right to possession as set forth
in this Section 11.1, Landlord shall, for a period of thirty (30) days
subsequent to such termination, continue to store on the Premises personal
property then located on the Premises and clearly marked as the property of
third parties. Landlord shall not, however, assume any liability to return
such property or any other obligation with respect to such property.
11.2 DAMAGES-TERMINATION. Upon the termination of this Lease under the
provision of this Section 11, Tenant shall pay to Landlord the Annual Fixed
Rent, additional rent and other charges payable by Tenant to Landlord up to
the time of such termination, shall continue to be liable for any preceding
breach of covenant, and in addition, shall pay to Landlord as damages, at
the election of Landlord, either:
(x) the amount by which, at the time of the termination of this Lease
(or at any time thereafter if Landlord shall have initially elected damages
under subparagraph (y), below), (i) the aggregate of the Annual Fixed Rent,
additional rent, taxes, Utility Expenses, Operating Expenses and other
charges projected over the period commencing with such termination and
ending on the Termination Date, as stated in Section 1 (or such later date
to which the Lease has been extended) exceeds (ii) the aggregate projected
rental value of the Premises for such period, or:
(y) amounts equal to the Annual Fixed Rent, additional rent, taxes,
Utility Expenses and Operating Expenses and other charges which would have
been payable by Tenant had this Lease not been so terminated, payable upon
the due dates therefor specified herein following such termination and
until the Termination Date, as specified in Section 1, (or such later date
to which the Lease has been extended) provided, however, if Landlord shall
re-let the Premises during such period, that Landlord shall credit Tenant
with the net rents received by Landlord from such re-letting, such net
rents to be determined by first deducting from the gross rents as and when
received by Landlord from such re-letting the expense incurred or paid by
Landlord in terminating this Lease, as well as the expenses of re-letting,
including altering and preparing the Premises for a new tenant(s), broker's
commissions, attorneys' fees and all other similar and dissimilar expenses
properly chargeable against the Premises and the rental therefrom, it being
understood that any such re-letting may be for a period equal to or shorter
or longer than the remaining term of this Lease (excluding any options not
exercised), as extended; and provided, further, that (i) in no event shall
Tenant be entitled to receive any excess of such net rents over the sums
payable by Tenant to Landlord hereunder and (ii) in no event shall Tenant
be entitled in any suit for the collection of damages pursuant to this
Subparagraph (y) to a credit in respect of any net rents from a re-letting
except to the extent that such net rents are actually received by landlord
prior to the commencement of such suit. If the Premises or any part
thereof should be re-let in combination with other space, then proper
apportionment on a square foot area basis shall be made of the rent
received from such re-letting and of the expenses of re-letting.
Suit or suits for the recovery of such damages, or any installments
thereof, may be brought by Landlord from time to time at its election, and
nothing contained herein shall be deemed to require Landlord to postpone
suit until the date when the Term of this Lease would have expired if it
had not been terminated hereunder.
Nothing herein contained shall be construed as limiting or precluding the
recovery by Landlord against Tenant of any sums or damages to which in
addition to the damages particularly provided above, Landlord may lawfully
be entitled by reason of any default hereunder on the part of Tenant.
11.3 EFFECT OF TAX AND OPERATING EXPENSES ON DAMAGES. In the event of any
termination of this Lease or re-entry by Landlord under the provisions of
this Section 11 or other proceeding or action or any provision of law by
reason of default under this Lease on the part of Tenant, then for the
purpose of computing damages, as shall be payable pursuant to this Section
11, it is agreed that:
(a) If Landlord shall elect that damages be payable pursuant to
Subparagraph (x) of Section 11.2, the computation of such damage shall be
made, insofar as the same relates to taxes, Utility Expenses and Operating
Expenses by taking the product of (i) the sum of taxes, and Operating
Expense for the immediately preceding fiscal year of Landlord,
respectively, times (ii) the number of years remaining of the full term
hereby granted, on the assumption that the amount of such taxes, Utility
Expenses and Operating Expense so payable for the immediately preceding
fiscal year of Landlord would have remained constant for each subsequent
fiscal year of the full term hereby granted.
(b) If Landlord shall elect that such damages be payable pursuant to
Subparagraph (y) of Section 11.2, the sums referred to in said Subparagraph
(y) shall include, without limitation, the amount of the taxes, Utility
Expenses and Operating Expense which under the provisions of Section 6.2,
7.1 and 7.2 would be payable by Tenant for the period referred to in said
Subparagraph (y).
11.4 LANDLORD'S EXPENSES IN PERFORMING OBLIGATIONS OF TENANT. If Tenant
shall default in the performance of any covenant of this Lease, Landlord
may without waiving or releasing any right or remedy immediately, or at any
time thereafter, without notice, perform the same for Tenant's account and
Tenant shall pay on demand as reimbursement the sum so paid by Landlord
with all interests, costs and damages.
11.5 LANDLORD'S REMEDIES NOT EXCLUSIVE. Landlord's remedies stated in
this Lease are cumulative and not exclusive of any other remedies or means
of redress available to Landlord by law.
11.6 EFFECT OF WAIVERS OF DEFAULT. No consent or waiver, express or
implied, by Landlord to any act or omission which otherwise would be a
breach of Tenant's obligations shall in any way be construed to impair
Tenant's continuing obligations hereunder or operate to permit similar acts
or omissions.
11.7 NO ACCORD AND SATISFACTION. No acceptance by Landlord of a lesser
sum than the Annual Fixed Rent, additional rent or any other charge then
due shall be deemed to be other than on account of the earliest installment
of such rent or charge due, nor shall any endorsement or statement on any
check or any letter accompanying any check for payment as rent or other
charge be deemed an accord and satisfaction, and Landlord may accept such
check or payment without prejudice to Landlord's right to recover the
balance of such installment or pursue any other remedy in this Lease
provided.
12. LANDLORD'S FINANCING.
12.1 SUBORDINATION. This Lease is subject and subordinate to all matters
of record including without limitation any mortgages or ground leases and
other instruments in the nature of a mortgage, which may now be on or
affect the Premises, or any part thereof, and to each advance made or to be
made under such mortgages and to all renewals, modifications,
consolidations, replacements and extensions thereof and all substitutions
therefor and Tenant shall, when requested, promptly execute and deliver
such written instruments as shall be necessary to show the subordination of
this Lease to any such mortgages, ground leases and other such instruments
in the nature of a mortgage and to any and all advances made or to be made
thereunder, provided that in the instrument of subordination, the mortgagee
(or trustee) agrees for itself and its successors and assigns, that so long
as Tenant shall not be in default of this Lease, the mortgagee (or trustee)
and its successors and assigns, will not disturb the peaceful, quiet
enjoyment of the Premises by Tenant and will recognize Tenant's rights
under this Lease. The form and substance of the Non-disturbance,
attornment and subordination agreement is attached hereto and made a part
hereof as Exhibit F. As a condition precedent to the effectiveness of this
Lease, Landlord shall promptly obtain and provide to Tenant a non-
disturbance, attornment and subordination agreement in substantially the
form of Exhibit D, executed by any mortgagee with an interest in the
Premises as of the date of this Lease.
12.2 ESTOPPEL CERTIFICATE. Each party shall, at any time and from time to
time upon not less than ten (10) days' prior written notice from the other
party, execute, acknowledge and deliver to the other party a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect)
and the dates to which the rental and other charges are paid, in advance,
if any; (ii) acknowledging that there are not, to such party's knowledge,
any uncured defaults on the part of the other party hereunder, or
specifying such defaults, if any which are claimed; and (iii) certifying as
to such other factual matters as the other party reasonably shall request.
Any such statement may be relied upon by any prospective purchaser or
encumbrancer of all or any portion of the property of which the Premises
are a part. Tenant's failure to deliver such statement within such time
shall be conclusive upon Tenant that this Lease is in full force and
effect, without modification, except as may be represented by Landlord,
that there are no uncured defaults in Landlord's performance, and that not
more than one month's rental has been paid in advance.
12.3 ASSIGNMENT OF RENTS. Tenant shall, upon receipt of written notice
from Landlord and any such mortgagee, overlessor, or other person to whom
Landlord may from time to time assign the rents or other payments due
hereunder, make payment of such rents or other payments to such person.
13. TENANT'S FIRST OFFER OPTION.
13.1 OPTION TO PURCHASE. Landlord hereby grants to Tenant the exclusive
right, at Tenant's option, to purchase the property of which the Premises
forms a part, together with all structures, alterations and improvements
thereon, as more particularly described in Exhibit D attached hereto (the
"Property") within thirty (30) days from Landlord's Notice ("Offer Notice")
to Tenant, which Offer Notice shall state the terms and conditions the
Property is going to be listed for sale to the general public, including
the purchase price. The purchase price shall reflect a good faith estimate
by Landlord of the fair market value of the Property based upon comparative
sales of office buildings in the Waltham market area within the six (6)
month period immediately prior to the Offer Notice. No subsequent sale or
transfer of title to the Property shall be binding upon Tenant unless and
until the foregoing requirements are fully complied with. If Tenant elects
to purchase the Property pursuant to the Offer Notice, it is agreed that
the terms and conditions of sale, including title to be conveyed, shall be
specified in a mutually acceptable Offer Letter to be negotiated in good
faith by Landlord and Tenant and executed and delivered between Tenant and
Landlord within said thirty (30) day period. If Tenant does not elect to
exercise the right of first offer to purchase and Landlord thereafter
accepts an offer to purchase from a third party, then Landlord shall be
free to enter into such a transaction with such third party on any terms
and conditions as Landlord deems in Landlord's sole judgment to be
appropriate without any liability or obligations of any kind or nature to
Tenant.
14. HOLDING OVER.
14.1 HOLDING OVER. If Tenant or anyone claiming under Tenant shall remain
in possession of the Premises or any part thereof after the expiration of
the Term of this Lease without any agreement in writing between Landlord
and Tenant with respect thereto, prior to acceptance of rent by Landlord,
the person remaining in possession shall be deemed a tenant at sufferance
at a use and occupancy charge equal to 120% of the monthly installment of
Annual Fixed Rent on a per diem basis for the first thirty (30) days of
such possession and thereafter at 150% of the rate of Annual Fixed Rent
plus all other charge payable under this Lease, and after acceptance of
rent by Landlord, the person remaining in possession shall be deemed a
tenant from month-to-month, subject to the provisions of this Lease (but
excluding all provisions for rent) insofar as the same may be made
applicable to a tenancy from month-to-month.
Notwithstanding the foregoing, Landlord may, prior to acceptance of rent
for any period after the Term, at its option forthwith re-enter and take
possession of the Premises or any part thereof without process or by any
manner provided by law without prejudice to claim for the use and occupancy
charge as stated above.
15. RESPONSIBILITY REGARDING HAZARDOUS SUBSTANCES
15.1 HAZARDOUS SUBSTANCES. The term "Hazardous Substances," as used in
this Lease, shall include, without limitation, flammables, explosives,
radioactive materials, asbestos, polychlorinated byphenyls (PCBs),
chemicals known to cause cancer or reproductive toxicity, pollutants,
contaminants, hazardous wastes, toxic substances or related materials,
petroleum and petroleum products, and substances declared to be hazardous
or toxic under any law or regulation now or hereafter enacted or
promulgated by any governmental authority.
15.2 PRIOR REMEDIAL ACTION. Prior to the execution of this Lease, Lessor
has delivered to Tenant a Phase I environmental report entitled
"Preliminary Environmental Assessment And Limited Subsurface Investigation
Prepared By Environmental Science Services" dated April, 1993 (the "21E
Report").
15.3 TENANT'S RESPONSIBILITY. Tenant shall be responsible for (a) any
violation of any federal, state or local law, ordinance, or regulation now
or hereafter enacted, related to environmental conditions arising from
Tenant's use or occupancy of the Premises and/or the Property and (b)
Tenant's use generation, release, manufacture, refining, production,
processing, storage or disposal of any Hazardous Substance on, under or
about the Premises and/or Property during the term of this Lease or the
transportation to and from the Premises of any Hazardous Substance by or
for Tenant.
15.4 ENVIRONMENTAL CLEAN-UP. Tenant shall, at Tenant's sole cost and
expense, comply with all laws regulating the use, generation, storage,
transportation, or disposal of Hazardous Substances ("Laws"). Should any
government authorities (the "Authority" or "Authorities") demand that a
cleanup plan be prepared and that a cleanup be undertaken because of any
deposit, spill, discharge or other release of Hazardous Substances that
occurs during the term of this Lease at or from the Premises and/or the
Property which arises from Tenant's use or occupancy of the Premises and/or
the Property is caused by the Tenant, its employees, agents or persons
claiming by, through or under Tenant, then Tenant shall, at Tenant's sole
cost and expense, prepare and submit the required plan(s) and all related
bond(s) and other financial assurances, if any, and carry out all such
cleanup plans required by the Authorities under law. Tenant shall promptly
provide to Landlord all information regarding the use, generation, storage,
transportation, or disposal of Hazardous Substances that is requested by
Landlord. If Tenant fails to fulfill any duty imposed under this Section
15.4 within a reasonable time, Landlord may do so; and in such case, Tenant
shall cooperate with Landlord in order to prepare all documents Landlord
deems necessary or appropriate to determine the applicability of the Laws
to the Premises and/or the Property and Tenant's use thereof, and for
compliance therewith, and Tenant shall execute all documents promptly upon
Landlord's request. No such action by Landlord and no attempt made by
Landlord to mitigate damages under any Law shall constitute a waiver of any
of Tenant's obligations under this Section 15.4. Tenant's obligations and
liabilities under this Section 15.4 shall survive the expiration of this
Lease.
15.5 TENANT'S INDEMNITY. Tenant shall indemnify, defend, and hold harmless
Landlord, its officers, directors, beneficiaries, shareholders, managers,
partners, agents, and employees from all fines, suits, procedures, claims,
and actions of every kind, and all costs associated therewith (including
attorneys' and consultants' fees) arising out of or in any way connected
with any deposit, spill, discharge, or other release of Hazardous
Substances that occur during the term of this Lease from Tenant's use or
occupancy of the Premises and/or the Property or is caused by the Tenant,
its employees, agents or persons claiming by, through or under Tenant, or
from Tenant's failure to provide all information, make all submissions, and
take all steps required by all Authorities under the Laws. Tenant's
obligations and liabilities under this Section 15.5 shall survive the
expiration or termination of this Lease.
15.6 LANDLORD'S INDEMNITY. To the extent disclosed in the 21E Report,
Landlord shall indemnify, defend and hold harmless Tenant, its officers,
directors, beneficiaries, shareholders, managers, partners, agents and
employees from all fines, suits procedures, claims, and actions of every
kind, and all costs associated therewith (including attorney's and
consultants' fees) arising out of or in any way connected with any deposit,
spill, discharge, or other release of Hazardous Substances that existed on,
under or about the Premises and/or the Property prior to the execution of
this Lease or is caused by the Landlord, its employees or agents.
Landlord's obligations and liabilities under this Section 15.6 shall
survive the expiration or termination of this Lease.
16. MISCELLANEOUS PROVISIONS
16.1 NOTICES. All notices hereunder shall be in writing and deemed duly
served if delivered in hand or if mailed, certified mail or by a nationally
recognized overnight delivery service with tracking receipt, to Tenant, at
the Original Address of Tenant or such other address as Tenant shall have
last designated by notice in writing to Landlord, and Landlord, at the
Original Address of Landlord or such other address as Landlord shall have
last designated by notice in writing to Tenant.
16.2 QUIET ENJOYMENT. Upon Tenant's paying the rent and performing all
material provisions of this Lease, Tenant may peaceably and quietly have,
hold and enjoy the Premises during the Term without any manner of hindrance
or molestation from Landlord or anyone claiming under Landlord.
16.3 LIMITATION OF LANDLORD'S LIABILITY. Tenant shall neither assert nor
seek to enforce any claim for breach of this Lease against any of
Landlord's assets other than Landlord's interest in the Building of which
the Premises forms a part and in the rents, issues and profits thereof, and
Tenant agrees to look solely to such interest for the satisfaction of any
liability of Landlord under this Lease. In no event shall Landlord (which
term shall include, without limitation, any of the officers, trustees,
directors, partners, beneficiaries, joint ventures, members, stockholders
or other principals or representatives, disclosed or undisclosed, thereof)
ever be personally liable for any such liability beyond such interest in
the Building, the Property and the rents, issues and profits thereof or
ever be liable for consequential damages.
16.4 ACTS OF GOD/FORCE MAJEURE. In any case where either party hereto is
required to do any act, other than the payment of Annual Fixed Rent or
additional rent, delays, caused by or resulting from acts of God, war,
civil commotion, fire, flood or other casualty, labor difficulties,
shortages of labor, materials, or equipment, unusual government
regulations, unusually severe weather, or other causes beyond such party's
reasonable control shall not be counted in determining the time during
which such act shall be completed, whether such time be designated by a
fixed date, a fixed time or "a reasonable time", and such time shall be
deemed to be extended by the period of such delay.
16.5 APPLICABLE LAW AND CONSTRUCTION. This Lease is made under
Massachusetts Law and shall bind Landlord and Tenant and their respective
heirs, successors and assigns. If any provisions of this Lease shall to
any extent be invalid, the remainder of this Lease, and the valid portion
of such provisions, shall not be affected thereby. There are no oral or
written agreements between Landlord and Tenant affecting this Lease. This
Lease may be amended only by instruments in writing executed by Landlord
and Tenant. The titles of the several Articles and Sections contained
herein are for convenience only and shall not be considered in construing
this Lease.
16.6 BROKER. Tenant and Landlord represent and warrant one to the other
that they have not directly or indirectly dealt, with respect to the
leasing of the Premises, nor had its attention called to the Premises by
anyone other than the brokers, persons or firms, if any, designated in
Section 1. Tenant and Landlord agree to exonerate and save harmless and
indemnify one another against any claims for a commission arising out of
the execution and delivery of this Lease or out of negotiations between
Landlord and Tenant with respect to the leasing the Premises, provided that
Landlord shall be solely responsible for the payment of brokerage
commission to the brokers, persons or firms, if any, designated in Section
1.
16.7 FINANCING REQUIREMENTS. If in connection with obtaining financing
for the Premises, the holder of the mortgage, a bank insurance company,
pension trust or other institutional lender shall request reasonable
modifications in this Lease as a condition to such financing, Tenant will
not unreasonably withhold, delay or
condition its consent thereto provided that such modifications do
not increase the obligations of Tenant hereunder or materially adversely
affect the Tenant's rights hereunder, or the use, occupancy or quiet
enjoyment of Tenant hereunder or the leasehold interest hereby created.
16.8 AGREEMENT MADE ONLY WHEN LEASE SIGNED. This Lease shall bind
Landlord and Tenant only when executed and delivered by both. This Lease
when signed by one party and delivered to the other shall constitute an
offer to enter into a lease on the terms set
forth herein. No submission of this Lease, unsigned by either party to the
other, shall constitute an offer to lease.
16.9 RECORDING. Tenant agrees not to record the within Lease, but each
party hereto agrees, on the request of the other, to execute a so-called
Notice of Lease or short form lease in form recordable and complying with
applicable law and reasonably satisfactory to Landlord's attorneys. In no
event shall such document set forth the rental or other charges payable by
Tenant under this Lease; and any such document shall expressly state that
it is executed pursuant to the provisions contained in this Lease, and is
not intended to vary the terms and conditions of this Lease.
16.10 GOVERNING LAW. This Lease shall be governed exclusively by the
provisions hereof and by the Laws of the Commonwealth of Massachusetts, as
the same may from time to time exist.
16.11 WARRANTY OF AUTHORITY.
16.11.1 Lessor covenants, warrants and represents that 100 TCD Associates
Limited Partnership is a limited partnership duly organized under the laws
of the Commonwealth of Massachusetts; that TW Conroy 2 LLC is a limited
liability company duly organized under the Laws of the State of Delaware
and authorized to do business in the Commonwealth of Massachusetts, as a
foreign limited liability company; and that the Lessor has full power and
authority to enter into this Lease.
16.11.2 Lessee covenants, warrants and represents that Lessee is a
corporation duly organized under the Laws of the State of Delaware and is
authorized to do business in the Commonwealth of Massachusetts, as a
foreign corporation; and that the Lessee has full power and authority to
enter into this Lease.
16.12 ATTORNEY'S FEES. If any party of this Lease brings an action or
proceeding to enforce the terms hereof or declare rights hereunder, the
Prevailing Party (as hereinafter defined) in any such proceeding, action,
or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit,
whether or not such action or proceeding is pursued to decision or
judgment. The term "Prevailing Party" shall include, without limitation, a
party to this Lease who substantially obtains or defeats the relief sought,
as the case may be, whether by compromise, settlement, judgment or the
abandonment by the other party of its claim or defense. The attorney's fee
award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse all reasonable attorney's fees
incurred. Landlord shall be entitled to reasonable attorney's fees, costs
and expenses incurred in preparation and service of notice of default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such default or resulting breach.
16.13 SATELLITE DISH. Provided Tenant has received the necessary
approvals and permits from the City of Waltham, Massachusetts and any other
applicable governmental or regulatory entity with jurisdiction and provided
the installation complies with the structural limitations of the Building
(including, but not limited to the roof warranty), Tenant shall be
permitted to install a satellite dish, microwave, antenna or other
communications equipment ("Communication Equipment") on the roof of the
Building. Tenant shall promptly repair any damage caused by the
installation, use, maintenance or removal of such Communication Equipment
and shall indemnify and hold harmless from and against any loss, cost,
liability or expense associated with Tenant's installation, use,
maintenance or removal of such Communication Equipment including without
limitation, any loss, cost, liability or expense associated with the breach
or voiding of Landlord's roof warranty. All roof penetrations shall be
performed by a certified roofing contractor reasonably acceptable to
Landlord. Upon the termination of this Lease, Tenant shall, at Tenant cost
and expense, remove such Communication Equipment and Tenant shall have the
right at any time during the term of this Lease to remove the Communication
Equipment at Tenant's cost and expense, and in connection with any such
removal, Tenant shall repair any damage caused of any kind or nature to the
Building and any parts hereof by such removal. Landlord shall dictate the
location of the Communication Equipment, provided that such location does
not diminish Tenant's ability to receive and transmit the appropriate
signals. The Communication Equipment shall be properly screened, at
Tenant's sole cost and expense, in accordance with applicable legal
requirements. The provisions of this Section 16.13 shall also apply to the
installation, use, maintenance or removal of the heating, ventilation and
air conditioning equipment installed by Tenant on the roof.
16.14 MORTGAGEE APPROVAL. As a condition precedent to the effectiveness
of this Lease, Landlord has disclosed to Tenant that Landlord must obtain
the prior approval of Landlord's mortgagee to the terms, covenants and
conditions of this Lease.
Executed under seal on the date set forth in Section 1.1.
LANDLORD: TENANT:
100 TCD Associates Limited Exodus Communications, Inc.
Partnership
By Cheerio LLC, General Partner By /s/ K. B. Chandrasekhar
Its
By /s/ Terence W. Conroy hereto duly authorized
Terence W. Conroy Chairman of the Board
TW Conroy 2 LLC
By /s/ Terence W. Conroy
Terence W. Conroy
SECRETARY'S CERTIFICATE
EXODUS COMMUNICATIONS, INC.
The undersigned hereby certifies (1) that he/she is the duly elected
Secretary of the Corporation executing this Lease, as Tenant, (2) that the
Tenant's Board of Directors has duly decided that the Tenant shall enter
into this Lease and has duly empowered the person who executed this Lease
to do in the name and on behalf of the Tenant, and (3) that the Tenant's
execution and performance of this Lease is consistent with and does not
contravene or violate the law and governing documents under which Tenant is
organized and operated.
, Secretary
EXHIBIT A
ATTACHED TO AND MADE A PART OF
THAT CERTAIN LEASE BY AND BETWEEN
100 TCD ASSOCIATES LIMITED PARTNERSHIP AND
TW CONROY 2 LLC
TO
EXODUS COMMUNICATIONS, INC.
580 WINTER STREET, WALTHAM, MA
FLOOR PLAN OF PREMISES
EXHIBIT B
ATTACHED TO AND MADE A PART OF
THAT CERTAIN LEASE BY AND BETWEEN
100 TCD ASSOCIATES LIMITED PARTNERSHIP AND
TW CONROY 2 LLC
TO
EXODUS COMMUNICATIONS, INC.
580 WINTER STREET, WALTHAM, MA
PLAN OF EXCLUSIVE AREA FOR MFS
EXHIBIT C
ATTACHED TO AND MADE A PART OF
THAT CERTAIN LEASE BY AND BETWEEN
100 TCD ASSOCIATES LIMITED PARTNERSHIP AND
TW CONROY 2 LLC
TO
EXODUS COMMUNICATIONS, INC.
580 WINTER STREET, WALTHAM, MA
PLAN OF PARKING
EXHIBIT D
ATTACHED TO AND MADE A PART OF
THAT CERTAIN LEASE BY AND BETWEEN
100 TCD ASSOCIATES LIMITED PARTNERSHIP AND
TW CONROY 2 LLC
TO
EXODUS COMMUNICATIONS, INC.
580 WINTER STREET, WALTHAM, MA
DESCRIPTION OF PROPERTY
EXHIBIT A
The land with the buildings and improvements thereon at Winter
Street, West Street and First Avenue, Waltham, Middlesex County,
Massachusetts, more particularly bounded and described as follows:
WESTERLY by West Street by four lines measuring respectively
40.25 feet, 59.78 feet, 131.95 feet and 82.81 feet;
NORTHERLY by land formerly of Griggs shown as Lot 10A on a
Plan dated July 23, 1960 by Raymond C. Pressey,
Inc., Registered Land Surveyors, recorded with
Middlesex South Registry of Deeds, Book 9735 End.
207.12 feet;
WESTERLY again, by the same land, 403.81 feet;
NORTHERLY again, by the new line of Winter Street, 245.5 feet;
NORTHEASTERLY by a curved line forming the Southwesterly junction
of Winter Street and First Avenue, 80.95 feet;
EASTERLY by the Westerly line of First Avenue, 385.74 feet;
SOUTHERLY by land now or late of Cricible Center Company, 295
feet;
EASTERLY again, by the same land, 255.27 feet; and
SOUTHERLY again, by Lot 6 as shown on a plan dated February,
1958 duly recorded in Book 9111, Page 385, 200
feet.
EXHIBIT E
ATTACHED TO AND MADE A PART OF
THAT CERTAIN LEASE BY AND BETWEEN
100 TCD ASSOCIATES LIMITED PARTNERSHIP AND
TW CONROY 2 LLC
TO
EXODUS COMMUNICATIONS, INC.
580 WINTER STREET, WALTHAM, MA
AMORTIZATION SCHEDULE AND FORMULA
Present value shall be deemed to be equal to the amount of the Tenant
improvements contract(s).
The interest rate shall be deemed to be prime rate as identified in
the Wall Street Journal from time to time.
The amortization period shall be deemed to be the useful life of the
improvements based on GAAP accounting principal.
EXHIBIT F
ATTACHED TO AND MADE A PART OF
THAT CERTAIN LEASE BY AND BETWEEN
100 TCD ASSOCIATES LIMITED PARTNERSHIP AND
TW CONROY 2 LLC
TO
EXODUS COMMUNICATIONS, INC.
580 WINTER STREET, WALTHAM, MA
NON-DISTURBANCE, ATTORNMENT AND
SUBORDINATION AGREEMENT
NON-DISTURBANCE, ATTORNMENT AND SUBORDINATION AGREEMENT
NON-DISTURBANCE, ATTORNMENT AND SUBORDINATION AGREEMENT, made this
day of July, 1999, by and between Exodus Communications, Inc., a
Delaware corporation ("Tenant") having a place of business at 580 Winter
Street, Waltham, Massachusetts and BMC Software, Inc., a Delaware
corporation ("Bank") having a mailing address of 2101 Citywest Boulevard,
Houston, Texas, its successors and assigns ("Bank").
WITNESSETH:
WHEREAS, by Lease dated June 7, 1999 (hereinafter referred to as the
"Lease"). 100 TCD Associates Limited Partnership and TW Conroy 2 LLC
("Landlord") leased and rented to Tenant a portion of certain premises
located at 580 Winter Street, Waltham, Middlesex County, Massachusetts (the
"Property"), a more particular description of which Property appears in
Exhibit A attached hereto and by this reference made a part hereof, notice
of which is to be recorded herewith in the Registry of Deeds; and
WHEREAS, Bank is the holder of a Commercial Mortgage, Security
Agreement dated March 23, 1999 recorded in the Middlesex South Registry of
Deeds in Book 29955, Page 292 ("Registry of Deeds") and Assignment of
Leases and Rents dated March 23, 1999 recorded in the Registry of Deeds in
Book 29955, Page 334 with respect to the Property (hereinafter referred to
as the "Mortgage"); and
WHEREAS, Tenant and Bank desire hereby to establish certain rights,
safeguards, obligations, and priorities with respect to their respective
interests by means of the following Non-Disturbance, Attornment and
Subordination Agreement;
NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and promises herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Tenant and Bank agree as follows:
1. The Tenant has provided the Bank with an original counterpart of
the Lease, fully executed by the Landlord and Tenant, which is a true and
complete agreement and which represents the entire agreement between the
Landlord and Tenant with respect to the Tenant's use and occupancy of, and
right, title and interest in and to the Property.
2. The Lease and the rights of Tenant thereunder are and shall be
subject and subordinate to the lien of the Mortgage and to all of the
terms, conditions and provisions thereof, to all advances made or to be
made thereunder, to the full extent of the principal sum and interest
thereon from time to time secured thereby, and to any renewal,
substitution, extension, modification or replacement thereof, including any
increase in the indebtedness secured thereby or any supplements thereto.
In the event that Bank or any other person (the Bank, any other such person
and their successors and assigns being referred to herein as the
"Purchaser") acquires title to the Property pursuant to the exercise of any
remedy provided for in the Mortgage or by reason of the acceptance of a
deed in lieu of foreclosure, Tenant covenants and agrees to attorn to and
recognize and be bound to Purchaser, as its new Landlord, and subject to
the provision in Paragraph 3 of this Agreement, the Lease shall continue in
full force and effect as a direct Lease between Tenant and Purchaser.
3. Subject to the terms and provisions of Section 2 hereof and so
long as the Lease is in full force and effect and Tenant is not in default
beyond any and all applicable time periods under any provision of the Lease
or this Agreement, and no event has occurred which would entitle Landlord
to terminate the Lease without further action by Landlord, or would entitle
Landlord to dispossess the Tenant thereunder:
a. the right of possession of Tenant to the premises and all of
the other rights of Tenant under the Lease described in the
Lease shall not be terminated or disturbed by any steps or
proceedings taken by Bank in the exercise of any of its rights
under the Mortgage or the indebtedness secured thereby;
b. the Lease shall not be terminated or affected by said exercise
of any remedy provided for in the Mortgage, and Bank hereby
covenants that any sale by it of the Property pursuant to the
exercise of any rights and remedies under the Mortgage or
otherwise, shall be made subject to the Lease and the right of
Tenant thereunder.
4. In no event shall Bank or any other Purchaser be:
a. liable for the representations, any act or omission of any
prior landlord, including the Landlord;
b. liable for the return of any security deposit not received by
Bank or other such Purchaser;
c. subject to any offsets or defenses which the Tenant might have
against any prior landlord;
d. bound by any payment of rent or additional rent which the
Tenant might have paid to any prior landlord, including the
Landlord, for more than the current month; or
e. bound by any amendment or modification of the Lease made
without Bank's (or such other Purchaser's) prior written
consent.
5. Tenant agrees that it will not, without the prior written consent
of Bank, do any of the following, and any such purported action without
such consent shall be void as against Bank:
a. modify the Lease or any extensions or renewals thereof or
change any renewal option;
b. terminate the Lease, except as provided by its terms;
c. tender or accept a surrender of the Lease, except as provided
by its terms, or make a prepayment in excess of one month of
rent thereunder; or
d. subordinate or permit subordination of the Lease to any lien
subordinate to the Mortgage, except as required by the terms of
the Lease.
6. Tenant agrees to certify in writing to Bank, upon request,
whether or not any default on the part of Landlord exists under the Lease
and the nature of any such default.
7. The foregoing provisions shall be self-operative and effective
without the execution of any further instruments on the part of either
party hereto. However, Tenant agrees to execute and deliver to Bank or to
any person to whom Tenant herein agrees to attorn such other instruments as
either shall request in order to effectuate said provisions.
8. The agreements herein contained shall be binding upon and shall
inure to the benefit of the parties hereto, their respective successors,
successors-in-interest and assigns, and, without limiting such, the
agreements of Bank shall specifically be binding upon any Purchaser of the
Property at foreclosure or at a sale under power.
9. This agreement may not be modified other than by an agreement in
writing signed by the parties hereto or their respective successors-in-
interest.
10. This agreement may be signed in counterparts.
11. If any term or provision of this Agreement shall to any extent
be held invalid or unenforceable, the remaining term and provisions hereof
shall not be affected thereby, but each term and provision hereof shall be
valid and enforceable to the fullest extent permitted by law. This
Agreement shall be governed in accordance with the laws of the Commonwealth
of Massachusetts.
12. The provisions of this agreement which are for the benefit of
the Tenant shall not be effective unless and until the Bank receives a
fully executed original of this agreement or an attested copy thereof,
together with an attested copy of the notice of lease with respect to the
Lease, as recorded in the Registry of Deeds.
IN WITNESS WHEREOF, Tenant and Bank have caused this instrument to be
executed under seal as of the day and year first above written.
WITNESS TENANT:
EXODUS COMMUNICATIONS, INC.
By:
Name
Title:
Address:
BANK: BMC Software, Inc.
By:
Name:
Title:
STATE OF CALIFORNIA
,ss. 1999
Then personally appeared the above-named as
aforesaid, and acknowledged the foregoing to be the free act and deed of
Exodus Communications, Inc., before me.
, Notary Public
My Commission Expires:
STATE OF TEXAS
,ss. 1999
Then personally appeared the above-named as
aforesaid, and acknowledged the foregoing to be the free act and deed of
the said BMC Software, Inc., before me.
Notary Public
My Commission Expires:
SCHEDULE A
ATTACHED TO AND MADE A PART OF
THAT CERTAIN LEASE BY AND BETWEEN
100 TCD ASSOCIATES LIMITED PARTNERSHIP AND
TW CONROY 2 LLC
TO
EXODUS COMMUNICATIONS, INC.
580 WINTER STREET, WALTHAM, MA
LANDLORD ALLOWANCES
Landlord shall cause to be paid to Tenant for Tenant improvements
("Tenant Improvements) an allowance of (i) $16.00 per rentable square foot
to be applied toward all Tenant improvements, including the cost of
architectural and engineering planning, space planning and construction
services for 15,000 square feet of rentable space (unimproved) within the
Premises; and (ii) $6.00 per rentable square foot to be applied toward all
Tenant improvements, including the cost of architectural and engineering
planning, space planning and construction services for 49,568 square feet
of rentable space (improved) within the Premises. The parties agree that
the aggregate amount of Tenant Improvements is $537,408 to be paid to
Tenant on or before the Commencement Date. If the aforesaid amount of
$537,408 is not paid to Tenant by the Commencement Date, Tenant may
withhold payment of the Security Deposit required to be paid in accordance
with Section 6.4 of the Lease. The aforesaid amount of the Landlord
Allowance shall be adjusted to reflect Landlord's contribution of
$150,000.00 towards the cost of the new roof resulting in a total Landlord
allowance of $687,408, less Tenant's contribution of $49,045.00 for the
balance of cost of the new roof or an adjusted Landlord allowance of
$638,363.
SCHEDULE B
ATTACHED TO AND MADE A PART OF
THAT CERTAIN LEASE BY AND BETWEEN
100 TCD ASSOCIATES LIMITED PARTNERSHIP AND
TW CONROY 2 LLC
TO
EXODUS COMMUNICATIONS, INC.
580 WINTER STREET, WALTHAM, MA
TENANT'S IMPROVEMENTS OWNED BY TENANT
Notwithstanding anything to the contrary in this Lease, but subject
nevertheless to the Section 4.2, Section 8.6.1 and Section 16.13 of the
Lease, at the expiration or earlier termination of this Lease, Tenant
shall have the right to remove the following items from the Premises and
other areas related thereto which were installed by or for Tenant at
Tenant's sole cost and expense:
1. Permanent and temporary generator systems including enclosures
and fuel tanks with the associated electronic and manual switch
gear.
2. Mechanical Systems, i.e, Air Conditioning and condenser
systems, air handlers and electrical dampers, installed by or
for Tenant.
3. Raised Flooring, racking, Cage materials, cabinets and patch
panels.
4. UPS Battery Systems including electrical switch gear.
5. Any customer satellite dishes installed on roof or parking lot
areas.
6. FM200 fire suppression canisters, piping and nozzles.
7. VESDA or smoke sensor stations on ceiling or floor area.
8. Inside or outside security cameras, access card reader
stations, VCR, multiplexer, monitors and computers.
9. Partition and conference room furniture systems and
freestanding, cabinets, storage units.
10. Telephone and voice mail system with desk stations and
receptionist, computers, servers, printers, phone sets.
11. Fiber Muxes or other Telco equipment installed in MPOE rooms.
12. Emergency distribution board and telephone backboard with
connectors.
13. Maintenance bypass electronic and manual switch gear.
14. Transformers and Power Distribution Units installed by or for
Tenant on premises.
15. Kitchen appliances like microwaves, refrigerators and vending
machines.
16. Console monitors, screen projection and screens in command
center.
17. Bulletproof/resistant glass installed by or for Tenant on the
premises.
18. Satellite dishes or other communications equipment installed by
or for Tenant or roof or in parking lot.
19. Customer and vendor equipment and related materials.
20. Tenant, Tenant Customer and Tenant Vendor personal property.
21. Anything similar or related to the foregoing items that was
installed by of for Tenant pursuant to the terms of the Lease.
EXHIBIT G
ATTACHED TO AND MADE A PART OF
THAT CERTAIN LEASE BY AND BETWEEN
100 TCD ASSOCIATES LIMITED PARTNERSHIP AND
TW CONROY 2 LLC
TO
EXODUS COMMUNICATIONS, INC.
580 WINTER STREET, WALTHAM, MA
WORK LETTER
EXHIBIT G
WORK LETTER
This Work Letter Agreement ("Work Letter") supplements that certain
Lease (the "Lease"), dated and executed concurrently herewith, by and
between 580 WINTER STREET REALTY TRUST, as "Landlord", and EXODUS
COMMUNICATIONS, INC., a Delaware corporation, as "Tenant", covering certain
premises described in the Lease (the "Premises"). All terms not defined
herein shall have the same meaning as set forth in this Lease.
1. Tenant's Plans. Tenant, at Tenant's expense, shall cause to be
prepared by Tenant's architect ("Tenant's Architect"), and shall submit to
Landlord, complete working drawings and specifications ("Tenant's Plans")
showing the details of the interior of the Premises and all initial
leasehold improvements, tenant improvements, including partitions, doors,
lighting fixtures, telephone and electrical outlets and other leasehold
improvements which Tenant may require pursuant to Section 4.2 of the Lease,
which shall be Tenant's design and construction responsibility ("Tenant
Improvements"); it being agreed, however, that Tenant's Plans shall be
subject to Landlord's approval, which approval Landlord shall not
unreasonably withhold and Landlord shall respond to Tenant's request for
approval within ten business days after submission of Tenant's Plans to
Landlord. Tenant's Plans as approved by Landlord shall constitute the
"Final Plans" hereunder.
2. Tenant Work.
a. Construction by Tenant. Tenant shall select a contractor
reasonably acceptable to Landlord ("Tenant's Contractor") to construct the
Tenant Improvements and shall be responsible for the construction within
the Premises of the Tenant Improvements, in accordance with the Final
Plans. Tenant shall work diligently to accomplish substantial completion
of construction of the Tenant Improvements in accordance with the Final
Plans. The quantities, character and manner of installation of all of
Tenant's work in the Premises shall be subject to the limitations imposed
by any application regulations, laws, ordinances, codes and rules and
Tenant shall construct the Tenant Improvements in conformance therewith.
The Tenant Improvements shall be deemed to be substantially completed when
Tenant's Architect certifies in writing to Landlord and Tenant that
Tenant's Contractor has substantially performed all of the Tenant
Improvements work in accordance with the Final Plans; and (b) Tenant's
Contractor has obtained a temporary certificate of occupancy or other
required approval from the local governmental authority permitting
occupancy of the Premises. Tenant's Contractor shall guaranty all work and
Tenant Improvements for one (1) year from the earlier of the Commencement
Date or the commencement of the warranty for those items covered by
manufacturer's or vendor's warranties and, to the extent possible, all such
warranties shall be assignable to Landlord.
b. Performance of Tenant Work. Landlord agrees to provide
reasonable access to the Premises to Tenant and its agents with respect to
the work of the Tenant's Improvements. Landlord agrees to provide
reasonable access to the Premises to Tenant and its agents during the
period between the Effective Date of the Lease and the Commencement Date
for the purpose of completing Tenant Improvements and installing Tenant's
fixtures, furnishings and equipment, so long as such access does not in
Landlord's reasonable judgment interfere with the conduct of Landlord's
construction.
EXHIBIT H
ATTACHED TO AND MADE A PART OF
THAT CERTAIN LEASE BY AND BETWEEN
100 TCD ASSOCIATES LIMITED PARTNERSHIP AND
TW CONROY 2 LLC
TO
EXODUS COMMUNICATIONS, INC.
580 WINTER STREET, WALTHAM, MA
TENANT'S RULES AND REGULATIONS
FOR ACCESS TO THE PREMISES
EXHIBIT 10.62
LEASE
EXODUS COMMUNICATIONS, INC.
ARTICLE I
Parties
THIS LEASE ("Lease"), dated April ____, 1999, is made between
REYNOLDS METALS DEVELOPMENT COMPANY, a Delaware Corporation ("Landlord")
and EXODUS COMMUNICATIONS, INC., a Delaware Corporation ("Tenant"). The
effective date shall be the date of execution hereof on behalf of
Landlord, as set forth on the signature page.
ARTICLE II
Premises
Landlord hereby leases to Tenant and Tenant leases from Landlord,
upon all of the terms and conditions set forth herein, that certain real
property comprising of 6.17 acre parcel with an approximately 78,671
square feet building as indicated on Exhibit A attached hereto (the
"Premises"), of the project known as Nokes Plaza, with an address of 45905
Nokes Boulevard, Sterling, Virginia (the "Project").
ARTICLE III
Term and Tenant Improvements
Section 3.1 Term. The term of this Lease (the "Term") is 10 years
commencing (1) on September 1, 1999 ("Commencement Date") and ending one
hundred twenty (120) months thereafter on August 31, 2009 ("Expiration
Date").
Section 3.2 Early Possession. It is understood that the Tenant is
authorized to enter the premises prior to the Commencement Date for the
specific purpose of constructing the tenant improvements.
Section 3.3 Holding Over.
(a) If Tenant remains in possession of the Premises or any part
thereof after the expiration of the Term hereof, such occupancy shall be
a tenancy from month-to-month upon all the provisions of this Lease
pertaining to the obligations of Tenant, except all options and rights of
first refusal, if any, granted under the terms of this Lease shall be
deemed terminated and be of no further effect during said month-to-month
tenancy.
(b) If Tenant shall hold over after the Expiration Date or
earlier termination of this Lease, and Landlord shall desire to regain
possession of the Premises, then Landlord, after delivery of written
notice to Tenant, may forthwith re-enter and take possession of the
Premises without process, or by any appropriate legal process. Tenant
shall indemnify Landlord against all reasonable liabilities and damages
sustained by Landlord by reason of such retention of possession.
Section 3.4 Tenant Improvements. Tenant shall construct or cause
to construct, with contractors selected by Tenant in Tenant's sole
discretion and at Tenant's sole cost and expense (except as set forth
below and in Section 3.7), certain improvements on the Premises which
shall include, without limitation, the construction of an internet data
facility substantially similar to the internet data facility currently
located at 45901 Nokes Boulevard, Sterling, Virginia (the "Tenant
Improvements"). Tenant shall promptly provide Landlord with the plans and
specifications for the Tenant Improvements (the "Plans") following the
completion of the Plans and Tenant's receipt of Landlord's request for the
same. The Tenant Improvements shall comply with all applicable laws, and
Tenant shall obtain any approval, if required, of any local zoning agency
for the Plans. All work shall be performed in a good and workmanlike
manner. Following completion of such work, Tenant shall furnish to
landlord a set of "as-built" drawings showing the Tenant Improvements and
a copy of the Certificate of Occupancy.
It is expressly understood by both Tenant and Landlord that
Landlord will not be delivering a shell building complete with a shell
building Certificate of Occupancy. The building will be available to
Tenant for early possession upon execution of this Lease with the shell
fully constructed but without power, lighting, electrical system,
sprinklers, restrooms and mechanical and electrical rooms. The Tenant
shall be solely responsible for completing the foregoing shell building
items and necessary Tenant Improvement plans in accordance with all
applicable codes and regulations as may be necessary to obtain the
Certificate of Occupancy all at Tenant's expense (except to the extent set
forth in Section 3.7). This includes, without limitation, the completion
of all mechanical, electrical, plumbing, sprinkling systems necessary to
obtain the Certificate of Occupancy. Any fees or charges by Loudoun
County for termination of the approved scope of construction, delay in
processing and review and approval of new building plans shall be the sole
responsibility of the Tenant. The Landlord will be responsible for paying
all fees and charges required by the Loudoun County Sanitation Authority
including, without limitation, sewer hookup fee, water hookup fee, 2"
meter charge, lateral fees, fire demand fee, and for posting the required
Sewer and Water Maintenance Bonds. Landlord will also be responsible for
posting a $10,000.00 traffic light escrow with Loudoun County.
Landlord agrees and acknowledges that the Tenant Improvements
shall, at Tenant's election and without Landlord's prior consent (unless
stated otherwise herein), include the following: (i) a new overhead door
opening in a location to be determined by Tenant in one of the existing
knockout panels to be installed at Landlord's cost and expense as long as
Tenant instructs Landlord as to the location of such door opening on or
before March 31, 1999 (Tenant may block the two overhead door openings
that currently exist); (ii) exterior generators and associated fuel tanks
at the rear of the Premises and HVAC and communications equipment on the
Premises' roof provided, however, that Landlord approves the plans for
such items (which approval shall not be unreasonably withheld or delayed)
and Tenant pays all costs associated with such improvements; (iii) a
mezzanine level in the Premises which complies with all existing laws and
regulations; and (iv) a security fence reasonably acceptable to Tenant
surrounding the building and any other improvements located on the
Premises. The parties further agree that Tenant will have the right to
construct, at its cost and expense, above and/or below ground connections
between the Premises and the improvements located at 45901 Nokes
Boulevard, Sterling, Virginia; provided, however, Tenant obtains all
required governmental approvals, such construction complies with all
applicable laws and regulations and the approval of Landlord and the
landlord of 45901 Nokes Boulevard. Landlord shall not unreasonably
withhold or delay any such approval.
Section 3.5 Satisfaction of Claims for Labor and Materials.
Tenant shall pay, when due, all claims for labor and materials furnished
to or for Tenant, at or for use in the Premises. Tenant shall give
Landlord not less than ten (10) days notice prior to commencement of such
work in the Premises and Landlord shall have the right to post notices of
nonresponsibility in or on the Premises. If the mechanic's or
materialman's lien shall be filed against the Premises, the building or
any part of the Project for work done or claim to have been done or
materials furnished or claimed to have been done or materials furnished or
claimed to have been furnished to or for the benefit of Tenant, Tenant
shall discharge and release such lien of record within fifteen (15) days
after Tenant receives advice of the filing of such lien, at Tenant's
expense by the payment of the amount claimed or by the filing of a bond as
prescribed by law. If Tenant shall fail to do so, Landlord may (but shall
not be obligated to) discharge the same, and the cost thereof, including
reasonable legal fees, shall be Additional Rent payable by Tenant within
three (3) days following demand by Landlord. Such discharge by Landlord
shall not be deemed to waive or release the default of Tenant in not
discharging the same. No provision of this Lease shall be deemed to be
the Agreement or consent of Landlord to subject Landlord's interest in the
Premises or the Project to any such liens.
Section 3.6 Landlord's Property. Unless Landlord requires the
removal, all alterations, improvements and conditions which may be made on
the Premises, shall become the property of Landlord and remain upon and be
surrendered with the Premises at the expiration of the term.
Notwithstanding the provisions of this Section, Tenant's trade fixtures,
furnishings and equipment as well as the items listed in Exhibit "B" shall
remain the property of the Tenant and may be removed by Tenant anytime
during the term or any extension thereof. Tenant shall repair any damages
to the Premises resulting from Tenant's removal of such trade fixtures,
furnishings and equipment.
Section 3.7 Landlord's Contribution to Tenant Improvements.
Landlord agrees to reimburse Tenant $300,000.00 for the Tenant
Improvements. Such sum shall be payable within thirty (30) days after
receipt of invoices from Tenant evidencing the same, and the issuance by
the local municipality of a permanent or temporary certificate of
occupancy, unless an Event of Default exists.
Section 3.8 Revisions to Plans for Tenant Improvements. Landlord
and Tenant acknowledge that the Tenant may require changes to Plans upon
their completion as set forth in Section 3.4 above. The cost of any such
revisions shall be the Tenant's sole expense. The Tenant shall furnish the
Landlord with copies of all changes, revisions or amendments to the Plans,
and such changes, revisions and amendments shall be reflected on the "as-
built" drawings.
ARTICLE IV
Rent
Section 4.1 Base Rent. Tenant shall pay to Landlord base rent
("Base Rent") in the amount of $645,889.00 per year subject to the
payment schedule and rental adjustment set forth below. Tenant's
obligation to pay Base Rent shall commence on the Commencement Date.
Notwithstanding the foregoing, the first year's rent shall be paid at the
rate of $7.21/sq.ft. (triple net) ($47,286.00/month) for the first six (6)
months and $9.21/sq.ft.(triple net) ($60,380.00/month) for the second six
(6) months. The second year Base Rent, and each year base rent
thereafter, will be twelve (12) equal monthly payments of Base Rent plus
annual rent adjustment.
Section 4.2 Payment of Base Rent. As long as Tenant is not in
default hereunder beyond any applicable cure period, Base Rent shall be
paid in equal monthly installments, in advance, on the first business day
of each month of the Term hereof, except the first installment of Base
Rent, which shall be paid upon execution of this Lease by Tenant. Rent
shall be paid to Landlord c/o Reynolds Metals Development Company, at 6601
West Broad Street, Richmond, Virginia 23230, Attn: W. S. Wasilewski,
Controller, or at such other address as may be specified in written notice
to Tenant.
Section 4.3 Annual Rent Adjustment. The Base Rent shall be
increased commencing on the first anniversary of the Lease Commencement
Date, and on each anniversary of the Commencement Date of this Lease
thereafter in an amount equal to 3% of the last preceding year's Base
Rent.
Section 4.4 Other Charges Added to Annual Base Rent. Tenant shall
pay to Landlord on the first business day of the first month of each
anniversary during the Lease Term as Additional Rent all property owner
association fees and the costs of any insurance obtained by Landlord and
related to the Premises.
Section 4.5 Additional Rent. All other monetary obligations of
Tenant to Landlord under the terms of this Lease shall be deemed to be
"Additional Rent", and shall be due and payable with the next due monthly
installment of Base Rent, unless otherwise indicated herein. The parties
agree that Tenant shall not have to pay any management or accounting fee
at any time. Tenant's obligation to pay Additional Rent shall commence on
the earlier of June 1, 1999, or the date that construction of the building
shell is completed.
Section 4.6 Tenant's Right to Audit. Landlord shall furnish Tenant
following Tenant's written request therefor, invoices and other source
documents relating to Additional Rent. If it is determined from Tenant's
audit of such materials that Tenant was overcharged by more than three
percent (3%), such overcharge shall entitle Tenant to credit against its
next payment of Additional Rent in the amount of the overcharge and the
costs associated with the audit (and, if such credit occurs following the
expiration of the Term, Landlord shall promptly pay the amount of such
credit to Tenant). If the audit determines that the Tenant was
overcharged less than three percent (3%), such overcharge shall entitle
Tenant to credit against its next payment of Additional Rent the amount of
the overcharge and Tenant shall pay for all costs associated with the
audit. If the audit shall determine that Tenant was undercharged for
Additional Rent, Tenant shall promptly pay the amount of such undercharge
to Landlord and Tenant shall pay for all costs associated with the audit.
Notwithstanding anything to the contrary herein, any Additional Rent
attributable to a period which falls only partially within the term of
this Lease shall be prorated between Landlord and Tenant so that Tenant
shall pay only that portion thereof which the part of such period within
the Lease term bears to the entire period.
ARTICLE V
Security Deposit
Tenant shall deposit with Landlord upon execution hereof an amount
equal to $10,000.00 as security for Tenant's faithful performance of
Tenant's obligations hereunder (the "Security Deposit"). It is expressly
understood that the Security Deposit is not an advance rental payment or
a measure of Landlord's damages in the event of default. If Tenant fails
to pay rent or other charges due hereunder, or otherwise defaults with
respect to any provision of this Lease and fails to cure such default
before the expiration of any applicable cure period, Landlord may use,
apply or retain all or any portion of the Security Deposit for the payment
of any rent or other charge in default or for the payment of any other sum
to which Landlord may become obligated by reason of Tenant's default, or
to compensate Landlord for any loss or damage which Landlord may suffer
thereby. If Landlord so uses or applies all or any portion of the
Security Deposit, Tenant shall within ten days after written demand
therefor, deposit cash with Landlord in an amount sufficient to restore
the Security Deposit to the full amount hereinabove stated and Tenant's
failure to do so shall be a material breach of this Lease. Landlord shall
not be required to keep the Security Deposit separate from its general
accounts. If Tenant performs all of Tenant's obligations hereunder, the
Security Deposit, or so much thereof as previously has not been applied by
Landlord, shall be returned without payment of interest to Tenant (or, at
Landlord's option, to the last assignee, if any, of Tenant's interest
hereunder) following the termination hereof, and after Tenant has vacated
the Premises. No trust relationship is created herein between Landlord
and Tenant with respect to the Security Deposit.
ARTICLE VI
Use
Section 6.1 Permitted Use. The Premises shall be used and
occupied as an office and internet data center or any other purpose
permitted by applicable laws, including but not limited to general
warehouse and light industrial use, and for no other purpose.
Section 6.2 Compliance with Law. Tenant shall, at Tenant's
expense, comply promptly with all present and future applicable statutes,
ordinances, rules, regulations, orders, permits, covenants and
restrictions of record, and any other requirements of any federal, state
or local authority in effect during the Term or any part of the Term
hereof, regulating the use or condition of the Premises, including, but
not limited to, environmental matters and employee health and safety.
Tenant shall not use nor permit the use of the Premises in any unlawful or
dangerous manner.
Section 6.3 Environmental Matters.
(a) Tenant shall not use the Premises, or the Project for the
storage, treatment, generation, transportation, processing, handling or
disposal of any Hazardous Substance (defined below) in quantities subject
to regulation under Environmental Laws (defined below). Further, Tenant
shall not cause or in any way directly or indirectly contribute to any
condition that is or may be characterized by any federal, state or local
government or agency as an actual or potential threat or endangerment to
health or the environment.
(b) For purposes of this Section 6.3,
(i) "Hazardous Substance" means (a) any hazardous
wastes or toxic chemicals, materials, substances or
wastes as defined by any Environmental Laws (defined
below), (b) any "oil" as defined by the Clean Water Act
and regulations promulgated thereunder (including crude
oil or any fraction of crude oil), (c) any substance,
the presence of which is now or in the future
prohibited, regulated or controlled by any Environmental
Law or any other law, regulation, statute or ordinance
of any of any governmental authority, (d) any asbestos
or asbestos containing materials, (e) any
polychlorinated biphenyls, (f) urea formaldehyde, (g)
atmospheric radon at levels over four picocuries per
cubic liter, (h) any solid, liquid, gaseous or thermal
irritant or contaminant, such as smoke, vapor, soot,
fumes, alkalis, acids, chemicals, pesticides,
herbicides, sewage, industrial sludge or similar wastes,
and (i) any industrial, nuclear or medical by-products.
However "Hazardous Substances" do not include (A)
immaterial quantities of automotive motor oil; leaked
inadvertently from vehicles in the ordinary course of
the operation of the Premises cleaned up in accordance
with reasonable property management procedures and any
applicable law, (B) immaterial quantities of substances
customarily and prudently used in the cleaning and
maintenance of the Premises in accordance with
applicable law, or (C) substances customarily used in
connection with any uses permitted by Section 6.1 of
this Lease, including, without limitation, diesel fuel
needed to run all emergency generators provided all are
in accordance with all applicable laws and regulations;
and
(ii) "Environmental Laws" means all applicable present
and future laws, statutes, ordinances, rules,
regulations, orders, and determinations of any
governmental authority pertaining to health, underground
storage tank regulation or removal, protection of the
environment, natural resources, wetlands, conservation,
wildlife, waste management, regulation of activities
involving Hazardous Substances, and pollution, or
relating to waste disposal or environmental protection
with respect to the exposure to, or manufacture,
possession, presence, use, generation, storage,
transportation, treatment, release, emission, discharge,
disposal, abatement, cleanup, removal, remediation or
handling of any Hazardous Substances, including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sec. 9601 et
seq., the Superfund Amendments and Reauthorization Act
of 1986, 42 U.S.C. Sec. 9601(20)(D), the Resource
Conservation and Recovery Act, 42 U.S.C. Sec. 9601 et
seq., the Federal Water Pollution Control Act, as
amended by the Clean Water Act, 33 U.S.C. Sec. 1251 et
seq., the Clean Air Act, 42 U.S.C. Sec. 7401 et seq. and
the Toxic Substances Control Act, 15 U.S.C. Sec. 2601 et
seq., all as amended from time to time.
(c) At any time during the term of this Lease if Landlord
reasonably believes the Premises may have been contaminated by any
Hazardous Substance as a result of Tenant's breach of this Lease, and
within 180 days after the termination or expiration of this Lease,
Landlord and its consultants shall have the right, but not the obligation,
to sample, analyze, inspect and monitor the air, soil, the surface water,
the ground water and any materials or substances (whether or not belonging
to Tenant) in, on or about the Premises, the Building or the Project, for
the purpose of determining the presence of any Hazardous Substance. Any
costs or damages incurred by Landlord due to any contamination from
Hazardous Substances on, under or about the Premises caused by Tenant's
use of or activities in the Premises in breach of this Lease, Tenant shall
reimburse Landlord for the costs of such assessment, and shall in addition
pay for (as Additional Rent) all costs associated with (i) the removal of
any such Hazardous Substance from the Premises, the Building, the Project
or any adjoining property if such Hazardous Substance migrated to any
adjoining property, (ii) the disposal of the same strictly in accordance
with applicable law, and (iii) any remediation work on the Premises, the
Building or the Project required by Environmental Laws. Landlord or its
environmental consultants shall prepare the work plan for such removal,
disposal and remediation, and Landlord shall retain such engineers or
other persons as it deems appropriate in its reasonable discretion to
carry out the work plan. Upon completion of the work, the Premises shall
be in compliance with existing standards of Environmental Laws, or in the
event there are no such standards for any particular contaminant, then the
Premises shall be free of any Hazardous Substance to a standard of
background levels of contamination, meaning the level of contaminants
naturally occurring in or under the air, soil, surface water or ground
water, or whatever higher level which presents no significant
environmental or health risks.
(d) Tenant shall not, without the consent of Landlord, disclose to
any third party or to the public any information obtained through any
environmental assessment or investigation of the Premises or the Project
which is not publicly known. Notwithstanding the foregoing, any such
confidential information may be disclosed to a governmental agency or to
the public if Tenant believes in good faith that such disclosure is
required by pertinent law, and Tenant notifies Landlord in writing of its
intent to disclose such confidential information within a reasonable
period of time before such disclosure.
(e) Tenant shall defend, indemnify and hold Landlord harmless from
and against any and all claims, response or remediation costs, losses,
damages, penalties, other costs, actions, judgments, expenses, and
liabilities of every kind and nature whatsoever (including, without
limitation, reasonable attorneys' and consultants' fees and costs and
expenses of investigation, remediation or defense) (i) which arise either
directly or indirectly from Tenant's violation of any Environmental Law,
or (ii) which arise either directly or indirectly from the generation,
treatment, storage, spillage, handling, disposal or release on, under or
from the Premises or the Project by Tenant or any of its affiliates,
agents, contractors, employees, or invitees of any Hazardous Substance in
violation of this Lease. This indemnity and the provision of this section
shall survive the termination or expiration of this Lease.
(f) Tenant warrants, represents and covenants that:
(i) its operations on the Premises are not
expected to result in the presence of Hazardous
Substances on the Premises or the Project;
(ii) it shall, at its own expense, comply
promptly with all applicable Environmental Laws;
(iii) it shall immediately notify Landlord of
any notice of violation, noncompliance or other
written communication by any governmental
authority or others of any violation of any
Environmental Laws; and
(iv) it shall immediately inform Landlord if
Tenant becomes aware of or causes a release of
Hazardous Substances on the Premises, the
Building, the Project or anywhere in the vicinity
of the foregoing.
(g) Landlord warrants, represents and covenants that:
(i) that as of the Lease Commencement Date, or
the Date on which the Tenant enters upon the
premises for the purposes of construction of the
tenant improvements, whichever occurs first, that
there are no Hazardous Substances in, on or under
the Premises.
(ii) that Landlord has complied with all
applicable Environmental Laws.
(iii) that Landlord shall immediately inform
Tenant if it becomes aware of any violation of
any Environmental Laws occurring prior to the
Lease Commencement Date or the date on which the
Tenant enters the Premises for the purpose of
constructing the Tenant Improvements, whichever
occurs earlier.
(h) Landlord shall defend, indemnify and hold Tenant harmless from
and against any and all claims, response or remediation costs, losses,
damages, penalties, other costs, actions, judgments, expenses and
liability of every kind and nature whatsoever (including, without
limitation, reasonable attorney's fees and consultant's fees and costs and
expenses of investigation, remediation or defense) which arise either
directly or indirectly from a breach of the warranties, representations
and covenants set forth in Section 6.3(g) hereof.
Section 6.4 Status of Property.
(a) Tenant hereby accepts the Premises, subject to all applicable
zoning, municipal, county and state laws, ordinances and regulations
governing and regulating the use and condition of the Project and/or
Premises, and any covenants or restrictions of record and accepts this
Lease subject thereto and to all matters disclosed thereby.
(b) Tenant acknowledges that neither Landlord nor Landlord's agent
has made any representation or warranty as to the present or future
suitability of the Premises for the conduct of Tenant's business.
Section 6.5 Auctions. Tenant shall not conduct, nor permit to be
conducted, whether voluntarily or involuntarily, any in-person
auctioneering on the Premises with the public invited, without first
having obtained Landlord's prior written consent. Notwithstanding
anything to the contrary in this Lease, Landlord shall not be obligated to
exercise any standard of reasonableness in determining whether to grant
such consent.
Section 6.6 Signs. No sign, door plaques, advertisement, or notice
shall be displayed, painted or affixed by Tenant on any part of the
Project, building, parking facilities, or Premises without the prior
written consent of Landlord, which shall not be unreasonably withheld or
delayed. Landlord acknowledges, however, that Tenant shall be permitted
to place its name and logo on and in front of the building, which such
signs shall be subject to Landlord's approval as set forth herein. The
color, size, character, style and material and placement of any sign shall
be submitted to Landlord for approval, and shall be subject to any
applicable governmental laws, ordinances, regulations or other
requirements. Tenant shall remove all such signs at the termination of
this Lease. Such installations and removals shall be made in such manner
as to avoid injury or defacement of the Project and other improvements,
and Tenant, at its sole expense, shall repair any injury or defacement,
reasonable wear and tear excepted.
Section 6.7 Access. Tenant shall have access to the Premises and
the parking spaces assigned to the Premises twenty-four (24) hours a day,
seven (7) days a week.
ARTICLE VII
Utilities and Services
Section 7.1 Tenant Responsibility. Tenant shall pay, starting on
the earlier of June 1, 1999, or the date that construction of the building
shell, as required by Section 3.4 hereof, is completed, for all water,
gas, heat, light, electric power, telephone, landscaping and lawn
maintenance, snow and ice removal, interior painting, cleaning and
repairing windows, interior wall and floor coverings, repair and
maintenance of paved and unpaved surfaces, lighting, trash removal and
other utilities and services (including, without limitation, janitorial
services) supplied to the Premises from and after taking possession,
together with any taxes thereon and connection charges to the Premises
(except as set forth in Section 3.4 hereof) and other expenses and costs,
whether or not similar in connection with operating, repairing and
maintaining the land and building. All services discussed herein shall be
performed by contractors hired by Tenant.
Section 7.2 Security Measures. Tenant hereby acknowledges that the
rent payable to Landlord hereunder does not include the cost of guard
service or other security measures, and that Landlord shall have no
obligation whatsoever to provide same. Tenant assumes all responsibility
for the protection of Tenant, its property, its agents and invitees from
acts of third parties.
Section 7.3 Special Costs. Tenant shall be responsible for the
installation on the Premises and maintenance of any dilution tanks,
holding tanks, settling tanks, sewer sampling devices, sand traps, grease
traps or similar devices which may be required by the appropriate
governmental subdivision for Tenant's use of the sanitary sewer system.
If obstructions or stoppages in the common sewer lines at the Project
result from discharges from tanks and items noted above, then Tenant shall
pay the entire cost of repair, upon demand, as Additional Rent.
ARTICLE VIII
Taxes
Section 8.1 Payment of Real Property Taxes. Tenant shall pay, as
Additional Rent, the Real Property Taxes (defined below) applicable to the
Premises during the Term of this Lease. All such payments shall be made
within ten business days after receipt of a written statement from
Landlord setting forth such taxes and a copy of the applicable real estate
tax bill or bills. If any Real Property Taxes paid by Landlord covers any
period of time prior to or after the expiration of the Term hereof,
Tenant's Share of such taxes shall be equitably prorated to cover only the
period of time within the tax fiscal year during which this Lease shall be
in effect. Landlord shall have the option, exercisable at any time during
the Term, to elect to have Tenant pay Real Property Taxes in monthly
installments, in advance, based on Landlord's reasonable estimate of Real
Property Taxes for such year.
Section 8.2 Definition of "Real Property Taxes." As used herein,
the term "Real Property Taxes" shall include any form of real estate tax
or assessment, general, special, ordinary or extraordinary, and any
license fee, commercial rental tax, gross receipts tax, improvement bond
or bonds, levy or tax (other than inheritance, personal income or estate
taxes) imposed on the Landlord or the Premises by any authority having the
direct or indirect power to tax, including any city, county, state or
federal government, or any school, agricultural, sanitary, fire, street,
drainage or other improvement district thereof, as against any legal or
equitable interest of Landlord in the Premises or in the real property of
which the Premises are a part, as against Landlord's right to rent or
obtain other income therefrom, and as against Landlord's business of
leasing the Premises. The term Real Property Taxes also shall include any
tax, fee, levy, assessment or charge (i) in substitution of, partially or
totally, any tax, fee, levy, assessment or charge hereinabove included
within the definition of Real Property Taxes, or (ii) the nature of which
was hereinbefore included within the definition of Real Property Taxes, or
(iii) which is imposed by reason of this transaction or any modifications
or changes hereto.
Section 8.3 Joint Assessment. If the Premises are not separately
assessed, Tenant's liability shall be an equitable proportion of the Real
Property Taxes for all of the land and improvements included within the
tax parcel assessed, such proportion to be reasonably determined by
Landlord from the respective valuations assigned in the assessor's work
sheets or such other information as may be reasonably available.
Landlord's reasonable determination thereof, in good faith, shall be
conclusive.
Section 8.4 Payment of Personal Property Taxes.
(a) Tenant shall pay, prior to delinquency, all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all
other personal property of Tenant contained in the Premises. When
possible, Tenant shall cause said trade fixtures, furnishings, equipment
and all other personal property to be assessed and billed separately from
the real property of Landlord.
(b) If any of the Tenant's personal property shall be assessed
with the Landlord's real property, Tenant shall pay Landlord the taxes
attributable to Tenant within ten days after receipt of a written
statement setting forth the taxes applicable to Tenant's property.
Section 8.5 Sales and Use Tax. In addition to the Base Rent
required hereunder, Tenant shall also be solely responsible for all sales
tax applicable thereon, or applicable to any other charges or payments due
hereunder.
ARTICLE IX
Maintenance, Repairs and Alterations
Section 9.1 Tenant's Obligations.
(a) Tenant, at Tenant's expense, shall keep in good order,
condition and repair the nonstructural portions of the Premises and every
part thereof, including by way of illustration, all plumbing, heating, air
conditioning, ventilating, electrical, mechanical and lighting facilities
and equipment located within the Premises; light bulbs and tubes; interior
surfaces of exterior walls; ceilings; interior and exterior of windows;
interior and exterior doors and entrance ways; truck doors and dock
bumpers; windows and plate glass; floors and floor coverings; and Tenant's
signs located on or about the Premises or the Project. Tenant shall be
obligated to make the repairs required hereunder, ordinary or
extraordinary, foreseen or unforeseen, and whether or not such portion of
the Premises requiring repair, or the means of repairing the same are
reasonably or readily accessible to Tenant, and whether or not the need
for such repairs occurs as a result of Tenant's use, the elements, or the
age of such portion of the Premises. The term "repair" shall be deemed to
include replacements. In addition to Tenant's obligations set forth
herein, Tenant shall, at its expense, repair and replace any and all
portions of the Premises, structural or nonstructural, for which the
Tenant shall be responsible to keep in good order, condition and repair,
which are damaged by Tenant's acts or omissions or the acts or omissions
of Tenant's employees, agents, contractors, invitees, or any others for
whom Tenant may be responsible.
(b) Tenant shall pay all charges for pest control and
extermination within the Premises. Landlord represents the premises are
delivered free and clear of infestation.
(c) If Tenant fails to perform (or to commence and diligently
pursue such performance) Tenant's obligations under this Section 9.1
within ten business days after receipt of written notice thereof, Landlord
may at Landlord's option enter upon the Premises (except in the case of
emergency, in which case no notice shall be required), perform such
obligations on Tenant's behalf and/or put the Premises in good order,
condition and repair, and the reasonable cost thereof shall be due and
payable as Additional Rent within ten days following receipt of a
statement of such costs.
(d) On the last day of the Term hereof, or on any sooner
termination, Tenant shall surrender the Premises to Landlord in the same
condition as received, ordinary wear and tear excepted, and the Premises
shall be delivered to Landlord clean, uncontaminated and free of debris.
Tenant shall remove its trade fixtures, furnishings and equipment from
the Premises and shall repair any damage to the Premises occasioned by the
installation or removal of its trade fixtures, furnishings and equipment.
Notwithstanding anything contained herein to the contrary, Landlord's
agreement to the Tenant Improvements pursuant to Sections 3.4 or 3.8 of
this Lease shall relieve Tenant of any responsibility to restore the
Premises to pre-Tenant Improvement condition upon termination.
(e) Notwithstanding the foregoing, Tenant shall not be obligated
to pay the costs of repairs due to damage caused by an insured casualty if
insurance proceeds are available for such repairs, and Tenant did not
cause such damage.
Section 9.2 Landlord's obligations. Landlord shall, at its sole
cost and expense, keep in good order, condition and repair, all of the
structural portions of the Premises which shall be limited to the roof,
the exterior walls, the foundation and interior structural portions (e.g.,
support beams, etc.). The term "walls" as used in the preceding sentence
shall not include windows, glass or plate glass, interior doors, special
entries, exterior doors, or any other item mentioned in Section 9.1 as
being an obligation of Tenant. Landlord represents and warrants that all
structural portions of the Premises are free of defects and have been
constructed in accordance with plans and specifications previously
submitted to Tenant. In addition, Landlord represents and warrants that
all non-structural portions of the Premises constructed by the Landlord
prior to the entry of the Tenant on the Premises for the purpose of
constructing the Tenant Improvements are in good working order. In the
event that such structural portions are not free of defects, or such non-
structural portions are not in good working order, of if Landlord fails to
keep the structural portions of the premises free of defect, then Tenant
may perform such obligations on Landlord's behalf, and the cost thereof
shall be charged against the rent due under the Lease. Landlord shall
have no obligation to make repairs under this Section 9.2 until a
reasonable time after receipt of written notice of the need for such
repairs.
If Landlord fails to perform any of its repair and maintenance
obligations under this Section 9.2 or otherwise as required in this Lease,
and such failure materially affects Tenant's ability to use and occupy the
Premises for the purposes permitted herein, Tenant shall have the right,
but not the obligation, to perform such repairs and/or maintenance if such
failure continues for more than thirty (30) days after written notice from
the Tenant; provided, however, that if the nature of the repairs and/or
maintenance to be completed by Landlord is such that more than thirty (30)
days are required to complete such repairs and/or maintenance, Landlord
shall have such additional time as is reasonably necessary to complete
such repairs and/or maintenance so long as Landlord takes appropriate
action to commence such repairs and/or maintenance within such thirty (30)
day period and thereafter diligently pursues such repairs and/or
maintenance to completion. In such event, Landlord shall reimburse Tenant
for the reasonable costs incurred by Tenant to complete such repairs
and/or maintenance within thirty (30) days after receipt of Tenant's
written demand therefor, together with copies of the paid invoices
evidencing the costs incurred by Tenant. Any repairs and/or maintenance
permitted herein shall be performed in a good workmanlike manner by
licensed contractors.
Section 9.3 Alterations and Additions.
(a) Any alterations, improvements or additions in the Premises
that Tenant shall desire to make in excess of $25,000.00 per calendar year
shall be presented to Landlord in written form with proposed detailed
plans prepared by a professional architect or engineer. If Landlord shall
give its consent, the consent shall be deemed conditioned upon Tenant
acquiring a permit from appropriate governmental agencies to perform the
work (if required), furnishing a copy thereof to Landlord prior to the
commencement of the work, and complying with all conditions of said permit
in a prompt and expeditious manner. Prior to the commencement of the
work, Tenant must obtain Landlord's written approval not to be
unreasonably withheld as to (i) the contractor and subcontractors selected
to perform such work, and (ii) if required by Landlord, a copy of payment
and performance bonds acceptable to Landlord naming Landlord as obligee.
All work shall be performed in a good and workmanlike manner. Tenant
shall bear the reasonable cost of inspection of such work by Landlord's
representative. If such work is not performed as herein required,
Landlord shall have the right to halt any further work and/or to require
Tenant to either comply with such requirements or restore the Premises to
their condition prior to such work. Following completion of such work,
Tenant shall furnish to Landlord a set of "as-built" drawings showing such
alterations, additions or improvements to the extent such improvements can
be reflected in such drawings. Landlord's consent or approval as required
herein shall not be unreasonably withheld or delayed.
(b) Tenant shall pay, when due, all claims for labor or materials
furnished to or for Tenant, at or for use in the Premises. Tenant shall
give Landlord not less than ten days' notice prior to the commencement of
any such work in the Premises, and Landlord shall have the right to post
notices of nonresponsibility in or on the Premises. If any mechanic's or
materialmen's lien shall be filed against the Premises, the Building or
any part of the Project for work done or claimed to have been done or
materials furnished or claimed to have been furnished to or for the
benefit of Tenant, Tenant shall discharge and release such lien of record
within fifteen days thereafter at Tenant's expense, by the payment of the
amount claimed or by filing of a bond as prescribed by law. If Tenant
shall fail to do so, Landlord may (but shall not be obligated to)
discharge the same, and the cost thereof, including reasonable legal fees,
shall be Additional Rent payable by Tenant within three days following
demand by Landlord. Such discharge by Landlord shall not be deemed to
waive or release the default of Tenant in not discharging the same. No
provision of this Lease shall be deemed to be the agreement or consent of
Landlord to subject Landlord's interest in the Premises, the Building or
the Project to any such liens.
(c) Unless Landlord requires their removal, all alterations,
improvements and additions which may be made on the Premises, shall become
the property of Landlord and remain upon and be surrendered with the
Premises at the expiration of the Term. Notwithstanding the provisions of
this Section 9.3, Tenant's trade fixtures, furnishings and equipment other
than those which are affixed to the premises so that they cannot be
removed without material damage to the Premises, and the items listed in
Exhibit "B" shall remain the property of Tenant and may be removed by
Tenant subject to the provisions of Section 9.l(e ).
ARTICLE X
Insurance and Indemnity
Section 10.1 Insurance to be Maintained by Tenant. Tenant shall
maintain at its own cost throughout the Term all insurance coverage
specified below. Tenant's insurance company shall be licensed to do
business in the state in which the Project is located and shall be
acceptable to Landlord. All policies shall designate Tenant and Landlord
(and, if Landlord so requests, the managing agent and/or any lender
secured by a lien against the Project) as additional named insureds, as
their interests may appear, and shall state that such insurance shall
remain in effect notwithstanding that the insured has waived its right of
action against any party prior to the occurrence of the loss. On or
before the Effective Date, Tenant shall deliver to Landlord certificates
of such insurance, and upon the request of Landlord, copies of all
policies. Each certificate shall indicate that the policy may not be
canceled or be subject to reduction in coverage without at least 30 days'
prior written notice to Landlord.
(a) Liability Insurance. Tenant shall obtain comprehensive general
liability insurance with a combined single limit of not less
than $1,000,000 per occurrence for personal injury and
property damage insuring both Landlord and Tenant against
liability arising out of Tenant's use, occupancy and
maintenance of the Premises and all other areas appurtenant
thereto, and containing endorsements for the following
coverages:
(i) Contractual liability insurance
relating to all obligations of Tenant
pursuant to this Lease, including its
indemnification of Landlord.
(ii) Automobile coverage.
(iii) Employee liability.
(iv) Boiler and machinery coverage (if there are
pressure vessels in the Premises).
(b) Workmen's Compensation. If and to the extent required by
applicable law, Tenant shall provide adequate workmen's
compensation insurance.
(c) Tenant shall obtain "all risk" property insurance covering
damage to or loss of any of Tenant's personal property,
inventory or equipment located in, on or about the Premises.
Section 10.2 Insurance to be Maintained by Landlord. Landlord shall
provide and maintain throughout the Term "all risk" property insurance
covering loss or damage to the Premises, including all improvements,
fixtures and permanent additions. The amount of such insurance procured
by Landlord shall be equal to one hundred percent (100%) of the full
replacement cost of the Premises, including all improvements and permanent
additions as the same shall exist from time to time. The deductible for
such insurance shall not be less than $10,000 per occurrence
Section 10.3 Waiver of Subrogation. Tenant and Landlord each
hereby release the other, and waive their entire right of recovery against
the other for loss, damage or liability in connection with this Lease
and/or Tenant's use or occupancy of the Premises, whether due to the
negligence of Landlord or Tenant or their agents, employees, contractors
and/or invitees, but only to the extent that such loss or damage is
actually covered by insurance, and only to the extent that the insured
party has received proceeds of insurance therefor.
Section 10.4 Indemnity.
(a) Tenant agrees to pay, and to defend, indemnify and save
harmless Landlord from and against any and all liabilities, losses,
damages, costs, expenses (including reasonable attorneys fees) in
connection with any injury to, or the death of, any person or any damage
to or loss of property in, on or about the Premises arising, directly or
indirectly, from (1) Tenant's use or occupancy of the Premises (excepting
herefrom such liabilities, losses, damages, costs, expenses (including
reasonable attorneys fees) arising out of a breach by Landlord of the
provisions set forth in Paragraph 9.2 hereof), or (2) from the negligence
or willful misconduct of Tenant, its agents, employees, contractors and/or
invitees. If any action or proceeding is brought against Landlord by
reason of any such claims, Tenant upon notice from Landlord shall defend
the same at Tenant's expense by counsel reasonably satisfactory to
Landlord.
(b) Landlord agrees to pay, and to defend, indemnify and save
harmless Tenant from and against any and all liabilities, losses, damages,
costs, expenses (including reasonable attorneys fees) in connection with
any injury to, or the death of, any person or any damage to or loss of
property in, on or about the premises, arising, directly or indirectly,
from the (1) breach by Landlord of any of the terms and conditions set
forth in Paragraph 9.2 hereof or (2) the negligence or willful misconduct
of Landlord, its agents, employees, contractors and/or invitees. If any
action or proceeding is brought against Tenant by reason of any such
claims Landlord upon notice from Tenant shall defend the same at
Landlord's expense by counsel reasonably satisfactory to Tenant.
Section 10.5 Exemption of Landlord from Liability. Tenant hereby agrees that
Landlord shall not be liable for injury to Tenant's business or any loss
of income therefrom or for damage to the goods, wares, merchandise or
other property of Tenant, Tenant's employees, invitees, customers, or any
other person in or about the Premises, for any reason whatsoever (other
than a breach of this Lease or Landlord's gross negligence or willful
misconduct); nor shall Landlord be liable for injury to the person of
Tenant, Tenant's employees, agents or contractors, whether such damage or
injury is caused by or results from fire, steam, electricity, gas, water,
wind or rain, or from the breakage, leakage, obstruction or other defects
of pipes, sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures, robbery, assault, or theft, whether the said damage or
injury results from conditions arising upon the Premises or upon other
portions of the Project, or from other sources or places and regardless of
whether the cause of such damage or injury or the means of repairing the
same is inaccessible to Tenant. Landlord shall not be liable for any
damages arising from any act or neglect of any other tenant, if any, of
the Project. In the event Landlord installs a security system in the
Project or engages the services of a professional security provider, such
action shall in no way increase Landlord's liability for occurrences
and/or consequences such a system is designed to avert or detect.
ARTICLE XI
Damage or Destruction
11.1 Casualty. If the Premises or any part thereof shall be damaged
or destroyed by fire or other casualty, Tenant shall give immediate
written notice thereof to Landlord. Within thirty (30) days after receipt
by Landlord of such notice, Landlord shall notify tenant, in writing,
whether the necessary repairs can reasonably be made: (a) within ninety
(90) days; or (b) in more than ninety (90) days, from the date of the
damage.
(a) Minor Insured Damage. If the Premises are damaged only to
such extent that repairs, rebuilding and/or restoration can be reasonably
completed within ninety (90) days, subject to the provisions hereof, this
Lease shall not terminate and, provided that insurance proceeds are
available to fully repair the damage or, at Tenant's election to be made
within ten (10) business days of being notified of any shortfall in
insurance proceeds, and Tenant contributes any such shortfall, Landlord
shall repair the Premises to substantially the same condition that existed
prior to the occurrence of such casualty. The Rent payable hereunder
shall be abated proportionately from the date and to the extent such
damage or destruction materially interferes with Tenant's use or occupancy
of the Premises but only to the extent rental loss insurance proceeds are
received by Landlord. Notwithstanding the foregoing, if insurance
proceeds are not available to fully repair the damage and Tenant elects
not to contribute said shortfall or fails to timely notify Landlord of
said election, then Landlord may terminate this Lease by delivering
written notice thereof to Tenant. If Landlord elects to terminate this
Lease, Rent shall be abated from the date Tenant actually vacates the
Premises.
(b) Major Insured Damage. If the Premises are damaged to such
extent that repairs, rebuilding and/or restoration cannot be reasonably
completed within ninety (90) days, then either Landlord or Tenant may
terminate this Lease by giving written notice within twenty (20) days
after notice from Landlord regarding the time period of repair. If either
party notifies the other of its intention to so terminate the Lease, then
this Lease shall terminate and the Rent shall be abated from the date
Tenant actually vacates the Premises; provided, however, if Landlord
elects to terminate this Lease due to a shortfall of insurance proceeds to
fully repair said damage, then within ten (10) days after Landlord
notifies Tenant of same, Tenant may elect to require Landlord to rescind
said termination if, and only if, Tenant unconditionally and conclusively
agrees to fully, promptly and completely pay to Landlord the entirety of
any actual shortfall of insurance proceeds. If neither party elects to
terminate this Lease or if Tenant timely elects to so contribute any
shortfall in funds to allow Landlord to fully repair the damage and
Landlord rescinds its election to terminate this Lease, Landlord shall
promptly commence and diligently prosecute to completion the repairs to
the Premises, provided insurance proceeds are available to fully repair
the damage or Tenant contributes any shortfall in insurance proceeds.
During the time when Landlord is prosecuting such repairs to completion,
the Rent payable hereunder shall be abated proportionately from the date
and to the extent such damage or destruction materially interferes with
Tenant's use or occupancy of the Premises or portions thereof, as
applicable, but only to the extent rental loss insurance proceeds are
received by Landlord.
(c) Damage Near End of Term. Notwithstanding anything to the
contrary contained in this Lease except for the provisions of Section 11.2
below, if the Premises are damaged or destroyed during the last year of
the then applicable term of this Lease, Landlord may, at its option,
cancel and terminate this Lease by giving written notice to Tenant of its
election to do so within sixty (60) days after receipt by Landlord of
notice from Tenant of the occurrence of such casualty. If Landlord so
elects to terminate this Lease, all rights of Tenant hereunder shall cease
and terminate ten (10) business days after Tenant's receipt of such
notice.
11.2 Tenant's Fault. If any portion of the Premises is damaged or
destroyed due to the fault, negligence (active or passive) or breach of
this Lease by Tenant, Rent shall not be diminished during the repair of
such damage and Tenant shall be liable to Landlord for the cost of the
repair caused thereby to the extent such cost is not covered by any
insurance proceeds. In addition, notwithstanding anything to the contrary
contained herein, Tenant shall not have any rights to terminate this Lease
pursuant to the provisions of this Article XI.
11.3 Uninsured Casualty. Tenant shall be responsible for and shall
pay to Landlord, as Additional Rent, any deductible amounts under the
property insurance policies for the Premises. If any portion of the
Premises is damaged and is not fully covered by insurance proceeds
received by Landlord (and Tenant elects not to pay any such difference) or
if the holder of any indebtedness secured by the Premises requires that
the insurance proceeds be applied to such indebtedness, then Landlord or
Tenant shall also have the right to terminate this Lease by delivering
written notice of termination to the other party within thirty (30) days
after the date of Landlord's delivery of notice to Tenant of any such
event, whereupon all rights and obligations shall cease and terminate
hereunder, except for those obligations expressly intended to survive any
such termination of this Lease. If Tenant or Landlord elects to terminate
this Lease due to any such casualty or damage to the Premises in
accordance with the provisions of this Article XI, Tenant shall use all
diligent efforts to vacate the Premises as quickly as possible after the
occurrence of such damage or casualty.
ARTICLE XII
Condemnation
If the Premises or the Project or any portion thereof are taken
under the power of eminent domain, or sold under the threat of the
exercise of said power (all of which are herein called "Condemnation"),
this Lease shall terminate as to the part so taken as of the date the
condemning authority takes title or possession, whichever first occurs.
If more than 5O% of the rentable area of the Premises shall be taken by
Condemnation, Tenant may, at Tenant's option to be exercised in writing
only within ten days after Landlord shall have given Tenant written notice
of such Condemnation (or in the absence of such notice, within ten days
after the condemning authority shall have taken possession), terminate
this Lease as of the date the condemning authority takes such possession.
Landlord and Tenant also shall have an option to terminate this Lease by
notice to the other given within the time limits set forth above if in
such party's opinion reasonably exercised, it would not be economically
feasible to continue leasing the Premises. If this Lease is not
terminated in accordance with the foregoing, this Lease shall remain in
full force and effect as to the portion of the Premises remaining, except
that the Base Rent shall be reduced in the proportion that the square feet
of the Premises which is taken bears to the total square feet of the
Premises. Tenant shall have no claim against Landlord as a result of any
such Condemnation. Any award for the Condemnation of all or any part of
the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the property of Landlord,
whether such award shall be made as compensation for diminution in value
of the leasehold or for the taking of the fee, or as severance damages;
provided, however, that Tenant shall be entitled to pursue a separate
claim against the condemning authority, for moving expenses, loss of
business claims, and for the taking of any property which does not become
the property of Landlord upon expiration of this Lease, provided that any
award to Tenant shall not result in a diminution of any award to Landlord.
In the event that this Lease is not terminated by reason of such
Condemnation, Landlord shall, at Landlord's expense, promptly repair any
damage to the Premises caused by such Condemnation.
ARTICLE XIII
Assignment and Subletting
Section 13.1 Landlord's Consent Required. Except (1) as required
in connection with the granting of a security interest in connection with
a senior secured credit facility provided by Goldman, Sachs & Co., (2) for
the sublet or assignment of all or part of the Premises to a subsidiary or
affiliated company, parent of Tenant, or to any person or entity acquiring
all or substantially all of the assets or stock of Tenant, or (3) for the
sublet or assignment of all or part of the Premises to any entity with
which the Tenant may merge or consolidate (collectively, items 1, 2 and 3
above are defined herein as "Permitted Transfers"), Tenant shall not
voluntarily or by operation of law assign, transfer, mortgage, sublet, or
otherwise transfer or encumber all or any part of Tenant's interest in
this Lease or in the Premises, without Landlord's prior written consent,
which consent shall not be unreasonably withheld, provided (i) such
assignment is to an entity/individual(s) whose financial integrity is
reasonably sound as reasonably determined by Landlord; and (ii) proof
thereof satisfactory to Landlord has been delivered to Landlord at least
ten (10) days prior to the effective date of any such transfer. Any
attempted assignment, transfer, mortgage, encumbrance or subletting
without such consent shall be void, and shall constitute a breach of this
Lease. Any profits resulting from the sublease of all or a portion of the
Premises shall accrue solely to Tenant.
Section 13.2 No Release of Tenant. Regardless of Landlord's
consent, no subletting or assignment shall release Tenant of Tenant's
obligation or alter the primary liability of Tenant to pay the rent and to
perform all other obligations to be performed by Tenant hereunder. The
acceptance of rent by Landlord from any other person shall not be deemed
to be a waiver by Landlord of any provision hereof. Consent to one
assignment or subletting shall not be deemed consent to any subsequent
assignment or subletting. In the event of a default by an assignee of
Tenant or any successor of Tenant, in the performance of any of the terms
hereof, which default is not cured within the applicable cure period,
Landlord may proceed directly against Tenant without the necessity of
exhausting remedies against such assignee or successor. Landlord may
consent to subsequent assignments or subletting of this Lease or
amendments or modifications to this Lease with assignees of Tenant,
without notifying Tenant, or any successor of Tenant and without obtaining
its or their consent thereto and such action shall not relieve Tenant of
liability under this Lease.
Section 13.3 Attorney's Fees. In the event Tenant shall assign or
sublet the Premises, then Tenant shall pay Landlord's reasonable
attorney's fees incurred in connection therewith up to a maximum of Two
Thousand Five Hundred Dollars ($2,500.00).
ARTICLE XIV
Defaults; Remedies
Section 14.1 Defaults. The occurrence of any one or more of the
following events ("Event(s) of Default") shall constitute a material
default and breach of this Lease by Tenant:
(a) The abandonment of the Premises by Tenant.
(b) The failure by Tenant to make any payment of Base Rent or
Additional Rent or any other payment required to be made by Tenant
hereunder, as and when due, where such failure shall continue for a period
of seven (7) days after written notice thereof from Landlord to Tenant.
In the event that Landlord serves Tenant with a notice to pay rent or
quit pursuant to applicable unlawful detainer statutes, such notice to pay
rent or quit shall also constitute the notice required by this section.
(c) The failure by Tenant to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or
performed by Tenant, other than described in Section 14.1(b) above, where
such failure shall continue for a period of 30 days after written notice
thereof from Landlord to Tenant; provided, however, that if the nature of
Tenant's default is such that more than 30 days are required for its cure,
then Tenant shall not be deemed to be in default if Tenant commences such
cure within the 30 day period and thereafter diligently prosecutes such
cure to completion.
(d) (i) The making by Tenant of any general arrangement or
assignment for the benefit of creditors; (ii) Tenant becomes a "debtor" as
defined in 11 U.S.C. Section 101 or any successor statute thereto or any
other law or statute relating to bankruptcy (unless, in the case of a
petition filed against Tenant, the same is dismissed within sixty days);
or (iii) the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets or of Tenant's interest in this
Lease, where possession is not restored to Tenant within 30 days.
Section 14.2 Remedies. Upon the occurrence of an Event of Default
by Tenant, Landlord may, at any time thereafter, with or without notice or
demand:
(a) Terminate this Lease and Tenant's right of possession of the
Premises, in which case the rent due for the balance of the Term shall
become immediately due and payable. In addition, Landlord shall be
entitled to recover from Tenant all damages incurred by Landlord by reason
of Tenant's default including, but not limited to: the cost of recovering
possession of the Premises; the reasonable expense of reletting,
including, without limitation, reasonable costs of renovation and
alteration of the Premises, reasonable attorney's fees, and real estate
commission(s) paid to obtain a new tenant; and that portion of the leasing
commission paid by Landlord pursuant to Article XV applicable to the
unexpired term of this Lease.
(b) Terminate Tenant's right to possession of the Premises without
terminating this Lease, in which event Landlord may, but shall not be
obligated to, relet the Premises, or any part thereof, for the account of
Tenant, for such rent and term and upon such other conditions as are
acceptable to Landlord. For purposes of such reletting, Landlord is
authorized to redecorate, repair, alter and improve the Premises to the
extent deemed necessary in Landlord's sole discretion. Until Landlord
relets the Premises, Tenant shall remain obligated to pay rent to Landlord
as provided in this Lease. If and when the Premises are relet and if a
sufficient sum is not realized from such reletting after payment of all
Landlord's reasonable expenses of reletting (including, without
limitation, rental concessions to new tenants, repairs, alterations, legal
fees and brokerage commissions) to satisfy the payment of rent due under
this Lease for any month, Tenant shall pay Landlord any such deficiency
upon demand. Tenant agrees that Landlord may file suit to recover any
sums due under this Section from time to time and that such suit or
recovery of any amount due Landlord shall not be any defense to any
subsequent action brought for any amount not previously reduced to
judgment in favor of Landlord. Tenant also agrees that if Landlord relets
the Premises for a term which equals or exceeds the Term of this Lease,
then the difference in rent between Tenant's rental obligations hereunder
and the sum realized from such reletting for the balance of the Term,
being then ascertainable, shall become immediately due and payable, at
Landlord's option, and Landlord shall be entitled to bring one suit to
recover the entire amount of such difference.
(c) Re-enter and repossess the Premises and remove all persons and
effects therefrom, by summary proceeding, ejectment or other legal means
as may be necessary. Landlord shall have no liability by reason of any
such re-entry, repossession or removal.
(d) Recover from the Tenant any sums reimbursed to Tenant for
Tenant Improvements, net of all repayments made by Tenant to Landlord, it
being understood that Landlord has provided for the level amortization of
such sums reimbursed over the ten (10) year initial term of this Lease.
(e) Without terminating this Lease and without entering into
possession of the Premises, continue this Lease in effect whether or not
Tenant shall have abandoned the Premises, and in such event Landlord shall
be entitled to enforce all of Landlord's rights and remedies under this
Lease, including the right to recover the rent as it becomes due
hereunder.
(f) Pursue any other remedy now or hereafter available to Landlord
in equity or at law in the state in which the Project is located; any
remedy or election hereunder not being exclusive, but rather, wherever
possible, being cumulative with all other remedies at law or in equity.
This Lease shall not be deemed to be terminated by Landlord's entry
on the Premises, or by any other act unless Landlord specifically
expresses its intent to terminate this Lease, in writing duly executed on
behalf of Landlord.
Section 14.3 Rights Upon Possession. If Landlord takes possession
pursuant to this Article 14, with or without terminating this Lease,
Landlord may, at its option and upon notice to Tenant, enter into the
Premises, remove Tenant's alterations, signs, personal property, equipment
and other evidence of tenancy, and store them at Tenant's risk and expense
or dispose of them as Landlord may see fit except with respect to
equipment owned by third-party customers of Tenant, which is labeled as
such, in which case Landlord will use its best efforts to provide 30 days
notice to such third-party customers of such intent to dispose, and take
and hold possession of the Premises; provided, however, that if Landlord
elects to take possession only without terminating this Lease, such entry
and possession shall not terminate this Lease or release Tenant or any
guarantor, in whole or in part, from the obligation to pay the Base Rent
reserved hereunder for the full Term or from any other obligation under
this Lease or any guaranty thereof.
Section 14.4 No Waiver. If Landlord shall institute proceedings
against Tenant and a compromise or settlement thereof shall be made, the
same shall not constitute a waiver of any other covenant, condition or
agreement herein contained, nor of any of Landlord's rights hereunder
unless expressly agreed otherwise. No waiver by Landlord of any breach
shall operate as a waiver of such covenant, condition or agreement itself,
or of any subsequent breach thereof. Landlord's consent to, or approval
of, any act shall not be deemed to render unnecessary the obtaining of
Landlord's consent to or approval of any subsequent act by Tenant. No
payment of rent by Tenant or acceptance of rent by Landlord shall operate
as a waiver of any breach or default by Tenant under this Lease. No
payment by Tenant or receipt by Landlord of a lesser amount than the
monthly installment of rent herein stipulated shall be deemed to be other
than a payment on account of the earliest unpaid rent, nor shall any
endorsement or statement on any check or communication accompanying a
check for the payment of rent be deemed an accord and satisfaction, and
Landlord may accept such check or payment without prejudice to Landlord's
right to recover the balance of such rent or to pursue any other remedy
provided in this Lease. No re-entry by Landlord, and no acceptance by
Landlord of keys from Tenant, shall be considered an acceptance of a
surrender of the Lease.
Section 14.5 Right of Landlord to Cure Tenant's Default. If an
Event of Default shall occur, then Landlord may (but shall not be
obligated to) make such payment or do such act to cure the Event of
Default, and charge the amount to the expense thereof, together with
interest thereon at the Interest Rate (as defined in Section 17.3 below),
to Tenant. Such payment shall be due and payable upon demand; however,
the making of such payment or the taking of such action by Landlord shall
not be deemed to cure the Event of Default or to stop Landlord from the
pursuit of any remedy to which Landlord would otherwise be entitled.
Section 14.6 Default by Landlord. Landlord shall not be in
default unless Landlord fails to perform obligations required of Landlord
within a reasonable time, but in no event later than thirty days after
written notice by Tenant to Landlord and to each lender secured by a lien
against the Project whose name and address shall have previously been
furnished to Tenant in writing, specifying the obligation Landlord has
failed to perform; provided, however, that if the nature of Landlord's
obligation is such that more than thirty days are required for
performance, then Landlord shall not be in default if Landlord commences
performance within such thirty day period and thereafter diligently
prosecutes the same to completion.
Section 14.7 Late Charges. Tenant hereby acknowledges that late
payment by Tenant to Landlord of rent and other sums due hereunder will
cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and
late charges which may be imposed on Landlord by the terms of any mortgage
or trust deed covering the Premises. Accordingly, if any installment of
rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five business days
after such amount shall be due then, without any requirement for notice to
Tenant (notwithstanding Section 14.1(b)), Tenant shall pay to Landlord a
late charge equal to four (4) percent of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of late payment by
Tenant. Acceptance of such late charge by Landlord shall in no event
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 consecutive installments of
Base Rent, then at Landlord's option Base Rent shall become due and
payable quarterly in advance, rather than monthly, notwithstanding Article
IV or any other provision of this Lease to the contrary.
ARTICLE XV
Brokers
Each party represents and warrants to the other that it has not
dealt with any broker, finder or similar agent in connection with any
transaction contemplated hereunder except for C.B. Richard Ellis, Inc.,
whose fee is the responsibility of Landlord under a separate written
agreement. Each party hereby covenants and agrees to defend, indemnify,
hold harmless and reimburse the other party for, from and against all
claims of any kind of any other brokers, finders or similar agents
purporting to represent the indemnifying party in connection with any
transaction contemplated hereunder.
ARTICLE XVI
Estoppel Certificate
Section 16.1 Tenant Certification. Tenant shall, at any time upon
not less than twenty (20) days' prior notice from Landlord, execute,
acknowledge and deliver to Landlord a statement in writing certifying that
(i) this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modifications and certifying that
this Lease, as so modified, is in full force and effect); (ii) the
amount(s) of and the date to which the rent and other charges are paid in
advance, if any; (iii) that the Term has commenced and specifying the
Commencement and Expiration Dates; (iv) that all Tenant Improvements
required by the Lease have been made to Tenant's satisfaction; (v) that
there are no existing set-offs, charges, claims or defenses against the
enforcement of any right hereunder; (vi) that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder, or
specifying such defaults if any are claimed; and (vii) any other
information as may be reasonably requested by Landlord. Any such
statement may be conclusively relied upon by any prospective purchaser or
encumbrancer of the Premises.
Section 16.2 Failure to Provide Certification. Tenant's failure to
deliver such statement within such time shall be conclusive upon Tenant as
to all information set forth in such statement.
Section 16.3 Tenant Financial Statements. If Landlord desires to
finance, refinance, or sell the Premises, or any part thereof, it may
request financial statements from Tenant. Within twenty (20) days of a
request therefor Tenant shall deliver to Landlord or to any lender or
purchaser designated by Landlord, such financial statements of Tenant as
may be reasonably required by such lender or purchaser, provided that such
financial statement shall have previously been filed with the SEC or
otherwise released to the general public. All such financial statements
shall be received by Landlord and such lender or purchaser in confidence
and shall be used only for the purposes herein set forth.
ARTICLE XVII
Miscellaneous
Section 17.1 Landlord's Liability. The term "Landlord" as used
herein shall mean only the owner or owners at the time in question of the
fee title or a tenant's interest in a ground lease of the Premises. In
the event of any transfer of such title or interest, Landlord herein named
(and in case of any subsequent transfers, then the grantor) shall be
relieved from and after the date of such transfer of all liability in
respect of Landlord's obligations thereafter to be performed, provided
that any funds in the hands of Landlord or the then grantor at the time of
such transfer, in which Tenant has an interest, shall be delivered to the
grantee. The obligations contained in this Lease to be performed by
Landlord shall, subject as aforesaid, be binding on Landlord's successors
and assigns, only during their respective periods of ownership. Neither
Landlord nor its agents, whether disclosed or undisclosed, shall have any
personal liability under any provision of this Lease. If Landlord
defaults in the performance of any of its obligations hereunder or
otherwise, Tenant shall look solely to Landlord's equity, interest and
rights in the Land or Building (or any applicable proceeds of insurance)
for satisfaction of Tenant's remedies on account thereof. This Lease
shall be assignable by Landlord in whole.
Section 17.2 Severability. The invalidity of any provision of
this Lease as determined by a court of competent jurisdiction, shall in no
way affect the validity of any other provision hereof.
Section 17.3 Interest on Past-Due Obligation. Except as expressly
herein provided, any amount due to Landlord not paid when due shall bear
interest at the lesser of 12% per annum or the maximum rate then allowable
by law from the date due (the "Interest Rate"). Payment of such interest
shall not excuse or cure any default by Tenant under this Lease. Interest
shall not be payable on late charges incurred by Tenant nor on any amounts
upon which late charges are paid by Tenant until 30 days after the due
date of such payment.
Section 17.4 Notices. Notices shall be in writing and shall be
delivered to the following address(es):
If to Landlord: Reynolds Metals Development Company
6601 West Broad Street
Richmond, Virginia 23230
Attn: Corporate Secretary
Fax: 804-281-2721
with a copy to: Reynolds Metals Development Company
3300 Vickery Drive
North Syracuse, New York 13212
Attn: Frederick J. Jackson
Fax: 315-461-8817
If to Tenant: Exodus Communications, Inc.
2650 San Tomas Expressway
Santa Clara, CA 95051
Attn: Dick Stoltz, Chief Operating
Officer and Chief Financial Officer
Fax: 408-348--2206
with a copy to: Exodus Communications, Inc.
2650 San Tomas Expressway
Santa Clara, CA 95051
Attn: General Counsel
Fax: 408-348-2206
A notice shall be delivered by: (a) prepaid U.S. express, registered or
certified mail or prepaid express courier service; (b) hand delivery
during regular business hours; or (c) telecopy with an original, signed
copy of the notice delivered in the manner described in (a) or (b). The
notifying party, with the other party's cooperation, shall obtain a
receipt evidencing delivery. A notice shall be effective upon receipt or
refusal to accept receipt, except that a telecopy notice shall be
effective upon confirmation of receipt by the receiving party. Any notice
provided in a manner not specified in this Lease shall not be effective
unless the parties otherwise agree. A party may change its address or fax
number for purposes of this section by giving the other party notice to
that effect, except that upon Tenant's taking possession of the Premises,
the Premises, in addition to the address set forth above, shall constitute
Tenant's address for notice purposes. Unless otherwise specified in this
Lease, "notice" includes any communication required or permitted by this
Lease. A copy of all notices required or permitted to be given to
Landlord hereunder shall be concurrently transmitted to such party or
parties at such addresses as Landlord may from time to time hereafter
designate by notice to Tenant.
Section 17.5 Binding Effect; Choice of Law. Subject to any
provisions hereof restricting assignment or subletting by Tenant, this
Lease shall bind the parties, their personal representatives, successors
and assigns. This Lease shall be governed by the laws of the state in
which the Project is located.
Section 17.6. Subordination.
(a) This Lease shall be subordinate to any ground lease,
mortgage, deed of trust, assignment of lease, or any other hypothecation
or security (collectively, "Mortgage") now or hereafter placed upon the
real property of which the Premises are a part and to any and all advances
made on the security thereof and to all renewals, modifications,
consolidations, replacements and extensions thereof; provided, however,
that so long as no Event of Default has occurred and is continuing, this
Lease shall not be terminated or Tenant's quiet enjoyment of the Premises
disturbed in the event of any termination of any such ground or underlying
lease or the foreclosure of any mortgage or deed of trust to which Tenant
has subordinated this Lease pursuant to this Section. If the holder of
any obligation, note or reversionary interest secured or evidenced by a
Mortgage (the "Mortgagee") shall elect to have this Lease inferior to the
lien of its Mortgage and shall give written notice thereof to Tenant, this
Lease shall be deemed inferior to such Mortgage whether this Lease is
dated prior or subsequent to the date of said Mortgage or the date of
recording thereof.
(b) Tenant agrees to execute any documents reasonably required by
Landlord to effectuate an attornment, a subordination or to make this
Lease inferior to the lien of any Mortgage provided that such documents
are in form and substance reasonably acceptable to Tenant and contain
nondisturbance provisions for Tenant's benefit substantially in accordance
with the provisions of Section 17.6(a). Tenant's failure to execute such
documents within twenty (20) days after written demand shall constitute
a material default by Tenant hereunder, or, at Landlord's option, Landlord
shall execute such documents on behalf of Tenant as Tenant's attorney-in-
fact. Tenant does hereby make, constitute and irrevocably appoint
Landlord as Tenant's attorney-in-fact and in Tenant's name, place and
stead, to execute such documents in accordance with this Section 17.6.
(c) Tenant agrees to give any Mortgagee by certified mail, return
receipt requested, a copy of any notice of default served upon Landlord,
provided that before such notice Tenant has been notified in writing of
the address of such Mortgagee. Tenant further agrees that if Landlord
shall have failed to cure such default within the time provided for in
this Lease, then Mortgagee shall have an additional 30 days within which
to cure such default; provided, however, that if such default cannot be
reasonably cured within that time, then such Mortgagee shall have such
additional time as may be necessary to cure such default (including,
without limitation, the commencement of foreclosure proceedings, if
necessary), in which event this Lease shall not be terminated or rent
abated while such remedies are being so diligently pursued. In the event
of the sale of the Project or the Building, by foreclosure or deed in lieu
thereof, the Mortgagee or purchaser at such sale shall not be (a)
responsible for any act, omission, or default by any prior landlord
(including Landlord), (b) be responsible for the return of the Security
Deposit, or the payment of any tenant allowance or other concession, (c)
be bound by any rent paid more than one month in advance, or (d) be
subject to any offset, defense, or counterclaim against any prior landlord
(including Landlord). Tenant agrees to attorn to such Mortgagee or
purchaser as its lessor under this Lease.
(d) If, in connection with obtaining the construction or permanent
financing for the Premises or the Project, any lender (or Mortgagee) shall
request reasonable modifications of this Lease as a condition to such
financing, Tenant shall promptly execute a modification of this Lease,
provided such modifications do not increase Base Rent or materially
adversely affect the leasehold interest hereby created or Tenant's
reasonable use and enjoyment of the Premises in accordance with Section
6.1. Tenant and any guarantor shall each, prior to execution and
throughout the Term, upon request from time to time, provide such
financial information and documentation about itself to Landlord or
Mortgagee as may be requested.
(e) Landlord represents and warrants that, as of the execution of
this Lease by Landlord, there is no ground or underlying lease or mortgage
lien or deed of trust encumbering the Premises.
Section 17.7 Attorney's Fees. If either party named herein brings
an action to enforce the terms hereof or declare rights hereunder, the
prevailing party in any such action, on trial or appeal, shall be entitled
to reasonable attorney's fees to be paid by the losing party as determined
by the court.
Section 17.8 Landlord's Access. Landlord and Landlord's agents
shall have the right to enter the Premises at reasonable times, with at
least twenty-four (24) hours prior written notice and in compliance with
Tenant's reasonable rules and regulations for the purposes of (a)
inspecting the same; (b) showing the same to prospective purchasers,
lenders, or tenants (only during the last twelve (12) months of the term
with respect to tenants); (c) making such alterations, repairs,
improvements or additions to the Premises or the Project as Landlord may
deem necessary or desirable (but without adversely impacting Tenant's
business), but without any obligation to do so except as specifically set
forth herein; (d) performing Landlord's obligations under Section 9.2 of
this Lease; or (e) taking air, water or soil samples, samples of other
materials or substances in or about the Premises or the Project, and
conducting such other tests or analyses as Landlord deems in its sole
discretion to be desirable in connection with investigating any potential
environmental claim or in connection with monitoring Tenant's activities
in or about the Premises for compliance with the terms of this Lease. The
foregoing shall not impose upon Landlord any obligation to undertake such
investigation or monitoring activities. Notwithstanding the foregoing,
Landlord shall not be permitted to enter the Premises without an escort
provided by Tenant and without executing a confidentiality and non-
disclosure agreement provided by Tenant, which shall be promptly provided
by Tenant. Landlord may at any time, with the consent of the Tenant,
which consent shall not be unreasonably withheld, place on or about the
premises any ordinary "for sale" signs, and Landlord may at any time
during the last 12 months of the Term hereof place on or about the
Premises any ordinary "For Lease", signs, all without reduction of rent or
liability to Tenant.
Section 17.9 Merger. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, or a termination by
Landlord, shall not work a merger, and shall, at the option of Landlord
either: (i) terminate all or any existing subtenancies, or (ii) operate as
an assignment to Landlord of any or all of such subtenancies.
Section 17.10 Quiet Possession. Upon Tenant paying the rent for the
Premises and observing and performing all of the covenants, conditions and
provisions on Tenant's part to be observed and performed hereunder, Tenant
shall have quiet possession of the Premises subject to all of the
provisions of this Lease and any Mortgage to which this Lease is
subordinate, and any easements, conditions and restrictions of record
affecting the land on which the Building is situated.
Section 17.11 Easements. Landlord reserves to itself the right,
from time to time, to grant such easements, rights, and dedications that
Landlord deems necessary or desirable, and to cause the recordation of
site plans, parcel maps, restrictions and similar instruments so long as
such easements, rights, dedications, maps and restrictions do not
unreasonably interfere with the use of the Premises by Tenant, in
accordance with Section 6.1 and do not materially increase Tenant's costs
or expenses or materially impair Tenant's ability to conduct its business.
Tenant shall sign any of the aforementioned documents upon request of
Landlord and failure to do so shall constitute a material breach of this
Lease.
Section 17.12 Performance Under Protest. If at any time a dispute
shall arise as to any amount or sum of money to be paid by one party to
the other under the provisions hereof, the party against whom the
obligation to pay the money is asserted shall have the right to make
payment "under protest" and such payment shall not be regarded as a
voluntary payment, and there shall survive the right on the part of said
party to institute a suit for recovery of such sum. If it shall be
adjudged that there was no legal obligation on the part of said party to
pay such sum or any part thereof, said party shall be entitled to recover
such sum with interest or so much thereof as it was not legally required
to pay under the provisions of this Lease.
Section 17.13 Authority. If Tenant is a corporation, trust, or
general or limited partnership, each individual executing this Lease on
behalf of such entity represents and warrants that he or she is duly
authorized to execute and deliver this Lease on behalf of said entity,
that the entity is duly formed and validly existing and qualified to do
business in the state in which the Project is located, and that the entity
has full power and authority to enter into this Lease.
Section 17.14 Survival. Each term, agreement obligation or
provision of this Lease to be performed by Tenant and Landlord shall be
construed to be both a covenant and a condition, all of which shall
survive the expiration or termination of this Lease and any renewals or
extensions of this Lease.
Section 17.15 Conflict. Any conflict between the typewritten or
printed provisions of this Lease and the handwritten provisions shall be
controlled by the handwritten provisions, provided such handwritten
revisions are signed and initialled by both Landlord and Tenant.
Section 17.16 Abandoned Property. Any of Tenant's personal
property left on or in the Premises, the Project or the Common Areas after
the Expiration Date or earlier termination of this Lease shall be deemed
to be abandoned, and, at Landlord's option, title shall pass to Landlord
under this Lease, or Landlord may cause the same to be removed and stored,
or disposed of, and Tenant shall be liable for all Costs incurred by
Landlord.
Section 17.17 Waiver of Jury Trial. Tenant hereby waives trial by
jury in any action, proceeding or counterclaim brought by Landlord against
Tenant with respect to any matter whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant
hereunder or Tenant's use or occupancy of the Premises. In the event
Landlord commences any proceedings for nonpayment of rent, Tenant shall
not interpose any counterclaims. This shall not, however, be construed as
a waiver of Tenant's right to assert such claims in any separate action
brought by Tenant.
Section 17.18 Gender and Number. All terms and words used in this
Lease, regardless of the number or gender in which they are used shall be
deemed to include any other number or gender as the context may require.
Section 17.19 No Partnership. Nothing contained in this Lease shall
be deemed or construed to create a partnership or joint venture of or
between Landlord and Tenant, or to create any other relationship between
Landlord and Tenant other than that of landlord and tenant.
Section 17.20 Attorney-in-Fact. If Tenant fails or refuses to
execute and deliver any instrument or certificate required to be delivered
by Tenant hereunder within the time periods required herein, then Tenant
hereby appoints Landlord as its attorney-in-fact with full power and
authority to execute and deliver such instrument or certificate for and in
the name of Tenant, provided Landlord first delivers written notice to
Tenant of its intent to rely on this Section 17.20, and Tenant is given a
reasonable opportunity to object thereto.
Section 17.21 Effectiveness. The furnishing of the form of this
Lease shall not constitute an offer and this Lease shall become effective
upon and only upon its execution by and delivery to each party hereto.
Section 17.22 Time of the Essence. Time is of the essence as to
Tenant's and Landlord's obligations contained in this Lease.
Section 17.23 Force Majeure. Neither party shall be required to
perform any of its obligations under this Lease, nor shall either party be
liable for loss or damage for failure to do so, where such failure arises
from or through acts of God, strikes, lockouts, labor difficulties,
explosions, sabotage, accidents, riots, civil commotions, acts of war,
results of any warfare or warlike conditions in this or any foreign
country, fire or casualty, legal requirements, requirements of any
governmental body or agency, shortages or unavailability of materials or
labor, energy shortage or other causes beyond the reasonable control of
either party, unless such loss or damage results from willful misconduct
or gross negligence of the party. In the event that Landlord shall not be
able to perform its obligations under this Lease for the foregoing recited
reasons for a period of more than forty-five (45) days, then Tenant shall
have the option to terminate this Lease. Notwithstanding anything
contained herein to the contrary, a force majeure event will not relieve
Tenant of its continuing obligation to make scheduled rent payments.
Section 17.24 Headings. Captions and headings are for convenience
of reference only.
Section 17.25 Exhibits. The Exhibits attached to and referenced
in the body of this Lease are incorporated into and expressly made part of
this Lease.
Section 17.26 Memorandum of Lease. Tenant shall not record a
memorandum of this Lease without Landlord's consent. In the event
Landlord requests or consents to recordation of a memorandum of this
Lease, Tenant shall be obligated to pay all costs, fees and taxes, if any,
associated with such recordation.
Section 17.27 Further Assurances. Tenant will execute,
acknowledge, and deliver all such instruments and take all actions as
Landlord from time to time may require to document and maintain the
tenancy created hereby including, but not limited to, estoppel letters and
subordination agreements.
Section 17.28 Incorporation of Prior Agreements; Amendments.
This Lease and the Exhibits attached hereto contain all agreements of the
parties with respect to any matter mentioned herein. No prior agreement
or understanding pertaining to any such matter shall be effective. This
Lease may be modified in writing only, signed by the parties in interest
at the time of the modification. Except as otherwise stated in this
Lease, Tenant hereby acknowledges that neither the real estate broker(s)
listed in Article XVII hereof nor any cooperating broker on this
transaction nor the Landlord or any employees or agents of any of said
persons has made any oral or written warranties or representations to
Tenant relative to the condition or use by Tenant of said Premises, except
as herein set forth. The taking of possession of the Premises by Tenant
shall be conclusive evidence that the Premises and the Project are in good
and satisfactory condition at such time, unless Tenant shall notify
Landlord otherwise within thirty (30) days of entry upon the Premises for
the purpose of constructing the Tenant Improvements.
Section 17.29 Limitation of Warranties. THERE ARE NO IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS OR OF ANY OTHER KIND ARISING OUT
OF THIS LEASE.
Section 17.30 Option to Renew. Tenant is hereby granted the
option to renew this Lease for two (2) full five-year terms. To exercise
these Renewal Options, Tenant shall notify the Landlord in writing of its
intention 270 days before the end of the initial term, or the first
renewal term, as the case may be. The rent payable by Tenant for the
Premises during each renewal term shall be:
(a) First Renewal Term. Beginning on the 11th year after
the initial ten (10) year term, the Tenant shall pay a base rent of
$824,472.00 per year ($68,706.00/month), plus other charges added to the
Annual Base Rent (Section 4.4) and additional rent (Section 4.5), the Base
Rent to increase thereafter in the 12th, 13th, 14th and 15th years by the
Annual Rent Adjustment (Section 4.3);
(b) Second Renewal Term. Beginning in the 16th year, the
Tenant shall pay a base rent of $955,852.00 per year ($79,654.33/month),
plus other charges added to the Annual Base Rent (Section 4.4) and
Additional Rent (Section 4.5), the base rent to increase thereafter in the
17th, 18th, 19th and 20th year by the Annual Rent Adjustment (Section
4.3).
Section 17.31 Lease Security. As security for Tenant's faithful
performance of all of the terms and conditions of this Lease, Tenant shall
deposit with Landlord an unconditional and irrevocable Letter of Credit in
a form acceptable to Landlord's counsel drawn upon a bank with a credit
rating acceptable to Landlord (minimum of A rating). Said Letter of
Credit shall be in the amount of $300,000.00, for lease years 1 through 3,
which will be reduced to the amount of $100,000.00 for lease years 4 and
5. Said Letter of Credit shall be delivered as soon as practicable
following the Effective Date of the Lease. Tenant may, from time to time,
replace any existing Letter of Credit with a new Letter of Credit if the
new Letter of Credit (1) becomes effective at least thirty (30) days
before expiration of the Letter of Credit that it replaces; (b) is in the
required amount; (c) is issued by a bank reasonably acceptable to
Landlord; and (d) otherwise complies with the requirements of this Section
17.31.
Section 17.32 Confidentiality. Except as required by the ordinary
course of business and/or financing or sale requirements of the parties or
as otherwise required by law, neither the Landlord nor the Tenant shall
misappropriate, disclose or make available to anyone for use outside of
their respective organizations at any time any of the terms and conditions
of this Lease. In addition to the foregoing, Landlord acknowledges that
Tenant's property, including, without limitation, those items identified
on Exhibit C attached hereto, the manner in which it is designed,
engineered, constructed, installed, integrated and used is unique, and an
integral part of Tenant's business and, as such, is proprietary and
confidential. Landlord agrees to hold any and all such confidential
information in strict confidence, not to disclose such information to
third parties and not to use any such information for any purpose except
that Landlord may (a) disclose such information to its responsible
employees who have a bona fide need to know such information; (b) disclose
and/or use such information in order to perform its obligations under this
Lease or in the event of an emergency involving the Premises and (c)
disclose such information to the extent required in order to sell or
mortgage the Premises to a bona fide purchaser for value or financial
institution. Landlord's breach of this covenant shall be a material
breach of this Lease, and Tenant may, without limitation, enjoin any such
breach and/or seek to recover damages as a result of such breach.
WITNESS, the parties hereto have executed this Lease on the dates
specified immediately below their respective signatures.
Landlord: REYNOLDS METALS DEVELOPMENT COMPANY
By: /s/ Frederick C. Jackson
------------------------------
Print Name: Frederick C. Jackson
Title: Vice President
Date: April 30, 1999
Witness:___________________________
Witness:___________________________
Tenant: EXODUS COMMUNICATIONS, INC.
By: /s/ Richard S. Stoltz
------------------------------
Print Name: Richard S. Stoltz
Title: Executive Vice President,
Chief Financial Officer and
Chief Operating Officer
Date: April 29, 1999
Witness:___________________________
Witness:___________________________
EXHIBIT A
Premises
EXHIBIT B
Special List of Items of Trade Fixtures, Furnishings,
and Equipment which remain property of
Tenant at expiration of Lease Term,
in addition to those items Tenant may remove
pursuant to Section 3.6.
Notwithstanding anything to the contrary in this Lease, at the Expiration
or earlier Termination of this Lease, Tenant shall have the right to
remove the following items from the Premises and other areas related
thereto:
1. Permanent and temporary generator systems including enclosures and
fuel tanks with the associated electronic and manual switch gear.
2. Mechanical Systems i.e., Air Conditioning, and condenser systems,
air handlers and electrical dampers.
3. Raised Flooring, Racking, Cage materials, cabinets and patch panels.
4. UPS Battery Systems including electrical switch gear.
5. Any customer satellite dishes installed on roof or parking lot
areas.
6. FM200 fire suppression canisters, piping and nozzles.
7. VESDA or smoke sensor stations in ceiling or floor area.
8. Inside or outside security cameras, access card reader stations,
VCR, multiplexer, monitors and computers.
9. Partition and conference room furniture systems and freestanding,
cabinets, storage units.
10. Telephone and voice mail system with desk stations and receptionist,
computers, servers, printers, phone sets.
11. Fiber Muxes or other Telco equipment installed in MPOE rooms.
12. Emergency distribution board and telephone backboard with
connectors.
13. Maintenance bypass electronic and manual switch gear.
14. Transformers and Power Distributions Units installed on premises.
15. Kitchen appliances like microwaves, refrigerators and vending
machines.
16. Console monitors, screen projection and screens in command center.
17. Bulletproof/resistant glass.
18. Satellite dishes or other communications equipment installed on roof
or in parking lot.
19. Customer and vendor equipment and related materials.
20. Tenant, Tenant Customer and Tenant Vendor personal property.
21. Anything similar or related to the foregoing items that was
installed by or for Tenant pursuant to the terms of the Lease.
EXHIBIT 10.63
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of May 6, 1999,
by and between Exodus Communications, Inc. ("Borrower") and Silicon Valley
Bank ("Bank").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to,
among other documents, a Loan and Security Agreement, dated June 14, 1996,
together with all schedules thereto (the "Loan Agreement"), as may be
amended from time to time. The Loan Agreement provided for, among other
things, a Committed Line in the original principal amount of One Million
Dollars ($1,000,000) (the "Revolving Facility"). The Revolving Facility
has been modified pursuant to, among other documents, an Loan Modification
and Assumption Agreement, dated April 14, 1998, pursuant to, among other
things the Committed Line was increased to Seven Million Dollars
($7,000,000). Defined terms used but not otherwise defined herein shall
have the same meanings as in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred
to as the "Indebtedness".
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the
Indebtedness is secured by the Collateral as defined in the Loan Agreement,
and a Collateral Assignment, Patent Mortgage and Security Agreement dated
June 13, 1996.
Hereinafter, the above-described security documents and guaranties,
together with all other documents securing repayment of the Indebtedness
shall be referred to as the "Security Documents". Hereinafter, the
Security Documents, together with all other documents evidencing or
securing the Indebtedness shall be referred to as the "Existing Loan
Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A Modification(s) to Loan Agreement.
1. The definition of "Revolving Maturity Date" is hereby
amended to mean August 6, 1999.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
5. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that it has no defenses against the obligations to
pay any amounts under the Indebtedness.
6. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor
signing below) understands and agrees that in modifying the existing
Indebtedness, Bank is relying upon Borrower's representations, warranties,
and agreements, as set forth in the Existing Loan Documents. Except as
expressly modified pursuant to this Loan Modification Agreement, the terms
of the Existing Loan Documents remain unchanged and in full force and
effect. Bank's agreement to modifications to the existing Indebtedness
pursuant to this Loan Modification Agreement in no way shall obligate Bank
to make any future modifications to the Indebtedness. Nothing in this
Loan Modification Agreement shall constitute a satisfaction of the
Indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the
party is expressly released by Bank in writing. No maker, endorser, or
guarantor will be released by virtue of this Loan Modification Agreement.
The terms of this paragraph apply not only to this Loan Modification
Agreement, but also to all subsequent loan modification agreements.
This Loan Modification Agreement is executed as of the date first
written above.
BORROWER: BANK:
EXODUS COMMUNICATIONS, INC. SILICON VALLEY BANK
By: /s/ Mike Healy By: /s/ Joellen Ademski
Name: Mike Healy Name: Joellen Ademski
Title: Vice President, Finance Title: Senior Vice President
EXHIBIT 10.64
EXODUS COMMUNICATIONS, INC.
11 1/4% Senior Notes due 2008
Purchase Agreement
June 17, 1999
Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
Exodus Communications, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and
sell to Goldman, Sachs & Co. (the "Purchaser") an aggregate of $75,000,000
principal amount of the 11 1/4% Senior Notes due 2008 (the "Securities").
1. The Company represents and warrants to, and agrees with, the
Purchaser that:
(a) An offering circular, dated June 17, 1999 (the "Offering
Circular"), has been prepared in connection with the offering of the
Securities. Additionally, the Company has previously prepared the
following documents: the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999, the Company's Annual Report on Form
10-K for the year ended December 31, 1998, and the Company's Current
Reports on Form 8-K, dated January 29, 1999, February 22, 1999 and
March 2, 1999 (together the "Exchange Act Reports"). Any reference
(other than in Sections 7(a) and 7(b) hereof) to the Offering Circular
shall be deemed to refer to and include the Exchange Act Reports, and
any reference (other than in Sections 7(a) and 7(b) hereof) to the
Offering Circular as amended or supplemented as of any specified date
after the date hereof shall be deemed to include (i) the Exchange Act
Reports and all subsequent documents filed with the United States
Securities and Exchange Commission (the "Commission") pursuant to
Section 13(a), 13(c) or 15(d) of the United States Securities Exchange
Act of 1934, as amended (the "Exchange Act"), after the date of the
Offering Circular and prior to such specified date and (ii) any
Additional Issuer Information (as defined in Section 5(f)) furnished
by the Company, prior to the completion of the distribution of the
Securities. The Exchange Act Reports, when they were filed with the
Commission, conformed in all material respects to the applicable
requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder. The Offering Circular and
the Exchange Act Reports did not, as of their respective dates,
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by the Purchaser expressly for use therein. Since March 31, 1999, the
Company has not filed any documents with the Commission pursuant to
Section 13(a), 13(c) or 15(d) of the Exchange Act other than the
Exchange Act Reports;
(b) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in
the Offering Circular any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular; and, otherwise than as set
forth or contemplated in the Offering Circular, since the respective
dates as of which information is given in the Offering Circular, there
has not been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any material adverse change, or
any development that is reasonably likely to result in a material
adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries;
(c) The Company has no subsidiary that is a "Significant
Subsidiary" of the Company within the meaning of Regulation S-X under
the Securities Act of 1933, as amended (the "Securities Act");
(d) The Company and its subsidiaries own no real property. The
Company and its subsidiaries have good and marketable title to all
personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Offering Circular or such as do not materially affect the value of
such property and do not interfere with the use made and proposed to
be made of such property by the Company and its subsidiaries; and any
real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries;
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Offering Circular, and
has been duly qualified as a foreign corporation for the transaction
of business and is in good standing under the laws of each other
jurisdiction where the failure to be so qualified could be reasonably
expected to have a material adverse effect on the business, financial
condition or results of operations of the Company, and each subsidiary
of the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation;
(f) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits
provided by the Indenture to be dated as of July 1, 1998 (the
"Indenture") between the Company and Chase Manhattan Bank and Trust
Company, National Association, as Trustee (the "Trustee"), under
which they are to be issued, which will be substantially in the form
previously delivered to you; and the Securities and the Indenture
conform to the descriptions thereof in the Offering Circular and are
in substantially the form previously delivered to you;
(g) The Indenture has been duly authorized and, when executed and
delivered by the Company and the Trustee, the Indenture will
constitute a valid and legally binding instrument, enforceable in
accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(h) That certain Exchange and Registration Rights Agreement
between the Company and the Purchaser to be dated as of June 22, 1999
(the "Registration Rights Agreement") has been duly authorized and,
when executed and delivered by the Company, the Registration Rights
Agreement will constitute a valid and legally binding instrument,
enforceable in accordance with its terms;
(i) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale
of the Securities) will violate or result in a violation of Section 7
of the Exchange Act, or any regulation promulgated thereunder,
including, without limitation, Regulations T, U, and X of the Board of
Governors of the Federal Reserve System;
(j) Prior to the date hereof, neither the Company nor any of its
affiliates (as such term is defined in Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act")) has taken
any action which is designed to or which has constituted or which
might have reasonably been expected to cause or result in
stabilization or manipulation of the price of any security of the
Company in connection with the offering of the Securities;
(k) The issue and sale of the Securities and the compliance by
the Company with all of the provisions of the Securities, the
Indenture, that certain Escrow Agreement by and among Chase Manhattan
Bank and Trust Company, National Association (as Escrow Agent) and the
Company dated as of July 1, 1998 (the "Escrow Agreement"), the
Registration Rights Agreement and this Agreement, and the consummation
of the transactions herein and therein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the
Company or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the
issue and sale of the Securities or the consummation by the Company of
the transactions contemplated by this Agreement or the Indenture,
except the filing of a notice on Form D by the Company with the
Commission pursuant to Section 5(h) hereof and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Securities by the Purchaser;
(l) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or Bylaws or in default
in the performance or observance of any material obligation, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(m) The statements set forth in the Offering Circular under the
captions "Description of Notes" insofar as they purport to constitute
a summary of the terms of the Securities, the Indenture, the Escrow
Agreement and the Registration Rights Agreement and under the captions
"Certain United States Federal Income Tax Considerations" and
"Underwriting", insofar as they purport to describe the provisions
of the laws and documents referred to therein, are accurate, complete
and fair;
(n) Other than as set forth in the Offering Circular, there are
no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
current or future financial position, stockholders' equity or results
of operations of the Company and its subsidiaries; and, to the
Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(o) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the
meaning of Rule 144A under the Securities Act) as securities which are
listed on a national securities exchange registered under Section 6 of
the Exchange Act or quoted in a U.S. automated inter-dealer quotation
system;
(p) The Company is subject to Section 13 or 15(d) of the Exchange
Act;
(q) The Company is not, and after giving effect to the offering
and sale of the Securities, will not be an "investment company", as
such term is defined in the United States Investment Company Act of
1940, as amended (the "Investment Company Act");
(r) Neither the Company nor any or its subsidiaries, nor any
person acting on its or their behalf has offered or sold the
Securities by means of any general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act or, with
respect to Securities sold outside the United States to persons who
are not U.S. persons (as defined in Rule 902 under the Securities
Act), by means of any directed selling efforts within the meaning of
Rule 902 under the Securities Act and the Company, any affiliate of
the Company and any person acting on its or their behalf has complied
with and will implement the "offering restrictions" within the
meaning of such Rule 902, it being understood that the Company makes
no representations in this clause (s) as to the Purchaser;
(s) Within the six months prior to the date hereof, neither the
Company nor any other person acting on behalf of the Company has
offered or sold to any person any Securities, or any substantially
similar securities of the Company, other than Securities offered or
sold to the Purchaser hereunder. The Company will take reasonable
precautions designed to insure that any offer or sale, direct or
indirect, in the United States or to any U.S. person (as defined in
Rule 902 under the Securities Act) of any Securities or any
substantially similar security issued by the Company, within six
months subsequent to the date on which the distribution of the
Securities has been completed (as notified to the Company by the
Purchaser), is made under restrictions and other circumstances
reasonably designed not to affect adversely the status of the offer
and sale of the Securities in the United States and to U.S. persons
contemplated by this Agreement as transactions exempt from the
registration provisions of the Securities Act;
(t) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes;
(u) KPMG LLP, who have certified certain financial statements of
the Company and its subsidiaries are independent public accountants as
required by the Securities Act and the rules and regulations of the
Commission thereunder;
(v) The Company owns or possesses, or can acquire on reasonable
terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by it, and the Company
has not received any notice of, and is not otherwise aware of, any
infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances
which would render invalid, or otherwise prevent or materially inhibit
the Company from utilizing, any Intellectual Property necessary to
carry on the business now conducted by the Company, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding), invalidity, prevention or inhibition, singly or in
the aggregate, is reasonably likely to result in a material adverse
change in the general affairs, management, financial position,
stockholders' equity or results of operations of the Company;
(w) Except as described in the Offering Circular and except as
would not, singly or in the aggregate, result in a material adverse
change in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the
Company, (A) the Company is not in violation of any federal, state,
local or foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of
chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively
"Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company has all permits, authorizations and approvals required under
any applicable Environmental Laws and is in compliance with their
requirements, (C) there are no pending or, to the best of the
Company's knowledge, threatened administrative, regulatory or judicial
action, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to
any Environmental Law against the Company and (D) to the best of the
Company's knowledge, there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
government body or agency, against or affecting the Company relating
to Hazardous Materials or any Environmental Laws;
(x) The Company has reviewed its operations and that of its
subsidiaries and any third parties with which the Company or any of
its subsidiaries has a material relationship to evaluate the extent to
which the business or operations of the Company or any of its
subsidiaries will be affected by the Year 2000 Problem. Based on such
review, the Company has no reason to believe, and does not believe,
that the Year 2000 Problem will have a material adverse effect on the
general affairs, management, the current or future consolidated
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries or result in any material loss or
interference with the Company's business or operations. The "Year
2000 Problem" as used herein means any significant risk that computer
hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization
of data or in the operation of mechanical or electrical systems of any
kind will not, in the case of dates or time periods occurring after
December 31, 1999, function at least as effectively as in the case of
dates or time periods occurring prior to January 1, 2000;
(y) The Company has duly authorized the Escrow Agreement, the
Company has duly executed and delivered the Escrow Agreement, and the
Escrow Agreement will be the legally valid and binding obligation of
the Company, enforceable against it in accordance with its terms,
except as the enforceability thereof may be limited (i) by the effect
of bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws by now or hereafter in effect
relating to or affecting the rights and remedies of creditors and (ii)
by the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion of
the court before which any proceeding therefor may be brought. The
description of the Escrow Agreement in the Offering Circular is
accurate in all material respects. Upon the Company's purchase of the
Pledged Securities (as such term is defined in the Escrow Agreement),
the Company will be the sole beneficial owner of the Pledged
Securities and no lien will exist upon the Pledged Securities and the
Escrow Account (and no right or option to acquire the same will exist
in favor of any other person or entity) other than the pledge and
security interest in favor the Trustee, for the benefit of the holders
of the Securities, to be created or provided in the Escrow Agreement,
which pledge and security interest constitutes a first priority
perfected pledge and security interest in and to all of the Collateral
and the Escrow Account;
(z) Neither the Company nor any of its affiliates nor any
person acting on its behalf (other than the Purchaser, as to whom the
Company makes no representation) has engaged or will engage in any
directed selling efforts within the meaning of Regulation S with
respect to the Securities;
(aa) The Company and its affiliates and all persons acting on
its behalf (other than the Purchaser, as to whom the Company makes no
representation) have complied in all material respects with the
offering restrictions requirements of Regulation S in connection with
the offering of the Securities outside the United States and, in
connection therewith, the Offering Circular contains the disclosure
required by Rule 902(h)(2) under the Securities Act; and;
(bb) The Company is a "reporting issuer," as defined in
Rule 902(l) under the Securities Act.
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the Purchaser, and the Purchaser agrees to
purchase from the Company, at a purchase price of 97.5% of the initial
offering price thereof, $75,000,000 in principal amount of Securities.
3. The Purchaser proposes to offer the Securities for sale upon the
terms and conditions set forth in this Agreement and the Offering Circular
and the Purchaser hereby represents and warrants to, and agrees with, the
Company that:
(a) It will offer and sell the Securities only to: (i) persons
which it reasonably believes are "qualified institutional buyers"
("QIBs") within the meaning of Rule 144A under the Securities Act in
transactions meeting the requirements of Rule 144A or, (ii) upon the
terms and conditions set forth in Annex I to this Agreement;
(b) Upon request of the Company, it will notify the Company
upon completion of the distribution of the Securities;
(c) It is an Institutional Accredited Investor; and
(d) It has not offered and will not offer or sell the
Securities by any form of general solicitation or general advertising,
including but not limited to the methods described in Rule 502(c)
under the Securities Act.
4. (a) The Securities to be purchased by the Purchaser hereunder
will be represented by one or more definitive global Securities in book-
entry form which will be deposited by or on behalf of the Company with The
Depository Trust Company ("DTC") or its designated custodian. The Company
will deliver the Securities to the Purchaser against payment by or on behalf
of such Purchaser of the purchase price therefor by wire transfer, payable
to the order of the Company in Federal (same day) funds, by causing DTC to
credit the Securities to the account of Goldman, Sachs & Co. at DTC. The
Company will cause the certificates representing the Securities to be made
available to the Purchaser for checking at least twenty-four hours prior to
the Time of Delivery (as defined below) at the office of DTC or its
designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be 9:30 a.m., New York City time, on June 22,
1999 or such other time and date as Goldman, Sachs & Co. and the Company may
agree upon in writing. Such time and date are herein called the "Time of
Delivery".
(b) The documents to be delivered at the Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof,
including the cross-receipt for the Securities and any additional
documents requested by the Purchaser pursuant to Section 7(h) hereof,
will be delivered at such time and date at the offices of Wilson
Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California
94304 (the "Closing Location"), and the Securities will be delivered
at the Designated Office, all at the Time of Delivery. A meeting will
be held at the Closing Location at 6:00 p.m., New York City time, on
the New York Business Day next preceding the Time of Delivery, at
which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to
close.
5. The Company agrees with the Purchaser:
(a) To prepare the Offering Circular in a form approved by
you; to make no amendment or any supplement to the Offering Circular
which shall be disapproved by you promptly after reasonable notice
thereof; and to furnish you with copies thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as you may request and
to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Securities, provided that in
connection therewith the Company shall not be required to qualify as
a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) To furnish the Purchaser with four copies of the Offering
Circular and each amendment or supplement thereto signed by an
authorized officer of the Company and with the independent
accountants' report(s) in the Offering Circular, and any amendment or
supplement containing amendments to the financial statements covered
by such report(s), signed by the accountants, and additional copies
thereof in such quantities as you may from time to time reasonably
request, and if, at any time prior to the expiration of nine months
after the date of the Offering Circular, any event shall have occurred
as a result of which the Offering Circular as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Offering Circular is delivered, not misleading,
or, if for any other reason it shall be necessary or desirable during
such same period to amend or supplement the Offering Circular, to
notify you and upon your request to prepare and furnish without charge
to the Purchaser and to any dealer in securities as many copies as you
may from time to time reasonably request of an amended Offering
Circular or a supplement to the Offering Circular which will correct
such statement or omission or effect such compliance;
(d) During the period beginning from the date hereof and
continuing until the date six months after the Time of Delivery, not
to offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder any securities of the Company that are
substantially similar to the Securities;
(e) Not to be or become, at any time prior to the expiration
of three years after the Time of Delivery, an open-end investment
company, unit investment trust, closed-end investment company or face-
amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act;
(f) At any time when the Company is not subject to Section 13
or 15(d) of the Exchange Act, for the benefit of holders from time to
time of Securities, to furnish at its expense, upon request, to
holders of Securities and prospective purchasers of securities
information (the "Additional Issuer Information") satisfying the
requirements of subsection (d)(4)(i) of Rule 144A under the Securities
Act;
(g) If requested by you, to use its best efforts to cause the
Securities to be eligible for the PORTAL trading system of the
National Association of Securities Dealers, Inc.;
(h) To file with the Commission, not later than 15 days after
the Time of Delivery, five copies of a notice on Form D under the
Securities Act (one of which will be manually signed by a person duly
authorized by the Company); to otherwise comply with the requirements
of Rule 503 under the Securities Act; and to furnish promptly to you
evidence of each such required timely filing (including a copy
thereof);
(i) To furnish to the holders of the Securities as soon as
practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, stockholders'
equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the date
of the Offering Circular), consolidated summary financial information
of the Company and its subsidiaries for such quarter in reasonable
detail;
(j) During a period of five years from the date of the
Offering Circular, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders of the
Company, and to deliver to you (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed
with the Commission or any securities exchange on which the Securities
or any class of securities of the Company is listed; and (ii) such
additional information concerning the business and financial condition
of the Company as you may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the
accounts of the Company and its subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission)
provided that you agree to hold in confidence any confidential or non-
public information so provided;
(k) To use the net proceeds received by it from the sale of
the Securities pursuant to this Agreement in the manner specified in
the Offering Circular under the caption "Use of Proceeds;" and
(l) The Company and its affiliates and all persons acting on
its behalf (other than the Purchaser, as to whom the Company makes no
representation) will comply in all material respects with the offering
restrictions requirements of Regulation S in connection with the
offering of the Securities outside the United States.
6. The Company covenants and agrees with the Purchaser that the
Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the issue of the Securities and all other expenses in
connection with the preparation, printing and filing of the Offering
Circular and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchaser and dealers; (ii) the cost of
printing or producing this Agreement, the Indenture, the Blue Sky and Legal
Investment Memoranda, closing documents (including any compilations thereof)
and any other documents in connection with the offering, purchase, sale and
delivery of the Securities; (iii) all expenses in connection with the
qualification of the Securities for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Purchaser in connection with such
qualification and in connection with the Blue Sky and legal investment
surveys; (iv) any fees charged by securities rating services for rating the
Securities; (v) the cost of preparing the Securities; (vi) the fees and
expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in connection with the Indenture
and the Securities; (vii) any cost incurred in connection with the
designation of the Securities for trading in PORTAL; and (viii) all other
costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, and
Sections 8 and 10 hereof, the Purchaser will pay all of its own costs and
expenses, including the fees of its counsel, transfer taxes on resale of any
of the Securities by it, and any advertising expenses connected with any
offers they may make.
7. The obligations of the Purchaser hereunder shall be subject, in
its discretion, to the condition that all representations and warranties and
other statements of the Company herein are, at and as of the Time of
Delivery, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and
the following additional conditions:
(a) Wilson Sonsini Goodrich & Rosati, Professional
Corporation, counsel for the Purchaser, shall have furnished to you
such opinion or opinions, dated the Time of Delivery, with respect to
the matters covered in paragraphs (i), (ii), (v), (vi), (vii), (xi),
(xii), (xiii) and (xiv) of subsection (b) below as well as such other
related matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(b) Fenwick & West LLP, counsel for the Company, (or such
other counsel as the Company shall deem appropriate) shall have
furnished to you their written opinion, dated the Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, with corporate power and
corporate authority to own its properties and conduct its
business as described in the Offering Circular;
(ii) The Company had, as of the dates specified in the
Offering Circular, duly authorized capital stock as set forth
under the caption "Capitalization" in the Offering Circular,
and all of the issued and outstanding shares of capital stock of
the Company described therein have been duly and validly
authorized and issued, are non-assessable and to such counsel's
knowledge, are fully paid;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each jurisdiction within the United
States in which it owns or leases properties or employs
personnel, where the failure to be so qualified would have a
material adverse effect of the business, financial condition or
results of operations of the Company;
(iv) To such counsel's knowledge and other than as set
forth in the Offering Circular, there are no legal or
governmental proceedings pending to which the Company is a party
or of which any property of the Company is the subject which, if
determined adversely to the Company, would individually or in
the aggregate have a material adverse effect on the current or
future consolidated financial position, stockholders' equity or
results of operations of the Company; and, to such counsel's
knowledge, no such proceedings are threatened by governmental
authorities or threatened by others;
(v) This Agreement has been duly authorized, executed
and delivered by the Company to you;
(vi) The Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and
legally binding obligations of the Company;
(vii) The Indenture, the Escrow Agreement and the
Registration Rights Agreement have been duly authorized,
executed and delivered by the Company and constitute valid and
legally binding instruments, enforceable in accordance with
their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles;
(viii) The issue and sale of the Securities being
delivered at the Time of Delivery and the compliance by the
Company with all of the provisions of the Securities, the
Indenture, this Agreement, the Escrow Agreement and the
Registration Rights Agreement and the consummation of the
transactions herein and therein contemplated were they to be
completed on or prior to the date of such opinion and assuming
the absence of any applicable cure period, waiting period or
other similar provision, do not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any of the agreements filed as
exhibits to the Company's Annual Report filed on form 10-K for
the year ended December 31, 1998, or to any Exchange Act Report
or any agreements entered into by the Company after March 31,
1999 that would be required to be filed as a material agreement
exhibit on Form 10-Q or any other Exchange Act Report (in each
case, a "Material Agreement") (provided that in determining
which documents would be required to be so filed, such counsel
may rely on an officer's certificate that specifies agreements
that the Company has entered into since March 31, 1999) nor does
such action result in any violation of the provisions of the
Certificate of Incorporation or Bylaws of the Company or any
statute or any order, rule or regulation known to such counsel
of any court or governmental agency or body having jurisdiction
over the Company or any of its properties;
(ix) No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body is required for the issue and sale
of the Securities or the consummation by the Company of the
transactions contemplated by this Agreement, the Indenture, the
Escrow Agreement or the Registration Rights Agreement, except
(A) such consents, approvals, authorizations, orders,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Purchaser (as to which
such counsel renders no opinion) or (B) such consents,
approvals, authorizations, orders, registrations or
qualifications as are referenced in the Offering Circular;
(x) The Company is not in violation of its Certificate
of Incorporation or Bylaws or, to such counsel's knowledge, in
default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
Material Agreement;
(xi) The statements set forth in the Offering Circular
insofar as they purport to constitute a summary of the terms of
the Securities, the Indenture, the Escrow Agreement and the
Registration Rights Agreement, and under the captions "Certain
United States Federal Income Tax Considerations" and
"Underwriting," insofar as they purport to describe the
provisions of the laws and documents referred to therein, are
accurate and complete in all material respects;
(xii) The Exchange Act Reports (other than the financial
statements and related notes and schedules (and financial data)
therein, as to which such counsel need express no opinion), when
they were filed with the Commission, complied as to form in all
material respects with the requirements of the Exchange Act, and
the rules and regulations of the Commission promulgated
thereunder;
(xiii) No registration of the Securities under the
Securities Act, and no qualification of an indenture under the
Trust Indenture Act of 1939 with respect thereto, is required
for the offer and sale to, and initial resale of the Securities
by, the Purchaser in the manner contemplated by this Agreement;
(xiv) The Company is not an "investment company," as
such term is defined in the Investment Company Act;
(xv) The Escrow Agreement has been duly and validly
authorized, executed and delivered by the Company and the
Escrow Agreement is the legally valid and binding obligation of
the Company, enforceable against it in accordance with its
terms, except as the enforceability thereof may be limited by
customary assumptions and exceptions. Once the Escrow Account
has been established as provided in the Escrow Agreement, the
pledge and security interest in the Escrow Account and the
Pledged Securities held in the Escrow Account (assuming such
Pledged Securities constitute securities entitlements and are
carried in such Escrow Account (as to which assumption such
counsel need not express an opinion)) created by the Company
under the Escrow Agreement in favor of the Trustee, for the
benefit of the holders of the Securities, will constitute a
perfected security interest which will be prior to any other
security interest in such account or covering such securities
entitlement, the priority of which is governed by the Uniform
Commercial Code as in effect in the State of New York on the
date hereof.
In addition, such counsel shall state that, although they
are not passing upon and do not assume any responsibility for,
nor have they independently verified, the accuracy, completeness
or fairness of the statements contained in the Offering
Circular, except for and to the extent of those referred to in
the opinion in subsection (xi ) of this Section 7(b), they
have participated in certain conferences with officers and other
employees of the Company, representatives of the Company's
independent certified public accountants and representatives of
the Purchaser with respect to the preparation of the Offering
Circular, and no facts have come to the attention of attorneys
devoting attention to the representation of the Company in its
preparation of the Offering Circular that have caused them to
believe that, as of its date and as of the Time of Delivery, the
Offering Circular or any further amendments thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related notes, related schedules and financial
data included therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Further, such counsel shall state that, although they are not
passing upon and do not assume any responsibility for, nor have
they independently verified, the accuracy, completeness or
fairness of the statements contained in the Exchange Act
Reports, they have participated in certain conferences with
officers and other employees of the Company, and representatives
of the Company's independent certified public accountants with
respect to the preparation of the respective Exchange Act
Reports, and no facts have come to the attention of attorneys
devoting attention to the representation of the Company in its
preparation of the respective Exchange Act Reports that have
caused them to believe that as of the dates on which the
respective Exchange Act Reports were filed with the Commission,
the Exchange Act Reports (other than the financial statements
and related notes, related schedules and financial data included
therein, as to which such counsel need express no opinion)
contained an untrue statement of material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances
under which they were made when such documents were so filed,
not misleading.
(c) On the date of the Offering Circular prior to the
execution of this Agreement and also at the Time of Delivery, KPMG LLP
shall have furnished to you a letter or letters, dated the respective
dates of delivery thereof, in form and substance satisfactory to you,
to the effect set forth in Annex II hereto;
(d) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Offering Circular any loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Offering Circular, and (ii) since the
respective dates as of which information is given in the Offering
Circular there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Offering Circular, the effect of which, in any such case described in
Clause (i) or (ii), is in the judgment of the Purchaser so material
and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Securities on the terms and
in the manner contemplated in this Agreement and in the Offering
Circular;
(e) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt
securities;
(f) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange; or on
NASDAQ; (ii) a suspension or material limitation in trading in the
Company's securities on NASDAQ; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York
or California State authorities; (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any
such event specified in this Clause (iv) in the judgment of the
Purchaser makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities on the terms and in
the manner contemplated in the Offering Circular; or (v) the
occurrence of any material adverse change in the existing financial,
political or economic conditions in the United States or elsewhere
which, in the judgment of the Purchaser, would materially and
adversely affect the financial markets or markets for the Securities
or other debt securities;
(g) The Securities have been designated for trading on PORTAL;
(h) The Company shall have furnished to you executed copies of
the Indenture, the Escrow Agreement and the Registration Rights
Agreement; and
(i) The Company shall have furnished or caused to be furnished
to you at the Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery,
as to the performance by the Company of all of its obligations
hereunder to be performed at or prior to such Time of Delivery, as to
the matters set forth in subsections (a) and (e) of this Section and
as to such other matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless the Purchaser
against any losses, claims, damages or liabilities, joint or several, to
which such Purchaser may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in the
Offering Circular, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, and
will reimburse the Purchaser for any legal or other expenses reasonably
incurred by the Purchaser in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in the Offering Circular or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
the Purchaser expressly for use therein.
(b) The Purchaser will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the
Company may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Offering
Circular, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by the Purchaser
expressly for use therein; and will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection,
notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation.
No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to, or
an admission of, fault, culpability or a failure to act, by or on
behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchaser on the other from the
offering of the Securities. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law
or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand
and the Purchaser on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Purchaser on the other shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the
Purchaser, in each case as set forth in the Offering Circular. The
relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Purchaser on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The Company and the Purchaser agree that it
would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this subsection (d), the
Purchaser shall not be required to contribute any amount in excess of
the amount by which the total price at which the Securities
underwritten by it and distributed to investors were offered to
investors exceeds the amount of any damages which the Purchaser has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.
(e) The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have
and shall extend, upon the same terms and conditions, to each person,
if any, who controls the Purchaser within the meaning of the
Securities Act; and the obligations of the Purchaser under this
Section 8 shall be in addition to any liability which the Purchaser
may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the
Securities Act.
9. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the Purchaser, as set
forth in this Agreement, shall remain in full force and effect, regardless
of any investigation (or any statement as to the results thereof) made by or
on behalf of Purchaser or any controlling person of the Purchaser, or the
Company, or any officer or director or controlling person of the Company,
and shall survive delivery of and payment for the Securities.
10. If for any other reason, any Securities are not delivered by or
on behalf of the Company as provided herein, the Company will reimburse the
Purchaser through you for all out-of-pocket expenses approved in writing by
you, including fees and disbursements of counsel, reasonably incurred by the
Purchaser in making preparations for the purchase, sale and delivery of the
Securities, but the Company shall then be under no further liability to any
Purchaser except as provided in Sections 6 and 8 hereof.
11. All statements, requests, notices and agreements hereunder shall
be in writing, and if to the Purchaser shall be delivered or sent by mail,
telex or facsimile transmission to you at Goldman, Sachs & Co., 32 Old Slip,
21st Floor, New York, New York 10004, Attention: Registration Department; and
if to the Company shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Company set forth in the Offering
Circular, Attention: Secretary; provided, however, that any notice to the
Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Purchaser at its address set
forth in the Purchaser's Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
12. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchaser, the Company and, to the extent provided in
Sections 8 and 9 hereof, the officers and directors of the Company and each
person who controls the Company or the Purchaser, and their respective
heirs, executors, administrators, successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement.
No purchaser of any of the Securities from the Purchaser shall be deemed a
successor or assign by reason merely of such purchase.
13. Time shall be of the essence of this Agreement.
14. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
15. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one
and the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and the Purchaser plus one for each
counsel counterparts hereof, and upon the acceptance hereof by you, this
letter and such acceptance hereof shall constitute a binding agreement
between the Purchaser and the Company.
Very truly yours,
EXODUS COMMUNICATIONS, INC.
By: /s/ Richard S. Stoltz
--------------------------------
Name: Richard S. Stoltz
Title: Executive Vice President, Finance
Chief Operating Officer and
Chief Financial Officer
Accepted as of the date hereof:
Goldman, Sachs & Co.
By: /s/ Goldman, Sachs & Co.
Name: Kenneth L. Hirsch
Title: Vice President
ANNEX I
(1) The Securities have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except in accordance with
Regulation S under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act. The Purchaser represents
that it has offered and sold the Securities, and will offer and sell the
Securities (i) as part of its distribution at any time and (ii) otherwise
until 40 days after the later of the commencement of the offering and the
Time of Delivery, only in accordance with Rule 903 of Regulation S or Rule
144A under the Securities Act. Accordingly, the Purchaser agrees that
neither it, its affiliates nor any persons acting on its or its behalf has
engaged or will engage in any directed selling efforts with respect to the
Securities, and it and they have complied and will comply with the offering
restrictions requirement of Regulation S. The Purchaser agrees that, at or
prior to confirmation of sale of Securities (other than a sale pursuant to
Rule 144A), it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
Securities from it during the distribution compliance period a confirmation
or notice to substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may not
be offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any
time or (ii) otherwise until 40 days after the later of the
commencement of the offering and the closing date, except in either
case in accordance with Regulation S (or Rule 144A if available) under
the Securities Act. Terms used above have the meaning given to them
by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
The Purchaser further agrees that it has not entered and will not
enter into any contractual arrangement with respect to the distribution or
delivery of the Securities, except with its affiliates or with the prior
written consent of the Company.
(2) Notwithstanding the foregoing, Securities may be offered, sold
and delivered by the Purchaser in the United States and to U.S. persons
pursuant to Section 3(a)(i) of this Agreement without delivery of the
written statement required by paragraph (1) above.
(3) The Purchaser further represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of
the Securities will not offer or sell any Securities to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995, (b) it has complied, and will comply, with all applicable
provisions of the Financial Services Act of 1986 of Great Britain with
respect to anything done by it in relation to the Securities in, from or
otherwise involving the United Kingdom, and (c) it has only issued or passed
on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of the Securities to a person
who is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1996 of Great Britain or
is a person to whom the document may otherwise lawfully be issued or passed
on.
(4) The Purchaser agrees that it will not offer, sell or deliver any
of the Securities in any jurisdiction outside the United States except
under circumstances that will result in compliance with the applicable laws
thereof, and that it will take at its own expense whatever action is
required to permit its purchase and resale of the Securities in such
jurisdictions. The Purchaser understands that no action has been taken to
permit a public offering in any jurisdiction outside the United States where
action would be required for such purpose. The Purchaser agrees not to cause
any advertisement of the Securities to be published in any newspaper or
periodical or posted in any public place and not to issue any circular
relating to the Securities, except in any such case with the Purchaser's
express written consent and then only at its own risk and expense.
ANNEX II
Pursuant to Section 7(d) of the Purchase Agreement, the accountants
shall furnish letters to the Purchaser to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Securities Exchange Act of 1934 (the "Exchange Act") and the
applicable published rules and regulations thereunder;
(ii) In our opinion, the consolidated financial statements and
financial statement schedules audited by us and included in the
Offering Circular comply as to form in all material respects with the
applicable requirements of the Exchange Act and the related published
rules and regulations;
(iii) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of
the Company for the five most recent fiscal years included in the
Offering Circular agrees with the corresponding amounts (after
restatements where applicable) in the audited consolidated financial
statements for such five fiscal years;
(iv) On the basis of limited procedures not constituting an audit
in accordance with generally accepted auditing standards, consisting
of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Offering Circular, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included in the Offering Circular are not in conformity
with generally accepted accounting principles applied on the
basis substantially consistent with the basis for the unaudited
condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows
included in the Offering Circular;
(B) any other unaudited income statement data and balance
sheet items included in the Offering Circular do not agree with
the corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements
included in the Offering Circular;
(C) the unaudited financial statements which were not
included in the Offering Circular but from which were derived
any unaudited condensed financial statements referred to in
Clause (A) and any unaudited income statement data and balance
sheet items included in the Offering Circular and referred to in
Clause (B) were not determined on a basis substantially
consistent with the basis for the audited consolidated financial
statements included in the Offering Circular;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Offering Circular do not comply as to
form in all material respects with the applicable accounting
requirements or the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital
stock upon exercise of options and stock appreciation rights,
upon earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest financial statements included in the
Offering Circular or any increase in the consolidated long-term
debt of the Company and its subsidiaries, or any decreases in
consolidated net current assets or stockholders' equity or other
items specified by the Purchaser, or any increases in any items
specified by the Purchaser, in each case as compared with
amounts shown in the latest balance sheet included in the
Offering Circular except in each case for changes, increases or
decreases which the Offering Circular discloses have occurred or
may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Offering Circular to the specified
date referred to in Clause (E) there were any decreases in
consolidated net revenues or operating profit or the total or
per share amounts of consolidated net income or other items
specified by the Purchaser, or any increases in any items
specified by the Purchaser, in each case as compared with the
comparable period of the preceding year and with any other
period of corresponding length specified by the Purchaser,
except in each case for decreases or increases which the
Offering Circular discloses have occurred or may occur or which
are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included in the Offering Circular and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (iv) above, they have carried out certain
specified procedures, not constituting an audit in accordance with
generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Purchaser, which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Offering
Circular, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
<PAGE>
June __, 1999
Dear KPMG LLP:
Goldman, Sachs & Co., the Purchaser of 11 1/4% Senior Notes due 2008 to
be issued by Exodus Communications, Inc. (the "Company"), will be reviewing
certain information relating to the Company that will be included
(incorporated by reference) in the Offering Circular. This review process,
applied to the information relation to the issue, is (will be) substantially
consistent with the due diligence review process that we would perform if
this placement of securities were being registered pursuant to the
Securities Act of 1933 (the Act). It is recognized however that what is
"substantially consistent" may vary from situation to situation and may not
be the same as that done in a registered offering of the same securities for
the same issuer and whether the procedures being, or to be, followed will be
"substantially consistent" will be determined by us on a case-by-case
basis. We are knowledgeable with respect to the due diligence review
process that would be performed if this placement of securities were being
registered pursuant to the Act. We hereby request that you deliver to us a
"comfort" letter concerning the financial statements of the issuer and
certain statistical and other data included in the offering document. We
will contact you to identify the procedures we wish you to follow and the
form we wish the comfort letter to take.
Very truly yours,
(Goldman, Sachs & Co.)
EXHIBIT 10.65
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, dated as of June 22,
1999, among Exodus Communications, Inc., a Delaware corporation (the
"Company") and Goldman, Sachs & Co., (the "Initial Purchaser") who has
agreed to purchase the Company's 11 1/4% Senior Notes due 2008
(collectively, the "Securities") pursuant to the Purchase Agreement,
dated June 17, 1999, by and among the Company and Initial Purchaser (the
"Purchase Agreement").
The Company proposes to issue and sell and the Initial Purchaser
propose to purchase the Securities upon the terms set forth in the
Purchase Agreement. As an inducement to the Initial Purchaser to enter
into the Purchase Agreement and in satisfaction of a condition to the
obligations of the Initial Purchaser thereunder, the Company agrees with
the Initial Purchaser for the benefit of holders (as defined herein) from
time to time of the Transfer Restricted Securities as follows:
1. Certain Definitions.
For purposes of this Exchange and Registration Rights Agreement,
the following terms shall have the following respective meanings:
"Act" shall mean the Securities Act of 1933, as amended.
"Affiliate" shall have the meaning ascribed thereto by Rule
144 of the Act.
"Business Days" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking
institutions in the City of New York, New York are authorized or
obligated by law or executive order to close.
"Broker-Dealer" shall mean any broker or dealer registered
with the Commission under the Exchange Act.
"Closing Date" shall mean the date hereof.
"Commission" shall mean the United States Securities and
Exchange Commission, or any other federal agency at the time
administering the Exchange Act or the Securities Act, whichever is
the relevant statute for the particular purpose.
"Effective Time" shall mean (i) with regard to the Exchange
Registration, the time and date as of which the Commission declares
the Exchange Offer Registration Statement effective or as of which
the Exchange Offer Registration Statement otherwise becomes
effective and (ii) with regard to the Shelf Registration, the time
and date as of which the Commission declares the Shelf Registration
Statement effective or as of which the Shelf Registration Statement
otherwise becomes effective.
"Electing Holder" shall mean any holder of Transfer
Restricted Securities that has returned a completed and signed
Notice and Questionnaire to the Company in accordance with Section
3(d)(ii) or 3(d)(iii) hereof.
"Exchange Act" shall mean the Securities Exchange Act of
1934, or any successor thereto, as the same shall be amended from
time to time.
"Exchange Offer" shall have the meaning assigned thereto in
Section 2(a) hereof.
"Exchange Offer Registration Statement" shall have the
meaning assigned thereto in Section 2(a) hereof.
"Exchange Registration" shall have the meaning assigned
thereto in Section 3(c) hereof.
"Exchange Securities" shall have the meaning assigned thereto
in Section 2(a) hereof.
"holder" shall mean with respect to the Transfer Restricted
Securities, the Initial Purchaser and other persons who acquire
Transfer Restricted Securities from time to time (including any
successors or assigns), in each case for so long as such person
owns any Transfer Restricted Securities.
"Indenture" shall mean the Indenture, dated as of July 1,
1998, between the Company and Chase Manhattan Bank and Trust
Company, National Association, as Trustee, as the same shall be
amended from time to time.
"Liquidated Damages" shall have the meaning assigned thereto
in Section 2(c) hereof.
"Notice and Questionnaire" means a Notice of Registration
Statement and Selling Securityholder Questionnaire substantially in
the form of Exhibit A hereto.
"person" shall mean a corporation, association, partnership,
organization, business, individual, government or political
subdivision thereof or governmental agency.
"Prospectus" shall have the meaning ascribed to it in
Section 2(a)(10) of the Act.
"Registration Default" shall have the meaning assigned
thereto in Section 2(c) hereof.
"Registration Expenses" shall have the meaning assigned
thereto in Section 4 hereof.
"Resale Period" shall have the meaning assigned thereto in
Section 2(a) hereof.
"Restricted Holder" shall mean (i) a holder that is an
affiliate of the Company within the meaning of Rule 405, (ii) a
holder who acquires Exchange Securities outside the ordinary course
of such holder's business, (iii) a holder who has arrangements or
understandings with any person to participate in the Exchange Offer
for the purpose of a distribution within the meaning of the Act of
Exchange Securities and (iv) a holder that is a Broker-Dealer, but
only with respect to Exchange Securities received by such Broker-
Dealer pursuant to an Exchange Offer in exchange for Transfer
Restricted Securities acquired by the Broker-Dealer directly from
the Company.
"Rule 144," "Rule 405" and "Rule 415" shall mean, in each
case, such rule promulgated under the Act (or any successor
provision), as the same shall be amended from time to time.
"Securities" shall mean, collectively, the 11 1/4% Senior Notes
due 2008 of the Company to be issued and sold to the Initial
Purchaser, and securities issued in exchange therefor or in lieu
thereof pursuant to the Indenture.
"Shelf Registration" shall have the meaning assigned thereto
in Section 2(b) hereof.
"Shelf Registration Statement" shall have the meaning
assigned thereto in Section 2(b) hereof.
"Transfer Restricted Securities" shall mean each Security
until the earliest of (i) the date on which such Security has been
exchanged by a person other than a Broker-Dealer for an Exchange
Security in an Exchange Offer, (ii) following the exchange by a
Broker-Dealer in the Exchange Offer of a Security for an Exchange
Security, the date on which such Exchange Security is sold to a
purchaser who receives from such Broker-Dealer on or prior to the
date of such sale a copy of the Prospectus used in connection with
such Exchange Offer, (iii) the date on which such Security has been
effectively registered under the Act and disposed of in accordance
with a Shelf Registration Statement or (iv) the date on which such
Security is distributed to the public pursuant to Rule 144 under
the Act.
"Trust Indenture Act" shall mean the Trust Indenture Act of
1939, or any successor thereto, and the rules, regulations and
forms promulgated thereunder, all as the same shall be amended from
time to time.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be,
of this Exchange and Registration Rights Agreement, and the words
"herein," "hereof" and "hereunder" and other words of similar import
refer to this Exchange and Registration Rights Agreement as a whole and
not to any particular Section or other subdivision.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company agrees
to file with the Commission, as soon as practicable after the Closing
Date, but no later than 60 days after the Closing Date, a registration
statement relating to an offer to exchange (such registration statement,
the "Exchange Offer Registration Statement", and such offer, the
"Exchange Offer") any and all of the Securities for a like aggregate
principal amount of debt securities issued by the Company, which debt
securities are substantially identical to the Securities (and are
entitled to the benefits of a trust indenture which is substantially
identical to the Indenture or is the Indenture and which has been quali-
fied under the Trust Indenture Act), except that they have been
registered pursuant to an effective registration statement under the Act
and do not contain provisions for liquidated damages contemplated in
Section 2(c) below (such new debt securities hereinafter called "Exchange
Securities"). The Company agrees to use its best efforts to cause the
Exchange Offer Registration Statement to become effective under the Act
as soon as practicable, but no later than 150 days after the Closing
Date. The Exchange Offer will be registered under the Act on the
appropriate form and will comply with all applicable tender offer rules
and regulations under the Exchange Act. Unless the Exchange Offer would
not be permitted by applicable law or Commission policy, the Company
further agrees to use its best efforts (i) to complete the Exchange Offer
promptly, but no later than 30 Business Days after the Exchange Offer
Registration Statement becomes effective or is declared effective by the
Commission, (ii) to hold the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state
securities laws, provided however, that in no event shall such period be
less than 20 Business Days, and (iii) to issue Exchange Securities for
all Transfer Restricted Securities that have been properly tendered and
not withdrawn on or prior to the expiration of the Exchange Offer. The
Exchange Offer will be deemed to have been "completed" only if the debt
securities received by holders other than Restricted Holders in the
Exchange Offer for Transfer Restricted Securities are, upon receipt,
transferable by each such holder without need for further compliance with
Section 5 of the Act and the Exchange Act (except for the requirement to
deliver a Prospectus included in the Exchange Offer Registration
Statement applicable to resales by Broker-Dealers of Exchange Securities
received by such Broker-Dealer pursuant to an Exchange Offer in exchange
for Transfer Restricted Securities other than those acquired by the
Broker-Dealer directly from the Company), and without material
restrictions under the blue sky or securities laws of a substantial
majority of the States of the United States of America. The Exchange
Offer shall be deemed to have been completed upon the earlier to occur of
(i) the Company having exchanged the Exchange Securities for all
outstanding Transfer Restricted Securities pursuant to the Exchange Offer
and (ii) the Company having exchanged, pursuant to the Exchange Offer,
Exchange Securities for all Transfer Restricted Securities that have been
properly tendered and not withdrawn before the expiration of the Exchange
Offer. If the Company is notified prior to the completion of the
Exchange Offer by a Broker-Dealer that is a holder of Transfer Restricted
Securities (other than Transfer Restricted Securities received by the
Broker-Dealer directly from the Company), then the Company agrees (x) to
include in the Exchange Offer Registration Statement a Prospectus for use
in connection with any resales of Exchange Securities by a Broker-Dealer,
other than resales of Exchange Securities received by a Broker-Dealer
pursuant to an Exchange Offer in exchange for Transfer Restricted
Securities acquired by the Broker-Dealer directly from the Company, and
(y) to keep such Exchange Offer Registration Statement effective for a
period (the "Resale Period") beginning when Exchange Securities are first
issued in the Exchange Offer and ending upon the earlier of the
expiration of the 180th day after the Exchange Offer has been completed
or such time as such Broker-Dealers no longer own any Transfer Restricted
Securities. With respect to such Exchange Offer Registration Statement,
each Broker-Dealer that holds Exchange Securities received in an Exchange
Offer in exchange for Transfer Restricted Securities not acquired by it
directly from the Company shall have the benefit of the rights of
indemnification and contribution set forth in Sections 6(a), (c), (d) and
(e) hereof.
(b) If (i) the Company is not permitted to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
Commission policy or (ii) any holder of Transfer Restricted Securities
notifies the Company prior to the 20th day following completion of the
Exchange Offer that (A) it is prohibited by law or Commission policy from
participating in the Exchange Offer or (B) that it may not resell in
compliance with the Act or Commission policy the Exchange Securities
acquired by it in the Exchange Offer to the public without delivering a
Prospectus and the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales
or (C) that it is a Broker-Dealer and owns Securities acquired directly
from the Company or an Affiliate, then in lieu of conducting the Exchange
Offer for such Transfer Restricted Securities contemplated by
Section 2(a) the Company shall use its best efforts to file with the
Commission as soon as practicable, but no later than 45 days after the
date on which the Company determines that it is not permitted to file the
Exchange Offer Registration Statement pursuant to clause (i) above or 45
days after the date on which the Company receives the notice specified in
clause (ii) above (but in either case, in no event less than 60 days
after the Closing Date), a "shelf" registration statement providing for
the registration of, and the sale on a continuous or delayed basis by the
holders of, all of the Transfer Restricted Securities, pursuant to Rule
415 or any similar rule that may be adopted by the Commission, which may
be an amendment to the Exchange Offer Registration Statement (such
filing, the "Shelf Registration" and such registration statement, the
"Shelf Registration Statement"). The Company agrees to use its best
efforts (i) to cause the Shelf Registration Statement to become or be
declared effective by the Commission on or prior to 90 days after such
obligation arises (but in no event less than 150 days after the Closing
Date) and to keep such Shelf Registration Statement continuously
effective in order to permit the Prospectus forming a part thereof to be
usable by holders for resales of Transfer Restricted Securities for a
period ending on the earlier of the second anniversary of the Effective
Time or such time as there are no longer any Transfer Restricted
Securities outstanding, provided, however, that no holder shall be
entitled to be named as a selling securityholder in the Shelf
Registration Statement or to use the Prospectus forming a part thereof
for resales of Transfer Restricted Securities unless such holder is an
Electing Holder, and (ii) after the Effective Time of the Shelf
Registration Statement, promptly upon the request of any holder of
Transfer Restricted Securities that is not then an Electing Holder, to
take any action reasonably necessary to enable such holder to use the
Prospectus forming a part thereof for resales of Transfer Restricted
Securities, including, without limitation, any action necessary to
identify such holder as a selling securityholder in the Shelf
Registration Statement, provided, however, that nothing in this Clause
(ii) shall relieve any such holder of the obligation to return a
completed and signed Notice and Questionnaire to the Company in
accordance with Section 3(d)(iii) hereof. No holder of Securities shall
be entitled to Liquidated Damages pursuant to 2(c) hereof unless and
until such holder shall have provided all such information. The Company
further agrees to supplement or make amendments to the Shelf Registration
Statement, as and when required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the Act or rules and regulations thereunder
for shelf registration, and the Company agrees to furnish to each
Electing Holder copies of any such supplement or amendment prior to its
being used or promptly following its filing with the Commission.
(c) In the event that (i) the Company has not filed the Exchange
Offer Registration Statement or Shelf Registration Statement on or before
the date on which such registration statement is required to be filed
pursuant to Section 2(a) or 2(b), respectively, or (ii) such Exchange
Offer Registration Statement or Shelf Registration Statement has not
become effective or been declared effective by the Commission on or
before the date on which such registration statement is required to
become or be declared effective pursuant to Section 2(a) or 2(b),
respectively, or (iii) the Exchange Offer has not been completed within
30 Business Days after the initial effective date of the Exchange Offer
Registration Statement relating to the Exchange Offer (if the Exchange
Offer is then required to be made) or (iv) any Exchange Offer
Registration Statement or Shelf Registration Statement required by
Section 2(a) or 2(b) hereof is filed and declared effective, but shall
thereafter cease to be effective or usable in connection with resales of
Transfer Restricted Securities during the periods specified in Section
2(a) or 2(b), respectively, (except as specifically permitted herein,
including pursuant to Sections 3(c)(ii) and (iv) and 3(d)(iv) and 3(e))
without being succeeded immediately by an additional registration
statement filed and declared effective (each such event referred to in
clauses (i) through (iv), a "Registration Default" and each period during
which a Registration Default has occurred and is continuing, a
"Registration Default Period"), then, the Company will pay liquidated
damages to each holder of Transfer Restricted Securities affected thereby
(such liquidated damages, the "Liquidated Damages"), with respect to the
first 90-day period immediately following the occurrence of the first
Registration Default in an amount equal to $0.05 per week such
Registration Default continues per $1,000 principal amount of Transfer
Restricted Securities held by such holder. The amount of the Liquidated
Damages will increase by an additional $0.05 per week such Registration
Default continues per $1,000 principal amount of Transfer Restricted
Securities with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages for all Registration Defaults of $0.25 per week per
$1,000 principal amount of Transfer Restricted Securities.
Notwithstanding the foregoing, the Company shall in no event be required
to pay Liquidated Damages for more than one Registration Default at any
time. All accrued Liquidated Damages will be paid by the Company on each
Interest Payment Date (as defined in the Indenture) to each holder of any
Transfer Restricted Securities by wire transfer of immediately available
funds or by federal funds check and to holders of Transfer Restricted
Securities by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have
been specified. Following the cure of all Registration Defaults, the
accrual of Liquidated Damages will cease. No other damages shall be
available to holders of Transfer Restricted Securities for any
Registration Default.
(d) Any reference herein to a registration statement as of any time
shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time and any reference
herein to any post-effective amendment to a registration statement as of
any time shall be deemed to include any document incorporated, or deemed
to be incorporated, therein by reference as of such time.
3. Registration Procedures.
If the Company files a registration statement pursuant to
Section 2(a) or Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Offer or the
Shelf Registration, as the case may be, the Company shall qualify the
Indenture under the Trust Indenture Act of 1939.
(b) In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall
appoint a new trustee thereunder pursuant to the applicable provisions of
the Indenture.
(c) In connection with the Company's obligations with respect to
the registration of Exchange Securities as contemplated by Section 2(a)
(the "Exchange Registration"), if applicable, the Company shall, as soon
as practicable (or as otherwise specified):
(i) prepare and file with the Commission, as soon as
practicable but no later than 60 days after the Closing Date, an
Exchange Offer Registration Statement on any form which may be
utilized by the Company and which shall permit the Exchange Offer
and, if applicable, resales of Exchange Securities by Broker-
Dealers during the Resale Period to be effected as contemplated by
Section 2(a), and use its best efforts to cause such Exchange Offer
Registration Statement to become effective as soon as practicable
thereafter, but no later than 150 days after the Closing Date;
(ii) as soon as practicable prepare and file with the
Commission such amendments and supplements to such Exchange Offer
Registration Statement and the Prospectus included therein as may
be necessary to effect and maintain the effectiveness of such
Exchange Offer Registration Statement for the periods and purposes
contemplated in Section 2(a) hereof and as may be required by the
applicable rules and regulations of the Commission and the
instructions applicable to the form of such Exchange Offer
Registration Statement, and promptly provide each Broker-Dealer
holding Exchange Securities with such number of copies of the
Prospectus included therein (as then amended or supplemented), in
conformity in all material respects with the requirements of the
Act and the Trust Indenture Act and the rules and regulations of
the Commission thereunder, as such Broker-Dealer reasonably may
request prior to the expiration of the Resale Period, for use in
connection with resales of Exchange Securities; provided that upon
the occurrence of any event that would cause any such Exchange
Offer Registration Statement or the Prospectus contained therein
(A) to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities,
either of which occurs during the period that the Company is
required to maintain an effective and usable Exchange Offer
Registration Statement and Prospectus pursuant to this Agreement,
the Company shall file promptly an appropriate amendment or
supplement to such Registration Statement or Prospectus, (1) in the
case of clause (A), correcting any such misstatement or omission,
and (2) in the case of clauses (A) and (B) use its best efforts to
cause any amendment to be declared effective and such Exchange
Offer Registration Statement and the Prospectus to become usable
for their intended purpose(s) as soon as practicable thereafter;
provided further notwithstanding anything to the contrary set forth
in this Agreement, during the 180 day period following completion
of the Exchange Offer, the Company's obligations to use its best
efforts to keep the Exchange-Offer Registration Statement
continuously effective, supplemented and amended shall be suspended
in the event continued effectiveness of the Exchange-Offer
Registration Statement would, with the advice of counsel to the
Company, make it advisable for the Company to disclose a material
financing, acquisition or other corporate transaction, and the
Board of Directors shall have determined in good faith that such
disclosure is not in the best interests of the Company, but in no
event will any such suspension, individually or in the aggregate,
exceed sixty (60) days (such suspensions being referred to herein
as an "Exchange Suspension Period");
(iii) promptly notify in writing each Broker-Dealer that has
requested or received from the Company copies of the Prospectus
included in such Exchange Offer Registration Statement, (A) when
such Exchange Offer Registration Statement or the Prospectus
included therein or any Prospectus amendment or supplement or
post-effective amendment has been filed, and, with respect to such
Exchange Offer Registration Statement or any post-effective
amendment, when the same has become effective, (B) of the issuance
by the Commission of any stop order suspending the effectiveness of
such Exchange Offer Registration Statement or the initiation or
threatening of any proceedings for that purpose, (C) of the receipt
by the Company of any notification with respect to the suspension
of the qualification of the Exchange Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose, or (D) at any time during the Resale Period when a
Prospectus is required to be delivered under the Act, that such
Exchange Offer Registration Statement, Prospectus, Prospectus
amendment or supplement or post-effective amendment does not
conform in all material respects to the applicable requirements of
the Act and the Trust Indenture Act and the rules and regulations
of the Commission thereunder or contains an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing. Each
holder of Transfer Restricted Securitiesagrees that upon receipt of
any notice from the Company pursuant to this Section 3(c)(iii)(D),
such holder shall forthwith discontinue the disposition of Transfer
Restricted Securities pursuant to the Exchange Offer Registration
Statement applicable to such Transfer Restricted Securities until
such Broker-Dealer shall have received copies of such amended or
supplemented Prospectus, and if so directed by the Company, such
Broker-Dealer shall deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such
Broker-Dealer's possession of the Prospectus covering such Transfer
Restricted Securities at the time of receipt of such notice;
(iv) in the event that the Company would be required,
pursuant to Section 3(c)(iii)(D) above, to notify any Broker-
Dealers holding Exchange Securities, without unreasonable delay,
subject to Section 3(c)(ii), prepare and furnish to each such
holder a reasonable number of copies of a Prospectus supplemented
or amended so that, as thereafter delivered to purchasers of such
Exchange Securities during the Resale Period, such Prospectus shall
conform in all material respects to the applicable requirements of
the Act and the Trust Indenture Act and the rules and regulations
of the Commission thereunder and shall not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(v) subject to the provisos in (ii) above, use its best
efforts to obtain the withdrawal of any order suspending the effec-
tiveness of such Exchange Offer Registration Statement or any
post-effective amendment thereto at the earliest practicable date;
(vi) use its best efforts to (A) register or qualify the
Exchange Securities under the securities laws or blue sky laws of
such jurisdictions as are contemplated by Section 2(a) no later
than the commencement of the Exchange Offer, (B) if applicable,
keep such registrations or qualifications in effect and comply with
such laws so as to permit the continuance of offers, sales and
dealings therein in such jurisdictions until the expiration of the
Resale Period and (C) take any and all other actions as may be
reasonably necessary or advisable to enable each Broker-Dealer
holding Exchange Securities to consummate the disposition thereof
in such jurisdictions; provided, however, that the Company shall
not be required for any such purpose to (1) qualify as a foreign
corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section
3(c)(vi), (2) consent to general service of process in any such
jurisdiction or (3) make any changes to its certificate of
incorporation or by-laws or any agreement between it and its
stockholders;
(vii) use its best efforts to obtain the consent or approval
of each governmental agency or authority, whether federal, state or
local, which may be required to effect the Exchange Registration,
the Exchange Offer and the offering and sale of Exchange Securities
by Broker-Dealers during the Resale Period;
(viii) provide a CUSIP number for all Exchange Securities,
not later than the applicable Effective Time;
(ix) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as
soon as practicable but no later than eighteen months after the
effective date of such Exchange Offer Registration Statement, an
earning statement of the Company and its subsidiaries complying
with Section 11(a) of the Act (including, at the option of the
Company, Rule 158 thereunder).
(d) In connection with the Company's obligations with respect to
the registration of the Transfer Restricted Securities as contemplated by
Section 2(b) pursuant to the Shelf Registration, if applicable, the
Company shall, as soon as practicable (or as otherwise specified):
(i) prepare and file with the Commission, as soon as
practicable but in any case within the time periods specified in
Section 2(b), a Shelf Registration Statement on any form which may
be utilized by the Company and which shall register all of the
Transfer Restricted Securities for resale by the holders thereof in
accordance with such method or methods of disposition as may be
specified by such of the holders as, from time to time, may be
Electing Holders and use its best efforts to cause such Shelf
Registration Statement to become effective as soon as practicable
but in any case within the time periods specified in Section 2(b);
(ii) not less than 30 calendar days prior to the Effective
Time of the Shelf Registration Statement, mail the Notice and
Questionnaire, in the form of Exhibit A hereto, to the holders of
Transfer Restricted Securities; no holder shall be entitled to be
named as a selling securityholder in the Shelf Registration
Statement as of the Effective Time, and no holder shall be entitled
to use the Prospectus forming a part thereof for resales of
Transfer Restricted Securities at any time, unless such holder has
returned a completed and signed Notice and Questionnaire to the
Company by the deadline for response set forth therein; provided,
however, holders of Transfer Restricted Securities shall have at
least 28 calendar days from the date on which the Notice and
Questionnaire is first mailed to such holders to return a completed
and signed Notice and Questionnaire to the Company;
(iii) after the Effective Time of the Shelf Registration
Statement, upon the request of any holder of Transfer Restricted
Securities that is not then an Electing Holder, promptly send a
Notice and Questionnaire to such holder; provided that the Company
shall not be required to take any action to name such holder as a
selling securityholder in the Shelf Registration Statement or to
enable such holder to use the Prospectus forming a part thereof for
resales of Transfer Restricted Securities until such holder has
returned a completed and signed Notice and Questionnaire to the
Company;
(iv) as soon as practicable prepare and file with the
Commission such amendments and supplements to such Shelf
Registration Statement and the Prospectus included therein, and
take any other action, as may be necessary to effect and maintain
the effectiveness of such Shelf Registration Statement for the
period specified in Section 2(b) hereof and as may be required by
the applicable rules and regulations of the Commission and the
instructions applicable to the form of such Shelf Registration
Statement, and furnish to the Electing Holders copies of any such
supplement or amendment simultaneously with or prior to its being
used or filed with the Commission; provided that upon the
occurrence of any event that would cause any such Shelf
Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities,
either of which occurs during the period that the Company is
required to maintain an effective and usable Shelf Registration
Statement and Prospectus pursuant to this Agreement, the Company
shall file promptly an appropriate amendment or supplement to such
Registration Statement or Prospectus, (1) in the case of clause
(A), correcting any such misstatement or omission, and (2) in the
case of clauses (A) and (B) use its best efforts to cause any
amendment to be declared effective and such Shelf Registration
Statement and the related Prospectus to become usable for their
intended purpose(s) as soon as practicable thereafter; provided
further notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligations to use its best efforts to
keep the Shelf Registration Statement continuously effective,
supplemented and amended shall be suspended in the event continued
effectiveness of the Shelf Registration Statement would, with the
advice of counsel to the Company, make it advisable for the Company
to disclose a material financing, acquisition or other corporate
transaction, and the Board of Directors shall have determined in
good faith that such disclosure is not in the best interests of the
Company, but in no event will any such suspension, individually or
in the aggregate, exceed ninety (90) days in any calendar year
(such suspensions being referred to herein as a "Shelf Suspension
Period");
(v) comply with the provisions of the Act with respect to the
disposition of all of the Transfer Restricted Securities covered by
such Shelf Registration Statement in accordance with the intended
methods of disposition by the Electing Holders provided for in such
Shelf Registration Statement;
(vi) provide (A) the Electing Holders, (B) the underwriters
(which term, for purposes of this Exchange and Registration Rights
Agreement, shall include a person deemed to be an underwriter
within the meaning of Section 2(11) of the Act), if any, thereof,
(C) any sales or placement agent therefor, (D) counsel for any such
underwriters or agents and (E) not more than one counsel for all
the Electing Holders the opportunity to participate in the
preparation of such Shelf Registration Statement, each Prospectus
included therein or filed with the Commission and each amendment or
supplement thereto;
(vii) for a reasonable period prior to the filing of such
Shelf Registration Statement, and throughout the period specified
in Section 2(b), make available at reasonable times at the
Company's principal place of business or such other reasonable
place for inspection by the persons referred to in Section 3(d)(vi)
who shall certify to the Company that they have a current intention
to sell the Transfer Restricted Securities pursuant to the Shelf
Registration such financial and other information and books and
records of the Company, and cause the officers, employees, counsel
and independent certified public accountants of the Company to
respond to such inquiries, as shall be reasonably necessary, in the
judgment of the respective counsel referred to in such Section, to
conduct a reasonable investigation within the meaning of Section 11
of the Act; provided, however, that each such party shall be
required to maintain in confidence and not to disclose to any other
person any information or records reasonably designated by the
Company as being confidential, until such time as (A) such informa-
tion becomes a matter of public record (whether by virtue of its
inclusion in such registration statement or otherwise), or (B) such
person shall be required so to disclose such information pursuant
to a subpoena or order of any court or other governmental agency or
body having jurisdiction over the matter (subject to the
requirements of such order, and only after such person shall have
given the Company prompt prior written notice of such requirement),
or (C) after the Effective Time and after having requested, in
writing, that the Company include such information in such Shelf
Registration Statement or an amendment or supplement thereto, and
such request has not been accepted by the Company within 15 days of
such request, such information, in the reasonable judgment of such
party pursuant to advice of counsel, is required to be set forth in
such Shelf Registration Statement or the Prospectus included
therein or in an amendment to such Shelf Registration Statement or
an amendment or supplement to such Prospectus in order that such
Shelf Registration Statement, Prospectus, amendment or supplement,
as the case may be, complies with applicable requirements of the
federal securities laws and the rules and regulations of the
Commission and does not contain an untrue statement of a material
fact or omit to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading
in light of the circumstances then existing;
(viii) promptly notify in writing each of the Electing
Holders, any sales or placement agent therefor and any underwriter
thereof (which notification may be made through any managing
underwriter that is a representative of such underwriter for such
purpose), (A) when such Shelf Registration Statement or the
Prospectus included therein or any Prospectus amendment or
supplement or post-effective amendment has been filed, and, with
respect to such Shelf Registration Statement or any post-effective
amendment, when the same has become effective, (B) of the issuance
by the Commission of any stop order suspending the effectiveness of
such Shelf Registration Statement or the initiation or threatening
of any proceedings for that purpose, (C) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Transfer Restricted Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose, or (D) (I) if at any time when a Prospectus is
required to be delivered under the Act, such Shelf Registration
Statement, Prospectus, Prospectus amendment or supplement or
post-effective amendment does not conform in all material respects
to the applicable requirements of the Act and the Trust Indenture
Act and the rules and regulations of the Commission thereunder or
contains an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circum-
stances then existing; or (II) the occurrence of a Shelf Suspension
Period;
(ix) subject to the provisos in (iv) above, use its best
efforts to obtain the withdrawal of any order suspending the effec-
tiveness of such registration statement or any post-effective
amendment thereto at the earliest practicable date;
(x) if requested by any managing underwriter or underwriters,
any placement or sales agent or any Electing Holder, promptly
incorporate in a Prospectus supplement or post-effective amendment
such information as is required by the applicable rules and regula-
tions of the Commission and as such managing underwriter or
underwriters, such agent or such Electing Holder specifies should
be included therein relating to the terms of the sale of such
Transfer Restricted Securities, including information with respect
to the principal amount of Transfer Restricted Securities being
sold by such Electing Holder or agent or to any underwriters, the
name and description of such Electing Holder, agent or underwriter,
the offering price of such Transfer Restricted Securities and any
discount, commission or other compensation payable in respect
thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of
the Transfer Restricted Securities to be sold by such Electing
Holder or agent or to such underwriters; and make all required
filings of such Prospectus supplement or post-effective amendment
promptly after notification of the matters to be incorporated in
such Prospectus supplement or post-effective amendment;
(xi) furnish to each Electing Holder, each placement or sales
agent, if any, therefor, each underwriter, if any, thereof and the
respective counsel referred to in Section 3(d)(vi) an executed copy
(or, in the case of an Electing Holder, a conformed copy) of such
Shelf Registration Statement, each such amendment and supplement
thereto (in each case including all exhibits thereto (in the case
of an Electing Holder of Transfer Restricted Securities, upon
request) and documents incorporated by reference therein) and such
number of copies of such Shelf Registration Statement (excluding
exhibits thereto and documents incorporated by reference therein
unless specifically so requested by such Electing Holder, agent or
underwriter, as the case may be) and of the Prospectus included in
such Shelf Registration Statement (including each preliminary
Prospectus and any summary Prospectus), in conformity in all
material respects with the applicable requirements of the Act and
the Trust Indenture Act and the rules and regulations of the
Commission thereunder, and such other documents, as such Electing
Holder, agent, if any, and underwriter, if any, may reasonably
request in order to facilitate the offering and disposition of the
Transfer Restricted Securities owned by such Electing Holder,
offered or sold by such agent or underwritten by such underwriter
and to permit such Electing Holder, agent and underwriter to
satisfy the Prospectus delivery requirements of the Act; and the
Company hereby consents, unless it has otherwise notified the
Electing Holder under Section 3(d)(iv) or (viii) hereof, to the use
of such Prospectus (including such preliminary and summary
Prospectus) and any amendment or supplement thereto by each such
Electing Holder and by any such agent and underwriter, in each case
in the form most recently provided to such person by the Company,
in connection with the offering and sale of the Transfer Restricted
Securities covered by the Prospectus (including such preliminary
and summary Prospectus) or any supplement or amendment thereto;
(xii) use its best efforts to (A) register or qualify the
Transfer Restricted Securities to be included in such Shelf
Registration Statement under such securities laws or blue sky laws
of such jurisdictions as any Electing Holder and each placement or
sales agent, if any, therefor and underwriter, if any, thereof
shall reasonably request, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit
the continuance of offers, sales and dealings therein in such
jurisdictions during the period the Shelf Registration is required
to remain effective under Section 2(b) above and for so long as may
be necessary to enable any such Electing Holder, agent or
underwriter to complete its distribution of Securities pursuant to
such Shelf Registration Statement and (C) take any and all other
actions as may be reasonably necessary or advisable to enable each
such Electing Holder, agent, if any, and underwriter, if any, to
consummate the disposition in such jurisdictions of such Transfer
Restricted Securities; provided, however, that the Company shall
not be required for any such purpose to (1) qualify as a foreign
corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section
3(d)(xii), (2) consent to general service of process in any such
jurisdiction or (3) make any changes to its certificate of
incorporation or by-laws or any agreement between it and its
stockholders;
(xiii) use its best efforts to obtain the consent or
approval of each governmental agency or authority, whether federal,
state or local, which may be required to effect the Shelf Registra-
tion or the offering or sale in connection therewith or to enable
the selling holder or holders to offer, or to consummate the
disposition of, their Transfer Restricted Securities;
(xiv) cooperate with the Electing Holders and the managing
underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted
Securities to be sold, which certificates shall be printed,
lithographed or engraved, or produced by any combination of such
methods, and which shall not bear any restrictive legends; and, in
the case of an underwritten offering, enable such Transfer
Restricted Securities to be in such denominations and registered in
such names as the managing underwriters may request at least two
business days prior to any sale of the Transfer Restricted
Securities;
(xv) provide a CUSIP number for all Transfer Restricted
Securities, not later than the applicable Effective Time;
(xvi) enter into one or more underwriting agreements,
engagement letters, agency agreements, "best efforts" underwriting
agreements or similar agreements, as appropriate, including
customary provisions relating to indemnification and contribution,
and take such other actions in connection therewith as any Electing
Holders aggregating at least 20% in aggregate principal amount of
the Transfer Restricted Securities at the time outstanding shall
reasonably request in order to expedite or facilitate the
disposition of such Transfer Restricted Securities;
(xvii) whether or not an agreement of the type referred to in
Section 3(d)(xvi) hereof is entered into and whether or not any
portion of the offering contemplated by the Shelf Registration is
an underwritten offering or is made through a placement or sales
agent or any other entity, (A) make such representations and
warranties to the Electing Holders and the placement or sales
agent, if any, therefor and the underwriters, if any, thereof in
form, substance and scope as are customarily made in connection
with an offering of debt securities pursuant to any appropriate
agreement or to a registration statement filed on the form
applicable to the Shelf Registration; (B) obtain an opinion of
counsel to the Company in customary form and covering such matters,
of the type customarily covered by such an opinion, as the managing
underwriters, if any, or as any Electing Holders of at least 20% in
aggregate principal amount of the Transfer Restricted Securities at
the time outstanding may reasonably request, addressed to such
Electing Holder or Electing Holders and the placement or sales
agent, if any, therefor and the underwriters, if any, thereof and
dated the effective date of such Shelf Registration Statement (and
if such Shelf Registration Statement contemplates an underwritten
offering of a part or all of the Transfer Restricted Securities,
dated the date of the closing under the underwriting agreement
relating thereto) (it being agreed that the matters to be covered
by such opinion shall include the due incorporation and good
standing of the Company and its subsidiaries; the qualification of
the Company and its subsidiaries to transact business as foreign
corporations; the due authorization, execution and delivery by the
Company of the relevant agreement of the type referred to in
Section 3(d)(xvi) hereof; the due authorization, execution,
authentication and issuance by the Company, and the validity and
enforceability, of the Securities; the absence of knowledge of such
counsel of material legal or governmental proceedings involving the
Company; the absence of governmental approvals required to be
obtained in connection with the Shelf Registration, the offering
and sale of the Transfer Restricted Securities, this Exchange and
Registration Rights Agreement or any agreement of the type referred
to in Section 3(d)(xvi) hereof, except such approvals as are
referenced in the Shelf Registration Statement or as may be
required under state securities or blue sky laws; the material
compliance as to form of such Shelf Registration Statement and any
documents incorporated by reference therein and of the Indenture
with the requirements of the Act and the Trust Indenture Act and
the rules and regulations of the Commission thereunder,
respectively; and the expression of the belief of such counsel as
to the absence of any facts having come to the attention of such
counsel that have caused them to believe that such Shelf
Registration Statement and the Prospectus included therein, as then
amended or supplemented, as of the date of the opinion and of the
Shelf Registration Statement or most recent post-effective
amendment thereto, as the case may be, and from the documents
incorporated by reference therein as of the dates of such documents
(in each case other than the financial statements, related notes,
related schedules and other financial data contained therein)
contained an untrue statement of a material fact or omitted to
state therein a material fact necessary to make the statements
therein in light of the circumstances under which they were made,
and in the case of the documents incorporated by reference, in the
light of the circumstances existing at the time that such documents
were filed with the Commission under the Exchange Act, not
misleading); (C) obtain a "comfort" letter or letters from the
independent certified public accountants of the Company addressed
to the selling Electing Holders, the placement or sales agent, if
any, therefor or the underwriters, if any, thereof, dated (i) the
effective date of such Shelf Registration Statement and (ii) the
effective date of any Prospectus supplement to the Prospectus
included in such Shelf Registration Statement or post-effective
amendment to such Shelf Registration Statement which includes
unaudited or audited financial statements as of a date or for a
period subsequent to that of the latest such statements included in
such Prospectus (and, if such Shelf Registration Statement
contemplates an underwritten offering pursuant to any Prospectus
supplement to the Prospectus included in such Shelf Registration
Statement or post-effective amendment to such Shelf Registration
Statement which includes unaudited or audited financial statements
as of a date or for a period subsequent to that of the latest such
statements included in such Prospectus, dated the date of the
closing under the underwriting agreement relating thereto), such
letter or letters to be in customary form and covering such matters
of the type customarily covered by letters of such type; (D)
deliver such documents and certificates, including officers'
certificates, as may be reasonably requested by any Electing
Holders of at least 20% in aggregate principal amount of the
Transfer Restricted Securities at the time outstanding or the
placement or sales agent, if any, therefor and the managing
underwriters, if any, thereof to evidence the accuracy of the
representations and warranties made pursuant to clause (A) above or
those contained in Section 5(a) hereof and the compliance with or
satisfaction of any agreements or conditions contained in the
underwriting agreement or other agreement entered into by the
Company; and (E) undertake such obligations relating to expense
reimbursement, indemnification and contribution as are provided in
Section 6 hereof;
(xviii) notify in writing each holder of Transfer Restricted
Securities of any proposal by the Company to amend or waive any
provision of this Exchange and Registration Rights Agreement pursu-
ant to Section 9(h) hereof and of any amendment or waiver effected
pursuant thereto, each of which notices shall contain the text of
the amendment or waiver proposed or effected, as the case may be;
(xix) in the event that any broker-dealer registered under
the Exchange Act shall underwrite any Transfer Restricted
Securities or participate as a member of an underwriting syndicate
or selling group or "assist in the distribution" (within the
meaning of the Rules of Fair Practice and the By-Laws of the
National Association of Securities Dealers, Inc. ("NASD") or any
successor thereto, as amended from time to time) thereof, whether
as a holder of such Transfer Restricted Securities or as an
underwriter, a placement or sales agent or a broker or dealer in
respect thereof, or otherwise, assist such broker-dealer in comply-
ing with the requirements of such Rules and By-Laws, including by
(A) if such Rules or By-Laws shall so require, engaging a
"qualified independent underwriter" (as defined in such Schedule
(or any successor thereto)) to participate in the preparation of
the Shelf Registration Statement relating to such Transfer
Restricted Securities, to exercise usual standards of due diligence
in respect thereto and, if any portion of the offering contemplated
by such Shelf Registration Statement is an underwritten offering or
is made through a placement or sales agent, to recommend the yield
of such Transfer Restricted Securities, (B) indemnifying any such
qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 6 hereof (or to
such other customary extent as may be requested by such
underwriter), and (C) providing such information to such
broker-dealer as may be required in order for such broker-dealer to
comply with the requirements of the Rules of Fair Practice of the
NASD; and
(xx) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as
soon as practicable but in any event not later than eighteen months
after the effective date of such Shelf Registration Statement, an
earning statement of the Company and its subsidiaries complying
with Section 11(a) of the Act (including, at the option of the
Company, Rule 158 thereunder).
(e) In the event that the Company would be required, pursuant to
Section 3(d)(viii)(D) above, to notify the Electing Holders, the
placement or sales agent, if any, therefor and the managing underwriters,
if any, thereof, the Company shall without unreasonable delay, subject to
Section 3(d)(iv), prepare and furnish to each of the Electing Holders, to
each placement or sales agent, if any, and to each such underwriter, if
any, a reasonable number of copies of a Prospectus supplemented or
amended so that, as thereafter delivered to purchasers of Transfer
Restricted Securities, such Prospectus shall conform in all material
respects to the applicable requirements of the Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder
and shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing. Each Electing Holder agrees that upon receipt of any notice
from the Company pursuant to Section 3(d)(viii)(D) hereof, such Electing
Holder shall forthwith discontinue the disposition of Transfer Restricted
Securities pursuant to the Shelf Registration Statement applicable to
such Transfer Restricted Securities until such Electing Holder shall have
received copies of such amended or supplemented Prospectus, and if so
directed by the Company, such Electing Holder shall deliver to the
Company (at the Company's expense) all copies, other than permanent file
copies, then in such Electing Holder's possession of the Prospectus
covering such Transfer Restricted Securities at the time of receipt of
such notice.
(f) In the event of a Shelf Registration, in addition to the
information required to be provided by each Electing Holder in its Notice
and Questionnaire, the Company may require such Electing Holder to
furnish to the Company such additional information regarding such
Electing Holder and such Electing Holder's intended method of
distribution of Transfer Restricted Securities as may be required in
order to comply with the Act. Each such Electing Holder agrees to notify
the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such Electing Holder to the Company
or of the occurrence of any event in either case as a result of which any
Prospectus relating to such Shelf Registration contains or would contain
an untrue statement of a material fact regarding such Electing Holder or
such Electing Holder's intended method of disposition of such Transfer
Restricted Securities or omits to state any material fact regarding such
Electing Holder or such Electing Holder's intended method of disposition
of such Transfer Restricted Securities required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly to furnish to the Company any
additional information required to correct and update any previously
furnished information or required so that such Prospectus shall not
contain, with respect to such Electing Holder or the disposition of such
Transfer Restricted Securities, an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the
circumstances then existing.
(g) Until the expiration of two years after the Closing Date, the
Company will not resell, and will use its best efforts to prevent any of
its Affiliates from reselling, any of the Securities that have been
reacquired by any of them except pursuant to an effective registration
statement under the Act.
(h) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each holder of Transfer
Restricted Securities shall furnish, upon the written request of the
Company, prior to the completion of the Exchange Offer, a written
representation to the Company, (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) to
the effect that (A) it is not an affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the
Exchange Securities to be issued in the Exchange Offer and (C) it is
acquiring the Exchange Securities in its ordinary course of business.
Each Holder hereby acknowledges and agrees that any Broker-Dealer and any
such holder using the Exchange Offer to participate in a distribution of
the securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and similar no-action letters,
and (2) must comply with the registration and prospectus delivery
requirements of the Act in connection with a secondary resale transaction
and that such a secondary resale transaction must be covered by an
effective registration statement (which may be the Exchange Offer
Registration Statement) containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K
if the resales are of Exchange Securities obtained by such Holder in
exchange for securities acquired by such holder directly from the Company
or an affiliate thereof.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly
all expenses incident to the Company's performance of or compliance with
this Exchange and Registration Rights Agreement, including (a) all
Commission and any NASD registration, filing and review fees and expenses
including fees and disbursements of counsel for the placement or sales
agent or underwriters in connection with such NASD registration, filing
and review, (b) all fees and expenses in connection with the qualifi-
cation of the Securities for offering and sale under the State securities
and blue sky laws referred to in Section 3(d)(xii) hereof and
determination of their eligibility for investment under the laws of such
jurisdictions as any managing underwriters or the Electing Holders may
designate, including any fees and disbursements of counsel for the
Electing Holders (subject to the limitations of Clause (i) below) or
underwriters in connection with such qualification and determination, (c)
all expenses relating to the preparation, printing, production,
distribution and reproduction of each registration statement required to
be filed hereunder, each Prospectus included therein or prepared for
distribution pursuant hereto, each amendment or supplement to the
foregoing, the expenses of preparing the Securities for delivery and the
expenses of printing or producing any underwriting agreements, agreements
among underwriters, selling agreements and blue sky or legal investment
memoranda and all other documents in connection with the offering, sale
or delivery of Securities to be disposed of (including certificates
representing the Securities), (d) messenger, telephone and delivery
expenses relating to the offering, sale or delivery of Securities and the
preparation of documents referred in clause (c) above, (e) fees and
expenses of the Trustee under the Indenture, any agent of the Trustee and
any counsel for the Trustee and of any collateral agent or custodian, (f)
internal expenses (including all salaries and expenses of the Company's
officers and employees performing legal or accounting duties), (g) fees,
disbursements and expenses of counsel and independent certified public
accountants of the Company (including the expenses of any opinions or
"comfort" letters required by or incident to such performance and
compliance), (h) fees, disbursements and expenses of any "qualified
independent underwriter" engaged pursuant to Section 3(d)(xix) hereof,
(i) fees, disbursements and expenses of one counsel for the Electing
Holders retained in connection with a Shelf Registration, as selected by
the Electing Holders of at least a majority in aggregate principal amount
of the Transfer Restricted Securities held by Electing Holders (which
counsel shall be reasonably satisfactory to the Company), (j) any fees
charged by securities rating services for rating the Securities, and (k)
fees, expenses and disbursements of any other persons, including special
experts, retained by the Company in connection with such registration
(collectively, the "Registration Expenses"). To the extent that any
Registration Expenses are incurred, assumed or paid by any holder of
Transfer Restricted Securities or any placement or sales agent therefor
or underwriter thereof, the Company shall reimburse such person for the
full amount of the Registration Expenses so incurred, assumed or paid
promptly after receipt of a request therefor. Notwithstanding the
foregoing, the holders of the Transfer Restricted Securities being
registered shall pay all agency fees and commissions and underwriting
discounts and commissions attributable to the sale of such Transfer
Restricted Securities and the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or
jointly), other than the counsel and experts specifically referred to
above.
5. Representations and Warranties.
The Company represents and warrants to, and agrees with, the
Initial Purchaser and each of the holders from time to time of Transfer
Restricted Securities that:
(a) Each registration statement covering Transfer Restricted
Securities and each Prospectus (including any preliminary or
summary Prospectus) contained therein or furnished pursuant to
Section 3(d) or Section 3(c) hereof and any further amendments or
supplements to any such registration statement or Prospectus, when
it becomes effective or is filed with the Commission, as the case
may be, and, in the case of an underwritten offering of Transfer
Restricted Securities, at the time of the closing under the
underwriting agreement relating thereto, will conform in all
material respects to the applicable requirements of the Act and the
Trust Indenture Act and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and at
all times subsequent to the Effective Time when a Prospectus would
be required to be delivered under the Act, other than from (i) such
time as a notice has been given to holders of Transfer Restricted
Securities pursuant to Section 3(d)(viii)(D) or
Section 3(c)(iii)(D) hereof until (ii) such time as the Company
furnishes an amended or supplemented Prospectus pursuant to Section
3(e) or Section 3(c)(iv) hereof, each such registration statement,
and each Prospectus (including any summary Prospectus) contained
therein or furnished pursuant to Section 3(d) or Section 3(c)
hereof, as then amended or supplemented, will conform in all
material respects to the applicable requirements of the Act and the
Trust Indenture Act and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the
light of the circumstances then existing; provided, however, that
this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a holder of
Transfer Restricted Securities expressly for use therein.
(b) Any documents incorporated by reference in any Prospectus
referred to in Section 5(a) hereof, when they become or became
effective or are or were filed with the Commission, as the case may
be, will conform or conformed in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and
none of such documents will at such time contain or contained an
untrue statement of a material fact or will omit or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a holder of
Transfer Restricted Securities expressly for use therein.
(c) The compliance by the Company with all of the provisions
of this Exchange and Registration Rights Agreement and the
consummation of the transactions herein contemplated will not con-
flict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any material indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any subsidiary of the Company is
a party or by which the Company or any subsidiary of the Company is
bound or to which any of the property or assets of the Company or
any subsidiary of the Company is subject, nor will such action
result in any violation of the provisions of the certificate of
incorporation, as amended, or the by-laws of the Company or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
any subsidiary of the Company or any of their properties; and no
consent, approval, authorization, order, registration or qualifica-
tion of or with any such court or governmental agency or body is
required for the consummation by the Company of the transactions
contemplated by this Exchange and Registration Rights Agreement,
except the registration under the Act of the Securities,
qualification of the Indenture under the Trust Indenture Act and
such consents, approvals, authorizations, registrations or
qualifications as may be required under State securities or blue
sky laws in connection with the offering and distribution of the
Securities.
(d) This Exchange and Registration Rights Agreement has been
duly authorized, executed and delivered by the Company.
6. Indemnification.
(a) Indemnification by the Company. The Company shall indemnify
and hold harmless each of the holders of Transfer Restricted Securities
included in an Exchange Offer Registration Statement, each of the
Electing Holders of Transfer Restricted Securities included in a Shelf
Registration Statement and each person who participates as a placement or
sales agent or as an underwriter in any offering or sale of such Transfer
Restricted Securities against any losses, claims, damages or liabilities,
joint or several, to which such holder, agent or underwriter may become
subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Exchange Offer Registration Statement or
Shelf Registration Statement, as the case may be, under which such
Transfer Restricted Securities were registered under the Act, or any
preliminary, final or summary Prospectus contained therein or furnished
by the Company to any such holder, Electing Holder, agent or underwriter,
or any amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and the Company shall, and it hereby agrees to, reimburse
such holder, such Electing Holder, such agent and such underwriter for
any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such action or claim as such expenses
are incurred; provided, however, that the Company shall not be liable to
any such person in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, or preliminary, final or summary Prospectus, or
amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by such person expressly for
use therein;
(b) Indemnification by the Holders and any Agents and Underwriters.
The Company may require, as a condition to including any Transfer
Restricted Securities in any registration statement filed pursuant to
Section 2(b) hereof and to entering into any underwriting agreement with
respect thereto, that the Company shall have received an undertaking
reasonably satisfactory to it from the Electing Holder of such Transfer
Restricted Securities and from each underwriter named in any such
underwriting agreement, severally and not jointly, to (i) indemnify and
hold harmless the Company, and all other holders of Transfer Restricted
Securities, against any losses, claims, damages or liabilities to which
the Company or such other holders of Transfer Restricted Securities may
become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in such registration statement, or any
preliminary, final or summary Prospectus contained therein or furnished
by the Company to any such Electing Holder, agent or underwriter, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company by such Electing Holder or
underwriter expressly for use therein, and (ii) reimburse the Company for
any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as
such expenses are incurred; provided, however, that no such Electing
Holder shall be required to undertake liability to any person under this
Section 6(b) for any amounts in excess of the dollar amount of the
proceeds to be received by such Electing Holder from the sale of such
Electing Holder's Transfer Restricted Securities pursuant to such
registration.
(c) Notices of Claims, Etc. Promptly after receipt by an
indemnified party under subsection (a) or (b) above of written notice of
the commencement of any action, such indemnified party shall, if a claim
in respect thereof is to be made against an indemnifying party pursuant
to the indemnification provisions of or contemplated by this Section 6,
notify such indemnifying party in writing of the commencement of such
action; but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to any indemnified party
other than under the indemnification provisions of or contemplated by
Section 6(a) or 6(b) hereof. In case any such action shall be brought
against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, such indemnifying party shall not be liable to such
indemnified party for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party,
in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such
action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of
any indemnified party.
(d) Contribution. If for any reason the indemnification provisions
contemplated by Section 6(a) or Section 6(b) are unavailable to or
insufficient to hold harmless an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact
relates to information supplied by such indemnifying party or by such
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 6(d) were determined
by pro rata allocation (even if the holders or any agents or underwriters
or all of them were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in this Section 6(d). The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages, or liabilities (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this Section 6(d), no holder shall be required to contribute any amount
in excess of the amount by which the dollar amount of the proceeds
received by such holder from the sale of any Transfer Restricted
Securities (after deducting any fees, discounts and commissions
applicable thereto) exceeds the amount of any damages which such holder
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, and no underwriter
shall be required to contribute any amount in excess of the amount by
which the total price at which the Transfer Restricted Securities
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The holders' and any underwriters'
obligations in this Section 6(d) to contribute shall be several in
proportion to the principal amount of Transfer Restricted Securities
registered or underwritten, as the case may be, by them and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each officer, director and
partner of each holder, agent and underwriter and each person, if any,
who controls any holder, agent or underwriter within the meaning of the
Act; and the obligations of the holders and any agents or underwriters
contemplated by this Section 6 shall be in addition to any liability
which the respective holder, agent or underwriter may otherwise have and
shall extend, upon the same terms and conditions, to each officer and
director of the Company (including any person who, with his consent, is
named in any registration statement as about to become a director of the
Company) and to each person, if any, who controls the Company within the
meaning of the Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Transfer Restricted
Securities covered by the Shelf Registration are to be sold pursuant to
an underwritten offering, the managing underwriter or underwriters
thereof shall be designated by Electing Holders holding at least a
majority in aggregate principal amount of the Transfer Restricted
Securities to be included in such offering, provided that such designated
managing underwriter or underwriters is or are reasonably acceptable to
the Company.
(b) Participation by Holders. Each holder of Transfer Restricted
Securities hereby agrees with each other such holder that no such holder
may participate in any underwritten offering hereunder unless such holder
(i) agrees to sell such holder's Transfer Restricted Securities on the
basis provided in any underwriting arrangements approved by the persons
entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwrit-
ing agreements and other documents reasonably required under the terms of
such underwriting arrangements.
8. Rule 144.
The Company covenants to the holders of Transfer Restricted
Securities that to the extent it shall be required to do so under the
Exchange Act, the Company shall timely file the reports required to be
filed by it under the Exchange Act or the Act (including the reports
under Section 13 and 15(d) of the Exchange Act referred to in
subparagraph (c)(1) of Rule 144 adopted by the Commission under the Act)
and the rules and regulations adopted by the Commission thereunder, and
shall take such further action as any holder of Transfer Restricted
Securities may reasonably request, all to the extent required from time
to time to enable such holder to sell Transfer Restricted Securities
without registration under the Act within the limitations of the
exemption provided by Rule 144 under the Act, as such Rule may be amended
from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commission. Upon the request of any holder of
Transfer Restricted Securities in connection with that holder's sale
pursuant to Rule 144, the Company shall deliver to such holder a written
statement as to whether it has complied with such requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents, warrants,
covenants and agrees that it has not granted, and shall not grant,
registration rights with respect to Transfer Restricted Securities or any
other securities which would be inconsistent with the terms contained in
this Exchange and Registration Rights Agreement.
(b) Specific Performance. The parties hereto acknowledge that
there would be no adequate remedy at law if the Company fails to perform
any of their respective obligations hereunder and that the Initial
Purchaser and the holders from time to time of the Transfer Restricted
Securities may be irreparably harmed by any such failure, and accordingly
agree that the Initial Purchaser and such holders, in addition to any
other remedy to which they may be entitled at law or in equity, shall be
entitled to compel specific performance of the respective obligations of
the Company under this Exchange and Registration Rights Agreement in
accordance with the terms and conditions of this Exchange and
Registration Rights Agreement, in any court of the United States or any
State thereof having jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers and
other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered by hand, if delivered personally or
by courier, or three days after being deposited in the mail (registered
or certified mail, postage prepaid, return receipt requested) as follows:
To the Company:
Exodus Communications, Inc.
2831 Mission College Boulevard
Santa Clara, California 95054
Attention: General Counsel
Phone: (408) 346-2200
Fax: (408) 346-2206
To the Initial Purchaser:
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Phone: (212) 902-1000
Fax: (212) 902-3000
To a holder:
to the address of such holder set forth in the security
register or other records of the Company, or to such
other address as the Company or any such holder may
have furnished to the other in writing in accordance
herewith, except that notices of change of address
shall be effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of this
Exchange and Registration Rights Agreement shall be binding upon, shall
inure to the benefit of and shall be enforceable by the parties hereto
and the holders from time to time of the Transfer Restricted Securities
and the respective successors and assigns of the parties hereto and such
holders. In the event that any transferee of any holder of Transfer
Restricted Securities shall acquire Transfer Restricted Securities, in
any manner, whether by gift, bequest, purchase, operation of law or
otherwise, such transferee shall, without any further writing or action
of any kind, be deemed a beneficiary hereof for all purposes and such
Transfer Restricted Securities shall be held subject to all of the terms
of this Exchange and Registration Rights Agreement, and by taking and
holding such Transfer Restricted Securities such transferee shall be
entitled to receive the benefits of, and be conclusively deemed to have
agreed to be bound by all of the applicable terms and provisions of this
Exchange and Registration Rights Agreement. If the Company shall so
request, any such successor, assign or transferee shall agree in writing
to acquire and hold the Transfer Restricted Securities subject to all of
the applicable terms hereof.
(e) Survival. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this
Exchange and Registration Rights Agreement or made pursuant hereto shall
remain in full force and effect regardless of any investigation (or
statement as to the results thereof) made by or on behalf of any holder
of Transfer Restricted Securities, any director, officer or partner of
such holder, any agent or underwriter or any director, officer or partner
thereof, or any controlling person of any of the foregoing, and shall
survive delivery of and payment for the Transfer Restricted Securities
pursuant to the Purchase Agreement and the transfer and registration of
Transfer Restricted Securities by such holder and the consummation of an
Exchange Offer.
(f) LAW GOVERNING. THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK.
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Exchange and Registration Rights Agreement are
inserted for convenience only, do not constitute a part of this Exchange
and Registration Rights Agreement and shall not affect in any way the
meaning or interpretation of this Exchange and Registration Rights
Agreement.
(h) Entire Agreement; Amendments. This Exchange and Registration
Rights Agreement and the other writings referred to herein (including the
Indenture and the form of Securities) or delivered pursuant hereto which
form a part hereof contain the entire understanding of the parties with
respect to its subject matter. This Exchange and Registration Rights
Agreement supersedes all prior agreements and understandings between the
parties with respect to its subject matter. This Exchange and Registrat-
ion Rights Agreement may be amended and the observance of any term of
this Exchange and Registration Rights Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively) only by a written instrument duly executed by the Company
and the holders of at least a majority in aggregate principal amount of
the Transfer Restricted Securities at the time outstanding. Each holder
of any Transfer Restricted Securities at the time or thereafter
outstanding shall be bound by any amendment or waiver effected pursuant
to this Section 9(h), whether or not any notice, writing or marking
indicating such amendment or waiver appears on such Transfer Restricted
Securities or is delivered to such holder.
(i) Counterparts. This agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original, but all
such respective counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date referred to above.
EXODUS COMMUNICATIONS, INC.
By: /s/ Richard S. Stoltz
Name:
Title:
INITIAL PURCHASER
GOLDMAN, SACHS & CO.
By: /s/ GOLDMAN, SACHS & CO.
Name:
Title:
<PAGE>
Exhibit A
EXODUS COMMUNICATIONS, INC.
INSTRUCTION TO DTC PARTICIPANTS
(Date of Mailing)
URGENT - IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE] /
The Depository Trust Company ("DTC") has identified you as a
DTC Participant through which beneficial interests in the Exodus
Communications, Inc. (the "Company") 11 1/4% Senior Notes due 2008 (the
"Securities") are held.
The Company is in the process of registering the Securities
under the Securities Act of 1933 for resale by the beneficial owners
thereof. In order to have their Securities included in the registration
statement, beneficial owners must complete and return the enclosed Notice
of Registration Statement and Selling Securityholder Questionnaire.
It is important that beneficial owners of the Securities
receive a copy of the enclosed materials as soon as possible as their
rights to have the Securities included in the registration statement
depend upon their returning the Notice and Questionnaire by [DEADLINE FOR
RESPONSE]. Please forward a copy of the enclosed documents to each
beneficial owner that holds interests in the Securities through you. If
you require more copies of the enclosed materials or have any questions
pertaining to this matter, please contact Exodus Communications, Inc.,
2650 San Tomas Expressway, Santa Clara, CA 95051, Attention: General
Counsel, (408) 346-2200.
Exodus Communications, Inc.
Notice of Registration Statement
and
Selling Securityholder Questionnaire
(Date)
Reference is hereby made to the Exchange and Registration
Rights Agreement (the "Exchange and Registration Rights Agreement")
between Exodus Communications, Inc. (the "Company") and the Initial
Purchaser named therein. Pursuant to the Exchange and Registration
Rights Agreement, the Company has filed with the United States Securities
and Exchange Commission (the "Commission") a registration statement on
Form [___] (the "Shelf Registration Statement") for the registration and
resale under Rule 415 of the Securities Act of 1933, as amended (the
"Act"), of the Company's 11 1/4% Senior Notes due 2008 (the "Securities").
A copy of the Exchange and Registration Rights Agreement is attached
hereto. All capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Exchange and Registration Rights
Agreement.
Each beneficial owner of Transfer Restricted Securities (as
defined below) is entitled to have the Transfer Restricted Securities
beneficially owned by it included in the Shelf Registration Statement.
In order to have Transfer Restricted Securities included in the Shelf
Registration Statement, this Notice of Registration Statement and Selling
Securityholder Questionnaire ("Notice and Questionnaire") must be
completed, executed and delivered to the Company's counsel at the address
set forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE].
Beneficial owners of Transfer Restricted Securities who do not complete,
execute and return this Notice and Questionnaire by such date (i) will
not be named as selling securityholders in the Shelf Registration
Statement and (ii) may not use the Prospectus forming a part thereof for
resales of Transfer Restricted Securities.
Certain legal consequences arise from being named as a
selling securityholder in the Shelf Registration Statement and related
Prospectus. Accordingly, holders and beneficial owners of Transfer
Restricted Securities are advised to consult their own securities law
counsel regarding the consequences of being named or not being named as a
selling securityholder in the Shelf Registration Statement and related
Prospectus.
The term "Transfer Restricted Securities" is defined in the
Exchange and Registration Rights Agreement.
ELECTION
The undersigned holder (the "Selling Securityholder") of
Transfer Restricted Securities hereby elects to include in the Shelf
Registration Statement the Transfer Restricted Securities beneficially
owned by it and listed below in Item (c). The undersigned, by signing
and returning this Notice and Questionnaire, agrees to be bound with
respect to such Transfer Restricted Securities by the terms and
conditions of this Notice and Questionnaire and the Exchange and
Registration Rights Agreement, including, without limitation, Section 6
of the Exchange and Registration Rights Agreement, as if the undersigned
Selling Securityholder were an original party thereto.
Upon any sale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, the Selling Securityholder will be
required to deliver to the Company and Trustee the Notice of Transfer set
forth in Appendix A to the Prospectus and as Exhibit B to the Exchange
and Registration Rights Agreement.
The Selling Securityholder hereby provides the following
information to the Company and represents and warrants that such
information is accurate and complete:
QUESTIONNAIRE
(a) Full Legal Name of Selling Securityholder:
(i) Full Legal Name of Registered Holder (if not the same as in
(a) above) of Transfer Restricted Securities Listed in Item
(c) below:
(ii) Full Legal Name of DTC Participant (if applicable and if not
the same as (a) above) Through Which Transfer Restricted
Securities Listed in Item (c) below are Held:
(b) Address for Notices to Selling Securityholder:
Telephone:
Fax:
Contact Person:
(c) Beneficial Ownership of Securities:
Except as set forth below in this Item (c), the undersigned does
not beneficially own any Securities.
(i) Principal amount of Transfer Restricted Securities
beneficially owned:
CUSIP No(s). of such Transfer Restricted Securities:
(ii) Principal amount of Securities other than Transfer Restricted
Securities beneficially owned:
CUSIP No(s). of such other Securities:
(iii) Principal amount of Transfer Restricted Securities which the
undersigned wishes to be included in the Shelf Registration
Statement:
CUSIP No(s). of such Transfer Restricted Securities to be
included in the Shelf Registration Statement:
(d) Beneficial Ownership of Other Securities of the Company:
Except as set forth below in this Item (d), the undersigned Selling
Securityholder is not the beneficial or registered owner of any other
securities of the Company, other than the Securities listed above in
Item (c).
State any exceptions here:
(e) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor
any of its affiliates, officers, directors or principal equity holders
(5% or more) has held any position or office or has had any other
material relationship with the Company (or its predecessors or
affiliates) during the past three years.
State any exceptions here:
(f) Plan of Distribution:
Except as set forth below, the undersigned Selling
Securityholder intends to distribute the Transfer Restricted Securities
listed above in Item (c) only as follows (if at all): Such Transfer
Restricted Securities may be sold from time to time directly by the
undersigned Selling Securityholder or, alternatively, through
underwriters, Broker-Dealers or agents. Such Transfer Restricted
Securities may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at varying prices
determined at the time of sale, or at negotiated prices. Such sales may
be effected in transactions (which may involve crosses or block
transactions) (i) on any national securities exchange or quotation
service on which the Transfer Restricted Securities may be listed or
quoted at the time of sale, (ii) in the over-the-counter market, (iii) in
transactions otherwise than on such exchanges or services or in the over-
the-counter market, or (iv) through the writing of options. In
connection with sales of the Transfer Restricted Securities or otherwise,
the Selling Securityholder may enter into hedging transactions with
Broker-Dealers, which may in turn engage in short sales of the Transfer
Restricted Securities in the course of hedging the positions they assume.
The Selling Securityholder may also sell Transfer Restricted Securities
short and deliver Transfer Restricted Securities to close out such short
positions, or loan or pledge Transfer Restricted Securities to Broker-
Dealers that in turn may sell such securities.
State any exceptions here:
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees that it will comply,
with the provisions of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the rules and regulations thereunder,
particularly Rule 10b-6.
In the event that the Selling Securityholder transfers all or any
portion of the Transfer Restricted Securities listed in Item (c) above
after the date on which such information is provided to the Company, the
Selling Securityholder agrees to notify the transferee(s) at the time of
the transfer of its rights and obligations under this Notice and
Questionnaire and the Exchange and Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the
disclosure of the information contained herein in its answers to
Items (a) through (f) above and the inclusion of such information in the
Shelf Registration Statement and related Prospectus. The Selling
Securityholder understands that such information will be relied upon by
the Company in connection with the preparation of the Shelf Registration
Statement and related Prospectus.
In accordance with the Selling Securityholder's obligation under
Section 3(d) and (f) of the Exchange and Registration Rights Agreement to
provide such information as may be required by law for inclusion in the
Shelf Registration Statement, the Selling Securityholder agrees to notify
the Company promptly of any inaccuracies or changes in the information
provided herein which may occur subsequent to the date hereof at any time
while the Shelf Registration Statement remains in effect. All notices
hereunder and pursuant to the Exchange and
Registration Rights Agreement shall be made in writing, by hand-delivery,
first-class mail, or air courier guaranteeing overnight delivery as
follows:
(i) To the Company:
Exodus Communications, Inc.
2650 San Tomas Expressway
Santa Clara, CA 95051
Attention: General Counsel
(408) 346-2200.
(ii) With a copy to:
Fenwick & West, LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Eileen Duffy Robinett
(650) 494-0600
Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by the Company's counsel, the terms of this
Notice and Questionnaire, and the representations and warranties
contained herein, shall be binding on, shall inure to the benefit of and
shall be enforceable by the respective successors, heirs, personal
representatives, and assigns of the Company and the Selling
Securityholder (with respect to the Transfer Restricted Securities
beneficially owned by such Selling Securityholder and listed in Item (c)
above). This Agreement shall be governed in all respects by the laws of
the State of New York.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either
in person or by its duly authorized agent.
Dated: ________________
Selling Securityholder
(Print/type full legal name of beneficial
owner of Transfer Restricted Securities)
By:
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR
RECEIPT ON OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Eileen Duffy Robinett
(650) 494-0600
<PAGE>
Exhibit B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
Chase Manhattan Bank and Trust Company,
National Association
Exodus Communications, Inc.
c/o Chase Manhattan Bank and Trust Company,
National Association
101 Barclay Street
Floor 21 West
New York, NY 10286
Attention: Trust Officer
Re: Exodus Communications, Inc. (the "Company")
11 1/4% Senior Notes due 2008
Ladies and Gentlemen:
Please be advised that _____________________ has transferred
$___________ aggregate principal amount of the above-referenced Notes
pursuant to an effective Registration Statement on Form [___] (File No.
333-____) filed by the Company.
We hereby certify that the prospectus delivery requirements,
if any, of the Securities Act of 1933, as amended, have been satisfied
and that the above-named beneficial owner of the Notes is named as a
"Selling Holder" in the Prospectus dated ___________, 199_ or in
supplements thereto, and that the aggregate principal amount of the Notes
transferred are the Notes listed in such Prospectus opposite such owner's
name.
Dated:
Very truly yours,
________________________
(Name)
By:________________________
(Authorized Signature)
/ Not less than 28 calendar days from date of mailing.
EXHIBIT 10.66
EXODUS COMMUNICATIONS, INC.
AS ISSUER
CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION
AS TRUSTEE
_________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of June 22, 1999
_________________
11 1/4 % Senior Notes due 2008
FIRST SUPPLEMENTAL INDENTURE, dated as of June 22, 1999 (the
"First Supplemental Indenture"), between Exodus Communications, Inc., a
Delaware corporation (the "Company") and Chase Manhattan Bank and Trust
Company, National Association, as Trustee (the "Trustee").
RECITALS
WHEREAS, the Company and the Trustee are parties to an Indenture,
dated as of July 1, 1998 (the "Indenture"), relating to the Company's
11-1/4% Senior Notes due 2008 (the "Securities").
WHEREAS, the Company desires to amend the Indenture to provide that
with respect to the Additional Securities being sold on the date hereof
the Regular Record Date for the Interest Payment Date on July 1, 1999
shall be June 22, 1999, and to make certain other conforming changes to
the form of the Security in connection with the issuance of the
Additional Securities;
WHEREAS, such amendment of the Indenture may be made without the
consent of any Holders in accordance with Section 901(5) of the
Indenture;
WHEREAS, all conditions and requirements necessary to make this
First Supplemental Indenture a valid, binding and legal instrument in
accordance with the terms of the Indenture have been performed and
fulfilled and the execution and delivery hereof have been in all respects
duly authorized.
WHEREAS, in accordance with the terms of the Indenture, the Company
has requested that the Trustee execute and deliver this First
Supplemental Indenture and has delivered to the Trustee a copy of a Board
Resolution authorizing the execution of this First Supplemental
Indenture.
NOW, THEREFORE, in consideration of the above premises, each party
agrees, for the benefit of the other and for the equal and ratable
benefit of the Holders of the Securities, as follows:
I. EFFECTIVENESS
1.1 Effectiveness of First Supplemental Indenture. This First
Supplemental Indenture will be effective as of June 22, 1999.
II. AMENDMENT
2.1 Definition of "Regular Record Date". The following amendment is
hereby made to Section 101 of the Indenture:
(a) the definition of "Regular Record Date" is replaced in its
entirety by the following:
"Regular Record Date" for the interest payable on any
Interest Payment Date means the June 15 or December 15
(whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date; provided that with
respect to the Additional Securities the Regular Record Date
for the Interest Payment Date on July 1, 1999 shall be
June 22, 1999.
2.2 Form of Face of Security. The following amendments are hereby made
to Section 202 of the Indenture:
(a) the following shall be added at the end of the second
sentence of the first paragraph of the body of the form of Security:
[IF THE SECURITY IS AN ADDITIONAL SECURITY, THEN INSERT
- -- ; provided that the Regular Record Date for the Interest
Payment Date on July 1, 1999 shall be June 22, 1999].
(b) the following shall be added in the eighth line of the first
sentence of the first paragraph of the body of the form of Security,
immediately prior to the word "on":
[IF THE SECURITY IS A GLOBAL ADDITIONAL SECURITY, THEN
INSERT IN LIEU OF THE PRECEDING BRACKETED TEXT -- , or such
other principal amount (which when taken together with the
principal amounts of all other Outstanding Additional
Securities, shall not exceed $75,000,000 in the aggregate at
any time) as may be set forth in the records of the Trustee
as referred to in accordance with the Indenture,].
III. MISCELLANEOUS PROVISIONS
3.1 Incorporation of Indenture. All the provisions of this First
Supplemental Indenture shall be deemed to be incorporated in, and made a
part of, the Indenture; and the Indenture, as supplemented and amended by
this First Supplemental Indenture, shall be read, taken and construed as
one and the same instrument.
3.2 Conflict with Trust Indenture Act. If any provision hereof limits,
qualifies or conflicts with another provision hereof which is required to
be included in this First Supplemental Indenture by any of the provisions
of the Trust Indenture Act, the required provision shall control.
3.3 Terms Defined. For all purposes of this First Supplemental
Indenture, except as otherwise defined herein, capitalized terms used in
this First Supplemental Indenture shall have the meanings ascribed to
such terms in the Indenture.
3.4 Indenture. Except as amended hereby, the Indenture and the
Securities are in all respects ratified and confirmed and all their terms
shall remain in full force and effect. From and after the effectiveness
of this First Supplemental Indenture, any reference to the Indenture or
the Securities shall mean the Indenture or the Securities, as the case
may be, as so amended by this First Supplemental Indenture.
3.5 Governing Law. The internal laws of the State of New York shall
govern this First Supplemental Indenture, without regard to the
principles of the conflicts of law thereof.
3.6 Successors. All agreements of the Company in this First
Supplemental Indenture and the Securities shall bind its successors and
assigns. This First Supplemental Indenture shall be binding upon each
Holder of Securities and their respective successors and assigns.
3.7 Multiple Counterparts. The parties may sign multiple counterparts
of this First Supplemental Indenture. Each signed counterpart shall be
deemed an original, but all of them together represent the same
agreement.
3.8 Trustee Disclaimer. The Trustee accepts the amendment of the
Indenture and the Securities effected by this First Supplemental
Indenture and agrees to execute the trust created by the Indenture as
hereby amended, but only upon the terms and conditions set forth in the
Indenture, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee, which terms and
provisions shall in like manner define and limit its liabilities and
responsibilities in the performance of the trust created by the Indenture
as hereby amended.
3.9 Separability Clause. In case any clause of this First Supplemental
Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IV. SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the date first
written above.
EXODUS COMMUNICATIONS, INC.
By: /s/ Richard S. Stoltz
----------------------------------
Name: Richard S. Stoltz
Title: Executive Vice President, Finance, Chief
Operating Officer and Chief Financial Officer
CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION
By: /s/ Cecil D. Bobey
----------------------------------
Name: Cecil D. Bobey
Title: Assistant Vice President
EXHIBIT 10.67
[FACE OF SECURITY]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON
WHOM THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (3) TO AN INSTITUTIONAL ACCREDITED INVESTOR (AS DEFINED IN
RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT)
IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (5)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND OTHER JURISDICTIONS.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN
WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS
SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON
OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
EXODUS COMMUNICATIONS, INC.
11 1/4% Senior Notes due 2008
CUSIP No. 302088AA7
No. __________ $________
Exodus Communications, Inc., a corporation duly organized and
existing under the laws of Delaware (herein called the "Issuer", which
term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promise to pay to
__________________, or registered assigns, the principal sum of
_____________________ Dollars (such amount the "principal amount" of this
Security), or such other principal amount (which, when taken together with
the principal amounts of all other Outstanding Securities, shall not
exceed $75,000,000 in the aggregate at any time) as may be set forth in
the records of the Trustee as referred to in accordance with the
Indenture, on July 1, 2008 and to pay interest thereon from June 22, 1999
or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, payable in arrears semi-annually on January 1
and July 1 in each year, commencing July 1, 1999 at the rate of 11 1/4% per
annum, until the principal hereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest, which shall be the June 15 or December 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date; provided that the Regular Record Date for the Interest Payment Date
on July 1, 1999 shall be June 22, 1999. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to
the Holder on the relevant Regular Record Date and may either be paid to
the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the Trustee
in accordance with Section 308 of the Indenture, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture. Interest on this
Security shall be computed on the basis set forth in the Indenture.
Payment of the principal of (and premium, if any) and any such
interest on this Security will be made at the office or agency of the
Issuer in the Borough of Manhattan, The City of New York, New York,
maintained for such purpose and at any other office or agency maintained
by the Issuer for such purpose, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the
Issuer payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register; provided further that all payments of the principal (and
premium, if any) and interest on Securities, the Holders of which hold
more than $5.0 million in principal amount and have given wire transfer
instructions to the Issuer or its agent at least 10 Business Days prior to
the applicable payment date, will be required to be made by wire transfer
of immediately available funds to the accounts specified by such Holders
in such instructions.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.
EXODUS COMMUNICATIONS, INC.
By: /s/ Ellen M. Hancock
Name: Ellen M. Hancock
Title: President and Chief Executive
Officer
Attest: /s/ Adam W. Wegner
Name: Adam W. Wegner
Title: Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: June 22, 1999
Chase Manhattan Bank and Trust Company,
National Association,
as Trustee
By: /s/ Cecil D. Bobey
Authorized Signatory
[REVERSE OF SECURITY]
This Security is one of a duly authorized issue of Securities of the
Issuer designated as its 11 1/4% Senior Notes due 2008 (herein called the
"Securities"), issued and to be issued under an Indenture, dated as of
July 1, 1998 (herein called the "Indenture", which term shall have the
meaning assigned to it in such instrument), among the Issuer and Chase
Manhattan Bank and Trust Company, National Association, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Issuer, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
Prior to or concurrently with the issuance of this Security, the
Issuer shall have deposited funds with the Escrow Agent in the Escrow
Account held by the Escrow Agent for the benefit of the holders in
accordance with an Escrow Agreement. The funds in the Escrow Account will
be sufficient to pay, when due, the first four semi-annual interest
payments on all Securities. The Escrow Agreement will provide, among
other things, that funds may be disbursed from the Escrow Account for
interest payments the Issuer makes on the Securities. The Escrow Agent
will be instructed to cause all funds in the Escrow Account to be
invested, pending disbursement, in U.S. Government Securities.
The Securities are subject to redemption, at the option of the
Issuer, in whole or in part, at any time on or after July 1, 2003 and
prior to maturity, upon not less than 30 nor more than 60 days' notice
mailed to each Holder of Securities to be redeemed at such Holder's
address appearing in the Security Register, in amounts of $1,000 or an
integral multiple of $1,000, at the following Redemption Prices (expressed
as percentages of the principal amount) plus accrued and unpaid interest
and Liquidated Damages, if any, to but excluding the Redemption Date
(subject to the right of Holders of record on the immediately preceding
Record Date to receive interest due on an Interest Payment Date that is on
or prior to the Redemption Date), if redeemed during the 12-month period
beginning July 1 of the years indicated below:
Redemption
Year Price
2003 ..................................... 105.625%
2004 ..................................... 103.750%
2005 ..................................... 101.875%
2006 and thereafter....................... 100.000%
In addition, at any time prior to July 1, 2001, the Issuer may
redeem up to 35% of the aggregate Outstanding principal amount of the
Securities with the Net Cash Proceeds of one or more sales of Capital
Stock (other than Disqualified Stock) at a Redemption Price equal to
111.25% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon and Liquidated Damages, if any, to the date of
redemption; provided that at least 65% of the original principal amount of
the Securities remains Outstanding immediately following such redemption.
In order to effect the foregoing redemption, the Issuer must mail a
notice of redemption no later than 45 days after the related sale of
Capital Stock and must consummate such redemption within 60 days of the
closing of the sale of Capital Stock.
The Securities do not have the benefit of any sinking fund
obligations.
In the event of redemption or purchase pursuant to an Offer to
Purchase of this Security in part only, a new Security or Securities for
the unredeemed or unpurchased portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, there may be
declared due and payable the principal amount of (together with accrued
and unpaid interest on) the Securities, in the manner and with the effect
provided in the Indenture.
The Holder of this Security (and any Person that has a beneficial
interest in this Security) is entitled to the benefits of an Exchange and
Registration Rights Agreement, dated as of July 1, 1998, and as the same
may be amended from time to time (the "Exchange and Registration Rights
Agreement"), executed by the Issuer. The Exchange and Registration Rights
Agreement provides that Liquidated Damages will be payable by the Issuer
on the Securities for specified periods if the Issuer does not comply with
certain of its obligations thereunder. Issuer agrees to pay Liquidated
Damages, if any, accruing on this Security.
The Indenture provides that, subject to certain conditions, if (i)
certain Net Cash Proceeds are available to the Issuer as a result of an
Asset Sale or (ii) a Change of Control occurs, the Issuer shall be
required to make an Offer to Purchase for all or a specified portion of
the Securities.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations
of the Issuer and the rights of the Holders of the Securities under the
Indenture at any time by the Issuer and the Trustee with the consent of
the Holders of a majority in aggregate principal amount of the Securities
at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal
amount of the Securities at the time Outstanding, on behalf of the Holders
of all the Securities, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture
and its consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any
proceeding with respect to the Indenture or for the appointment of a
receiver or trustee or for any other remedy thereunder, unless such Holder
shall have previously given the Trustee written notice of a continuing
Event of Default with respect to the Securities, the Holders of not less
than 25% in principal amount of the Securities at the time Outstanding
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee
reasonable indemnity and the Trustee shall not have received from the
Holders of a majority in principal amount of Securities at the time
Outstanding a direction inconsistent with such request and shall have
failed to institute any such proceeding for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to
certain suits described in the Indenture, including any suit instituted by
the Holder of this Security for the enforcement of any payment of
principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein (or, in the case of redemption, on
or after the Redemption Date or, in the case of any purchase of this
Security required to be made pursuant to an Offer to Purchase, on the
Purchase Date).
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and
rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Issuer in the Borough of
Manhattan, The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Issuer and the
Security Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Securities, of
authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the
Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
Interest on this Security shall be computed on the basis of a
360-day year of twelve 30-day months.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed
in accordance with the laws of the State of New York.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Issuer pursuant to Section 1015 or 1016 of the Indenture, check the
box:
[_]
If you want to elect to have only a part of this Security purchased
by the Issuer pursuant to Section 1015 or 1016 of the Indenture, state the
amount:
$_____________
Dated: Your Signature:
(Sign exactly as name appears on the other side of
this Security)
Signature Guarantee:
(Signature must be guaranteed by an eligible
Guarantor Institution (banks, stockbrokers,
savings and loan associations and credit
unions) with membership in an approved
signature medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15.)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S CONDENSED CONSOLIDATED BALANCE
SHEETS, CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS INCLUDED
IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDED JUNE 30,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 330,605
<SECURITIES> 0
<RECEIVABLES> 24,984
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 362,028
<PP&E> 166,214
<DEPRECIATION> 28,754
<TOTAL-ASSETS> 624,051
<CURRENT-LIABILITIES> 75,639
<BONDS> 525,375
0
0
<COMMON> 83
<OTHER-SE> (15,553)
<TOTAL-LIABILITY-AND-EQUITY> 624,051
<SALES> 72,586
<TOTAL-REVENUES> 72,586
<CGS> 62,706
<TOTAL-COSTS> 62,706
<OTHER-EXPENSES> 40,960
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,985
<INCOME-PRETAX> (43,065)
<INCOME-TAX> 0
<INCOME-CONTINUING> (43,065)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (43,065)
<EPS-BASIC> (0.53)
<EPS-DILUTED> (0.53)
</TABLE>
