EXHIBIT 10.11
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this "AMENDMENT"), dated as of the 3rd
day OF March 1998, is entered into by and between ZORO, LLC, a California
limited liability company ("Landlord"), FOCAL COMMUNICATIONS CORPORATION, a
Delaware corporation ("Tenant"). Capitalized terms used in this Amendment
without definition shall have the meanings ascribed to such terms in the Lease
(as hereinafter defined).
THE PARTIES ENTER into this Amendment on the basis of the following
facts, understandings and intentions:
A. Landlord and Tenant entered into that certain Lease dated January
26, 1998 (the "Lease"), whereby Landlord leased to Tenant and Tenant leased from
Landlord certain premises more particularly described therein (the "Premises"),
located in the second floor of the building owned by Landlord at 000 Xxxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (the "Building").
B. Landlord and Tenant desire to amend the Lease to provide for the
construction and installation of the Tenant Auxiliary and Emergency Power
Facility (the "Facility") to serve Tenant and another tenant of the Building,
Xxxx-Xxxxx Inc. ("ZD") (collectively the "Phase One Tenants"), and to provide
for expansion of the Facility at the request of Landlord.
NOW, THEREFORE, based on the foregoing and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties agree as follows:
1. Tenant Auxiliary and Emergency Power Facility. Landlord acknowledges
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that it has been unable to reach agreement with the Auxiliary Power Provider for
the construction and installation of the Shared Auxiliary and Emergency Power
Facility contemplated by Section 6.3(b) of the Lease. Landlord hereby designates
the location described in Exhibit A to this First Amendment as the location
designated by Landlord under Section 6.3(b) of the Lease as the location in the
Building where Tenant may construct the
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Facility (the "Approved Auxiliary and Emergency Power Facility Location"),
subject to the conditions of this Amendment. Tenant hereby accepts and approves
of the Approved Auxiliary and Emergency Power Facility Location and agrees to
construct and install thereon, subject to the approval of Landlord as provided
in Paragraph 3 of this First Amendment, at Tenant's sole cost and expense,
subject to reimbursement as provided in Paragraph 4 of this First Amendment, the
following:
(i) an emergency generator providing 1,000 kilowatts of power
(the "Phase One Generator"), (ii) supplemental chiller equipment
with the capacity of 400 tons of cooling (the "Phase One
Chiller"), and (iii) related conduit, cabling and infrastructure
to accommodate the Phase One Generator and Phase One Chiller
(hereinafter, collectively "Phase One").
2. TRANSFORMER AND FUEL TANK. Landlord will cause to be constructed and
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installed, at Landlord's sole cost and expense, subject to reimbursement as
provided in Paragraph 4 hereof, (i) a transformer and related equipment to
distribute the electrical power generated by the Phase One Generator (the
"Transformer"), and (ii) an above ground, shared fuel tank (the "Fuel Tank") to
support the Facility, of a size not less than that required to met the Phase One
requirements, in the location noted for such fuel tank in the Approved Auxiliary
and Emergency Power Facility Location. Landlord shall coordinate such
construction and installation with Tenant's contractor.
3. APPROVAL OF PLANS AND SPECIFICATIONS. Tenant's contractor for the
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installation and construction of the Facility shall be selected by Tenant and
approved by Landlord in accordance with Section 9.1(b) of the Lease, and
Tenant's plans and specifications with respect to the work shall be prepared by
Tenant, with the advice and consultation of Landlord's consultants, and
submitted to Landlord for Landlord's approval in accordance with Section 9.2 of
the Lease. Tenant agrees to design the Facility to the following capacities,
notwithstanding that users for such capacity may not be operating in the
Building and have a demand for such auxiliary and emergency power services as of
the date hereof.
Phase One Phase Two Total
(i) Emergency Generator 1,000 kw 1,250 kw 2,250kw
(ii) Chiller 400 tons 200 tons 600 tons
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and otherwise in accordance with Paragraph 1 of this First
Amendment.
4. ALLOCATION AND RESPONSIBILITY FOR COST.
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(a) Oversizing. Landlord will reimburse Tenant, following lien free
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completion of the Facility, for the incremental additional cost associated with
the design and construction of the Facility over and above the Phase One
capacities described in Paragraph 1 above. The incremental cost shall be
initially determined by Tenant, and shall be limited to Tenant's actual out-of-
pocket costs of design and installation, and construction, and documentation in
support of such charges shall be submitted to Landlord in reasonably sufficient
detail to enable Landlord to review Tenant's determination and calculation of
such incremental costs. Any dispute between the parties shall be resolved as
described in paragraph 8 ("Arbitration").
(b) Transformer. Tenant will reimburse Landlord, following lien free
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completion of the Transformer, for the actual out-of-pocket costs of design,
acquisition and installation of the Transformer. The actual costs with respect
thereto be shall initially determined by Landlord, and documentation in support
of such charges shall be submitted to Tenant in reasonably sufficient detail to
enable Tenant to review Landlord's determination and calculation of such costs.
Any dispute between the parties shall be resolved by Arbitration.
(c) Fuel Tank. Tenant shall reimburse Landlord, following lien free
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completion of the Fuel Tank, for the actual out-of-pocket costs of design,
construction and installation of a 10,000 gallon capacity Fuel Tank (the "Base
Fuel Tank Cost"), with the incremental cost in excess of the Base Fuel Tank Cost
(the "Incremental Tank Cost") being borne by Landlord. The Base Fuel Tank Cost
and the Incremental Tank Cost shall be initially determined by Landlord, and
documentation in support of such charges shall be submitted to Tenant in
reasonably sufficient detail to enable Tenant to review Landlord's determination
and calculation of such incremental costs. Any dispute between the parties shall
be resolved by Arbitration.
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(d) ZD. Tenant agrees to enter into arrangements with ZD, on terms
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and conditions acceptable to both parties, allocating to ZD the right to use up
to 500 kw of power from the Facility Phase One Generator, and 100 tons of
chilled water from the Phase One Chiller. Subject to the foregoing, the amount
of kilowatt power capacity made available to ZD shall be as determined by ZD.
Tenant shall be solely responsible for entering into such arrangements as it
deems appropriate for the reimbursement of its costs from ZD. Except as
otherwise agreed by ZD, Tenant shall only charge ZD for Tenant's actual costs
for emergency and auxiliary power and auxiliary cooling capacity and shall not
require ZD to pay for such services other than on a rental or lease basis (i.e.,
no contribution or payment of capital).
(e) Other Building Tenants. Tenant agrees to cooperate with Landlord
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and/or other Building tenants (the "Subsequent Users") to whom Landlord grants
rights to use the Phase Two capacity of the Facility, including providing
interconnection to the chiller being designed and installed as part of the
Facility. For so long as Tenant is providing maintenance and repair services
with respect to the Facility, Landlord shall condition Subsequent Users' use of
the excess capacity of the chiller on their entering into arrangements for
reimbursement with Tenant for Tenant's maintenance and repair expenses
associated with the chiller; provided, however, Tenant shall only charge
Subsequent Users for its actual costs of maintenance and repair.
5. INDEMNIFICATION. Tenant agrees that the obligation to provide ZD with
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an allocation of electrical power capacity from the Tenant Auxiliary and
Emergency Power Facility is an obligation that Landlord has to ZD under a
separate lease entered into by Landlord and ZD (the "ZD Lease"). Tenant
understands that the terms of this First Amendment allocate to Tenant the
responsibility for performing an obligation that Landlord is otherwise obligated
to perform under the ZD Lease. So long as ZD does not demand more of Tenant with
respect to the use of the Tenant Auxiliary and Emergency Power Facility than is
provided in this First Amendment as allocable to ZD, Tenant agrees that any
breach or default by Tenant under the terms of Paragraph 4(c) of this First
Amendment shall be an occurrence subject to the indemnification provision of
Section 10.1 of the Lease, including
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(notwithstanding anything to the contrary in the Lease), for any actual damages
incurred by Landlord as a result thereof.
6. Ownership and Removal of Tenant Auxiliary and Emergency Power
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Facility Upon Expiration of Term. Notwithstanding anything to the contrary in
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the Lease, Tenant shall be responsible for any and all maintenance, repair and
replacement of the Tenant Auxiliary and Emergency Power Facility, at its sole
cost and expense. Upon expiration of the Term of the Lease, the Facility shall
revert to Landlord at no cost.
7. Placement Charge. The placement and use charge provided in Section
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6.3(c) of the Lease is expressly made applicable to the Facility.
8. Arbitration. In the event that any controversy or dispute shall arise
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under Paragraph 4 hereof, the parties shall first try in good faith to settle
the dispute by mediation administered by the Judicial Arbitration & Mediation
Service, 0 Xxxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx ("JAMS"). Thereafter
any remaining unresolved controversy or claim arising out of or relating to such
matter shall be settled by binding arbitration administered by the JAMS or, if
JAMS no longer exists, to any similar organization mutually acceptable to the
parties, and judgment upon the award rendered by the arbitrator may be entered
in any court of competent jurisdiction. Unless otherwise agreed to by the
parties, the matter shall be submitted to one (1) arbitrator and shall be heard
in San Francisco, California. The parties shall have three (3) business days
after the matter is submitted to arbitration to agree upon the neutral
arbitrator from the available panel. If the parties are unable to agree within
that three (3) days period, any party may request the appropriate official at
JAMS to appoint the arbitrator from its panel and that appointment shall be
binding upon the parties to the arbitration. The arbitrator chosen by the
parties or appointed by JAMS shall be a retired Federal District Court,
California Superior Court, or federal or state appellate court judge with at
least ten (10) years experience on the bench. The arbitrators shall resolve the
controversy in accordance with applicable law and the terms and conditions of
this Lease. The arbitrators shall allow the parties reasonable opportunities for
pre-hearing document exchange and other pre-hearing discovery of evidence as
determined by the arbitrator in his or her discretion. The costs of the
arbitration shall be shared equally between the parties
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provided, however, that such costs along with all other costs and expenses,
including attorneys' fees, shall be subject to award in full or in part by the
arbitrators in the arbitrators' discretion to the prevailing party.
9. LANDLORD RIGHT TO TAKE OVER MAINTENANCE. If, at any time, Landlord, in
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its reasonable discretion, is not satisfied with the level of performance, or
quality of maintenance and repair of or to the Facility being provided by Tenant
under this First Amendment, or if Tenant fails to provide interconnection to the
Facility to Subsequent Users to utilize the Phase Two capacity being designed
into the Facility as provided in this First Amendment, Landlord may notify
Tenant in writing of its objection to such services. Tenant shall have ten (10)
days to commence to cure any identified deficiencies. If after ten (10) days
Landlord finds, in its reasonable discretion, that the deficiencies have not
been cured, it shall notify Tenant in writing of the failure to cure and of the
specific deficiencies that have not been cured. Tenant shall have an additional
five (5) days to effect a cure. If after such five (5) day period, Landlord
finds, in its reasonable discretion, that the maintenance and repair of the
Facility is still not satisfactory, or that Tenant has still not provided
interconnection to the Facility as hereinabove provided, Landlord may take over
the maintenance and repair responsibilities of the Facility (hereinafter the
"Changeover"). In such case, Landlord shall so notify Tenant in writing at least
ten (10) days prior to the date of Changeover. Tenant shall thereupon transfer
to Landlord (or Landlord's designee) all books, records, plans and
specifications with respect to the Facility and shall otherwise cooperate with
the Landlord in arranging the Changeover. If Landlord elects to cause the
Changeover, provide its own maintenance and repair services, rent payable under
the Lease shall be adjusted to reflect the costs of providing the service of the
Facility (including appropriate management fees) for Tenant's use. Such charges
may be assessed against Tenant separately or may be included as an additional
item of Operating Expenses.
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10. FULL FORCE AND EFFECT. Except as amended hereby, the Lease remains
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unamended, and as amended hereby the Lease is in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
"LANDLORD"
ZORO, LLC,
A California limited liability company
By: /s/ [SIGNATURE ILLEGIBLE]^^
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Its: Managing Member
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"TENANT"
FOCAL COMMUNICATIONS CORPORATION,
a Delaware corporation,
By: /s/ [SIGNATURE ILLEGIBLE]^^
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Its: Executive Vice President
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[PLAN OF LOADING DOCK LEVEL]
EXHIBIT "A"
SHEET #1
(LOADING DOCK LEVEL)
EXHIBIT "A"
SHEET #2
(ROOF LEVEL)
[ROOF PLAN APPEARS HERE]
