EXHIBIT 10.46
FIRST MODIFICATION TO GROUND LEASE
THIS FIRST MODIFICATION TO GROUND LEASE (this "Modification") is made on
September 26, 2001, and is effective as of October 1, 2001 (the "Effective
Date"), by and between ISTAR SAN XXXX, LLC, a Delaware limited liability company
("Lessor"), and EQUINIX, INC., a Delaware corporation ("Lessee").
R E C I T A L S
A. Lessor and Lessee entered into that certain Ground Lease dated as of
June 21, 2000 (the "Lease"), which Lease covers approximately 78.446 acres of
unimproved real property, located in the City of San Xxxx, County of Santa
Xxxxx, State of California, as more particularly described in the Lease.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Lease.
B. Concurrently with the execution of the Lease, Lessor and Lessee executed
a Memorandum of Lease and Purchase Option, dated as of June 21, 2000 (the
"Original Memorandum"), which Original Memorandum was recorded on June 21, 2000,
as Document No.15286834 in the Official Records of Santa Xxxxx County,
California.
C. Lessee has requested that (i) Lessor grant Lessee the Purchase Option on
December 31, 2002, in addition to the other Available Closing Dates set forth in
the Lease, and (ii) Lessor reduce the Annual Base Rent payable by Lessee under
the Lease during the twelve (12) month period commencing on October 1, 2001, and
ending on September 30, 2002 (the "Base Rent Reduction Period") by the sum of
Three Million Dollars ($3,000,000.00).
D. Pursuant to Section 9.1(b) of the Lease, Lessee is required to increase
the LC Face Amount to Thirty-Five Million Dollars ($35,000,000.00) if Lessee
fails to perform certain obligations set forth in Section 9.1(b)(ii) of the
Lease on or before December 21, 2001 (the "Outside Date"), including, among
other things, if it has not commenced construction of Qualifying Buildings and
completed a Qualifying Secondary Offering. Lessee has determined that it will
not have commenced construction of Qualifying Buildings and closed a Qualifying
Secondary Offering by the Outside Date, and has requested that Lessor agree to a
smaller increase in the LC Face Amount than would otherwise be required under
Section 9.1(b) of the Lease.
X. Xxxxxx is willing to (i) accelerate the first Available Closing Date,
(ii) reduce the Annual Base Rent payable during the Base Rent Reduction Period,
and (iii) reduce the amount by which the LC Face Amount is to be increased as a
result of Lessee not commencing construction of Qualifying Buildings and not
completing
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a Qualifying Secondary Offering by the Outside Date, provided that Lessee agrees
to (i) pay the Rent payable with respect to the Base Rent Reduction Period in
advance on the first day of the Base Rent Reduction Period, and (ii) increase
the LC Face Amount to Twenty-Five Million Dollars ($25,000,000) of the date of
this First Modification and Lessee is willing to so agree.
A G R E E M E N T
NOW THEREFORE, in consideration of the agreements of Lessor and Lessee
herein contained and other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Lessor and Lessee hereby agree to modify the
Lease as follows:
1. DEFINITIONS
(a) The following definition is hereby added to Section 1 of the Lease:
"First Modification" means the First Modification to Ground Lease, by
and between Lessor and Lessee, dated as of October 1, 2001.
(b) The definition of "Augmented LC Amount" set forth in Section 1 of the
Lease is hereby deleted in its entirety and the following definition is hereby
substituted therefor:
"Augmented LC Amount" is defined in Section 3(a) of the First
Modification.
(c) The definition of "Construction Costs" set forth in Section 1 of the
Lease is hereby deleted in its entirety and the following definition is hereby
substituted therefor:
"Construction Costs" means, with respect to a Building, the total
costs of construction of such Building, together with a contingency in an amount
reasonably acceptable to Lessor.
(d) The definitions of Minimum Available Cash Period, Net Proceeds,
Original LC Face Amount, Outside Initial IPO Date, Outside Secondary Offering
Date, Qualifying Buildings, Qualifying IPO, Qualifying Secondary Offering and
Secondary Offering set forth in Section 1 of the Lease are hereby deleted in
their entirety.
2. RENT
(a) The Annual Base Rent payable during the Base Rent Reduction Period
shall be reduced by the sum of Three Million Dollars ($3,000,000.00) to the
aggregate sum of Six Million Five Hundred Eighty-Three Thousand Nine Hundred
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Thirty-Four and 61/100 Dollars ($6,583,934.61) (the "Adjusted Base Rent"),
provided that, on or before the Effective Date, and in consideration of such
rent reduction and the other agreements of Lessor set forth herein, Lessee shall
pay the Adjusted Base Rent to Lessor in full. Lessee understands and agrees that
Lessor's willingness to reduce the Annual Base Rent as provided in this Section
2 is a one-time concession, that Lessor has not and shall not agree to any
further reductions in the Annual Base Rent and that, upon the expiration of the
Base Rent Reduction Period, Lessee shall recommence paying Annual Base Rent in
the full amount specified in Section 4.1(a) of the Lease.
(b) For purposes of calculating the adjustments to be made to the
Annual Base Rent pursuant to Section 4.1(b) of the Lease, the parties shall
disregard the reduction provided for in Section 2(a) above and shall calculate
the adjustments based upon the current Annual Base Rent payable under the Lease
as of each Adjustment Date.
3. LETTER OF CREDIT
(a) On or before September 30, 2001, , Lessee shall deliver to Lessor an
amendment to the Letter of Credit or a replacement Letter of Credit increasing
the LC Face Amount to the sum of Twenty-Five Million Dollars ($25,000,000.00)
and otherwise satisfying the requirements of Section 9.1 of the Lease. From and
after the date of this Modification, the term "Augmented LC Amount", as used in
the Lease, shall mean the sum of Twenty-Five Million Dollars ($25,000,000.00).
Lessee shall cause the Letter of Credit, as increased pursuant to this Section
3(a), to be maintained in effect through the LC Termination Date. Lessee shall
be entitled to reduce the amount of the Letter of Credit below the Augmented LC
Amount, if at all, solely to the extent provided in Section 9.1(c) of the Lease.
(b) Section 9.1(b) of the Lease is hereby deleted in its entirety and the
following Section 9.1(b) is hereby substituted therefor:
(b) [Intentionally Blank].
(c) Section 9.1(c) of the Lease is hereby deleted in its entirety and the
following Section 9.1(c) is hereby substituted therefor:
(c) Notwithstanding the terms of Sections 9.1(a) above, Lessee
shall be entitled to reduce the then-current Augmented LC Amount from
time to time during the period commencing on January 1, 2003 (the
"Potential Reduction Period"), as Lessee constructs Buildings on the
Premises, all on the terms and subject to the conditions set forth in
subsections (i) through (iii) below:
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(i) Concurrently with the commencement of construction of each
Building on the Premises during the Potential Reduction Period (for
purposes of this subsection, a Building the construction of which was
commenced prior to the Potential Reduction Period shall be deemed
commenced as of the first day of the Potential Reduction Period),
Lessee shall have the right to reduce the then-current Augmented LC
Amount, by the applicable Reduction Amount for such Building. For
purposes of this clause (i), the following terms shall have the
meanings set forth below:
(A) "Aggregate Permitted Square Footage" means the greater
of one million two hundred thousand (1,200,000) gross square feet or
the aggregate gross square footage of Buildings permitted to be
constructed on the Premises pursuant to Entitlements issued by the
City as of the first date of the Potential Reduction Period.
(B) "Applicable Percentage" means, with respect to any
Building, the ratio (expressed as a percentage) that the gross square
footage of such Building bears to the Aggregate Permitted Square
Footage. By way of example only, if the Aggregate Permitted Square
Footage is one million two hundred thousand (1,200,000) square feet,
and if Lessee is commencing construction of a Building containing a
total of one hundred twenty thousand (120,000) square feet, the
Applicable Percentage of such Building shall be ten percent (10%).
(C) "Augmented LC Face Amount" means Twenty-Five Million
Dollars ($25,000,000.00).
(D) "Reduction Amount" means, with respect to any Building,
an amount equal to such Building's Applicable Percentage of the
Augmented LC Face Amount.
An example of the calculation contemplated under this Section 9.1(c) is
set forth on Exhibit D hereto.
(ii) If Lessee commences construction of any Building and reduces
the Augmented LC Amount concurrently therewith as contemplated under
subsection (i) above, and if Lessee does not thereafter Substantially
Complete such Building within eighteen (18) months after the
commencement of construction thereof, then Lessee shall be required to
restore the Augmented LC Amount to the amount that would be in place
if such reduction had not occurred; provided, however, that Lessee
shall be entitled to again reduce the Augmented
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LC Amount (as restored pursuant to the foregoing clause) at such
time as Lessee actually Substantially Completes such Building.
(iii) Notwithstanding the terms of subsections (i) and (ii)
immediately above, if an Event of Default or Potential Default is
occurring hereunder at the time Lessee is entitled to reduce the
amount of the Letter of Credit, then Lessee's right to so reduce the
Letter of Credit shall be suspended until the Event of Default or
Potential Default has been fully cured or waived by Lessor in writing.
(d) Subsection (iii) in Section 9.1(d) of the Lease is hereby
deleted in its entirety and the following provision is hereby
substituted therefor:
(iii) that the beneficial interest under the Letter of
Credit shall be freely transferable one or more times
and, therefore, in the event of Lessor's (or any
successor Lessor's) assignment or other transfer of
its interest in this Lease, the Letter of Credit shall
be freely transferable by Lessor (or any successor
Lessor), without recourse and without the payment of
any fee or consideration, to the assignee or
transferee of such interest and the LC Issuer shall
confirm the same to Lessor (or such successor) and
such assignee or transferee.
(e) Section 14.1(d) of the Lease is hereby deleted in its entirety and the
following provision is hereby substituted therefor:
(d) If Lessee fails to restore the Letter of Credit to the
LC Face Amount or the Augmented LC Amount, as applicable,
pursuant to Section 9.1(a) above, increase the amount of the
Letter of Credit to the Augmented LC Amount when required
pursuant to Section 9.1(c), or deliver to Lessor a modified or
amended Letter of Credit when required pursuant to Section 9.1(d)
above.
(f) Section 22(a) of the Lease is hereby deleted in its entirety and the
following provision is hereby substituted therefor:
(a)[Intentionally Blank];
4. OPTION TO PURCHASE
(a) Section 18.1(a) of the Lease is hereby deleted in its entirety and the
following provision is hereby substituted therefor:
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(a) Subject to Section 18.1(d) and provided that no Monetary
Event of Default is occurring hereunder either on the date Lessee
delivers a Purchase Notice to Lessor or on the Closing Date,
Lessee shall have the right to purchase the Premises on December
31, 2002 and on the date which is every ten (10) years after the
date of the Term Commencement Date during the term (each such
date being herein referred to as an "Available Closing Date");
(b) The last sentence of Section 20(b) of the Lease is hereby deleted
in its entirety and the following provision is hereby substituted therefor:
For purposes of this Section 20(b), "Maximum Reversion Value"
shall mean (i) as of the second (2/nd/) anniversary of the date
hereof (the "Initial Date"), One Million Five Hundred Thousand
Dollars ($1,500,000)(the "Initial Amount"), (ii) as of the tenth
(10th) anniversary of the date hereof (the "Base Date"), Three
Million Five Hundred Thousand Dollars ($3,500,000.00) (the "Base
Amount"), and (iii) as of any date after the Base Date, the sum
of the Base Amount and the amount of interest that would accrue
on the Base Amount from the Base Date to the measuring date, at
eleven percent (11%) per annum, compounded annually; provided,
however, that (A) if the Maximum Reversion Value is being
determined prior to the Initial Date, it shall be the amount
obtained by discounting, at eleven percent (11%) per annum, the
Initial Amount from the Initial Date to the measuring date. or
(B) if the Maximum Reversion Value is being determined prior to
the Base Date, it shall be the amount obtained by discounting, at
eleven percent (11%) per annum, the Base Amount from the Base
Date to the measuring date.
5. MISCELLANEOUS MODIFICATIONS
(a) The address for Lessee in Section 23.1 of the Lease is deleted in its
entirety and the following address is hereby substituted therefor:
If to Lessee: Equinix, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: Chief Financial Officer
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(b) The address for Lessor in Section 23.1 of the Lease is modified by
deleting the "Attention" line in its entirety and substituting therefor
"Attention: Xxx Xxxxxxxx and Xxxx Xxxxx".
6. REPRESENTATIONS, WARRANTIES AND COVENANTS
Lessee hereby represents, warrants and covenants to Lessor as follows:
(a) Lessee is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is duly qualified to
transact business in the State of California.
(b) Lessee has taken all necessary action to authorize the execution,
delivery and performance of this Modification. This Modification constitutes the
legal, valid and binding obligation of Lessee.
(c) Lessee has the right, power, legal capacity and authority to enter into
and perform its obligations under this Modification, and no approval or consent
of any Person is required in connection with Lessee's execution and performance
of this Modification that has not been obtained. The execution and performance
of this Modification will not result in or constitute any default or event that
would be, or with notice or lapse of time or both would be, a default, breach or
violation of the organizational instruments governing Lessee or any agreement or
any deed restriction or order or decree of any court or other governmental
authority to which Lessee is a party or to which it is subject.
(d) Lessee is the sole owner and holder of the leasehold estate and
leasehold interest created by the Lease, and Lessee has not made or agreed to
make any assignment, sublease, transfer, conveyance, encumbrance, or other
disposition of the Lease, Lessee's leasehold estate or any other right, title or
interest under or arising by virtue of the Lease.
(e) Lessee has not (i) made a general assignment for the benefit of
creditors, (ii) filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition by its creditors, (iii) suffered the
appointment of a receiver to take possession of all or substantially all of its
assets, (iv) suffered the attachment or other judicial seizure of all or
substantially all of its assets, (v) admitted in writing its inability to pay
its debts as they become due, or (vi) made an offer of settlement, extension or
composition to its creditors generally.
(f) At the time of the execution of this Agreement, Lessee is generally
paying its debts as they become due, and the aggregate value of Lessee's assets
at fair value exceeds the aggregate value of Lessee's liabilities.
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Lessee shall take all actions necessary to ensure that each of the
representations, warranties and covenants contained in this Section 5 remain
true and correct in all material respects at all times during the period between
the date of this Modification and the expiration of the Term and any holdover
period.
7. RESTRUCTURING FEE
Concurrently with the execution of this Modification, Lessee shall pay to
Lessor a restructuring fee in the amount of One Hundred Thousand Dollars
($100,000.00) (the "Restructuring Fee"). The Restructuring Fee shall be deemed
fully earned when paid to Lessor and shall not be refundable to Lessee, in whole
or in part, at any time. Lessee shall not be obligated to reimburse Lessor for
any fees and expenses, including attorney fees and expenses, it incurs in
connection with this Modification.
8. MEMORANDUM OF LEASE AND PURCHASE OPTION
Concurrently herewith, Lessor and Lessee shall execute and record in the
Official Records of Santa Xxxxx County, California, an Amended and Restated
Memorandum of Lease and Purchase Option in the form attached hereto as Exhibit A
(the "Amended Memorandum"), which Amended Memorandum shall amend and restate the
Original Memorandum in its entirety.
9. BROKERS
Lessor and Lessee each represents and warrants to the other that neither it
nor its officers or agents nor anyone acting on its behalf has dealt with any
real estate broker in the negotiating or making of this Modification, and each
party agrees to indemnify and hold harmless the other from any claim or claims,
and costs and expenses, including attorneys' fees, incurred by the indemnified
party in conjunction with any such claim or claims of any other broker or
brokers to a commission in connection with this Modification as a result of the
actions of the indemnifying party.
10. MISCELLANEOUS
A. As amended hereby, the Lease is hereby ratified and confirmed in all
respects. In the event of any inconsistencies between the terms of this
Modification and the Lease, the terms of this Modification shall prevail. This
Modification shall bind and inure to the benefit of Lessor and Lessee and their
respective legal representatives and successors and assigns.
B. This Modification may be executed in counterparts each of which
counterparts when taken together shall constitute one and the same agreement.
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C. Except as set forth in this Modification, all terms and conditions of
the Lease shall remain in full force and effect.
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IN WITNESS WHEREOF, Lessor and Lessee have executed this Modification as of
the date first above written.
LESSOR:
iSTAR SAN XXXX, LLC,
a Delaware limited liability company
By: TriNet Corporate Realty Trust, Inc.,
a Maryland corporation,
Its: Sole Member
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
LESSEE:
EQUINIX, INC.,
a Delaware corporation
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
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