New York-New York-7 Teleport Drive Lease - Telehouse International Corporation of America and Digital Island Inc.
EXECUTION
DIGITAL ISLAND, INCORPORATED
DATA CENTER SPACE LEASE - SITE K
and
CONFERENCE ROOMS 212B AND 213
December, 1998
TELEHOUSE International Corporation of America
7 Teleport Drive, Staten Island, New York 10311
1
<PAGE>
TABLE OF CONTENTS
DATA CENTER SPACE LEASE
ARTICLE 1
FUNDAMENTAL LEASE PROVISIONS
1.1 Fundamental Lease Provisions
1.2 Effect of Reference to a Fundamental Lease Provision
1.3 Definitions
1.4 Other Interpretive Provisions
ARTICLE 11
PREMISES AND LEASE TERM
2.1 Premises; Rentable Area Calculation
2.1.1 Demise of Premises
2.1.2 Determination of Rentable Area of the Premises
2.1.3 Appurtenant Facilities
2.2 Lease Term Commencement Date
2.3 Preparation of Premises
2.4 Failure to Deliver Possession
ARTICLE III
LIMITATIONS ON LANDLORD'S WORK-OWNERSHIP OF IMPROVEMENTS
3.1 Tenant Improvements
3.2 Ownership of Improvements
ARTICLE IV
RENTS
4.1 Rents
4.2 Payment of Rents
4.3 Payment of Base Rent
4.4 Intentionally Omitted
4.5 Intentionally Omitted
4.6 Late Charge
4.7 Payments Included in Rents
4.8 Government Rent Restrictions
4.9 Partial Payment
ARTICLE V
TAX AND OPERATING EXPENSE ADJUSTMENTS
5.1 Tax and Operating Expense Definitions
5.1.1 "Lease Year"
5.1.2. [Intentionally omitted.]
5.1.3 "Taxes"
5.1.4 [Intentionally omitted.]
5.1.5 "Building Operating Expenses"
5.1.6 Building Operating Expenses - Exclusions
5.1.7 Building Operating Expenses Adjustment
5.2 Payment of Taxes and Building Operating Expenses
5.2.1 Payment of Tenant's Share of Taxes
5.2.2 Payment of Tenant's Share of Building Operating Expenses
5.2.3 Tenant's Objection to Tax Statement or Operating Expense Statement
5.2.4 Arbitration
ARTICLE VI
SERVICES AND UTILITIES
2
<PAGE>
6.1 Electricity
6.1.1 Direct Supply
6.1.2 Additional Electrical Equipment
6.1.3 Landlord's Consent to Electrical Alterations
6.1.4 Requirements Applicable to Tenant
6.1.5 Provision of Emergency Power
6.2 Water
6.2.1 Provision of Water
6.2.2 Failure of Water Supply
6.3 Elevators and Cleaning
6.4 Heating and Air Conditioning
6.4.1 Heating
6.4.2 Air Conditioning.
6.4.3 Miscellaneous HVAC Provisions
6.4.4 Effect on HVAC of Changes in Premises
6.6 Service Interruption
6.6 Additional Tenant Use
6.7 Exculpation of Landlord for Utilities
6.8 Access
6.9 Communication Facilities
ARTICLE VII
INSURANCE
7.1 Property Insurance
7.2 Liability Insurance
7.3 Use of Premises
7.4 Waiver of Subrogation
7.4.1 Waiver Included in Policy
7.4.2 Landlord's Waiver
7.4.3 Tenants' Waiver
7.4.4 Limitation on Waiver
7.5 Policy Requirements
7.6 Premium Increase
ARTICLE VIII
ALTERATIONS
8.1 Conditions
8.1.1 Alterations by Tenant
8.1.2 Alterations by Landlord
8.2 Performance
8.3 Liens and Violations
8.3.1 Discharge of Liens and Violations
8.3.2 Tenants Right to Contest Liens
8.4 Labor Conditions
8.5 Port Authority's Fee
8.6 Improvement Fee
ARTICLE IX
LANDLORD'S AND TENANTS PROPERTY
9.1 Tenants Property
9.2 Fixtures
9.3 [Intentionally omitted]
9.4 Abandonment
9.5 Taxes on Tenant's Property and Non-Standard Tenant Improvements
9.5.1 Taxes on Tenant's Property
9.5.2 [Intentionally omitted]
3
<PAGE>
ARTICLE X
REPAIRS AND MAINTENANCE
10.1 Landlord's Obligations
10.2 Tenant's Obligations
10.3 Exculpation of Landlord for Repairs
10.4 Notice
ARTICLE XI
USE AND COMPLIANCE WITH LAW
11.1 Use
11.2 Licenses and Permits
11.3 Prohibited Uses
11.4 Compliance by Tenant
11.5 Service Contracts
11.6 Floor Load
11.7 Right of Repossession
11.8 Rules and Regulations
11.9 Labor Harmony
11.10 Landlord's and Port Authority's Consent
ARTICLE XII
RIGHTS OF LANDLORD
12.1 Conduits in Premises
12.2 Entry by Landlord
12.3 [intentionally omitted]
12.4 Exhibiting the Premises
12.5 [Intentionally omitted]
12.6 Building Name and Address
12.7 Alterations of Building
12.8 Security
12.9 Other Rights
ARTICLE XIII
DAMAGE OR DESTRUCTION
13.1 Restoration
13.2 Rent Abatement
13.3 [Intentionally omitted]
13.4 Election to Terminate
13.4.1 Landlord's Election to Terminate
13.4.2 Tenant's Election to Terminate
13.5 Business Interruption
13.6 Tenant's Property
13.7 Waiver
ARTICLE XIV
EMINENT DOMAIN
14.1 Complete Taking
14.2 Partial Taking
14.3 Award
14.4 Temporary Taking
ARTICLE XV
SURRENDER OF PREMISES
15.1 Surrender
15.2 Acceptance of Surrender
4
<PAGE>
15.3 No Merger
15.4 No Holding Over
ARTICLE XVI
EXCULPATION AND INDEMNIFICATION
16.1 Exculpation
16.2 Indemnity
16.3 Transfers of Landlord's Interest
16.4 Recourse Limited to Building
16.5 Responsibility for Infrastructure
ARTICLE XVII
SUBORDINATION AND ATTORNMENT
17.1 Subordination
17.2 Election to Subordinate
17.3 Notice and Cure of Landlord's Default
17.4 Attornment
17.5 Requirements of Superior Lessor or Mortgagee
17.6 Compliance With Ground Lease
17.6.1 Approval of Lease and Sublease By Port Authority
17.6.2 Compliance With Ground Lease
ARTICLE XVIII
QUIET ENJOYMENT
18.1 Quiet Enjoyment
ARTICLE XIX
ASSIGNMENTS AND SUBLEASES
19.1 [Intentionally omitted]
19.2 Prohibition
19.3 Corporate and Partnership Transactions
19.4 Notice to Landlord
19.5 [Intentionally omitted]
19.6 [Intentionally omitted]
19.7 [Intentionally omitted]
19.8 Consent by Landlord
19.9 Miscellaneous
19.9.1 General Terms
19.9.2 Tenant Remains Liable
19.9.3 Landlord's Consent Required
19.9.4 lndemnification of Landlord
19.9.5 General Sublease Provisions
19.9.6 Modification
19.10 [Intentionally omitted]
19.11 Additional Charges
19.12 Acceptance of Rent
19.13 Standards of Landlord's Consent
ARTICLE XX
ESTOPPEL CERTIFICATES
20.1 Estoppel Certificates
ARTICLE XXI
[INTENTIONALLY OMITTED]
ARTICLE XXII
5
<PAGE>
BROKER
22.1 Broker
24.10.4 Presumptions
24.10.5 Independent Covenants
24.10.6 Number and Gender
24.10.7 Exhibits
24.11 Joint and Several Liability
24.12 Submission of Lease
24.13 Notices From One Party to the Other
24.14 Partnership Tenant
24.15 Port Authority's Immunity
24.16 No Discrimination
EXHIBIT "A" Floor Plans
EXHIBIT "B" Special Site Fitout
EXHIBIT "C" TELEHOUSE Tenant Cleaning Specifications
EXHIBIT "D" Rules and Regulations
EXHIBIT "E" APPURTENANT FACILITIES
EXHIBIT "F" EXCESSIVE ELECTRICITY
EXHIBIT "Z" CONSENT AGREEMENT
6
<PAGE>
EXECUTION
THE TELEPORT
DATA CENTER SPACE LEASE
ARTICLE I
FUNDAMENTAL LEASE PROVISIONS
SECTION 1.1 FUNDAMENTAL LEASE PROVISIONS
DATE: December 01, 1998
LANDLORD: TELEHOUSE INTERNATIONAL CORPORATION OF
AMERICA, a Delaware corporation.
ADDRESS OF LANDLORD: 7 Teleport Drive
Staten Island, New York 10311 -1011
Attention: Sales & Marketing
Telephone: (718) 355-2500
Fax: (718) 355-2517
TENANT: Digital Island, Inc.
a Hawaiian corporation.
ADDRESS OF TENANT: 353 Sacramento Street
Suite 1520
San Francisco, CA 94111
Attn:
Telephone:
Fax:
PREMISES: Space consisting of portions
of the second floor in the
Building, which space is more
particularly known as Site K
and Conference Rooms 212B and
213 and is indicated by
shading on the floor plan
annexed hereto as Exhibit "A".
BUILDING: The data center and office
building and underlying land
known as TELEHOUSE CENTER and
located at 7 Teleport Drive in
the Teleport, in the Borough
of Staten Island, County of
Richmond, City and State of
New York, and all rights and
interests appurtenant thereto.
INITIAL BASE RENT: $271,116.00 per annum, for Site K, plus
$33,775.00 per
7
<PAGE>
annum for Conference Rooms.
INITIAL BUILDING OPERATING EXPENSE: $14.50 per square foot of Rentable Area
per annum applicable to Site K only.
TENANTS SHARE: 2.53 percent (2.53%)
LEASE TERM: The term of this Lease shall include the
lnitial Lease Term and any extension or
renewals thereof.
INITIAL LEASE TERM: A period of 3 years (unless terminated
earlier pursuant to any of the
provisions of this Lease or pursuant to
law), commencing as set forth in Section
2.2.
RECAPTURE PERCENTAGE: The Recapture Percentage shall be one
hundred percent (100%) unless a
different percentage is specified as
follows: fifty percent (50% ).
FIXED COMMENCEMENT DATE*: December 01, 1998
*Do Not Fill In This Date If An Outside Commencement Date Is Specified Below.
OUTSIDE COMMENCEMENT DATE**: The Outside Commencement Date is ___
days after the date of this Lease.
**Do Not Fill in This Date If A Scheduled Commencement Date Is Specified Above.
RENT COMMENCEMENT DATE: Payment of Base Rent commences on the
Fixed Commencement Date.
RENTABLE AREA: Site K: 3,813 square feet (2,040 usable
square feet). Conference Room: 1,803
square feet (965 usable square feet).
TENANT'S BUSINESS: Communication related services.
TENANTS BROKER: None
ADDRESS OF TENANTS BROKER: Not applicable.
SECTION 1.2 EFFECT OF REFERENCE TO A FUNDAMENTAL LEASE PROVISION. Each reference
in this Lease to any of the Fundamental Lease Provisions contained in Section
1.1 shall be construed to incorporate all of the terms provided under each such
Fundamental Lease Provision.
SECTION 1.3 DEFINITIONS. Whenever used in this Lease, the following terms
shall have the indicated meanings:
Additional Rent: As defined in Section 4.1.
Alterations: As defined in Section 8.1.
8
<PAGE>
Appurtenant Facilities: As defined in Exhibit E.
Base Rent: As defined in Section 4. 1.
Building: As defined in Section 1.1.
Building Operating Expenses: As defined in Section 5.1.5.
Business Hours: As defined in Section 6.3.
Conditional Limitation: As defined in Section 23.1.
Commencement Date: As defined in Section 2.2.
Critical Power: As defined in Section 6.1.5.
Date of the Taking: As defined in Section 14.1.
Deficiency: As defined in Section 23.3.3.
Eminent Domain: As defined in Section 14.1.
Essential Power: As defined in Section 6.1.5.
Expiration Date: As defined in Section 2.2.
Force Majeure: As defined in Section 24.5.
Fundamental Lease Provisions: Those terms and provisions set forth in Section
1.1.
Ground Lease: That certain Agreement dated as of August 9, 1988 by and between
the Port Authority as landlord and Landlord as tenant.
Improvements: As defined in Section 3.2.
Improvement Fee: As defined in Section 8.5.
Infrastructure: Roadways, walkways, landscaping, driveways and other areas
located within the Teleport and used in common by tenants and subtenants of the
Teleport.
Initial Base Rent: As defined in Section 1.1.
Interest Rate: As defined in Section 4.6.
Initial Tenant's Share of Building Operating Expenses: As defined in Section
1.1.
Labor Conditions: As defined in Section 8.4.
Landlord: The party named as "Landlord" in Section 1.1 until a sale, transfer or
lease by it and thereafter the Person or Persons who shall, at any given time,
be liable for the obligations of Landlord under the provisions of this Lease, as
more fully described in Section 16.3.
Landlord's Sublease: As defined in Section 19.7.1.
9
<PAGE>
Law: The terms "law," "laws," "provisions of law," and words of similar import
shall mean present and future laws, statutes, ordinances, building and fire
codes, rules, regulations, requirements, judgments, rulings, decrees, executive,
judicial and other orders and directives of any or all of the federal, state,
county and city governments and all agencies, authorities, bureaus, commissions,
courts, departments, subdivisions, or offices thereof, and of any other
governmental, public or quasipublic authorities (including the board of fire
underwriters or other insurance body) having jurisdiction over the Building, and
the direction of any public officer pursuant to law, whether now or hereafter in
force. References to specific statutes include successor statutes of similar
purpose and import.
Lease Term: As defined in Section 1.1.
Lease Year: As defined in Section 5.1.1.
Mortgage: The term "mortgage" shall include a mortgage or a deed of trust, and
the term "holder of a mortgage" or "mortgagee" or words of similar import shall
include a mortgagee of a m mortgage or a beneficiary of a deed of trust.
Offer: As defined in Section 19.4.
Operating Expense Payment: As defined in Section 5.2.2.
Operating Expense Statement: As defined in Section 5.2.2.
Partial Lease Year: As defined in Section 5.1.1.
Partnership Tenant: As defined in Section 24.14.
Permitted Use: Data processing and data, video and voice communications in
connection with Tenant's Business, office space and incidental and usual
activities compatible therewith, and for no other purpose whatsoever.
Person: A natural person, firm, association, corporation, partnership, joint
venture, trust or other entity, as the case may be.
Port authority: The Port Authority of New York and New Jersey, a body corporate
and politic created by compact between the States of New York and New Jersey
with the consent of the Congress of the United States of America.
Premises: As defined in Section 1.1.
Recapture Percentage: As defined in Section 1.1.
Rents: As defined in Section 4. 1.
Rent Commencement Date: As defined in Section 1.1.
Rentable Area: As defined in Section 1.1.
Repossession Date: As defined in Section 11.7.
Rules and Regulations: As defined in Section 11.8.
Sublet Portion: As defined in Section 19.7.
Substantially Complete or Substantial Comp ID Completion: As defined in Section
2.3.2.
Substantial Completion Date: The date on which the Premises are Substantially
Complete as defined in Section 2.3.
10
<PAGE>
Substitute Premises: As defined in Section 21.1.
Successor Landlord: As defined in Section 17.4.
Superior Interest Holder. As defined in Section 17.1.
Superior Lease: As defined in Section 17. 1.
Superior Lessor: As defined in Section 17.1.
Superior Mortgage: As defined in Section 17.1.
Superior Mortgagee: As defined in Section 17.1.
Taxes: As defined in Section 5.1.3.
Tax Payment: As defined in Section 5.2. 1. 1.
Tax Statement: As defined in Section 5.2.1.1.
TELEHOUSE Complex: The Building together with any other data centers and office
buildings owned or operated by Landlord and the underlying land located adjacent
to the Building in the Teleport.
Teleport: The telecommunications facility and related office park developed by
the Port Authority within a portion of the Staten Island Industrial Park in the
Borough of Staten Island, County of Richmond, City and State of New York, of
which the TELEHOUSE Complex is a part.
Tenant Improvements: As defined in the Exhibit B, Special Site Fitout.
Tenant's Broker: As defined in Section 1.1.
Tenants Business: As defined in Section 1.1.
Tenant Expenses: As defined in Section 19.11.
Tenant's Property: As defined in Section 9.2.
Tenant's Share: As defined in Section 1.1.
Tenant's Work: As defined in the Exhibit B, Special Site Fitout.
UPS System: As defined in Section 6.1.6.
Useable Area: The floor area of space in the Building in which Tenant
Improvements have been or will be constructed.
SECTION 1.4 OTHER INTERPRETIVE PROVISIONS. References to "Articles" and
"Sections" shall be to Articles and Sections respectively, of this Lease unless
otherwise specifically provided. Any of the terms defined in Sections 1.1 and
1.3 may, unless the content otherwise requires, be used in the singular or the
plural depending on the. reference. References to agreements and other
contractual instruments shall be deemed to include all subsequent amendments and
other modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of this Lease. The term
"including" shall mean "including, but not limited to," except where the context
requires otherwise. Where either Landlord or Tenant is obligated to perform some
duty, such obligation shall be at the sole cost and expense of the party so
obligated, unless otherwise provided herein.
11
<PAGE>
Whenever it is provided in this Lease that a party's consent or approval shall
not unreasonably be withheld, such consent or approval shall also not
unreasonably be conditioned or delayed.
ARTICLE II
PREMISES AND LEASE TERM
SECTION 2.1 PREMISES; RENTABLE AREA CALCULATION.
2.1.1 Demise of Premises. Landlord hereby leases to Tenant and Tenant
hereby hires from Landlord the Premises, pursuant to the provisions of this
Lease, together with the nonexclusive right, together with all other lessees and
occupants of the Building, to use common areas of the Building (including the
Appurtenant Facilities pursuant to Section 2.1.3 hereof) and the Infrastructure,
subject to the provisions of this Lease and Landlord's Rules and Regulations
(annexed hereto as Exhibit "D" and the rules and regulations of the Port
Authority (Ground Lease, Exhibit R).
2.1.2 Determination of Rentable Area of the Premises. If the Rentable
Area of the Premises is reduced in size pursuant to Section 11.7 or as a result
of a partial taking in Eminent Domain, all amounts, sums and/or percentages
based upon the Rentable Area of the Premises (including amounts, sums and/or
percentages based upon the useable area of the Premises), including without
limitation, amounts, sums and/or percentages set forth in Sections 1.1 and 4.5
and in any Rider hereto, shall be adjusted by multiplying said amounts, sums
and/or percentages by a fraction, the numerator of which shall be the number of
square feet of Rentable Area (or useable area depending on the manner in which
the percentage is calculated) contained in the Promises, as so determined, and
the denominator of which shall be the number of square feet of Rentable Area set
forth in Section 1.1 (or in the number of square feet of useable area contained
in the Premises on the date of this Lease). After the Rentable Area of the
Premises has been determined as provided herein, the parties shall execute an
addendum to this Lease setting forth the Rentable Area of the Premises, and the
amounts, sums and/or percentages based thereon and adjusted as set forth above.
The failure of either party to execute such addendum shall not affect the
validity or enforceability of this Lease. The number of square feet of Rentable
Area contained in the Premises, as set forth in this Lease, shall for all
purposes of this Lease conclusively be deemed to be the Rentable Area of the
Premises as of the date of this Lease, and Landlord and Tenant shall be
responsible for performance of all obligations based upon or calculated from the
Rentable Area of the Premises, as so determined, notwithstanding any subsequent
remeasurement of the Premises as they exist on the date of this Lease.
2.1.3 Appurtenant Facilities. In addition to the Premises, Tenant shall
have the right in common with all other lessees and occupants of the Building to
use the Appurtenant Facilities located in the Building as described in Exhibit E
annexed hereto, subject to payment by Tenant as Additional Rent of Landlord's
standard charge for such use.
SECTION 2.2 LEASE TERM: Commencement Date. The "Lease Term" (a) shall commence
on the Fixed Commencement Date.
SECTION 2.3 PREPARATION OF PROMISES. Landlord has provided the Site K position
of the premises with Landlord's standard site buildout including:
- raised floor, drop ceiling, site painting
- lighting
- Critical Power, Essential Power and non
- essential power feederinstallation
- Demising walls
- Halon and pre-action sprinkler fire protection installation and
testing
- Computer room air conditioning (two 25 ton units).
- Connection to centralized building monitoring and security system
- Site preparation coordination
- Governmental approvals and scheduling
- 125 Kva Computer Power Center (CPC)
12
<PAGE>
The conference Room position of the premises is provided on an "as is" basis. In
addition, Landlord will perform certain other site fitout work according to the
requirements of the Special Site Fitout Work annexed hereto as Exhibit "B". Such
additional work will be completed on or about January 31, 1999 ("Substantial
Completion Date"), however will not impact the Commencement Date.
SECTION 2.4 FAILURE TO DELIVER POSSESSION. Except to the extent specifically
provided for in this Article, Tenant waives any right to rescind this Lease
under Section 223-a of the New York Real Property Law and further waives the
right to recover any damages that may result from Landlord's failure to deliver
possession of a portion of the Premises on the Fixed Commencement Date. If
Landlord shall be unable to give possession of a portion of the Premises, known
as Site K, on the Fixed Commencement Date, and provided Tenant is not solely
responsible for such inability to give possession, Tenant's obligation to pay
Base Rent and Tenant's Share of Taxes and Building Operating Expenses and all
other additional rent shall, on a prorated basis, not commence until possession
of the Premises is given or are available for occupancy by Tenant, and no such
failure to give possession on such date shall in any way affect the validity of
this Lease or the obligations of Tenant hereunder or give rise to any claim for
damages by Tenant or claim for rescission of this Lease, nor shall the same be
construed to extend the Lease Term.
ARTICLE III
LIMITATIONS ON LANDLORD'S WORK; OWNERSHIP OF IMPROVEMENTS
SECTION 3.1 TENANT IMPROVEMENTS. Landlord has agreed to the preparation
of the Premises in accordance with the provisions of Article III of this Lease
and Exhibit "B'", Special Site Fitout, and Landlord shall not be further
obligated to prepare, after or improve the Premises.
SECTION 3.2 OWNERSHIP OF IMPROVEMENTS. All installations, alterations,
additions, substitutions, replacements, betterments or improvements, including
Tenant Improvements ("Improvements") upon the Premises, made by either party,
including pipes, ducts, conduits, wiring, paneling, non-mobile partitions and
railings, shall become the property of Landlord and shall remain upon and be
surrendered with the Premises as a part thereof; provided, however, that
Landlord may elect to have Tenant remove any Improvements, such election to be
exercised at the time of consent for such improvements is .given by Landlord.
Notwithstanding the foregoing, improvements (i) which are standard and customary
installations for data processing and communications occupancy may be left in
place by Tenant at the expiration or sooner termination of the term of this
Lease, (ii) movable office furniture and equipment and mobile partitions, which
have been heretofore installed or which are hereafter installed by Tenant at its
expense, shall at ail times remain Tenant's Property and may be removed at any
time, subject to the provisions of Section 9.2 and (iii) which have been
completed as of the above date in accordance with provisions of Section 3.1 and
Exhibit "B" need not be removed by Tenant because Landlord did not elect to
require such removal at the time Landlord consented to the improvements.
ARTICLE IV
RENTS
SECTION 4.1 RENTS. Commencing on the Rent Commencement Date and
thereafter-during the Lease Term, Tenant shall pay to Landlord the following
rents for the Premises (collectively, the "Rents"): (a) a base rent per annum
(the "Base Rent") In an amount equal to the Initial Base Rent, and (b)
additional charges ("Additional Rent") consisting of all other sums of money
payable by Tenant under the provisions of this Lease.
SECTION 4.2 PAYMENT OF RENTS. Tenant shall pay the Rents when due, without
notice or demand, and without any abatement, deduction or setoff, except for
abatements expressly provided for elsewhere in this Lease. Tenant shall pay the
Rents to Landlord, or as Landlord may otherwise designate, in lawful money of
the United States, at the Address of Landlord or at such other place as Landlord
may designate.
13
<PAGE>
SECTION 4.3 PAYMENT OF BASE RENT. Tenant shall pay the annual Base Rent in equal
monthly installments in advance on the first day of each calendar month included
in the Lease Term. The first installment of Base Rent shall be paid on the Rent
Commencement Date.
SECTION 4.4 [Intentionally Omitted]
SECTION 4.5 [Intentionally Omitted]
SECTION 4.6 LATE CHARGE. If Landlord does not receive payment of Base Rent or
Additional Rent within ten (10) days after notice of failure to receive such
Base Rent or Additional Rent payment, Tenant shall pay Landlord a late charge of
One Hundred Dollars ($100.00) per such occurrence.
SECTION 4.7 PAYMENTS INCLUDED IN RENTS. All payments to be made hereunder by
Tenant to Landlord, including Base Rent, shall be included in the term "Rents"
whenever used in this Lease. All such payments, other than Base Rent, shall be
deemed to be Additional Rent hereunder, whether or not designated as such and,
unless another time shall be herein expressly provided for the payment thereof,
shall be due and payable within thirty (30) days after demand and Landlord shall
have the same remedies for failure to pay the Additional Rent as for non-payment
of Base Rent.
SECTION 4.8 GOVERNMENT RENT RESTRICTIONS. If the amount of the Rents payable
under this Lease exceeds that allowed by the terms of any valid government
restriction which limits the amount of rent or other charges that a commercial
lessor may charge or collect, the amount of Rents payable under this Lease shall
be the maximum permitted by such government restriction for the period of time
during which such restriction remains in effect. However, all increases in Rents
provided for in this Lease shall, to the extent permitted by law, be calculated
upon the amount of the Rents that would have been payable in the absence of the
government restriction, and, effective as of the expiration of the government
restriction, the Rents payable hereunder shall be increased to the amount that
would have prevailed had the government restriction never been in effect.
Moreover, to the fullest extent permitted by law, on the first due date for an
installment of Base Rent following expiration of the government restriction,
Tenant shall pay to Landlord, as Additional Rent, an amount equal to the
difference between the amount of Rents which Tenant would have paid if the
government restriction had not been in force and the amount of Rents actually
paid by Tenant during the period in which the government restriction remained in
effect.
SECTION 4.9 PARTIAL PAYMENT. If Tenant pays a lesser amount than the correct
amount of Rents due, such payment shall be deemed to be a payment on account. No
endorsement or statement on any check or any letter accompanying any check or
payment may tie deemed to be an accord and satisfaction, but Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance, treat such partial payment as a default or pursue any other available
remedy.
ARTICLE V
TAX AND OPERATING EXPENSE ADJUSTMENTS
SECTION 5.1 TAX AND OPERATING EXPENSE DEFINITIONS.
5.1.1 "Lease Year" means a period of twelve (12) consecutive full
calendar months, the first full Lease Year to commence on the July 1 immediately
following the Commencement Date (or on the Commencement Date if the Commencement
Date is July 1), with each succeeding Lease Year commencing on the anniversary
date of such first Lease Year. Any portion of the Lease Term which is less than
a full Lease Year, that is, from the Commencement Date (if other than July 1)
through the following June 30 and from the last July 1 falling within the Lease
Term to the end of the Lease Term (if the Lease Term does not end on June 30),
shall be deemed a "Partial Lease Year". Any reference in this Lease to a Lease
Year shall, unless the context clearly indicates otherwise, be deemed to be a
reference to a Partial Lease Year if the period in question involves a Partial
Lease Year.
5.1.2 [intentionally omitted.]
14
<PAGE>
5.1.3 "Taxes" includes the aggregate amount of all real estate taxes,
general or specific assessments and other governmental impositions, duties,
charges and levies of every kind, character and nature whatsoever, extraordinary
as well as ordinary, foreseen and unforeseen (including payments in lieu of
taxes imposed on Landlord because the Teleport is owned by a public authority),
and each and every installment thereof, which shall during the Lease Term, be
levied, assessed, imposed, become due and payable, or liens upon, or arise in
connection with the use, occupancy or possession of, the TELEHOUSE Complex, the
Building or the Premises (including any expenses incurred by Landlord (including
attorneys' reasonable fees and disbursements, payments to appraisers and fees to
experts and other witnesses) in contesting any of the foregoing or contesting
the assessed valuation of the TELEHOUSE Complex), and shall include (i)
assessments made with respect to any "air" and "development" rights affecting
the TELEHOUSE Complex, and (ii) any fee, tax or charge imposed by any
governmental authority for any vaults, vault space or other properties within or
outside the boundaries of the land underlying the TELEHOUSE Complex, but
excluding, however, all penalties and interest thereon and also excluding any
water charges, sewer rental, utility taxes and any other costs included in the
term "Building Operating Expenses". Nothing in the preceding sentence shall be
construed to include as Taxes any inheritance, estate, succession, transfer,
gift, gain, franchise, corporation, income or profit tax or capital levy that is
imposed upon Landlord. However, if at any time during the Lease Term the methods
of taxation prevailing on the date hereof shall be altered so that in lieu of or
as a substitute for the whole or any part of the Taxes now levied, assessed or
imposed on real estate or upon Landlord with respect to the TELEHOUSE Complex,
the Building, or the Promises, there shall be levied, assessed or imposed any
other tax, fee, charge, Imposition or assessment, however denominated including,
(a) a tax on the rents received from Such real estate, or (b) a license fee
measured by the rents receivable by Landlord from the TELEHOUSE Complex or the
Building or the Premises, or (c) a tax or license fee imposed upon Landlord
which is otherwise measured by or based in whole or in part upon the TELEHOUSE
Complex, the Building or the Premises, or (d) a payment in lieu of taxes, then
the same, computed as if the amount of such tax or fee so payable were that due
if the TELEHOUSE Complex, the Building or the Premises were the only property of
Landlord subject thereto, shall be included in Taxes. Provided, that the Taxes
imposed on the TELEHOUSE Complex shall be equitably allocated among all of the
buildings (including the Building) within the TELEHOUSE Complex.
5.1.4 [intentionally omitted.]
5.1.5 "Building Operating Expenses" means the aggregate of all costs,
expenses and disbursements of every kind and nature paid or incurred by or on
behalf of Landlord or its agent or any contractor employed by Landlord with
respect to the operation, repair, cleaning, maintenance, management and security
of the Building and the TELEHOUSE Complex, provided that Building Operating
Expenses incurred in connection with the operation, repair, cleaning,
maintenance, management and security of the TELEHOUSE Complex shall be allocated
among all of the buildings (including the Building) located within the
TELEHOUSE- Complex on an equitable basis as determined by Landlord in its
reasonable discretion according to generally acceptable accounting principles.
Without in any way limiting the generality of the foregoing, Building Operating
Expenses shall include the following:
(i) salaries, wages, bonuses, fringe benefits and the cost of any
pension or retirement plan or of any life or disability or other benefits
with respect to the employees of Landlord engaged in the operation, repair,
cleaning, maintenance, management and security of the Building at or below
the grade of director of operations; provided that if any such employees of
Landlord provide services for more than one building of Landlord, then a
prorated portion of their wages, benefits and taxes shall be included in
Building Operating Expenses, based on the portion of their working time
devoted to the Building;
(ii) social security, unemployment and other payroll taxes;
(iii) electricity for use in common areas; gas, steam or other fuel;
operation of elevators and security systems; heating, cooling, air
conditioning and ventilating in common areas; hot and cold water, sewer and
other utilities; utility taxes, water rates and charges and sewer rental;
(iv) cleaning (including windows), painting, trash removal, security
and other services and replacement of tubes, bulbs, lamps and ballasts
required for building standard lighting;
15
<PAGE>
(v) the cost of all appropriate insurance including Workers
Compensation, property, casualty, rental or business interruption,
liability and fidelity insurance and insurance consultants;
(vi) repairs and maintenance of the TELEHOUSE Complex and the
Building and its systems;
(vii) landscaping;
(viii) building and cleaning goods and supplies;
(ix) the cost of, or rental charges (including interest
charges paid by Landlord) for, machinery, equipment, tools, maintenance
facilities or systems used in the operation, repair, cleaning,
maintenance, management and security of the Building, and any sales and
other taxes thereon;
(x) uniforms and dry cleaning;
(xi) management fees, or if no management fee is being
charged, an amount not in excess of the amount which would be paid for
managing a similar data center,
(xii) service agreements on equipment and service contracts and
charges of independent contractors;
(xiii) telephone, telegraph, fax (or other telecommunication)
costs incurred by Landlord in the management and operation of the
Building and stationery;
(xiv) legal, accounting and professional fees and disbursements
(other than with respect to Landlord's leasing of space in the
Building);
(xv) costs of capital improvements and replacements which are
made after completion of the Building or TELEHOUSE Complex and which are
reasonably necessary for the proper functioning of the Building or
TELEHOUSE Complex and the respective facilities and systems of each or
which are intended to reduce Operating Costs or which are required by
law, amortized over the shortest useful life permitted by the Internal
Revenue Code of 1986 for such improvements and replacements, Including
interest charges paid by Landlord or, in the absence of actual Interest,
imputed interest at the Interest Rate;
(xvi) licenses, permits and inspections;
(xvii) depreciation on personal property, tools and moveable
equipment used in the operation repair, cleaning, maintenance,
management or security of the Building or the TELEHOUSE Complex or
provided by Landlord for the use or benefit of lessees or occupants,
including window coverings and carpeting in public corridors;
(xviii) costs of contesting the validity or applicability of any
law if a successful contest would reduce Building Operating Expenses;
(xix) those taxes, duties, charges, levies and assessments
which are expensed as a part of the Building's or the TELEHOUSE
Complex's operation, repair, cleaning, maintenance, management and
security, but which are not included within Taxes (as defined below),
such as sales, use and utility taxes;
(xx) all expenses and costs incurred by Landlord (other than
for capital improvements, which are covered by clause (xv) of this
Section) as a result of or in order to comply with applicable laws,
including laws pertaining to energy or natural resource conservation or
environmental protection (such as the costs of securing alternative
sources of utilities, energy or other products or services and the costs
of making the Building, the Premises or the TELEHOUSE Complex compatible
with the use of such alternative sources);
16
<PAGE>
(xxi) all charges, taxes, surcharges, assessments or penalties
imposed by any government agency or public utility as a means of
conserving or controlling the consumption of water, gas, electricity,
energy sources or other natural resources;
(xxii) all charges imposed by the Port Authority with respect to
the operation, repair, cleaning, maintenance, management and security of
the Teleport or the Infrastructure;
(xxiii) rent (excluding annual basic ground rent, basic operating
expense rental and additional operating expense rental) payable to the
Port Authority under the Ground Lease; and
(xxiv) any and all other costs and expenses of any kind or
nature paid in connection with the operation, repair, cleaning,
maintenance, management and security of the Building, the Premises or
the TELEHOUSE Complex.
5.1.6 Building Operating Expenses- Exclusions. The term Building
Operating Expenses excludes:
(i) expenses relating to leasing space in the TELEHOUSE
Complex (including tenant improvements, leasing commissions and
advertising expenses);
(ii) legal charges incurred for collection of accounts, or
negotiation of leases, or relating to disputes between Landlord and
other lessees and occupants of the TELEHOUSE Complex;
(iii) the cost of electricity and other utilities and services
furnished directly to the Premises or to space leased to other lessees
and occupants to the extent that such lessees and occupants pay for such
utilities and services directly or reimburse Landlord for such costs
other than as provided in this Article V;
(iv) the cost of repairs or replacements incurred by reason of
fire or other casualty or Eminent Domain to the extent to which Landlord
has actually received compensation therefor through proceeds of
insurance or condemnation awards;
(v) Taxes;
(vi) depreciation (other than on personal property, tools and
moveable equipment as described in Clause (xvii) of Section 5.1.5
above), and interest and principal on mortgages encumbering the Building
or Landlord's interest under the Ground Lease;
(vii) telephone, telegraph, fax or other telecommunication
costs incurred by lessees and occupants of the TELEHOUSE Complex or the
Building;
(viii) costs and expenses otherwise includable in Building
Operating Expenses, to the extent that Landlord is reimbursed from other
sources for such costs and expenses;
(ix) salaries, wages, bonuses, fringe benefits and the cost of
any pension or retirement plan or of any life or disability or other
benefits with respect to the employees of Landlord above the grade of
director of operations;
(x) annual basic ground rent payable to the Port Authority
under the Ground Lease and payments under any mortgage encumbering the
Building and/or the estate created by the Ground Lease; and
(xi) costs of performing work or furnishing services for
tenants other than this Tenant at the Landlord's expense, to the extent
that such work or service is in excess of any work or service, Landlord
is obligated to furnish to this Tenant at Landlord's expense.
It is the intention of the parties that Tenant shall not be
required to make duplicate payments of any Building Operating Expense item, if
such payment was made in relation to the item pursuant to any other
17
<PAGE>
provision of this Lease; nor shall Tenant be required to pay any Rent as an
Building Operating Expense to the extent Landlord is reimbursed for such item,
whether by another tenant, through insurance proceeds or otherwise.
5.1.7 Building Operating Expenses Adjustment. If during all or part of
any Lease Year the Rentable Area of the Building is not fully occupied by
tenants, the Building Operating Expenses for such Lease Year shall be adjusted
to reflect the Building Operating Expenses which would have been payable had the
Building been fully occupied throughout such Lease Year.
SECTION 5.2. PAYMENT OF TAXES AND BUILDING OPERATING EXPENSES. Landlord shall
pay all Taxes and Building Operating Expenses and Tenant shall reimburse
Landlord for Tenant's Share thereof, in accordance with this Section 5.2.
5.2.1. Payment Of Tenant's Share Of Taxes.
5.2.1.1 Tax Payment and Tax Statement, Tenant shall pay to Landlord as
Additional Rent, an amount equal to Tenant's Share of Taxes for any Lease Year
or Partial Lease Year in the manner set forth in this Section 5.2. 1. At any
time during or after a Lease Year, Landlord may render to Tenant a statement
(the "Tax Statement") showing (a) the Taxes for the Lease Year and (b) Tenant's
Share of any such Taxes (the "Tax Payment"). Tenant shall pay to Landlord, in
(2) equal installments, in advance, on June 1 and December 1 of each year, the
Tax Payment shown on the Tax Statement. If the taxing authority changes the
number or amount of installments of Taxes or the dates on which Taxes are
required to be paid, then the amounts or the due dates of the installments of
the Tax Payment shall be correspondingly revised so that the Tax Payment (or the
installments thereof) will be due not more than thirty (30) days prior to the
date the corresponding payment is due to such authority. If any additional Taxes
are imposed during any Lease Year or if any Tax Statement contains an error,
Landlord may at any time deliver revised Tax Statements to Tenant, and the
provisions of this Section 5.2.1.1 regarding the timing of the Tax Payment shall
apply to such revised Tax Statements. Landlord's failure to render a Tax
Statement during any Lease Year or failure to make a demand under this Section
5.2.1 shall not prejudice Landlord's right to render a Tax Statement with
respect to such Lease Year during any subsequent Lease Year or with respect to
any subsequent Lease Year, and shall not affect Tenant's obligation to pay the
Tax Payment for such Lease Year or act as a waiver of any kind. Whenever so
requested, but not more than once a year, Landlord shall furnish Tenant with a
reproduced copy of the tax bill for the Taxes for the current or next succeeding
Lease Year, if theretofore issued by the taxing authority.
5.2.1.2 Adjustments of Tax Payment. The Tax Payment shall be prorated
for any Partial Lease Year in which the Lease Term shall commence or end. If a
Tax Statement is furnished to Tenant after the commencement of the Lease Year in
respect of which such Tax Statement is rendered, Tenant shall, within thirty
(30) days after receipt, pay to Landlord the amount shown thereon. If, after
Tenant shall have made a Tax Payment and regardless of whether this Lease shall
have terminated, Landlord shall receive a refund of any portion of the Taxes on
which such payment shall have been based, Landlord shall have the option either
to pay to Tenant Tenant's Share of the net refund after deduction of all
expenses (including, but not limited to, attorneys' and appraisers' fees and
disbursements and witnesses' fees) incurred by Landlord in connection with
obtaining the refund or to credit such sum against subsequent Tax Payments;
provided however, , that Tenant's Share of such refund shall be limited to the
amount, if any, which Tenant had theretofore paid to Landlord in respect of
Taxes for such Lease Year.
5.2.1.3 Miscellaneous Tax Matters. Tenant shall receive Tenant's Share
of any discount that Landlord may receive by virtue of any early payment of
Taxes or on account of any exemption or abatement of Taxes, and Taxes shall be
calculated by taking such discounts into account. Subject to the second sentence
of Section 5.1.7, Taxes shall be computed initially on the assessed valuation in
effect at the time the Tax Statement is issued to Tenant, regardless of any then
pending proceeding for reduction of such assessed valuation. Only Landlord shall
be eligible to institute tax reduction or other proceedings to reduce the
assessed valuation of the TELEHOUSE Complex or the Building or contest any item
comprising Taxes. Notwithstanding the foregoing, tenant shall have the right to
participate in, at Tenant's, sole cost and expense, or maintain, at Tenant's
sole cost and expense, appropriate proceedings to seek reduction of any Tax
imposed on Tenant's property under the provisions of the New York State Tax Law
imposing a tax on telecommunications equipment. Tenant's liability for any Tax
Payment due under this Section 5.2.1 shall survive the expiration or earlier
termination of this Lease, and shall be payable within thirty (30)
18
<PAGE>
days after demand therefor following such expiration or termination. In no event
shall any adjustment of any Tax Payment hereunder result in a decrease in Base
Rent.
5.2.2 Payment of Tenant's Share of Building Operating expenses,
5.2.2.1 Operating Expense Statement, Tenant shall pay to Landlord as
Additional Rent an amount equal to Tenant's Share of Building Operating Expenses
for any Lease Year or Partial Lease Year in the manner set forth in this Section
5.2.2. Promptly after the commencement of each Lease Year, Landlord shall submit
to Tenant a statement (the "Operating Expense Statement") setting forth
Landlord's estimate of Building Operating Expenses for such Lease Year and
indicating Tenant's Share of the estimated Building Operating Expenses. For the
first Lease Year, Tenant's Share of estimated Building Operating Expenses is set
forth in Section 1.1 as the Initial Tenant's Share of Building Operating
Expenses (the "Operating Expense Payment"). Landlord's failure to render an
Operating Expense Statement during any Lease Year or failure to make a demand
under this Section 5.2.2 shall not prejudice Landlord's right to render an
Operating Expense Statement with respect to such Lease Year during any
subsequent Lease Year or with respect to any subsequent Lease Year, and shall
not affect Tenant's obligation to pay Tenant's Share of such Building Operating
Expenses for such Lease Year or act as a waiver of any kind. Within thirty (30)
days of receipt of an Operating Expense Statement, Tenant shall pay to Landlord
a sum equal to one-twelfth (1/12th) of such estimated Building Operating
Expenses multiplied by the number of months (including any partial months) to
and including the then current month which have elapsed since the commencement
of such Lease Year, less the aggregate of any payments made on account of
Building Operating Expenses made since the commencement of such Lease Year
pursuant to this Section 5.2.2; and, thereafter, commencing with the first day
of the month following the furnishing to Tenant of an Operating Expense
Statement and continuing monthly on the first day of every month thereafter
until rendition of the next succeeding Operating Expense Statement, Tenant shall
pay an amount equal to one-twelfth (1/12th) of Tenant's Share of such estimated
Building Operating Expenses.
5.2.2.2 Miscellaneous Building Operating Expense Matters. Tenant's
liability for Tenant's Share of Building Operating Expenses due under this
Section 5.2.2 shall survive the expiration or earlier termination of this Lease,
and shall be payable within thirty (30) days after demand therefore following
such expiration or termination. In no event shall the Base Rent ever be reduced
by the operation of any provision of this Section 5.2.2.
Landlord and Tenant. In rendering their decision and award, the
arbitrators shall have no power to vary, modify or amend any provision of this
Lease.
ARTICLE VI
SERVICES AND UTILITIES
SECTION 6.1 ELECTRICITY.
6.1.1 Direct Supply. Electrical power shall be furnished directly to
Site K position of the Premises by the Port Authority for so long as the Port
Authority provides electrical power to the Building, and Tenant shall obtain
electrical power directly from the Port Authority. The costs of such service
(which shall be at least one hundred fifteen percent (115%) of the cost to the
Port Authority of the same quantity of electrical power) shall be paid by Tenant
directly to the Port Authority on such terms and conditions as the Port
Authority may establish. Notwithstanding the foregoing, if Tenant's consumption
of electrical power exceeds the standard of forty (40) VoltAmps per square foot
of Useable Area, Tenant shall pay as Additional Rent an amount calculated
according to the Excessive Electricity Schedule annexed hereto as Exhibit "F".
Notwithstanding the foregoing, such Additional Rent for Excessive Electricity
shall be waived until such time that it becomes necessary and appropriate for
the Landlord to expand the Building's basic power and/or cooling capacity.
6.1.2 Additional Electrical Equipment. If Tenant from time to time
shall require additional electrical power for use in the Site K position of the
Premises in excess of the quantity being previously supplied to the Site K
position of the Premises, Tenant may obtain such additional electrical power
from the Port Authority so long as
19
<PAGE>
Tenant's use of electrical power will not exceed the capacity of existing
feeders to the Building or the risers, conduits, transformers, cables, switches,
meters, switchboards or wiring installations and Tenant's use of electrical
power will not, in Landlord's reasonable judgment, overload such installations
or interfere with the use thereof by other lessees and occupants of the
Building. If, in Landlord's reasonable judgment, such excess requirements cannot
be furnished unless additional risers, conduits, feeders, transformers, cables,
switches, meters, switchboards or installations are installed in the Premises or
the Building, Landlord, upon written request of Tenant, will, to the extent that
such excess requirements can in Landlord's reasonable opinion be practically and
safely met without undue interference with the use and occupancy of other
lessees and occupants, proceed with reasonable diligence to install such
additional risers, conduits, feeders, transformers, cables, switches, meters,
switchboards or installations provided the same and the use thereof (i) shall be
permitted by the Port Authority, (ii) shall not cause permanent damage to the
Building or the Premises or create a dangerous condition or entail unreasonable
Alterations or unreasonably interfere with, or disturb other lessees or
occupants of the Building or increase the premiums for any insurance on the
Building, and (iii) shall comply with applicable laws; but no risers, conduits,
feeders, transformers, cables, switches, meters, switchboards or installations
may be installed without Tenant's first submitting plans and obtaining the prior
written consent of Landlord (which shall not be unreasonably withheld) and the
Port Authority. Tenant shall pay all costs and expenses incurred by Landlord in
connection with such installation within thirty (30) days after receipt of an
Invoice and documentation substantiating all charges. All meters and all panel
boards, feeders, risers, wiring, transformers, switches, switchboards and other
conductors or equipment required for the Premises to receive electrical power
directly from the Port Authority and/or public utility shall be installed by
Landlord at Tenant's expense, the amount of which shall be equal to the direct,
out-of-pocket costs and expenses actually incurred by Landlord, plus the
Landlord's Improvement Fee as described in Section 8.6.
6.1.3 Landlord's Consent to Electrical Alterations. In order that
Landlord may at all times have ail necessary Information that it requires to
maintain and protect its equipment, Tenant agrees that Tenant will not make any
alteration of or addition to, the electrical equipment or wiring in the Premises
without the prior written consent in each instance of Landlord (which shall not
be unreasonably withheld) and, if required, of the Port Authority.
6.1.4 Requirements Applicable to Tenant. Tenant shall at all times
comply with the rules, regulations, tariffs, terms and requirements of the Port
Authority applicable to service, equipment and wiring.
6.1.5 Provision of Emergency Power. Except as provided in this Section
6.1.5, Landlord shall not be liable in any way to Tenant for any failure,
inadequacy or defect in the supply or character of electrical power furnished to
the Site K position of the Premises caused by any applicable law or any act or
omission of the Port Authority or for any other reason not attributable to the
gross negligence or willful misconduct of Landlord. However, in the event of an
interruption in the electrical power furnished by the Port Authority, Landlord
shall furnish emergency electrical power to the Site K position of the Premises
as follows:
(i) Landlord shall provide to the Site K position of the
Premises an emergency power system consisting of (a) four diesel generators
located in the Building equipped with a 48-hour capacity fuel tank, and (b) an
uninterruptable power source ("UPS System") with batteries which operate to
provide electrical power from the time of the interruption in the Port
Authority's service until the generators are operating, but not exceeding
fifteen (15) minutes.
(ii) Landlord shall operate the emergency power system to
provide two categories of electrical power to the Site K position of the
Premises. The first category, referred to as "Essential Powers", is electrical
power in quantity at least equal to one-half (1/2) of the quantity of electrical
power normally consumed by Tenant during the time of year in which the
interruption occurs in Tenant's operation of its lighting and air-conditioning
equipment for office space. The second category, referred to as "Critical
Power", is electrical power in quantity at least equal to the quantity of
electrical power normally consumed by Tenant during the time of year in which
the interruption occurs in Tenant's operation of its computers in the Premises.
PROVIDED, that Landlord shall use its best efforts to furnish both Essential
Power and Critical Power to the Site K position of the Premises at all times
during any interruption of the Port Authority's service, but Landlord shall not
be liable to Tenant for any loss, liability, damage or expense which Tenant may
sustain or incur if (i) all or part of the emergency power system fails to
operate or (ii) the electrical power supplied to the Site K position of the
Premises by Landlord's emergency power system is interrupted due to an event of
Force Majeure or otherwise or (iii) the
20
<PAGE>
quantity or character of electrical power supplied by Landlord's emergency power
system changes or is no longer available or suitable for Tenant's requirements,
except for actual damage suffered by Tenant and resulting from Landlord's
willful misconduct or gross negligence, and then only after actual notice
thereof to Landlord and Landlord's failure to cure within a reasonable time.
Notwithstanding anything to the contrary contained in this Section 6.1.5, in no
event shall Landlord be liable to Tenant or any third person for consequential
damages. Provided, further, that Landlord will maintain in good working order
and condition all equipment and conductors required to furnish the Site K
position of the Premises with normal and emergency electrical power, will not
interrupt or diminish electrical power supplied to the Site K position of the
Premises unless required due to an emergency, and will use its best efforts to
notify Tenant not less than five (5) business days in advance of an anticipated
or planned interruption or diminution of power furnished to the Site K position
of the Premises. In the event that the supply of electrical power to the
Premises is Interrupted by any cause except Tenant's acts or omissions, and such
interruption results in the shut down of Tenant's computer and/or communications
equipment in the Premises and prevents Tenant from engaging in its business for
a period in excess of one hour in any calendar day, then the Base Rent and
Tenant's Share of Building Operating Expenses shall be abated for such calendar
day.
SECTION 6.2 WATER.
6.2.1 Provision of Water. Landlord shall provide hot and cold water for
ordinary lavatory and drinking purposes only in the common areas. Additionally,
Landlord shall provide chilled water to the Site K position of the Premises only
for the cooling of the computer and/or communications equipment therein and for
conditioning air for office space cooling.
6.2.2 Failure of Water Supply. Except as provided in this Section
6.2.2, Landlord shall not be liable to Tenant for any loss, liability, damage or
expense which Tenant may sustain or incur by reason of any failure, inadequacy
or defect in the supply or character of water furnished to the Site K position
of the Premises or the common areas except for actual damage suffered by Tenant
by reason of any such failure, inadequacy or defect caused by the gross
negligence or willful misconduct of Landlord, and then only after actual notice
thereof to Landlord and Landlord's failure to cure within a reasonable time, and
in no event shall Landlord be liable to Tenant or any third Person for
consequential damages. In the event that the supply of chilled water for cooling
the computer and/or communications equipment in the Site K position of the
Premises is interrupted by any cause except Tenant's acts or omissions, and such
interruption results in the shut down of Tenant's computer and/or communications
equipment in the Site K position of the Premises and prevents Tenant from
engaging in its business for a period in excess of one hour in any calendar day,
then the Base Rent and Tenant's Share of Building Operating Expenses shall be
abated for such calendar day.
SECTION 6.3 ELEVATORS AND CLEANING. Landlord shall (i) provide necessary
passenger elevator service on a 24-hour basis each day and shall provide freight
elevator service and loading dock service on business days from 8:00 o'clock
a.m. to 6:00 o'clock p.m. and on Saturdays from 8:00 o'clock a.m. to 1:00
o'clock p.m. (collectively, "Business Hours") and (ii) provide office and window
cleaning services, and remove Tenant's ordinary office refuse and rubbish, all
pursuant to the Cleaning Specifications provided in Exhibit `C' annexed hereto.
Landlord shall not be required to provide janitorial services for portions of
the Premises used for computer operations or for storage. The terms "Business
Days" and "Saturdays" as used in this Section 6.3 and in Section 6.4 shall not
include Sundays or Federal or New York State legal holidays. Landlord shall have
the right to make reasonable changes in the operation of the elevators or the
loading dock in the Building and shall have the right to discontinue,
temporarily or permanently, the use of any one or more cars in any of the banks
of elevators provided reasonable elevator service is furnished to the Premises
as above provided.
SECTION 6.4 HEATING AND AIR CONDITIONING.
6.4.1 Heating Landlord shall, through the heating equipment of the
Building, furnish the common areas of the Building and the Conference Room
position of the Premises with heat sufficient in Landlord's reasonable judgment
for comfortable occupancy of the common areas between October 1st and May 14th.
Tenant shall be responsible for providing heating to the Site K position of the
Premises.
6.4.2 Air Conditioning. Landlord shall, through the air conditioning
equipment of the Building, furnish the common areas of the Building with air
conditioning sufficient in Landlord's reasonable judgment for
21
<PAGE>
comfortable occupancy of the common areas between May 15th and September 30th.
Tenant shall be responsible for providing air conditioning to the Site K
position of the Premises.
6.4.3 Miscellaneous HVAC Provisions. Any heating, ventilating or air
conditioning equipment required by Tenant for the proper operation of Tenant's
computer or for the comfortable occupancy by Tenant of the Premises and any
utilities required for the operation of such equipment shall be furnished,
installed, maintained and obtained by Tenant, at Tenant's sole cost, in
accordance with the applicable provisions of this Lease and Exhibit "B".
Landlord shall not be required to provide any heat, ventilating or air
conditioning to the Premises other than conditioned fresh air as required by
applicable law. Landlord and Tenant shall at all times cooperate fully with each
other, and Tenant shall abide by all the Rules and Regulations which Landlord
may reasonably prescribe or which the Port Authority may prescribe for the
proper functioning of the Building's heating, ventilating and air conditioning
system. Landlord upon reasonable notice (except in emergency) shall have free
and unrestricted access to any and all heating, ventilating and air conditioning
facilities in the Premises.
6.4.4 Effect on HVAC of Changes in Premises. Tenant understands that
(i) any occupancy of the Premises, in whole or in part, for any purpose other
than the Permitted Use or (ii) any rearrangement of partitioning which
interferes with normal operation of the Building's heating, ventilating and air
conditioning system, may require changes or alterations in said system or in the
ducts through which the system operates, and Tenant accordingly agrees that any
changes or alterations so occasioned shall be made only with the prior written
consent of Landlord which Landlord will not unreasonably withhold (and the
consent of the Port Authority), and shall be done by Tenant at Tenant's expense,
and otherwise subject to the provisions of Article VIII, to the extent
applicable.
SECTION 6.5 SERVICE INTERRUPTION. Landlord reserves the right to interrupt,
curtail, stop or suspend service or operation of the heating, air conditioning,
elevator, plumbing, mechanical and electrical systems when Landlord is required
to do so because Landlord has been mandated by law to adhere to a recognized
energy, water or other resource conservation program promulgated by any
governmental or quasi-governmental agency, bureau, board, commission,
department, office or other division thereof. Landlord may take such action as
it deems appropriate to comply with any such program, including making
Alterations to the Building or Premises. Landlord agrees, however, that it will
use its best efforts to minimize interference with Tenant's use of the Premises
in effecting such and that Landlord diligently will prosecute same to
completion. Landlord agrees that it will not apply the restrictions of such
program to Tenant on a discriminatory basis. Subject to the provisions of
Section 6.1.5, Landlord reserves the right without liability to Tenant to
interrupt, curtail, stop or suspend service or operation of the heating, air
conditioning, elevator, plumbing, mechanical and electrical systems, when
necessary by reason of accident, or emergency, or for repairs or Alterations
desirable or necessary in the reasonable judgment of Landlord to be made, until
said repairs or Alterations shall have been completed. Landlord agrees, however,
that it will use its best efforts to minimize interference with Tenant's use of
the Premises in effecting such and that Landlord diligently will prosecute same
to completion.
SECTION 6.6 ADDITIONAL TENANT USE. At the Commencement Date, and from time to
time thereafter, Landlord may impose a reasonable charge, as Additional Rent,
and establish reasonable Rules and Regulations for: (a) the use by Tenant of the
heating, air conditioning, or ventilation systems serving the common areas, or
of the loading dock or freight elevator at any time other than during Business
Hours; or (b) the use by Tenant of chilled water in amounts exceeding the
amounts Landlord has undertaken to provide in Section 6.2.1 of this Article VI.
All requests for additional services must be submitted in writing to the
Building's superintendent (or such other person designated by Landlord), by a
person authorized by Tenant to make such requests, before 3:00 o'clock p.m. on
weekdays for weekday service and before 3:00 o'clock p.m. the day preceding
holidays and weekends for holiday or weekend service. In the event of emergency,
after-hours service may be obtained by calling the Building's superintendent (or
such other person designated by Landlord) in sufficient time to enable him to
provide the service requested, and Tenant shall follow up with a written
confirmation. Landlord may also impose a reasonable charge, as Additional Rent,
for the use of any additional or unusual cleaning services required because of
any non-building standard improvements in the Premises or for the removal of any
refuse and rubbish from the Premises, other than discarded material placed in
wastepaper baskets and left for emptying as an incident to Landlord's normal
cleaning of the Premises. Landlord may charge Tenant an additional charge for
cleaning if Tenant has glass partitions or an unusual amount of glass surfaces
in the interior of the Premises. Any charges imposed under the provisions of
this Section shall not exceed charges imposed for the provision of such services
in similar, first-class data centers.
22
<PAGE>
SECTION 6.7 EXCULPATION OF LANDLORD FOR UTILITIES. Except as provided in Section
6.1.5 and Section 6.2.2, Landlord shall not be liable for any failure to furnish
any services or utilities when such failure is caused by events of Force
Majeure, accidents, breakage, necessary repairs, including any governmental
energy, water or other resource conservation program and including any
interruption in service by the Port Authority, and Tenant shall not be entitled
to any damages nor shall such failure abate or suspend Tenant's obligation to
pay the Rents or constitute or be construed as a constructive or other eviction
of Tenant.
SECTION 6.8 ACCESS. Tenant agrees to allow Landlord, its cleaning contractor and
their employees, to have access to the Premises after 5:30 o'clock p.m. and
before 8:00 o'clock a.m. and to have the right to use, without charge therefor,
all light and electrical power in the Premises reasonably required to clean the
Premises.
SECTION 6.9 COMMUNICATION FACILITIES. During the Lease Term, until Landlord
gives Tenant written notice to the contrary, Teleport Communications Group, a
partnership, shall, under the terms of the Ground Lease, be the exclusive
provider of communications services and facilities at the Teleport, including,
without limitation, all antennas, conduit, and cabling and including any such
items located in, on, or around any buildings and structures at the Teleport,
and Tenant shall not, and shall not permit any other Person to, install,
contract for, or use, or cause to be installed, contracted for, or used, any
such items, services, or facilities at the Teleport not provided by Teleport
Communications Group without the prior written approval of Teleport
Communications Group, which may be withheld or subject to such conditions as
Teleport Communications Group in its sole discretion may determine, provided,
however, that Teleport Communications Group may consent to internal building
wiring and internal terminal equipment furnished by Tenant, but only if Teleport
Communications Group is reasonably satisfied after testing and inspection that
such wiring and equipment is technologically compatible with its
telecommunications equipment and configurations at the Teleport. Notwithstanding
the above, Tenant will have access to fiber based services of both the Teleport
Communications Group and Bell Atlantic.
ARTICLE VII
INSURANCE
SECTION 7.1 PROPERTY INSURANCE. During the Lease Term, Landlord shall maintain
All Risk property insurance, covering the Building and insuring the Building in
the amount of its full replacement value, with loss of rents coverage. The
amount of any deductible shall be determined by Landlord but shall not exceed
that which is commercially reasonable for a first-class data center.
SECTION 7.2 LIABILITY INSURANCE. During the Lease Term, Landlord shall maintain
public liability insurance covering the Building and insuring against all
hazards and risks customarily insured against by Persons operating data
communications buildings. During the Lease Term, Tenant shall maintain
comprehensive general liability insurance, written on an occurrence basis with
blanket contractual liability coverage, broad form property damage and such
other coverage as Landlord may reasonably require, with respect to the Premises,
their use and occupancy by Tenant and the conduct or operation of business
therein, with combined single-limit coverage of not less than Five Million
Dollars ($5,000,000). Landlord may, from time to time, but not more frequently
than once every three (3) years, increase the policy amount to be maintained by
Tenant under this Section 7.2 as Landlord reasonably deems necessary in order to
maintain adequate liability coverage, provided, that the policy amount does not
exceed the policy amount required for other Tenants within the building and
TELEHOUSE.
SECTION 7.3 USE OF PREMISES. Tenant shall not do, or permit anything to be done,
in or about the Premises which might, solely by reason of the particular nature
of Tenant's use of the Premises: (a) increase any insurance rate with respect to
the Building over the rate which would otherwise then be in effect, or (b)
result in insurance companies of good standing refusing to insure the Building
in amounts satisfactory to Landlord, or (c) result in the cancellation of any
policy covering or relating to the Building.
SECTION 7.4 WAIVER OF SUBROGATION.
7.4.1 Waiver Included in Policy. Landlord and Tenant shall each secure
an appropriate clause in, or an endorsement upon, each property insurance policy
required by this Article VII, pursuant to which the insurance
23
<PAGE>
company waives subrogation or permits the insured, prior to any loss, to agree
with a third party to waive any claim it might have against said third party
without invalidating the coverage under the insurance policy. On Tenant's
policies, the waiver of subrogation or permission for waiver of any claim shall
extend to Landlord and its agents and employees and against other lessees in the
Building, , provided that such other lessees agree to a waiver of their
respective rights of subrogation against Tenant. On Landlord's policies, the
waiver of subrogation or permission for waiver of any claim shall extend to
Tenant and its agents and employees. If such waiver be unobtainable, the parties
shall include in their property insurance policies (i) an express agreement that
such policy shall not be invalidated if the insured waives or has waived before
the casualty the right of recovery against any party responsible for a covered
casualty or (ii) any other form of permission for the release of such
responsible party. If such waiver, agreement or permission shall not be, or
shall cease to be, obtainable without additional charge or at all, the insured
party shall so notify the other party promptly after notice thereof. If the
other party shall agree in writing to pay the insurer's additional charge
therefor, such waiver, agreement or permission shall (if obtainable) be included
in the policy. In the event either party's insurer shall refuse to permit such
waiver, agreement or permission even with an additional charge, then the other
party shall have the right to designate another insurer with a Best's Insurance
Guide rating of A-XI or better who would be prepared to permit such waiver, and
the first party shall use such other insurer.
7.4.2 Landlord's Waiver. As long as Landlord's casualty insurance
policies include the waiver of subrogation or agreement or permission to release
liability referred to in Section 7.4.1, Landlord hereby waives, for itself and
those claiming through or under it, any right of recovery against Tenant, any
other permitted occupant of the Premises, and of their partners, employees,
agents or contractors, for any loss occasioned by fire or other insured
casualty, whether or not arising from the negligence of Tenant or its employees,
agents or contractors. If at any time any of Landlord's property insurance
policies shall not include such or similar provisions, the waiver set forth in
the foregoing sentence shall, upon notice given by Landlord to Tenant, be of no
further force or effect (or, if the insurer shall not grant such waiver for all
of the required parties, such waiver shall be of no force or effect only with
respect to the required parties not included in such waiver). To the extent that
Landlord is at any time a self-insurer with respect to loss, damage or
destruction by fire or other casualty, Landlord agrees to waive any claim or
right of recovery which Landlord might have against Tenant for any loss
occasioned by fire or other casualty, whether or not arising from Tenant's
negligence.
7.4.3 Tenants' Waiver. As long as Tenant's property insurance policies
include the waiver of subrogation or agreement or permission to release
liability referred to in Section 7.4.1 and provided that Landlord provides the
waiver referred to in Section 7.4.2, Tenant hereby waives (and agrees to cause
all other occupants of the Premises to execute and deliver to Landlord
instruments waiving), for itself and those claiming through or under it any
right of recovery against Landlord, the other additional insureds and any of
their partners, employees, agents or contractors, and against other lessees of
the TELEHOUSE Complex to the extent that the policies of such other lessees
permit a similar waiver for the benefit of Tenant and such other lessee actually
gives such a waiver, for any loss occasioned by fire or other insured peril,
whether or not arising from the negligence of Landlord or its employees, agents
or contractors. If at any time any of Tenant's property insurance policies shall
not include such or similar provisions, the waiver set forth in the foregoing
sentence shall, upon notice given by Tenant to Landlord, be of no further force
or effect (or, if the insurer shall not grant such waiver for all of the
required parties, such waiver shall be of no force or effect only with respect
to the required parties not included in such waiver). To the extent that Tenant
is at any time a self-insurer with respect to loss, damage or destruction by
fire or other peril, Tenant agrees to waive any claim or right of recovery which
Tenant might have against Landlord for any loss occasioned by fire or other
peril, whether or not arising from Landlord's negligence provided that Landlord
provides the waiver referred to in Section 7.4.2.
7.4.4 Limitation on Waiver. Except to the extent expressly provided in
this Section 7.4, nothing contained in this Lease shall relieve either party of
any liability to the other or to its insurance carriers which such party may
have under law or the terms of this Lease in connection with any damage to the
Building by fire or other peril.
SECTION 7.5 POLICY REQUIREMENTS. Landlord and its agents and employees, the City
of New York, the New York City Public Development Corporation, the Port
Authority and any other Superior Lessor or any Superior Mortgagee whose name and
address shall have been furnished to Tenant shall be designated as additional
insureds on any insurance policy required by this Article VII. Tenant shall
deliver to Landlord certificates of insurance for the
24
<PAGE>
insurance coverage required by this Article VII, in form reasonably satisfactory
to Landlord, issued by the insurance company or its authorized agent, within
thirty (30) days of the Commencement Date. Tenant shall procure and pay for
renewals of such insurance from time to time before the expiration thereof, and
Tenant shall deliver to Landlord such renewal certificate(s). At Landlord's
request, Tenant shall deliver certificates of insurance to additional insured
parties. All policies shall be issued by companies of recognized responsibility,
reasonably acceptable to Landlord, and licensed to do business in the State of
New York. All policies shall provide that they cannot be cancelled or modified
unless Landlord, the Port Authority and any other Superior Lessor or any
Superior Mortgagee named as an additional insured are given at least thirty (30)
days' prior written notice of such cancellation or modification. All insurance
policies involving liability shall contain a provision that in any action or
proceeding under or in connection with such policy, the insurance carrier shall
not without obtaining express advance consent from the General Counsel of the
Port Authority raise any defense involving in any way the immunity of the Port
Authority, its Commissioners, officers, agents or employees, the governmental
nature of the Port Authority, the provisions of any statutes respecting suits
against the Port Authority, or the jurisdiction of the tribunal over the person
of the Port Authority. Tenant shall not carry separate or additional insurance,
concurrent in form or contributing in the event of any loss or damage with any
insurance required to be obtained by Tenant under this Lease. Tenant may carry
any insurance coverage required of it hereunder pursuant to blanket policies of
insurance so long as the coverage afforded Landlord and the other additional
insureds thereunder shall not be less than the coverage which would be provided
by direct policies.
SECTION 7.6 PREMIUM INCREASE. If, by reason of any default by Tenant under this
Lease after notice and beyond any applicable grace period, or by reason of any
Tenant's Work Installed in the Premises except for any work performed by
Landlord pursuant to the terms hereof, including without limitation, the work
referred to in Section 2.3 of this Lease, the premiums on Landlord's insurance
on the Building (including without limitation rent insurance) are higher than
they otherwise would be, Tenant shall correct such default, and Tenant shall
reimburse Landlord, within thirty (30) days after demand, as Additional Rent,
for that part of the premiums attributable to the default by Tenant or the
Tenant's Work. If, due to the particular manner of Tenant's use of the Premises,
any such insurance shall be cancelled by the insurance carrier, then Tenant
shall cease such. use or occupancy and shall indemnify, defend and hold Landlord
harmless against any loss which would have been covered by such Insurance. A
schedule or statement of rates for the Building, issued by the insurance
companies insuring the Building, or by a fire insurance rating organization or
other similar body making rates for insurance for the Building, shall be
conclusive evidence of the facts therein stated and of the several items and
charges in the insurance rate then applicable to the Building.
ARTICLE VIII
ALTERATIONS
SECTION 8.1 CONDITIONS.
SECTION 8.1.1 ALTERATIONS BY TENANT. With Landlord's prior approval, which will
not be unreasonably withheld, and the prior approval of the Port Authority, if
such approval is required pursuant to the Ground Lease, Tenant may from time to
time, at its expense, make such alterations, improvements, additions and
replacements (including installation of fixtures, cables, wires) and decorations
(collectively, "Alterations") in and to the Premises as Tenant may desire
provided that: (a) the Alterations do not affect the outside appearance of the
Building and are not visible from the outside of the Building; (b) the
Alterations are non-structural and do not impair the strength or structural
integrity of the Building; (c) the Alterations are to the interior of the
Premises and do not affect any part of the Building outside of the Premises; (d)
the Alterations do not adversely affect the proper functioning of the
mechanical, electrical, sanitary and other service systems of the Building, or
unreasonably increase the usage of such systems by Tenant; (e) before proceeding
with any Alteration (other than decorations), Tenant shall submit to Landlord,
for Landlord's reasonable approval, plans and specifications for the work to be
done, and Tenant shall not proceed with such work until it obtains Landlord's
approval, which shall not be unreasonably withheld; (f) Tenant shall pay to
Landlord upon demand the reasonable direct, outof-pocket costs and expenses
actually incurred by Landlord in reviewing Tenant's plans and specifications and
inspecting the Alterations to determine whether they are being performed in
accordance with the approved plans and specifications and in compliance with
law, including the fees of any architect or engineer employed by Landlord for
such purpose; and (g) Tenant shall comply with the rules and regulations of
Landlord and the Port Authority (including applicable provisions of the Ground
Lease) then
25
<PAGE>
in force with respect to the making of Alterations. Tenant hereby agrees that
the review and approval by Landlord of Tenant's plans and specifications for
Alterations are solely for Landlord's benefit. Landlord shall have no duty
toward Tenant, nor shall Landlord be deemed to have made any representation or
warranty to Tenant with respect to the safety, adequacy, correctness, efficiency
or compliance with law of the plans and specifications, the Alterations or their
design, or any other matter regarding the Alterations. Landlord shall, at no
cost or expense to Landlord, cooperate reasonably with Tenant and its
contractors and subcontractors in obtaining all permits, approvals, certificates
and bonds required under this Article VIII.
SECTION 8.1.2 ALTERATIONS BY LANDLORD. Landlord reserves the right, at any time,
to make such Alterations, in or to the Building, the TELEHOUSE Complex and the
respective systems and equipment of each, as well as in or to street entrances,
doors, halls, passages, elevators, escalators and stairways, and other public
parts of the Building, as Landlord shall deem necessary or desirable. However,
Landlord shall not exercise its rights under this Section 8.1.2 in a manner that
would materially interfere with Tenant's use or access to the Premises, reduce
Tenant's usable square footage, materially alter the configuration of the
Premises, or in any manner effect the Tenant's ability to continue their
permitted use of the Premises.
SECTION 8.2 PERFORMANCE. Landlord or Tenant shall obtain all necessary
governmental permits and certificates for the construction of the Alterations
which either of them undertakes and for the use and occupancy of the Alterations
upon completion. Tenant shall retain a reputable contractor, selected from
Landlord's list of acceptable contractors and independently approved by Landlord
(which approval shall not be unreasonably withheld) and by the Port Authority
for specific Alterations, to perform the Alterations in compliance with the
permits and certificates and applicable law. Alterations shall be diligently
performed in a good and workmanlike manner, using new materials and equipment at
least equal in quality and class to the better of: (a) the original
installations of the Building, or (b) the prevailing building standards
established by Landlord. Any Alterations by Tenant in the mechanical,
electrical, sanitary, heating, ventilating, air-conditioning or other systems of
the Building shall be performed only by contractors designated by Landlord.
Alterations shall be performed in a manner that causes the least interference
with the use of the Building by lessees and occupants and in a manner that does
not interfere unreasonably with, delay or, in the case of Tenant's Alterations,
impose additional expense on Landlord in the maintenance, repair or operation of
the Building; and if any additional expense is incurred by Landlord as a result
of any Alterations by Tenant, Tenant shall reimburse Landlord for such
additional expense, within thirty (30) days after demand, as Additional Rent.
Throughout the performance of Alterations by Tenant, Tenant shall carry, or
cause its contractors to carry, workers' compensation insurance as required by
law and general liability insurance, with completed operations endorsements, for
any occurrence in or about the Building, in such coverage limits as Landlord may
reasonably require, with insurers meeting the requirements of Section 7.5.
Landlord and the Persons specified in Section 7.5 shall be designated as
additional insureds on such insurance policies. Tenant shall furnish Landlord
with evidence reasonably satisfactory to Landlord that such insurance is in
effect before the commencement of Alterations and, on request of Landlord during
construction, Tenant shall provide evidence reasonably satisfactory to Landlord
that the insurance remains in effect. Upon completion of any Alterations,
Landlord or Tenant shall obtain certificates of final approval of such
Alterations required by any governmental authority and, in the case of
Alterations performed by Tenant, shall furnish Landlord with copies thereof,
together with the "as-built" plans and specifications therefor as approved in
accordance with law and the Rules and Regulations for the Building and the
Teleport. If any of Tenant's Alterations involve the removal of fixtures,
equipment or other property in the Premises which are not Tenant's Property, the
removed fixtures, equipment or other property shall be promptly replaced at
Tenant's expense with new fixtures, equipment or other property of like utility
and at least equal value, unless Landlord otherwise directs Tenant in writing.
SECTION 8.3 LIENS AND VIOLATIONS.
8.3.1 Discharge of Liens and Violations. Tenant shall promptly procure
the cancellation or discharge of all notices of violation arising from or
otherwise connected with Alterations, or any other work, done for Tenant, or any
person claiming through or under Tenant, which shall be Authority or the
Building Department of the City of New York or any other public authority.
Tenant shall not utilize materials in Alterations that are subject to security
interests or liens. Tenant shall defend, indemnify and hold Landlord harmless
from and against all liens and encumbrances or claims of liens or encumbrances
filed in connection with Alterations, or any other work, labor, services or
materials done for or supplied to Tenant, including security interests in any
materials, fixtures or articles installed in the Premises; and against all
costs, expenses and liabilities incurred in connection with any such lien or
26
<PAGE>
encumbrance, or claim of lien or encumbrance, its removal or any related action
or proceeding. Subject to Tenant's right to contest as set forth below, Tenant
shall satisfy or discharge of record each lien or encumbrance within fifteen
(15) days after it is filed. If Tenant fails to do so, Landlord shall have the
right to satisfy or discharge such lien or encumbrance by payment to the
claimant on whose behalf it was filed or by payment into court or to the County
Clerk pursuant to the New York Lien Law. Tenant shall reimburse Landlord within
thirty (30) days after demand for the costs and expenses so incurred by
Landlord, as Additional Rent, and without regard for any defense or offset that
Tenant may have had against the claimant.
8.3.2 Tenant's Right to Contest Liens. Notwithstanding anything to the
contrary contained in this Section 8.3, Tenant shall have the right to contest
in good faith and with diligence the correctness or the validity of any lien,
encumbrance or claim therefor if Tenant discharges the lien of record, whether
by deposit of funds into the appropriate court or with the County, Clerk or by
procuring and recording a lien release bond issued by a corporation authorized
to issue surety bonds in the State of New York in an amount equal to one and
one-half (1.5) times the amount of the claim of lien, encumbrance or claim
therefor. The bond shall meet the requirements of New York law and shall provide
for payment of any sum that the claimant may recover on the claim, together with
costs of suit if it recovers in the action. Nothing in this Lease contained
shall be construed as a consent on the part of Landlord to subject Landlord's
estate in the Premises to any lien or liability under the Lien Law of the State
of New York.
SECTION 8.4 LABOR CONDITIONS. In the performance of Alterations, Tenant shall
not permit any Labor Condition to arise or continue at the Building or the
Teleport which interferes with the progress of other construction work at the
Building or the Teleport. The determinations of the Port Authority or Landlord
as to whether any Labor Condition interferes with the progress of other
construction work at the Teleport or the Building shall be conclusive on Tenant
so long as such determinations are not arbitrary or capricious and, upon notice
from the Port Authority or Landlord, Tenant shall, or shall cause its contractor
to, rectify any Labor Condition specified in the notice as soon as is reasonably
possible, unless failure to rectify such Labor Condition immediately will result
in an emergency situation, in which event Tenant shall, or shall cause its
contractor to, rectify such Labor Condition immediately. In the event of failure
by
Tenant or its contractor to comply with the requirements of this Section
(whether or not such failure is due to Tenant's fault), the Port Authority or
Landlord by notice shall have the right to suspend the Port Authority's or
Landlord's permission to Tenant to proceed with any portion of the Alterations
being performed, and Tenant shall thereupon immediately cease the same. Unless
failure to immediately suspend construction will result in an emergency
condition, the Port Authority has agreed to give, and Landlord will give,
reasonable advance notice before directing a cessation of construction. When the
Labor Condition shall be so settled that such interference no longer exists, the
Port Authority has agreed to, or Landlord, by notice to Tenant, shall, reinstate
the permission to Tenant to perform the Alterations on all the same terms and
conditions as before the suspension. "Labor Condition" shall mean and include
strikes, boycotts, picketing, work-stoppages, slowdowns, complaints, disputes,
controversies, or any other type of labor trouble, regardless of the employer of
the Person involved or their employment status, if any.
SECTION 8.5 PORT AUTHORITY'S FEE. If the Port Authority shall charge any fee in
connection with any Alteration to the Premises, Tenant shall pay the fee.
SECTION 8.6 IMPROVEMENT FEE. Tenant shall pay to Landlord as Additional Rent in
connection with any Alterations except for those performed by Landlord in
connection with Tenant's initial occupancy of the Premises, Landlord's fee (the
"Improvement Fee"). which shall not exceed (i) fifteen percent (15%) of the
total cost of such Alteration it Landlord performs the Alteration on Tenant's
behalf, and (ii) if Tenant performs the Alteration, all of Landlord's reasonable
costs and expenses in connection with such Alteration. There shall be excluded
from such computation the cost of furniture, furnishings, draperies, office,
computer and communication equipment, painting, cabinetry, items of special
decoration and telephone installation. Prior to making-any Alteration, Tenant
shall submit to Landlord a statement of Tenant's contractor, estimating the
total cost of such Alteration. The Improvement Fee shall be calculated on the
basis of such estimate and paid in equal monthly installments during the course
of the performance of the Alteration, together with the monthly installments of
Base Rent. Upon completion of the Alteration, Tenant shall submit to Landlord a
statement of Tenant's contractor, certifying the total cost of such Alteration.
The Improvement Fee shall be adjusted, if necessary, based on the certification.
Within thirty (30) days
27
<PAGE>
after completion of the Alteration, Tenant shall pay to Landlord any remaining
balance of the Improvement Fee. If the Improvement Fee, as adjusted, is less
than the amount theretofore paid to Landlord, Landlord, within thirty (30) days
after receipt of the certification, shall refund to Tenant the amount of such
overpayment.
ARTICLE IX
LANDLORD'S AND TENANT'S PROPERTY
SECTION 9.1 TENANT'S PROPERTY. All computer, communications and office
equipment, whether or not attached to or built into the Premises, which are
installed in the Premises by or for the account of Tenant, without expense to
Landlord, and which can be removed without substantial damage to the Premises or
the Building, and all furniture, furnishings and other articles of movable
personal property owned by Tenant and located in the Premises shall remain the
property of Tenant ("Tenant's Property") and may be removed by Tenant at any
time during the Lease Term. Prior to the expiration of the Lease Term, or
immediately upon any earlier termination of this Lease, Tenant shall remove from
the Premises all of Tenant's Property (except such items thereof as Landlord has
expressly permitted to remain, which shall become the property of Landlord).
Tenant shall repair any damage to the Premises or to the Building resulting from
the installation or removal of Tenant's Property. Equipment or other property
for which Landlord shall have granted an allowance or credit to Tenant, or any
item installed for Tenant's account, but in replacement of an item that was not
Tenant's Property, shall not be deemed Tenant's Property and shall become the
property of Landlord.
SECTION 9.2 FIXTURES. All fixtures, equipment (other than equipment referred to
in Section 9.1), improvements and appurtenances attached to or built into the
Premises at the Commencement Date or during the Lease Term, including
Alterations, shall become and remain a part of the Premises and the property of
Landlord, regardless of whether they were installed by Tenant or at Tenant's
expense, and shall not be removed by Tenant.
SECTION 9.3 [intentionally omitted]
SECTION 9.4 ABANDONMENT. If Tenant does not remove items of Tenant's Property
from the Premises after the expiration or earlier termination of the Lease Term,
Landlord may consider such items to have been abandoned. In that event Landlord
may retain such items as its property or dispose of them, at Tenant's expense,
in such manner as Landlord shall determine.
SECTION 9.5 TAXES ON TENANT'S PROPERTY R AND NON-STANDARD TENANT IMPROVEMENTS.
9.5.1 Taxes on Tenant's Prop. At least fifteen (15) days prior to
delinquency, Tenant shall pay all taxes levied or assessed upon Tenant's
Property. If the assessed value of the Building is increased by the inclusion of
a value placed upon Tenant's Property, Tenant shall pay to Landlord, within
thirty (30) days after demand, as Additional Rent, the taxes (including payments
in lieu of taxes) levied against Landlord on account of the included value of
Tenant's Property. Landlord shall uniformly apply this Section 9.5.1 or a
similar provision to all tenants of the Building and if Landlord does not
uniformly apply such a provision, Landlord shall not include in Building
Operating Expenses any taxes that should have been charged directly to other
tenants of the Building under the terms of such a provision.
9.5.2 [Intentionally omitted.)
ARTICLE X
REPAIRS AND MAINTENANCE
SECTION 10.1 LANDLORD'S OBLIGATIONS. Landlord, at its expense, shall keep and
maintain the Building's exterior walls, glass, roof and foundation and the
public portions of the Building and the Building systems and facilities serving
the Premises, including, without limitation, the mechanical, electrical,
sanitary, ventilating, air conditioning and other systems, in proper working
order, condition and repair. Landlord's obligation to perform such repairs in
the Premises, or with respect to Building systems and facilities serving the
Premises, shall arise
28
<PAGE>
promptly after Tenant has notified Landlord or Landlord has actual knowledge of
the need for such repairs in the Premises.
SECTION 10.2 TENANT'S OBLIGATIONS. Except for Landlord's obligations as set
forth specifically in Sections 10.1 and 13.1, Tenant shall take good care of the
Premises and Tenant's Property. Tenant shall promptly replace all scratched,
damaged or broken doors and interior glass in the Premises with doors and glass
that match as nearly as practicable the damaged item unless such damage or
breakage is caused by the acts or omissions of Landlord. Tenant shall be
responsible for all repairs, maintenance and replacement of wall and floor
coverings and electrical fixtures and equipment in the Premises (excluding the
portions of the HVAC system located outside of the Premises and excluding the
sprinkler system and life safety system). Additionally, Tenant shall be
responsible for all maintenance and repairs, interior and exterior, structural
and non-structural, ordinary and extraordinary, of the Premises, the Building
and the Building's facilities and systems, made necessary, in whole or in part,
by: (a) the performance or existence of Tenant's Work or Alterations (excluding
any Work or Alterations performed by Landlord under the Lease); (b) the
installation or use of Tenant's Property in the Premises; (c) the moving of
Tenant's Property into or out of the Building; (d) an act or omission of Tenant
or its officers, partners, employees, agents, representatives, contractors,
sublessees or invitees; or (e) the particular nature of Tenant's use or
occupancy of the Premises. Tenant shall promptly make all repairs in or to the
Premises for which Tenant is responsible, and such repair work shall be subject
to the provisions of Article VIII regarding Alterations, to the extent
applicable. Tenant shall also be responsible for any repairs and maintenance of
the Infrastructure required as a result of the acts or omissions of Tenant, its
officers, partners, employees, agents, representatives, contractors, sublessees
or invitees. Landlord shall perform or cause to be performed, at Tenant's
expense, any other repairs of the Building and its facilities and systems or the
Infrastructure for which Tenant is responsible. Tenant shall reimburse Landlord
on demand, as Additional Rent, for the costs of such repairs, plus fifteen
percent (15%) of such costs as an allowance for Landlord's overhead and indirect
costs.
SECTION 10.3 EXCULPATION OF LANDLORD FOR REPAIRS. Except as otherwise expressly
provided in this Lease, Landlord will not be liable to Tenant and Tenant's
obligations under this Lease shall not be reduced or abated, by reason of any
inconvenience, annoyance, interruption or injury to business arising from
Landlord making any maintenance, repairs or Alterations in or to any portion of
the Building or the Premises or in or to the fixtures, equipment or
appurtenances of the Building or the Premises, which Landlord is required or
permitted to make by this Lease, or which are required by law, or which Landlord
deems appropriate, excepting any direct (but not consequential) damages to the
extent caused by the gross negligence or willful misconduct of Landlord or its
employees. Landlord shall have the right to erect scaffolding and barricades in
the Building for purposes of such repairs, provided that such structures do not
unreasonably impair access to or use of the Premises. Tenant waives any rights
it may have under any provisions of law regarding the duties of a lessor to
repair leased premises or the rights of lessees to make repairs if the lessor
fails to do so. In the event that Landlord fails for a period of thirty (30)
days after receipt of written notice from Tenant to perform maintenance or
repairs in the Premises that Landlord is required to perform by the terms of
this Lease, and such maintenance or repairs will not affect the utility and
other systems in the Building nor interfere in any way with the occupancy and
quiet enjoyment of other tenants and occupants of the Building, then Tenant may
make such repairs to the Promises and Landlord shall pay the reasonable cost of
such repairs within thirty (30) days after receipt of Tenant's itemized invoices
for such work.
SECTION 10.4 NOTICE. Tenant will notify Landlord and Landlord will notify Tenant
of: (a) any occurrence in or about the Premises for which Landlord will be
liable; (b) any fire or other casualty in the Premises; (c) any damage to or
defect in the Premises, for the repair of which Landlord will be responsible;
and (d) any damage to or defect in any part of the Building's sanitary heating,
ventilating, air-conditioning or other systems located in or passing through the
Premises.
ARTICLE XI
USE AND COMPLIANCE WITH LAW
SECTION 11.1 USE. Tenant shall use and occupy the Premises for the Permitted Use
and for no other purpose.
SECTION 11.2 LICENSES AND PERMITS. Tenant shall procure and at all times comply
with the terms and conditions of any governmental license or permit required for
the lawful conduct of the Permitted Use in the
29
<PAGE>
Premises, and Landlord shall procure and at all times comply with the terms and
conditions of any governmental license or permit required for the lawful
occupancy of the Building, excluding licenses and permits relating to work done
by or on behalf of Tenant. Landlord and Tenant shall, at no cost or expense to
Landlord, cooperate with each other in obtaining any governmental license or
permit required under this Section 11.2. Anything contained herein to the
contrary notwithstanding, to the best knowledge of Landlord, the Permitted Use
of the Premises is permissible under all applicable laws, statutes, rules and
regulations affecting the Premises and Landlord maintains all necessary
governmental licenses and permits and certificates of occupancy for the
Permitted use of the Premises.
SECTION 11.3 PROHIBITED USES. Tenant shall not at any time use or occupy or
allow any Person to use or occupy the Premises or the Infrastructure or do or
permit anything to be done or kept in or about the Premises or the Building or
the Infrastructure that solely by reason of the particular nature of Tenant's
use of the Premises or Infrastructure: (a) violates any certificate of occupancy
in force for the Building or the Infrastructure; (b) causes or is likely to
cause damage to the Building or the Infrastructure or any equipment, facilities
or other systems therein; (c) constitutes a violation of law; (d) violates a
requirement or condition of the standard fire insurance policy issued for office
or data processing buildings in the City of New York or, in the non-arbitrary
and non-capricious judgment of Landlord or the Port Authority, constitutes an
extra-hazardous condition; (e) impairs the character, reputation, image or
appearance of the Building as a first class data center; (f) impairs the proper
and economic maintenance, operation and repair of the Building, the
Infrastructure or their respective equipment, facilities or systems; (g)
constitutes a nuisance, annoyance or inconvenience to other lessees or occupants
of the Building or the Infrastructure or any portion of the TELEHOUSE Complex
or interferes with or disrupts the use or occupancy of any area of the Building,
the Infrastructure or any portion of the TELEHOUSE Complex (other than the
Premises) by other lessees or occupants of the Building or the TELEHOUSE Complex
or the Teleport; (h) interferes with the computer or telecommunications
operations of any lessee or occupant of the TELEHOUSE Complex or with the
transmission or reception of microwave, television, radio or other
communications signals by antennae located anywhere within the Teleport
(including the Building); (i) constitutes an unlawful, immoral or objectionable
occurrence or condition; or (j) results in repeated demonstrations, bomb threats
or other events which require evacuation of the Building or any other portion of
the TELEHOUSE Complex or otherwise disrupts the use, occupancy or quiet
enjoyment of the Building or any other portion of the TELEHOUSE Complex by other
lessees and occupants. Tenant shall not use or allow another Person to use any
part of the Premises for a restaurant or bar, the preparation, consumption,
storage, manufacture or sale of food, beverages, liquor, tobacco, drugs or
hazardous substances; the maintenance or operation of vending machines or
devices for dispensing or sale of food, beverages, liquor, tobacco, tobacco
products or merchandise of any kind or any equipment or device for furnishing
services to the public, including pay telephones; the business of photocopying,
multilith or offset printing (but Tenant may use part of the Premises for
photocopying in connection with its own business); a typing or stenography
business; a school or classroom; cooking, lodging or sleeping; or for immoral
purposes. No noise, vibration or odor shall be permitted to escape from the
Premises.
SECTION 11.4 COMPLIANCE BY TENANT. Tenant and Landlord shall promptly forward to
each other any notice received of the violation of any law involving the
Premises. Tenant shall comply with all laws and all Superior Leases that impose
any obligation arising from or related to: (a) the particular manner of Tenant's
use of the Premises; (b) the conduct of Tenant's business or operation of its
equipment therein; (c) any cause or condition created by or at the instance of
Tenant; or (d) breach of any of Tenant's obligations hereunder, and Tenant shall
pay all the costs, expenses, fines, penalties and damages which may be imposed
upon Landlord by reason of or arising out of Tenant's failure to comply with (i)
the requirement for delivery of the notice provided in the first sentence of
this Section 11.4 or (ii) any law or any Superior Lease that imposes any
obligation arising from or related to: (w) the peculiar nature of Tenant's use
of the Premises; (x) the conduct of Tenant's business or operation of its
equipment therein; (y) any cause or condition created by or at the instance of
Tenant; or (z) breach of any of the Premises by Tenant pursuant to this Section
11.4 shall be subject to the provisions of Article VIII. Anything contained in
this Lease to the contrary notwithstanding, to the best knowledge of Landlord,
at the time possession of the Premises is delivered, the Premises shall comply
fully with (i) all laws regarding life safety, including, without limitation,
New York Local Laws -Nos. 5, 16, and 58 and any similar or successor laws
thereto, and (ii) all laws regrading the removal and disposal of asbestos,
including, without limitation, New York City Local Law 76 and any similar or
successor laws thereto.
SECTION 11.5 SERVICE CONTRACTS. Tenant shall neither contract for, nor employ
any labor in connection with, the maintenance or cleaning of, or providing of
any other services to, the Premises or the Building (but
30
<PAGE>
excluding Tenant's Property) without the prior consent of Landlord, which
consent shall not be unreasonably withheld or delayed, and the prior consent of
the Port Authority.
SECTION 11.6 FLOOR LOAD. Tenant shall not place a load upon any floor of the
Premises which exceeds either the load per square foot which such floor was
designed to carry (100 lbs. per square foot) or that which is allowed by law.
Landlord reserves the right to prescribe the weight and position of all safes,
business machines and mechanical equipment. Business machines and mechanical
equipment used by Tenant that cause vibrations or noise that may be transmitted
to the Building structure or to any leased space to such a degree as to be
reasonably objectionable to Landlord or to any lessees or occupants of the
Building shall be placed and maintained by Tenant, at its expense, in settings
of cork, rubber or spring-type vibration eliminators sufficient to eliminate
such vibrations or noise.
SECTION 11.7 RIGHT OF REPOSSESSION. If in order to comply with any law now or
hereafter enacted, it becomes necessary for Landlord to recover possession of
all or any portion of the Premises, Landlord shall have the right to repossess
the Promises, or such portion thereof, at any time upon one hundred eighty (180)
days' (or any lesser time required by law) notice to Tenant, and when said space
shall have been repossessed, in lieu of any and all claims for damages, Tenant
shall be entitled to a reduction in the Base Rent equal to the percentage that
the Rentable Area of the repossessed space bears to the total Rentable Area of
the Premises, and a reduction in Tenant's Share of Taxes and Building Operating
Expenses by an amount equal to the percentage that the Rentable Area of the
repossessed space bears to the total Rentable Area of the Building. However, if
the space taken is of such an amount or size as to make the remaining space
unusable to Tenant, then Landlord, upon thirty (30) days' notice from Tenant,
shall use its best efforts to furnish Tenant with comparable space, if
available, elsewhere in the TELEHOUSE Complex and to place Tenant in such new
space, and this Lease and each and all of the terms, covenants and conditions
hereof shall thereupon remain in full force and effect and be deemed applicable
to such new space. For this purpose, comparable space shall include provision by
Landlord of capability similar to that resulting from Preparation of Premises,
Section 2.3, and Tenant Improvements, Section 3.1. If Landlord is unable to
provide Tenant with such substitute space, then this. Lease shall cease and
terminate on the date (the "Repossession Date") designated in writing by Tenant
to Landlord at least thirty (30) days prior to such Repossession Date, which
Repossession Date shall not be later than ninety (90) days from the end of the
thirty (30) day notice period. No exercise by Landlord of any right reserved in
this Section 11.7 shall entitle Tenant to damages for any injury or
inconvenience occasioned thereby.
SECTION 11.8 RULES AND REGULATIONS. Tenant shall observe and comply with the
Rules and Regulations for the Teleport promulgated by the Port Authority and the
Rules and Regulations for the Building set forth in Exhibit D hereto, and any
amendments and additions thereto as Landlord may reasonably adopt or the Port
Authority may adopt from time to time for the management, safety, security,
care, cleanliness and good order of the Teleport or of the Building (the "Rules
and Regulations"). Landlord shall not be responsible or liable to Tenant for
violations of the Rules and Regulations by other lessees and occupants of the
Building. Landlord agrees that it shall not apply any Rule or Regulation to
Tenant on a discriminatory basis.
SECTION 11.9 LABOR HARMONY. Tenant shall not use (and upon notice from Landlord
shall cease using) contractors, labor, materials or equipment that, in
Landlord's reasonable judgment, would disturb labor harmony with the workforce
or trades engaged in performing other work or services in or about the Building
or the TELEHOUSE Complex or which would violate any of the terms of the Ground
Lease.
SECTION 11.10 LANDLORD'S AND PORT AUTHORITY'S CONSENT. In the event Tenant's
compliance as required by this Lease necessitates actions by Tenant for which
this Lease requires Landlord's consent and the consent of the Port Authority,
Tenant shall obtain such consents before taking such actions.
ARTICLE XII
RIGHTS OF LANDLORD
SECTION 12.1 CONDUITS IN PREMISES. Landlord reserves the right, and Tenant shall
permit Landlord, to install, erect, use and maintain pipes, ducts and conduits
in and through the Premises when reasonably required; provided that (i) Landlord
shall disguise, conceal or camouflage the pipes, ducts and conduits, (ii) the
same are
31
<PAGE>
erected along perimeter walls wherever possible and are installed in a manner
that does not materially detract from the appearance of the Premises or
interfere with Tenant's use and operation of the Premises.
SECTION 12.2 ENTRY BY LANDLORD. Landlord and its agents shall have the right to
enter or pass through the Premises at reasonable times: (a) to examine the
Premises and to show them to actual and prospective lenders, Superior Lessors,
Superior Mortgagees, purchasers, and lessees of the Building; (b) to make
repairs and Alternations in the Premises, the Building or Building facilities
and equipment; and (c) to take such actions as Landlord deems necessary or
desirable in an emergency, including shutting down or turning off Tenant's
computer, air conditioning, cooling and other equipment. Any entry by Landlord
shall be made on reasonable advance oral notice, except in emergency situations.
In exercising its rights under this Section 12.2, Landlord shall take reasonable
measures to avoid unnecessary interference with Tenant's use and occupancy of
the Premises. Landlord shall have a pass key or card key to the Premises and
shall be allowed to bring materials and equipment into the Premises as necessary
in connection with repairs and Affirmations. If work is to be performed by
Landlord in the Premises, Tenant shall afford Landlord access and the work shall
be done with due diligence. Landlord shall not interfere with Tenant's business
operations and shall not cause any interruption thereto; but Tenant acknowledges
that Landlord's work may be done on business days during business hours and
Tenant agrees to cooperate amicably enabling Landlord to complete such work,
Landlord shall repair any damage it causes to the Premises and shall fully
restore the Premises to the condition existing prior to the commencement of
Landlord's work.
SECTION 12.3 [Intentionally omitted]
SECTION 12.4 EXHIBITING THE PREMISES. During the period of six (6) months prior
to the date of expiration of the Lease Term, Landlord and its agents may exhibit
the Premises to prospective tenants during normal business hours, on reasonable
advance oral notice to Tenant.
SECTION 12.5 [Intentionally omitted]
SECTION 12.6 BUILDING NAME AND ADDRESS. Landlord reserves the right at any time,
without notice to Tenant, to change the Building's or the TELEHOUSE Complex's
respective name or address, and Landlord shall have no liability to Tenant for
any cost or inconvenience occasioned thereby.
SECTION 12.7 ALTERATIONS OF BUILDING.
SECTION 12.8 SECURITY. Landlord shall supply reasonable security measures for
the Building, consistent with such services supplied for other buildings in the
Teleport. By obligating itself to provide security measures, Landlord does not
warrant or represent the adequacy or sufficiency of such security to protect
persons and property in or about the Premises or the Building, and Landlord's
obligations under this Section 12.8 are expressly subject to the exculpatory
provisions of Article XVI of this Lease. In addition, Landlord reserves the
right to institute such security measures as may be required by the Port
Authority, from time to time.
SECTION 12.9 Other Rights. The enumeration of rights of Landlord in this Article
is not all-inclusive, and shall not be construed to preclude or limit other
rights reserved to Landlord by this Lease or by law.
ARTICLE XIII
DAMAGE OR DESTRUCTION
SECTION 13.1 RESTORATION. If the Building or the Premises is partially damaged
or totally destroyed by fire or other casualty, and if this Lease is not
terminated as provided in this Article XIII, Landlord shall repair the damage
and restore the Building or the Premises (except for Tenant's Property), as the
case may be, with reasonable dispatch after notice to Landlord of the damage or
destruction and the collection of substantially all of the insurance proceeds
receivable on account of the casualty; provided, that in no event shall Landlord
be required to expend on such restoration amounts in excess of the total
insurance proceeds collected on account of the casualty. Tenant shall not be
obligated to repair damage to or destruction of the Building or the Premises
caused by such casualty.
32
<PAGE>
SECTION 13.2 RENT ABATEMENT. If fire or other casualty damages or destroys or
renders the Premises untenantable, or deprives Tenant of reasonable access to
the Premises, the Base Rent shall be abated or reduced in the proportion that
the Rentable Area of the untenantable portion of the Premises bears to the total
Rentable Area of the Premises, for the period from the date of the damage or
destruction to the date that any damage to the Premises has been substantially
repaired except for Punch-List Items and Tenant has reasonable access to the
Premises and Tenant's Share of Taxes and Building Operating Expenses shall be
adjusted to the percentage that the Rentable Area of the portion of the Premises
that has not been rendered untenantable bears to the then Rentable Area of the
Building after the casualty; provided however should Tenant reoccupy a portion
of the Premises for the conduct of Tenant's Business during the period the
repair work is taking place and prior to the date that the Premises are
substantially repaired, the Base Rent and Additional Rent allocable to such
reoccupied portion, based upon the proportion which the Rentable Area of the
reoccupied portion of the Premises bears to the total Rentable Area of the
Premises, shall be payable by Tenant, and Tenant's Share of Taxes and Building
Operating Expenses shall be adjusted based upon the proportion which the
Rentable Area of the reoccupied portion of the Premises bears to the then total
Rentable Area of the Building, from the date of such occupancy.
SECTION 13.3 [Intentionally omitted]
SECTION 13.4 Election to Terminate.
13.4.1 Landlord's Election to Terminate. If: (i) the Building or the
Premises is totally destroyed by fire or other casualty; or (ii) the Building is
so damaged (whether or not the Premises are damaged or destroyed) that Landlord
elects not to restore the Building; or (iii) less than one (1) year remains in
the Lease Term at the time of the fire or other casualty and the time necessary
to rebuild or repair the Building or the Premises, in the opinion of a reputable
contractor, would exceed ninety (90) days; then, in any of such cases, either
party may terminate this Lease by giving the other party notice to such effect
within ninety (90) days after the date of the casualty. This Lease shall
terminate on the date specified in such party's notice.
13.4.2 Tenant's Election to Terminate. If: (i) the Building is totally
destroyed by fire or other casualty; or (ii) the Building or the Premises is
damaged to such an extent that Tenant cannot reasonably expect to conduct its
business for a period exceeding ninety (90) days from the date of the casualty,
Tenant may terminate this Lease by giving Landlord notice within ninety (90)
days after the date of the casualty, and this Lease shall terminate as of the
date of the casualty.
SECTION 13.5 BUSINESS INTERRUPTION. Except as set forth in Section 6.1.5 and
Section 6.2.2 of the Lease, Tenant shall not be entitled to any compensation or
rent abatement solely on account of inconvenience, loss of business or annoyance
arising from any repair or restoration of any portion of the Premises or of the
Building pursuant to this Article XIII. Landlord shall exert reasonable efforts
to make such repair or restoration promptly and in such manner as not to
interfere unreasonably with Tenant's use and occupancy of the Promises, but
Landlord shall have no obligation to perform such work on an overtime or
premium-pay base.
SECTION 13.6 TENANT'S PROPERTY. Landlord shall not be obligated to repair any
damage to or replace Tenant's Property.
SECTION 13.7 WAIVER. Tenant hereby waives the application of any law, now or
hereafter in force, to any case of damage to or destruction of the Building or
the Premises by fire or other casualty, or to a taking of all or part of the
Building or the Premises subject to the provisions of Article XIV below. This
Article XIII constitutes an express agreement governing the case of damage or
destruction of the Premises or the Building by fire or other casualty, and
Section 227 of the Real Property Law of the State of New York, which provides
for such contingency in the absence of an express agreement, shall not apply in
any such case.
ARTICLE XIV
EMINENT DOMAIN
33
<PAGE>
SECTION 14.1 COMPLETE TAKING. If the whole of the Building or the Premises is
taken by condemnation, sale in lieu of condemnation, or in any other manner for
any public or quasi-public use or purpose ("Eminent Domain"), this Lease and the
term and estate hereby granted shall terminate as of the date of vesting of
title on such taking or the date that the condemning or purchasing authority
takes possession, whichever is earlier ("Date of the Taking"), and the Rents
shall be prorated and adjusted as of such date.
SECTION 14.2 PARTIAL TAKING. If only part of the Building is taken by Eminent
Domain, this Lease shall be unaffected by such taking, except that: (a) if more
than twenty- five percent (25%) of the Rentable Area of the Building shall be
taken, whether or not any portion of the Premises shall be affected thereby, or
if so much of the Building shall be taken that Landlord in the exercise of its
good faith business judgment determines that it Would be economically or
operationally impractical to operate (including impracticability of providing
conditioned air or of operating the emergency power system) the portion of the
Building remaining after the taking, Landlord may, at its option, terminate this
Lease by giving Tenant sixty (60) days prior notice to that effect within thirty
(30) days after the Date of the Taking, and (b) if twenty percent (20%) or more
of the Premises shall be so taken and the remaining area of the Premises shall
not be reasonably adequate for Tenant to continue operation of its business,
Tenant may terminate this Lease by giving Landlord sixty (60) days prior notice
to that effect within thirty (30) days after the Date of the Taking. This Lease
shall terminate on the sixtieth (60th) day after the date that such termination
notice from Landlord or Tenant is given, and the Rents shall be prorated and
adjusted as of such termination date. Upon a partial taking, where this Lease
continues in force as to any part of the Premises, the Base Rent shall be
reduced by the percentage that the Rentable Area of the portion of the Premises
taken bears to the Rentable Area of the Premises prior to the taking, and
Tenant's Share of Taxes and Building Operating Expenses shall be adjusted to the
percentage that the Rentable Area of the portion of the Premises left to Tenant
bears to the Rentable Area of the Building after the taking.
SECTION 14.3 AWARD. Landlord shall be entitled to receive the entire award or
payment in connection with any taking of the Premises, without deduction for any
estate vested in Tenant by this Lease. Tenant hereby expressly assigns to
Landlord all of its right, title and interest in and to every such award or
payment. Tenant shall be entitled to claim and receive any award or payment from
the condemning authority expressly granted for the taking of Tenant's Property,
interruption of its business or moving expenses, but only if Tenant's claim does
not adversely affect or result in any reduction of Landlord's or the Port
Authority's award or interfere with Landlords or the Port Authority's
prosecution of its claim for the taking. If Tenant intervenes in a condemnation
proceeding in which Landlord or the Port Authority is a party, Landlord and
Landlord's counsel or the Port Authority and the Port Authority's counsel shall
manage and control the proceeding for the claimants.
SECTION 14.4 Temporary Taking. If all or any portion of the Premises is taken by
Eminent Domain for a limited period of time, not exceeding fourteen (14) days
this Lease shall remain in full force and effect and Tenant shall continue to
perform all of Tenant's obligations under this Lease, including, without
limitation, the payment of Rents. Tenant shall be entitled to receive that
portion of the award which is made for any such temporary taking of the Premises
attributable to any period within the Lease Term and for any damage to Tenant's
Property. Landlord shall be entitled to receive that portion of the award which
is made for any such temporary taking of the Premises attributable to the period
after the expiration of the Lease Term or which is allocable to the Building,
other than the Promises, or to the cost of restoration of the Premises or which
is made for any other purpose. If any such temporary taking terminates prior to
the expiration of the Lease Term, Tenant shall restore the Premises as nearly as
possible to their condition prior to the taking, at Tenant's sole cost and
expense; provided that Tenant shall receive the portion of the award
attributable to such restoration. If all of the Premises is taken by Eminent
Domain for a period of time longer than ninety (90) consecutive days, then
Tenant shall have the right to treat such taking as a Total Taking and the
provisions of Sections 14.1 and 14.3 shall apply. If less than all of the
Premises is taken by Eminent Domain for a period of time longer than ninety (90)
consecutive days, then Tenant shall have the right to treat such taking as a
Partial Taking and the provisions of Sections 14.2 and 14.3 shall apply.
ARTICLE XV
SURRENDER OF PREMISES
SECTION 15.1 SURRENDER. On the last day of the Lease Term, or upon any earlier
termination of this Lease, or upon any re-entry by Landlord upon the Premises,
Tenant shall quit and surrender the Premises to Landlord "broom-
34
<PAGE>
clean" and in good order, condition and repair, ordinary wear and tear and also
excepting any damage or destruction caused by fire or other casualty which
Tenant is not obligated by this Lease to repair. As provided in Section 9.2,
Tenant shall remove all of Tenant's Property from the Premises.
SECTION 15.2 ACCEPTANCE OF SURRENDER. Prior to expiration of the Lease Term, or
earlier termination of this Lease in accordance with the terms hereof, no act or
thing done by Landlord or its agents (including accepting the keys to the
Premises) shall be deemed an acceptance of surrender of the Premises, and no
agreement to accept such surrender shall be valid unless in writing and signed
by Landlord.
SECTION 15.3 NO MERGE. The surrender of this Lease by Tenant or the termination
of this Lease prior to expiration of the Lease Term shall not constitute a
merger, and at the option of Landlord shall operate as an assignment to Landlord
of any subleases of the Premises.
SECTION 15.4 NO HOLDING OVER. There shall be no holding over by Tenant after
expiration of the Lease Term, and the failure by Tenant to deliver possession of
the Premises to Landlord shall be an unlawful detainer.
ARTICLE XVI
EXCULPATION AND INDEMNIFICATION
SECTION 16.1 EXCULPATION. Except to the extent provided for in this Lease,
neither Landlord, nor any partner, shareholder, director, officer, agent or
employee of Landlord nor the Port Authority nor the agents or employees of the
Port Authority shall be liable to Tenant or its partners, directors, officers,
contractors, agents, employees, invitees, sublessees or licensees, for any loss,
injury or damage to Tenant or to any other Person, or to its or their property,
irrespective of the cause of such injury, damage or loss, including but not
limited to, claims for damage resulting from: (i) any equipment or appurtenances
becoming out of repair, (ii) injury done or occasioned by weather conditions;
(iii) any defect in or failure of plumbing, heating or air conditioning
equipment, raised flooring, leak detection equipment, gas, water, and steam
pipes, stairs, porches, railings or walks; (iv) broken glass; (v) the backing up
of any sewer pipe or downspout; (vi) the bursting, leaking or running of any
water pipe, air conditioner, humidifier, chiller, tank, tub, washstand, water
closet, waste pipe, sprinkler, drain or any other pipe or tank in, upon or about
the Building or the Premises; (vii) the escape of steam or hot water; (viii)
water, snow or ice being upon or coming through the roof or any skylight,
trapdoor, stair, doorway, window, walk or any other place upon or near the
Building or the Premises or otherwise; (ix) the falling of any fixture, plaster,
tile or stucco; and (x) any act, omission or negligence of other lessees,
licensees or other occupants of the Building or of adjoining or contiguous
buildings or of owners of adjacent or contiguous property; unless solely caused
by or solely resulting from the gross negligence or willful misconduct of
Landlord or its employees in the operation or maintenance of the Premises or the
Building, without any contributing negligence on the part of Tenant or any of
its sublessees or licensees or its or their employees, agents or contractors, or
any other lessees or occupants of the Building. Further, neither Landlord, nor
any partner, shareholder, director, officer, agent or employee of Landlord nor
the Port Authority or the Commissioners, officers, agents and employees of the
Port Authority in its capacity as Superior Lessor shall be liable: (a) for any
such damage caused by other lessees or Persons in or about the Building, or
caused by operations in construction of any private, public or quasi-public
work; or (b) for consequential damages, whether arising out of any loss of the
use of the Premises or any equipment or facilities therein by Tenant or any
Person claiming through or under Tenant, or arising from any other cause
including the gross negligence or willful misconduct of Landlord or its agents,
contractors or employees.
SECTION 16.2 INDEMNITY.
(A) To the extent not covered by insurance, Tenant shall defend,
indemnify and hold harmless Landlord, the Port Authority and the Commissioners
of the Port Authority, all Superior Lessors and Superior Mortgagees, and its and
their respective partners, directors, officers, agents and employees (in the
case of the Landlord only, to the extent not covered by insurance maintained by
Landlord) from and against any and all claims, demands, liability, losses,
damages, costs and expenses arising from or in connection with: (a) the use or
occupancy of the Premises or the conduct or management of the Premises or of any
business therein, or any work or act whatsoever done, or any condition created
(other than by Landlord or with respect to which Landlord is obligated to remedy
pursuant to the terms and provisions of this Lease) in or about the Premises
during the Lease Term or during the period of time, if
35
<PAGE>
any, prior to the Commencement Date that Tenant may have been given access to
the Premises or during any holdover by Tenant after the expiration or earlier
termination of this Lease; (b) any act or omission of Tenant or any of its
subtenants or licensees or its or their partners, directors, officers, members,
agents, employees, representatives, contractors, customers, guests, invitees and
other Persons doing business with Tenant or who are at the Premises with
Tenant's consent (whether or not such acts or omissions occur at the Premises or
elsewhere in the Teleport); (c) any accident, injury or damage whatever (unless
caused solely by Landlord's negligence) occurring in or about the Premises; and
(d) any breach or default by Tenant in the full and prompt payment and
performance of Tenant's obligations under this Lease or under any other lease of
space in the TELEHOUSE Complex or any ancillary service agreement or other
agreement between Landlord and Tenant. If any claim, action or proceeding is
brought against any of the persons indemnified under this Section 16.2 (A) for a
matter covered by this indemnity, Tenant, upon notice from the indemnified
Person, shall defend such claim, action or proceeding by counsel reasonably
satisfactory to Landlord and the indemnified Person. In the conduct of such
defense, Tenant shall not, without obtaining express advance permission from the
General Counsel of the Port Authority, raise any defense involving in any way
the jurisdiction of the tribunal over the person of the Port Authority, the
immunity of the Port Authority, its Commissioners, officers, agents or
employees, the governmental nature of the Port Authority. or the provisions of
any statutes respecting suits against the Port Authority. Any party seeking
indemnification pursuant to this Section 16.2 (A) shall (i) give prompt written
notice to Tenant of the commencement by a third party of any action, suit or
proceeding or of any written threat from a third party of any claim, action,
suit or proceeding for which such party shall seek to be indemnified, (ii)
advise Tenant in writing upon request of the status of the same, (iii)
cooperate, at no expense to such party, with Tenant with respect to the defense
of the same, and (iv) not settle or compromise any such claim, action, suit or
proceeding without Tenant's prior written consent, which consent shall not
unreasonably be withheld. The Tenant's obligations under this Section 16.2 (A)
shall not be diminished by any delay or failure to comply with the foregoing
clauses (i) through (iv), except to the extent that such failure or delay
results in any increased costs or material prejudice to Tenant solely as a
result of such failure or delay.
(B) Landlord shall defend, indemnify and hold harmless Tenant and its
partners, directors, officers, agents and employees (to the extent not covered
by insurance maintained by Tenant) from and against any and all claims,
liability, losses, damages, costs and expenses arising from or in connection
with: (a) the use or occupancy of the Building (other than the Premises) or the
conduct or management of the Building (other than the Premises), or any work or
act whatsoever done, or any condition created (other than by Tenant or with
respect to which Tenant is obligated to remedy pursuant to the terms and
provisions of this Lease) in or about the Building (other than the Premises)
during the Lease Term or during the period of time, if any, prior to the
Commencement Date that Tenant may have been given access to the Premises or
during any holdover (with Landlord's express written consent) by Tenant after
the expiration or earlier termination of this Lease; (b) any act or omission of
Landlord or any of its partners, directors, officers, members, agents,
employees, representatives, and contractors, and other Persons doing business
with Landlord (excluding other tenants and occupants of the Building) (whether
or not such acts or omissions occur at the Building or elsewhere in the
Teleport); (c) any accident, injury or damage whatever (unless causes solely ;by
Tenant's negligence) occurring in or about i the Building (other than the
Premises); and (d) any breach or default by Landlord in the full and prompt
payment and performance of Landlord's obligations under this Lease or any
ancillary service agreement or other agreement between Landlord and Tenant. If
any claim, action or proceeding is brought against any of the persons
indemnified under this Section 16.2 (B) for a matter covered by this indemnity,
Landlord, upon notice from the indemnified Person, shall defend such claim,
action or proceeding by counsel reasonably satisfactory to Tenant and the
indemnified Person. Any party seeking indemnification pursuant to this Section
16.2 (B) shall (i) give prompt written notice to Landlord of the commencement by
a third party of any action, suit or proceeding or of any written threat from a
third party of any claim, action, suit or proceeding for which such party shall
seek to be indemnified, (ii) advise Landlord in writing upon request of the
status of the same, (iii) cooperate, at no expense to such party, with Landlord
with respect to the defense of the same, and (iv) not settle or compromise any
such claim, action, suit or proceeding without Landlord's prior written consent,
which consent shall not unreasonably be withheld. Landlord's obligations under
this Section 16.2 (B) shall not be diminished by any delay or failure to comply
with the foregoing clauses (i) through (iv), except to the extent that such
failure or delay results in any increased costs or material prejudice to
Landlord solely as a result of such failure or delay.
SECTION 16.3 TRANSFERS OF LANDLORD'S INTEREST. The term "Landlord" shall mean
only the owner at the time in question of the present Landlord's interest in the
Building. In the event of a sale or transfer of the Building (by operation of
law or otherwise) or a lease of all or substantially all of the Building, or a
sale or transfer (by operation of law or otherwise) of the leasehold estate
under any such lease, the grantor, transferor or lessor, as
36
<PAGE>
the case may be, shall be and hereby is (to the extent of the interest or
portion of the Building or leasehold estate sold, transferred or leased)
automatically and entirely released and discharged, from and after the date of
such sale, transfer or leasing, of all liability in respect of the performance
of any of the terms of this Lease on the part of Landlord thereafter to be
performed; it being intended that Landlord's obligations hereunder shall be
binding on Landlord, its successors and assigns only during and in respect of
their respective successive periods of ownership. In the event of such a sale,
transfer or leasing, the covenants of Landlord shall thereafter be binding upon
the transferee of Landlord's interest. If Landlord's interest in the Building
shall be sold, assigned or otherwise transferred to any Person, including any
transfer upon the exercise of any remedy provided in a Superior Lease or a
Superior Mortgage or at law or equity, that Person, and each Person thereafter
succeeding to its interest in the Building, shall not be: (a) liable for any act
or omission of Landlord under this Lease occurring prior to such sale,
assignment or other transfer, (b) subject to any offset, defense or counterclaim
accruing prior to such sale, assignment, or other transfer, (c) bound by any
payment prior to such sale, assignment or other transfer of Base Rent or
Additional Rent for more than one month in advance; and (d) liable for the
return of the Security Deposit except to the extent that the Security Deposit
has been paid over to such Person.
SECTION 16.4 RECOURSE LIMITED TO BUILDING. No recourse shall be had on any of
Landlord's obligations hereunder or for any claim based thereon or otherwise in
respect thereof against any agent, incorporator, subscriber to the capital
stock, shareholder, officer, director, or employee, past, present or future, of
any corporation or any joint venturer of a joint venture which shall be Landlord
hereunder or included in the term "Landlord" or of any successor of any such
corporation, or against any principal, disclosed or undisclosed, or any
affiliate of any party which at the time the obligation accrued shall have been
Landlord or included in the term "Landlord", whether directly or through
Landlord or through any receiver, assignee, trustee in bankruptcy or through any
other Person, whether by virtue of any law or by enforcement of any assessment
or penalty or otherwise, except to the extent of the interest of any of the
foregoing in the Building or the proceeds of the Building, all such liability,
except as aforesaid, being expressly waived and released by Tenant. Tenant shall
look solely to Landlord's estate and interest in the Building or the proceeds of
the Building for the satisfaction of any right of Tenant for the collection of a
judgment or other judicial process or arbitration award requiring the payment of
money by Landlord, and no other property or assets of Landlord, Landlord's
agents, incorporators, subscribers, shareholders, officers, directors,
employees, partners, principals (disclosed or undisclosed) or affiliates shall
be subject to levy, lien, execution, attachment, or other enforcement procedure
for the satisfaction of Tenant's rights and remedies under or with respect to
this Lease, the relationship of Landlord and Tenant, or Tenant's use and
occupancy of the Premises or any other liability of Landlord to Tenant.
SECTION 16.5 RESPONSIBILITY FOR INFRASTRUCTURE. The Infrastructure has been
designed and constructed and will be repaired and maintained by the Port
Authority. Landlord shall have no responsibility regarding the Infrastructure,
and the Rents will not be reduced or abated, nor will Tenant's other obligations
hereunder be affected, by any defect or change in, or closure of, or failure to
complete, the Infrastructure; provided however. the Base Rent and Tenant's Share
of Taxes and Building Operating Expenses will be abated on a daily basis for
each day of twelve (12) hours or more that Tenant is denied access to the
Building by some defect in or repair or closure of the Infrastructure; and
provided further, that the provisions set forth in Section 6.1.5 and Section
6.2.2 shall apply.
ARTICLE XVII
SUBORDINATION AND ATTORNMENT
SECTION 17.1 SUBORDINATION. This Lease, and all rights of Tenant under R, are
subordinate to the Ground Lease and the rights of the Port Authority thereunder
and all present and future leases of all or any part of the Building or any
other part of the TELEHOUSE Complex (except for leases of office or commercial
space within the Building or other portions of the TELEHOUSE Complex); existing
present and future mortgages encumbering the Building, the TELEHOUSE Complex or
any of such leases, including mortgages also covering other real property; all
past and future advances made under such mortgages, all renewals, modifications,
replacements and extensions of such leases and such mortgages and spreaders and
consolidations of such mortgages; unless the lessor under any such lease or the
mortgagee under any such mortgage elects that this Lease shall be Superior to
his lease or mortgage pursuant to Section 17.2. This Section 17.1 shall be
self-operative and no further instrument of subordination shall be required.
However, in confirmation of subordination. Tenant shall promptly execute,
37
<PAGE>
acknowledge and deliver any instrument that Landlord, the lessor under any such
lease or the mortgagee under any such mortgage or any of their respective
successors in interest may reasonably request to evidence such subordination if
Tenant fails to execute, acknowledge or deliver any such instrument within ten
(10) days after request therefor, such failure shall constitute a material
default under this Lease. Tenant hereby irrevocably appoints Landlord as
Tenant's attorney-in- fact, with full power of substitution, coupled with an
interest, to execute, acknowledge and deliver any such instrument for and on
behalf of Tenant in the event of such a default by Tenant,' but exercise by
Landlord of its power-of attorney shall not cure the default. Any lease to which
this Lease, at the time referred to, is subordinate (including the Ground Lease)
is herein called a "Superior Lease" and the lessor of a Superior Lease or its
successor in Interest, at the time referred to (including the Port Authority),
is herein called a "Superior Lessor"; and any mortgage to which this Lease, at
the time referred to, is subordinate is herein called a "Superior Mortgage" and
the holder of a Superior Mortgage is herein called a "Superior Mortgagee". Each
Superior Lessor or Superior Mortgagee is also herein called a "Superior Interest
Holder".
SECTION 17.2 ELECTION TO SUBORDINATE. By written notice to Tenant, any Superior
Lessor or Superior Mortgagee may elect to subordinate its Superior Lease or
Superior Mortgage to this Lease.
SECTION 17.3 NOTICE AND CURE OF LANDLORD'S DEFAULT. If any act or omission of
Landlord would give Tenant the right, immediately or after lapse of a period of
time, to cancel or terminate this Lease, or to claim a partial or total
eviction, Tenant shall not exercise such right until: (a) it has given written
notice of the act or omission to Landlord, to the Port Authority at its address
specified in Section 24.13 and to each Superior Mortgagee and Superior Lessor
whose name and address shall previously have been furnished to Tenant, which
notice shall specifically refer to this Section 17.3 and shall describe
Landlord's default with reasonable detail, specifying the section of this Lease
as to which Landlord is in default, and (b) a reasonable period for remedying
the act or omission shall have elapsed following the giving of such notice and
following the time during which the Port Authority and each such Superior
Mortgagee or Superior Lessor would be entitled under its Superior Mortgage or
Superior Lease to remedy the act or omission (which reasonable period shall in
no event be shorter than the period during which Landlord would be entitled
under this Lease, after similar notice, to effect such remedy nor be shorter
than thirty (30) days). If, within said reasonable period, the Port Authority or
such a Superior Mortgagee or Superior Lessor gives Tenant notice of its
intention to remedy the act or omission, and thereafter diligently commences the
required remedial action and pursues it to completion, Tenant shall have no
right to terminate this Lease on account of the act or omission.
SECTION 17.4 ATTORNMENT. Any Superior Lessor or Superior Mortgagee who succeeds
to the rights of Landlord under this Lease, whether through exercise of remedies
in a Superior Lease or Superior Mortgage or by operation of law, is in this
Section 17.4 called a "Successor Landlord". Subject to the terms of any
non-disturbance agreement between Tenant and the Superior Landlord, if such
Successor Landlord does not elect to treat this Lease as extinguished, upon the
Successor Landlord's request, Tenant shall attorn to and recognize the Successor
Landlord as Tenant's landlord under this Lease and shall promptly execute and
deliver any instrument that such Successor Landlord may reasonably request to
evidence the attainment. Tenant hereby irrevocably appoints Landlord or the
Successor Landlord as Tenant's attorney-in-fact, coupled with an interest, to
execute, acknowledge and deliver the instrument of attornment on behalf of
Tenant in the event Tenant fails to do so within twenty (20) days after receipt.
Upon attornment, this Lease shall continue in full force and effect and as a
direct lease between the Successor Landlord and Tenant, upon all of the terms,
conditions and covenants as are set forth in this Lease, subject to the
provisions of Section 16.3.
SECTION 17.5 REQUIREMENTS OF SUPERIOR LESSOR OR MORTGAGEE. If any Superior
Lessor or Superior Mortgagee requires any modifications of this Lease, Tenant
shall, at Landlord's request, promptly execute and deliver to Landlord
instruments effecting the modifications that the Superior Lessor or Superior
Mortgagee requires, provided that such modifications do not adversely affect in
a material respect any of Tenant's rights or Landlord's obligation, or reduce
limit or modify, in a manner materially adverse to Tenant, Landlord's
obligations under this Lease.
SECTION 17.6 COMPLIANCE WITH GROUND LEASE.
17.6.1 Approval of Lease and Sublease By Port Authority. Notwithstanding
the execution of this Lease by Landlord and Tenant, if the Port Authority shall
refuse to execute and deliver a consent agreement in the form
38
<PAGE>
attached to the Ground Lease as "Exhibit Z", a copy of which is attached hereto
as Exhibit Z, then on the date of such refusal this Lease shall terminate and
all obligations of Landlord and Tenant arising thereafter shall be discharged
and released automatically. In addition, if the Port Authority shall fail to
execute and deliver a consent agreement in the form attached to the Ground Lease
as "Exhibit Z", a copy of which is attached hereto as Exhibit Z within fourteen
(14) days from the Fixed Commencement Date, then Tenant shall have the right to
terminate this lease and all obligations of Landlord and Tenant arising
thereafter shall thereafter be discharged and released. Alternatively, if either
Landlord or Tenant elects not to perform any of their respective obligations
hereunder until the Port Authority consents, then this Lease shall not become
effective until Landlord, Tenant and the Port Authority shall each have executed
a consent agreement in the form attached to the Ground Lease as "Exhibit Z", a
copy of which is attached hereto as Exhibit Z. Additionally, no sublease of the
Premises or assignment of this Lease shall be effective until Tenant, its
proposed subtenant or assignee and the Port Authority shall each have executed a
consent agreement in the form attached hereto as subtenant or assignee pursuant
to consent by the Port Authority shall not entitle any such subtenant or
assignee to any rights or privileges which the Port Authority has or may
hereafter accord to lessees of space at the Teleport.
17.6.2 Compliance With Ground Lease. Tenant shall: (i) observe, be bound
by, and comply with all of the terms, provisions, covenants and conditions of
the Ground Lease affecting its operations under or in connection with this Lease
and its occupancy of the Premises; (ii) use the Premises for the Permitted Use
and for no other purpose whatsoever; and (iii) pay directly to the Port
Authority on demand any rental, fee, charge or other amount due to Landlord if
Landlord shall be under notice of default under the Ground Lease. If the default
shall have been remedied, the Port Authority shall remit to Landlord any such
rentals, fees, charges or other amounts it has collected and which have not been
used by the Port Authority to cure the default pursuant to the terms of the
Ground Lease. No change or modification to this Lease shall be binding on the
Port Authority unless and until the Port Authority shall have given its written
approval to such change or modification. This Lease shall terminate and expire,
without notice to Tenant, no later than the day preceding the date of expiration
of the Ground Lease, or on the earlier expiration date of the Lease Term, or on
the effective date of any revocation of the Port Authority's consent to this
Lease. The Ground Lease requires that this Lease contain the following
provision, and Tenant agrees to perform and comply with the covenants of the
"Tenant" contained therein:
"Tenant covenants and agrees that, if by reason of a default upon the
part of Landlord who is the Lessee under the Underlying Lease covering the
demised premises, to wit, the Agreement of Lease between The Port Authority of
New York and New Jersey as Lessor arid TELEHOUSE international Corporation of
America, as Lessee, in the performance of any of the terms or provisions of such
Underlying Lease or if for any other reason of any nature whatsoever such
Underlying Lease and the leasehold estate of the Lessee thereunder are
terminated by summary dispossess proceedings or otherwise, Tenant, at the
request in writing of the then landlord under such Underlying Lease, shall
attorn to and recognize such landlord as Tenant's landlord under this lease.
Tenant covenants and agrees to execute and deliver, at any time and from time to
time, upon the request of the landlord under such Underlying Lease, any
instrument which may be necessary or appropriate to evidence such attornment.
Tenant further waives the provisions of any statute or rule of law now or
hereafter in effect which may terminate this lease or give or purport to give
Tenant any right of election to terminate this lease or to surrender possession
of the premises demised hereby in the event such Underlying Lease terminates or
in the event any such proceeding is brought by the landlord under such
Underlying. Lease if such landlord shall have requested in writing that Tenant
attorn, as aforesaid, and in that circumstance Tenant agrees that this lease
shall not be affected in any way whatsoever by any such proceeding or
termination. Nothing contained herein shall obligate the landlord to request the
Tenant to attorn or to accept such attornment from the Tenant."
ARTICLE XVIII
QUIET ENJOYMENT
SECTION 18.1 Quiet Enjoyment. So long as Tenant timely pays all the
Rents and performs all of Tenant's other obligations hereunder within the time
periods permitted under this Lease, Tenant shall peaceably and quietly, hold and
enjoy the Premises during the Lease Term without hindrance or ejection by
Landlord or-any person lawfully claiming through or under Landlord, subject,
nevertheless, to the provisions and to Superior Leases and Superior Mortgages.
This covenant is a covenant running with the land, and is not a personal
covenant of Landlord, except to the extent of Landlord's interest in this Lease
and for only so long as such interest shall continue.
39
<PAGE>
ARTICLE XIX
ASSIGNMENTS AND SUBLEASES
SECTION 19.1 [intentionally omitted]
SECTION 19.2 PROHIBITION. Tenant shall not mortgage, pledge, encumber or
otherwise hypothecate this Lease or the Premises or any part thereof in any
manner whatsoever, and any attempt to do so shall be void and a material breach
of this Lease. Provided that Tenant obtains the prior written consent of the
Port Authority pursuant to Section 17.6 and of Landlord in accordance with the
provisions of this Article XIX, then Tenant may (a) assign or otherwise transfer
this Lease or offer or advertise to do so; or (b) sublet the Premises or any
part thereof, or offer or advertise to do so. Any attempt by Tenant to assign or
transfer this Lease or offer or advertise to do so, or sublet the Premises or
offer or advertise to do so, without strictly complying with the requirements of
Section 17.6 and this Article XIX shall be void and a material breach of this
Lease. Use or occupancy of the Premises by a licensee, concessionaire, or any
other Person other than Tenant is a sublease subject to the provisions of this
Article XIX.
SECTION 19.3 CORPORATE AND PARTNERSHIP TRANSACTIONS. If Tenant is a
corporation, a dissolution of the corporation or a transfer (by one or more
transactions) of a majority of the voting stock of Tenant shall be deemed an
assignment of this Lease subject to the provisions of Section 17.6 and this
Article XIX; but the provisions of this Article XIX shall not apply to
transactions with a corporation into or with which Tenant is merged or
consolidated or to which substantially all of Tenant's assets are transferred or
which controls or is controlled by Tenant or is under common control with
Tenant, provided that a principal purpose of such merger or transfer is not the
assignment of this Lease and that in any of such events the successor to Tenant
has a net worth computed in accordance with generally accepted accounting
principles at least equal to the net worth of Tenant immediately prior to such
merger, consolidation or transfer. Proof satisfactory to Landlord of such net
worth shall be delivered to Landlord at least thirty (30) days prior to the
effective date of any such transaction. If Tenant is a partnership, a
dissolution of the partnership or a transfer of the controlling interest in
Tenant (including the admission of new partners or withdrawal of existing
partners having a controlling interest) shall be deemed an assignment of this
Lease subject to the provisions of Section 17.6 and this Article XIX, regardless
of whether the transfer is made by one or more transactions, or whether one or
more Persons hold the controlling interest prior to the transfer or afterwards.
SECTION 19.4 NOTICE TO LANDLORD. Tenant shall give notice to Landlord of
any proposed assignment or sublease accompanied by: (a) a conformed or
Photostatted copy of the proposed assignment or sublease; (b) a statement
setting forth in reasonable detail the identity of the proposed assignee or
sublessee, the nature of its business and (for a proposed sublease) the space to
be sublet; and (c) current financial information with respect to proposed
assignee or sublessee, including, without limitation, its most recent financial
report.
SECTION 19.5 [Intentionally omitted]
SECTION 19.6 [Intentionally omitted]
SECTION 19.7 [Intentionally omitted]
SECTION 19.8 CONSENT BY LANDLORD. Landlord, in its reasonable judgment,
shall either consent, or withhold its consent, to the proposed assignment or
sublease. Landlord may condition its consent on reasonable conditions,
including, without limitation, the following requirements:
19.8.1. The business of the proposed assignee or sub-tenant and its use
of the Premises, or the relevant portion thereof, must be consistent with the
Permitted Use and, in Landlord's judgment, in keeping with the standards of the
Building.
19.8.2 The proposed assignee or subtenant must be a reputable person
of good character, with sufficient assets and income, in Landlord's judgment, to
bear the financial responsibilities of Tenant under this Lease, and Landlord
must be furnished with reasonable proof thereof.
40
<PAGE>
19.8.3 Neither the proposed assignee or sublessee, nor any person who
directly or indirectly, controls, is controlled by, or is under common control
with, the proposed assignee or sublessee or any person who controls the proposed
assignee or sublessee, may then be an occupant of any part of the Building
unless Landlord is unable to provide the proposed assignee or subtenant with
comparable space within the building.
19.8.4 The proposed assignee or sublessee is not presently negotiating
with Landlord to lease space in the Building (or with the Port Authority to
lease space in the Teleport).
19.8.5 The form of the proposed sublease must be reasonably
satisfactory to Landlord and shall comply with the applicable provisions of this
Article XIX.
19.8.6 There may not be more than one Person occupying the Premises,
in the case of an assignment of this Lease or a sublease of all of the Premises,
or occupying the Sublet Portion, in the case of a sublease of part of the
Premises.
19.8.7 In the case of a sublease, Tenant shall not advertise or permit
any broker or agent or other Person to advertise the availability of the
Premises or any portion thereof at an aggregate rent per square foot of Rentable
Area which is less than the current market rent per square foot of Rentable Area
of the Premises that could be obtained if the Premises were vacant.
19.8.8 The Sublet Portion must be regular in shape and suitable for
normal leasing purposes.
19.8.9 The written consent of the Port Authority to the proposed
sublease or assignment must first be obtained. In this regard, Tenant
acknowledges that under the terms of the Ground Lease the Port Authority's
consent to any subletting or assignment is required and that the Port Authority
has no obligation whatsoever to give such consent.
SECTION 19.9 MISCELLANEOUS.
19.9.1 General Terms. Any sublease to which Landlord gives its consent
shall be expressly subject and subordinate to all of the covenants, agreements,
terms, provisions and conditions contained in this Lease and to the Ground
Lease. Tenant shall reimburse Landlord on demand for any reasonable costs that
may be incurred by Landlord in connection with any proposed assignment or
sublease, including, without limitation, the costs of making investigations as
to the acceptability of the proposed assignee or subtenant, and legal costs
incurred in connection with any request for consent. Any assignment of this
Lease to which Landlord gives its consent shall not be valid or binding on
Landlord unless and until the assignee executes an agreement in form and
substance reasonably satisfactory to Landlord, and expressly enforceable by
Landlord, whereby the assignee assumes and agrees to be bound by all of the
provisions of this Lease and to perform all of the obligations of Tenant
hereunder. Tenant's obligation to reimburse Landlord for costs under this
Section shall be limited to an amount equal to the direct, out-of-pocket costs
and expenses actually incurred by Landlord. Upon request, Landlord shall provide
Tenant with copies of all invoices for which reimbursement is sought and any
related documents.
19.9.2 Tenant Remains Liable. Notwithstanding any sublease to Landlord
or any assignment or sublease to any other Person, Tenant will remain fully
liable for the payment of Rents and for the performance of all the other
obligations of Tenant contained in this Lease. Any act or omission of an
assignee or subtenant, or anyone claiming under or through any subtenant, that
violates any of the obligations of this Lease shall be deemed a violation of
this Lease by Tenant.
19.9.3 Landlord's Consent Required. The consent by Landlord and the
Port Authority to any assignment or sublease shall not relieve Tenant or any
Person claiming through or under Tenant of the obligation to obtain the consent
of Landlord and the Port Authority, pursuant to the provisions of Section 17.6
and this Article XIX, to any future assignment or sublease.
19.9.4 Indemnification of Landlord. If Landlord or the Port Authority
declines to give its consent to any proposed assignment or sublease, Tenant
shall indemnity, defend and hold Landlord and the Port Authority harmless
41
<PAGE>
against and from any and all loss, liability, damages, costs and expenses
(including reasonable attorneys' fees) resulting from any claims that may be
made against Landlord or the Port Authority by the proposed assignee or
sublessee, or brokers or other persons claiming a commission or similar
compensation in connection with the proposed assignment or sublease.
19.9.5 General Sublease Provisions. With respect to each and every
sublease authorized by Landlord under the provisions of this Article XlX, it is
further agreed that:
(i) The term of the sublease must end no later than one day
prior to the last day of the Lease Term.
(ii) No sublease shall be valid, and no subtenant shall take
possession of the Premises or any part thereof, until a fully executed
counterpart of such sublease has been delivered to Landlord.
(iii) Each sublease shall provide that it Is subject and
subordinate to this Lease and the Ground Lease and to all Superior Leases and
Superior Mortgages; that Landlord may enforce the provisions of the sublease,
including collection of rents; that in the event of termination of this Lease or
re-entry or repossession of the Premises by Landlord, Landlord may, at its
option, take over all of the right, title and interest of Tenant, as sublessor,
under such sublease, and such subtenant shall, at Landlord's option, attorn to
Landlord but that nevertheless Landlord shall not: (1) be liable for any
previous act or omission of Tenant under such sublease; (2) be subject to any
defense or offset previously accrued in favor of the subtenant against Tenant;
or (3) be bound by any previous modification of such sublease made without
Landlord's written consent or by any previous prepayment of more than one (1)
month's rent.
19.9.6 Modification. Landlord shall not be bound by any modification
or amendment to a sublease of the Premises which Landlord has not approved in
writing.
SECTION 19.10 [Intentionally omitted]
SECTION 19.11 ADDITIONAL CHARGES. If Landlord shall give its consent to any
assignment of this Lease or to any sub-lease, Tenant shall in consideration
therefor, pay to Landlord, as Additional Rent:
(a) in the case of an assignment, an amount equal to the Recapture
Percentage specified in Section 1.1 multiplied by all sums and other
consideration paid to Tenant by the assignee for or by reason of such assignment
(including sums paid for the purchase or rental of part or all of Tenant's
Property to the extent that such sums are. intended as consideration for the
assignment of the Lease) less (ii) Tenant Expenses in connection with such
assignment; and
(b) in the case of a sublease, Q) the Recapture Percentage
specified in Section 1.1 multiplied by the amount by which the sublease rental
exceeds the portion of the Rents allocable to the subleased space less (ii)
Tenant Expenses in connection with such sublease. In computing this amount, the
sublease rental shall include all rents, charges and other consideration payable
to Tenant under the terms of the sublease and any collateral agreements, and
also sums paid by the sublessee for the purchase or rental of all or part of
Tenant's Property to the extent that such sums are intended as sublease rental.
The Rents allocable to the subleased space for any period shall equal the total
Rents accruing during such period, multiplied by a fraction, the numerator of
which is the Rentable Area of the subleased space and the denominator of which
is the Rentable Area of the Premises.
Said Additional Rent shall be paid by Tenant to Landlord as and when
said sums, rentals, and other consideration (or any portion thereof) are
received by Tenant; provided that Tenant shall receive a credit toward such
Additional Rent in an amount equal to the net unamortized or undepreciated cost
of any of Tenant's Property that is sold to the assignee or sublessee in
connection with such assignment or sublease, determined on the basis of Tenant's
federal income tax returns, such credit to be prorated over the period during
which such sums, rentals, or other consideration are to be paid by the assignee
or sublessee, in proportion to the amount of such sums, rentals or other
consideration received by Tenant.
42
<PAGE>
For purposes of this Section 19.11, "Tenant Expenses" in connection with
an assignment or sublease shall mean all brokerage commissions, legal fees,
takeover expenses and cash contributions or alteration expenses incurred, or to
be incurred, by Tenant in connection with such assignment or sublease.
SECTION 19.12 ACCEPTANCE OF RENT. If this Lease is assigned, whether or not in
violation of the provisions of this Lease, Landlord may collect Rents from the
assignee if the Premises or any part thereof are sublet, whether or not in
violation of this Lease, Landlord may, after default by Tenant and expiration of
Tenant's time to cure such default, collect rent from the sublessee. In either
event, Landlord may apply the net amount collected to payment of Rents, but no
such assignment, subletting, or collection shall be deemed a waiver of any of
the provisions of this Article, an acceptance of the assignee or sublessee as a
lessee, or a release of Tenant from the performance by Tenant of Tenant's
obligations under this Lease.
SECTION 19.13 STANDARDS OF LANDLORD'S CONSENT. Landlord and Tenant agree that if
Tenant desires to assign this Lease or sublet all or any part of the Premises,
and Landlord withholds its consent or conditions its consent and Tenant believes
that Landlord did so unreasonably, Tenant may prosecute an action for
declaratory relief to determine if Landlord unreasonably withheld or conditioned
its consent, but Tenant waives and discharges any claims it may have against
Landlord for damages arising from Landlord's withholding or conditioning its
consent. In any such action, each party shall bear its own attorneys' fees.
Tenant shall indemnify, defend and hold Landlord harmless from any and all
liability, losses, claims, damages, costs, expenses, causes of action and
proceedings involving any third party or parties (including without limitation
Tenant's proposed subtenant or assignee) who claim they were damaged by
Landlord's wrongful withholding or conditioning of Landlord's consent.
ARTICLE XX
ESTOPPEL CERTIFICATES
SECTION 20.1 Estoppel Certificates. Landlord and Tenant each agree from time to
time, within ten (10) days after a request by the other, to execute and deliver
to the other an estoppel certificate, in form satisfactory to the other, that:
(a) certifies that this Lease is unmodified and in full force and effect (or if
there have been modifications, that the same is in full force and effect as
modified, and stating the modifications); (b) states the expiration date of the
Lease Term and that there are no agreements with either party to extend or renew
the Lease Term or to permit any holding over (or if there are any such
agreements, describes them and specifies the periods of extension or renewal);
(c) certifies the dates through which Rents have been paid; (d) states whether
or not, to the knowledge and belief of Landlord or Tenant, Tenant or Landlord Is
in default in performance of any of its obligations under this Lease, and
specifies each default of which Landlord or Tenant has knowledge; (e) states
whether or not, to the knowledge and belief of Landlord or Tenant, any event has
occurred that, with the giving of notice or passage of time, or both, would
constitute a default by Tenant or .Landlord and, if such an event has occurred,
specifies each such event; (f) states whether Tenant is entitled to any credits,
offsets, defenses or deductions against payment of Rents, and, if so, describes
them; and (g) states that Tenant has no rights or options to purchase the
Building or the TELEHOUSE Complex or the Premises. An estoppel certificate
issued by Landlord or Tenant pursuant to this Section 20.1 shall be a
representation and warranty by such party which may be relied upon by the other
party and by others with whom the other party may be dealing, regardless of
independent investigation. Landlord or Tenant also shall include in any estoppel
certificate such other information concerning this Lease as the other party may
reasonably request. If Landlord or Tenant fails to execute and deliver an
estoppel statement within ten (10) days after a request by the other party: (i)
the other party's representations concerning the factual matters covered by an
estoppel certificate, as described above, shall be conclusively presumed to be
correct, and (ii) such failure shall be a material default. Upon request, Tenant
shall execute and deliver estoppel certificates to the Port Authority and any
other Superior Lessor and any Superior Mortgagee.
ARTICLE XXI
[INTENTIONALLY OMITTED]
ARTICLE XXII
43
<PAGE>
BROKER
SECTION 22.1 BROKER. Tenant covenants, warrants and represents that no was
instrumental in bringing about or consummating this Lease and that Tenant had no
conversations or negotiations with any broker concerning the leasing of the
Premises. Tenant agrees to indemnify, defend and hold Landlord harmless against
and from any claims for any brokerage commissions or finder's fees, and all
costs, expenses and liabilities incurred in connection with such claims,
including attorneys' fees. Landlord agrees to indemnify, defend and hold Tenant
harmless against and from any claims for any brokerage commissions or finder's
fees by persons claiming under Landlord, and all costs, expenses and liabilities
incurred in connection with such claims, including attorneys fees.
ARTICLE XXIII
CONDITIONAL LIMITATIONS
SECTION 23.1. CONDITIONAL LIMITATIONS. This Lease and the Lease Term and
estate here granted are subject to the limitation that if any of the following
(each a "Conditional Limitation") shall occur, Landlord may, at any time
thereafter, give a written notice to Tenant stating that this Lease and the
Lease Term and estate hereby granted shall automatically expire and terminate on
the specified in such notice, which date shall be twenty (20) days after the
giving of such notice, and upon the expiration of such twenty (20) day period
this Lease and the Lease Term and estate here granted shall automatically expire
and terminate as if the last day of such twenty (20) day period we the
Expiration Date herein definitely fixed, and Tenant immediately shall quit and
surrender the Premises to Landlord, but Tenant shall remain liable for damages
as provided in this Article XXIII.
23.1.1 [Intentionally omitted]
23.1.2 Failure to Pay Rent. Any failure by Tenant to pay Base Rent or
Additional Rent when due and such failure shall continue for ten (10) days after
notice thereof by Landlord to Tenant;
23.1.3 [Intentionally omitted]
23.1.4 Failure to Perform Under This Lease. The failure by Tenant to
observe and perform any other provisions of this Lease to be observed or
performed by Tenant, where such failure continues for thirty (30) days after
written notice thereof by Landlord to Tenant; provided, however, that if the
nature of such default is such that it cannot reasonably be cured within such
thirty (30) day period, Tenant shall not be deemed to be in default if Tenant
within that period commences to cure the default and thereafter diligently
proceeds to completion within a reasonable time; and provided further, that if
such failure by Tenant would constitute a default under the Ground Lease, Tenant
shall have five (5) days after receipt of notice of default from the Port
Authority to cure such default (except where cure of not such default requires
more than five (5) days, Tenant shall not be deemed to be in default if Tenant
commences to cure the default within five (5) days and thereafter diligently
proceeds to completion within a reasonable time);
23.1.5 [Intentionally omitted]
23.1.6 Admission of Inability to Pay Debts. Tenant shall be unable to,
or shall admit in writing its inability to, pay its debts as they become due;
23.1.7 Voluntary Proceeding. Tenant shall commence any case, proceeding
or other action (x) seeking relief on its behalf as debtor, or to adjudicate it
a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts under any law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, or (y)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for any part of its property;
23.1.8 General Assignment. Tenant shall make a general assignment for
the benefit of creditors;
44
<PAGE>
23.1.9 Involuntary Proceeding. Any case, proceeding or other action
shall be commenced against Tenant (x) seeking to enter an order against Tenant
as debtor or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts under any law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, or (y) seeking appointment of a receiver,
trustee, custodian or other similar' official for it or for all or any part of
its property, which either results in the entry of such an order, adjudication
of bankruptcy or insolvency or such an appointment or the entry of any other
order having a similar effect or remains undismissed for a period of sixty (60)
days;
23.1.10 Appointment of Trustee. A trustee, receiver, custodian or other
similar official is appointed for any substantial part of the assets of Tenant
which appointment is not vacated or effectively stayed within seven (7) business
days;
23.1.11 Tenant's Acquiescence. Tenant shall consent to or acquiesce in,
any of the acts set forth in Section 23.1.9 or 23.1.10;
23.1.12 [Intentionally Omitted]
23.1.13 Waste. The committing of waste on the Premises;
23.1.14 Hypothecation or Assignment. The hypothecation or assignment of
this Lease or subletting of the Premises, or attempts at such actions, in
violation of Article XIX;
23.1.15 Service of Notice. The service by Landlord of a three-day notice
under Section 711 of the New York Real Property Actions and Proceedings Law more
than once during each of any two (2) consecutive Lease Years of this Lease;
23.1.16 Rent Delays. Payment of Base Rent or Additional Rent more than
ten (10) days after notice on two (2) or more occasions during each of any two
(2) consecutive Lease Years of this Lease, regardless of whether Landlord served
a three-day notice on Tenant under Section 711 of the New York Real Property
Actions and Proceedings Law on any such occasion; or
23.1.17 Legal Process. If Landlord, on two (2) or more occasions,
institutes legal proceedings to recover possession of the Premises from Tenant
on account of defaults.
SECTION 23.2 TERMINATION. Upon the occurrence of any Conditional Limitation,
Landlord shall have the separate and independent right to re-enter the Premises
and to remove Tenant by summary dispossess proceeding or other lawful process.
Notwithstanding anything to the contrary contained herein, if the expiration and
termination of the Lease Term shall be stayed by operation of law or by order of
any court having jurisdiction over any proceeding described in Section 23.1 or
if the trustee appointed in any such proceeding or Tenant or Tenant as
debtor-in-possession shall fail to assume Tenant's obligations under this Lease
within the period prescribed by law for such assumption or within one hundred
twenty (120) days after entry of the order for relief or within any other period
allowed by the court, or if said trustee or Tenant or Tenant as
debtor-in-possession shall fail to provide adequate protection of Landlord's
right, title and interest in and to the Premises; then, following the lifting of
any such stay, this Lease shall automatically expire and terminate five (5) days
after the lifting of such stay.
SECTION 23.3 REMEDIES AND DAMAGES.
23.3.1 Surrender and Re-Entry. If this Lease shall automatically expire
or terminate pursuant to Section 23.1, or if this Lease shall otherwise expire
or be terminated or if Landlord shall re-enter or Tenant be removed from
possession of the Premises:
(i) Tenant shall immediately quit and peacefully surrender the
Premises to Landlord, and Landlord and its agents may immediately, or at any
time after such default or after the date upon which this Lease and the Lease
Term shall expire, re-enter and repossess the Premises, without notice, either
by summary proceedings or
45
<PAGE>
otherwise. In the event of any such re-entry, Landlord shall have the right,
with or without terminating this Lease, to remove all persons and property from
the Premises; the removed property may be stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant.
(ii) Landlord, at Landlord's option, may relet the Premises from
time to time, either in the name of Landlord or otherwise, to such tenant or
tenants, for such term or terms ending before, on or after the Expiration Date,
at such rental or rentals and upon such other conditions, which may include
concessions and free rent periods, as Landlord, in its sole discretion, may
determine; provided however, that Landlord shall have no obligation to relet the
Premises and shall in no event be liable for refusal or failure to relet the
Premises or, in the event of any such reletting, for refusal or failure to
collect any rent due upon any such reletting, and no such refusal or failure
shall operate to relieve Tenant of any liability under this Lease or otherwise
affect any such liability. Landlord may make such repairs, replacements,
alterations, additions, improvements, decorations and other physical changes in
and to the Premises as Landlord, in its sole discretion, considers advisable or
necessary. In connection with any such reletting or proposed reletting, without
relieving Tenant of any liability under this Lease or otherwise affecting any
such liability.
23.3.2 Tenant's Waiver of Notice and Redemption. Tenant hereby waives
the service of any notice of intention to. re-enter (which waiver shall not
constitute a waiver of any other notice required to be given to Tenant pursuant
to the terms of this Lease). Tenant does further hereby waive all rights of
Tenant to redeem the Premises, or to re-enter or repossess the Premises, or to
restore the operation of this Lease, after (i) Tenant shall have been
dispossessed by a judgment or by warrant of any court or (ii) any re-entry by
Landlord, or (iii) any expiration or termination of this Lease and the Lease
Term, whether such dispossess, re-entry, expiration or termination shall be by
operation of law or pursuant to the provisions of this Lease. The terms
"re-enter", "re-entry" and re-entered" as used in this Lease shall not be deemed
to be restricted to their technical legal meanings.
23.3.3 Damages. If this Lease and the Lease Term shall expire as
provided in Section 23.1 or 23.2 hereof or by or under any summary proceeding or
any other proceeding, or if Landlord shall re-enter the Premises, then, in any
of said events:
(i) Tenant shall pay to Landlord all Base Rent and Additional
Rent to the date upon which this Lease and the Lease Term shall have expired or
to the date of re-entry upon the Premises by Landlord, as the case may be;
(ii) Tenant also shall pay to Landlord, as damages, any
deficiency (a "Deficiency") between the Rents for the period that otherwise
would have constituted the unexpired portion of the Lease Term and, the net
amount, if any, of rents collected under any reletting effected pursuant to the
provisions of Section 23.3.1 (ii) for any part of such period (first deducting
from the rents collected under any such reletting all of Landlord's expenses in
connection with the termination of this Lease, Landlord's re-entry, upon the
Premises and such reletting including all repossession costs, brokerage
commissions, attorneys' fees and disbursements, alteration costs an other
expenses of preparing the Premises for such reletting): any such Deficiency
shall be paid in monthly installments by Tenant on the days specified in this
Lease for payment of installments of Base Rent, and Landlord shall be entitled
to recover from Tenant each monthly Deficiency as the same shall arise, and no
suit to collect the amount of the Deficiency for any month shall prejudice
Landlord's right to collect the Deficiency for any subsequent month by a similar
proceeding; and
(iii) whether or not Landlord shall have collected any monthly
Deficiency as aforesaid, Landlord shall be entitled to recover from Tenant, and
Tenant shall pay to Landlord, within thirty (30) days after demand, in lieu of
any further Deficiency as and for liquidated damages, a sure equal to the amount
by which the Rents for the period that otherwise would have constituted the
unexpired portion of the Lease Term exceeds the then fair market rental value of
the Premises for the same period, both discounted to present value at the rate
of four per cent (4%) per annum less the aggregate amount of Deficiencies
theretofore collected by Landlord for the same period; if, before presentation
of proof of such liquidated damages to any court or tribunal, the Premises, or
any part thereof, shall have been relet by Landlord for the period which
otherwise would have constituted the unexpired portion of the Lease Term, or any
part thereof, the amount of rent reserved upon such reletting shall be deemed,
prima facie, to be the fair market rental value for the part of the Premises so
relet during the term of the reletting.
46
<PAGE>
23.3.4. Rents from Reletting. If the Premises shall be relet together
with other space in the Building, the rents collected or reserved under any such
reletting and the expenses of any such reletting shall be equitably apportioned
for the purposes of this Section 23.3. Tenant shall in no event be entitled to
any rents collected or payable under any reletting, whether or not such rents
shall exceed the Base Rent reserved in this Lease. Nothing contained in this
Article XXIII shall be deemed to limit or preclude the recovery by Landlord-from
Tenant of the maximum amount allowed to be obtained as damages by applicable
law, or of any sums or damages to which Landlord may be entitled in addition to
the damages set forth in this Section 23.3.
23.3.5 Monies Received. Landlord from or on behalf of Tenant during
the pendency of any proceedings between Landlord and Tenant shall be deemed paid
as compensation for the use and occupation of the Premises, and the acceptance
of any such compensation by Landlord shall not be deemed an acceptance of Rents
or a waiver on the part of Landlord of any rights hereunder.
23.3.6 Equitable Remedies. In the event of a breach or threatened
breach by Tenant of any of the provisions hereof, Landlord shall have the right
of injunction and the right to invoke any remedy allowed at law or in equity as
if re-entry, summary proceedings and other remedies were not herein provided.
SECTION 23.4 WAIVER OF TRIAL BY JURY: TENANT NOT TO COUNTERCLAIM. Landlord
and Tenant each waive trial by jury in any action, proceeding or counterclaim
brought by either of them against the other on any matters not relating to
personal injury or property damage but otherwise arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant or Tenant's
use or occupancy of the Premises. Tenant shall not interpose any counterclaim in
a summary proceeding or in any action based on nonpayment of Rents or on
Tenant's holding over after expiration of the Lease Term or on any matter
relating to the foregoing unless the failure of Tenant to interpose such
counterclaim would result in the forfeiture or waiver of any claim raised
therein.
SECTION 23.5 NO HOLDOVER BY TENANT. Tenant waives any rights under Section
2201 of the New York Civil Practice Law and Rules in connection with any
holdover proceedings which Landlord may Property institute against Tenant. If
the Premises shall not be surrendered within thirty (30) days the termination of
this Lease, Tenant hereby indemnifies Landlord against loss, cost, injury,
damage, claim, expense, or liability (including but not limited to attorneys'
fees and disbursements) resulting from delay by Tenant in so surrendering the
Premises, including any claims made by any succeeding tenant or prospective
tenant founded upon such delay.
SECTION 23.6 LANDLORD'S RIGHT TO CURE DEFAULTS.
Landlord may, but shall not be obligated to, cure any default by Tenant
under this Lease, at any time after expiration of any applicable cure period,
without notice; and whenever Landlord so elects, all costs and expenses incurred
by Landlord in curing any such default, including, without limitation,
reasonable attorneys' fees and disbursements, together with interest on the
amount of costs and expenses so incurred at the Interest Rate, shall be paid by
Tenant to Landlord within thirty (30) days after demand, as Additional Rent.
SECTION 23.7 EFFECTS OF WAIVERS OF DEFAULT: NO OTHER WAIVER. No consent or
waiver, express or implied, by Tenant or Landlord to or of any breach of any
obligation of the other party shall be construed as a consent or waiver to or of
any other breach of the same or any other obligation. The failure of Landlord or
Tenant at any time to insist upon the strict performance of any obligation of
the other party under this Lease or to exercise any right or remedy herein
contained, shall not be construed as a waiver or relinquishment of the
performance of such obligation or of the right to exercise any right or remedy
in the future. The following specific provision shall not limit the generality
of the provisions of this Section 23.7. The receipt or acceptance by Landlord of
Rents or the payment by Tenant of Rents with knowledge of a breach by the other
party of any term of this Lease shall not be deemed a waiver of such breach. No
payment by Tenant or receipt by Landlord of an amount less than the correct
Rents shall be deemed to be other than a payment on account, nor shall any
endorsement or statement on any check or any accompanying letter be deemed to
effect or evidence 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 rights of Landlord.
47
<PAGE>
SECTION 23.8 ELECTION TO TERMINATE. No re-entry or taking possession of the
Premises by Landlord shall be construed as an election to terminate this Lease
unless a written notice of such intention be given to Tenant or unless the
termination thereof be decreed by a court of competent jurisdiction.
SECTION 23.9 REMEDIES NOT EXCLUSIVE. The rights and remedies of Landlord
provided in this Lease for a default by Tenant are cumulative and not exclusive,
and the exercise by Landlord of any right or remedy it may have shall not
preclude the concurrent or subsequent exercise of any other right or remedy it
may have pursuant to this Lease, at law or in equity.
SECTION 23.10 PAYMENT OF LANDLORD'S EXPENSES. Any expenses incurred by Landlord
in connection with any performance by it for the account of Tenant, and all
costs and expenses, including reasonable attorneys' fees (whether or not legal
proceedings are Instituted), involved in collecting Rents or enforcing the
obligations of Tenant under this Lease, including the cost and expense of
instituting and prosecuting legal proceedings or recovering possession of the
Premises after default by Tenant or upon expiration or sooner termination of
this Lease, shall be due and payable by Tenant, within thirty (30) days after
demand, as Additional Rent.
ARTICLE XXIV
MISCELLANEOUS
SECTION 24.1 NO RECORDING OF LEASE. Neither Landlord nor Tenant shall record
this Lease or any memorandum thereof.
SECTION 24.2 ENTIRE AGREEMENT. This Lease contains all of the agreements and
understandings related to the leasing of the Premises and the respective
obligations of Landlord and Tenant in connection therewith. All prior agreements
and understandings between the parties have merged into this Lease, which alone
folly and completely expresses the agreement of the parties.
SECTION 24.3 AMENDMENTS. No agreement shall be effective to amend, change,
modify, waive, release, discharge, terminate or effect an amendment of this
Lease, in whole or in part, unless such agreement is in writing, refers
expressly to this Lease and is signed by Landlord and Tenant. Modifications to
this Lease will not be binding upon the Port Authority or any other Superior
Lessor or Superior Mortgagee who has a right to approve modifications hereto
under its Superior Lease or Superior Mortgage unless approved by the Port
Authority or by the other Superior Lessor or Superior Mortgagee.
SECTION 24.4 SUCCESSORS. Except as otherwise expressly provided herein, the
obligations of this Lease shall bind and benefit the successors and assigns of
the parties hereto; provided, however, that no assignment, sublease or other
transfer in violation of the provisions of Article XIX shall operate to vest any
rights in any putative assignee, sublessee or transferee of Tenant.
SECTION 24.5 FORCE MAJEURE. Tenant and Landlord shall have no liability
whatsoever to the other on account of the inability of Tenant or Landlord to
fulfill, or delay in fulfilling, any of their respective obligations (excluding
obligations to pay money) under this Lease by reason of any strike, lockout or
other Labor Condition; inability to obtain labor, materials, coal, oil, or other
suitable fuel or reasonable substitutes therefor or the failure of the supply of
any thereof; acts of God, fire or other casualty; governmental preemption of
priorities or other controls in connection with a public emergency; governmental
restrictions or requirements of law; enemy or hostile governmental action; civil
commotion; or any other cause, whether similar or dissimilar to the above,
beyond Tenant's or Landlord's reasonable control. (The foregoing events are
collectively referred to as "Force Majeure".) if this Lease specifies a time
period for performance of an obligation of Tenant or Landlord, that time period
shall be extended by the period of any delay in Tenant's or Landlord's
performance caused by any of the events of Force Majeure.
SECTION 24.6 POST-TERMINATION OBLIGATIONS. Upon the expiration of the Lease
Term or earlier termination of this Lease, neither party shall have any further
obligation or liability to the other except as otherwise expressly provided in
this Lease and except for such obligations as by their nature or under the
circumstances can
48
<PAGE>
only be, or by the provisions of this Lease, may be, performed after such
expiration or earlier termination. However, any liability for a payment of Rents
or indemnity shall survive the expiration of the Lease Term or earlier
termination of this Lease.
SECTION 24.7 CONSTRUCTION ON ADJACENT PROMISES. If any excavation or other
construction shall be made on any premises adjoining or above or below the
Building, Tenant shall permit Landlord, the Port Authority or the adjoining
owner, and their respective agents, employees, licensees and contractors to
enter upon the Premises and to shore the walls thereof and to erect scaffolding
and/or protective barricades around the Building (but not so as to preclude
entry thereto) and to do any act or thing necessary for the safety or
preservation of the Building. Tenant's obligations under this Lease shall not be
affected by any such construction or excavation work, shoring-up, scaffolding or
barricading. Landlord shall not be liable in any case for any inconvenience,
disturbance, loss of business or any other annoyance arising from such
construction, excavation, shoring-up, scaffolding or barricades, but if Landlord
is performing such work, Landlord shall use its best efforts so that the work
will cause as little inconvenience, annoyance and disturbance to Tenant as
possible, consistent with accepted construction practice in the vicinity, so
that such work shall be expeditiously completed.
SECTION 24.8 NO REPRESENTATIONS BY LANDLORD. Landlord and Landlord's agents
have made no representations, warranties or promises whatsoever with respect to
the Promises, the Building and the Teleport, except as expressly set forth
herein, and no rights, easements or licenses are acquired by Tenant by
implication or otherwise except as expressly set forth herein. Tenant represents
and warrants that it has thoroughly inspected the Premises and is fully familiar
with the Premises.
SECTION 24.9 LANDLORD'S CONSENT. All references in this Lease to the consent
or approval of Landlord shall be deemed to mean the written consent or approval
of Landlord, and no consent or approval of Landlord shall be effective for any
purpose unless such consent or approval is in writing.
SECTION 24.10 INTERPRETATION.
24.10.1 Governing Law. Irrespective of the place of execution or
performance, this Lease shall be governed by and construed in accordance with
the laws of the State of New York.
24.10.2 Invalidity. If any provision of this Lease or the application
thereof to any Person or circumstance shall, for any reason and to any extent,
be invalid or unenforceable, the remainder of this Lease and the application of
that provision to other Persons or circumstances shall not be affected but
rather shall be enforced to the fullest extent permitted by law.
24.10.3 Captions. The Table of Contents, captions, headings and titles
of this Lease are solely for convenience of reference and shall not affect its
interpretation.
24.10.4 Presumptions. This Lease shall be construed without regard to
any presumption or other rule requiring construction against the party drafting
a document. It shall be construed neither for nor against Landlord or Tenant,
but shall be given a reasonable interpretation in accordance with the plain
meaning of its terms and the intent of the parties.
24.10.5 Independent Covenants. Each covenant, agreement, obligation or
other provision of this Lease on Tenant's part to be performed shall be deemed
and construed as a separate and independent covenant of Tenant, not dependent on
any other provision of this Lease.
24.10.6 Number and Gender. 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 and any other gender as the context may require.
24.10.7 Exhibits. All exhibits, schedules and riders appended to this
Lease are incorporated herein and by this reference made a part hereof.
49
<PAGE>
SECTION 24.11 JOINT AND SEVERAL LIABILITY. If, at any time during the Lease
Term, Tenant comprises more than one person, all such persons shall be jointly
and severally liable for payment of Rents and for performance of every
obligation of Tenant under this Lease.
SECTION 24.12 SUBMISSION OF LEASE. The submission of this Lease by Tenant to
Landlord or by Landlord to Tenant for review or signature does not constitute an
offer by or to Tenant to lease the Premises or the granting of an option to do
so. This instrument shall have no binding force or effect until its execution
and delivery by both Landlord and Tenant.
SECTION 24.13 NOTICES FROM ONE PARTY TO THE OTHER. Any notice or demand from
Landlord to Tenant or from Tenant to Landlord shall be in writing and shall be
deemed duly served if personally delivered, sent by a nationally recognized
courier service, or mailed by registered or certified mail, return receipt
requested, addressed, if to Tenant, at the Premises or such other address as
Tenant shall have last designated by notice in writing to Landlord and, if to
Landlord, to the Address of Landlord or at such other address as Landlord shall
have last designated by notice in writing to Tenant. Notices to the Port
Authority shall be delivered to the Executive Director at One World Trade
Center, New York, New York 10048 or to such other address as the Port Authority
may hereafter designate. Notices shall be deemed received and served when
personally delivered or upon receipt if mailed or sent by a courier service.
SECTION 24.14 PARTNERSHIP TENANT. If Tenant is a partnership (or is comprised of
two (2) or more Persons, individually or as partners of a partnership) or if
Tenant's interest in this Lease shall be assigned to a partnership (or to two
(2) or more Persons, individually or as partners of a partnership) in a manner
permitted under Article XIX (any such partnership and such Persons are referred
to as "Partnership Tenant"), the following provisions shall apply to such
Partnership Tenant: (a) the liability of each of the parties comprising
Partnership Tenant shall be joint and several; (b) each of the parties
comprising Partnership Tenant hereby consents in advance to, and agrees to be
bound by (i) any written instrument which may hereafter be executed by
Partnership Tenant or any successor partnership, changing, modifying, extending
or discharging this Lease, in whole or in part, or surrendering all or any part
of the Premises to Landlord, and (ii) any notices, demands, requests or other
communications which may hereafter be given by Partnership Tenant; (c) any
bills, statements, notices, demands, requests or other communications given or
rendered to Partnership Tenant or to any of such parties shall be binding upon
Partnership Tenant and all such parties; (d) if Partnership Tenant shall admit
new partners, all of such new partners shall, by their admission to Partnership
Tenant, be deemed to have assumed joint and several liability for the
performance of all of the provisions of this Lease on Tenant's part to be
observed and performed from and after the date of their admission to Partnership
Tenant; and (e) Partnership Tenant shall give prompt notice to Landlord of the
admission of any such new partners, and upon demand of Landlord, shall cause
each such new partner to execute and deliver to Landlord an agreement in form
satisfactory to Landlord, wherein each such new partner shall assume joint and
several liability for the performance of all the provisions of this Lease on
Tenant's part to be observed and performed from and after the date of their
admission to Partnership Tenant, but neither Landlord's failure to request any
such agreement nor the failure of any such new partner to execute or deliver any
such agreement to Landlord shall vitiate the provisions of clause (d) of this
Section 24.14.
SECTION 24.15 PORT AUTHORITY'S IMMUNITY. No immunity or exemption (actual,
alleged or imputed) of the Port Authority from any law or other requirement
shall excuse compliance, or be grounds for noncompliance, therewith by Tenant.
SECTION 24.16 NO DISCRIMINATION. Tenant shall treat all employees and
applicants for employment at the Premises without unlawful discrimination as to
race, creed, color, national origin, sex, age, handicap, marital status, sexual
orientation or affectional preference in all employment divisions, including but
not limited to recruitment, hiring, compensation, training and apprenticeship,
promotion, upgrading, demotion, downgrading, transfer, lay-off, and termination,
and all other terms and conditions of employment except as provided by law, and
shall state in all solicitations for employment at the Premises that all
qualified applicants will receive consideration for employment without regard to
race, color, religion, national origin, sex, sexual orientation or affectional
preference.
IN WITNESS WHEREOF, Landlord and Tenant have hereunto executed this Lease
as of the day and year first above written.
50
<PAGE>
LANDLORD: TELEHOUSE INTERNATIONAL CORPORATION OF AMERICA,
a Delaware corporation
By: /s/ Y. SHINTANI
Name: Y. SHINTANI
Title: President
TENANT: DIGITAL ISLAND, INC.
a Hawaiian corporation
By: /s/ RUANN F. ERNST
Name: RUANN F. ERNST
Title: CEO and PRESIDENT
51
<PAGE>
TELEHOUSE International Corp. of America TELEHOUSE
[LOGO]
FIRST AMENDMENT TO TELEHOUSE SERVICE AGREEMENT
between
TELEHOUSE INTERNATIONAL CORPORATION OF AMERICA
and
DIGITAL ISLAND
This First Amendment to the TELEHOUSE SERVICE AGREEMENT (the
"Agreement") made this 16th day of November, 1999, by and between TELEHOUSE
International Corporation of America, a Delaware corporation, having an address
at 7 Teleport Drive, Staten Island, New York, 10311 ("TELEHOUSE") and Digital
Island, Inc., a Delaware corporation, having an address at 45 Freemont Street,
Suite 1200 San Francisco, CA 94105 ("Client").
WITNESSETH:
WHEREAS, TELEHOUSE and Digital Island have entered into an Agreement as
of July 21, 1999 (the "Agreement") providing Digital Island with CAC and CPC
Maintenance Services associated with Site K.
WHEREAS, TELEHOUSE and Client mutually desire additional CAC/CPC
Maintenance Services associated with Site N, and in order to accomplish that,
TELEHOUSE and Client mutually desire to amend the Agreement, upon the terms and
conditions set fourth in this Amendment;
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter contained and for other good and valuable consideration, TELEHOUSE
and Client hereby agree as follows:
1. Amendment of Agreement
A. Amendment of Exhibit A. Section B. "Fees and Charge", is
hereby amended in its entirety to read as follows:
"B. Fees and Charges.
In consideration of the CAC/CPC Maintenance Services to be performed by
TELEHOUSE, Client shall pay a CAC/CPC Maintenance Service-Fee of Twelve Thousand
five hundred Dollars ($12,500.00) per year from December 01, 1998 until August
31, 1999, and effective September 01, 1999, Twenty five Thousand Dollars
($25,000) per year for the additional CAC/CPC Maintenance Services performed by
TELEHOUSE, which amount is derived from the following schedule:
---------------------------- ------------------ --------------------
Number of Units Site K Equipment Type Annual Cost/Unit
---------------------------- ------------------ --------------------
2 CPD $1,500.00
---------------------------- ------------------ --------------------
2 CAC (on-line) $3,500.00
---------------------------- ------------------ --------------------
1 CAC (standby) $2,500.00
---------------------------- ------------------ --------------------
---------------------------- ------------------ --------------------
Number of Units Site N Equipment Type Annual Cost/Unit
---------------------------- ------------------ --------------------
2 CPC $1,500.00
---------------------------- ------------------ --------------------
2 CAC (on-line) $3,500.00
---------------------------- ------------------ --------------------
52
<PAGE>
---------------------------- ------------------ --------------------
1 CAC (standby) $2,500.00
---------------------------- ------------------ --------------------
The CAC/CPC Maintenance Service Fee shall be payable monthly at a rate
of One Thousand forty-one Dollars ($1,041.00) from December 01, 1998 until
August 31,1999. Effective September 01, 1999, CAC/CPC Maintenance Service Fee
shall be payable monthly at a rate of Two Thousand eighty-three Dollars
($2,083.00), for the additional CAC/CPC Maintenance Service associated with Site
N, within (30) days after receipt by Client of an invoice thereof from
TELEHOUSE".
2. Confirmation of License. Except as modified by this Amendment,
the Agreement is and shall remain in full force and effect. TELEHOUSE and Client
hereby ratify and confirm all of the terms and provisions of the Agreement, as
amended hereby.
IN WITNESS WHEREOF, TELEHOUSE and Licensee have hereunto executed this
Amendment by their respective duly authorized representatives as of the day and
year first above written.
Digital Island, Inc. TELEHOUSE International Corporation of
America
By: /s/ By: /s/ Hideki Akabawa
Name: Name: Hideki Akabawa
Title: Real Estate Manger Title: Director
53
<PAGE>
TELEHOUSE International Corp. of America Original
SECOND AMENDMENT TO TELEHOUSE DATA CENTER SPACE LEASE
between
TELEHOUSE INTERNATIONAL CORPORATION OF AMERICA
and
DIGITAL ISLAND, INC.
THIS SECOND AMENDMENT TO TELEHOUSE CENTER SPACE LICENSE (this
"Amendment"), is made and entered into as of the It' day of June, 2000, by and
between TELEHOUSE International Corporation of America, a Delaware corporation,
with an address at 7 Teleport Drive, Staten Island, New York, 10311
("TELEHOUSE") and Digital Island, Inc. a Delaware corporation, having an address
at 45 Freemont Street, Suite 1200, San Francisco, CA 94105 ("Lessee").
W I T N E S S E T H:
WHEREAS, TELEHOUSE and Lessee have entered into a Lease dated as of the
1st day of December, 1998 (the "Lease") covering certain space referred to as
Site K and Conference Rooms 212B and 213 of the TELEHOUSE premises at 7 Teleport
Drive, Staten Island New,
WHEREAS, TELEHOUSE and Lessee have entered into a First Amendment to
such Lease dated as of the 17th day of August, 1999 (the "First Amendment")
covering certain additional space referred to as Site N of the TELEHOUSE
premises at 7 Teleport Drive, Staten Island Now York,
WHEREAS, TELEHOUSE and Lessee mutually desire that TELEHOUSE again
provide additional space referred to as Sites P and H and in order to accomplish
that, TELEHOUSE and Lessee mutually desire to amend the Lease, upon the terms
and conditions set forth in this Amendment;
NOW THEREFORE, In consideration of the mutual promises and covenants
hereinafter contained and for other good and valuable consideration, TELEHOUSE
and Lessee hereby agree as follows:
a. Amendment of Section 1.1. Section 1.1 "Fundamental Lease
Provisions," is hereby amended in its entirety to read as follows;
"DATE: December 01, 1998
LANDLORD: TELEHOUSE INTERNATIONAL CORPORATION OF
AMERICA, Delaware corporation.
ADDRESS OF LANDLORD: 7 Teleport Drive
Staten Island, Now York 10311 -1011
Attention: Sales & Marketing
Telephone: (718) 355-2500
Fax: (718) 355-2517
TENANT: Digital Island, Inc.
a Delaware corporation.
ADDRESS OF TENANT: 45 Fremont Street
Suite 1200
San Francisco, CA 94105
54
<PAGE>
Attn:
Telephone:
Fax:
PREMISES: Space consisting of portions of the
second and third floors in the
Building, which space is more
particularly known as Site K, Site N,
Site P, Site H and Conference Rooms
2128 and 213 and is indicated by
shading on the floor plan annexed
hereto as Exhibit "A".
BUILDING: The data center and office building
and underlying land known as TELEHOUSE
CENTER and located at 7 Teleport Drive
in the Teleport, in the Borough of
Staten Island, County of Richmond,
City and State of New York, and all
rights and interests appurtenant
thereto.
INITIAL BASE RENT: $271,116.00 per annum, for Site K,
plus $33,775.00 per annum for
Conference Rooms, plus $401,328.00 per
annum for Site N, plus $745,366.00 per
annum for Site P and plus $946,836.00
per annum for Site H.
INITIAL BUILDING OPERATING EXPENSE: $14.50 per square foot of Rentable
Area per annum applicable to Site K,
Site N, Site P and Site H only.
TENANT'S SHARE: 28.66 percent (28.66%)
LEASE TERM: The term of this Lease shall include
the Initial Lease Term and any
extension or renewals thereof.
INITIAL LEASE TERM: A period of 3 years (unless terminated
earlier pursuant to any of the
provisions of this Lease or pursuant
to law), commencing as set forth in
Section 2.2.
RECAPTURE PERCENTAGE: The Recapture Percentage shall be one
hundred percent (100%) unless a
different percentage is specified as
follows: fifty percent (50%).
FIXED COMMENCEMENT DATE: December 01, 1998
RENT COMMENCEMENT DATE: Payment of Base Rent commences on the
Fixed Commencement Date for Site K and
Conference Rooms, on September 01,
1999 for Site N, on June 1, 2000 for
Site P and on July 1, 2000 for Site H.
RENTABLE AREA: Site K: 3,813 square feet (2,040
usable square feet).
Conference Room: 1,803 square feet
(965 usable square feet).
Site N: 8,074 square feet (4,320
usable square feet)
She P: 12,340 square feet (6,602
usable square feet)
Site H: 19,050 square feet (10, 192
usable square feet)
55
<PAGE>
TENANTS BUSINESS: Communication related services.
TENANT'S BROKER: None
ADDRESS OF TENANTS BROKER: Not applicable."
b. Amendment of Section 2.3 "Preparation of Premises". Section 2.3
"Preparation of Premise", is hereby amended by inserting the following language
at the end of the Section:
"Landlord has provided the Site P portion of the Premises on an "as is" basis
including:
- Raised floor, drop ceiling and lighting
- Critical Power, Essential Power and Non-essential power feeder
installation
- Demising walls
- Computer room air conditioning (three 23 ton units).
- Connection to centralized building monitoring and security system
- Halon and dry sprinkler fire protection in computer room
- Three (3) 75 Kva Computer Power Centers (CPC) each with 84 breaker
positions
- Main entrance and computer room card readers
Notwithstanding above. Landlord will clean all underfloor and floor surfaces
including removal of cabling and power distribution wiring as necessary and
Landlord will paint and re-lamp entire space.
Landlord has provided the Site H portion of the Premises on an "as is" basis
including:
- Raised floor, drop ceiling and lighting
- Critical Power and Essential Power feeder installation
- Demising walls
- Computer room air conditioning (two 20 ton units) with overhead
distribution.
- Connection to centralized building monitoring and security system
- Pre-action sprinkler system
- One (1) 125 Kva Computer Power Center (CPC) with 126 breaker positions
- Main entrance card reader
Notwithstanding above, Landlord will clean all underfloor and floor surfaces
including removal of cabling and power distribution wiring as necessary and
Landlord will paint and re-lamp entire space.
In addition and as requested by Tenant, Landlord will perform certain other
special site fitout work for the Site H portion of the Premises according to the
requirements of the Special Site Fitout Work annexed hereto as Exhibit "B". Such
additional work will be completed on or about October 1, 2000 however such
completion will not impact the Commencement Date or Rent Commencement Date.
Tenant will pay for such special fitout work as per schedule provided in Exhibit
"B" and Article IV herein,"
c. Amendment of Section 6.1. "Service and Utilities", is hereby amended
by replacing in subsection 6.1.2 "Additional Electrical Equipment" and in
subsection 6.1.5 "Provision of Emergency Power", every occurrence of the phrase
"Site K or Site N" with the phrase "Site K, Site N, Site P or Site H".
d. Amendment of Section 6.2. Section 6.2, "Water". is hereby amended
by replacing every occurrence of the phrase "Site K or Site N" with the phrase
"Site K, Site N, Site P or Site H".
56
<PAGE>
e. Amendment of Section 6.4. Section 6.4 "Heating and Air Conditioning"
is hereby amended by replacing in subsection 6.4.1 "Heating" and in subsection
6.4.2 "Air Conditioning" every occurrence of the phrase "Site K or Site N" with
the phrase "Site K, Site N, Site P or Site H".
f. Amendment of Exhibit A. Exhibit A "Floor Plans", is hereby amended to
include Site P and Site H portions of the Premises as per Exhibit "A" attached.
g. Amendment of Exhibit B. Exhibit B "Special Site Fitout", is hereby
amended by adding the following language at the end of the Exhibit:
"Site H Modifications
. Architect and engineering design fees and Port Authority filing fees.
. Provide and install eight (8) Liebert 25-ton air conditioning units
. Provide and install four (4)125 Kva United Power PDUs
. Provide and install halon fire protection system
. Close second doorway from Tenant corridor
. Other site work as specified in construction drawings listed below
Site H Construction Drawings:
G-1 Second Floor Site H : General Notes, Legend and Key Plan 3/24/00 Rev 0
D-1 Second Floor Site H: Demolition Plan 3/24/00 Rev 0
D-2 Second Floor Site H Demolition Reflected Ceiling 3/24/00 Rev 0
A-1 Second Floor Site H: Floor Plan 3/24/00 Rev 0
A-2 Second Floor Site H: Reflected Ceiling Plan 3/24/00 Rev 0
M-1 Second Floor Site H: Floor Plan Ductwork Demolition HVAC 3/24/00 Rev 0
M-2 Second Floor Site H: Floor Plan Piping Demolition HVAC 3/24/00 Rev 0
M-3 Second Floor Site. H: Floor Plan Ductwork HVAC 3/24/00 Rev 0
M-4 Second Floor Site H : Floor Plan Piping HVAC 3/24/00 Rev 0
M-5 Second Floor Site H: Equipment Schedules & Notes HVAC 3/24/00 Rev 0
M-6 Second Floor Site H: Details-HVAC 3/24/00 Rev 0
FP-1 Second Floor Site H: Fire Protection Notes, Details & Specifications 3/24/00 Rev 0
FP-2 Second Floor Site H: Fire Protection Floor Plan 3/24/00 Rev 0
E-1 Second Floor Site H: Specifications, General Notes and Legend 3/24/00 Rev 0
E-2 Second Floor Site H: Floor Plan Lighting & Diagram 3/24/00 Rev 0
E-3 Second Floor Site H: Floor Plan- Power, Details & Diagram 3/24/00 Rev 0
E-3A Second Floor Site H: Demolition Plan 3/24/00 Rev 0
E-4 Second Floor Site H: Riser Diagrams 3/24/00 Rev 0
E-5 Second Floor Site H: Panelboard Schedules (Sheet-1) 3/24/00 Rev 0
E-6 Second Floor Site H: Panelboard Schedules (Sheet-2) 3/24/00 Rev 0
E-7 Second Floor Site H: Demolition Plan 3/24/00 Rev 0
Site H Tenant's Costs. Tenant shall be responsible for payment of the following
costs (hereinafter, "Tenant's Costs") for Site H fitout work specified in this
Exhibit:
Cost of above work $1,448,871.00
Tax 2,373.00
Total $1,451,244.00
Tenant's Costs will be paid according to the following schedule:
- 20% upon approval of construction plans by Port Authority and
commencement of construction work (estimated July 1, 2000)
- 40% upon completion of all construction work except installation of
Liebert air conditioning units (estimated September 1, 2000)
57
<PAGE>
- 40% upon final completion of all construction work (estimated October 1,
2000)"
IN WITNESS WHEREOF, TELEHOUSE and Licensee have hereunto executed this
Amendment by their respective duly authorized representatives as of the day and
year first above written.
Digital Island, Inc. TELEHOUSE Intentional Corporation
of America
By: /s/ Howard Lasky By: /s/ Y. SHINTANI
Name: Howard Lasky Name: Y. SHINTANI
Title: VP & General Counsel Title: President
Attachment: Exhibit "A Floor Plans
Exhibit "Z" Consent Agreement
58
<PAGE>
EXHIBIT "Z"
CONSENT AGREEMENT
Port Authority Lease No. TP-004
(said Lease being dated as of August 9, 1988)
THIS AGREEMENT, made as of June 1st, 2000 by and among THE PORT AUTHORITY
OF NEW YORK AND NEW JERSEY (hereinafter called the "Port Authority"), a body of
corporate and politic, created by Compact between the States of New Jersey and
New York, with the consent of the Congress of the United States of America and
having an office at One World Trade Center, in the Borough of Manhattan, City,
County and State of New York, and TELEHOUSE International Corporation of America
(hereinafter called "the Lessee'), and Digital I land, Inc. (hereinafter called
the "Space Lessee) whose representative is Allan Leinwand
WITNESSETH, that:
WHEREAS, the Port Authority and the Lessee have heretofore entered into an
agreement dated August 9, 1988 (which agreement, as the same has been or may
hereafter be supplemented and amended, is hereinafter called the "Main Lease"
covering the construction and operation of an office building or buildings at
the Teleport (located in a portion of the Staten Island Industrial Park leased
by the City of New York to the Port Authority and hereinafter called the
"Facility"); and
WHEREAS, pursuant to and in accordance with the terms of the Main Lease,
the Lessee proposes as of the effective date hereof to enter ink a use and
occupancy agreement with the Second Amendment to the Space Lease dated June 1st,
2000, a copy of which is attached hereto, made a part hereof and hereafter
called "Second Amendment", subject to the consent of the Port Authority and the
execution of a Consent Agreement by and among the Lessee, the Space Lessee and
the Port Authority;
NOW, THEREFORE, for and in consideration of the covenants and mutual
agreements herein contained, the Port Authority, the Lessee and the Space Lessee
hereby agree effective as of June 1st, 2000, as follows:
1. On the terms and conditions hereinafter set forth, the Port Authority
consents to the Space Lease.
2. The Second Amendment shall terminate, without notice to the Space
Lessee, on the day proceeding the date of expiration or earlier termination of
the Main Lease, or on such earlier date as the Lessee and the Space Lessee may
agree upon. The Space Lessee shall quit the space covered by the Second
Amendment and remove its property for which it is responsible therefrom on or
before the termination of the Second Amendment.
3. Neither this Consent Agreement, or anything contained herein nor the
consent granted hereunder shall constitute or be deemed to constitute a consent
to nor shall they create an implication that there has been consent to any
enlargement or change in the rights, powers and privileges granted to the Lessee
under the Main Lease, nor consent to the granting of any rights or privileges to
the Space Lessee as may be provided by the Second Amendment if not granted to
the Lessee under the Main Lease. The Second Amendment is an agreement between
the Lessee and the Space Lessee with respect to the various matters set forth
therein. Neither this Consent nor anything herein nor the consent granted
hereunder shall constitute an agreement between the Port Authority and the
Lessee that the provisions of the Second Amendment shall apply and pertain as
between the Lessee and the Port Authority, it being understood that the terms,
conditions and agreements of the Main Lease shall, in all respects, be
controlling and determinative. The specific mention of or reference to the Port
Authority in any part of the Second Amendment, including without limitation
thereto, any mention of any consent or approval of the Port Authority now or
hereafter to be obtained, shall not be or be deemed to create an inference that
the Port Authority has granted its consent or approval thereto under this
Consent Agreement or shall thereafter grant its consent or approval thereto or
that the Port Authority's discretion pursuant to the Main Lease as to any such
consents or approvals shall in any way be affected or impaired. The lack of any
specific reference in any provisions of the Second Amendment to Port Authority
approval, or consent shall not be deemed to imply that no such approval or
consent is required and the Main Lease shall, in all respects, be controlling.
59
<PAGE>
No provision of the Second Amendment, including, but not limited to, those
imposing obligations on the Space Lessee with respect to laws, rules,
regulations, taxes, assessments and liens shall be construed as a submission or
admission by the Port Authority that the same could or does lawfully apply to
the Port Authority, nor shall the existence of any provision of the Second
Amendment covering actions which shall or may be undertaken by the Space Lessee
or the Lessee including, but not limited to, construction on the space covered
by the Second Amendment, be deemed to imply or infer that Port Authority consent
or approval thereto pursuant to the Main Lease will be given or that Port
Authority discretion with respect thereto will in any way be affected or
impaired.
4. The Space Lessee, in its operations under or in connection with the
Second Amendment and in its use of the space covered by the Second Amendment,
shall be subject to the applicable terms, provisions, covenants and conditions
of the Main Lease. Without in any way affecting the obligations of the Lessee
under the Main Lease and under this Consent Agreement, all acts and omissions of
the Space Lessee shall be deemed acts and omissions of the Lessee under the Main
Lease, but notwithstanding the foregoing, the Lessee shall not be or be deemed
to be default of the Main Lease to the extent that any of the foregoing shall
constitute a breach thereof if, except for causes beyond the control of the
Lessee, it shall have commenced to remedy said default within twenty (20) days
after receipt of notice thereof from the Port Authority and continues diligently
to pursue such remedy.
5. The Second Amendment shall not be changed, modified, discharged or
extended except by written instrument duly executed by the parties thereto and
only with the express written consent of the Port Authority. Without limiting
the generality of the foregoing, the Space Lessee shall use the space covered by
the Second Amendment for the following purpose and for no other purpose or
purposes whatsoever: for communications related services in connection with its
business.
6. If the Lessee shall at any time be in default of its obligations under
the Main Lease to make payments to the Port Authority, or if there shall occur
at any time an event involving insolvency, bankruptcy, arrangement or
reorganization of the Lessee which under the terms of the Main Lease would
constitute an event the occurrence of which grants the Port Authority the right
to terminate the Main Lease and provided the same has not been cured within the
time granted therefor, if any, under the Main Lease, the Space Lessee on demand
of the Port Authority shall pay directly to the Port Authority any fee or other
amount due to the Lessee. No such payment shall relieve the Lessee from any
obligations under the Main Lease or under this Consent Agreement but all such
payments shall be credited against the obligations of the Lessee and of the
Space Lessee for each payment or part thereof.
7. The granting of the consent hereunder by the Port Authority shall not
be or be deemed to operate as a waiver of consent to any subsequent agreement
with respect to the use or occupancy of space at the Facility (by the Lessee or
by the Space Lessee) or to any assignment of the Main Lease or the Second
Amendment or of any rights under either of them, whether in whole or in part.
8. In the event of any substantial default by the Space Lessee under any
of the provisions of this Consent Agreement and said default has not been cured
within thirty (30) days after the Port Authority has served a notice of such
default upon the Lessee and the Space Lessee, the Port Authority shall have the
right to revoke the consent granted hereunder upon thirty (30) days' written
notice to the Lessee and the Space Lessee, but no such revocation shall be
deemed to affect the Main Lease and the continuance thereof, it being
understood, moreover, that the foregoing shall not be deemed to affect or limit
any rights of the Port Authority under the Main Lease. In the event of the
revocation of the consent hereunder as hereinabove provided, the Lessee shall
immediately terminate the Second Amendment.
9. Reference herein to the Space Lessee shall mean and include the Space
Lessee, its officers, agents, employees and also others on the space covered by
the Second Amendment or on the Facility with the consent of the Space Lessee.
10. Neither the Commissioners of the Port Authority nor any of them, nor
any officer, agent or employee thereof shall be held personally liable to the
Lessee or to the Space Lessee under any term or provision of this Consent
Agreement or because of its execution or because of any breach or alleged breach
hereof.
60
<PAGE>
IN WITNESS WHEREOF, the Port Authority, the Lessee and the Space Lessee
have executed these presents.
THE PORT AUTHORITY OF NEW YORK
AND NEW JERSEY
ATTEST: /s/ Daniel D Bergstein By: /s/ Cherrie Nanninga
Daniel D Bergstein Name: Cherrie Nanninga
Secretary The Port Authority Title: DIRECTOR OF REAL STATE
of NY & NY
TELEHOUSE INTERNATIONAL CORP.
OF AMERICA
ATTEST: By: /s/ Y. SHINTANI
Name: Y. SHINTANI
Title: President
DIGITAL ISLAND INC.
ATTEST: By: /s/ Howard Lasky
Name: Howard Lasky
Title: VP & General Counsel
61
<PAGE>
STATE OF NEW YORK )
COUNTY OF RICHMOND ) ss.:
On the 2nd day of October, 2000 before me personally came Yasuhiro Shintani
to me known, who, being by me duly sworn, did depose and say that he resides at
110 East 56th Street, NY, NY; that he is the President of TELEHOUSE
International Corporation of America, one of the corporations described in and
which executed the foregoing instrument; and that he signed his name thereto by
order of the Board of Directors of the said corporation.
_____________________________________________
(Notarial Seal and Stamp)
STATE OF CALIFORNIA )
COUNTY OF SAN FRANCISCO ) ss.
On the 5th day of September, 2000 before me personally came Howard Lasky to
me known, who, being by me duly sworn, did depose and say that he resides at 10
Bay Vista, Ct., Mill Valley, CA 94941; that he is the VP & General Counsel of
DIGITAL ISLAND, INC., one of the corporations described in and which executed
the foregoing instrument; and that he signed his name thereto by order of the
Board of Directors of the said corporation.
/s/ Alaina Austin
---------------------------------------------
(Notarial Seal and Stamp)
STATE OF NEW YORK )
COUNTY OF NEW YORK ) ss.:
On the 14th day of November, 2000 before me personally came Cherrie
Nanninga, to me known, who, being by me duly sworn, did depose and say that she
resides at 250 W. 24 Street, New York, New York 10011; that she is the Director
of Real Estate of the Port Authority of New York and New Jersey, one of the
corporations described in and which executed the foregoing instrument; that she
knows the seal of said corporation; that it was so affixed by order of the Board
of Commissioners of said corporation; and that she signed her name thereto by
like order.
/s/ Sylvia Shepherd
---------------------------------------------
(Notarial Seal and Stamp)
62