EX-10.46 Capital Lease Facility Commitment Letter



 





EXHIBIT 10.46




January 5, 2007

(the “Effective Date”)




CONFIDENTIAL




Chief Financial Officer

Terremark Worldwide, Inc.

2601 South Bayshore Drive

Suite 900

Miami, Florida 33133




Terremark Worldwide, Inc. (“Sponsor”)

$13,250,000 Capital Lease Facility

Commitment Letter (the “Commitment Letter”)




Ladies and Gentlemen:




     Credit Suisse and Credit Suisse Securities (USA) LLC (with their other affiliates,
“CS”) commit to arrange for the acquisition of each Property by a special purpose entity to
be formed for such purpose, and thereafter lease each Property to Lessee, all in accordance with
the attached term sheet (the “Term Sheet”), and subject to the conditions in the Term Sheet
and below in this Commitment Letter. Wherever this Commitment Letter or the Term Sheet refers to
Lessee, each such reference shall be deemed to refer instead to Sponsor unless and until Lessee has
actually been formed and executed and delivered a counterpart of (or otherwise assumed Lessee’s
obligations under) this Commitment Letter. Any definitions in the Term Sheet also apply in this
Commitment Letter. CS, Lessee, and Sponsor further agree as follows:



	 	 	 
	Standby Fee —

Amount
	 	On the first day of every calendar
quarter starting January 1, 2007
(accruing for a full calendar quarter
upon the signing of this Commitment
Letter), CS shall earn a fee (the
“Standby Fee”) equal to one quarter of
5.50% (550 basis points) (the “Standby
Rate”) times the sum of the following:







	 	 	 	 	 
	 	 	·
	 	$13,250,000; less

	 
	 	 	 	 

	 	 	·
	 	Any Lessor’s Investment that
Lessor has actually funded in cash at a
Closing or for which Lessor’s obligation
to fund has expired (or for which Sponsor
and Lessee have issued a Cancellation
Notice, as described below) without
funding.







	 	 	 
	Standby Fee —

Calculation and

Payment
	 	The Standby Fee shall accrue on the first
day of every calendar quarter. When a
Closing occurs for a Property, accrued
Standby Fee allocable to that Property
shall become part of Lessor’s Investment.
If, for any Property, the Term Sheet
expires without a Closing or Sponsor and
Lessee issue a Cancellation Notice, then
on the date of such expiration or
Cancellation Notice Sponsor shall pay in
cash the Standby Fee earned to date and
allocable to such Property.







 









 






	 	 	 
	Sponsor’s Right

to Issue

Cancellation
Notice
	 	Sponsor and Lessee may cancel this
Commitment Letter as it relates to any
Property(ies) (a “Cancellation Notice”).
If Sponsor and Lessee issue a
Cancellation Notice for any Property,
then neither CS nor Lessor shall have any
obligations regarding that Property.

	 
	 	 

	Costs and
Expenses
	 	Sponsor shall pay CS’s and Lessor’s
reasonable out of pocket costs in
evaluating (and, if applicable, closing)
the proposed Lease(s), including
reasonable accounting, appraisal,
auditing, consulting, due diligence,
engineering, environmental, legal, out of
pocket costs of establishing Lessor,
back-office administrative fees,
administration and loan fees and other
closing costs (but not interest) for any
financing Lessor obtains to fund this
transaction, independent director service
fees, and title fees, and costs of
travel, messengers, and other items,
including all other bona fide transaction
and due diligence costs incurred by CS,
but not CS’s staff time or internal
overhead (the “Costs and Expenses”).

	 
	 	 

	 	 	Sponsor has requested that CS and Lessor
seek to minimize the need to duplicate
any due diligence or other investigations
that Sponsor or its counsel or other
consultants (the “Due Diligence Team”)
have performed regarding the Properties
and this transaction (the “Sponsor Due
Diligence”). CS and Lessor shall
reasonably endeavor to comply with that
request, but only to the extent that the
Due Diligence Team shall have agreed in
writing (in a manner reasonably
satisfactory to CS) that CS and Lessor
shall have the same ability and legal
right as Sponsor to rely upon the Sponsor
Due Diligence. This does not limit CS
and Lessor’s right to perform such due
diligence as they require, or limit the
extent to which the resulting costs shall
constitute Costs and Expenses.

	 
	 	 

	Due Diligence
	 	Lessee and Sponsor consent that CS and
Lessor may perform or cause others to
perform background checks, credit checks,
and other investigations of Lessee and
Sponsor.







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	Indemnification
	 	Sponsor agrees (a) to indemnify and hold
harmless CS, Lessor, and each of their
officers, directors, employees, agents,
advisors, controlling persons, members
and successors and assigns (each, an
“Indemnified Person”) from and against
any and all losses, claims, damages,
liabilities and expenses, joint or
several, to which any such Indemnified
Person may become subject arising out of
or in connection with this Commitment
Letter, the Term Sheet, the Lease(s), or
any related transaction (including any
claims made by any broker or finder) or
any claim, litigation, investigation or
proceeding relating to any of the
foregoing, regardless of whether any such
Indemnified Person is a party thereto
(and regardless of whether such matter is
initiated by a third party), and to
reimburse each such Indemnified Person
upon demand for any reasonable legal or
other expenses incurred in connection
with investigating or defending any of
the foregoing, provided that the
foregoing indemnity will not, as to any
Indemnified Person, apply to losses,
claims, damages, liabilities or related
expenses to the extent they result from
the willful misconduct or gross
negligence of such Indemnified Person,
and (b) to reimburse CS and Lessor from
time to time, upon presentation of a
summary statement, for all reasonable
out-of-pocket expenses (including but not
limited to expenses of CS’s and Lessor’s
due diligence investigation, consultants’
fees, syndication expenses, travel
expenses and fees, disbursements and
other charges of counsel), but not CS’s
or Lessor’s staff time or internal
overhead, in each case, incurred in
connection with the preparation,
negotiation and enforcement of the
Lease(s), this Commitment Letter, the
Term Sheet, the definitive documentation
for the Lease(s) and any ancillary
documents or security arrangements in
connection therewith, including
arrangements for the establishment of
Lessor. Notwithstanding any other
provision of this Commitment Letter,
neither any Indemnified Person nor Lessee
nor Sponsor shall be liable for any
indirect, special, punitive or
consequential damages in connection with
its activities related to the Lease(s) or
this transaction.

	 
	 	 

	Information
	 	Sponsor represents and warrants (and it
shall be a condition to CS’s commitment
hereunder, including CS’s agreements to
cause Lessor to enter into the Lease(s))
that (a) all information except the
Projections (the “Information”) that has
been or will be made available to CS or
Lessor by or on behalf of Sponsor or any
of Sponsor’s representatives is or will
be, when furnished (to Sponsor’s
knowledge, in the case of any Information
about the Properties) complete and
correct in all material respects and does
not or will not, when furnished (to
Sponsor’s knowledge, in the case of any
Information about the Properties) contain
any untrue statement of a material fact
or omit to state a material fact
necessary in order to make the statements
contained therein not materially
misleading in light of the circumstances
under which such statements are made and
(b) any financial projections that have
been or will be made available to CS or
Lessor by or on behalf of Sponsor or any
of Sponsor’s representatives (the
“Projections”) have been or will be
prepared in good faith based upon
accounting principles consistent with the
historical audited financial statements
of Lessee and Sponsor and upon
assumptions that are reasonable at the
time made and at the time the related
projections are made available to CS and
Lessor.

	 
	 	 






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	 	 	Sponsor agrees that if at any time before
either Lease Closing Sponsor becomes
aware that any representation in the
preceding sentence would be incorrect if
the Information and Projections were
being furnished, and such representations
were being made, at such time, then
Sponsor will promptly supplement the
Information and Projections so that such
representations will be correct under
those circumstances. In arranging and
causing Lessor to close the Lease(s), CS
and Lessor will be entitled to use and
rely primarily on the Information and the
Projections without responsibility for
independent verification thereof.

	 
	Conditions
Precedent
	 	CS’s commitment hereunder, and CS’s
agreements to cause Lessor to enter into
the Lease(s), are subject to the
following conditions precedent, in
addition to those described in the Term
Sheet: (a) CS’s and Lessor’s completion
of, and satisfaction in all respects with
the results of, legal and environmental
due diligence investigation of the
Property, Lessee, and the Lease(s); (b)
CS’s and Lessor’s not having discovered
or otherwise become aware of any
information not previously disclosed that
they believe to be inconsistent in a
material and adverse manner with their
understanding, based on the information
provided prior to the date hereof, of the
business, assets, liabilities,
operations, condition (financial or
otherwise), operating results,
Projections or prospects of Lessee,
Sponsor, and their affiliates, taken as a
whole; (c) there not having occurred any
event, change or condition since March
31, 2006 (the date of the most recent
audited financial statements of Sponsor
delivered to CS as of the date hereof)
that, individually or in the aggregate,
has had, or could reasonably be expected
to have, a material adverse effect on the
business, assets, liabilities,
operations, condition (financial or
otherwise), operating results,
Projections or prospects of Sponsor and
its subsidiaries, including Lessee, taken
as a whole; (d) the negotiation,
execution and delivery of definitive
documentation with respect to the
Lease(s) reasonably satisfactory to CS,
Lessor, and their counsel; (e) Sponsor’s
compliance with the terms of this
Commitment Letter and the Term Sheet; and
(f) the other conditions set forth or
referred to in the Term Sheet.

	 
	 	 

	Confidentiality
	 	This Commitment Letter is delivered to
Sponsor on the understanding that neither
this Commitment Letter, nor any of its
terms or substance, nor the activities of
CS and Lessor pursuant hereto, shall be
disclosed, directly or indirectly, to any
other person except (a) to Sponsor’s
officers, directors, employees,
attorneys, accountants and advisors, or
those of Sponsor’s affiliates, on a
confidential and need-to-know basis or
(b) as required by applicable law or
compulsory legal process (in which case
you agree to inform us promptly thereof
prior to such disclosure); provided that
Sponsor may disclose this Commitment
Letter and the contents hereof to the
party selling the Property and its
officers, directors, employees,
attorneys, accountants, representatives
and advisors on a confidential and
need-to-know basis, and only after
redaction (in a manner satisfactory to
CS) of any information on the amount or
calculation of the Standby Fee.







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	Conflicting
Interests
	 	Sponsor acknowledges that CS may be
providing debt financing, equity capital
or other services (including financial
advisory services) to other companies in
respect of which Sponsor or its
affiliates may have conflicting interests
regarding the transactions described
herein or otherwise. Sponsor also
acknowledges that CS does not have any
obligation to use in connection with the
transactions contemplated by this
Commitment Letter, or to furnish to
Sponsor, confidential information
obtained by CS from other companies.

	 
	Survival
	 	The compensation, reimbursement,
indemnification, confidentiality,
jurisdiction, governing law and waiver of
jury trial provisions contained herein
shall remain in full force and effect
regardless of whether definitive Lease
documentation shall be executed and
delivered and notwithstanding the
termination of this Commitment Letter or
CS’s commitment hereunder, and CS’s
agreements to cause Lessor to enter into
the Lease(s) and perform CS’s services
described herein.

	 
	No Fiduciary

Relationship
	 	Sponsor further acknowledges and agrees
that (a) no fiduciary, advisory or agency
relationship between Sponsor and its
affiliates, on the one hand, and CS and
Lessor, on the other hand, is intended to
be or has been created in respect of any
of the transactions contemplated by this
Commitment Letter, irrespective of
whether CS has advised or is advising
Sponsor or its affiliates on other
matters; (b) CS, on the one hand, and
Sponsor and its affiliates, on the other
hand, have an arms-length business
relationship that does not directly or
indirectly give rise to, nor does Sponsor
or its affiliates rely on, any fiduciary
duty on the part of CS or Lessor; (c)
Sponsor and its affiliates are capable of
evaluating and understanding, and they
understand and accept, the terms, risks
and conditions of the transactions
contemplated by this Commitment Letter
and the Term Sheet; (d) Sponsor has been
advised that CS is engaged in a broad
range of transactions that may involve
interests that differ from Sponsor’s
interests and that CS has no obligation
to disclose such interests and
transactions to Sponsor by virtue of any
fiduciary, advisory, or agency
relationship; and (e) Sponsor and its
affiliates waive, to the fullest extent
permitted by law, any claims any of them
may have against CS and Lessor for breach
of fiduciary duty or alleged breach of
fiduciary duty and agree that CS and
Lessor shall have no liability (whether
direct or indirect) to Sponsor and its
affiliates in respect of such a fiduciary
duty claim or to any person asserting a
fiduciary duty claim on behalf of or in
right of Sponsor’s (or its affiliates’),
including Sponsor’s stockholders,
employees or creditors.

	 
	 	 

	Other Activities
	 	Sponsor and its affiliates further
acknowledge that CS is a full service
securities firm engaged in securities
trading and brokerage activities as well
as providing investment banking and other
financial services. In the ordinary
course of business, CS may provide
investment banking and other financial
services to, and/or acquire, hold or
sell, for its own accounts and the
accounts of customers, equity, debt and
other securities and financial
instruments (including bank loans and
other obligations) of Sponsor, its
affiliates and other companies with which
Sponsor may have commercial or other
relationships. With respect to any
securities and/or financial instruments
so held by CS or any of its customers,
all rights in respect of such securities
and financial instruments, including any
voting rights, will be exercised by the
holder of the rights, in its sole
discretion.







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	Assignment
	 	This Commitment Letter shall not be
assignable by Sponsor without the prior
written consent of CS (and any attempted
assignment without such consent shall be
null and void), is intended to be solely
for the benefit of the parties hereto
(and Indemnified Persons), and is not
intended to confer any benefits upon, or
create any rights in favor of, any person
other than the parties hereto (and
Indemnified Persons). Notwithstanding
the foregoing, Sponsor may assign this
Commitment Letter to any entity wholly
owned by Sponsor, provided that such
entity (a) is Lessee or holds all the
stock of Lessee; and (b) is reasonably
satisfactory to CS. Any such assignment
shall not limit Sponsor’s or Lessee’s
obligations under this Commitment Letter
or the Term Sheet. CS may assign its
commitment hereunder to one or more of
its affiliates, whereupon CS shall be
released from the portion of its
commitment hereunder so assigned. Any
and all obligations of, and services to
be provided by, CS hereunder (including,
without limitation, CS’s commitment to
cause Lessor to enter into the Lease(s))
may be performed and any and all rights
of CS hereunder may be exercised by or
through any of its respective affiliates
or branches.

	 
	 	 

	Miscellaneous
	 	This Commitment Letter may not be amended
or any provision hereof waived or
modified except by an instrument in
writing signed by CS and Sponsor. This
Commitment Letter may be executed in any
number of counterparts, each of which
shall be an original and all of which,
when taken together, shall constitute one
agreement. Delivery of an executed
counterpart of a signature page of this
Commitment Letter by facsimile
transmission shall be effective as
delivery of a manually executed
counterpart hereof. Paragraph headings
used herein are for convenience of
reference only, are not part of this
Commitment Letter and are not to affect
the construction of, or to be taken into
consideration in interpreting, this
Commitment Letter.

	 
	 	 

	 	 	Both parties acknowledge that information
and documents relating to this
transaction and the Lease(s) may be
transmitted through SyndTrak, Intralinks,
the internet, e-mail, or similar
electronic transmission systems, and that
neither party shall be liable for any
damages arising from the unauthorized use
by others of information or documents
transmitted in such manner.
Notwithstanding anything in this
Commitment Letter or the Term Sheet to
the contrary, CS may place advertisements
in financial and other newspapers and
periodicals or on a home page or similar
place for dissemination of information on
the Internet or worldwide web as it may
choose, and circulate similar promotional
materials, after the closing of the
transactions in the form of a “tombstone”
or otherwise describing the names of
Sponsor and its affiliates (or any of
them), and the amount, type and closing
date(s) of the Lease(s), all at CS’s
expense.

	 
	 	 

	 	 	This Commitment Letter and the Term Sheet
supersede all prior understandings,
whether written or oral, between us with
respect to the Lease(s) or CS’s or
Lessor’s obligations relating to or
arising from the Lease(s). This
Commitment Letter shall be governed by,
and construed in accordance with, the
laws of the State of New York.







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	Jurisdiction
	 	Each of the parties hereto hereby
irrevocably and unconditionally (a)
submits, for itself and its property, to
the exclusive jurisdiction of any New
York State court or Federal court of the
United States of America sitting in New
York City, and any appellate court from
any thereof, in any action or proceeding
arising out of or relating to this
Commitment Letter, or the transactions
contemplated by this Commitment Letter or
the Term Sheet, and agrees that all
claims in respect of any such action or
proceeding may be heard and determined
only in such New York State court or, to
the extent permitted by law, in such
Federal court, (b) waives, to the fullest
extent it may legally and effectively do
so, any objection which it may now or
hereafter have to the laying of venue of
any suit, action or proceeding arising
out of or relating to this Commitment
Letter or the transactions contemplated
hereby in any New York State court or in
any such Federal court, (c) waives, to
the fullest extent permitted by law, the
defense of an inconvenient forum to the
maintenance of such action or proceeding
in any such court, and (d) agrees that a
final judgment in any such action or
proceeding shall be conclusive and may be
enforced in other jurisdictions by suit
on the judgment or in any other manner
provided by law.

	 
	 	 

	Jury Trial
Waiver
	 	Each of the parties hereto irrevocably
waives the right to trial by jury in any
action, proceeding, claim or counterclaim
brought by or on behalf of any party
related to or arising out of this
Commitment Letter, the lease(s), or the
performance of services hereunder or
thereunder.

	 
	 	 

	USA PATRIOT
Act
	 	To help fight terrorism funding and money
laundering activities, CS obtains,
verifies, and records information that
identifies each person with whom CS
enters (or may enter) into a business
relationship. Verification may include
name, address, corporate tax
identification number, date of birth (if
an individual), and other information to
allow CS to identify Lessee and Sponsor.
CS may also ask to see corporate or
limited liability company resolutions or
other identifying documents.

	 
	 	 

	Exclusivity
	 	Until either a Closing with respect to a
Property occurs or CS advises Sponsor in
writing that the conditions precedent to
such Closing have not been timely met,
Lessee, Sponsor and their related parties
shall deal exclusively with CS regarding
(and shall not seek or obtain from anyone
else) any financing or capital lease
arrangements for the acquisition of such
Property described in the Term Sheet.







No Further Text on This Page.




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     If the foregoing correctly sets forth our agreement with you, please indicate your acceptance
of the terms of this Commitment Letter by returning to us executed counterparts hereof not later
than 5:00 p.m., New York City time, on the Effective Date. CS’s offer hereunder, and our
agreements to perform the services described herein, will expire automatically and without further
action or notice and without further obligation to you at such time in the event that CS has not
received such executed counterparts in accordance with the immediately preceding sentence. This
Commitment Letter will become a binding commitment on CS only after it has been duly executed and
delivered by you in accordance with the first sentence of this paragraph. To the extent that any
Property has not been acquired and demised to Lessee under a Lease before the Outside Closing Date,
this Commitment Letter and CS’s commitment hereunder, and CS’s agreements to perform the services
described herein, shall automatically terminate without further action or notice and without
further obligation to Sponsor unless CS shall, in its discretion, agree in writing to an extension.



     We look forward to working with you on this matter.



	 	 	 	 	 
	 	Very truly yours,





CREDIT SUISSE SECURITIES (USA) LLC

 	 
	 	By:  	/s/ Robert Nydegger
 	 
	 	 	Name:  	Robert Nydegger 	 
	 	 	Title:  	Managing Director 	 
	 
	 	 	 
	 	By:  	                    /s/ Damien Dwin
 	 
	 	 	Name:  	Damien Dwin 	 
	 	 	Title:  	Director 	 
	 
	 	CREDIT SUISSE, CAYMAN ISLANDS BRANCH

 	 
	 	By:  	/s/ Robert Nydegger
 	 
	 	 	Name:  	Robert Nydegger 	 
	 	 	Title:  	Managing Director 	 
	 
	 	 	 
	 	By:  	                    /s/ Damien Dwin
 	 
	 	 	Name:  	Damien Dwin 	 
	 	 	Title:  	Director 	 



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     Confirmed and agreed to.



	 	 	 	 	 
	 	SPONSOR



TERREMARK WORLDWIDE, INC.

 	 
	 	By:  	/s/ Jose Segrera
 	 
	 	 	Its:  Chief Financial Officer 	 
	 	 	 	 
	 



Date: Effective Date




Attachment: Term Sheet





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TERM SHEET




	 	 	 
	Lessee

	 	A to-be-named wholly owned direct or indirect subsidiary of
Sponsor, which shall be a newly formed single-purpose entity
subject to SPE covenants satisfactory to CS. Lessee shall at
all times be 100% owned, directly or indirectly, by Sponsor.
	 
	 	 
	Property

	 	Each of the following:







	 	•	 	The real property identified as Property 1 in the
documentation for the Notes (Allocated Purchase Price:
$4,366,300); and
	 
	 	•	 	The real property identified as Property 2 in the
documentation for the Notes (Allocated Purchase Price, net of
any contribution from other sources: $9,250,000).





	 	 	 
	Lessor

	 	Single-purpose entity(ies) to be designated and structured (but
not necessarily owned) by CS.
	 
	 	 
	Nature of Transaction

	 	Subject to satisfaction of the conditions precedent and other
requirements of this Term Sheet and the Commitment Letter to
which it is annexed, Lessor shall acquire each Property when and
as Lessee or Sponsor would otherwise close such acquisition
under its contracts (each, a “Contract”) with the sellers of
each Property (each, a “Seller”). Sponsor may direct Lessor to
close under either Contract or both Contracts at Sponsor’s
election. If Sponsor elects to require Lessor to close under
both Contracts, then such closings need not, but may, be
simultaneous. Sponsor and Lessee may modify any Contract
provided they act in good faith and promptly give CS a copy of
the modification. Any such modification shall not increase or
extend Lessor’s funding obligations.

	 
	 	 
	

	 	
Simultaneously with each such acquisition, CS shall cause Lessor
to lease each Property to Lessee on the terms described in this
Term Sheet. The Properties shall be leased under a single lease
or, at Sponsor’s option, each Property shall be leased under a
separate Lease. At Sponsor’s option, Lessor may acquire one
Property without acquiring both Properties.
	 
	 	 
	Lessor’s Investment

	 	For each Property, considered separately, Lessor’s aggregate
investment (the “Lessor’s Investment”) shall equal the sum of
all items listed below as in effect from time to time. The
aggregate Lessor’s Investment for both Properties to be funded
in cash at Closing(s) (i.e., before taking into account accrued
Standby Fees or future PIK Rent Payments) shall never exceed
$13,250,000 in aggregate.







	 	•	 	The Allocated Purchase Price plus or minus closing
adjustments under the Contract;
	 
	 	•	 	Sponsor’s and Lessee’s bona fide third party transaction
costs reasonably approved by CS (including title, escrow and
survey fees, Lessee’s transfer taxes, consultants’ fees,
reasonable attorneys’ fees for the Closing, and the like);




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	 	•	 	Sponsor’s and Lessee’s predevelopment costs reasonably
approved by CS;
	 
	 	•	 	The aggregate amount of all PIK Rent Payments;
	 
	 	•	 	Accrued Standby Fees for periods before Closing; and
	 
	 	•	 	CS’s and Lessor’s Costs and Expenses.





	 	 	 
	 

	 	No portion of Lessor’s Investment shall be paid directly to
Lessee or Sponsor, except as expressly contemplated above in the
definition of Lessor’s Investment.
	 
	 	 
	Closing

	 	Each Lease transaction will close (a “Closing”) on a date
coinciding with the closing under the respective Contract for
the Property to be demised under such Lease. If (at Sponsor’s
election) both Contracts close simultaneously, then only a
single Closing shall occur, but each Property may (at Sponsor’s
election) be demised under a separate Lease.
	 
	 	 
	Outside Closing Date

	 	For each Property, the Commitment Letter, CS’s obligations
thereunder and this Term Sheet shall irrevocably expire and
terminate on the date (the “Outside Closing Date”) that is the
earliest of the following:







	 	•	 	Expiration of the Contract for that Property (after
taking into account any extensions of the closing date under
such Contract);
	 
	 	•	 	Sponsor’s and Lessee’s issuance of a Cancellation Notice
for that Property; and
	 
	 	•	 	December 31, 2007.





	 	 	 
	Lease Term

	 	The Lease(s) will expire on the earliest of the following:







	 	•	 	June 30, 2009;
	 
	 	•	 	The maturity date, occurrence of a payment default, or
acceleration, under the Loan Facility and Convertible Debt
(together, the “Notes”) to be provided by CS under the Purchase
Agreement among Terremark Worldwide, Inc., the Guarantors
thereunder, Credit Suisse, Cayman Islands Branch, as Agent, and
the Purchasers thereunder, dated the Effective Date; and
	 
	 	•	 	The date of any default under either Lease (or under any
financing secured by a mortgage encumbering the Lease) beyond
applicable cure periods if such default results in a termination
or acceleration of the other Lease or financing in question,
unless Lessor elects otherwise in writing.




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	Rent

	 	Lessee shall pay rent under each Lease (the “Rent”), without
offset or deduction, in an annual amount (payable only as
described in the next paragraph) equal to the product of: (a)
the Money Rate; times (b) Lessor’s Investment from time to time.
If Sponsor elects to use a separate Lease for each Property,
then Lessor’s Investment shall be calculated separately for each
Property; otherwise Lessor’s Investment shall be calculated on a
combined basis. “Money Rate” shall mean the sum of: (a)
three-month LIBOR, as in effect for consecutive three-month
periods starting at the Closing; plus (b) 5.50% (550 basis
points) per annum; plus (c) starting on January 1, 2009, an
additional 1.00% (100 basis points) per annum. Rent shall be
calculated on an actual/360 basis.
	 
	 	 
	 

	 	Lessee need not pay Rent in cash during the Lease term.
Instead, at Lessee’s option, each quarter’s Rent may, on the
first day of such quarter, be added to and become part of
Lessor’s Investment (a “PIK Rent Payment”). Future Rent shall
increase accordingly, taking into account that increase in
Lessor’s Investment. Lessee may pay Rent under any Lease in
cash if it wishes to do so.
	 
	 	 
	Lease Obligations

	 	Each Lease shall be an “absolutely triple net,” “hell or high
water,” “bondable” type of Lease, under which Lessee shall bear
absolutely all rights, obligations, and expenses related to the
Property; CS and Lessor shall have absolutely no obligations or
liabilities of any kind (except Lessor’s obligation to deliver a
quitclaim deed in connection with a Buyout for which Lessee has
timely satisfied all conditions under the Lease, and any other
covenants expressly set forth in the Lease, including a covenant
not to encumber the Properties); and the Rent shall be
absolutely free and clear of any and all costs related to the
Property.
	 
	 	 
	Expiration Date

Obligations; Buyout

	 	Provided Lessee has not theretofore exercised its Early Buyout
Option (defined below), starting at least three months before
the expiration date of each Lease, Lessee shall undertake a
diligent marketing program for the Property demised under that
Lease and seek to arrange a sale of such Property at the best
possible price, with a closing to occur simultaneously with the
expiration date of such Lease. If such program is unsuccessful,
or if the sales price of the Property is less than Lessor’s
Investment, then on the expiration date of such Lease (including
an expiration date arising from early termination of such Lease)
the following shall occur as to the Property demised under such
Lease (a “Buyout”):







	 	•	 	If such Property is sold to a third party, Lessee shall
pay Lessor, as additional rent, an amount equal to Lessor’s
Investment less the sales price of the Property;
	 
	 	•	 	If such Property is not sold to a third party, Lessee
shall purchase such Property from Lessor for an amount equal to
Lessor’s Investment;




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	 	•	 	Lessee and Sponsor shall pay Lessor all unpaid sums
(including accrued but unpaid Rent) then due under such Lease;
	 
	 	•	 	Provided that Lessee has paid and performed all its
obligations in connection with the Buyout when and as the Lease
requires by its express terms, Lessor shall convey the Property
by quitclaim deed, to Lessee or Lessee’s designee, entirely at
Lessee’s cost and expense (including payment of any applicable
transfer taxes), subject to no liens or encumbrances created by
Lessor;
	 
	 	•	 	If Lessee does not timely perform its Buyout obligations
for a Property, then Lessee’s Buyout rights shall terminate, and
Lessor shall have the unrestricted right to sell such Property
to a third party, in full or partial satisfaction of Lessee’s
obligations under the Lease, and Lessee (and Sponsor under its
guaranty) shall continue to be liable for an amount (the “Net
Payment”) equal to the difference between the actual net sales
proceeds, if any, of such Property (the “Proceeds”) and Lessor’s
Investment for such Property, and all other sums due under the
Lease (collectively, “Leasehold Obligations”); and Lessee shall
be entitled to receive any Proceeds that exceed the Leasehold
Obligations;
	 
	 	•	 	If Lessor has not actually sold the Property when Lessor
demands the Net Payment, then Lessor shall reasonably determine
the fair market value of the Property based on a third party
appraisal and recalculate the Net Payment to give Lessee and
Sponsor credit for the Proceeds Lessor would have realized if
Lessor had sold the Property for such fair market value; and
	 
	 	•	 	Sponsor’s guaranty shall extend to Lessee’s obligations
upon any Buyout.





	 	 	 
	 

	 	If there exists more than one Lease, then Lessee and Lessor
shall consummate any Buyout simultaneously for each and every
Property, and not for one Property only (except in the case of a
Buyout for a single Property initiated by Lessee).
	 
	 	 
	 

	 	The total amount payable by Lessee upon a Buyout is referred to
as the “Buyout Payment.”
	 
	 	 
	Early Buyout

	 	If any Lease terminates before its scheduled expiration date for
any reason (including Lessee’s default beyond applicable cure
periods or the occurrence of any casualty or condemnation for
which Lessee does not with reasonable promptness satisfy
ordinary and customary restoration conditions), then at Lessee’s
or Lessor’s option a Buyout shall occur under such Lease
effective 20 days after the giving of notice to such effect.
	 
	 	 
	 

	 	In addition, Lessee may elect at any time, on 20 days written
notice, to consummate a Buyout under any Lease(s) as Lessee
designates.






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	General Covenants,

Representations,

Warranties, and

Events of Default

	 	Substantially equivalent to those contained in Sponsor’s
existing second-lien term loan facility, subject to such
exceptions and modifications as CS (or Lessor) and Sponsor shall
agree.
	 
	 	 
	Lease Covenants,

Representations,

Warranties, and

Events of Default

	 	In addition, the Lease documents shall contain Lease-specific
covenants, representations, warranties, and Events of Default as
CS or Lessor requires. These will include at least the
following provisions:







	 	•	 	Property Costs. Lessee shall pay all real estate taxes,
operating expenses, insurance premiums, construction costs,
maintenance and repair costs, utilities, and all other
Property-related costs of any kind or character whatsoever.
Lessee shall give CS and Lessor such evidence of payment of such
costs as CS and Lessor reasonably require from time to time.
	 
	 	•	 	Legal Compliance. Lessee shall be solely responsible
for legal compliance, even if applicable laws require “capital”
or “structural” improvements or repairs to the Property.
	 
	 	•	 	Easement Grants. Lessor shall cooperate with Lessee in
granting ordinary and customary easements and other
development-related rights (collectively, the “Easements”),
provided that: (a) the Easements are on reasonable and customary
terms; (b) Lessee gives Lessor reasonable prior notice of any
Easement; and (c) Lessee gives CS and Lessor a certificate
executed by an officer of Lessee stating that the granting of
such Easement will not impair the fair market value of the
Property in any material respect.
	 
	 	•	 	Trade Fixtures. Lessee’s trade fixtures (including
fixtures, machinery and equipment) remain Lessee’s property.
Lessee may remove them from the Property at any time during the
Lease term, provided that Lessee repairs any damage to the
Property resulting from such removal.
	 
	 	•	 	Alterations. Lessee may perform the following
(“Approved Construction”), in compliance with law: (i)
non-structural alterations, modifications or improvements,
without any notice to or consent of Lessor, (ii) any structural
alteration, modification or improvement, without Lessor’s
consent, provided that Lessee gives CS and Lessor a certificate
from a structural engineer and a certificate of an officer of
Lessee stating that the proposed changes will not adversely
affect the structural integrity of the Property or impair the
revenue production potential (in Sponsor’s business) of the
Property in any material respect; and (iii) certain specified
construction work (to be pre-approved in the Lease) enabling
Lessee and Sponsor to use the Property in Sponsor’s business.




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	 	•	 	Ownership. Lessee shall own (and be entitled to
depreciation on) any improvements it constructs, but such
improvements shall revert to Lessor if the Lease terminates and
Lessee does not acquire the Property through a Buyout. Lessee
shall not damage or destroy any improvements.
	 
	 	•	 	Lessee’s Assignment and Subletting. Lessee may not
sublease or assign except as this paragraph allows. Lessee may
collaterally assign a Lease solely to secure the Notes and
Sponsor’s obligations to any creditor that the Notes allow to
hold a lien senior to the lien securing the Notes (the “Approved
Leasehold Financing”). Any Approved Leasehold Financing shall
attach solely to the leasehold under the Lease and not to
Lessor’s fee estate (and hence shall be subordinate to Lessor’s
estate). Lessor shall have no obligation to “subordinate the
fee” or join in any Approved Leasehold Financing. Lessee may
sublease to any entity that is directly or indirectly wholly
owned by Sponsor (as necessary or appropriate for the operation
of Sponsor’s business), or in connection with any merger,
acquisition, or consolidation of Sponsor or the acquisition of
all or substantially all of the assets of Sponsor. Lessee may
without Lessor’s consent sublease or license any part(s) or all
of any Property on arm’s length terms in the ordinary course of
Lessee’s and Sponsor’s business operations.
	 
	 	•	 	Mortgagee Protections. Any party providing Approved
Leasehold Financing (an “Approved Leasehold Mortgagee”) shall
have the rights, subject to the terms of the Approved Leasehold
Financing, to: (a) cure Lessee’s defaults under the Lease
(within an additional cure period of up to 30 days); (b) after
an Event of Default under, and foreclosure of, the Approved
Leasehold Financing, elect to exercise Lessee’s Buyout rights,
provided that such Approved Leasehold Mortgagee also timely
performs Lessee’s Buyout obligations (without prejudice to its
rights against Lessee); (c) consent to any amendment of the
economic terms of the Lease; (d) receive an assignment of the
Lease without Lessor’s consent (but this may at Lessor’s option
trigger a Buyout); and (e) obtain a new lease if the Lease
terminates because Lessor exercises its remedies under the Lease
after Lessee’s default, provided that within 30 days after such
termination (and as a condition to receiving a new lease) the
Approved Leasehold Mortgagee pays Lessor the Buyout Payment.
Any foreclosure under Approved Leasehold Financing shall
terminate only Lessee’s estate and shall have no effect on
Lessor’s fee estate or right to receive any payments under the
Lease.
	 
	 	•	 	Lessor’s Assignment. Lessor may assign (or grant
participations in) its interest in the Property(ies) and the
Lease. Lessee will at Lessee’s expense (including its
attorneys’ fees) provide such cooperation as Lessor reasonably
requests to facilitate the foregoing.





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	 	•	 	Operation and Use. Lessee will develop the Property as
a “web hotel” and collocation facility for Internet services and
connections. Any changes in or suspension of use will be
permitted provided it causes no material adverse impact on the
value of the Property.
	 
	 	•	 	Repairs. Lessee will be responsible for all structural
and nonstructural repairs and maintenance to the Property,
including without limitation all capital repairs, such that
Lessor will retain no repair, maintenance, or other operating
expenses or performance obligations of any kind or nature for
the Property.
	 
	 	•	 	No Lessor Liability. Neither CS nor Lessor shall have
any liability whatsoever for any matter relating to the
Property. Neither CS nor Lessor shall make any representations
whatsoever. Lessee and Sponsor shall indemnify CS and Lessor
against all costs, risks, burdens, claims, and obligations
relating to or arising from the Property, save only for those
arising out of CS or Lessor’s own gross negligence, wrongful
acts or material breach of its specific and express obligations
under the Lease.
	 
	 	•	 	Insurance. As CS or Lessor requires, consistent with
similar transactions, provided however that CS and Lessor shall
have absolutely no obligation or liability for payment of any
premiums. Lessor shall be named as a loss payee under any
property insurance covering the Properties.
	 
	 	•	 	Loss Proceeds. Fee mortgagees and permitted leasehold
mortgagees may participate in adjustment or settlement of any
insurance proceeds or condemnation award (“Loss Proceeds”). If
Lessee elects a Buyout upon any casualty or condemnation (or if
Lessee fails to satisfy ordinary and typical restoration
conditions with reasonable promptness, and Lessor thereupon
elects a Buyout), then Loss Proceeds (except any attributable to
Approved Construction) up to the Buyout Payment shall go to
Lessor, with credit against the Buyout Payment. Pending
restoration or Buyout, a creditworthy depository (which may be
the fee mortgagee, if an institutional lender) shall hold Loss
Proceeds, applying them first to pay current monetary
obligations under the Lease (other than accrued and unpaid PIK
Rent), second to restore and fully pay for restoration (under
ordinary and customary restoration and disbursement procedures)
or toward the Buyout payment (if a Buyout occurs), and third to
release any balance to Lessee or its leasehold mortgagee.
	 
	 	•	 	Fee Mortgages. If Lessor grants a mortgage on its fee
estate, then such mortgage shall be junior and subordinate to
the Lease, including Lessee’s rights under any Buyout. Fee
mortgagees shall have cure rights and other ordinary mortgagee
protections.





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	 	•	 	Environmental. Lessee shall bear, and shall indemnify
the Indemnified Persons from and against, any and all
environmental risks related to the Property, including
pre-existing environmental conditions, conditions on adjacent
property affecting any Property, and conditions caused by third
parties.
	 
	 	•	 	Transaction Taxes. Lessee shall pay all transfer,
stamp, conveyancing, leasehold, personal property, sales, and
other taxes imposed on the creation of each Lease and the
consummation of any Buyout.





	 	 	 
	Guaranty

	 	Sponsor shall fully guaranty all payment and performance
obligations of Lessee under each Lease, under a form of guaranty
satisfactory to CS and Lessor.
	 
	 	 
	Transfers

	 	The Lease Documents shall prohibit any transfer (or encumbrance)
of Lessee’s interest in the Property or of interests in Lessee,
without CS’s and Lessor’s approval in their sole and absolute
discretion, except as expressly permitted above.
	 
	 	 
	Indebtedness

	 	The Lease Documents shall prohibit Lessee from incurring any
indebtedness whatsoever except accrued but unpaid Rent; current
liabilities for expenditures for operation and maintenance of
the demised Property that the Lease requires Lessee to pay or
incur; and contracts and other obligations arising from Approved
Construction affecting the demised Property. This restriction
shall not apply to existing indebtedness of Lessee as of the
date of this Commitment or to the Convertible Debt and Debt
Transactions being entered into contemporaneously with this
Commitment.
	 
	 	 
	Regulatory Change;

Withholding, Illegality

	 	The Lease Documents shall contain customary provisions on
increased costs, capital adequacy protection, withholding and
other taxes, unavailability of LIBOR, and illegality.
	 
	 	 
	Conditions Precedent

	 	As customary for a transaction of this nature, including CS’s
receipt of the following (the “Closing Deliveries”), all of
which shall be satisfactory to CS, and Sponsor’s satisfaction of
the following additional conditions:







	 	•	 	Completion and execution of Lease documents by Sponsor,
Lessee, Lessor, and other parties as necessary in form and
substance satisfactory to CS and Lessor and their counsel (the
“Lease Documents”);
	 
	 	•	 	The full and simultaneous funding from sources other
than CS and its affiliates of the entire purchase price and
closing costs for Lessor’s acquisition of each Property, to the
extent that such purchase price and closing costs exceed
Lessor’s Investment applied for such purpose;




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	 	•	 	Other conditions precedent as stated in the Commitment
Letter to which this Term Sheet is annexed;
	 
	 	•	 	The Notes shall remain outstanding and not be in default
in any way;
	 
	 	•	 	In the case of the second Closing, if any, the Lease
shall be in full force and effect and not in default as to the
Property already demised, and such Lease shall not have expired
or terminated;
	 
	 	•	 	Lessee’s organizational documents;
	 
	 	•	 	Evidence that the Property is assessed separate and
apart from any other property for local property tax purposes
and a tax bill or tax search clearly identifying the property
taxes for the Property;
	 
	 	•	 	Payment of Lessor’s and CS’s Costs and Expenses (to be
funded at Closing from additional Lessor’s Investment, subject
to the dollar limitation on Lessor’s Investment as stated in
this Term Sheet);
	 
	 	•	 	Identification, background information, and documents
necessary for CS to comply with the USA PATRIOT Act;
	 
	 	•	 	Insurance coverage and certificates;
	 
	 	•	 	On-site Property inspection by CS;
	 
	 	•	 	Opinions of counsel as CS’s counsel requires;
	 
	 	•	 	Phase I environmental report and Phase II, if indicated
(including asbestos and mold);
	 
	 	•	 	PZR zoning report;
	 
	 	•	 	Seismic report (if applicable), including calculation of
probable maximum loss;
	 
	 	•	 	Survey, no more than 60 days old, certified to “Credit
Suisse and its affiliates, successors and assigns”;
	 
	 	•	 	Title insurance policy from Chicago, Fidelity, First
American, LandAmerica, or Stewart (or another company CS
approves);
	 
	 	•	 	UCC, judgments, litigation, bankruptcy, real estate tax,
and other searches as CS requires; and
	 
	 	•	 	Such other closing deliveries and documents as CS,
Lessor, and their counsel reasonably require.




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	CS’s Counsel

	 	Latham & Watkins LLP

885 Third Avenue, Suite 1000

New York, New York 10022-4802

Attention: Joshua Stein, Esq.
	 
	 	 
	Governing Law

	 	New York







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