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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED APRIL 28, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .
COMMISSION FILE NUMBER 0-27130
NETWORK APPLIANCE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 77-0307520
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (IRS EMPLOYER IDENTIFICATION NO.)
ORGANIZATION)
495 EAST JAVA DRIVE,
SUNNYVALE, CALIFORNIA 94089
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 822-6000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED
------------------- ------------------------------------
NONE NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK (NO PAR VALUE)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
Registrant, as of May 26, 2000, was $18,217,977,594 (based on the closing price
for shares of the Registrant's common stock as reported by the Nasdaq National
Market for the last trading day prior to that date). Shares of common stock held
by each executive officer, director, and holder of 5% or more of the outstanding
common stock have been excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
On May 26, 2000, 312,417,087 shares of the Registrant's common stock, no
par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The information called for by Part III is incorporated by reference from
the definitive Proxy Statement for our annual meeting of shareholders to be held
on October 11, 2000, which will be filed with the Securities and Exchange
Commission not later than 120 days after April 28, 2000.
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This Annual Report on Form 10-K contains forward looking statements that
are accompanied by cautionary statements that identify important factors that
could cause actual results to differ materially from those in the forward
looking statements.
PART I
ITEM 1. BUSINESS
OVERVIEW
Network Appliance pioneered the concept of the "network appliance," an
extension of the industry trend toward specialized devices that perform a
specific function in the network, similar to the development of the router for
network communications. Today we are a leader in delivering high-performance
network-attached data storage and access devices specifically designed to
improve the accessibility of data stored and distributed over a network. Our
Internet caching solutions (NetCache(TM) appliances) and file servers (filers)
deliver fast, simple, reliable and cost-effective access to network-stored data
and enable simultaneous shared file services for UNIX(R), Windows NT(R), and the
World Wide Web. Our solutions are faster, more highly available and easier to
operate than similarly configured and competitively priced products. System
performance is accomplished by a specialized and patented software and operating
system optimized to exclusively perform file server and caching tasks, thus
providing performance advantages when compared to general purpose computers in
similar environments.
Our dedicated Internet caching appliance, designed to serve data at high
speeds, eases network and server bottlenecks and speeds up delivery of web
content by storing or caching frequently used content closer to end-users. Our
NetCache solutions scale network infrastructures and enhance end-user
performance, benefiting customers struggling with Web data traffic that is,
according to market analysts, doubling every three to six months.
Our filers are marketed to users of leading database and enterprise
software applications, such as those offered by Oracle Corp., Sybase, Inc.,
Informix Software, Inc. and SAP AG. We have OEM agreements with Dell Computer
Corporation and Fujitsu Limited to broaden our focus on the Windows NT market.
We continue to leverage our core software architecture in developing new
enterprise software and data management tools by providing solutions for the
e-business infrastructure and database applications among Internet and
enterprise-related customers.
PRODUCTS
The demand for our Network Attached Storage (NAS) and caching appliances is
driven by the need to manage the rapid growth in data volume and the increasing
complexity of data type and content delivery. We are focused on creating
dedicated, specialized data access solutions that perform a single function:
serve data. Both our filers and NetCache appliances are based on our patented
Data ONTAP(TM) software and standards-compliant hardware.
Filers. Our first Network Appliance(TM) product was a filer developed for
the UNIX environment. Subsequently, we added the capability for the filer to
handle the heterogeneous network environment of UNIX, Windows NT and the World
Wide Web, using the NFS, CIFS, and HTTP protocols. Current products include: the
NetApp(R) F720, an entry-level filer targeted for workgroups and smaller
application environments, the NetApp F740, designed to address the needs of
large departments, and the NetApp F760, an enterprise class filer. All filers
are based on a PCI-bus architecture and come packaged in rack mountable
enclosures which may be factory installed in cabinets. The NetApp F700-series
filers are all based on the Digital(R) Alpha(R) processor and support either
fibre channel arbitrated loop (FC-AL) conventions or legacy SCSI as storage
options.
All of our filers include the Data ONTAP operating system and one base or
standard protocol (either NFS, CIFS or HTTP). Data ONTAP delivers simultaneous
file service to UNIX, Windows NT and Web
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clients. Data ONTAP, versions 5.0 and higher, supports multiple volume server
partitioning, a popular strategy for modularizing, consolidating and
administering data according to applications, data types and organizational
needs. Native multi-protocol functionality can be easily added through licensing
non-base protocols at an additional cost. Cluster Failover software technology,
which automatically senses a system failure and switches all file service
functions to its cluster partner, is available on the NetApp F740 and NetApp
F760 products.
Two software features SnapMirror(TM) and SnapRestore(TM), (based on the
Data ONTAP Snapshot(TM) technology), allow enterprise, database and e-commerce
customers to implement multi-terabyte data management systems by utilizing
remote mirroring, enterprise backup, disaster recovery and data replication.
These data protection tools further enhance our filers' performance allowing
customers to minimize downtime, eliminate unnecessary storage investment and
time consuming backup routines. A third software feature, SecureAdmin(TM) is a
security product that allows administrators to conduct encrypted management
sessions with the filer over the Internet or corporate intranets.
In fiscal 2000, we launched two new storage management software solutions:
SnapManager(TM) for Microsoft(R) Exchange that allows customers to perform
online backup and rapid data recovery in Microsoft Exchange environments; and
ApplianceWatch(TM) that allows IT professionals to centrally manage, administer
and optimize our systems for superior performance.
NetCache Appliances. NetCache appliances were developed to address the
explosive growth of Internet traffic that is slowing Web data access. The rapid
growth and increasing richness of web content, including images, audio, video
and downloadable applications are creating a greater demand for bandwidth.
NetCache appliances scale network infrastructure by distributing content closer
to the end-users and improving end-user performance. Web access delays can be
substantially reduced if frequently accessed data is stored or "cached" nearer
to the end-user.
Our NetCache products further assist customers in growing network
infrastructure and managing mission critical data, providing customers with a
fast, cost-effective way to administer corporate Internet/Intranet access
policies and offers advanced security features, including user authentication,
filtering and auditing. With our patented Write Anywhere File Layout (WAFL(TM))
file system, microkernel OS and advanced caching algorithms, NetCache appliances
provide enhanced response times and throughput.
In fiscal 2000, we introduced new caching products, which included NetCache
4.1, the industry's first streaming media appliance supporting Apple(R)
Quicktime(TM), Microsoft(R) Windows Media(TM) and RealNetworks(R) Real
System(TM) G2 users, delivering live broadcasting on the Internet.
The NetCache appliance provides a high performance, cost-effective,
scalable solution that:
- enables enterprise web caching to efficiently accelerate information
gathering along with decreasing overall bandwidth demands and costs and
provides security access and content filtering controls;
- mirrors the most often used corporate data to distributed enterprise
sites, thereby relieving network congestion across the enterprise
intranet;
- delivers high performance NetNews, based on NNTP (Network News transfer
protocol) for all network environments; and
- improves delivery of Internet content, allowing webcasting, replicating
video and audio streams to thousands of simultaneous users.
Current products include the entry-level NetApp C720s, a dedicated caching
appliance designed for smaller ISP and enterprise environments, the NetApp C720,
designed for remote, low administrative overhead environments such as Internet
Points-of-Presence (POPs), web hosting and content providers and larger
enterprises, and the NetApp C760, which supports the most demanding,
data-intensive caching environments.
Our product list prices range from $6,000 to $750,000, depending primarily
on the model purchased and average product configuration.
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SALES AND MARKETING
We seek to market and distribute our products and technology globally. In
North America, we employ a multi-tiered distribution strategy, which focuses on
product sales to end-users through a direct sales force, as well as selected
value-added resellers in certain geographies. In Europe, we employ a mix of
resellers and direct sales channels to sell to end-users. In Asia, our products
are primarily sold through resellers, which are supported by our channel sales
representatives and technical support personnel. In fiscal 1999, we entered into
OEM agreements with Dell Computer Corporation and Fujitsu Limited, which are
part of our strategy to increase the worldwide distribution of our filer
products. No single customer accounted for 10% or more of our net sales in
fiscal 2000, 1999 or 1998. See additional discussion regarding sales and
marketing in "Note 8 -- Segment, Geographic and Customer Information under Item
8. Financial Statements and Supplementary Data -- Notes to Consolidated
Financial Statements."
BACKLOG
We manufacture our products based upon forecasts of our customers' demand.
Orders are generally placed by customers on an as-needed basis. Products are
typically shipped within one to four weeks following receipt of an order. In
certain circumstances, customers may cancel or reschedule orders without
penalty. For these reasons, we do not believe "orders" constitute a firm
"backlog" and we believe orders are not a meaningful indicator of revenues nor
material to an understanding of our business.
CUSTOMER SERVICE AND SUPPORT
Support Services. Our customer service and support organization provides
technical support, education and training. We believe that providing a high
level of customer service and technical support is critical to customer
satisfaction and our success. Warranty coverage provides customers with free
7x24-telephone support for emergency situations for one year from the date of
purchase along with the same day shipment of replacement parts, and access to
our self-service on-line website, NetApp on the Web (NOW). In addition, our
customers receive 90 days of software subscription -- on-line access to all
entitled software updates. Additional software support can be purchased through
our Warranty Plus offering, which includes:
- One year of access to NOW, and Information Subscription Service;
- AutoSupport;
- Software Subscription Service;
- Next-Business-Day Parts Delivery (Disks and System Hardware); and
- 7x24 Emergency Telephone Support, and 7x24 Web Case Support for
Non-Emergency Situations.
Additional service options available in-warranty or post warranty include:
- Non-Emergency Telephone Support;
- Upgraded Hardware Services for Disks;
- Upgraded Hardware Services for System Hardware;
- Global Advisor, providing a customer with access to a team of advisors
and tools that will monitor all service-based activity for their account;
and
- Global Advisor Plus, providing immediate phone access to our "back line"
engineers for non-emergency situations. This service allows incoming
requests to be automatically upgraded to receive emergency support, thus
immediately escalating the case to the highest level resource available
at the time the call is received.
Professional Services. Our professional services organization offers a
comprehensive solution designed to optimize performance and improve reliability
for enterprise-wide data management, enabling more cost-effective network and
information technology administration. Our baseline professional service
includes a self-
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service web site, web case support for non-emergency situations, subscription
services and next-business-day hardware delivery. We also offer upgraded
services, providing for faster on-site hardware replacement and non-emergency
telephone support through the global support center.
Professional services programs also include:
- System Availability Management, providing proactive system administration
involving global support center call activity review, regular site
inspections and system availability reviews plus upgraded services
involving on-site and 24-hour emergency response from a Professional
Services Engineer;
- Expert consulting services available on an hourly or daily rate basis to
help customers develop customized solutions; and
- Time and materials consulting services for short-term consulting or
emergency on-site response.
In general, we charge for service programs on an annual subscription basis.
On-site support is primarily provided by independent parties both in North
America and internationally.
MANUFACTURING
Our manufacturing operations, located in Sunnyvale, California, include
materials procurement, commodity management, component engineering, test
engineering, manufacturing engineering, product assembly, product assurance,
quality control and final test. We rely on many suppliers for materials, as well
as several key subcontractors for the production of certain sub-assemblies. Our
strategy has been to develop close relationships with our suppliers, exchanging
critical information and implementing joint quality training programs. We are
currently expanding the use of subcontractors for the production of major
sub-assemblies. See "-- Risk Factors -- We rely upon a limited number of
suppliers." This manufacturing strategy minimizes capital investment and
overhead expenditures and creates flexibility by allowing us to rapidly expand.
We were awarded the ISO 9001 certification on May 29, 1997.
RESEARCH AND DEVELOPMENT
Since our inception we have made substantial investments in research and
development. We believe that our future performance will depend in large part on
our ability to maintain and enhance our current product line, develop new
products that achieve market acceptance, maintain technological competitiveness
and meet an expanding range of customer requirements. We intend to continuously
expand our existing product offerings and to introduce new products.
As part of our ongoing development process, we continue to deliver new data
access solutions with enterprise software and database management tools. New
products introduced in fiscal 1999 included the F700 series filers, the C700
caching products, new enterprise software offerings and data management tools
with the Cluster Failover solutions, SnapMirror, SnapRestore, and SecureAdmin.
In the fourth quarter of fiscal 2000, we shipped two new storage management
software solutions, SnapManager for Microsoft Exchange and ApplianceWatch. New
caching product introductions in fiscal 2000 included NetCache software release
4.0 and NetCache 4.1, adding streaming media support for Apple Quicktime,
Microsoft Windows Media and RealNetworks Real System G2 users, delivering live
broadcasting on the Internet.
Our future growth depends upon the successful development and introduction
of new hardware and software, however we cannot assure you that these or other
new products will attain market acceptance. See "-- Risk Factors -- We depend
upon our research and development efforts to develop and introduce new products"
and "-- We face risks of technological changes that affect our products."
Our total expenses for research and development for fiscal years 2000, 1999
and 1998 were $62.1 million, $30.5 million, and $16.6 million, respectively. We
anticipate that research and development expenses will increase in absolute
dollars in future periods.
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COMPETITION
The network attached data storage market is intensely competitive and
characterized by rapidly changing technology. With the increasing adoption of
network attached storage, or NAS, appliances that substitute for the use of
general purpose computers, we compete against traditional suppliers of
UNIX-based general purpose computers that are used as network file servers
including Sun Microsystems, Inc., Hewlett-Packard Company, Silicon Graphics,
Inc., and IBM Corporation, among others. In addition, certain of these large
traditional suppliers of general purpose computers may in the future offer
specialized file server products with dedicated solutions for file serving,
database serving, caching and web serving, which are more directly competitive
with our products. We also encounter competition from manufacturers of PC-based
file servers utilizing Windows NT such as Compaq Computer Corporation and Dell
Computer Corporation, as well as competition from manufacturers of open systems
storage and RAID solutions such as EMC Corporation, Compaq StorageWorks, and MTI
Corporation. We also experience competition from smaller NAS appliance vendors
including Procom Technology, Inc., MetaStor Storage Solutions (a subsidiary of
LSI Logic Corp.) and specialized network file server companies such as Auspex
Systems, Inc. In the Internet caching market, our NetCache appliances compete
against both the caching appliance vendors including CacheFlow Inc., Cisco
Systems, Inc. as well as the caching software vendors including Inktomi Corp.,
and Novell, Inc. See "-- Risk Factors -- An increase in competition could
materially adversely affect our operating results" and "-- We face risks of
technological changes that affect our products."
We believe that the principal competitive factors affecting our market
include product features such as response time, reliability, data availability,
scalability, ease of use, price, multiprotocol capabilities and customer service
and support. Although we believe that our products currently compete favorably
with respect to these factors, we can not assure you that we can maintain our
competitive position against current and potential competitors, especially those
with significantly greater financial, marketing, service, support, technical and
other resources.
PROPRIETARY RIGHTS
We currently rely on a combination of copyright and trademark laws, trade
secrets, confidentiality procedures, contractual provisions and patents to
protect our proprietary rights. We seek to protect our software, documentation
and other written materials under trade secret, copyright and patent laws, which
afford only limited protection. We have registered our "Network Appliance" name
and logo, "FAServer", "FilerView", "NetApp" and "SecureShare" trademarks in the
United States. Other United States trademarks and some of the other United
States registered trademarks are registered internationally as well. We will
continue to evaluate the registration of additional trademarks as appropriate.
We generally enter into confidentiality agreements with our employees, resellers
and customers. We currently have multiple United States and international patent
applications pending and four United States patents issued. See "-- Risk
Factors -- If we are unable to protect our intellectual property we may be
subject to increased competition which could materially adversely affect our
operating results."
EMPLOYEES
As of April 28, 2000, we had 1,469 employees. Of the total, 775 were in
sales and marketing, 327 in research and development, 162 in finance and
administration and 205 in operations. Our future performance depends in
significant part upon our key technical and senior management personnel, none of
whom is bound by an employment agreement. We have never had a work stoppage and
consider relations with our employees to be good.
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EXECUTIVE OFFICERS
Our executive officers and their ages as of April 28, 2000, are as follows:
NAME AGE POSITION
---- --- --------
Daniel J. Warmenhoven......... 49 Chief Executive Officer and Director
Thomas F. Mendoza............. 49 President
Jeffry R. Allen............... 48 Executive Vice President, Finance and Operations,
Chief Financial Officer and Secretary
David Hitz.................... 37 Executive Vice President, Engineering
James K. Lau.................. 41 Executive Vice President and Chief Strategy Officer
Daniel J. Warmenhoven has served as our President and Chief Executive
Officer and has been a member of the Board of Directors since October 1994.
Prior to joining us, Mr. Warmenhoven served in various capacities, including
President, Chief Executive Officer and Chairman of the Board of Directors of
Network Equipment Technologies, Inc., a telecommunications company, from
November 1989 to January 1994. He presently serves on the Board of Directors of
Redback Networks, Inc., a communications products company. Mr. Warmenhoven holds
a B.S. degree in electrical engineering from Princeton University.
Thomas F. Mendoza was promoted to President in May 2000. Previously he has
served as our Senior Vice President, Worldwide Sales and Marketing since
February 1999 and Senior Vice President, Worldwide Sales since 1998. Prior to
that he served as Vice President, North American Sales. From November 1993 to
April 1994, Mr. Mendoza served in various capacities including Vice President,
Sales at Work Group Technology, a product data management company. Prior to
that, Mr. Mendoza served in various capacities including Vice President of North
American Sales at Auspex Systems, Inc., a UNIX-based network file server
company, from November 1990 to October 1993. Mr. Mendoza was previously Vice
President of Western Operations at Stratus Computer Corp., a vendor of fault
tolerant computers, from May 1982 to October 1990. Mr. Mendoza holds a B.A.
degree from the University of Notre Dame.
Jeffry R. Allen was promoted to Executive Vice President, Finance and
Operations, Chief Financial Officer and Secretary in May 2000 and has served as
our Senior Vice President, Finance and Operations, Chief Financial Officer and
Secretary since December 1996. From October 1994 to December 1996, Mr. Allen
served in various capacities, including Senior Vice President of Operations and
Vice President and Controller of Bay Networks, Inc., a networking company. From
December 1990 to October 1994, Mr. Allen held various positions at SynOptics,
Inc., the latest of which was Vice President and Controller. Before joining
SynOptics, Inc., he held various positions, from December 1973 to November 1990,
at Hewlett-Packard Company, the latest of which was Controller of the
Information Networks Group. He presently serves on the Board of Directors of VA
Linux Systems, a provider of Linux and Open Source solutions for the Web. Mr.
Allen holds a B.S. degree from San Diego State University.
David Hitz was promoted to Executive Vice President, Engineering in May
2000 and has served as our Senior Vice President, Engineering since February
2000 and Vice President and a co-founder of the Company since April 1992. Prior
to that, Mr. Hitz worked as a senior engineer at Auspex Systems, Inc., a
UNIX-based network file server company, from May 1988 to January 1991.
Previously to Auspex, Mr. Hitz held various engineering positions at MIPS
Computer. Mr. Hitz holds a B.S. degree in computer science and electrical
engineering from Princeton University.
James K. Lau was promoted to Executive Vice President and Chief Strategy
Officer in May 2000. Mr. Lau has served as our Vice President, Chief Technical
Officer and Vice President of Engineering and a co-founder of the Company since
April 1992. Prior to that, he served as director of software development at
Auspex Systems, Inc. Prior to Auspex, he served as group manager of PC products
at Bridge Communications, now known as 3Com. Mr. Lau holds a B.S. degree in
computer science and mathematics from the University of California, Berkeley and
a master's degree in computer engineering from Stanford University.
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RISK FACTORS
FACTORS BEYOND OUR CONTROL COULD CAUSE OUR QUARTERLY RESULTS TO FLUCTUATE.
Although we have experienced significant revenue growth in recent periods,
this growth may not be indicative of our future operating results. As a result,
we believe that period-to-period comparisons of our results of operations are
not necessarily meaningful and should not be relied upon as indicators of future
performance. Many of the factors that could cause our quarterly operating
results to fluctuate significantly in the future are beyond our control and
include the following:
- the level of competition in our target product markets;
- the size, timing and cancellation of significant orders;
- product configuration and mix;
- market acceptance of new products and product enhancements;
- new product announcements or introductions by us or our competitors;
- deferrals of customer orders in anticipation of new products or product
enhancements;
- changes in pricing by us or our competitors;
- our ability to timely develop, introduce and market new products and
enhancements;
- supply constraints;
- technological changes in our target product markets;
- the levels of expenditure on research and development and expansion of
our sales and marketing programs;
- seasonality; and
- general economic trends.
In addition, sales for any future quarter may vary and accordingly be
inconsistent with our plans. We generally operate with limited order backlog
because our products are typically shipped shortly after orders are received. As
a result, product sales in any quarter are generally dependent on orders booked
and shipped in that quarter. Product sales are also difficult to forecast
because the network attached storage market is rapidly evolving and our sales
cycle varies substantially from customer to customer.
Due to all of the foregoing factors, it is possible that in one or more
future quarters our results may fall below the expectations of public market
analysts and investors. In such event, the trading price of our common stock
would likely decrease.
OUR GROSS MARGINS MAY VARY BASED ON THE CONFIGURATION OF OUR PRODUCTS.
We derive a significant portion of our sales from the resale of disk drives
as components of our filers, and the resale market for hard disk drives is
highly competitive and subject to intense pricing pressures. Our sales of disk
drives generate lower gross margin percentages than those of our filer products.
As a result, as we sell more highly configured systems with greater disk drive
content, overall gross margin percentages will be negatively affected.
Conversely, we believe our increased licensing of add-on software products may
favorably impact gross margins.
Our gross margins have been and may continue to be affected by a variety of
other factors, including:
- competition;
- direct versus indirect sales;
- the mix of software as a percentage of revenue;
- the mix and average selling prices of products;
- new product introductions and enhancements; and
- the cost of components and manufacturing labor.
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A SIGNIFICANT PERCENTAGE OF OUR EXPENSES ARE FIXED WHICH COULD AFFECT OUR NET
INCOME.
Our expense levels are based in part on our expectations as to future sales
and a significant percentage of our expenses are fixed. As a result, if sales
levels are below expectations, net income may be disproportionately affected.
OUR FUTURE FINANCIAL PERFORMANCE DEPENDS ON GROWTH IN THE NETWORK ATTACHED DATA
STORAGE MARKET AND ANY LACK OF GROWTH WILL HAVE A MATERIAL ADVERSE EFFECT ON OUR
OPERATING RESULTS.
All of our filer products address the network attached data storage market.
Accordingly, our future financial performance will depend in large part on
continued growth in the network attached data storage market and on emerging
standards in this market. We cannot assure you that the market for network
attached data storage will continue to grow or that emerging standards in the
network attached data storage market will not adversely affect the growth of
UNIX and Windows NT server markets. If the network attached data storage market
grows more slowly than anticipated or if network attached data storage based on
emerging standards other than those adopted by us become increasingly accepted
by the market, our operating results could be materially adversely affected.
THE SUCCESS OF OUR NETCACHE APPLIANCE PRODUCTS DEPENDS UPON MARKET ACCEPTANCE OF
CACHING TECHNOLOGY AND CONTINUED GROWTH IN THE CACHING APPLIANCE MARKET.
In late 1997, we released our NetCache appliance products, a new category
of hardware-based Internet caching appliances designed to speed the delivery of
information stored on the Web. However, hardware-based caching technology is
still in its infancy.
Our future financial performance will depend in part on the acceptance of
caching technology and the acceptance of our NetCache appliance products. We
cannot assure you that the caching appliance market will continue to grow at its
current rate, or at all.
IF WE ARE UNABLE TO INTRODUCE NEW PRODUCTS, OR IF OUR NEW PRODUCTS DO NOT
ACHIEVE MARKET ACCEPTANCE, OUR OPERATING RESULTS COULD BE MATERIALLY ADVERSELY
AFFECTED.
We derive a substantial portion of our revenue from the sale of our network
filer products. As a result, a reduction in the demand for our filer products
due to increased competition, a general decline in the market for network
attached data storage or other factors could materially adversely affect our
operating results. As part of our ongoing development process, we launched our
F700 filer products, C700 caching products, Cluster Failover solutions,
SnapMirror, SnapRestore, and SecureAdmin in fiscal 1999. During the third
quarter of fiscal 2000, we introduced new caching products, which included
NetCache software release 4.0 and NetCache 4.1, adding streaming media support
for Apple Quicktime, Microsoft Windows Media and RealNetworks Real System G2
users, delivering live broadcasting on the Internet. During the fourth quarter
of fiscal 2000, we launched more new enterprise software and data management
tools: SnapManager for Microsoft Exchange and ApplianceWatch. We expect to
derive a substantial portion of our revenue from sales of our F700 filer and
C700 caching products and these major data management software products.
Additional product introductions in future periods are expected to impact the
sales of existing products. If we are unable to introduce new products in a
timely manner, effectively manage the introduction of new products and any
related inventory transitions, or if such products do not achieve market
acceptance, our operating results could be materially adversely affected.
IF WE FAIL TO MANAGE OUR EXPANDING BUSINESS EFFECTIVELY OUR OPERATING RESULTS
COULD BE MATERIALLY ADVERSELY AFFECTED.
We have experienced rapid growth. Our future operating results depend to a
large extent on management's ability to successfully manage expansion and
growth, including but not limited to expanding international operations,
forecasting revenues, addressing new markets, controlling expenses, implementing
infrastructure and systems and managing our assets. In addition, an unexpected
decline in the growth rate of
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revenues without a corresponding and timely reduction in expense growth or a
failure to manage other aspects of growth could materially adversely affect our
operating results.
WE DEPEND ON ATTRACTING AND RETAINING QUALIFIED TECHNICAL AND SALES PERSONNEL.
Our continued success depends, in part, on our ability to identify,
attract, motivate and retain qualified technical and sales personnel. Because
our future success is dependent on our ability to continue to enhance and
introduce new products, we are particularly dependent on our ability to
identify, attract, motivate and retain qualified engineers with the requisite
education, backgrounds and industry experience. Competition for qualified
engineers, particularly in Silicon Valley, is intense. The loss of the services
of a significant number of our engineers or sales people could be disruptive to
our development efforts or business relationships and could materially adversely
affect our operating results.
RISKS INHERENT IN OUR INTERNATIONAL OPERATIONS COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR OPERATING RESULTS.
We conduct business internationally. For the year ended April 30, 2000
approximately 30.7% of our net sales were to international customers (including
United States exports). Accordingly, our future operating results could be
materially adversely affected by a variety of factors, some of which are beyond
our control, including regulatory, political or economic conditions in a
specific country or region, trade protection measures and other regulatory
requirements and government spending patterns.
Our international sales are denominated in U.S. dollars and in foreign
currencies. An increase in the value of the U.S. dollar relative to foreign
currencies could make our products more expensive and, therefore, potentially
less competitive in foreign markets. For international sales and expenditures
denominated in foreign currencies, we are subject to risks associated with
currency fluctuations. We hedge risks associated with foreign currency
transactions in order to minimize the impact of changes in foreign currency
exchange rates on earnings. We utilize forward contracts to hedge trade and
intercompany receivables and payables. All hedge contracts are marked to market
through earnings every period.
Additional risks inherent in our international business activities
generally include, among others, longer accounts receivable payment cycles,
difficulties in managing international operations and potentially adverse tax
consequences. Such factors could materially adversely affect our future
international sales and, consequently, our operating results.
Although operating results have not been materially adversely affected by
seasonality in the past, because of the significant seasonal effects experienced
within the industry, particularly in Europe, our future operating results could
be materially adversely affected by seasonality.
We believe that continued growth and profitability will require successful
expansion of our international operations and sales and therefore we have
committed significant resources to such expansion. In order to successfully
expand international sales in future periods, we must strengthen foreign
operations, hire additional personnel and recruit additional international
distributors and resellers. This will require significant management attention
and financial resources and could materially adversely affect our operating
results. To the extent that we are unable to effect these additions in a timely
manner, our growth, if any, in international sales will be limited, and our
operating results could be materially adversely affected. In addition, we cannot
assure you that we will be able to maintain or increase international market
demand for our products.
AN INCREASE IN COMPETITION COULD MATERIALLY ADVERSELY AFFECT OUR OPERATING
RESULTS.
The network attached data storage market is intensely competitive and
characterized by rapidly changing technology. With the increasing adoption of
the NAS appliances that substitute for the use of general purpose server-storage
computers, we compete against traditional suppliers of UNIX-based general
purpose computers that are used as network file servers including Sun
Microsystems, Inc., Hewlett-Packard Company, Silicon Graphics, Inc. and IBM
Corporation, among others. Many of our current and potential competitors have
significantly greater financial, technical, marketing and other resources than
we do. In addition, certain of these large traditional suppliers of general
purpose computers may in the future offer specialized file server
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products with dedicated solutions for file serving, database serving, caching
and web serving, which are more directly competitive with our products. We also
encounter competition from manufacturers of PC-based file servers utilizing
Windows NT such as Compaq Computer Corporation and Dell Computer Corporation, as
well as competition from manufacturers of open systems storage and RAID
solutions such as EMC Corporation, Compaq StorageWorks, and MTI Corporation. We
also experience competition from smaller NAS appliance vendors including Procom
Technology, Inc., MetaStor Storage Solutions (a subsidiary of LSI Logic Corp.)
and specialized network file server companies such as Auspex Systems, Inc. In
the Internet caching market, our NetCache appliances compete against both the
caching appliance vendors, including CacheFlow, Inc. and Cisco Systems, Inc. as
well as the caching software vendors, including Inktomi Corp. and Novell, Inc.
Increased competition could result in price reductions, reduced gross
margins and loss of market share, any of which could materially adversely affect
our operating results. As a result, our competitors may be able to respond more
quickly than we can to new or emerging technologies and changes in customer
requirements, or devote greater resources to the development, promotion, sale
and support of their products. In addition, current and potential competitors
have established or may establish cooperative relationships among themselves or
with third parties. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share. We cannot assure you that we will be able to compete successfully against
current or future competitors. Competitive pressures we face could materially
adversely affect our operating results.
We believe that the principal competitive factors affecting our market
include product features such as response time, reliability, data availability,
scalability, ease of use, price, multiprotocol capabilities and customer service
and support. Although we believe that our products currently compete favorably
with respect to these factors, we cannot assure you that we can maintain our
competitive position against current and potential competitors, especially those
with significantly greater financial, marketing, service, support, technical and
other resources.
WE RELY UPON A LIMITED NUMBER OF SUPPLIERS AND ANY DISRUPTION OR TERMINATION OF
THESE SUPPLY ARRANGEMENTS COULD DELAY SHIPMENT OF OUR PRODUCTS AND COULD
MATERIALLY ADVERSELY AFFECT OUR OPERATING RESULTS.
We rely upon a limited number of suppliers of several key components
utilized in the assembly of our products. We purchase most of our disk drives
through a single supplier. We purchase computer boards and microprocessors from
a limited number of suppliers. Our reliance on a limited number of suppliers
involves several risks, including:
- a potential inability to obtain an adequate supply of required components
because we do not have long-term supply commitments;
- supplier capacity constraints;
- price increases;
- timely delivery; and
- component quality.
In the future, we intend to increasingly rely on contract manufacturers to
assemble our products. If our contract manufacturers' operations were
interrupted for any reason, our ability to meet scheduled product deliveries to
customers would be materially adversely affected.
Component quality is particularly significant with respect to our supplier
of disk drives. In order to meet product performance requirements, we must
obtain disk drives of extremely high quality and capacity. In addition, there
are periodic supply and demand issues for disk drives, microprocessors and for
semiconductor memory components, which could result in component shortages,
selective supply allocations and increased prices of such components. We cannot
assure you that we will be able to obtain our full requirements of such
components in the future or that prices of such components will not increase. In
addition, problems with respect to yield and quality of such components and
timeliness of deliveries could occur. Disruption or
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termination of the supply of these components could delay shipments of our
products and could materially adversely affect our operating results. Such
delays could also damage relationships with current and prospective customers.
WE CANNOT ASSURE YOU THAT WE WILL NOT INCUR PROBLEMS WITH CURRENT OR FUTURE
EQUITY INVESTMENTS AND ACQUISITIONS OR THAT WE WILL REALIZE VALUE FROM SUCH
STRATEGIC RELATIONSHIPS.
We are continuously evaluating alliances and external investment in
technologies related to our business and have already made relatively small
strategic investments in a number of NAS-related technology companies. Equity
investments may result in the loss of investment capital. Acquisitions of
companies or products and alliances and strategic investments entail numerous
risks, and we cannot assure you that we will be able to successfully integrate
acquired operations and products or to realize anticipated synergies, economies
of scale, or other value. In addition, we may experience a diversion of
management's attention, the loss of key employees of acquired operations or the
inability to recover strategic investments in development stage entities. Any
such problems could have a material adverse effect on our business, financial
condition and results of operation.
WE CANNOT ASSURE YOU THAT OUR OEM RELATIONSHIPS WITH DELL COMPUTER CORPORATION
AND FUJITSU LIMITED WILL GENERATE SIGNIFICANT REVENUE.
While our agreements with Dell Computer Corporation and Fujitsu Limited are
an element of our strategy to increase penetration in the Windows NT market,
neither Dell Computer Corporation nor Fujitsu Limited have made purchase
commitments for our products. In addition, since these agreements are relatively
new, we do not have a history upon which to base an analysis of their future
success. Currently we do not, and cannot assure you that we will, generate
significant revenue from these agreements.
WE DO NOT HAVE EXCLUSIVE RELATIONSHIPS WITH OUR DISTRIBUTORS AND ACCORDINGLY
THERE IS A RISK THAT THOSE DISTRIBUTORS MAY GIVE HIGHER PRIORITY TO PRODUCTS OF
OTHER SUPPLIERS WHICH COULD MATERIALLY ADVERSELY AFFECT OUR OPERATING RESULTS.
Our distribution customers generally offer products of several different
companies, including products of our competitors. Accordingly, there is risk
that these distributors may give higher priority to products of other suppliers,
which could materially adversely affect our operating results.
WE DEPEND UPON OUR RESEARCH AND DEVELOPMENT EFFORTS TO DEVELOP AND INTRODUCE NEW
PRODUCTS AND ANY FAILURE TO DEVELOP AND INTRODUCE NEW PRODUCTS SUCCESSFULLY
COULD MATERIALLY ADVERSELY AFFECT OUR OPERATING RESULTS.
Our future growth depends upon the successful development and introduction
of new hardware and software products. We cannot assure you that these or other
new products will be introduced on a timely basis or attain market acceptance.
Due to the complexity of network file servers and Internet caching devices, and
the difficulty in gauging the engineering effort required to produce new
products, new products are subject to significant technical risks. We cannot
assure you that new products will be introduced on a timely basis or at all. In
the past, we have experienced delays in the shipments of our new products
principally due to an inability to qualify component parts from disk drive and
other suppliers, resulting in delay or loss of product sales. If new products
are delayed or do not achieve market acceptance, our operating results will be
materially adversely affected.
WE FACE RISKS OF TECHNOLOGICAL CHANGES THAT AFFECT OUR PRODUCTS.
The markets we serve are characterized by rapid technological change,
changing customer needs, frequent new product introductions and evolving
industry standards. The introduction of products embodying new technologies and
the emergence of new industry standards could render our existing products
obsolete and unmarketable. Our future success will depend upon our ability to
develop and introduce new products (including new software releases and
enhancements) on a timely basis that keep pace with technological developments
and emerging industry standards and address the increasingly sophisticated needs
of our
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customers. We cannot assure you that we will be successful in developing and
marketing new products that respond to technological changes or evolving
industry standards. If we are unable, for technological or other reasons, to
develop and introduce new products in a timely manner in response to changing
market conditions or customer requirements, our operating results will be
materially adversely affected.
UNDETECTED SOFTWARE ERRORS OR FAILURES FOUND IN NEW PRODUCTS MAY RESULT IN LOSS
OF OR DELAY IN MARKET ACCEPTANCE OF OUR PRODUCTS WHICH COULD MATERIALLY
ADVERSELY AFFECT OUR OPERATING RESULTS.
Our products may contain undetected software errors or failures when first
introduced or as new versions are released. Despite testing by us and by current
and potential customers, errors may not be found in new products until after
commencement of commercial shipments, resulting in loss of or delay in market
acceptance, which could materially adversely affect our operating results.
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY WE MAY BE SUBJECT TO
INCREASED COMPETITION WHICH COULD MATERIALLY ADVERSELY AFFECT OUR OPERATING
RESULTS.
Our success depends significantly upon our proprietary technology. We
currently rely on a combination of copyright and trademark laws, trade secrets,
confidentiality procedures, contractual provisions and patents to protect our
proprietary rights. We seek to protect our software, documentation and other
written materials under trade secret, copyright and patent laws, which afford
only limited protection. We have registered trademarks including our "Network
Appliance" name and logo, "FAServer," "FilerView," "NetApp" and "SecureShare"
trademarks in the United States. Other United States trademarks and some of the
other United States -- registered trademarks are registered internationally as
well. We will continue to evaluate the registration of additional trademarks as
appropriate. We generally enter into confidentiality agreements with our
employees and with our resellers and customers. We currently have multiple
United States and international patent applications pending and four United
States patents issued. The pending applications may not be approved and if
patents are issued, such patents may be challenged. If such challenges are
brought, the patents may be invalidated. We cannot assure you that we will
develop proprietary products or technologies that are patentable, that any
issued patent will provide us with any competitive advantages or will not be
challenged by third parties, or that the patents of others will not materially
adversely affect our ability to do business.
Litigation may be necessary to protect our proprietary technology. Any such
litigation may be time-consuming and costly. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy aspects of our
products or to obtain and use information that we regard as proprietary. In
addition, the laws of some foreign countries do not protect proprietary rights
to as great an extent as do the laws of the United States. We cannot assure you
that our means of protecting our proprietary rights will be adequate or that our
competitors will not independently develop similar technology, duplicate our
products or design around patents issued to us or other intellectual property
rights of ours.
We are subject to intellectual property infringement claims. We may, from
time to time receive claims that we are infringing third parties' intellectual
property rights. In fiscal 1997, we settled litigation related to the alleged
infringement of third party rights and other claims, which resulted in a pre-tax
expense of $4.3 million ($3.5 million in payments to the plaintiffs and $0.8
million in legal fees). Third parties may in the future claim infringement by us
with respect to current or future products, patents, trademarks or other
proprietary rights. We expect that companies in the appliance market will
increasingly be subject to infringement claims as the number of products and
competitors in our industry segment grows and the functionality of products in
different industry segments overlaps. Any such claims could be time-consuming,
result in costly litigation, cause product shipment delays, require us to
redesign our products or require us to enter into royalty or licensing
agreements, any of which could materially adversely affect our operating
results. Such royalty or licensing agreements, if required, may not be available
on terms acceptable to us or at all.
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THE MARKET PRICE FOR OUR COMMON STOCK HAS FLUCTUATED SIGNIFICANTLY IN THE PAST
AND WILL LIKELY CONTINUE TO DO SO IN THE FUTURE AND ANY BROAD MARKET
FLUCTUATIONS MAY MATERIALLY ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON
STOCK.
The market price for our common stock has been volatile in the past, and
several factors could cause the price to fluctuate substantially in the future.
These factors include:
- fluctuations in our operating results;
- fluctuations in the valuation of companies perceived by investors to be
comparable to us;
- a shortfall in revenues or earnings compared to securities analysts'
expectations;
- changes in analysts' recommendations or projections;
- announcements of new products, applications or product enhancements by us
or our competitors; and
- changes in our relationships with our suppliers or customers.
In addition, the stock market has experienced volatility that has
particularly affected the market prices of equity securities of many high
technology companies and that often has been unrelated to the operating results
of such companies. As a result, the market price of our common stock may
fluctuate significantly in the future and any broad market fluctuations may
materially adversely affect the market price of our common stock. Due to all of
the foregoing, the current market price of our common stock may not be
indicative of future market prices.
PROTECTIVE ANTI-TAKEOVER PROVISIONS IN OUR CHARTER AND BYLAWS COULD MATERIALLY
ADVERSELY AFFECT STOCKHOLDERS.
Our Board of Directors has the authority to issue up to 5,000,000 shares of
preferred stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of those shares without any further vote
or action by the shareholders. The rights of the holders of common stock will be
subject to, and may be materially adversely affected by, the rights of the
holders of any preferred stock that may be issued in the future. The issuance of
preferred stock could have the effect of making it more difficult for a third
party to acquire a majority of our outstanding voting stock. Further, certain
provisions of our bylaws pertaining to the future elimination of cumulative
voting and shareholder action by written consent, and the requirement that
shareholders may call a special meeting of shareholders only upon a request of
shareholders owning at least 50% of our common stock, could delay or make more
difficult a proxy contest involving us, which could materially adversely affect
the market price of our common stock.
ITEM 2. PROPERTIES
In fiscal 2000, we executed agreements to acquire approximately 37.7 acres
of land in Sunnyvale, California. These sites will support expansion of
approximately 800,000 square feet to accommodate future growth. In fiscal 1999,
we executed agreements to acquire approximately 18 acres of land in Sunnyvale,
California and to develop 393,000 square feet of buildings. Beginning in June
1999, we began relocating all of our principal activities to Sunnyvale. This new
headquarter site will consolidate general administration, sales and marketing,
research and development, customer services and manufacturing operations. Our
manufacturing and research and development facilities will begin to relocate in
the first quarter of fiscal 2001 and will be complete in the second quarter of
fiscal 2001. The Santa Clara facilities are leased under various operating
leases with 100,000 square feet of space expiring in June 2000, and the
remaining 20,000 square feet expiring in fiscal 2003.
We have commitments related to operating lease arrangements, under which we
have an option to purchase various properties for an aggregate of $245.0
million, or arrange for the sale of the properties to a third party for at least
the option price with a contingent liability for any deficiency. We lease other
sales offices and a design center throughout the United States and
internationally. We believe that our existing facilities and those being
developed in Sunnyvale are adequate for our requirements over at least the next
two years and that additional space will be available as needed.
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See additional discussion regarding properties in "Note 4 under Item 8.
Financial Statements and Supplementary Data -- Notes to Consolidated Financial
Statements" and "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Annual Report on Form 10-K.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Our common stock commenced trading on the Nasdaq National Market on
November 21, 1995 and is traded under the symbol "NTAP." As of April 28, 2000,
there were 636 holders of record of the common stock. The following table sets
forth for the periods indicated the high and low closing sale prices for our
common stock as reported on the Nasdaq National Market, adjusted to reflect the
effect of the December 20, 1999 and March 22, 2000 two-for-one stock splits.
FISCAL 2000 FISCAL 1999
----------------- ---------------
HIGH LOW HIGH LOW
------- ------ ------ -----
First Quarter................................... $ 15.84 $ 9.91 $ 6.28 $4.14
Second Quarter.................................. 19.58 12.78 7.56 4.35
Third Quarter................................... 59.06 18.50 13.88 6.85
Fourth Quarter.................................. 120.19 50.19 15.88 9.91
We believe that a number of factors may cause the market price of our
common stock to fluctuate significantly. See "Item 1. Business -- Risk Factors."
We have never paid cash dividends on our capital stock. We currently
anticipate retaining all available funds, if any, to finance internal growth and
product development. Payment of dividends in the future will depend upon our
earnings and financial condition and such other factors as the directors may
consider or deem appropriate at the time.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
FIVE FISCAL YEARS ENDED APRIL 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000 1999 1998 1997 1996
-------- -------- -------- ------- -------
Net Sales............................. $579,300 $289,420 $166,163 $93,333 $46,632
Income From Operations................ 105,368 55,126 32,658 3,083 6,000
Net Income............................ 73,792 35,613 20,965 250 6,600
Net Income Per Share, basic........... 0.25 0.13 0.08 0.00 0.05
Net Income Per Share, diluted......... 0.21 0.11 0.07 0.00 0.03
Total Assets.......................... 592,233 346,347 115,736 68,941 45,449
Long-Term Obligations................. 54 93 163 232 318
Total Shareholders' Equity............ 478,746 295,724 86,265 54,029 39,029
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read together with the financial statements and the related
notes thereto set forth under "Item 8. Financial Statements and Supplementary
Data." This discussion contains forward-looking statements that involve risks
and uncertainties. Our actual results may differ materially from those
anticipated in those forward-looking statements as a result of certain factors,
including those set forth in "Item 1. Business -- Risk Factors" and elsewhere in
this Annual Report on Form 10-K.
Overview
We pioneered the concept of the "network appliance," an extension of the
industry trend toward specialized devices that perform a specific function in
the network, similar to the adoption of the router for network communications.
Today we are the leading supplier of network attached data storage and access
devices, called filers. Extending our technology strengths in providing
intelligent data storage and access appliances, in late 1997, we introduced a
dedicated Internet caching appliance, NetCache, designed to serve data at high
speeds over the Internet and enterprise networks.
We derive a substantial portion of our revenue from the sales of our
network filer and caching appliances. As a result, a reduction in the demand for
our filer and NetCache appliances due to increased competition, a general
decline in the market for network attached data storage or other factors could
materially adversely affect our operating results.
Our gross margin has been and may continue to be affected by a variety of
other factors, including:
- competition;
- product configuration;
- direct versus indirect sales;
- the mix of software as a percentage of revenue;
- the mix and average selling prices of products;
- new product introductions and enhancements; and
- the cost of components and manufacturing labor.
Operating results have not been materially adversely affected by
seasonality in the past. However, because of the significant summer seasonal
effects experienced within the industry, particularly in Europe, our future
operating results could be materially adversely affected by seasonality.
For the year ended April 28, 2000 approximately 30.7% of our net sales were
derived from international customers (including United States exports).
Accordingly our future operating results could be materially adversely affected
by a variety of factors, some of which are beyond our control. For more
information on risks associated with our international operations, see "Item
1 -- Business -- Risk Factors -- Risks inherent in our international operations
could have a material adverse effect on our operating results."
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RESULTS OF OPERATIONS
The following table sets forth certain consolidated statements of income
data as a percentage of net sales for the periods indicated:
YEARS ENDED APRIL 30,
-----------------------
2000 1999 1998
----- ----- -----
Net Sales................................................... 100.0% 100.0% 100.0%
Cost of Sales............................................... 40.7 40.8 40.7
----- ----- -----
Gross Margin.............................................. 59.3 59.2 59.3
----- ----- -----
Operating Expenses:
Sales and Marketing....................................... 26.7 26.1 25.7
Research and Development.................................. 10.7 10.5 10.0
General and Administrative................................ 3.7 3.5 3.9
----- ----- -----
Total Operating Expenses.......................... 41.1 40.1 39.6
----- ----- -----
Income From Operations...................................... 18.2 19.1 19.7
Other Income, Net........................................... 1.5 0.6 0.5
----- ----- -----
Income Before Income Taxes.................................. 19.7 19.7 20.2
Provision for Income Taxes.................................. 7.0 7.4 7.6
----- ----- -----
Net Income.................................................. 12.7% 12.3% 12.6%
===== ===== =====
FISCAL 2000 COMPARED TO FISCAL 1999
Net Sales -- Net sales increased by 100.2% to $579.3 million in fiscal
2000, from $289.4 million in fiscal 1999. Net sales growth was across all
geographies, products and markets. This increase was primarily attributable to a
higher volume of units shipped, as compared to the corresponding period of the
prior fiscal year. Factors impacting unit growth include:
- strong demand for our F700 filer products utilizing primarily
fibre-channel connectivity;
- increased worldwide demand for our NetCache solutions;
- increased worldwide shipment of NetApp Cluster Failover solutions, which
require another filer to take over in the event of a hardware failure;
- increased demand for the SnapMirror software option, which requires
multiple filers to provide remote mirroring of data for quick disaster
recovery and backup at remote sites;
- expansion of our sales organization to 582 in fiscal 2000, from 309 in
fiscal 1999; and
- increased sales through indirect channels, representing 28.0% of total
sales compared to 25.2% in the prior year, including sales through our
two OEM partners.
Net sales growth was also positively impacted by:
- a higher average selling price due to the introduction of new software
features: SnapMirror, SnapRestore and Cluster Failover, supporting
mission-critical applications;
- the increase in storage capacity;
- increased add-on software revenue from multi-protocol solutions; and
- higher software subscription and service revenues to support a growing
installed base.
Overall net sales growth was partially offset by declining unit sales of
our older products and declining average selling price of the caching products
due primarily to competitive pricing pressure.
International net sales (including United States exports) grew by 100.4%
for fiscal 2000, as compared to fiscal 1999. International net sales were $177.9
million, or 30.7% of total net sales for fiscal 2000. The increase
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in international sales for fiscal 2000, was primarily a result of European sales
growth, due to increased headcount in the direct sales force, increased indirect
channel sales, increased shipments of filers, Cluster Failover solutions,
NetCache appliances and increased sales of add-on software licenses. Asia
Pacific net sales growth for fiscal 2000, was also primarily driven by increased
sales through resellers, increased headcount in the direct sales force,
increased shipments of filers, and NetCache appliances and increased sales of
add-on software licenses, as compared to fiscal 1999.
We cannot assure you that our net sales will continue to increase in
absolute dollars or at the rate at which they have grown in recent fiscal
periods.
Gross Margin -- Gross margin increased slightly to 59.3% of net sales for
fiscal 2000, from 59.2% for fiscal 1999.
Gross margin was favorably impacted by:
- increased licensing of add-on software options such as: multi-protocol,
Cluster Failover, SnapMirror and SnapRestore associated with new filers
shipped;
- growth in software subscription due primarily to a larger installed base;
- increased manufacturing efficiencies;
- the increase in product volume; and
- lower costs of key components.
Gross margin was negatively impacted by sales price reductions on storage
products due to competitive pricing pressure from other storage vendors and
increased investments in customer service personnel in areas such as logistics
and professional services.
Sales and Marketing -- Sales and marketing expenses consist primarily of
salaries, commissions, advertising and promotional expenses and certain customer
service and support costs. Sales and marketing expenses increased 104.6% to
$154.5 million for fiscal 2000 from $75.5 million for fiscal 1999. These
expenses were 26.7% and 26.1% of net sales for fiscal 2000 and 1999,
respectively. The increase in absolute dollars was primarily related to the
continued worldwide expansion and increased headcount growth of our sales and
customer service organizations, and increased commission expenses. Sales and
marketing headcount increased from 411 at April 30, 1999 to 775 at April 30,
2000. In fiscal 2000, we launched various marketing and advertising programs,
which also contributed to absolute dollar increases in sales and marketing
expenses. We expect to continue to increase our sales and marketing expenses in
an effort to expand domestic and international markets, introduce new products,
establish and expand new distribution channels and increase product and company
awareness. We believe that our continued growth and profitability is dependent
in part on the successful expansion of our international operations, and
therefore, have committed significant resources to increase international sales.
Research and Development -- Research and development expenses consist
primarily of salaries and benefits, prototype expenses, non-recurring
engineering charges and fees paid to outside consultants. Research and
development expenses increased 103.8% to $62.1 million in fiscal 2000 from $30.5
million in fiscal 1999. These expenses represented 10.7% and 10.5% of net sales,
for fiscal 2000 and 1999, respectively. Research and development expenses
increased in absolute dollars, primarily as a result of increased headcount,
ongoing support of current and future product development and enhancement
efforts, prototyping expenses and non-recurring engineering charges associated
with the development of new products and technologies. Research and development
headcount increased from 198 at April 30, 1999 to 327 at April 30, 2000. In
fiscal 2000, we shipped new enterprise software offerings and data management
tools with SnapManager for Microsoft Exchange and ApplianceWatch. We also
introduced new caching products which included NetCache software release 4.0 and
NetCache 4.1, adding streaming media support for Apple Quicktime, Microsoft
Windows Media and RealNetworks Real System G2 users, delivering live
broadcasting on the Internet. In fiscal 1999, we introduced the F700 series
filers, the Cluster Failover solutions, the C700 caching products, SnapMirror,
SnapRestore, and SecureAdmin. We believe that our future performance will depend
in large part on our
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ability to maintain and enhance our current product line, develop new products
that achieve market acceptance, maintain technological competitiveness and meet
an expanding range of customer requirements. We intend to continuously expand
our existing product offerings and introduce new products and expect that such
expenditures will continue to increase in absolute dollars. For both fiscal 2000
and 1999, no software development costs were capitalized.
General and Administrative -- General and administrative expenses increased
111.2% to $21.5 million in fiscal 2000, from $10.2 million in fiscal 1999. These
expenses represented 3.7% and 3.5% of net sales, for fiscal 2000 and 1999,
respectively. Increases in absolute dollars were primarily due to increased
headcount, expenses associated with initiatives to implement enterprise-wide
management information systems, increases in professional services, consulting
fees and outside service fees. General and administrative headcount increased
from 80 at April 30, 1999 to 162 at April 30, 2000. We believe that our general
and administrative expenses will increase in absolute dollars as we continue to
build our infrastructure.
Total Other Income, net -- Total other income, net, was $9.0 million and
$1.9 million in fiscal 2000 and 1999, respectively. The increase was due
primarily to interest income earned on the net proceeds from the March 1999
follow-on public offering, cash generated from operations, and net proceeds from
stock option exercises. Fiscal 1999 included losses from foreign currency
transactions as compared to fiscal 2000, where gains or losses from foreign
transactions have been partially mitigated through our hedging program.
Provision for Income Taxes -- Our effective tax rate was 35.5% for fiscal
2000 compared to 37.5% for the fiscal 1999. The effective tax rates differed
from the U.S. statutory rate primarily due to state taxes, credits and tax
exempt interest.
FISCAL 1999 COMPARED TO FISCAL 1998
Net sales increased by 74.2%, to $289.4 million in fiscal 1999 from $166.2
million in fiscal 1998. This increase was primarily attributable to a higher
volume of units shipped, as compared to the corresponding period of the prior
fiscal year. Factors impacting unit growth include:
- expansion of our sales organization to 309 in fiscal 1999, from 173 in
fiscal 1998;
- increased unit shipments principally due to the successful launching of
our F700 filer products during the second quarter of fiscal 1999;
- increased worldwide shipment of NetApp cluster failover and NetCache
solutions;
- increased multi-protocol software licensing, software subscription and
service revenues due to a growing installed base, and increased sales of
multi-protocol systems; and
- increased sales through indirect channels, representing 25.2% of total
sales compared to 20.9% in the prior year, including sales through our
two OEM partners.
Net sales growth was also positively impacted by a higher average selling
price of the newly introduced F700 filer products due primarily to the increase
in storage content. Factors which partially offset overall net sales growth
include declining unit sales of our older products and decreases in base prices
of our older product line due to competitive forces.
International net sales (including United States exports) grew by 116.3%
for fiscal 1999 as compared to fiscal 1998. International net sales were $88.8
million, or 30.7%, of total net sales for fiscal 1999. The increase in
international sales for fiscal 1999 was primarily a result of European sales
growth due to increased headcount in the direct sales force, indirect channel
sales through resellers, shipments of filers and sales of our new NetApp Cluster
Failover solutions and NetCache appliances. Asia Pacific net sales growth for
fiscal 1999 was also driven by indirect sales through resellers, increased
headcount in the direct sales force, increased shipments of filers and the sale
of NetCache appliances, as compared to fiscal 1998.
We cannot assure you that our net sales will continue to increase in
absolute dollars or at the rate at which they have grown in recent fiscal
periods.
18
20
Gross Margin -- Gross margin remained relatively flat decreasing slightly
to 59.2% of net sales for fiscal 1999 as compared to 59.3% for fiscal 1998. The
consistency in gross margin for fiscal 1999 as compared to fiscal 1998 was
primarily attributable to the increase in product volume, lower costs of key
components, increased manufacturing efficiencies, increased market acceptance of
our product line with the continuance of the cost-reduced designs introduced in
the second quarter of fiscal 1999, the introduction of the F700 filer products
and NetApp Cluster Failover system during the second quarter of fiscal 1999 and
the revenue growth from sales of NetCache appliances. Gross margin was also
favorably impacted by the licensing of multi-protocol software and support
contracts, and by growth in software subscription and service revenues due to a
larger installed base. Primary factors negatively impacting gross margin were
the increase in the sales volume of the F700 products, which has higher
incremental costs associated with greater disk drive and memory content, and the
effect of base system price reductions across the full range of older generation
filers.
Our gross margin may also vary based upon the configuration of systems that
are sold and whether they are sold directly or through indirect channels. Highly
configured systems have historically generated lower overall gross margin
percentages due to greater disk drive and memory content.
Sales and Marketing -- Sales and marketing expenses consist primarily of
salaries, commissions, advertising and certain promotional expenses and customer
service and support costs. In fiscal 1999, sales and marketing expenses of $75.5
million reflect an increase of 76.5% over fiscal 1998. These expenses were 26.1%
and 25.7% of net sales for fiscal 1999 and 1998, respectively. The increase in
absolute dollars was primarily related to the continued expansion of our sales
and marketing organization, including growth in the domestic and international
direct sales forces and increased commission expenses. Sales and marketing
headcount increased from 240 at April 30, 1998 to 411 at April 30, 1999. We
expect to continue to increase our sales and marketing expenses in an effort to
expand domestic and international markets, introduce new products, establish and
expand new distribution channels and increase product and company awareness. We
believe that our continued growth and profitability is dependent in part on the
successful expansion of our international operations, and therefore, have
committed significant resources intended to increase international sales.
Research and Development -- Research and development expenses consist
primarily of salaries and benefits, prototype expenses and fees paid to outside
consultants. Research and development expenses increased 82.9% to $30.5 million
in fiscal 1999 from $16.6 million in fiscal 1998. These expenses represented
10.5% and 10.0% of net sales, respectively, for those periods. Research and
development expenses increased in absolute dollars, primarily as a result of
increased headcount, ongoing support of current and future product development
and enhancement efforts and prototyping expenses associated with the development
of new products, including the NetApp F700 series filers and the C700 caching
products, the second generation of our NetCache appliances. Research and
development headcount increased from 116 at April 30, 1998 to 198 at April 30,
1999. We believe that our future performance will depend in large part on our
ability to maintain and enhance our current product line, develop new products
that achieve market acceptance, maintain technological competitiveness and meet
an expanding range of customer requirements. We intend to continuously expand
our existing product offerings and to introduce new products. Consequently, we
expect that such expenditures will continue to increase in absolute dollars. For
both fiscal 1999 and 1998, no software development costs were capitalized.
General and Administrative -- General and administrative expenses increased
56.1% to $10.2 million in fiscal 1999 from $6.5 million in fiscal 1998. These
expenses represented 3.5% and 3.9% of net sales, respectively, for those
periods. Increases in absolute dollars were primarily due to increased
headcount, and increases to the allowance for doubtful accounts and outside
service fees. General and administrative headcount increased from 23 at April
30, 1998 to 80 at April 30, 1999. We believe that our general and administrative
expenses will increase in absolute dollars as we continue to build our
infrastructure.
Other Income, Net -- Other income, net, was $1.9 million and $0.9 million
in fiscal 1999 and 1998, respectively. The increase was due primarily to
interest income earned on the net proceeds of $138.8 million from our March 1999
follow-on public offering and cash flow from operations, but was partially
offset by foreign currency exchange losses recorded in fiscal 1999.
Provision for Income Taxes -- Our effective tax rate was 37.5% for both
fiscal 1999 and 1998.
19
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LIQUIDITY AND CAPITAL RESOURCES
As of April 28, 2000, as compared to the April 30, 1999 balances, our cash,
cash equivalents and short-term investments increased by $126.4 million to
$353.5 million. Working capital increased by $154.8 million to $419.6 million.
We generated cash from operating activities totaling $118.1 million and $45.9
million in fiscal 2000 and fiscal 1999, respectively. Net cash provided by
operating activities in fiscal 2000 was principally related to net income of
$73.8 million, increases in accounts payable, accrued compensation and related
benefits, deferred revenue and other accrued liabilities, coupled with
depreciation and amortization and income tax benefit from employee stock
transactions which are non-cash transactions, partially offset by increases in
accounts receivable, inventories, prepaid expenses and other and deferred income
taxes.
We used $40.8 million and $15.5 million of cash during fiscal 2000 and
1999, respectively, for capital expenditures. The increases were primarily
attributed to upgrades of software and computer equipment purchases and
furniture and fixtures for the Sunnyvale headquarters facility. We have used
$68.9 million during fiscal 2000 and received net proceeds of $5.0 million
during fiscal 1999, for net short-term investment redemptions. Investing
activities in fiscal 2000 also included equity investments of $7.0 million in
three technology companies. These investments were recorded at cost which
approximated fair market value. We cannot assure you that such equity
investments made to date nor any potential future investments will be
successful.
Financing activities provided $53.8 million and $155.5 million during
fiscal 2000 and 1999 respectively. The decrease in cash provided by financing
activities in fiscal 2000, compared to fiscal 1999, was due to a follow-on
common stock offering in fiscal 1999 yielding proceeds of approximately $138.8
million. Excluding the impact of the fiscal 1999 common stock offering, proceeds
from sale of common stock in fiscal 2000 increased over the prior fiscal year
due to an increased quantity of stock options exercised at a higher average
exercise price and a greater number of employees participating in the employee
stock purchase plan.
In fiscal 2000, we executed two lease agreements to acquire approximately
37.7 acres of land in Sunnyvale, California and the accompanying 533,262 square
feet of buildings. We subsequently assigned our rights and obligations under all
the agreements for the Sunnyvale facilities to a third-party entity and entered
into two operating leases. Our lease payments will vary based on London
Interbank Offered Rate (LIBOR) plus a spread. The leases are for five years and
can be renewed for two five-year periods, subject to the approval of the
third-party entity. At the expiration or termination of the leases, we have the
option to either purchase these properties for $55.0 million and $62.0 million,
respectively, or arrange for the sale of the properties to a third party for at
least $55.0 million and $62.0 million, respectively, with a contingent liability
for any deficiency. If the properties under these leases are not purchased or
sold as described above, we will be obligated for additional lease payments of
approximately $49.3 million and $51.5 million, respectively. The leases also
require us to maintain specified financial covenants with which we were in
compliance as of April 30, 2000.
Excluding the commitments related to operating lease arrangements for
various properties, which aggregate $245.0 million, we currently have no
significant commitments other than commitments under operating leases. We
believe that our existing liquidity and capital resources, including the
available amounts under our $5.0 million line of credit, are sufficient to fund
our operations for at least the next twelve months.
NEW ACCOUNTING STANDARDS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which defines derivatives, requires that
all derivatives be carried at fair value, and provides for hedging accounting
when certain conditions are met. This statement, as amended, is effective for
all fiscal quarters of fiscal years beginning after June 15, 2000. Although we
have not fully assessed the implications of this new statement, we do not
believe adoption of this statement will have a material impact on our
consolidated financial position, results of operations or cash flows.
20
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk related to fluctuations in interest rates and
in foreign currency exchange rates. We use certain derivative financial
instruments to manage these risks. We do not use derivative financial
instruments for speculative or trading purposes. All financial instruments are
used in accordance with management-approved policies.
Market Interest Risk
Short-term Investments -- As of April 28, 2000 and April 30, 1999, we had
short-term investments of $74.5 million and $5.8 million, respectively. These
short-term investments consist of highly liquid investments with original
maturities at the date of purchase between three and twelve months. These
investments are subject to interest rate risk and will decrease in value if
market interest rates increase. A hypothetical 10 percent increase in market
interest rates from levels at April 28, 2000 and April 30, 1999, would cause the
fair value of these short-term investments to decline by an immaterial amount.
Because we have the ability to hold these investments until maturity we would
not expect any significant decline in value of our investments caused by market
interest rate changes. Declines in interest rates over time will, however,
reduce our interest income.
Operating Lease Commitments -- As of April 28, 2000 and April 30, 1999, we
have outstanding lease commitments to a third-party entity under operating lease
agreements, which vary based on a monthly LIBOR rate plus a spread. A
hypothetical 10 percent increase in interest rates would increase our annual
rent expense under operating lease commitments by approximately $2.0 million.
Increases in interest rates could, however, increase our rent expenses
associated with future lease payments. We do not currently hedge against
interest rate increases. Our investment portfolio offers a natural hedge against
interest rate risk from our operating lease commitments in the event of a
significant increase in the market interest rate.
The hypothetical changes and assumptions discussed above will be different
from what actually occurs in the future. Furthermore, such computations do not
anticipate actions that may be taken by management, should the hypothetical
market changes actually occur over time. As a result, the effect on actual
earnings in the future will differ from those described above.
Foreign Currency Exchange Rate Risk -- We hedge risks associated with
foreign currency transactions in order to minimize the impact of changes in
foreign currency exchange rates on earnings. We utilize forward contracts to
hedge against the short-term impact of foreign currency fluctuations on certain
assets and liabilities denominated in foreign currencies. All hedge instruments
are marked to market through earnings every period. We believe that these
forward contracts do not subject us to undue risk due to foreign exchange
movements because gains and losses on these contracts are offset by losses and
gains on the underlying assets and liabilities.
All contracts have a maturity of less than one year and we do not defer any
gains and losses, as they are all accounted for through earnings every period.
The following table provides information about our foreign exchange forward
contracts outstanding on April 28, 2000, (in thousands):
BUY/ FOREIGN CONTRACT VALUE FAIR VALUE
CURRENCY SELL CURRENCY AMOUNT USD IN USD
-------- ---- --------------- -------------- ----------
CHF................................. Sell 4,013 $ 2,300 $ 2,333
GBP................................. Sell 11,929 $18,016 $18,641
GBP................................. Buy 5,000 $ 7,785 $ 7,756
EUR................................. Sell 17,505 $15,928 $15,235
EUR................................. Buy 11,500 $10,464 $10,640
21
23
The following table provides information about our foreign exchange forward
contracts outstanding on April 30, 1999, (in thousands):
BUY/ FOREIGN CONTRACT VALUE FAIR VALUE
CURRENCY SELL CURRENCY AMOUNT USD IN USD
-------- ---- --------------- -------------- ----------
GBP................................. Buy 3,500 $ 5,643 $ 5,630
GBP................................. Sell 6,100 $ 9,802 $ 9,813
EUR................................. Buy 1,534 $ 1,631 $ 1,621
EUR................................. Sell 11,900 $12,825 $12,574
22
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Network Appliance, Inc.:
We have audited the accompanying consolidated balance sheets of Network
Appliance, Inc. and its subsidiaries as of April 30, 2000 and 1999, and the
related consolidated statements of income, shareholders' equity and
comprehensive income and cash flows for each of the three years in the period
ended April 30, 2000. Our audits also included the consolidated financial
statement schedule listed in Item 14(a)(2). These financial statements and the
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements and the
financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the financial position of Network Appliance,
Inc. and its subsidiaries as of April 30, 2000 and 1999, and the results of
their operations and their cash flows for each of the three years in the period
ended April 30, 2000 in conformity with accounting principles generally accepted
in the United States of America. Also, in our opinion, the consolidated
financial statement schedule listed in Item 14(a)(2), when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
May 16, 2000 (June 13, 2000 as to Note 11)
23
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NETWORK APPLIANCE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
APRIL 30,
--------------------
2000 1999
-------- --------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $279,014 $221,284
Short-term investments.................................... 74,477 5,800
Accounts receivable, net of allowances of $3,039 in 2000
and $1,886 in 1999..................................... 108,902 57,163
Inventories............................................... 20,434 13,581
Prepaid expenses and other................................ 27,958 7,384
Deferred income taxes..................................... 22,215 10,134
-------- --------
Total current assets.............................. 533,000 315,346
Property and Equipment, net................................. 47,949 19,271
Deposits.................................................... -- 7,000
Other Assets................................................ 11,284 4,730
-------- --------
$592,233 $346,347
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 34,061 $ 15,126
Accrued compensation and related benefits................. 34,902 15,189
Other accrued liabilities................................. 21,288 8,741
Deferred revenue.......................................... 23,182 11,474
-------- --------
Total current liabilities......................... 113,433 50,530
LONG-TERM OBLIGATIONS....................................... 54 93
-------- --------
113,487 50,623
-------- --------
COMMITMENTS AND CONTINGENCIES (NOTE 4)
SHAREHOLDERS' EQUITY:
Preferred stock, no par value; 5,000 shares authorized;
shares outstanding: none in 2000 and 1999.............. -- --
Common stock, no par value; 880,000 shares authorized;
shares outstanding: 311,803 in 2000 and 291,324 in
1999................................................... 352,693 240,807
Deferred stock compensation............................... (1,174) (714)
Retained earnings......................................... 129,746 55,954
Cumulative other comprehensive loss....................... (2,519) (323)
-------- --------
Total shareholders' equity........................ 478,746 295,724
-------- --------
$592,233 $346,347
======== ========
See notes to consolidated financial statements.
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NETWORK APPLIANCE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED APRIL 30,
--------------------------------
2000 1999 1998
-------- -------- --------
NET SALES.................................................. $579,300 $289,420 $166,163
COST OF SALES.............................................. 235,846 118,120 67,549
-------- -------- --------
Gross Margin............................................. 343,454 171,300 98,614
-------- -------- --------
OPERATING EXPENSES:
Sales and marketing...................................... 154,496 75,526 42,779
Research and development................................. 62,065 30,457 16,649
General and administrative............................... 21,525 10,191 6,528
-------- -------- --------
Total operating expenses......................... 238,086 116,174 65,956
-------- -------- --------
INCOME FROM OPERATIONS..................................... 105,368 55,126 32,658
-------- -------- --------
OTHER INCOME (EXPENSE):
Interest income.......................................... 10,846 2,645 1,097
Other expense............................................ (1,808) (781) (208)
-------- -------- --------
Total other income, net.......................... 9,038 1,864 889
-------- -------- --------
INCOME BEFORE INCOME TAXES................................. 114,406 56,990 33,547
PROVISION FOR INCOME TAXES................................. 40,614 21,377 12,582
-------- -------- --------
NET INCOME................................................. $ 73,792 $ 35,613 $ 20,965
======== ======== ========
NET INCOME PER SHARE(1):
Basic.................................................... $ 0.25 $ 0.13 $ 0.08
======== ======== ========
Diluted.................................................. $ 0.21 $ 0.11 $ 0.07
======== ======== ========
SHARES USED IN PER SHARE CALCULATIONS(1):
Basic.................................................... 299,370 273,740 259,656
======== ======== ========
Diluted.................................................. 345,171 311,724 287,608
======== ======== ========
- ---------------
(1) Share and per share amounts have been adjusted to reflect the two-for-one
stock splits which were effective December 20, 1999 and March 22, 2000.
See notes to consolidated financial statements.
25
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NETWORK APPLIANCE, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(IN THOUSANDS)
RETAINED CUMULATIVE
COMMON STOCK DEFERRED EARNINGS OTHER
------------------ STOCK (ACCUMULATED COMPREHENSIVE
SHARES AMOUNT COMPENSATION DEFICIT) LOSS TOTAL
------- -------- ------------ ------------ ------------- --------
BALANCES, APRIL 30, 1997................. 262,656 $ 54,707 $ (54) $ (624) $ -- $ 54,029
Net income and comprehensive income...... -- -- -- 20,965 -- 20,965
Issuance of common stock................. 6,616 6,937 -- -- -- 6,937
Repurchase of common stock............... (88) (1) -- -- -- (1)
Deferred stock compensation.............. -- 714 (714) -- -- --
Amortization of deferred stock
compensation........................... -- -- 270 -- -- 270
Income tax benefit from employee stock
transactions........................... -- 4,065 -- -- -- 4,065
------- -------- ------- -------- ------- --------
BALANCES, APRIL 30, 1998................. 269,184 66,422 (498) 20,341 -- 86,265
Components of comprehensive income:
Net income............................. -- -- -- 35,613 -- 35,613
Currency translation adjustment........ -- -- -- -- (323) (323)
--------
Total comprehensive income..... 35,290
Issuance of common stock................. 10,724 16,942 -- -- -- 16,942
Repurchase of common stock............... (84) (280) -- -- -- (280)
Issuance of common stock at $12.63 per
share pursuant to follow-on public
offering, net.......................... 11,500 138,834 -- -- -- 138,834
Deferred stock compensation.............. -- 916 (916) -- -- --
Amortization of deferred stock
compensation........................... -- -- 667 -- -- 667
Reversal of deferred stock compensation
due to employee termination............ -- (33) 33 -- -- --
Other stock compensation expense......... -- 230 -- -- -- 230
Income tax benefit from employee stock
transactions........................... -- 17,776 -- -- -- 17,776
------- -------- ------- -------- ------- --------
BALANCES, APRIL 30, 1999................. 291,324 240,807 (714) 55,954 (323) 295,724
Components of comprehensive income:
Net income............................. -- -- -- 73,792 -- 73,792
Currency translation adjustment........ -- -- -- -- (2,204) (2,204)
Unrealized loss on investments......... -- -- -- -- 8 8
--------
Total comprehensive income..... 71,596
Issuance of common stock, net............ 20,479 53,833 -- -- -- 53,833
Deferred stock compensation.............. -- 1,845 (1,845) -- -- --
Amortization of deferred stock
compensation........................... -- -- 1,345 -- -- 1,345
Reversal of deferred stock compensation
due to employee termination............ -- (40) 40 -- -- --
Income tax benefit from employee stock
transactions........................... -- 56,248 -- -- -- 56,248
------- -------- ------- -------- ------- --------
BALANCES, APRIL 30, 2000................. 311,803 $352,693 $(1,174) $129,746 $(2,519) $478,746
======= ======== ======= ======== ======= ========
See notes to consolidated financial statements.
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NETWORK APPLIANCE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEARS ENDED APRIL 30,
---------------------------------
2000 1999 1998
--------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................. $ 73,792 $ 35,613 $ 20,965
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................ 15,708 8,146 5,548
Other stock compensation expense..................... -- 230 --
Loss on disposal of equipment........................ 1,904 1,221 --
Provision for doubtful accounts...................... 1,153 1,075 481
Deferred income taxes................................ (11,614) (5,084) (1,749)
Deferred rent........................................ (39) (70) (36)
Changes in assets and liabilities:
Accounts receivable................................ (53,230) (24,188) (20,883)
Inventories........................................ (12,425) (4,934) 1,213
Prepaid expenses and other assets.................. 39,327 12,042 3,339
Accounts payable................................... 18,935 5,085 5,626
Accrued compensation and related benefits.......... 19,713 6,704 3,819
Other accrued liabilities.......................... 13,148 3,432 1,921
Deferred revenue................................... 11,708 6,675 2,482
--------- -------- --------
Net cash provided by operating activities....... 118,080 45,947 22,726
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments..................... (99,514) (18,680) (15,050)
Redemptions of short-term investments................... 30,650 23,680 11,166
Purchases of property and equipment..................... (40,819) (15,474) (7,971)
Purchases of equity investments......................... (7,000) -- (2,000)
Refund (payment) of deposits, net....................... 2,500 (7,000) --
--------- -------- --------
Net cash used in investing activities........... (114,183) (17,474) (13,855)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term obligations..................... -- -- (12)
Proceeds from sale of common stock, net................. 53,833 16,662 6,936
Proceeds from follow-on common stock offering, net...... -- 138,834 --
--------- -------- --------
Net cash provided by financing activities....... 53,833 155,496 6,924
--------- -------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS................. 57,730 183,969 15,795
CASH AND CASH EQUIVALENTS:
Beginning of year....................................... 221,284 37,315 21,520
--------- -------- --------
End of year............................................. $ 279,014 $221,284 $ 37,315
========= ======== ========
See notes to consolidated financial statements.
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NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
1. THE COMPANY
Network Appliance, Inc., incorporated in the state of California in April
1992, and its subsidiaries operate in a single industry segment and are involved
in the design, manufacturing, marketing and support of high performance network
attached data storage and access devices which provide fast, simple, reliable
and cost-effective file service and content delivery solutions for
data-intensive network environments.
2. SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year -- We operate on a 52-week or 53-week year ending on the last
Friday in April. For presentation purposes we have indicated in the accompanying
consolidated financial statements that our fiscal year end is April 30. Fiscal
2000 was a 52-week fiscal year. Fiscal 1999 was a 53-week fiscal year and fiscal
1998 was a 52-week year.
Basis of Presentation -- The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts
and transactions are eliminated in consolidation. Certain amounts from prior
years have been reclassified to conform to current-year presentation. These
reclassifications did not change previously reported total assets, liabilities,
shareholders' equity or net income.
Cash and Cash Equivalents -- We consider all highly liquid debt investments
with original maturities of three months or less to be cash equivalents.
Short-term Investments -- Our short-term investments consist of debt and
equity securities with original maturities ranging between three and twelve
months. All of our investments are classified as available-for-sale, which are
measured at market value, and net unrealized gains or losses are recorded in
cumulative other comprehensive loss, a separate component of shareholders'
equity, until realized. Any gains or losses on sales of investments are computed
based upon specific identification. For all periods presented, realized gains
and losses on available-for-sale investments were not significant. Management
determines the appropriate classification of debt and equity securities at the
time of purchase and reevaluates the classification at each reporting date.
Inventories -- Inventories are stated at the lower of cost (first-in,
first-out basis) or market.
Property and Equipment -- Property and equipment are stated at cost and
depreciated on a straight-line basis over estimated useful lives which range
from two to five years. Leasehold improvements are amortized over their
estimated useful lives or the life of the lease, whichever is shorter.
Revenue Recognition -- In accordance with Statement of Position ("SOP")
97-2, "Software Revenue Recognition," we recognize revenue when persuasive
evidence of an arrangement exists, delivery has occurred or services have been
rendered, the fee is fixed or determinable, collectibility is probable and
vendor specific objective evidence exists to allocate a portion of the total fee
to any undelivered elements of the arrangement. This generally occurs at the
time of shipment, at which time we also record estimated product return and
warranty reserves. Revenues from software subscriptions, which entitle customers
to software updates, including bug fixes, patch releases and major revisions,
and services are recognized over the terms of the related contractual periods
and were less than 10% of net sales in fiscal 2000, 1999 and 1998.
Advertising Costs -- Advertising costs are charged to operations when
incurred. Advertising expenses for fiscal 2000, 1999 and 1998 were approximately
$2,594, $1,072 and $1,000, respectively.
Software Development Costs -- We capitalize eligible computer software
development costs, which include software enhancement costs, upon the
establishment of technological feasibility, which occur upon the completion of a
working model. Software development costs capitalized have not been significant.
28
30
NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
Foreign Currency Translation and Foreign Exchange Contracts -- Prior to
fiscal 1999, the functional currency of our foreign subsidiaries was the U.S.
dollar. Accordingly, all monetary assets and liabilities were translated at the
current exchange rate at the end of the year, nonmonetary assets and liabilities
were translated at historical rates and net sales and expenses were translated
at average exchange rates in effect during the period. Transaction gains and
losses, which are included in other income (expense) in the accompanying
consolidated statements of income, have not been significant.
In fiscal 1999, we determined that the functional currencies of certain of
our foreign subsidiaries had changed from the U.S. dollar to the local
currencies. Accordingly, for fiscal 2000 and 1999, assets and liabilities of our
foreign subsidiaries are translated to U.S. dollars at the exchange rates in
effect as of the balance sheet date, and results of operations for each
subsidiary are translated using average rates in effect for the period
presented. Translation adjustments have been included within shareholders'
equity as part of cumulative other comprehensive loss. The effect of the change
in functional currencies did not have a material impact on our consolidated
financial position, results of operations or cash flows.
Foreign currency transaction gains and losses, which are included in the
consolidated statements of income, have not been material in any of the three
years presented. We utilize forward exchange contracts to hedge against the
short-term impact of foreign currency fluctuations on certain assets or
liabilities denominated in foreign currencies. The gains or losses on these
contracts are included in income as the exchange rates change. Management
believes that these forward contracts do not subject us to undue risk due to
foreign exchange movements because gains and losses on these contracts are
offset by losses and gains on the underlying assets and transactions being
hedged.
Certain Significant Risks and Uncertainties -- The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
We are subject to certain risks, including without limitation, risks
relating to fluctuating operating results, customer and market acceptance of new
products, dependence on new products, rapid technological change, litigation,
dependence on growth in the network attached data storage market, expansion of
international operations, product concentration, changing product mix,
competition, management of expanding operations, dependence on high-quality
components, dependence on proprietary technology, intellectual property rights,
dependence on key personnel, volatility of stock price, shares eligible for
future sale, and effect of certain anti-takeover provisions and dilution.
Concentration of Credit Risk -- Financial instruments which potentially
subject us to concentrations of credit risk consist primarily of cash
equivalents, short-term investments and accounts receivable. Cash, cash
equivalents and short-term investments consist primarily of municipal
securities, cash accounts held at various banks and a money market fund held at
several financial institutions. We sell our products primarily to large
organizations in different industries and geographies. Credit risk is further
mitigated by our credit evaluation process and limited payment terms. We do not
require collateral or other security to support accounts receivable. In
addition, we maintain an allowance for estimated credit losses. In entering into
forward foreign exchange contracts, we have assumed the risk that might arise
from the possible inability of counterparties to meet the terms of their
contracts. The counterparties to these contracts are major multinational
commercial banks, and we do not expect any losses as a result of counterparty
defaults.
Comprehensive Income -- During fiscal 1999, we adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"), which requires an enterprise to report, by major components and as a
single total, the change in net assets during the period from nonowner sources.
29
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NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
Comprehensive income for the years ended April 30, 2000, 1999 and 1998 has been
disclosed within the consolidated statements of shareholders' equity and
comprehensive income. Total comprehensive income was equal to net income for the
year ended April 30, 1998.
Net Income Per Share -- Basic net income per share is computed by dividing
net income by the weighted average number of common shares outstanding for that
period. Diluted net income per share is computed giving effect to all dilutive
potential shares that were outstanding during the period. Dilutive potential
common shares consist of incremental common shares subject to repurchase and
common shares issuable upon exercise of stock options. All prior-period net
income per-share amounts have been restated to reflect the two-for-one stock
splits which were effective December 20, 1999 and March 22, 2000 (See Note 6).
The following is a reconciliation of the numerators and denominators of the
basic and diluted net income per share computations for the periods presented:
YEARS ENDED APRIL 30,
--------------------------------
2000 1999 1998
-------- -------- --------
NET INCOME (NUMERATOR):
Net Income, basic and diluted.................... $ 73,792 $ 35,613 $ 20,965
======== ======== ========
SHARES (DENOMINATOR):
Weighted average common shares outstanding....... 299,554 275,060 265,600
Weighted average common shares outstanding
subject to repurchase......................... (184) (1,320) (5,944)
-------- -------- --------
Shares used in basic computation................. 299,370 273,740 259,656
Weighted average common shares outstanding
subject to repurchase......................... 184 1,320 5,944
Common shares issuable upon exercise of stock
options (treasury stock method)............... 45,617 36,664 22,008
-------- -------- --------
Shares used in diluted computation............... 345,171 311,724 287,608
======== ======== ========
NET INCOME PER SHARE:
Basic............................................ $ 0.25 $ 0.13 $ 0.08
======== ======== ========
Diluted.......................................... $ 0.21 $ 0.11 $ 0.07
======== ======== ========
Statements of Cash Flows -- Supplemental cash flow and noncash investing
and financing activities are as follows:
2000 1999 1998
------- ------- ------
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid net of refund...................... $ (225) $ 7,985 $9,402
NONCASH INVESTING AND FINANCING ACTIVITIES:
Deferred stock compensation.......................... 1,805 883 714
Income tax benefit from employee stock
transactions...................................... 56,248 17,776 4,065
Conversion of evaluation inventory to fixed assets... 3,723 1,665 975
Geographic Operating Information -- During fiscal 1999, we adopted
Statement of Financial Accounting Standards No. 131, "Disclosures About Segments
of an Enterprise and Related Information" ("SFAS 131"), which establishes annual
and interim reporting standards for an enterprise's business segments and
related disclosures about its products, services, geographic areas and major
customers. We operate in one reportable segment (Note 8).
30
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NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
Stock-Based Compensation -- We account for stock-based awards to employees
using the intrinsic value method in accordance with Accounting Principles Board
Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees."
Accounting for Long-Lived Assets -- We evaluate the impairment of
long-lived assets, certain identifiable intangibles and goodwill related to
those assets whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
Recently Issued Accounting Standards -- In June 1998, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which defines derivatives, requires that all derivatives be carried
at fair value, and provides for hedging accounting when certain conditions are
met. This statement, as amended, is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. Although we have not fully assessed the
implications of this new statement, we do not believe adoption of this statement
will have a material impact on our consolidated financial position, results of
operations or cash flows.
3. BALANCE SHEET COMPONENTS
SHORT-TERM INVESTMENTS
APRIL 30,
--------------------
2000 1999
-------- --------
Municipal bonds............................................. $ 12,481 $ --
Municipal securities........................................ 285,675 183,650
Corporate bonds............................................. 5,000 --
U.S. government securities.................................. 8,996 --
-------- --------
Total debt and equity securities............................ 312,152 183,650
Less cash equivalents....................................... 237,675 177,850
-------- --------
Short-term investments...................................... $ 74,477 $ 5,800
======== ========
INVENTORIES, NET
APRIL 30,
------------------
2000 1999
------- -------
Purchased components........................................ $ 9,230 $ 5,316
Work in process............................................. 646 1,727
Finished goods.............................................. 10,558 6,538
------- -------
$20,434 $13,581
======= =======
PROPERTY AND EQUIPMENT
APRIL 30,
--------------------
2000 1999
-------- --------
Computers, related equipment and purchased software......... $ 54,716 $ 28,619
Furnitures and fixtures..................................... 8,159 2,236
Leasehold improvements...................................... 3,747 3,104
-------- --------
66,622 33,959
Accumulated depreciation and amortization................... (18,673) (14,688)
-------- --------
$ 47,949 $ 19,271
======== ========
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NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
4. COMMITMENTS AND CONTINGENCIES
In fiscal 2000, we executed agreements to acquire approximately 37.7 acres
of land in Sunnyvale, California. These sites will support expansion of
approximately 800,000 square feet to accommodate future growth. In fiscal 1999,
we executed agreements to acquire approximately 18 acres of land in Sunnyvale,
California and to develop 393,000 square feet of buildings. Beginning in June
1999, we began relocating all of our principal activities to Sunnyvale. This new
headquarter site will consolidate general administration, sales and marketing,
research and development, customer services and manufacturing operations. Our
manufacturing and research and development facilities will begin to relocate in
the first quarter of fiscal 2001 and will be complete in the second quarter of
fiscal 2001. The Santa Clara facilities are leased under various operating
leases with 100,000 square feet of space expiring in June 2000, and the
remaining 20,000 square feet expiring in fiscal 2003. We lease other sales
offices and a design center throughout the United States and internationally.
These sales offices are also leased under operating leases which expire through
fiscal 2013. We are responsible for certain maintenance costs, taxes and
insurance under these leases.
In fiscal 2000, we executed two lease agreements to acquire approximately
37.7 acres of land in Sunnyvale, California and the accompanying 533,262 square
feet of buildings. We subsequently assigned our rights and obligations under all
the agreements for the Sunnyvale facilities to a third-party entity and entered
into two operating leases. Our lease payments will vary based on LIBOR plus a
spread (8.0% at April 30, 2000). The leases are for five years and can be
renewed for two five-year periods, subject to the approval of the third-party
entity. At the expiration or termination of the leases, we have the option to
either purchase these properties for $55,000 and $62,000, respectively, or
arrange for the sale of the properties to a third party for at least $55,000 and
$62,000, respectively, with a contingent liability for any deficiency. If the
properties under these leases are not purchased or sold as described above, we
will be obligated for additional lease payments of approximately $49,288 and
$51,460, respectively.
In fiscal 1999, we executed three lease agreements to acquire approximately
18 acres of land in Sunnyvale, California and to develop 393,000 square feet of
buildings. We subsequently assigned our rights and obligations under all the
agreements for the Sunnyvale facilities to a third-party entity and entered into
three operating leases. The leases require monthly payments, which vary, based
on the LIBOR plus a spread. The aggregate annual minimum rent commitment under
one lease, which began in August 1999, is approximately $3,520. The lease
payments under the other two operating leases are expected to commence in the
first and second quarter of fiscal 2001 and will also vary based on LIBOR plus a
spread, estimated to be approximately $3,840 and $2,880. Our lease payments
under these three leases are included in the minimum annual lease payments
schedule below. The leases are for five years and can be renewed for two
five-year periods, subject to the approval of the third-party entity. At the
expiration or termination of the leases, we have the option to either purchase
these properties for $44,000, $48,000 and $36,000, respectively, or arrange for
the sale of the properties to a third party for at least $44,000, $48,000 and
$36,000, respectively, with a contingent liability for any deficiency. If the
properties under these leases are not purchased or sold as described above, we
will be obligated for additional lease payments of approximately $36,960,
$43,912 and $32,610, respectively.
The operating leases mentioned above require us to maintain specified
financial covenants with which we were in compliance as of April 30, 2000.
32
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NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
Future minimum annual lease payments as of April 30, 2000, are as follows:
YEARS ENDING APRIL 30,
----------------------
2001....................................................... $13,185
2002....................................................... 14,413
2003....................................................... 13,716
2004....................................................... 13,120
2005....................................................... 10,006
Thereafter................................................. 5,547
-------
Total lease payments............................. $69,987
=======
Rent expense was $7,779, $5,963 and $4,278 for the years ended April 30,
2000, 1999 and 1998, respectively. Rent expense under certain of our facility
leases is recognized on a straight-line basis over the term of the lease. The
difference between the amounts paid and the amounts expensed is classified as
long-term obligations in the accompanying consolidated balance sheets.
We are also subject to various legal proceedings and claims, either
asserted or unasserted, which arise in the normal course of business. We do not
believe that any current litigation claims will have a material adverse effect
on our consolidated financial position, results of operations or cash flows.
5. LINE OF CREDIT
In July 1998, we negotiated a $5,000 unsecured revolving credit facility
with a domestic commercial bank. Under terms of the credit facility, which
expires in July 2000, we must maintain various financial covenants. Any
borrowings under this agreement bear interest at either LIBOR plus 1% or at the
lender's "prime" lending rate, such rate determined at our discretion.
We also have foreign exchange facilities used for hedging arrangements with
several banks that allow us to enter into foreign exchange contracts of up to
$65,000, of which $10,395 was available at April 30, 2000.
6. SHAREHOLDERS' EQUITY
Follow-on Public Offering -- In March 1999, we completed a public offering
of 11,500 shares of our common stock and received net proceeds of $138,834.
Stock Splits -- On December 20, 1999 and March 22, 2000, the Company
effected two-for-one stock splits of the outstanding shares of common stock. All
share and per share amounts in these consolidated financial statements have been
adjusted to give effect to the stock split.
Preferred Stock -- Our Board of Directors has the authority to issue up to
5,000 shares of preferred stock and to determine the price, rights, preferences,
privileges and restrictions, including voting rights, of those shares without
any further vote or action by the shareholders.
Stock Option Plans -- We adopted the 1993 Stock Option/Stock Issuance Plan
(the "1993 Plan") in April 1993. In September 1995, we adopted the 1995 Stock
Incentive Plan (the "1995 Plan"). The 1995 Plan replaced the 1993 Plan, and
provides for the grant of options and the issuance of common stock under terms
substantially the same as those provided under the 1993 Plan, except that the
1995 Plan does not allow for the exercise of options prior to vesting.
Accordingly, all options and shares issued under the 1993 Plan were incorporated
into the 1995 Plan upon the effectiveness of our initial public offering.
Under the 1995 Plan, the Board of Directors may grant to employees,
directors and consultants options to purchase shares of our common stock. The
exercise price for an incentive stock option and a nonqualified
33
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NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
stock option cannot be less than 100% and 85%, respectively, of the fair market
value of our common stock as determined by the Board of Directors on the date of
grant. Options granted under the 1995 Plan generally vest at a rate of 25% on
the first anniversary of the vesting commencement date and then ratably over the
following 36 months. Options expire as determined by the Board of Directors, but
not more than ten years after the date of grant.
In April 1997, the Board of Directors adopted the Special Non-Officer Stock
Option Plan (the "Non-Officer Plan") which provides for the grant of options and
the issuance of common stock under terms substantially the same as those
provided under the 1995 Plan, except that the Non-Officer Plan allows only for
the issuance of nonqualified options to non-officer employees.
In August 1999, the Board of Directors adopted the 1999 Stock Option Plan
(the "1999 Plan") which is comprised of two separate equity incentive programs:
(i) the Discretionary Option Grant Program under which options may be granted to
eligible individuals during the service period at a fixed price per share and
(ii) Automatic Option Grant Program under which non-employee Board members will
automatically receive special option grants at designated intervals over their
period of Board service.
The 1999 Plan will supplement the existing 1995 Plan and Non-Officer Plan
and those plans will continue to remain in full force and effect until all
available shares have been issued under each such plan. However, the Automatic
Option Grant Program previously in effect under the 1995 Plan terminated as of
October 26, 1999 and all automatic option grants made to non-employee Board
members on or after that date will be made under the 1999 Plan.
Under the 1999 Plan, the Board of Directors may grant to employees,
directors and consultants and other independent advisors options to purchase
shares of our common stock during their period of service with us. The exercise
price for an incentive stock option and a non-statutory option cannot be less
than 100% of the fair market value of the common stock on the grant date.
Options granted under the 1999 Plan generally vest at a rate of 25% on the first
anniversary of the vesting commencement date and then ratably over the following
36 months. Options will have a term of ten years after the date of grant,
subject to earlier termination upon the occurrence of certain events.
Options granted under the 1999 Plan are subject to the cancellation/regrant
program with the following limitations: (i) only options held by employees who
are neither executive officers nor members of the Board can be repriced; and
(ii) the total number of repriced options will not exceed ten percent of the
total number of shares of common stock authorized for issuance under the 1999
Plan. No options have been repriced under the 1999 Plan.
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NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
A summary of the combined activity under our stock option plans and
agreements is as follows:
OPTIONS OUTSTANDING
---------------------
SHARES WEIGHTED
AVAILABLE AVERAGE
FOR NUMBER EXERCISE
GRANT OF SHARES PRICE
--------- --------- --------
Balances, April 30, 1997.............................. 7,512 45,112 $ 1.36
Shares reserved for plan............................ 32,000 -- --
Options granted (weighted average fair value of
$1.14)........................................... (21,792) 21,792 2.94
Options exercised................................... -- (4,960) 1.06
Options canceled.................................... 4,592 (4,592) 1.73
------- -------
Balances, April 30, 1998 (20,048 options exercisable
at a weighted average exercise price of $0.99)...... 22,312 57,352 1.95
Shares reserved for plan............................ 21,600 -- --
Options granted (weighted average fair value of
$2.46)........................................... (25,292) 25,292 6.29
Options exercised................................... -- (8,972) 1.55
Options canceled.................................... 3,700 (3,700) 2.68
------- -------
Balances, April 30, 1999 (26,348 options exercisable
at a weighted average exercise price of $1.73)...... 22,320 69,972 3.53
Shares reserved for plan............................ 13,200 -- --
Options granted (weighted average fair value of
$13.98).......................................... (25,773) 25,773 28.60
Options exercised................................... -- (18,976) 2.55
Options canceled.................................... 3,127 (3,127) 7.19
------- -------
Balances, April 30, 2000.............................. 12,874 73,642 $12.45
======= =======
Options for the purchase of 24,829 shares of common stock were vested as of
April 30, 2000. Unvested common shares of 92 issued under the 1993 Plan as of
April 30, 2000 are subject to repurchase by the Company.
Additional information regarding options outstanding as of April 30, 2000
is as follows:
OPTIONS OUTSTANDING
---------------------------------------
WEIGHTED OPTIONS EXERCISABLE
AVERAGE ----------------------
REMAINING WEIGHTED WEIGHTED
NUMBER CONTRACTUAL AVERAGE AVERAGE
RANGE OF OUTSTANDING AT LIFE EXERCISE NUMBER EXERCISE
EXERCISE PRICES APRIL 30, 2000 (IN YEARS) PRICE EXERCISABLE PRICE
- ---------------- -------------- ----------- -------- ----------- --------
$ 0.01 - $ 0.69 4,596 5.25 $ 0.40 4,288 $ 0.40
0.74 - 1.82 5,507 6.61 1.53 4,293 1.51
1.82 - 3.27 16,266 7.07 2.51 9,853 2.48
3.31 - 9.20 19,229 8.21 5.23 5,617 5.01
10.50 - 18.50 18,144 9.20 14.32 770 12.53
31.25 - 67.88 9,130 9.72 46.92 24 38.74
95.03 - 95.03 770 9.84 95.03 -- --
------ ------
$ 0.01 - $95.03 73,642 8.10 $12.45 24,845 $ 2.87
====== ======
Employee Stock Purchase Plan -- Under the Employee Stock Purchase Plan,
employees are entitled to purchase shares of our common stock at 85% of the fair
market value at certain specified dates. Of the 8,200 shares authorized to be
issued under this plan, 2,713 shares were available for issuance at April 30,
2000 and
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NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
1,473 and 1,092 shares were issued in fiscal 2000 and 1999, respectively, at a
weighted average price of $3.87 and $2.80, respectively.
Pro Forma Information -- As discussed in Note 2, we continue to account for
our stock-based awards using the intrinsic value method in accordance with APB
No. 25, "Accounting for Stock Issued to Employees" and its related
interpretations. Accordingly, no compensation expense has been recognized in the
financial statements for employee stock arrangements with the exception of
$1,345, $667 and $270 in fiscal 2000, 1999 and 1998, respectively, which
consists of the amortization of deferred stock compensation related to the
granting of nonqualified stock options at exercise prices below market.
In fiscal 1999, we recorded $230 compensation expense for the fair value of
options granted to an independent contractor.
SFAS 123 requires the disclosure of pro forma net income and net income per
share had we adopted the fair value method as of the beginning of fiscal 1996.
Under SFAS 123, the fair value of stock-awards to employees is calculated
through the use of option pricing models, even though such models were developed
to estimate the fair value of freely tradeable, fully transferable options
without vesting restrictions, which significantly differ from our stock option
awards. These models also require subjective assumptions, including future stock
price volatility and expected time to exercise, which greatly affect the
calculated values. Our calculations were made using the Black-Scholes option
pricing model with the following weighted average assumptions:
YEARS ENDED APRIL 30,
-----------------------
2000 1999 1998
----- ----- -----
Expected Life (in years).................................... 3.20 3.07 2.94
Risk-free interest rate..................................... 6% 5% 6%
Volatility.................................................. 65% 50% 50%
Expected dividend........................................... -- -- --
Our calculations are based on a multiple option valuation approach and
forfeitures are recognized as they occur. If the computed fair values of the
awards issued beginning in fiscal 1996 had been amortized to expense over the
vesting period of the awards, pro forma net income and net income per share
would have been as follows:
YEARS ENDED APRIL 30,
---------------------------
2000 1999 1998
------ ------- ------
Net income.............................................. $3,065 $12,163 $8,677
Net income per share, basic............................. 0.01 0.04 0.03
Net income per share, diluted........................... 0.01 0.04 0.03
However, the impact of outstanding non-vested stock options granted prior
to fiscal 1996 has been excluded from the pro forma calculations; accordingly,
the fiscal 2000, 1999 and 1998 pro forma adjustments are not indicative of
future period pro forma adjustments, when the calculation will apply to all
applicable stock options.
Deferred Stock Compensation -- In May 1995, we issued stock options for the
purchase of 8,504 shares of common stock at $0.02 per share. We recognized $515
of deferred compensation in May 1995 equal to the difference between the option
price as determined by the Board of Directors and $0.08 (the deemed fair value
for financial reporting purposes) for each option. We are amortizing the
deferred compensation expense ratably over the four-year period in which the
options vest.
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NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
We recorded $1,845, $916 and $714 of deferred compensation in fiscal 2000,
1999 and 1998, respectively, primarily related to the grant of stock options to
certain highly compensated employees. Under terms of the 1995 Stock Option Plan,
highly compensated employees as defined by our management are eligible to
contribute between $15 to $75 in annual salary for the rights to be granted
nonqualified stock options. The discount from fair market value which is equal
to the amount of salary contributed has been recorded as deferred compensation
expense. We are amortizing the deferred compensation expense ratably over a
one-year period.
7. INCOME TAXES
Income before income taxes is as follows:
YEARS ENDED APRIL 30,
------------------------------
2000 1999 1998
-------- ------- -------
Domestic............................................. $105,806 $45,617 $33,175
Foreign.............................................. 8,600 11,373 372
-------- ------- -------
Total...................................... $114,406 $56,990 $33,547
======== ======= =======
The provision for income taxes consists of the following:
YEARS ENDED APRIL 30,
------------------------------
2000 1999 1998
-------- ------- -------
CURRENT:
Federal............................................ $ 41,475 $20,094 $12,132
State.............................................. 7,973 3,098 2,199
Foreign............................................ 2,780 3,269 --
-------- ------- -------
Total current...................................... 52,228 26,461 14,331
-------- ------- -------
DEFERRED:
Federal............................................ (8,631) (4,078) (1,597)
State.............................................. (2,983) (1,006) (152)
-------- ------- -------
Total deferred..................................... (11,614) (5,084) (1,749)
-------- ------- -------
Provision for income taxes................. $ 40,614 $21,377 $12,582
======== ======= =======
The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate as follows:
YEARS ENDED APRIL 30,
-----------------------------
2000 1999 1998
------- ------- -------
Tax computed at federal statutory rate................ $40,042 $19,947 $11,741
State income taxes, net of federal benefit............ 5,720 2,850 1,482
Federal and state credits............................. (2,623) (1,802) (555)
Benefit of foreign sales corporation.................. -- (142) (489)
Tax exempt interest................................... (3,301) (547) (281)
Other................................................. 776 1,071 684
------- ------- -------
Provision for income taxes............................ $40,614 $21,377 $12,582
======= ======= =======
The income tax benefits associated with dispositions from employee stock
transactions of $56,248, $17,776 and $4,291, respectively, for fiscal 2000, 1999
and 1998, were recognized as additional paid in capital.
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NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
The components of net deferred tax assets are as follows:
YEARS ENDED APRIL 30,
----------------------
2000 1999
--------- ---------
Inventory reserves.......................................... $12,732 $ 5,120
Reserves and accruals not deductible for tax purposes....... 5,197 2,654
Research and development credits............................ 4,285 2,227
Tax benefit of options issued in IMC acquisition............ 532 913
Depreciation................................................ 544 585
Other....................................................... 51 228
------- -------
Deferred tax assets............................... $23,341 $11,727
======= =======
Current net deferred tax assets are $22,215 and $10,134, as of April 30,
2000 and April 30, 1999, respectively. Non-current net deferred tax assets at
April 30, 2000 and 1999 of $1,126 and $1,593, respectively, are included in
other assets within the accompanying consolidated balance sheets.
As of April 30, 2000, the federal and state net operating loss
carryforwards for income tax purposes were approximately $209,702 and $136,814,
respectively. The federal net operating loss carryforwards will begin to expire
in 2020, and the state net operating loss carryforwards will begin to expire in
2006. As of April 30, 2000, we had federal and state research and development
credit carryforwards of approximately $6,440 and $6,135, respectively, available
to offset future taxable income. These federal credit carryforwards will begin
to expire in 2013.
Deferred tax assets of approximately $89,493 consisting of certain net
operating loss and credit carryforwards resulting from the exercise of employee
stock options have not been recognized in the financial statements. When
utilized, the tax benefit of these loss and credit carryforwards will be
accounted for as a credit to additional paid in capital.
8. SEGMENT, GEOGRAPHIC AND CUSTOMER INFORMATION
SFAS 131 establishes annual and interim reporting standards for an
enterprise's operating segments and related disclosures about its products,
services, geographic areas and major customers. Under SFAS 131, we operate in
one reportable industry segment: the design, manufacturing and marketing of
high-performance network attached data storage and access devices. For the years
ended April 30, 2000, 1999 and 1998, we recorded revenue from customers
throughout the United States and Canada; Europe; Latin America, Australia and
Asia Pacific.
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NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
The following presents net sales for the years ended April 30, 2000, 1999,
and 1998 by geographic area and long-lived assets as of April 30, 2000 and 1999
by geographic area.
YEAR ENDED APRIL 30,
--------------------------------
2000 1999 1998
-------- -------- --------
Net Sales:
United States...................................... $401,377 $200,627 $125,108
International...................................... 177,923 88,793 41,055
-------- -------- --------
Total net sales.......................... $579,300 $289,420 $166,163
======== ======== ========
Long-lived Assets:
United States...................................... $ 55,857 $ 29,198
International...................................... 3,376 1,803
-------- --------
Total assets............................. $ 59,233 $ 31,001
======== ========
Net sales above are attributed to regions based on the customers' shipment
locations.
International sales include export sales primarily to United Kingdom,
Germany, Japan, France, Israel, the Netherlands, Switzerland, Sweden, Canada and
Australia. No single foreign country accounted for 10% or more of net sales in
fiscal 2000, 1999 and 1998.
No customer accounted for 10% or more of net sales in fiscal 2000, 1999 or
1998.
9. FINANCIAL INSTRUMENTS FAIR VALUE DISCLOSURE
The following disclosures are made in accordance with the provisions of
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments" ("SFAS 107"), which requires the disclosure of
fair value information about both on- and off-balance sheet financial
instruments where it is practicable to estimate the value. Fair value is defined
in SFAS 107 as the amount at which an instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale.
None of the financial instruments are held or issued for trading purposes.
At April 30, 2000, we had $54,605 of outstanding foreign exchange contracts
in British Pounds, Swiss Francs and European Currency Units. These foreign
exchange contracts are adjusted to the fair value at the end of every month.
Unrealized gains or losses on foreign exchange contracts were not significant at
April 30, 2000. Other than foreign exchange contracts, we have not entered into
any other material financial derivative instruments.
The fair values of cash and cash equivalents and short-term investments
reported in the balance sheets approximate their carrying value. The fair value
of short-term investments and foreign exchange contracts is based on quoted
market value.
10. EMPLOYEE BENEFIT PLAN
We have established a 401(k) tax-deferred savings plan ("Savings Plan").
Employees meeting the eligibility requirements, as defined, may contribute
specified percentages of their salaries. We contributed $611, $314 and $202 for
fiscal 2000, 1999 and 1998, respectively.
11. SUBSEQUENT EVENT
In June 2000, we acquired privately-held Orca Systems, Inc. ("Orca"), a
developer of high performance Virtual Interface Architecture software. Under the
terms of the agreement, we acquired Orca for approxi-
39
41
NETWORK APPLIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
mately $49,000 in common stock, assumed options and cash, with an obligation to
provide approximately 280 shares of additional common stock, if certain
performance criteria are achieved. The acquisition will be accounted for using
the purchase method of accounting.
12. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
YEAR ENDED APRIL 30, 2000
--------------------------------------------
Q1 Q2 Q3 Q4
-------- -------- -------- --------
Net sales............................... $103,279 $124,712 $151,290 $200,019
Gross margin............................ 60,740 73,196 89,875 119,643
Net income.............................. 13,468 16,048 19,799 24,477
Net income per share, basic............. 0.05 0.05 0.07 0.08
Net income per share, diluted........... 0.04 0.05 0.06 0.07
YEAR ENDED APRIL 30, 1999
--------------------------------------------
Q1 Q2 Q3 Q4
-------- -------- -------- --------
Net sales............................... $ 57,375 $ 65,625 $ 75,616 $ 90,804
Gross margin............................ 34,136 38,744 44,798 53,622
Net income.............................. 7,097 8,376 9,394 10,746
Net income per share, basic............. 0.03 0.03 0.03 0.04
Net income per share, diluted........... 0.02 0.03 0.03 0.03
40
42
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item with respect to the Company's
executive officers is incorporated herein by reference from the information
under Item 1 of Part I of this Report under the section entitled "Executive
Officers." The information required by this Item with respect to the Company's
directors is incorporated herein by reference from the information provided
under the heading "Election of Directors" of the Definitive Proxy Statement
which will be filed with the Commission. The information required by Item 405 of
Regulation S-K is incorporated herein by reference from the information provided
under the heading "Section 16(a) Beneficial Ownership Reporting Compliance" of
the Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding the compensation of executive officers and directors
of the Company is incorporated by reference from the information under the
heading "Executive Compensation and Related Information" in our Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners and
management is incorporated by reference from the information under the heading
"Security Ownership of Certain Beneficial Owners and Management" in our Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is
incorporated by reference from the information under the caption "Employment
Contracts, Termination of Employment and Change-In-Control Agreements" in our
Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) The following consolidated financial statements of Network Appliance,
Inc. are filed as part of this Form 10-K:
Independent Auditors' Report
Consolidated Balance Sheets -- April 30, 2000 and 1999
Consolidated Statements of Income for the years ended April 30, 2000,
1999 and 1998
Consolidated Statements of Shareholders' Equity and Comprehensive Income
for the years ended April 30, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the years ended April 30,
2000, 1999 and 1998
Notes to Consolidated Financial Statements
41
43
(a)(2) Financial Statement Schedule.
The following financial statement schedule of the Company is filed in Part
IV, Item 14(d) of this Annual Report on Form 10-K:
Schedule II -- Valuation and Qualifying Accounts
All other schedules have been omitted since the required information is not
present in amounts sufficient to require submission of the schedule or because
the information required is included in the consolidated financial statements or
notes thereto.
(a)(3) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
- ---------- -----------
2.1(1) Agreement and Plan of Reorganization, dated as of March 17,
1997, between the Company and IMC, a California corporation
2.2(1) Agreement of Merger between the Company and IMC as filed
with the California Secretary of State on March 17, 1997
3.1(2) Restated Articles of Incorporation of the Company
3.2(3) Bylaws of the Company
3.3(8) Amendment to the Restated Articles of Incorporation of the
Company, filed December 18, 1997
3.4(11) Certificate of Amendment to the Restated Articles of
Incorporation of the Company
4.1(3) Reference is made to Exhibits 3.1 and 3.2
4.2(3) Specimen Common Stock certificate
4.3(3) Amended and Restated Investors' Rights Agreement, dated
September 23, 1994, among the Company and the investors and
the founders named therein, as amended
4.4(3) Amended and Restated Shareholders Agreement, dated September
23, 1994, among the Company and the employee holders and the
Preferred Stock investors named therein
4.5(3) Forms of Warrants to Purchase Shares of Series A and Series
C Preferred Stock
10.1*(3) Distributor Agreement, dated June 1, 1993, by and among the
Company, Itochu Corporation and CTC Supply Sales
10.2(3) Forms of Indemnification Agreements entered into between the
Company and its directors and officers
10.3(3) The Company's 1993 Stock Option/Stock Issuance Plan
10.4(3) The Company's 1993 Stock Incentive Plan
10.5(3) The Company's Employee Stock Purchase Plan
10.6(3) Series C Preferred Stock and Common Stock and Warrant to
Purchase Series C Preferred Stock Purchase Agreement, dated
September 23, 1994, among the Company and the purchasers
named therein
10.7(3) Office lease dated October 21, 1993, between the Company and
Vanni Business Park General Partnership ("Vanni") and Office
Lease Agreement, dated October 20, 1994, between the Company
and Vanni
10.8(3) Agreement dated June 19, 1995, between the Company and
Imperial Bank, as amended, Promissory Note issued thereunder
and ancillary documents
10.9(3) Settlement Agreement and General Release, dated June 28,
1995, between the Company and Michael Malcolm
10.10(3) Security and Loan Agreement, Credit Terms and Conditions and
General Security Agreement between the Company and Imperial
Bank, dated August 31, 1994, as amended
10.11(4) Facility sublease, dated August 9, 1996, by and between S3,
Inc. and the Company
10.12(5) The Company's Amended 1995 Stock Incentive Plan
10.13(5) The Company's Special Non-Officer Stock Option Plan
10.14(6) Facility lease, dated August 18, 1997, by and between the
McCandless -- San Tomas No. 2 and the Company
42
44
EXHIBIT
NUMBER DESCRIPTION
- ---------- -----------
10.15(8) Agreement of Purchase and Sale, dated June 11, 1998, by and
between 495 Java Drive Associates, L.P. and the Company
10.16(8) Operating lease agreement, dated June 11, 1998, by and
between 475 Java Drive Associates L.P. and the Company
10.17(8) Purchase Option Agreement, dated June 11, 1998, by and
between 475 Java Drive Associates L.P. and the Company
10.18(8) Line of credit agreement dated July 10, 1998, between the
Company and Wells Fargo Bank, National Association
10.19(9) Purchase and Sale Agreement, dated August 5, 1998, by and
between Martin/Crossman, LLC and the Company.
10.20*(10) OEM Distribution and License Agreement, dated October 27,
1998, by and between Dell Products L.P. and the Company
10.21(11) Amended Purchase and Sale Agreement, dated December 9, 1998,
by and between Martin/ Crossman, LLC and the Company.
10.22(11) Amended Purchase and Sale Agreement, dated December 21,
1998, by and between 495 Java Drive Associates. L.P. and the
Company.
10.23(11) Lease Agreement, dated January 20, 1999, by and between BNP
Leasing Corporation and the Company
10.24(11) Purchase Agreement, dated January 20, 1999, by and between
BNP Leasing Corporation and the Company
10.25(11) Pledge Agreement, dated January 20, 1999, by and between BNP
Leasing Corporation, Bank Nationale De Paris and the Company
10.26(11) OEM Distribution and License Agreement, dated November 6,
1998, by and between Fujitsu Limited and the Company
10.27(12) Construction Management Agreement (Phase
II -- Improvements), dated May 3, 1999, by and between BNP
Leasing Corporation and the Registrant
10.28(12) Lease Agreement (Phase II -- Improvements), dated May 3,
1999, by and between BNP Leasing Corporation and the
Registrant
10.29(12) Lease Agreement (Phase II -- Land), dated May 3, 1999, by
and between BNP Leasing Corporation and the Registrant
10.30(12) Pledge Agreement (Phase II -- Land), dated May 3, 1999, by
and between BNP Leasing Corporation and the Registrant
10.31(12) Pledge Agreement (Phase II -- Improvements), dated May 3,
1999, by and between BNP Leasing Corporation and the
Registrant
10.32(12) Purchase Agreement (Phase II -- Land), dated May 3, 1999, by
and between BNP Leasing Corporation and the Registrant
10.33(12) Purchase Agreement (Phase II -- Improvements), dated May 3,
1999, by and between BNP Leasing Corporation and the
Registrant
10.34(12) Construction Management Agreement (Phase
III -- Improvements), dated June 16, 1999, by and between
BNP Leasing Corporation and the Registrant
10.35(12) Lease Agreement (Phase III -- Improvements), dated June 16,
1999, by and between BNP Leasing Corporation and the
Registrant
10.36(12) Lease Agreement (Phase III -- Land), dated June 16, 1999, by
and between BNP Leasing Corporation and the Registrant
10.37(12) Pledge Agreement (Phase III -- Land), dated June 16, 1999,
by and between BNP Leasing Corporation and the Registrant
10.38(12) Pledge Agreement (Phase III -- Improvements), dated June 16,
1999, by and between BNP Leasing Corporation and the
Registrant
10.39(12) Purchase Agreement (Phase III -- Land), dated June 16, 1999,
by and between BNP Leasing Corporation and the Registrant
10.40(12) Purchase Agreement (Phase III -- Improvements), dated June
16, 1999, by and between BNP Leasing Corporation and the
Registrant
43
45
EXHIBIT
NUMBER DESCRIPTION
- ---------- -----------
10.41(13) Purchase and Sale Agreement, dated September 9, 1999, by and
between Trinet Essential Facilities XII, Inc., and the
Company
10.42(13) Agreement of Assignment of Lease, dated September 3, 1999 by
and between Lockheed Martin Corporation, and the Company
10.43(14) Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1347 Crossman
Avenue in Sunnyvale, California
10.44(14) Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1350 Geneva
Drive in Sunnyvale, California
10.45(14) Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1345 Crossman
Avenue in Sunnyvale, California
10.46(14) Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1330 Geneva
Drive in Sunnyvale, California
10.47(14) Assignment of Agreement of Sale, dated December 20, 1999, by
and between BNP Leasing and the Company
10.48(14) Purchase and Sale Agreement, dated November 16, 1999, by and
between TRW Inc. and ESL Incorporated and the Company
10.49(14) Closing Certificate (Phase IV) and Agreement, dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.5(14) Lease Agreement (Phase IV -- Land), dated December 20, 1999,
by and between BNP Leasing Corporation and the Company
10.51(14) Lease Agreement (Phase IV -- Improvements ), dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.52(14) Purchase Agreement (Phase IV -- Land), dated December 20,
1999, by and between BNP Leasing Corporation and the Company
10.53(14) Purchase Agreement (Phase IV -- Improvements), dated
December 20, 1999, by and between BNP Leasing Corporation
and the Company
10.54(14) Pledge Agreement (Phase IV -- Land), dated December 20,
1999, by and between BNP Leasing Corporation and the Company
10.55(14) Pledge Agreement (Phase IV -- Improvements), dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.56(14) Participation Agreement (Phase IV), dated December 20, 1999,
by and between BNP Leasing Corporation and Banque Nationale
De Paris
10.57 Closing Certificate (Phase V) and Agreement, dated March 1,
2000, by and between BNP Leasing Corporation and the Company
10.58 Lease Agreement (Phase V -- Land), dated March 1, 2000, by
and between BNP Leasing Corporation and the Company
10.59 Lease Agreement (Phase V -- Improvements ), dated March 1,
2000, by and between BNP Leasing Corporation and the Company
10.60 Purchase Agreement (Phase V -- Land), dated March 1, 2000,
by and between BNP Leasing Corporation and the Company
10.61 Purchase Agreement (Phase V -- Improvements), dated March 1,
2000, by and between BNP Leasing Corporation and the Company
10.62 Pledge Agreement (Phase V -- Land), dated March 1, 2000, by
and between BNP Leasing Corporation and the Company
10.63 Pledge Agreement (Phase V -- Improvements), dated March 1,
2000, by and between BNP Leasing Corporation and the Company
10.64 Construction Management Agreement (Phase V -- Improvements),
dated March 1, 2000, by and between BNP Leasing Corporation
and the Company
10.65 Participation Agreement (Phase V), dated March 1, 2000, by
and between BNP Leasing Corporation and Banque Nationale De
Paris
10.66 Modification Agreement (Phase V), dated April 19, 2000, by
and between BNP Leasing Corporation and the Company
21.1 Subsidiaries of the Company
44
46
EXHIBIT
NUMBER DESCRIPTION
- ---------- -----------
23.1 Independent Auditors' Consent
24.1 Power of Attorney (see signature page)
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedules
27.3 Restated Financial Data Schedules
27.4 Restated Financial Data Schedules
27.5 Restated Financial Data Schedules
27.6 Restated Financial Data Schedules
27.7 Restated Financial Data Schedules
- ---------------
(1) Previously filed as an exhibit with the Company's Form 8-K dated March 17,
1997.
(2) Previously filed as an exhibit with the Company's Annual Report on Form
10-K dated July 25, 1996.
(3) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (No. 33-97864)
(4) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated March 7, 1997.
(5) Previously filed as an exhibit with the Company's Annual Report on Form
10-K dated July 23, 1997.
(6) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated December 5, 1997.
(7) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated March 6, 1998
(8) Previously filed as an exhibit with the Company's Annual Report on Form
10-K dated July 22, 1998
(9) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated September 11, 1998
(10) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated December 11, 1998
(11) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated March 11, 1999
(12) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated August 31, 1999
(13) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated December 2, 1999
(14) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated February 29, 2000
* Specified portions of this agreement have been omitted and have been filed
separately with the Commission pursuant to a request for confidential
treatment
(b) Reports on Form 8-K.
None.
45
47
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on July 12, 2000.
NETWORK APPLIANCE, INC.
By: /s/ DANIEL J. WARMENHOVEN
------------------------------------
Daniel J. Warmenhoven
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Daniel J. Warmenhoven and Jeffry R. Allen, and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Annual Report on Form 10-K, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitutes, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated:
SIGNATURES TITLE DATE
---------- ----- ----
/s/ DANIEL J. WARMENHOVEN Chief Executive Officer, Director July 12, 2000
- --------------------------------------------------- (Principal Executive Officer)
(Daniel J. Warmenhoven)
/s/ DONALD T. VALENTINE Chairman of the Board, Director July 12, 2000
- ---------------------------------------------------
(Donald T. Valentine)
/s/ JEFFRY R. ALLEN Executive Vice President Finance and July 12, 2000
- --------------------------------------------------- Operations, Chief Financial Officer
(Jeffry R. Allen) (Principal Financial and Accounting
Officer) and Secretary
/s/ SANJIV AHUJA Director July 12, 2000
- ---------------------------------------------------
(Sanjiv Ahuja)
/s/ CAROL A. BARTZ Director July 12, 2000
- ---------------------------------------------------
(Carol A. Bartz)
/s/ LARRY R. CARTER Director July 12, 2000
- ---------------------------------------------------
(Larry R. Carter)
46
48
SIGNATURES TITLE DATE
---------- ----- ----
/s/ MICHAEL R. HALLMAN Director July 12, 2000
- ---------------------------------------------------
(Michael R. Hallman)
/s/ ROBERT T. WALL Director July 12, 2000
- ---------------------------------------------------
(Robert T. Wall)
/s/ DR. SACHIO SEMMOTO Director July 12, 2000
- ---------------------------------------------------
(Dr. Sachio Semmoto)
47
49
SCHEDULE II
NETWORK APPLIANCE, INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
(IN THOUSANDS)
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
----------- ---------- ---------- ---------- ---------
Allowance for doubtful accounts:
2000........................................... $1,886 $1,275 $ 122 $3,039
1999........................................... 811 1,100 25 1,886
1998........................................... 330 550 69 811
Excess and obsolescence inventory reserve:
2000........................................... 2,480 4,274 3,753 3,001
1999........................................... 2,985 1,380 1,885 2,480
1998........................................... 3,016 1,302 1,333 2,985
48
50
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2.1(1) Agreement and Plan of Reorganization, dated as of March 17,
1997, between the Company and IMC, a California corporation
2.2(1) Agreement of Merger between the Company and IMC as filed
with the California Secretary of State on March 17, 1997
3.1(2) Restated Articles of Incorporation of the Company
3.2(3) Bylaws of the Company
3.3(8) Amendment to the Restated Articles of Incorporation of the
Company, filed December 18, 1997
3.4(11) Certificate of Amendment to the Restated Articles of
Incorporation of the Company
4.1(3) Reference is made to Exhibits 3.1 and 3.2
4.2(3) Specimen Common Stock certificate
4.3(3) Amended and Restated Investors' Rights Agreement, dated
September 23, 1994, among the Company and the investors and
the founders named therein, as amended
4.4(3) Amended and Restated Shareholders Agreement, dated September
23, 1994, among the Company and the employee holders and the
Preferred Stock investors named therein
4.5(3) Forms of Warrants to Purchase Shares of Series A and Series
C Preferred Stock
10.1*(3) Distributor Agreement, dated June 1, 1993, by and among the
Company, Itochu Corporation and CTC Supply Sales
10.2(3) Forms of Indemnification Agreements entered into between the
Company and its directors and officers
10.3(3) The Company's 1993 Stock Option/Stock Issuance Plan
10.4(3) The Company's 1993 Stock Incentive Plan
10.5(3) The Company's Employee Stock Purchase Plan
10.6(3) Series C Preferred Stock and Common Stock and Warrant to
Purchase Series C Preferred Stock Purchase Agreement, dated
September 23, 1994, among the Company and the purchasers
named therein
10.7(3) Office lease dated October 21, 1993, between the Company and
Vanni Business Park General Partnership ("Vanni") and Office
Lease Agreement, dated October 20, 1994, between the Company
and Vanni
10.8(3) Agreement dated June 19, 1995, between the Company and
Imperial Bank, as amended, Promissory Note issued thereunder
and ancillary documents
10.9(3) Settlement Agreement and General Release, dated June 28,
1995, between the Company and Michael Malcolm
10.10(3) Security and Loan Agreement, Credit Terms and Conditions and
General Security Agreement between the Company and Imperial
Bank, dated August 31, 1994, as amended
10.11(4) Facility sublease, dated August 9, 1996, by and between S3,
Inc. and the Company
10.12(5) The Company's Amended 1995 Stock Incentive Plan
10.13(5) The Company's Special Non-Officer Stock Option Plan
10.14(6) Facility lease, dated August 18, 1997, by and between the
McCandless -- San Tomas No. 2 and the Company
10.15(8) Agreement of Purchase and Sale, dated June 11, 1998, by and
between 495 Java Drive Associates, L.P. and the Company
10.16(8) Operating lease agreement, dated June 11, 1998, by and
between 475 Java Drive Associates L.P. and the Company
10.17(8) Purchase Option Agreement, dated June 11, 1998, by and
between 475 Java Drive Associates L.P. and the Company
10.18(8) Line of credit agreement dated July 10, 1998, between the
Company and Wells Fargo Bank, National Association
10.19(9) Purchase and Sale Agreement, dated August 5, 1998, by and
between Martin/Crossman, LLC and the Company.
49
51
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.20*(10) OEM Distribution and License Agreement, dated October 27,
1998, by and between Dell Products L.P. and the Company
10.21(11) Amended Purchase and Sale Agreement, dated December 9, 1998,
by and between Martin/ Crossman, LLC and the Company.
10.22(11) Amended Purchase and Sale Agreement, dated December 21,
1998, by and between 495 Java Drive Associates. L.P. and the
Company.
10.23(11) Lease Agreement, dated January 20, 1999, by and between BNP
Leasing Corporation and the Company
10.24(11) Purchase Agreement, dated January 20, 1999, by and between
BNP Leasing Corporation and the Company
10.25(11) Pledge Agreement, dated January 20, 1999, by and between BNP
Leasing Corporation, Bank Nationale De Paris and the Company
10.26(11) OEM Distribution and License Agreement, dated November 6,
1998, by and between Fujitsu Limited and the Company
10.27(12) Construction Management Agreement (Phase
II -- Improvements), dated May 3, 1999, by and between BNP
Leasing Corporation and the Registrant
10.28(12) Lease Agreement (Phase II -- Improvements), dated May 3,
1999, by and between BNP Leasing Corporation and the
Registrant
10.29(12) Lease Agreement (Phase II -- Land), dated May 3, 1999, by
and between BNP Leasing Corporation and the Registrant
10.30(12) Pledge Agreement (Phase II -- Land), dated May 3, 1999, by
and between BNP Leasing Corporation and the Registrant
10.31(12) Pledge Agreement (Phase II -- Improvements), dated May 3,
1999, by and between BNP Leasing Corporation and the
Registrant
10.32(12) Purchase Agreement (Phase II -- Land), dated May 3, 1999, by
and between BNP Leasing Corporation and the Registrant
10.33(12) Purchase Agreement (Phase II -- Improvements), dated May 3,
1999, by and between BNP Leasing Corporation and the
Registrant
10.34(12) Construction Management Agreement (Phase
III -- Improvements), dated June 16, 1999, by and between
BNP Leasing Corporation and the Registrant
10.35(12) Lease Agreement (Phase III -- Improvements), dated June 16,
1999, by and between BNP Leasing Corporation and the
Registrant
10.36(12) Lease Agreement (Phase III -- Land), dated June 16, 1999, by
and between BNP Leasing Corporation and the Registrant
10.37(12) Pledge Agreement (Phase III -- Land), dated June 16, 1999,
by and between BNP Leasing Corporation and the Registrant
10.38(12) Pledge Agreement (Phase III -- Improvements), dated June 16,
1999, by and between BNP Leasing Corporation and the
Registrant
10.39(12) Purchase Agreement (Phase III -- Land), dated June 16, 1999,
by and between BNP Leasing Corporation and the Registrant
10.40(12) Purchase Agreement (Phase III -- Improvements), dated June
16, 1999, by and between BNP Leasing Corporation and the
Registrant
10.41(13) Purchase and Sale Agreement, dated September 9, 1999, by and
between Trinet Essential Facilities XII, Inc., and the
Company
10.42(13) Agreement of Assignment of Lease, dated September 3, 1999 by
and between Lockheed Martin Corporation, and the Company
10.43(14) Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1347 Crossman
Avenue in Sunnyvale, California
10.44(14) Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1350 Geneva
Drive in Sunnyvale, California
10.45(14) Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1345 Crossman
Avenue in Sunnyvale, California
50
52
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.46(14) Industrial Lease Agreement, dated December 20, 1999 between
TRW Inc. and the Company in connection with 1330 Geneva
Drive in Sunnyvale, California
10.47(14) Assignment of Agreement of Sale, dated December 20, 1999, by
and between BNP Leasing and the Company
10.48(14) Purchase and Sale Agreement, dated November 16, 1999, by and
between TRW Inc. and ESL Incorporated and the Company
10.49(14) Closing Certificate (Phase IV) and Agreement, dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.5(14) Lease Agreement (Phase IV -- Land), dated December 20, 1999,
by and between BNP Leasing Corporation and the Company
10.51(14) Lease Agreement (Phase IV -- Improvements ), dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.52(14) Purchase Agreement (Phase IV -- Land), dated December 20,
1999, by and between BNP Leasing Corporation and the Company
10.53(14) Purchase Agreement (Phase IV -- Improvements), dated
December 20, 1999, by and between BNP Leasing Corporation
and the Company
10.54(14) Pledge Agreement (Phase IV -- Land), dated December 20,
1999, by and between BNP Leasing Corporation and the Company
10.55(14) Pledge Agreement (Phase IV -- Improvements), dated December
20, 1999, by and between BNP Leasing Corporation and the
Company
10.56(14) Participation Agreement (Phase IV), dated December 20, 1999,
by and between BNP Leasing Corporation and Banque Nationale
De Paris
10.57 Closing Certificate (Phase V) and Agreement, dated March 1,
2000, by and between BNP Leasing Corporation and the Company
10.58 Lease Agreement (Phase V -- Land), dated March 1, 2000, by
and between BNP Leasing Corporation and the Company
10.59 Lease Agreement (Phase V -- Improvements ), dated March 1,
2000, by and between BNP Leasing Corporation and the Company
10.60 Purchase Agreement (Phase V -- Land), dated March 1, 2000,
by and between BNP Leasing Corporation and the Company
10.61 Purchase Agreement (Phase V -- Improvements), dated March 1,
2000, by and between BNP Leasing Corporation and the Company
10.62 Pledge Agreement (Phase V -- Land), dated March 1, 2000, by
and between BNP Leasing Corporation and the Company
10.63 Pledge Agreement (Phase V -- Improvements), dated March 1,
2000, by and between BNP Leasing Corporation and the Company
10.64 Construction Management Agreement (Phase V -- Improvements),
dated March 1, 2000, by and between BNP Leasing Corporation
and the Company
10.65 Participation Agreement (Phase V), dated March 1, 2000, by
and between BNP Leasing Corporation and Banque Nationale De
Paris
10.66 Modification Agreement (Phase V), dated April 19, 2000, by
and between BNP Leasing Corporation and the Company
21.1 Subsidiaries of the Company
23.1 Independent Auditors' Consent
24.1 Power of Attorney (see signature page)
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedules
27.3 Restated Financial Data Schedules
27.4 Restated Financial Data Schedules
27.5 Restated Financial Data Schedules
51
53
EXHIBIT
NUMBER DESCRIPTION
------- -----------
27.6 Restated Financial Data Schedules
27.7 Restated Financial Data Schedules
- ---------------
(1) Previously filed as an exhibit with the Company's Form 8-K dated March 17,
1997.
(2) Previously filed as an exhibit with the Company's Annual Report on Form
10-K dated July 25, 1996.
(3) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (No. 33-97864)
(4) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated March 7, 1997.
(5) Previously filed as an exhibit with the Company's Annual Report on Form
10-K dated July 23, 1997.
(6) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated December 5, 1997.
(7) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated March 6, 1998
(8) Previously filed as an exhibit with the Company's Annual Report on Form
10-K dated July 22, 1998
(9) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated September 11, 1998
(10) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated December 11, 1998
(11) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated March 11, 1999
(12) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated August 31, 1999
(13) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated December 2, 1999
(14) Previously filed as an exhibit with the Company's Quarterly Report on Form
10-Q dated February 29, 2000
* Specified portions of this agreement have been omitted and have been filed
separately with the Commission pursuant to a request for confidential
treatment
52
1
EXHIBIT 10.57
================================================================================
CLOSING CERTIFICATE
(PHASE V)
AND
AGREEMENT
BETWEEN
NETWORK APPLIANCE, INC.
("NAI")
AND
BNP LEASING CORPORATION
("BNPLC")
MARCH 1, 2000
================================================================================
2
TABLE OF CONTENTS
Page
----
1. Representations, Warranties and Covenants of NAI Concerning the Property..........................................2
(A) Condition of the Property...........................................................................2
(B) Title to the Property...............................................................................2
(C) Title Insurance.....................................................................................2
(D) Environmental Representations.......................................................................3
(E) Cooperation by NAI and its Affiliates...............................................................3
2. Other Representations, Warranties, Covenants and Acknowledgments of NAI...........................................3
(A) No Default or Violation of Other Agreements.........................................................3
(B) No Suits............................................................................................4
(C) Enforceability......................................................................................4
(D) Solvency............................................................................................4
(E) Organization........................................................................................5
(F) Existence...........................................................................................5
(G) Not a Foreign Person................................................................................5
(H) Investment Company Act..............................................................................5
(I) ERISA...............................................................................................5
(J) Use of Proceeds.....................................................................................5
(K) Omissions...........................................................................................6
(L) Y2000 Issues........................................................................................6
(M) Further Assurances..................................................................................6
(N) No Implied Representations or Promises by BNPLC.....................................................7
3. Limited Covenants and Representations by BNPLC....................................................................7
(A) Cooperation of BNPLC to Facilitate Construction and Development.....................................7
(B) Actions Permitted by NAI Without BNPLC's Consent....................................................8
(C) Waiver of Landlord's Liens..........................................................................9
(D) Estoppel Letter.....................................................................................9
(E) Limited Representations by BNPLC Concerning Accounting Matters......................................9
(F) Other Limited Representations by BNPLC.............................................................11
(1) No Default or Violation.............................................................11
(2) No Suits............................................................................11
(3) Enforceability......................................................................11
(4) Organization........................................................................11
(5) Existence...........................................................................11
(6) Not a Foreign Person................................................................11
(7) Bankruptcy..........................................................................12
i.
3
4. Obligations of NAI Under Other Operative Documents Not Limited by this Agreement.................................12
5. Obligations of NAI Hereunder Not Limited by Other Operative Documents............................................12
ii
4
EXHIBITS AND SCHEDULES
Exhibit A Legal Description
Exhibit B Permitted Encumbrance List
Exhibit C Development Document List
Exhibit D Standard Notice of Request for Action by BNPLC
iii
5
CLOSING CERTIFICATE AND AGREEMENT
This CLOSING CERTIFICATE AND AGREEMENT (this "AGREEMENT"), by and
between NETWORK APPLIANCE, INC., a California corporation ("NAI"), and BNP
LEASING CORPORATION, a Delaware corporation ("BNPLC"), is made and dated as of
March 1, 2000 (the "EFFECTIVE DATE").
RECITALS
A. Contemporaneously with the execution of this Agreement, BNPLC and NAI
are executing a Common Definitions and Provisions Agreement (Phase V -
Improvements) (the "IMPROVEMENTS CDPA"), and a Common Definitions and Provisions
Agreement (Phase V - Land) (the "LAND CDPA"), each dated as of the Effective
Date, which are each incorporated into and made a part of this Agreement for all
purposes. Capitalized terms defined in the Improvements CDPA and used but not
otherwise defined herein are intended in this Agreement to have the respective
meanings ascribed to them in the Improvements CDPA. Any capitalized terms
defined in the Land CDPA and used but not otherwise defined herein or in the
Improvements CDPA are intended in this Agreement to have the respective meanings
ascribed to them in the Land CDPA. As used in this Agreement, "PROPERTY" is
intended to mean, collectively, the Property as defined in the Improvements CDPA
and the Property as defined in the Land CDPA; "IMPROVEMENT DOCUMENTS" is
intended to mean, collectively, the Operative Documents as defined in the
Improvements CDPA; "LAND DOCUMENTS" is intended to mean the Operative Documents
as defined in the Land CDPA; "OPERATIVE DOCUMENTS" is intended to mean the
Improvement Documents and the Land Documents, collectively; "IMPROVEMENTS LEASE"
is intended to mean the Lease as defined in the Improvements CDPA; "LEASES" is
intended to mean the Improvements Lease and the Lease as defined in the Land
CDPA, collectively; "PURCHASE AGREEMENTS" is intended to mean the Purchase
Agreement as defined in the Improvements CDPA and the Purchase Agreement as
defined in the Land CDPA, collectively; "PLEDGE AGREEMENTS" is intended to mean
the Pledge Agreement as defined in the Improvements CDPA and the Pledge
Agreement as defined in the Land CDPA, collectively; and "DESIGNATED SALE DATE"
is intended to mean the earlier of the Designated Sale Date as defined in the
Improvements CDPA or the Designated Sale Date as defined in the Land CDPA.
B. As a condition to its execution of other Operative Documents, BNPLC
requires the representations, warranties and covenants of NAI set out below. At
the request of NAI and to facilitate the transactions contemplated in the other
Operative Documents, BNPLC is acquiring the Land described in Exhibit A attached
hereto from Seller and any interest of Seller in any existing Improvements
thereon, subject to the Permitted Encumbrances described in Exhibit B attached
hereto and with the understanding that development and use of such Land may be
subject to or benefitted by the Development Documents described in Exhibit C
attached hereto (if any).
C. As a condition to its execution of other Operative Documents, NAI
requires the representations and covenants of BNPLC set out below.
1.
6
NOW, THEREFORE, in consideration of the above recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI CONCERNING THE
PROPERTY. NAI represents, warrants and covenants as follows:
(A) Condition of the Property. The Land as described in Exhibit A is the
same as the land shown on the plat included as part of the survey titled
"ALTA/ACSM LAND TITLE SURVEY FOR NETWORK APPLIANCE, 1260 Crossman Avenue" made
by Kier & Wright, Licensed Land Surveyor, dated January 21, 2000, as Job No.
99274, which survey was delivered to BNPLC at the request of NAI, and except as
shown on the survey there are to the best of NAI's knowledge no easements or
encroachments visible or apparent from an inspection of the Land. No significant
encroachment of building Improvements exist across the boundaries of the Land
described in Exhibit A, and no significant building Improvements that presently
exist (or that will be constructed by NAI as part of the Construction Project)
on the Land may be disturbed by reason of the exercise of easement or other
rights created by any of the Permitted Encumbrances. Adequate provision has been
made for the Land and the Property to be served by electric, gas, storm and
sanitary sewers, sanitary water supply, telephone and other utilities required
for the use thereof. All streets, alleys and easements necessary to serve the
Land and Improvements contemplated by the Improvements Lease and the
Construction Management Agreement have been completed and are serviceable (or
can and will be completed at a cost that is reasonable in connection with the
construction contemplated in the Construction Management Agreement). To the best
of NAI's knowledge, no extraordinary circumstances (including any use of the
Land as a habitat for endangered species) exists that would materially and
adversely affect the construction of Improvements contemplated by the
Construction Management Agreement, the use of such Improvements for their
intended purposes or other reasonable future development of the Land. NAI is not
aware of any latent or patent material defects or deficiencies in the Property
that, either individually or in the aggregate, could materially and adversely
affect the use or occupancy of the Property or the construction or use of
Improvements as permitted by the Improvements Lease and the Construction
Management Agreement or could reasonably be anticipated to endanger life or
limb. No part of the Land is within a flood plain as designated by any
governmental authority.
(B) Title to the Property. The deed that Seller is executing in favor of
BNPLC pursuant to the Existing Contract shall vest in BNPLC good and marketable
title to the Land and Improvements, subject only to the Permitted Encumbrances,
the Development Documents and any Liens Removable by BNPLC. NAI shall not,
without the prior consent of BNPLC, create, place or authorize, or through any
act or failure to act, acquiesce in the placing of, any deed of trust, mortgage
or other Lien, whether statutory, constitutional or contractual against or
covering the Property or any part thereof (other than Permitted Encumbrances and
Liens Removable by BNPLC), regardless of whether the same are expressly or
otherwise subordinate to the Operative Documents or BNPLC's interest in the
Property.
(C) Title Insurance. Without limiting NAI's obligations under the
preceding subparagraph, contemporaneously with the execution of this Agreement
NAI shall provide to BNPLC a title insurance policy (or binder committing the
applicable title insurer to issue a title
2.
7
insurance policy, without the payment of further premiums) in the amount of no
less than $51,000,000, in form and substance satisfactory to BNPLC, written by
one or more title insurance companies satisfactory to BNPLC and insuring BNPLC's
fee estate in the Land and Improvements.
(D) Environmental Representations. To the knowledge of NAI except as
otherwise disclosed in the Environmental Report: (i) no Hazardous Substances
Activity has occurred prior to the Effective Date; (ii) no owner or operator of
the Property has reported or been required to report any release of any
Hazardous Substances on or from the Property pursuant to any Environmental Law;
and (iii) no owner or operator of the Property has received from any federal,
state or local governmental authority any warning, citation, notice of violation
or other communication regarding a suspected or known release or discharge of
Hazardous Substances on or from the Property or regarding a suspected or known
violation of Environmental Laws concerning the Property. Further, NAI represents
that to its knowledge, the Environmental Report taken as a whole is not
misleading or inaccurate in any material respect.
(E) Cooperation by NAI and its Affiliates. If neither NAI nor an
Applicable Purchaser purchases the Property pursuant to the Purchase Agreements
on the Designated Sale Date, then after the Designated Sale Date:
(1) if a use of the Property by BNPLC or any removal or
modification of Improvements proposed by BNPLC would violate any
Permitted Encumbrance, Development Document or Applicable Law unless NAI
or any of its Affiliates, as an owner of adjacent property or otherwise,
gave its consent or approval thereto or agreed to join in a modification
of a Permitted Encumbrance or Development Document, then NAI shall, to
the extent it can without violating Applicable Law, give and cause its
Affiliates to give such consent or approval or join in such
modification;
(2) to the extent, if any, that any Permitted Encumbrance,
Development Document or Applicable Law requires the consent or approval
of NAI or any of its Affiliates or of the City of Sunnyvale or any other
Person to a transfer of any interest in the Property by BNPLC or its
successors or assigns, NAI will without charge give and cause its
Affiliates to give such consent or approval and will cooperate in any
way reasonably requested by BNPLC to assist BNPLC to obtain such consent
or approval from the City or any other Person; and
(3) NAI's obligations under this subparagraph 1(E) shall be
binding upon any successor or assign of NAI with respect to the Land and
other properties encumbered by the Permitted Encumbrances or subject to
the Development Documents.
2. OTHER REPRESENTATIONS, WARRANTIES, COVENANTS AND ACKNOWLEDGMENTS of
NAI. NAI represents, warrants, covenants and acknowledges as follows:
(A) No Default or Violation of Other Agreements. The execution, delivery
and performance by NAI of this Agreement and the other Operative Documents do
not and will not constitute a breach or default under any other material
agreement or contract to which NAI is a party or by which NAI is bound or which
affects the Property, and do not violate or contravene
3.
8
any law, order, decree, rule or regulation to which NAI is subject, and such
execution, delivery and performance by NAI will not result in the creation or
imposition of (or the obligation to create or impose) any lien, charge or
encumbrance on, or security interest in, NAI's property pursuant to the
provisions of any such other material agreement.
(B) No Suits. Other than as previously disclosed in NAI's most recent
10-K filings with the Securities and Exchange Commission (copies of which have
been delivered to BNPLC), there are no judicial or administrative actions,
suits, proceedings or investigations pending or, to NAI's knowledge, threatened
that will adversely affect the Property or the validity or enforceability or
priority of this Agreement or any other Operative Document, and NAI is not in
default with respect to any order, writ, injunction, decree or demand of any
court or other governmental or regulatory authority that could materially and
adversely affect the use, occupancy or operation of the Property for the
purposes contemplated in the Leases. No condemnation or other like proceedings
are pending or, to NAI's knowledge, threatened against the Property.
(C) Enforceability. The execution, delivery and performance of each of
the Operative Documents by NAI are duly authorized, are not in contravention of
or conflict with any term or provision of NAI's articles of incorporation or
bylaws and do not, to NAI's knowledge, conflict with any Applicable Laws or
require the consent or approval of any governmental body or other regulatory
authority that has not heretofore been obtained; provided, some consents or
approvals which are readily obtainable and which are required for NAI's
performance under the Operative Documents (for example, building permits
required for construction of the Construction Project) may not have been
heretofore obtained, but NAI shall obtain such consents or approvals as required
in connection with its performance of the Operative Documents. Each of the
Operative Documents are valid, binding and legally enforceable obligations of
NAI except as such enforcement is affected by bankruptcy, insolvency and similar
laws affecting the rights of creditors, generally, and equitable principles of
general application.
(D) Solvency. NAI is not "insolvent" on the date hereof (that is, the
sum of NAI's absolute and contingent liabilities - including the obligations of
NAI under this Agreement and the other Operative Documents - does not exceed the
fair market value of NAI's assets) and has no outstanding liens, suits,
garnishments or court actions which could render NAI insolvent or bankrupt.
NAI's capital is adequate for the businesses in which NAI is engaged and intends
to be engaged. NAI has not incurred (whether hereby or otherwise), nor does NAI
intend to incur or believe that it will incur, debts which will be beyond its
ability to pay as such debts mature. There has not been filed by or, to NAI's
knowledge, against NAI a petition in bankruptcy or a petition or answer seeking
an assignment for the benefit of creditors, the appointment of a receiver,
trustee, custodian or liquidator with respect to NAI or any significant portion
of NAI's property, reorganization, arrangement, rearrangement, composition,
extension, liquidation or dissolution or similar relief under the federal
Bankruptcy Code or any state law. The financial statements and all financial
data heretofore delivered to BNPLC relating to NAI are true, correct and
complete in all material respects. No material adverse change has occurred in
the financial position of NAI as reflected in NAI's financial statements
covering the most recent fiscal period for which NAI's financial statements have
been published.
4.
9
(E) Organization. NAI is duly incorporated and legally existing under
the laws of the State of California. NAI has all requisite corporate power and
has procured or will procure on a timely basis all governmental certificates of
authority, licenses, permits, qualifications and similar documentation required
to fulfill its obligations under this Agreement and the other Operative
Documents. Further, NAI has the corporate power and adequate authority, rights
and franchises to own NAI's property and to carry on NAI's business as now
conducted and is duly qualified and in good standing in each state in which the
character of NAI's business makes such qualification necessary (including the
State of California) or, if it is not so qualified in a state other than
California, such failure does not have a material adverse effect on the
properties, assets, operations or businesses of NAI and its Subsidiaries, taken
as a whole.
(F) Existence. So long as any of the Operative Documents continue in
force, NAI shall continuously maintain its existence and its qualification to do
business in the State of California.
(G) Not a Foreign Person. NAI is not a "foreign person" within the
meaning of Sections 1445 and 7701 of the Code (i.e. NAI is not a non-resident
alien, foreign corporation, foreign partnership, foreign trust or foreign estate
as those terms are defined in the Code and regulations promulgated thereunder).
(H) Investment Company Act. NAI is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(I) ERISA. NAI is not and will not become an "employee benefit plan" (as
defined in Section 3(3) of ERISA) which is subject to Title I of ERISA. The
assets of NAI do not and will not in the future constitute "plan assets" of one
or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. NAI is
not and will not become a "governmental plan" within the meaning of Section
3(32) of ERISA. Transactions by or with NAI are not subject to state statutes
regulating investments of and fiduciary obligations with respect to governmental
plans. Each Plan and, to the knowledge of NAI, any Multiemployer Plan, is in
compliance with, and has been administered in compliance with, the applicable
provisions of ERISA, the Code and any other applicable Federal or state law in
all respects, the failure to comply with which would have a material adverse
effect upon the properties, assets, operations or businesses of NAI and its
Subsidiaries taken as a whole. As of the date hereof no event or condition is
occurring or exists which would require a notice from NAI under subparagraph
13(a)(vii) of the Leases.
(J) Use of Proceeds. In no event shall the funds advanced to NAI
pursuant to the Operative Documents be used directly or indirectly for personal,
family, household or agricultural purposes or for the purpose, whether
immediate, incidental or ultimate, of purchasing, acquiring or carrying any
"margin stock" or any "margin securities" (as such terms are defined
respectively in Regulation U and Regulation G promulgated by the Board of
Governors of the Federal Reserve System) or to extend credit to others directly
or indirectly for the purpose of purchasing or carrying any such margin stock or
margin securities. NAI represents and warrants that NAI is not engaged
principally, or as one of NAI's important activities, in the business of
extending credit to others for the purpose of purchasing or carrying such margin
stock or margin securities.
5.
10
(K) Omissions. None of NAI's representations or warranties contained in
this Agreement or any other Operative Document or any other document,
certificate or written statement furnished to BNPLC by or on behalf of NAI
contains any untrue statement of a material fact or omits a material fact
necessary in order to make the statements contained herein or therein (when
taken in their entireties) not misleading.
(L) Y2000 Issues. As necessary to avoid any material adverse impact upon
any activity significant to the business of NAI and its Subsidiaries, taken as
whole, and as necessary to insure the full and prompt compliance with and
performance of NAI's obligations under the Operative Documents, on or before
June 30, 1999, the software and other processing capabilities of NAI and its
Subsidiaries had the ability to correctly interpret and manipulate all data (in
whatever form, including printed form, screen displays, financial records,
calculations and loan-related data) so as to avoid errors in processing that may
otherwise occur because of the inability of the software or other processing
capabilities to recognize accurately the year 2000 or subsequent dates.
(M) Further Assurances. NAI shall, on request of BNPLC, (i) execute,
acknowledge, deliver and record or file such further instruments and do such
further acts as may be necessary, desirable or proper to carry out more
effectively the purposes of this Agreement or any other Operative Document and
to subject to this Agreement or any other Operative Document any property
intended by the terms hereof or thereof to be covered hereby or thereby,
including specifically, but without limitation, any renewals, additions,
substitutions, replacements or appurtenances to the Property; (ii) execute,
acknowledge, deliver, procure and record or file any document or instrument
deemed advisable by BNPLC to protect its rights in and to the Property against
the rights or interests of third persons; and (iii) provide such certificates,
documents, reports, information, affidavits and other instruments and do such
further acts as may be necessary, desirable or proper in the reasonable
determination of BNPLC to enable BNPLC to comply with the requirements or
requests of any agency or authority having jurisdiction over it.
Without limiting the forgoing, NAI shall cooperate with BNPLC as
reasonably required to allow BNPLC to induce banks not affiliated with BNPLC to
become Participants. Such cooperation will include the payment of fees ("UPFRONT
SYNDICATION FEES") as provided under the heading "Upfront Fees for the
Participants" in the letter from BNPLC to NAI dated February 11, 2000. Such
cooperation will also include the execution of one or more modification
agreements proposed by BNPLC to any of the Operative Documents, which agreements
may change the Spread, Unsecured Spread, Commitment Fee Rate or may limit NAI's
right to designate a Collateral Percentages under Section 3.1 of the Pledge
Agreements or may otherwise modify terms and conditions of the Operative
Documents as requested by a prospective Participant; provided, however, that the
form and substance of any such modification agreements is approved by NAI (which
approval will not be unreasonably withheld); and, provided further, that NAI
will have no obligation to join with BNPLC in executing any such modification
agreement to satisfy a prospective Participant after the earlier of (1) the date
that is one hundred twenty days after the Effective Date, or (2) the date upon
which other banks not affiliated with BNPLC have become Participants with
aggregate Percentages under (and as defined in) the Participation Agreement of
no less than eighty percent (80%).
6.
11
(N) No Implied Representations or Promises by BNPLC. BNPLC AND BNPLC'S
AGENTS HAVE MADE NO REPRESENTATIONS OR PROMISES WITH RESPECT TO THE PROPERTY
EXCEPT AS EXPRESSLY SET FORTH IN THE OTHER OPERATIVE DOCUMENTS, AND NO RIGHTS,
EASEMENTS OR LICENSES ARE BEING ACQUIRED BY NAI BY IMPLICATION OR OTHERWISE
EXCEPT AS EXPRESSLY SET FORTH IN THE OTHER OPERATIVE DOCUMENTS.
3. LIMITED COVENANTS AND REPRESENTATIONS BY BNPLC.
(A) Cooperation of BNPLC to Facilitate Construction and Development. So
long as the Leases remain in force and NAI remains in possession of the
Property, BNPLC shall take any action reasonably requested by NAI to facilitate
the construction or use of the Property permitted by the Leases or the
Construction Management Agreement; provided, however, that:
(1) This subparagraph 3(A) shall not impose upon BNPLC the
obligation to take any action that can be taken by NAI, NAI's Affiliates
or anyone else other than BNPLC as the owner of the Property.
(2) BNPLC shall not be required by this subparagraph 3(A) to
make any payment to another Person unless BNPLC shall first have
received funds from NAI, in excess of any other amounts due from NAI
under any of the Operative Documents, sufficient to make the payment.
(This clause (2) will not be construed as limiting the right of NAI to
obtain additional Construction Advances, on and subject to the terms and
conditions set forth in the Construction Management Agreement, for
payments NAI itself may pay or incur an obligation to pay to another
Person.)
(3) BNPLC shall have no obligations whatsoever under this
subparagraph 3(A) at any time after a CMA Termination Event or when an
Event of Default shall have occurred and be continuing.
(4) NAI must request any action to be taken by BNPLC pursuant to
this subparagraph 3(A), and such request must be specific and in
writing, if required by BNPLC at the time the request is made. A
suggested form for such a request is attached as Exhibit D.
(5) No action may be required of BNPLC pursuant to this
subparagraph 3(A) that could constitute a violation of any Applicable
Laws or compromise or constitute a waiver of BNPLC's rights under other
provisions of this Agreement or any of the other Operative Documents or
that for any other reason is reasonably objectionable to BNPLC.
The actions BNPLC shall take pursuant to this subparagraph 3(A) if
reasonably requested by NAI will include, subject to the conditions listed in
the proviso above, executing or consenting to, or exercising or assisting NAI to
exercise rights under any (I) grant of easements, licenses, rights of way, and
other rights in the nature of easements encumbering the Land or the
Improvements, (II) release or termination of easements, licenses, rights of way
or other rights in the nature of easements which are for the benefit of the Land
or Improvements or any portion thereof, (III) dedication or transfer of portions
of the Land not improved with a building, for road, highway or other public
purposes, (IV) agreements (other than with NAI or its Affiliates)
7.
12
for the use and maintenance of common areas, for reciprocal rights of parking,
ingress and egress and amendments to any covenants and restrictions affecting
the Land or any portion thereof, (V) documents required to create or administer
a governmental special benefit district or assessment district for public
improvements and collection of special assessments, (VI) instruments necessary
or desirable for the exercise or enforcement of rights or performance of
obligations under any Permitted Encumbrance or any contract, permit, license,
franchise or other right included within the term "Property" (including, without
limitation, under the Development Documents), (VII) modifications of Permitted
Encumbrances or Development Documents, (VIII) permit applications or other
documents required to accommodate the Construction Project, (IX) confirmations
of NAI's rights under any particular provisions of the Operative Documents which
NAI may wish to provide to a third party or (X) execution or filing of a tract
or parcel map subdividing the Land into lots or parcels or to adjust boundary
lines of the Land to facilitate construction thereon or on adjacent land which
NAI leases from BNPLC. However, the determination of whether any such action is
reasonably requested or reasonably objectionable to BNPLC may depend in whole or
in part upon the extent to which the requested action shall result in a lien to
secure payment or performance obligations against BNPLC's interest in the
Property, shall cause a decrease in the value of the Property to less than
forty-five percent (45%) of Stipulated Loss Value after any Qualified
Prepayments that may result from such action are taken into account, or shall
impose upon BNPLC any present or future obligations greater than the obligations
BNPLC is willing to accept in reliance on the indemnifications provided by NAI
under the Operative Documents.
Any Losses incurred by BNPLC because of any action taken pursuant to
this subparagraph 3(A) shall be covered by the indemnifications set forth in
subparagraph 5(c) of the Leases. Further, for purposes of such indemnification,
any action taken by BNPLC will be deemed to have been made at the request of NAI
if made pursuant to any request of counsel to or any officer of NAI (or with
their knowledge, and without their objection) in connection with the execution
or administration of the Leases or the other Operative Documents.
(B) Actions Permitted by NAI Without BNPLC's Consent. No refusal by
BNPLC to execute or join in the execution of any agreement, application or other
document requested by NAI pursuant to the preceding subparagraph 3(A) shall
preclude NAI from itself executing such agreement, application or other
document; provided, that in doing so NAI is not purporting to act for BNPLC and
does not thereby create or expand any obligations or restrictions that encumber
BNPLC's title to the Property. Further, subject to the other terms and
conditions of the Leases and other Operative Documents, NAI shall be entitled to
do any of the following in NAI's own name and to the exclusion of BNPLC without
any notice to or consent of BNPLC, provided, that (i) the Leases remain in
force, (ii) NAI remains in possession of the Property, (iii) no CMA Termination
Event has occurred, and no Event of Default has occurred and is continuing, and
(iv) NAI is not purporting to act for BNPLC and does not thereby create or
expand any obligations or restrictions that encumber BNPLC's title to the
Property:
(1) perform obligations arising under and exercise and enforce
the rights of NAI or the owner of the Property under the Development
Documents and Permitted Encumbrances;
(2) perform obligations arising under and exercise and enforce
the rights of NAI
8.
13
or the owner of the Property with respect to any other contracts or
documents (such as building permits) included within the Personal
Property;
(3) recover and retain any monetary damages or other benefit
inuring to NAI or the owner of the Property through the enforcement of
any rights, contracts or other documents included within the Personal
Property (including the Development Documents and Permitted
Encumbrances); provided, that to the extent any such monetary damages
may become payable as compensation for an adverse impact on value of the
Property, the rights of BNPLC and NAI hereunder with respect to the
collection and application of such monetary damages shall be the same as
for condemnation proceeds payable because of a taking of all or any part
of the Property; and
(4) without limiting the foregoing, as tenant under the
Improvements Lease, (i) collect and retain all rents paid under the
Premises Lease; (ii) recover and retain any monetary damages or other
benefit inuring to NAI or the owner of the Real Property through the
enforcement of any rights under the Premises Lease (provided that this
subsection (ii) shall not apply to any damages or benefits that are
required by the terms of the Lease to be paid over to BNPLC); (iii)
cancel or accept the surrender of any space under Premises Lease; and
(iv) enforce any guaranties or other collateral provided by Lessees
under the Premises Lease and retain the proceeds thereof.
(C) Waiver of Landlord's Liens. BNPLC waives any security interest,
statutory landlord's lien or other interest BNPLC may have in or against
computer equipment and other tangible personal property placed on the Land from
time to time that NAI or its Affiliates own or lease from other lessors;
provided, however, that BNPLC does not waive its interest in or rights with
respect to equipment or other property included within the "Property" as
described in Paragraph 7 of the Improvements Lease. Although computer equipment
or other tangible personal property may be "bolted down" or otherwise firmly
affixed to Improvements, it shall not by reason thereof become part of the
Improvements if it can be removed without causing structural or other material
damage to the Improvements and without rendering HVAC or other major building
systems inoperative and if it does not otherwise constitute "Property" as
provided in Paragraph 7 of the Improvements Lease.
(D) Estoppel Letter. Upon thirty days written request by NAI at any time
and from time to time prior to the Designated Sale Date, BNPLC shall provide a
statement in writing certifying that the Operative Documents are unmodified and
in full effect (or, if there have been modifications, that the Operative
Documents are in full effect as modified, and setting forth such modifications),
certifying the dates to which the rents payable by NAI under the Leases has been
paid, stating whether BNPLC is aware of any default by NAI that may exist under
the Leases and confirming BNPLC's agreements concerning landlord's liens and
other matters set forth in subparagraph 3(C). It being intended that any such
statement by BNPLC may be relied upon by anyone with whom NAI may intend to
enter into an agreement for construction of the Improvements or other
significant agreements concerning the Property.
(E) Limited Representations by BNPLC Concerning Accounting Matters.
BNPLC is not expected or required to represent or warrant that the Leases or the
Purchase Agreements will qualify for any particular accounting treatment under
GAAP. However, to permit NAI to
9.
14
determine for itself the appropriate accounting for the Leases and the Purchase
Agreements, BNPLC does represent to NAI the following as of the Effective Date:
(1) Equity capital invested in BNPLC is greater than three
percent (3%) of the aggregate of all lease funding amounts (including
participations) of BNPLC. Such equity capital investments constitute
equity in legal form and are reflected as shareholders' equity in the
financial statements and accounting records of BNPLC.
(2) BNPLC is one hundred percent (100%) owned by French American
Bank Corporation, which is one hundred percent (100%) owned by BNPLC's
Parent.
(3) BNPLC leases properties of substantial value to more than
fifteen tenants.
(4) All parties to whom BNPLC has any material obligations known
to BNPLC are (and are expected to be) Affiliates of BNPLC's Parent,
Participants, or participants with BNPLC in other leasing deals or loans
made by BNPLC, or other tenants or borrowers in such other leasing deals
or loans.
(5) BNPLC has substantial assets in addition to the Property,
assets which BNPLC believes to have a value far in excess of the value
of the Property.
(6) Other than any Funding Advances provided from time to time
by Participants under the Participation Agreement, BNPLC expects to
obtain all Funding Advances from Banque Nationale de Paris or other
Affiliates of BNPLC (including Funding Advances to cover Carrying Costs
and other amounts to be capitalized as part of the Outstanding
Construction Allowance, and assuming that NAI uses the Maximum
Construction Allowance under the Construction Management Agreement), and
to the extent that Banque Nationale de Paris or such other Affiliates
themselves borrow or accept bank deposits to obtain the funds needed to
provide such Funding Advances, the obligation to repay such funds shall
not be limited, by agreement or corporate structure, to payments
collected from NAI or otherwise recovered from the Property.
(7) BNPLC has not obtained residual value insurance or a
residual value guarantee from any third party to ensure the recovery of
its investment in the Property.
(8) BNPLC does not intend to take any action during the terms of
the Leases that would change, or anticipate any change in, any of the
facts listed above in this subparagraph.
NAI shall have the right to ask BNPLC questions from time to time concerning
BNPLC's financial condition, concerning matters relevant to the proper
accounting treatment of the Leases on NAI's financial statements and accounting
records (including the amount of BNPLC's equity capital as a percentage of the
aggregate of all lease funding amounts [including participations] by BNPLC) or
concerning BNPLC's ability to perform under the Leases or the Purchase
Agreements, to which questions BNPLC shall promptly respond. Such response,
however, may be limited to a statement that BNPLC will not provide requested
information; provided, however, BNPLC must notify NAI in writing if at any time
during the terms of the Leases BNPLC ceases to be 100% owned, directly or
indirectly, by Banque Nationale de Paris, or if at
10.
15
any time during the terms of the Leases BNPLC believes it could not represent
that the statements in clauses (1), (5) and (7) above continue to be accurate,
whether because of a change in the capital structure of BNPLC, a purchase of
residual value insurance with respect to the Property or otherwise.
(F) Other Limited Representations by BNPLC. BNPLC represents
that:
(1) No Default or Violation. The execution, delivery and
performance by BNPLC of this Agreement and the other Operative Documents
do not and will not constitute a breach or default under any material
contract or agreement to which BNPLC is a party or by which BNPLC is
bound and do not, to the knowledge of BNPLC, violate or contravene any
law, order, decree, rule or regulation to which BNPLC is subject. (As
used in this subparagraph 3(F), "BNPLC'S KNOWLEDGE" means the present
actual knowledge of Lloyd Cox, the current officer of BNPLC having
primary responsibility for the negotiation of the Operative Documents.)
(2) No Suits. There are no judicial or administrative actions,
suits, proceedings or investigations pending or, to BNPLC's knowledge,
threatened against BNPLC that are reasonably likely to affect BNPLC's
interest in the Property or the validity, enforceability or priority of
the Leases or the Purchase Agreements, and BNPLC is not in default with
respect to any order, writ, injunction, decree or demand of any court or
other governmental or regulatory authority that could materially and
adversely affect the business or assets of BNPLC or its interest in the
Property.
(3) Enforceability. The execution, delivery and performance of
each of the Operative Documents by BNPLC are duly authorized, are not in
contravention of or conflict with any term or provision of BNPLC's
articles of incorporation or bylaws and do not, to BNPLC's knowledge,
require the consent or approval of any governmental body or other
regulatory authority that has not heretofore been obtained or conflict
with any Applicable Laws. Each of the Operative Documents are valid,
binding and legally enforceable obligations of BNPLC except as such
enforcement is affected by bankruptcy, insolvency and similar laws
affecting the rights of creditors, generally, and equitable principles
of general application; provided, BNPLC makes no representation or
warranty that conditions imposed by zoning ordinances or other state or
local Applicable Laws to the purchase, ownership, lease or operation of
the Property have been satisfied.
(4) Organization. BNPLC is duly incorporated and legally
existing under the laws of Delaware and is duly qualified to do business
in the State of California. BNPLC has or will obtain on a timely basis,
at NAI's expense to the extent so provided in the Leases, all requisite
power and all governmental certificates of authority, licenses, permits,
qualifications and other documentation necessary to own and lease the
Property and to perform its obligations under the Operative Documents.
(5) Existence. So long as NAI continues to have rights under the
Leases or Purchase Agreements, BNPLC shall continuously maintain its
existence and, to the extent required to comply with its obligations
under the Operative Documents, its qualification to do business in the
State of California.
(6) Not a Foreign Person. BNPLC is not a "foreign person" within
the meaning of Sections 1445 and 7701 of the Code (i.e., BNPLC is not a
non-resident alien,
11.
16
foreign corporation, foreign partnership, foreign trust or foreign
estate as those terms are defined in the Code and regulations
promulgated thereunder).
(7) Bankruptcy. BNPLC's capital is adequate for the businesses
in which BNPLC is engaged and intends to be engaged. BNPLC has not
incurred (whether hereby or otherwise), nor does BNPLC intend to incur
or believe that it will incur, debts which will be beyond its ability to
pay as such debts mature. There has not been filed by or, to BNPLC's
knowledge, against BNPLC a petition in bankruptcy or a petition or
answer seeking an assignment for the benefit of creditors, the
appointment of a receiver, trustee, custodian or liquidator with respect
to BNPLC or any significant portion of BNPLC's property, reorganization,
arrangement, rearrangement, composition, extension, liquidation or
dissolution or similar relief under the federal Bankruptcy Code or any
state law.
4. OBLIGATIONS OF NAI UNDER OTHER OPERATIVE DOCUMENTS NOT LIMITED BY
THIS AGREEMENT. Nothing contained in this Agreement shall limit, modify or
otherwise affect any of NAI's obligations under the other Operative Documents,
which obligations are intended to be separate, independent and in addition to,
and not in lieu of, those established by this Agreement.
5. OBLIGATIONS OF NAI HEREUNDER NOT LIMITED BY OTHER OPERATIVE
DOCUMENTS. Recognizing that but for this Agreement (including the
representations of NAI set forth in Paragraphs 1 and 2) BNPLC would not acquire
the Property or enter into the other Operative Documents, NAI agrees that
BNPLC's rights for any breach of this Agreement (including a breach of such
representations) shall not be limited by any provision of the other Operative
Documents that would limit NAI's liability thereunder, including any provision
therein that would limit NAI's liability in the event of a termination of the
Leases or of any of NAI's rights or obligations under the Purchase Agreements.
[The signature pages follow.]
12.
17
IN WITNESS WHEREOF, this Closing Certificate and Agreement is hereby
executed in multiple originals as of March 1, 2000.
"NAI"
NETWORK APPLIANCE, INC.
By:
----------------------------------------
Jeffry R. Allen, Chief Financial Officer
13.
18
[Continuation of signature pages to Closing Certificate and Agreement dated to
be effective as of March 1, 2000]
"BNPLC"
BNP LEASING CORPORATION
By:
----------------------------------------
Lloyd G. Cox, Vice President
14.
19
EXHIBIT A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
1.
20
EXHIBIT B
PERMITTED ENCUMBRANCES
1. TAXES for the fiscal year 2000-2001, a lien not yet due or payable.
2. THE LIEN of supplemental taxes, if any, assessed pursuant to Chapter 3.5
commencing with Section 75 of the California Revenue and Taxation Code,
resulting from changes of ownership or completion of construction on or
after the date hereof.
3. EASEMENT for the purposes stated herein and incidents thereto
Purpose : 16-foot slope easement
Granted to : City of Sunnyvale, a municipal corporation
of the State of California
Recorded : October 9, 1964 in Book 6695, Page 389,
Official Records
Affects : Southerly 16 feet abutting Moffett Park Drive,
as shown on a survey plat entitled "ALTA/ACSM
Land Title Surveyed for Network Appliance,
1260 Crossman Avenue," dated January 21, 2000,
prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
4. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Slope easement
Granted to : City of Sunnyvale, a municipal corporation of
the State of California
Recorded : October 9, 1964 in Book 6695, Page 409,
Official Records
Affects : Northwesterly 16 feet abutting Crossman Road,
as shown on a survey plat entitled "ALTA/ACSM
Land Title Surveyed for Network Appliance,
1260 Crossman Avenue," dated January 21, 2000,
prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
5. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utilities Easement
Granted to : City of Sunnyvale, a municipal corporation of
the State of California
Recorded : October 9, 1964 in Book 6695, Page 457,
Official Records
Affects : Northwesterly 7 feet abutting Crossman Road,
as shown on a survey plat entitled "ALTA/ACSM
Land Title Surveyed for Network Appliance,
1260 Crossman Avenue," dated January 21, 2000,
prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
6. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utility Easement
1.
21
Granted to : City of Sunnyvale, a municipal corporation of
the State of California
Recorded : September 24, 1965 in Book 7116, Page 489,
Official Records
Affects : Southerly 7 feet abutting Moffett Park Drive,
as shown on a survey plat entitled "ALTA/ACSM
Land Title Surveyed for Network Appliance,
1260 Crossman Avenue," dated January 21, 2000,
prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
7. AGREEMENT on the terms and conditions contained therein
For : Construction of Storm Drainage Facilities
Between : City of Sunnyvale
And : Moffett Park Associates, a joint venture
partnership
Recorded : November 2, 1966 in Book 7552, Page 688,
Official Records
An amendment to said agreement recorded in an instrument recorded April 21, 1967
in Book 7700, Page 638, Official Records.
An amendment to said agreement recorded in an instrument recorded February 23,
1968 in Book 8034, Page 631, Official Records.
Notice affecting said real property-waiver of construction credit dated
September 22, 1976 has been executed by Moffett Park Association (MPA) a joint
venture partnership, recorded September 28, 1976 in Book C307, Page 346,
Official Records.
8. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utilities Easement
Recorded : July 18, 1978 in Book 423 of Maps, at page 13
Affects : Northwesterly 9 feet, Southwesterly 15 feet
from the Southernmost 9 feet of said land, as
shown on a survey plat entitled "ALTA/ACSM
Land Title Surveyed for Network Appliance,
1260 Crossman Avenue," dated January 21, 2000,
prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
9. Limitations, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting any covenant,
condition or restriction indicating a preference, limitation or
discrimination based on race, color, religion, sex, handicap, familial
status, or national origin to the extent such covenants, conditions or
restrictions violate 42 U.S.C. 3604(c), contained in the document
recorded March 8, 1978 in Book D511, Page 396, Official Records.
And re-recorded December 12, 1978 in Book E157, Page 147, Official Records.
2.
22
EXHIBIT C
DEVELOPMENT DOCUMENTS
-NONE-
1.
23
EXHIBIT D
NOTICE OF REQUEST FOR ACTION BY BNPLC
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Closing Certificate and Agreement dated as of March 1, 2000,
between Network Appliance, Inc. and BNP Leasing Corporation
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Closing Certificate and Agreement referenced above.
Pursuant to subparagraph 0 of the Closing Certificate and Agreement, NAI
requests the following of BNPLC:
[INSERT HERE A SPECIFIC DESCRIPTION OF THE ACTION REQUESTED - E.G.,
"PLEASE EXECUTE THE ENCLOSED APPLICATION FOR BUILDING PERMIT REQUIRED BY
THE CITY OF SUNNYVALE IN CONNECTION WITH CONSTRUCTION OF CERTAIN
IMPROVEMENTS WHICH ARE PART OF THE INITIAL CONSTRUCTION PROJECT."]
PLEASE NOTE: SUBPARAGRAPH 3(A) OF THE CLOSING CERTIFICATE OBLIGATES BNPLC NOT TO
UNREASONABLY REFUSE TO COMPLY WITH THE FOREGOING REQUEST, SUBJECT TO TERMS AND
CONDITIONS SET FORTH IN THAT SUBPARAGRAPH. NAI HEREBY CERTIFIES TO BNPLC THAT
AFTER CAREFUL CONSIDERATION NAI BELIEVES THAT ALL SUCH TERMS AND CONDITIONS ARE
SATISFIED IN THE CASE OF THE FOREGOING REQUEST, AND NAI HEREBY RATIFIES AND
CONFIRMS ITS OBLIGATION TO INDEMNIFY BNPLC AGAINST ANY LOSSES BNPLC MAY INCUR OR
SUFFER BECAUSE OF ITS COMPLIANCE WITH SUCH REQUEST AS PROVIDED IN SUBPARAGRAPH
5(c) OF THE LEASES.
NAI respectfully requests that BNPLC respond to this notice as soon as
reasonably possible.
Executed this _____ day of ______________, 2000.
NETWORK APPLIANCE, INC.
Name:
-----------------------------
Title:
----------------------------
1.
1
EXHIBIT 10.58
================================================================================
LEASE AGREEMENT
(PHASE V - LAND)
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
NETWORK APPLIANCE, INC.
("NAI")
MARCH 1, 2000
(SUNNYVALE, CALIFORNIA)
================================================================================
2
TABLE OF CONTENTS
Page
----
1. Term....................................................................................... 2
(a) Scheduled Term...................................................................... 2
(b) Intentionally Deleted............................................................... 2
(c) Intentionally Deleted............................................................... 2
(d) Election by NAI to Terminate After Accelerating the Designated Sale Date............ 2
(e) Extension of the Term............................................................... 3
2. Use and Condition of the Property.......................................................... 3
(a) Use................................................................................. 3
(b) Condition of the Property........................................................... 4
(c) Consideration for and Scope of Waiver............................................... 4
3. Rent....................................................................................... 4
(a) Base Rent Generally................................................................. 4
(b) Impact of Collateral Upon Formulas.................................................. 4
(c) Calculation of and Due Dates for Base Rent.......................................... 5
(i) Amount Payable for Base Rent Periods Ending On or Prior to the
Base Rent Commencement Date............................................ 5
(ii) Determination of Payment Due Dates After the Base Rent
Commencement Date, Generally........................................... 5
(iii) Special Adjustments to Base Rent Payment Dates and Periods............. 6
(iv) Base Rent Formula for Periods After the Base Rent Commencement
Date and During Which The Collateral Percentage is 100%................ 6
(v) Base Rent Formula for Periods After the Base Rent Commencement
Date and During Which The Collateral Percentage is Greater Than
Zero and Less Than 100%................................................ 7
(vi) Base Rent Formula for Periods After the Base Rent Commencement
Date and During Which The Collateral Percentage is Zero................ 8
(d) Additional Rent..................................................................... 8
(e) Intentionally Deleted............................................................... 8
(f) Intentionally Deleted............................................................... 8
(g) Intentionally Deleted............................................................... 8
(h) Intentionally Deleted............................................................... 9
(i) No Demand or Setoff................................................................. 9
(j) Default Interest and Order of Application........................................... 9
4. Nature of this Agreement................................................................... 9
i
3
(a) "Net" Lease Generally............................................................... 9
(b) No Termination...................................................................... 9
(c) Tax Reporting....................................................................... 10
(d) Characterization of this Land Lease................................................. 11
5. Payment of Executory Costs and Losses Related to the Property.............................. 11
(a) Impositions......................................................................... 11
(b) Increased Costs; Capital Adequacy Charges........................................... 11
(c) NAI's Payment of Other Losses; General Indemnification.............................. 12
(d) Exceptions and Qualifications to Indemnities........................................ 14
6. Intentionally Deleted...................................................................... 15
7. Intentionally Deleted...................................................................... 15
8. Environmental.............................................................................. 15
(a) Environmental Covenants by NAI...................................................... 15
(b) Right of BNPLC to do Remedial Work Not Performed by NAI............................. 16
(c) Environmental Inspections and Reviews............................................... 16
(d) Communications Regarding Environmental Matters...................................... 16
9. Insurance Required and Condemnation........................................................ 17
(a) Liability Insurance................................................................. 17
(b) Intentionally Deleted............................................................... 17
(c) Failure to Obtain Insurance......................................................... 17
(d) Condemnation........................................................................ 17
(e) Waiver of Subrogation............................................................... 18
10. Application of Insurance and Condemnation Proceeds......................................... 18
(a) Collection and Application of Insurance and Condemnation Proceeds
Generally........................................................................... 18
(b) Advances of Escrowed Proceeds to NAI................................................ 19
(c) Application of Escrowed Proceeds as a Qualified Prepayment.......................... 19
(d) Special Provisions Applicable After an Event of Default............................. 19
(e) NAI's Obligation to Restore......................................................... 19
(f) Takings of All or Substantially All of the Property on or after the
Base Rent Commencement Date......................................................... 20
11. Additional Representations, Warranties and Covenants of NAI Concerning the
Property................................................................................... 20
(a) Compliance with Covenants and Laws.................................................. 20
(b) Operation of the Property........................................................... 20
ii
4
(c) Debts for Construction, Maintenance, Operation or Development....................... 21
(d) Repair, Maintenance, Alterations and Additions...................................... 22
(e) Permitted Encumbrances and Development Documents.................................... 22
(f) Books and Records Concerning the Property........................................... 22
12. Financial Covenants and Other Covenants Incorporated by Reference to Schedule 1............ 23
13. Financial Statements and Other Reports..................................................... 23
(a) Financial Statements; Required Notices; Certificates................................ 23
14. Assignment and Subletting by NAI........................................................... 24
(a) BNPLC's Consent Required............................................................ 24
(b) Standard for BNPLC's Consent to Assignments and Certain Other Matters............... 24
(c) Consent Not a Waiver................................................................ 25
15. Assignment by BNPLC........................................................................ 25
(a) Restrictions on Transfers........................................................... 25
(b) Effect of Permitted Transfer or other Assignment by BNPLC........................... 25
16. BNPLC's Right of Access.................................................................... 25
17. Events of Default.......................................................................... 26
18. Remedies................................................................................... 28
(a) Basic Remedies...................................................................... 28
(b) Notice Required So Long As the Purchase Option and NAI's Initial
Remarketing Rights and Obligations Continue Under the Purchase Agreement............ 29
(c) Enforceability...................................................................... 30
(d) Remedies Cumulative................................................................. 30
19. Default by BNPLC........................................................................... 30
20. Quiet Enjoyment............................................................................ 31
21. Surrender Upon Termination................................................................. 31
22. Holding Over by NAI........................................................................ 31
iii
5
23. Independent Obligations Evidenced by the Other Operative Documents......................... 32
EXHIBITS AND SCHEDULES
Exhibit A Legal Description
Exhibit B Insurance Requirements
Exhibit C LIBOR Period Election Form
Schedule 1 Financial Covenants and Other Requirements
iv
6
LEASE AGREEMENT
(PHASE V - LAND)
This LEASE AGREEMENT (PHASE V - LAND) (this "LAND LEASE"), by and
between BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), and NETWORK
APPLIANCE, INC., a California corporation ("NAI"), is made and dated as of March
1, 2000, the Effective Date. ("EFFECTIVE DATE" and other capitalized terms used
and not otherwise defined in this Land Lease are intended to have the meanings
assigned to them in the Common Definitions and Provisions Agreement (Phase V -
Land) executed by BNPLC and NAI contemporaneously with this Land Lease. By this
reference, the Common Definitions and Provisions Agreement (Phase V - Land) is
incorporated into and made a part of this Land Lease for all purposes.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC is acquiring the Land and any appurtenances thereto from Seller
contemporaneously with the execution of this Land Lease.
In anticipation of BNPLC's acquisition of the Land under the Existing
Contract, BNPLC and NAI have reached agreement as to the terms and conditions
upon which BNPLC is willing to lease the Land to NAI, and by this Land Lease
BNPLC and NAI desire to evidence such agreement.
GRANTING CLAUSES
BNPLC does hereby LEASE, DEMISE and LET unto NAI for the term
hereinafter set forth all right, title and interest of BNPLC, now owned or
hereafter acquired, in and to:
(1) the Land;
(2) all easements and other rights appurtenant to the Land, whether
now owned or hereafter acquired by BNPLC; and
(3) (A) any land lying within the right-of-way of any street, open
or proposed, adjoining the Land, (B) any sidewalks and alleys adjacent
to the Land and (C) any strips and gores between the Land and any
abutting land not owned or leased by BNPLC.
BNPLC's interest in all property described in clauses (1) through (3) above are
hereinafter referred to collectively as the "REAL PROPERTY". The Real Property
does not include any Improvements (now existing or those to be constructed as
provided in the Other Lease Agreement and the Construction Management Agreement)
or BNPLC's rights appurtenant to the Improvements, it being understood that the
Other Lease Agreement constitutes a separate lease of the Improvements and the
appurtenances thereto, and only the Improvements and the appurtenances thereto,
from BNPLC to NAI.
To the extent, but only to the extent, that assignable rights or
interests in, to or under the following have been or will be acquired by BNPLC
under the Existing Contract or acquired by BNPLC pursuant to Paragraph 7 below,
BNPLC also hereby grants and assigns to NAI for the term of this Land
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Lease the right to use and enjoy (and, in the case of contract rights, to
enforce) such rights or interests of BNPLC:
(a) the benefits, if any, conferred upon the owner of the Real
Property by the Permitted Encumbrances (including the right to receive
rents under and to otherwise enforce the Premises Lease) and Development
Documents; and
(b) any permits, licenses, franchises, certificates, and other
rights and privileges against third parties related to the Real
Property.
Such rights and interests of BNPLC, whether now existing or hereafter arising,
are hereinafter collectively called the "PERSONAL PROPERTY". The Real Property
and the Personal Property are hereinafter sometimes collectively called the
"PROPERTY."
However, the leasehold estate conveyed hereby and NAI's rights hereunder
are expressly made subject and subordinate to the terms and conditions of this
Land Lease, to the Premises Lease and all other Permitted Encumbrances, and to
any other claims or encumbrances not constituting Liens Removable by BNPLC.
GENERAL TERMS AND CONDITIONS
The Property is leased by BNPLC to NAI and is accepted and is to be used
and possessed by NAI upon and subject to the following terms and conditions:
1. TERM.
(a) Scheduled Term. The term of this Land Lease (the "TERM") shall
commence on and include the Effective Date, and end on the first Business Day of
March, 2005, unless sooner terminated as expressly herein provided.
(b) Intentionally Deleted.
(c) Intentionally Deleted.
(d) Election by NAI to Terminate After Accelerating the Designated
Sale Date. NAI shall be entitled to accelerate the Designated Sale Date (and
thus accelerate the purchase of BNPLC's interest in the Property by NAI or by an
Applicable Purchaser pursuant to the Purchase Agreement) by sending a notice to
BNPLC as provided in clause (2) of the definition of "Designated Sale Date" in
the Common Definitions and Provisions Agreement (Phase V - Land). In the event,
because of NAI's election to so accelerate the Designated Sale Date or for any
other reason, the Designated Sale Date occurs before the end of the scheduled
Term, NAI may terminate this Land Lease on or after the Designated Sale Date;
provided, however, as a condition to any such termination by NAI, NAI must have
done the following prior to the termination:
(i) purchased or caused an Applicable Purchaser to purchase the
Property pursuant to the Purchase Agreement and satisfied all of NAI's
other obligations under the Purchase Agreement;
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(ii) (paid to BNPLC all Base Rent and all other Rent due on or
before or accrued through the Designated Sale Date; and
(iii) paid any Breakage Costs caused by BNPLC's sale of the
Property pursuant to the Purchase Agreement.
(e) Extension of the Term. The Term may be extended at the option
of NAI for two successive periods of five years each; provided, however, that
prior to any such extension the following conditions must have been satisfied:
(A) at least ninety days prior to the commencement of any such extension, BNPLC
and NAI must have agreed in writing upon, and received the consent and approval
of BNPLC's Parent and all other Participants to (1) a corresponding extension
not only to the date for the expiration of the Term specified above in this
Section, but also to the date specified in clause (1) of the definition of
Designated Sale Date in the Common Definitions and Provisions Agreement (Phase V
- - Land), and (2) an adjustment to the Rent that NAI will be required to pay for
the extension, it being expected that the Rent for the extension may be
different than the Rent required for the original Term, and it being understood
that the Rent for any extension must in all events be satisfactory to both BNPLC
and NAI, each in its sole and absolute discretion; (B) no Event of Default shall
have occurred and be continuing at the time of NAI's exercise of its option to
extend; and (C) immediately prior to any such extension, this Land Lease must
remain in effect. With respect to the condition that BNPLC and NAI must have
agreed upon the Rent required for any extension of the Term, neither NAI nor
BNPLC is willing to submit itself to a risk of liability or loss of rights
hereunder for being judged unreasonable. Accordingly, both NAI and BNPLC hereby
disclaim any obligation express or implied to be reasonable in negotiating the
Rent for any such extension. Subject to the changes to the Rent payable during
any extension of the Term as provided in this Paragraph, if NAI exercises its
option to extend the Term as provided in this Paragraph, this Land Lease shall
continue in full force and effect, and the leasehold estate hereby granted to
NAI shall continue without interruption and without any loss of priority over
other interests in or claims against the Property that may be created or arise
after the date hereof and before the extension.
2. USE AND CONDITION OF THE PROPERTY.
(a) Use. Subject to the Permitted Encumbrances, the Development
Documents and the terms hereof, NAI may use and occupy the Property during the
Term, but only for the following purposes.
(i) constructing, maintaining and using Improvements on the Land
for purposes expressly permitted by and described in Paragraph 2(a) of
the Other Lease Agreement; and
(ii) other lawful purposes approved in advance and in writing by
BNPLC, which approval will not be unreasonably withheld after completion
of the Construction Project (but NAI acknowledges that BNPLC's
withholding of such approval shall be reasonable if BNPLC determines in
good faith that (1) giving the approval may materially increase BNPLC's
risk of liability for any existing or future environmental problem, or
(2) giving the approval is likely to substantially increase BNPLC's
administrative burden of complying with or monitoring NAI's compliance
with the requirements of this Land Lease or other Operative Documents).
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Nothing in this subparagraph will prevent a tenant under a Premises
Lease executed by NAI, as Landlord, prior to or concurrently with the
Effective Date, from using the space covered thereby for purposes
expressly authorized by the terms and conditions of such Premises Lease.
(b) Condition of the Property. NAI ACKNOWLEDGES THAT IT HAS
CAREFULLY AND FULLY INSPECTED THE PROPERTY AND ACCEPTS THE PROPERTY IN ITS
PRESENT STATE, AS IS, AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE CONDITION OF SUCH PROPERTY OR AS TO THE USE WHICH MAY BE MADE
THEREOF. NAI ALSO ACCEPTS THE PROPERTY WITHOUT ANY COVENANT, REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, BY BNPLC OR ITS AFFILIATES REGARDING THE TITLE
THERETO OR THE RIGHTS OF ANY PARTIES IN POSSESSION OF ANY PART THEREOF, EXCEPT
AS EXPRESSLY SET FORTH IN PARAGRAPH 20. BNPLC SHALL NOT BE RESPONSIBLE FOR ANY
LATENT OR OTHER DEFECT OR CHANGE OF CONDITION IN THE PROPERTY OR FOR ANY
VIOLATIONS WITH RESPECT THERETO OF APPLICABLE LAWS. FURTHER, THOUGH NAI MAY
OBTAIN FROM THIRD PARTIES ANY FACILITIES OR SERVICES TO WHICH NAI IS ENTITLED BY
REASON OF THE ASSIGNMENT AND LEASE OF PERSONAL PROPERTY SET FORTH ON PAGE 2 OF
THIS LAND LEASE, BNPLC SHALL NOT BE REQUIRED TO FURNISH TO NAI ANY FACILITIES OR
SERVICES OF ANY KIND, INCLUDING WATER, STEAM, HEAT, GAS, AIR CONDITIONING,
ELECTRICITY, LIGHT OR POWER.
(c) Consideration for and Scope of Waiver. The provisions of
subparagraph 2(b) above have been negotiated by BNPLC and NAI after due
consideration for the Rent payable hereunder and are intended to be a complete
exclusion and negation of any representations or warranties of BNPLC or its
Affiliates, express or implied, with respect to the Property that may arise
pursuant to any law now or hereafter in effect or otherwise, except as expressly
set forth herein.
However, such exclusion of representations and warranties by BNPLC is
not intended to impair any representations or warranties made by other parties,
the benefit of which may pass to NAI during the Term because of the definition
of Personal Property and Property above.
3. RENT.
(a) Base Rent Generally. On each Base Rent Date through the end of
the Term, NAI shall pay BNPLC rent ("BASE RENT"). Each payment of Base Rent must
be received by BNPLC no later than 10:00 a.m. (Pacific time) on the date it
becomes due; if received after 10:00 a.m. (Pacific time) it will be considered
for purposes of this Land Lease as received on the next following Business Day.
At least five days prior to any Base Rent Date upon which an installment of Base
Rent shall become due, BNPLC shall notify NAI in writing of the amount of each
installment, calculated as provided below. Any failure by BNPLC to so notify
NAI, however, shall not constitute a waiver of BNPLC's right to payment, but
absent such notice NAI shall not be in default hereunder for any underpayment
resulting therefrom if NAI, in good faith, reasonably estimates the payment
required, makes a timely payment of the amount so estimated and corrects any
underpayment within three Business Days after being notified by BNPLC of the
underpayment.
(b) Impact of Collateral Upon Formulas . To ease the administrative
burden of this Land Lease and the Pledge Agreement, the formulas for calculating
Base Rent set out below in subparagraph 3(c) reflect a reduction in the Base
Rent equal to the interest that would accrue on any Collateral provided in
accordance with the requirements of the Pledge Agreement from time to time if
the Accounts (as defined in the Pledge Agreement) bore interest at the Effective
Rate. BNPLC has agreed to such reduction to provide NAI with the economic
equivalent of interest on such Collateral, and
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in return NAI has agreed to the provisions of the Pledge Agreement that excuse
the actual payment of interest on the Accounts. By incorporating such reduction
of Base Rent into the formulas below, and by providing for noninterest bearing
Accounts in the Pledge Agreement, the parties will avoid an unnecessary and
cumbersome periodic exchange of equal payments. It is not, however, the intent
of BNPLC or NAI to understate Base Rent or interest for financial reporting
purposes. Accordingly, for purposes of any financial reports that this Land
Lease requires of NAI from time to time, NAI may report Base Rent as if there
had been no such reduction and as if the Collateral from time to time provided
in accordance with the requirements of the Pledge Agreement had been maintained
in Accounts bearing interest at the Effective Rate.
(c) Calculation of and Due Dates for Base Rent. Payments of Base
Rent shall be calculated and become due as follows:
(i) Amount Payable for Base Rent Periods Ending On or Prior to the
Base Rent Commencement Date. The Base Rent for any Base Rent Period that
ends prior to the Base Rent Commencement Date shall be payable on the
Base Rent Date upon which such period ends and shall equal:
- Stipulated Loss Value (Building 4/Land) on the first day of
such Base Rent Period, times
- the sum of (a) the Effective Rate with respect to such Base
Rent Period, plus (b) the Unsecured Spread for the period
from and including the first day of such Base Rent Period,
times
- the number of days in the such Base Rent Period, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that Stipulated Loss
Value (Building 4/Land) on the first day of a hypothetical Base Rent
Period that ends prior to the Base Rent Commencement Date is $5,000,000;
that the Effective Rate for the Base Rent Period is 6%; that the
Unsecured Spread is one hundred fifty basis points (150/100 of 1%) upon
the commencement of such Base Rent Period; and that such Base Rent
Period contains exactly thirty days. Under such assumptions, the Base
Rent for the hypothetical Base Rent Period will equal:
$5,000,000 x (6% + 1.50%) x 30/360 = $31,250
Base Rent for any Base Rent Period ending on the Base Rent
Commencement Date will also be calculated pursuant to the formula set
out in this subparagraph and will be payable on the Base Rent
Commencement Date, if (consistent with the parties expectations as of
the Effective Date) the Base Rent Commencement Date (Building 4) occurs
prior to the Base Rent Commencement Date (Building 5).
(ii) Determination of Payment Due Dates After the Base Rent
Commencement Date, Generally. For all Base Rent Periods subject to a
LIBOR Period Election of one month or three months, Base Rent shall be
due in one installment on the Base Rent Date upon which the Base
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Rent Period ends. For Base Rent Periods subject to a LIBOR Period
Election of six months, Base Rent shall be payable in two installments,
with the first installment becoming due on the Base Rent Date that
occurs on the first Business Day of the third calendar month following
the commencement of such Base Rent Period, and with the second
installment becoming due on the Base Rent Date upon which the Base Rent
Period ends.
(iii) Special Adjustments to Base Rent Payment Dates and Periods.
Notwithstanding the foregoing:
a) Any Base Rent Period that begins before, and does not
otherwise end before, a Failed Collateral Test Date shall end
upon but not include such Failed Collateral Test Date, and such
Failed Collateral Test Date shall constitute a Base Rent Date,
upon which NAI must pay all accrued, unpaid Base Rent for the
Base Rent Period just ended.
b) Consistent with clause (3) of the definition of LIBOR
Period Election in the Common Definitions and Provisions
Agreement (Phase V - Land), each successive Base Rent Date after
any such Failed Collateral Test Date shall be the first Business
Day of the first calendar month following the calendar month
which includes the preceding Base Rent Date, so long as any
Mandatory Collateral Period shall continue.
c) In addition to Base Rent due on a Failed Collateral
Test Date, NAI must pay the Breakage Costs, if any, resulting
from any early ending of a Base Rent Period on the Failed
Collateral Test Date pursuant to the preceding clause
3.(c)(iii)a).
d) If NAI or any Applicable Purchaser purchases BNPLC's
interest in the Property pursuant to the Purchase Agreement, any
accrued unpaid Base Rent and all outstanding Additional Rent
shall be due on the date of purchase in addition to the purchase
price and other sums due BNPLC under the Purchase Agreement.
(iv) Base Rent Formula for Periods After the Base Rent Commencement
Date and During Which The Collateral Percentage is 100%. Each
installment of Base Rent payable for any Base Rent Period that commences
on or after the Base Rent Commencement Date and during which the
Collateral Percentage is one hundred percent (100%) shall equal:
- Stipulated Loss Value on the first day of such Base Rent
Period, times
- the Secured Spread for the period from and including the
preceding Base Rent Date to but not including the Base Rent
Date upon which the installment is due, times
- the number of days in the period from and including the
preceding Base Rent Date to but not including the Base Rent
Date upon which the installment is due, divided by
- three hundred sixty.
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Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is one hundred percent
(100%); that prior to the first day of such Base Rent Period Qualified
Prepayments have been received by BNPLC, leaving a Stipulated Loss Value
of $20,000,000; that the Secured Spread is thirty basis points (30/100
of 1%); and that such Base Rent Period contains exactly thirty days.
Under such assumptions, the Base Rent for the hypothetical Base Rent
Period will equal:
$20,000,000 x .30% x 30/360 = $5,000
(v) Base Rent Formula for Periods After the Base Rent Commencement
Date and During Which The Collateral Percentage is Greater Than Zero and
Less Than 100%. Each installment of Base Rent payable for any Base Rent
Period that commences on or after the Base Rent Commencement Date and
during which the Collateral Percentage is greater than zero and less
than one hundred percent (100%) shall equal:
- Stipulated Loss Value on the first day of such Base Rent
Period, times
- the sum of:
(A) the product of:
(1) the Collateral Percentage for such Base
Rent Period, times
(2) the Secured Spread for the period from
and including the preceding Base Rent
Date to but not including the Base Rent
Date upon which the installment is due,
plus
(B) the product of:
(1) one minus the Collateral Percentage for
such Base Rent Period, times
(2) the sum of (a) the Effective Rate with
respect to such Base Rent Period, plus
(b) the Unsecured Spread for the period
from and including the preceding Base
Rent Date to but not including the Base
Rent Date upon which the installment is
due, times
- the number of days in the period from and including the
preceding Base Rent Date to but not including the Base Rent
Date upon which the installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is forty percent (40%);
that prior to the first day of such Base Rent Period Qualified
Prepayments have been received by BNPLC, leaving a Stipulated Loss Value
of $20,000,000; that the Effective Rate for the Base Rent Period is 6%;
that the Secured Spread is
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thirty basis points (30/100 of 1%); that upon the commencement of such
Base Rent Period the Unsecured Spread is one hundred fifty basis points
(150/100 of 1%); and that such Base Rent Period contains exactly thirty
days. Under such assumptions, the Base Rent for the hypothetical Base
Rent Period will equal:
$20,000,000 x {(40% x .30%) + ([1 - 40%] x [6% + 1.50%])} x 30/360 = $77,000
(vi) Base Rent Formula for Periods After the Base Rent Commencement
Date and During Which The Collateral Percentage is Zero. Each
installment of Base Rent payable for any Base Rent Period that commences
on or after the Base Rent Commencement Date and during which the
Collateral Percentage is zero shall equal:
- Stipulated Loss Value on the first day of such Base Rent
Period, times
- the sum of (a) the Effective Rate with respect to such Base
Rent Period, plus (b) the Unsecured Spread for the period
from and including the preceding Base Rent Date to but not
including the Base Rent Date upon which the installment is
due, times
- the number of days in the period from and including the
preceding Base Rent Date to but not including the Base Rent
Date upon which the installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is zero percent (0%);
that prior to the first day of such Base Rent Period Qualified
Prepayments have been received by BNPLC, leaving a Stipulated Loss Value
of $20,000,000; that the Effective Rate for the Base Rent Period is 6%;
that the Unsecured Spread is one hundred fifty basis points (150/100 of
1%) upon the commencement of such Base Rent Period; and that such Base
Rent Period contains exactly thirty days. Under such assumptions, the
Base Rent for the hypothetical Base Rent Period will equal:
$20,000,000 x (6% + 1.50%) x 30/360 = $125,000
(d) Additional Rent. All amounts which NAI is required to pay to or
on behalf of BNPLC pursuant to this Land Lease, together with every charge,
premium, interest and cost set forth herein which may be added for nonpayment or
late payment thereof, shall constitute rent (all such amounts, other than Base
Rent, are herein called "ADDITIONAL RENT", and together Base Rent and Additional
Rent are herein sometimes called "RENT").
(e) Intentionally Deleted.
(f) Intentionally Deleted.
(g) Intentionally Deleted.
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(h) Intentionally Deleted.
(i) No Demand or Setoff. Except as expressly provided herein, NAI
shall pay all Rent without notice or demand and without counterclaim, deduction,
setoff or defense.
(j) Default Interest and Order of Application. All Rent shall bear
interest, if not paid when first due, at the Default Rate in effect from time to
time from the date due until paid; provided, that nothing herein contained will
be construed as permitting the charging or collection of interest at a rate
exceeding the maximum rate permitted under Applicable Laws. BNPLC shall be
entitled to apply any amounts paid by or on behalf of NAI against any Rent then
past due in the order the same became due or in such other order as BNPLC may
elect.
4. NATURE OF THIS AGREEMENT.
(a) "Net" Lease Generally. Subject only to the exceptions listed in
subparagraph 5(d) below, it is the intention of BNPLC and NAI that Base Rent and
other payments herein specified shall be absolutely net to BNPLC and that NAI
shall pay all costs, expenses and obligations of every kind relating to the
Property or this Land Lease which may arise or become due, including: (i) any
taxes payable by virtue of BNPLC's receipt of amounts paid to or on behalf of
BNPLC in accordance with Paragraph 5; (ii) any amount for which BNPLC is or
becomes liable with respect to the Permitted Encumbrances or the Development
Documents; and (iii) any costs incurred by BNPLC (including Attorneys' Fees)
because of BNPLC's acquisition or ownership of any interest in the Property or
because of this Land Lease or the transactions contemplated herein.
However, neither this subparagraph 4(a) nor the indemnity in this
subparagraph 5(c)(i) shall be construed to make NAI liable for (I) an allocation
of general overhead or internal administrative expenses of BNPLC or any other
Interested Party or (II) any duplicate payment of the same Loss to both BNPLC
and another Interested Party. (If, for example, BNPLC were required to make a
$10 fine because of a failure of the Property to comply with Applicable Laws,
and a Participant were required by the Participation Agreement to reimburse
BNPLC for 20% of the $10, NAI would not be required by this subparagraph 4(a) or
by subparagraph 5(c)(i) to pay both $10 to BNPLC and $2 to the Participant on
account of the fine.)
(b) No Termination. Except as expressly provided in this Land Lease
itself, this Land Lease shall not terminate, nor shall NAI have any right to
terminate this Land Lease, nor shall NAI be entitled to any abatement of the
Rent, nor shall the obligations of NAI under this Land Lease be excused, for any
reason whatsoever, including any of the following: (i) any damage to or the
destruction of all or any part of the Property from whatever cause, (ii) the
taking of the Property or any portion thereof by eminent domain or otherwise for
any reason, (iii) the prohibition, limitation or restriction of NAI's use or
development of all or any portion of the Property or any interference with such
use by governmental action or otherwise, (iv) any eviction of NAI or of anyone
claiming through or under NAI, (v) any default on the part of BNPLC under this
Land Lease or under any other agreement to which BNPLC and NAI are parties, (vi)
the inadequacy in any way whatsoever of the Property (it being understood that
BNPLC has not made, does not make and will not make any representation express
or implied as to the adequacy thereof), (vii) any latent or other defect in the
Property or any change in the condition thereof or the existence with respect to
the Property of any violations of Applicable Laws, or (viii) any other cause
whether similar or dissimilar to the foregoing. It is the intention of the
parties
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hereto that the obligations of NAI hereunder shall be separate and independent
of the covenants and agreements of BNPLC, that Base Rent and all other sums
payable by NAI hereunder shall continue to be payable in all events and that the
obligations of NAI hereunder shall continue unaffected, unless the requirement
to pay or perform the same shall have been terminated or limited pursuant to an
express provision of this Land Lease. Without limiting the foregoing, NAI waives
to the extent permitted by Applicable Laws, except as otherwise expressly
provided herein, all rights to which NAI may now or hereafter be entitled by law
(including any such rights arising because of any implied "warranty of
suitability" or other warranty under Applicable Laws) (i) to quit, terminate or
surrender this Land Lease or the Property or any part thereof or (ii) to any
abatement, suspension, deferment or reduction of the Rent.
However, nothing in this subparagraph 4(b) shall be construed as a
waiver by NAI of any right NAI may have at law or in equity to the following
remedies, whether because of BNPLC's failure to remove a Lien Removable by BNPLC
or because of any other default by BNPLC under this Land Lease that continues
beyond the period for cure provided in Paragraph 19: (i) the recovery of
monetary damages, (ii) injunctive relief in case of the violation, or attempted
or threatened violation, by BNPLC of any of the express covenants, agreements,
conditions or provisions of this Land Lease which are binding upon BNPLC
(including the confidentiality provisions set forth in subparagraph 16(c)
below), or (iii) a decree compelling performance by BNPLC of any of the express
covenants, agreements, conditions or provisions of this Land Lease which are
binding upon BNPLC.
(c) Tax Reporting. BNPLC and NAI shall report this Land Lease and
the Purchase Agreement for federal income tax purposes as a conditional sale
unless prohibited from doing so by the Internal Revenue Service. If the Internal
Revenue Service shall challenge BNPLC's characterization of this Land Lease and
the Purchase Agreement as a conditional sale for federal income tax reporting
purposes, BNPLC shall notify NAI in writing of such challenge and consider in
good faith any reasonable suggestions by NAI about an appropriate response. In
any event, NAI shall (subject only to the limitations set forth in this
subparagraph) indemnify and hold harmless BNPLC from and against all
liabilities, costs, additional taxes (other than Excluded Taxes) and other
expenses that may arise or become due because of such challenge or because of
any resulting recharacterization required by the Internal Revenue Service,
including any additional taxes that may become due upon any sale under the
Purchase Agreement to the extent (if any) that such additional taxes are not
offset by tax savings resulting from additional depreciation deductions or other
tax benefits to BNPLC of the recharacterization. If BNPLC receives a written
notice of any challenge by the Internal Revenue Service that BNPLC believes will
be covered by this Paragraph, then BNPLC shall promptly furnish a copy of such
notice to NAI. The failure to so provide a copy of the notice to NAI shall not
excuse NAI from its obligations under this Paragraph; provided, that if none of
the officers of NAI and none of the employees of NAI responsible for tax matters
are aware of the challenge described in the notice and such failure by BNPLC
renders unavailable defenses that NAI might otherwise assert, or precludes
actions that NAI might otherwise take, to minimize its obligations hereunder,
then NAI shall be excused from its obligation to indemnify BNPLC against
liabilities, costs, additional taxes and other expenses, if any, which would not
have been incurred but for such failure. For example, if BNPLC fails to provide
NAI with a copy of a notice of a challenge by the Internal Revenue Service
covered by the indemnities set out in this Land Lease and NAI is not otherwise
already aware of such challenge, and if as a result of such failure BNPLC
becomes liable for penalties and interest covered by the indemnities in excess
of the
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penalties and interest that would have accrued if NAI had been promptly provided
with a copy of the notice, then NAI will be excused from any obligation to BNPLC
to pay the excess.
(d) Characterization of this Land Lease. For purposes of
determining the appropriate financial accounting for this Land Lease and for
purposes of determining their respective rights and remedies under state law,
BNPLC and NAI believe and intend that (i) this Land Lease constitutes a true
lease, not a mere financing arrangement, enforceable in accordance with its
express terms, and the preceding subparagraph is not intended to affect the
enforcement of any other provisions of this Land Lease or the Purchase
Agreement, and (ii) the Purchase Agreement shall constitute a separate and
independent contract, enforceable in accordance with the express terms and
conditions set forth therein. In this regard, NAI acknowledges that NAI asked
BNPLC to participate in the transactions evidenced by this Land Lease and the
Purchase Agreement as a landlord and owner of the Property, not as a lender.
Although other transactions might have been used to accomplish similar results,
NAI expects to receive certain material accounting and other advantages through
the use of a lease transaction. Accordingly, and notwithstanding the reporting
for income tax purposes described in the preceding subparagraph, NAI cannot
equitably deny that this Land Lease and the Purchase Agreement should be
construed and enforced in accordance with their respective terms, rather than as
a mortgage or other security device, in any action brought by BNPLC to enforce
this Land Lease or the Purchase Agreement.
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.
(a) Impositions. Subject only to the exceptions listed in
subparagraph 5(d) below, NAI shall pay or cause to be paid prior to delinquency
all ad valorem taxes assessed against the Property and other Impositions. If
requested by BNPLC from time to time, NAI shall furnish BNPLC with receipts
showing payment of all Impositions prior to the applicable delinquency date
therefor.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
Imposition, and pending such contest NAI shall not be deemed in default under
any of the provisions of this Land Lease because of the Imposition if (1) NAI
diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (2) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs,
penalties and interest thereon, promptly after such judgment becomes final;
provided, however, in any event each such contest shall be concluded and the
contested Impositions must be paid by NAI prior to the earlier of (i) the date
that any criminal prosecution is instituted or overtly threatened against BNPLC
or its directors, officers or employees because of the nonpayment thereof or
(ii) the date any writ or order is issued under which any property owned or
leased by BNPLC (including the Property) may be seized or sold or any other
action is taken against BNPLC or against any property owned or leased by BNPLC
because of the nonpayment thereof, or (iii) any Designated Sale Date upon which,
for any reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to the Break Even Price.
(b) Increased Costs; Capital Adequacy Charges. Subject only to the
exceptions listed in subparagraph 5(d) below:
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(i) If after the Effective Date there shall be any increase in the
cost to BNPLC's Parent or any other Participant agreeing to make or
making, funding or maintaining advances to BNPLC in connection with the
Property because of any Banking Rules Change, then NAI shall from time
to time, pay to BNPLC for the account of BNPLC's Parent or such other
Participant, as the case may be, additional amounts sufficient to
compensate BNPLC's Parent or the Participant for such increased cost. An
increase in costs resulting from any imposition or increase of reserve
requirements applicable to Collateral held from time to time by BNPLC's
Parent or other Participants pursuant to the Pledge Agreement would be
an increase covered by the preceding sentence. A certificate as to the
amount of such increased cost, submitted to BNPLC and NAI by BNPLC's
Parent or the other Participant, shall be conclusive and binding upon
NAI, absent clear and demonstrable error.
(ii) BNPLC's Parent or any other Participant may demand additional
payments ("CAPITAL ADEQUACY CHARGES") if BNPLC's Parent or the other
Participant determines that any Banking Rules Change affects the amount
of capital to be maintained by it and that the amount of such capital is
increased by or based upon the existence of advances made or to be made
to BNPLC to permit BNPLC to maintain BNPLC's investment in the Property.
To the extent that BNPLC's Parent or another Participant demands Capital
Adequacy Charges as compensation for the additional capital requirements
reasonably allocable to such investment or advances, NAI shall pay to
BNPLC for the account of BNPLC's Parent or the other Participant, as the
case may be, the amount so demanded. Without limiting the foregoing,
BNPLC and NAI hereby acknowledge and agree that the provisions for
calculating Base Rent set forth herein reflect the assumption that the
Pledge Agreement will cause a zero percent (0%) risk weight to be
assigned to a percentage (equal to the Collateral Percentage) of the
collective investment of BNPLC and the Participants in the Property
pursuant to 12 Code of Federal Regulations, part 225, as from time to
time supplemented or amended, or pursuant to any other similar or
successor statute or regulation applicable to BNPLC and the
Participants. If and so long as such risk weight is increased the
assumed amount of zero percent (0%) because of a Banking Rules Change,
Capital Adequacy Charges may be collected to yield the same rate of
return to BNPLC, BNPLC's Parent and any other Participants (net of their
costs of maintaining required capital) that they would have enjoyed from
this Land Lease absent such increase.
(iii) Any amount required to be paid by NAI under this subparagraph
5(b) shall be due ten days after a demand for such payment is received
by NAI.
(c) NAI's Payment of Other Losses; General Indemnification. Subject
only to the exceptions listed in subparagraph 5(d) below:
(i) All Losses (including Environmental Losses) asserted against or
incurred or suffered by BNPLC or other Interested Parties at any time
and from time to time by reason of, in connection with or arising out of
(A) their ownership or alleged ownership of any interest in the Property
or the Rents, (B) the use and operation of the Property, (C) the
negotiation, administration or enforcement of the Operative Documents,
(D) the making of the Initial Funding Advance, (E) the Premises Lease,
(F) the breach by NAI of this Land Lease or any other document executed
by NAI in connection herewith, (G) any failure of the Property or NAI
itself to comply with Applicable Laws, (H) Permitted Encumbrances, (I)
Hazardous Substance
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Activities, including those occurring prior to Effective Date, (J) any
obligations under the Existing Contract related to the Property that
survive the closing thereunder, or (K) any bodily or personal injury or
death or property damage occurring in or upon or in the vicinity of the
Property through any cause whatsoever, shall be paid by NAI, and NAI
shall indemnify and defend BNPLC and other Interested Parties from and
against all such Losses.
(ii) THE INDEMNITIES AND RELEASES PROVIDED HEREIN FOR THE BENEFIT
OF BNPLC AND OTHER INTERESTED PARTIES, INCLUDING THE INDEMNITY SET FORTH
IN THE PRECEDING SUBPARAGRAPH 5(c)(i), SHALL APPLY EVEN IF AND WHEN THE
SUBJECT MATTERS OF THE INDEMNITIES AND RELEASES ARE CAUSED BY OR ARISE
OUT OF THE NEGLIGENCE OR STRICT LIABILITY OF BNPLC OR ANOTHER INTERESTED
PARTY. FURTHER, SUCH INDEMNITIES AND RELEASES WILL APPLY EVEN IF
INSURANCE OBTAINED BY NAI OR REQUIRED OF NAI BY THIS LAND LEASE OR OTHER
OPERATIVE DOCUMENTS IS NOT ADEQUATE TO COVER LOSSES AGAINST OR FOR WHICH
THE INDEMNITIES AND RELEASES ARE PROVIDED. NAI'S LIABILITY, HOWEVER, FOR
ANY FAILURE TO OBTAIN INSURANCE REQUIRED BY THIS LAND LEASE OR OTHER
OPERATIVE DOCUMENTS WILL NOT BE LIMITED TO LOSSES AGAINST WHICH
INDEMNITIES ARE PROVIDED HEREIN, IT BEING UNDERSTOOD THAT SUCH INSURANCE
IS INTENDED TO DO MORE THAN PROVIDE A SOURCE OF PAYMENT FOR LOSSES
AGAINST WHICH BNPLC AND OTHER INTERESTED PARTIES ARE ENTITLED TO
INDEMNIFICATION BY THIS LAND LEASE.
(iii) Costs and expenses for which NAI shall be responsible
pursuant to this subparagraph will include appraisal fees, filing and
recording fees, inspection fees, survey fees, taxes, brokerage fees and
commissions, abstract fees, title policy fees, Uniform Commercial Code
search fees, escrow fees and Attorneys' Fees incurred by BNPLC with
respect to the Property, whether such costs and expenses are incurred at
the time of execution of this Land Lease or at any time during the Term.
(iv) NAI's obligations under this subparagraph 5(c) shall survive
the termination or expiration of this Land Lease. Any amount to be paid
by NAI under this subparagraph 5(c) shall be due ten days after a demand
for such payment is received by NAI.
(v) If an Interested Party notifies NAI of any claim or proceeding
included in, or any investigation or allegation concerning, Losses for
which NAI is responsible pursuant to this subparagraph 5(c), NAI shall
assume on behalf of the Interested Party and conduct with due diligence
and in good faith the investigation and defense thereof and the response
thereto with counsel selected by NAI, but satisfactory to the Interested
Party; provided, that the Interested Party shall have the right to be
represented by advisory counsel of its own selection and at its own
expense; and provided further, that if any such claim, proceeding,
investigation or allegation involves both NAI and the Interested Party
and the Interested Party shall have reasonably concluded that there are
legal defenses available to it which are inconsistent with or in
addition to those available to NAI, then the Interested Party shall have
the right to select separate counsel to participate in the investigation
and defense of and response to such claim, proceeding,
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investigation or allegation on its own behalf, and NAI shall pay or
reimburse the Interested Party for all Attorney's Fees incurred by the
Interested Party because of the selection of such separate counsel. If
NAI fails to assume promptly (and in any event within fifteen days after
being notified of the applicable claim, proceeding, investigation or
allegation) the defense of the Interested Party, then the Interested
Party may contest (or settle, with the prior consent of NAI, which
consent will not be unreasonably withheld) the claim, proceeding,
investigation or allegation at NAI's expense using counsel selected by
the Interested Party. Moreover, if any such failure by NAI continues for
forty-five days or more after NAI is notified of any such claim,
proceeding, investigation or allegation, the Interested Party may elect
not to contest or continue contesting the same and instead, in
accordance with the written advice of counsel, settle (or pay in full)
all claims related thereto without NAI's consent and without releasing
NAI from any obligations to the Interested Party under this subparagraph
5(c).
(d) Exceptions and Qualifications to Indemnities.
(i) BNPLC acknowledges and agrees that nothing in subparagraph 4(a)
or the preceding subparagraphs of this Paragraph 5 shall be construed to require
NAI to pay or reimburse an Interested Party for (w) any costs or expenses
incurred by BNPLC or any transferee to accomplish any Permitted Transfers
described in clauses (2), (3), (4), (6) or (7) of the definition thereof in the
Common Definitions and Provisions Agreement (Phase V - Land), (x) Excluded
Taxes, (y) Losses incurred or suffered by such Interested Party that are
proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of that Interested Party, or
(z) Losses incurred or suffered by Participants in connection with their
negotiation or execution of the Participation Agreement or Pledge Agreement (or
supplements making them parties thereto) or in connection with any due diligence
they may undertake before entering into the Participation Agreement or Pledge
Agreement. Further, without limiting BNPLC's rights (as provided in other
provisions of this Land Lease and other Operative Documents) to include the
following in the calculation of Stipulated Loss Value or the Break Even Price or
collect Base Rent, a Supplemental Payment and other amounts, the calculation of
which depends upon the Stipulated Loss Value or the Break Even Price, BNPLC
acknowledges and agrees that nothing in subparagraph 4(a) or the preceding
subparagraphs of this Paragraph 5 shall be construed to require NAI to pay or
reimburse an Interested Party for:
a) costs paid by BNPLC with the proceeds of the Initial Funding
Advance as part of the Transaction Expenses; or
b) Construction Advances made under (and as defined in) the
Construction Management Agreement or the Other Lease
Agreement, including costs and expenditures incurred or paid
by or on behalf of BNPLC after any Landlord's Election to
Continue Construction under (and as defined in) the Other
Lease Agreement, to the extent that such costs and
expenditures are considered to be Construction Advances
pursuant to subparagraph 6(e) of the Other Lease Agreement.
Further, if an Interested Party receives a written notice of Losses
that such Interested Party believes are covered by the indemnity in
subparagraph 5(c)(i), then such Interested Party will be expected
to promptly furnish a copy of such notice to NAI. The failure to
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so provide a copy of the notice to NAI shall not excuse NAI from
its obligations under subparagraph 5(c)(i); provided, that if NAI
is unaware of the matters described in the notice and such failure
renders unavailable defenses that NAI might otherwise assert, or
precludes actions that NAI might otherwise take, to minimize its
obligations, then NAI shall be excused from its obligation to
indemnify such Interested Party (and any Affiliate of such
Interested Party) against the Losses, if any, which would not have
been incurred or suffered but for such failure. For example, if
BNPLC fails to provide NAI with a copy of a notice of an obligation
covered by the indemnity set out in subparagraph 5(c)(i) and NAI is
not otherwise already aware of such obligation, and if as a result
of such failure BNPLC becomes liable for penalties and interest
covered by the indemnity in excess of the penalties and interest
that would have accrued if NAI had been promptly provided with a
copy of the notice, then NAI will be excused from any obligation to
BNPLC (or any Affiliate of BNPLC) to pay the excess.
6. INTENTIONALLY DELETED.
7. INTENTIONALLY DELETED.
8. ENVIRONMENTAL.
(a) Environmental Covenants by NAI. NAI covenants that:
(i) NAI shall not conduct or permit others to conduct Hazardous
Substance Activities, except Permitted Hazardous Substance Use and
Remedial Work.
(ii) NAI shall not discharge or permit the discharge of anything on
or from the Property that would require any permit under applicable
Environmental Laws, other than (1) storm water runoff, (2) waste water
discharges through a publicly owned treatment works, (3) discharges that
are a necessary part of any Remedial Work, and (4) other similar
discharges consistent with the definition herein of Permitted Hazardous
Substance Use, in each case in strict compliance with Environmental
Laws.
(iii) Following any discovery that Remedial Work is required by
Environmental Laws or otherwise believed by BNPLC to be reasonably
required, and to the extent not inconsistent with the other provisions
of this Land Lease, NAI shall promptly perform and diligently and
continuously pursue such Remedial Work, in each case in strict
compliance with Environmental Laws.
(iv) If requested by BNPLC in connection with any Remedial Work
required by this subparagraph, NAI shall retain independent
environmental consultants acceptable to BNPLC to evaluate any
significant new information generated during NAI's implementation of the
Remedial Work and to discuss with NAI whether such new information
indicates the need for any additional measures that NAI should take to
protect the health and safety of persons (including employees,
contractors and subcontractors and their employees) or to protect the
environment. NAI shall implement any such additional measures to the
extent required with respect to the Property by Environmental Laws or
otherwise believed by BNPLC to be
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reasonably required and to the extent not inconsistent with the other
provisions of this Land Lease.
(b) Right of BNPLC to do Remedial Work Not Performed by NAI. If
NAI's failure to cure any breach of the covenants set forth in subparagraph 8(a)
continues beyond the Environmental Cure Period (as defined below), BNPLC may, in
addition to any other remedies available to it, conduct all or any part of the
Remedial Work. To the extent that Remedial Work is done by BNPLC pursuant to the
preceding sentence (including any removal of Hazardous Substances), the cost
thereof shall be a demand obligation owing by NAI to BNPLC. As used in this
subparagraph, "ENVIRONMENTAL CURE PERIOD" means the period ending on the earlier
of: (1) one hundred eighty days after NAI is notified of the breach which must
be cured within such period, (2) the date that any writ or order is issued for
the levy or sale of any property owned by BNPLC (including the Property) because
of such breach, (3) the date that any criminal action is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such breach, or (4) any Designated Sale Date upon which, for any reason, NAI
or an Affiliate of NAI or any Applicable Purchaser shall not purchase BNPLC's
interest in the Property pursuant to the Purchase Agreement for a net price to
BNPLC (when taken together with any Supplemental Payment made by NAI pursuant to
Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value.
(c) Environmental Inspections and Reviews. BNPLC reserves the right
to retain environmental consultants to review any report prepared by NAI or to
conduct BNPLC's own investigation to confirm whether NAI is complying with the
requirements of this Paragraph 8. NAI grants to BNPLC and to BNPLC's agents,
employees, consultants and contractors the right to enter upon the Property at
any time to inspect the Property and to perform such tests as BNPLC deems
necessary or appropriate to review or investigate Hazardous Substances in, on,
under or about the Property or any discharge or suspected discharge of Hazardous
Substances into groundwater or surface water from the Property. NAI shall
promptly reimburse BNPLC for the fees of its environmental consultants and the
costs of any such inspections and tests.
(d) Communications Regarding Environmental Matters.
(i) NAI shall immediately advise BNPLC of (1) any discovery of any
event or circumstance which would render any of the representations of NAI
herein or in the Closing Certificate concerning environmental matters materially
inaccurate or misleading if made at the time of such discovery and assuming that
NAI was aware of all relevant facts, (2) any Remedial Work (or change in
Remedial Work) required or undertaken by NAI or its Affiliates in response to
any (A) discovery of any Hazardous Substances on, under or about the Property
other than Permitted Hazardous Substances or (B) any claim for damages resulting
from Hazardous Substance Activities, (3) NAI's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Property
which could cause the Property or any part thereof to be subject to any
ownership, occupancy, transferability or use restrictions under Environmental
Laws, or (4) any investigation or inquiry of any failure or alleged failure by
NAI to comply with Environmental Laws affecting the Property by any governmental
authority responsible for enforcing Environmental Laws. In such event, NAI shall
deliver to BNPLC within thirty days after BNPLC's request, a preliminary written
environmental plan setting forth a general description of the action that NAI
proposes to take with respect thereto, if any, to bring the
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Property into compliance with Environmental Laws or to correct any
breach by NAI of this Paragraph 8, including any proposed Remedial Work,
the estimated cost and time of completion, the name of the contractor
and a copy of the construction contract, if any, and such additional
data, instruments, documents, agreements or other materials or
information as BNPLC may request.
(ii) NAI shall provide BNPLC with copies of all material written
communications with federal, state and local governments, or agencies
relating to the matters listed in the preceding clause (i). NAI shall
also provide BNPLC with copies of any correspondence from third Persons
which threaten litigation over any significant failure or alleged
significant failure of NAI to maintain or operate the Property in
accordance with Environmental Laws.
(iii) Prior to NAI's submission of a Material Environmental
Communication to any governmental or regulatory agency or third party,
NAI shall, to the extent practicable, deliver to BNPLC a draft of the
proposed submission (together with the proposed date of submission), and
in good faith assess and consider any comments of BNPLC regarding the
same. Promptly after BNPLC's request, NAI shall meet with BNPLC to
discuss the submission, shall provide any additional information
requested by BNPLC and shall provide a written explanation to BNPLC
addressing the issues raised by comments (if any) of BNPLC regarding the
submission, including a reasoned analysis supporting any decision by NAI
not to modify the submission in accordance with comments of BNPLC.
9. INSURANCE REQUIRED AND CONDEMNATION.
(a) Liability Insurance. Throughout the Term NAI shall maintain
commercial general liability insurance against claims for bodily and personal
injury, death and property damage occurring in or upon or resulting from any
occurrence in or upon the Property under one or more insurance policies that
satisfy the requirements set forth in Exhibit B. NAI shall deliver and maintain
with BNPLC for each liability insurance policy required by this Land Lease
written confirmation of the policy and the scope of the coverage provided
thereby issued by the applicable insurer or its authorized agent, which
confirmation must also satisfy the requirements set forth in Exhibit B.
(b) Intentionally Deleted.
(c) Failure to Obtain Insurance. If NAI fails to obtain any
insurance or to provide confirmation of any such insurance as required by this
Land Lease, BNPLC shall be entitled (but not required) to obtain the insurance
that NAI has failed to obtain or for which NAI has not provided the required
confirmation and, without limiting BNPLC's other remedies under the
circumstances, BNPLC may require NAI to reimburse BNPLC for the cost of such
insurance and to pay interest thereon computed at the Default Rate from the date
such cost was paid by BNPLC until the date of reimbursement by NAI (provided,
however, that any such insurance cost paid by BNPLC prior to the Base Rent
Commencement Date will be charged against the Construction Allowance under, and
as defined in, the Construction Management Agreement as if it had been paid by
NAI).
(d) Condemnation. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Property or any
portion thereof, or any other similar governmental or quasi-governmental
proceedings arising out of injury or damage to the Property or any
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portion thereof, each party shall notify the other (provided, however, BNPLC
shall have no liability for its failure to provide such notice) of the pendency
of such proceedings. NAI shall, at its expense, diligently prosecute any such
proceedings and shall consult with BNPLC, its attorneys and experts and
cooperate with them as requested in the carrying on or defense of any such
proceedings. All proceeds of condemnation awards or proceeds of sale in lieu of
condemnation with respect to the Property and all judgments, decrees and awards
for injury or damage to the Property shall be paid to BNPLC as Escrowed
Proceeds, and all such proceeds will be applied as provided in Paragraph 10.
BNPLC is hereby authorized, in the name of NAI, at any time when an Event of
Default shall have occurred and be continuing, or otherwise with NAI's prior
consent, to execute and deliver valid acquittances for, and to appeal from, any
such judgment, decree or award concerning condemnation of any of the Property.
BNPLC shall not be in any event or circumstances liable or responsible for
failure to collect, or to exercise diligence in the collection of, any such
proceeds, judgments, decrees or awards.
(e) Waiver of Subrogation. NAI, for itself and for any Person
claiming through it (including any insurance company claiming by way of
subrogation), waives any and every claim which arises or may arise in its favor
against BNPLC or any other Interested Party and the officers, directors, and
employees of the Interested Parties for any and all Losses, to the extent that
NAI is compensated by insurance or would be compensated by the insurance
policies contemplated in this Land Lease, but for any deductible or self-insured
retention maintained under such insurance or but for a failure of NAI to
maintain the insurance as required by this Land Lease. NAI agrees to have such
insurance policies properly endorsed so as to make them valid notwithstanding
this waiver, if such endorsement is required to prevent a loss of insurance.
10. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.
(a) Collection and Application of Insurance and Condemnation
Proceeds Generally. This Paragraph 10 shall govern the application of proceeds
received by BNPLC or NAI during the Term from any third party (1) as
compensation for any restriction placed upon the use or development of the
Property or for the condemnation of the Property or any portion thereof, or (2)
because of any judgment, decree or award for injury or damage to the Property
(e.g.,damage resulting from a third party's release of Hazardous Materials onto
the Property); excluding, however, any funds paid to BNPLC by BNPLC's Parent, by
an Affiliate of BNPLC or by any Participant that is made to compensate BNPLC for
any Losses BNPLC may suffer or incur in connection with this Land Lease or the
Property. NAI will promptly pay over to BNPLC any insurance, condemnation or
other proceeds covered by this Paragraph 10 which NAI may receive from any
insurer, condemning authority or other third party. All proceeds covered by this
Paragraph 10, including those received by BNPLC from NAI or third parties, shall
be applied as follows:
(i) First, proceeds covered by this Paragraph 10 will be used to
reimburse BNPLC for any costs and expenses, including Attorneys' Fees,
that BNPLC incurred to collect the proceeds.
(ii) Second, the proceeds remaining after such reimbursement to
BNPLC (hereinafter, the "REMAINING PROCEEDS") will be applied, as
hereinafter more particularly provided, either as a Qualified Prepayment
or to reimburse NAI or BNPLC for the actual out-of-pocket costs of
repairing or restoring the Property. Until, however, any Remaining
Proceeds received by BNPLC are applied by BNPLC as a Qualified
Prepayment or applied by BNPLC to reimburse costs of
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repairs to or restoration of the Property pursuant to this Paragraph 10,
BNPLC shall hold and maintain such Remaining Proceeds as Escrowed
Proceeds in an interest bearing account, and all interest earned on such
account shall be added to and made a part of such Escrowed Proceeds.
(b) Advances of Escrowed Proceeds to NAI. Except as otherwise
provided below in this Paragraph 10, BNPLC shall advance all Remaining Proceeds
held by it as Escrowed Proceeds to reimburse NAI for the actual out-of-pocket
cost to NAI of repairing or restoring the Property in accordance with the
requirements of this Land Lease and the other Operative Documents as the
applicable repair or restoration progresses and upon compliance by NAI with such
terms, conditions and requirements as may be reasonably imposed by BNPLC. In no
event, however, shall BNPLC be required to pay Escrowed Proceeds to NAI in
excess of the actual out-of-pocket cost to NAI of the applicable repair or
restoration, as evidenced by invoices or other documentation satisfactory to
BNPLC, it being understood that BNPLC may retain and apply any such excess as a
Qualified Prepayment.
(c) Application of Escrowed Proceeds as a Qualified Prepayment.
Provided no Event of Default shall have occurred and be continuing, BNPLC shall
apply any Remaining Proceeds paid to it (or other amounts available for
application as a Qualified Prepayment) as a Qualified Prepayment on any date
that BNPLC is directed to do so by a notice from NAI; however, if such a notice
from NAI specifies an effective date for a Qualified Prepayment that is less
than five Business Days after BNPLC's actual receipt of the notice, BNPLC may
postpone the date of the Qualified Prepayment to any date not later than five
Business Days after BNPLC's receipt of the notice. In any event, except when
BNPLC is required by the preceding sentence to apply Remaining Proceeds or other
amounts as a Qualified Prepayment on a Base Rent Date, BNPLC may deduct Breakage
Costs incurred in connection with any Qualified Prepayment from the Remaining
Proceeds or other amounts available for application as the Qualified Prepayment,
and NAI will reimburse BNPLC upon request for any such Breakage Costs that BNPLC
incurs but does not deduct.
(d) Special Provisions Applicable After an Event of Default.
Notwithstanding the foregoing, when any Event of Default shall have occurred and
be continuing, BNPLC shall be entitled to receive and collect all insurance,
condemnation or other proceeds governed by this Paragraph 10 and to apply all
Remaining Proceeds, when and to the extent deemed appropriate by BNPLC in its
sole discretion, either (A) to the reimbursement of NAI or BNPLC for the
out-of-pocket cost of repairing or restoring the Property, or (B) as Qualified
Prepayments.
(e) NAI's Obligation to Restore. Regardless of the adequacy of any
Remaining Proceeds available to NAI hereunder, and notwithstanding other
provisions of this Land Lease to the contrary, if the Property is damaged by
fire or other casualty or less than all or substantially all of the Property is
taken by condemnation, NAI must:
A) increase the value of the Property or the remainder thereof by
restoring the same (in a manner consistent with the requirements and
limitations imposed by this Land Lease and the other Operative Documents
or otherwise acceptable to BNPLC), or decrease Stipulated Loss Value by
tendering a payment to BNPLC for application as a Qualified Prepayment,
as necessary to cause Current AS IS Market Value to be not less than
sixty percent (60%) of Stipulated Loss Value; and
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B) restore the Property or the remainder thereof to a reasonably
safe and sightly condition.
(f) Takings of All or Substantially All of the Property on or after
the Base Rent Commencement Date. In the event of any taking of all or
substantially all of the Property on or after the Base Rent Commencement Date,
BNPLC shall be entitled to apply all Remaining Proceeds as a Qualified
Prepayment. In addition, if Stipulated Loss Value immediately prior to any such
taking exceeds the sum of the Remaining Proceeds resulting from such
condemnation, then BNPLC shall be entitled to recover the excess from NAI upon
demand as an additional Qualified Prepayment, whereupon this Land Lease shall
terminate. Any taking of so much of the Real Property as, in BNPLC's reasonable
good faith judgment, makes it impracticable to restore or improve the remainder
thereof as required by part (2) of the preceding subparagraph shall be
considered a taking of substantially all the Property for purposes of this
Paragraph 10.
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI
CONCERNING THE PROPERTY. NAI represents, warrants and covenants as
follows:
(a) Compliance with Covenants and Laws. The use of the Property
permitted by this Land Lease complies, or will comply after NAI obtains
available permits as the tenant under this Land Lease, in all material respects
with all Applicable Laws. NAI has obtained or will promptly obtain all utility,
building, health and operating permits as may be required by any governmental
authority or municipality having jurisdiction over the Property for any
construction upon or use of the Property permitted by this Land Lease.
(b) Operation of the Property. During the Term, NAI shall operate
the Property in a good and workmanlike manner and substantially in compliance
with all Applicable Laws and will pay or cause to be paid all fees or charges of
any kind in connection therewith. (If NAI does not promptly correct any failure
of the Property to comply with Applicable Laws that is the subject of a written
notice given to NAI or BNPLC by any governmental authority, then for purposes of
the preceding sentence, NAI shall be considered not to have maintained the
Property "substantially in accordance with Applicable Laws" whether or not the
noncompliance would be substantial in the absence of the notice.) During the
Term, NAI shall not use or occupy, or allow the use or occupancy of, the
Property in any manner which violates any Applicable Law or which constitutes a
public or private nuisance or which makes void, voidable or cancelable any
insurance then in force with respect thereto. During the Term, to the extent
that any of the following would, individually or in the aggregate, increase the
likelihood of a CMA Termination Event under (and as defined in) the Construction
Management Agreement or materially and adversely affect the value of the
Property or NAI's use, occupancy or operations on the Property, NAI shall not,
without BNPLC's prior consent: (i) initiate or permit any zoning
reclassification of the Property; (ii) seek any variance under existing zoning
ordinances applicable to the Property; (iii) use or permit the use of the
Property in a manner that would result in such use becoming a nonconforming use
under applicable zoning ordinances or similar laws, rules or regulations; (iv)
execute or file any subdivision plat affecting the Property; or (v) consent to
the annexation of the Property to any municipality. If (A) a change in the
zoning or other Applicable Laws affecting the permitted use or development of
the Property shall occur after the Base Rent Commencement Date that reduces the
value of the Property, or (B) conditions or circumstances on or about the
Property are discovered after the Base Rent Commencement Date (such as the
presence of an endangered species) which substantially
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impede development and thereby reduce the value of the Property, and if after
any such reduction under clause (A) or (B) preceding the Current AS IS Market
Value of the Property is less than sixty percent (60%) of Stipulated Loss Value,
then NAI shall pay BNPLC upon request the amount by which Current AS IS Market
Value is less than sixty percent (60%) of Stipulated Loss Value, for application
as a Qualified Prepayment. During the Term, NAI shall not cause or permit any
drilling or exploration for, or extraction, removal or production of, minerals
from the surface or subsurface of the Property, and NAI shall not do any act
whereby the market value of the Property may reasonably be expected to be
materially lessened. During the Term, if NAI receives a written notice or claim
from any federal, state or other governmental entity that the Property is not in
compliance in any material respect with any Applicable Law, or that any action
may be taken against the owner of the Property because the Property does not
comply with Applicable Law, NAI shall promptly furnish a copy of such notice or
claim to BNPLC.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity and applicability of any Applicable Law with
respect to the Property, and pending such contest NAI shall not be deemed in
default hereunder because of the violation of such Applicable Law, if NAI
diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and if NAI promptly causes the Property to comply with
any such Applicable Law upon a final determination by a court of competent
jurisdiction that the same is valid and applicable to the Property; provided,
however, in any event such contest shall be concluded and the violation of such
Applicable Law must be corrected by NAI and any claims asserted against BNPLC or
the Property because of such violation must be paid by NAI, all prior to the
earlier of (i) the date that any criminal prosecution is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such violation, (ii) the date that any action is taken by any governmental
authority against BNPLC or any property owned by BNPLC (including the Property)
because of such violation, or (iii) a Designated Sale Date upon which, for any
reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to the Break Even Price.
(c) Debts for Construction, Maintenance, Operation or Development.
NAI shall cause all debts and liabilities incurred in the construction,
maintenance, operation or development of the Property, including all debts and
liabilities for labor, material and equipment and all debts and charges for
utilities servicing the Property, to be promptly paid; provided, that nothing in
this subparagraph will be construed to require NAI to remove Liens Removable by
BNPLC.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
mechanic's or materialmen's lien and pending such contest NAI shall not be
deemed in default under this subparagraph because of the contested lien if (1)
within sixty days after being asked to do so by BNPLC, NAI bonds over to BNPLC's
reasonable satisfaction all such contested liens against the Property alleged to
secure an amount in excess of $500,000 (individually or in the aggregate), (2)
NAI diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (3) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs and
interest thereon, promptly after such judgment becomes final; provided, however,
that in any event each such contest shall be
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concluded and the lien, interest and costs must be paid by NAI prior to the
earlier of (i) the date that any criminal prosecution is instituted or overtly
threatened against BNPLC or its directors, officers or employees because of the
nonpayment thereof, (ii) the date that any writ or order is issued under which
the Property or any other property in which BNPLC has an interest may be seized
or sold or any other action is taken against BNPLC or any property in which
BNPLC has an interest because of the nonpayment thereof, or (iii) a Designated
Sale Date upon which, for any reason, NAI or an Affiliate of NAI or any
Applicable Purchaser shall not purchase BNPLC's interest in the Property
pursuant to the Purchase Agreement for a price to BNPLC (when taken together
with any additional payments made by NAI pursuant to Paragraph 1(A)(2) of the
Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal
to the Break Even Price.
(d) Repair, Maintenance, Alterations and Additions. NAI shall keep
the Property in good order, operating condition and appearance and shall cause
all necessary repairs, renewals and replacements to be promptly made. NAI will
not allow any of the Property to be materially misused, abused or wasted. NAI
shall not, without the prior consent of BNPLC, make material new Improvements or
alter Improvements in any material respect , except as part of the work
performed in accordance with the Construction Management Agreement. Without
limiting the foregoing, NAI will notify BNPLC before making any significant
alterations to the Improvements after the completion of the Construction
Project. Nothing in this subparagraph, however, is intended to limit NAI's
rights and obligations under other express provisions of the Other Lease
Agreement and the Construction Management Agreement with respect to the
Construction Project.
(e) Permitted Encumbrances and Development Documents. NAI shall
during the Term comply with and will cause to be performed all of the covenants,
agreements and obligations imposed upon the owner of any interest in the
Property by the Permitted Encumbrances (including the Premises Lease) or the
Development Documents. Without limiting the foregoing, NAI shall cause all
amounts to be paid when due, the payment of which is secured by any Lien against
the Property created by the Permitted Encumbrances. Without the prior consent of
BNPLC, NAI shall not enter into, initiate, approve or consent to any
modification of any Permitted Encumbrance or Development Document that would
create or expand or purport to create or expand obligations or restrictions
which would encumber BNPLC's interest in the Property. (Whether BNPLC must give
any such consent requested by NAI during the Term of this Land Lease shall be
governed by subparagraph 3(A) of the Closing Certificate and Agreement.)
(f) Books and Records Concerning the Property. NAI shall keep books
and records that are accurate and complete in all material respects for the
Property and, subject to Paragraph 16(c), will permit all such books and records
to be inspected and copied by BNPLC. This subparagraph shall not be construed as
requiring NAI to regularly maintain separate books and records relating
exclusively to the Property; provided, however, that upon request, NAI shall
construct or abstract from its regularly maintained books and records
information required by this subparagraph relating to the Property.
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12. FINANCIAL COVENANTS AND OTHER COVENANTS INCORPORATED BY REFERENCE TO
SCHEDULE 1. Throughout the Term of this Land Lease, NAI shall comply with the
requirements of Schedule 1 attached hereto.
13. FINANCIAL STATEMENTS AND OTHER REPORTS.
(a) Financial Statements; Required Notices; Certificates.
Throughout the Term of this Land Lease, NAI shall deliver to BNPLC and to each
Participant:
(i) as soon as available and in any event within one hundred twenty
days after the end of each fiscal year of NAI, a consolidated balance
sheet of NAI and its Consolidated Subsidiaries as of the end of such
fiscal year and a consolidated income statement and statement of cash
flows of NAI and its Consolidated Subsidiaries for such fiscal year, all
in reasonable detail and all prepared in accordance with GAAP and
accompanied by a report and opinion of accountants of national standing
selected by NAI, which report and opinion shall be prepared in
accordance with generally accepted auditing standards and shall not be
subject to any qualifications or exceptions as to the scope of the audit
nor to any qualification or exception which BNPLC determines, in BNPLC's
reasonable discretion, is unacceptable;
(ii) as soon as available and in any event within sixty days after
the end of each of the first three quarters of each fiscal year of NAI,
the consolidated balance sheet of NAI and its Consolidated Subsidiaries
as of the end of such quarter and the consolidated income statement and
the consolidated statement of cash flows of NAI and its Consolidated
Subsidiaries for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, all in reasonable detail
and all prepared in accordance with GAAP and certified by the chief
financial officer or controller of NAI (subject to year-end
adjustments);
(iii) together with the financial statements furnished in
accordance with subparagraph 13(a)(i) and 13(a)(ii), a certificate of
the chief financial officer or controller of NAI: (i) certifying that to
the knowledge of NAI no Default or Event of Default under this Land
Lease has occurred and is continuing or, if a Default or Event of
Default has occurred and is continuing, a brief statement as to the
nature thereof and the action which is proposed to be taken with respect
thereto, (ii) certifying that the representations of NAI set forth in
the Operative Documents are true and correct in all material respects as
of the date thereof as though made on and as of the date thereof or, if
not then true and correct, a brief statement as to why such
representations are no longer true and correct, and (iii) with
computations demonstrating compliance with the financial covenants
contained in Schedule 1;
(iv) within five days after the end of each calendar month, a
certificate of the chief financial officer or controller of NAI
certifying that at the end of the preceding calendar month, NAI had
sufficient cash and other assets described in Paragraph 1 of Part II of
Schedule 1 to comply with the requirements of that paragraph;
(v) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports which NAI sends to
NAI's stockholders, and copies of all regular, periodic and special
reports, and all registration statements (other than registration
statements on Form S-8 or any form substituted therefor) which NAI files
with the Securities and
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Exchange Commission or any governmental authority which may be
substituted therefor, or with any national securities exchange;
(vi) upon request by BNPLC, a statement in writing certifying that
the Operative Documents are unmodified and in full effect (or, if there
have been modifications, that the Operative Documents are in full effect
as modified, and setting forth such modifications) and the dates to
which the Base Rent has been paid and either stating that to the
knowledge of NAI no Default or Event of Default under this Land Lease
has occurred and is continuing or, if a Default or Event of Default
under this Land Lease has occurred and is continuing, a brief statement
as to the nature thereof; it being intended that any such statement by
NAI may be relied upon by any prospective purchaser or mortgagee of the
Property and by the Participants
(vii) as soon as possible after, and in any event within ten days
after NAI becomes aware that, any of the following has occurred, with
respect to which the potential aggregate liability to NAI relating
thereto is $500,000 or more, a notice signed by a senior financial
officer of NAI setting forth details of the following and the response,
if any, which NAI or its ERISA Affiliate proposes to take with respect
thereto (and a copy of any report or notice required to be filed with or
given to PBGC by NAI or an ERISA Affiliate with respect to any of the
following or the events or conditions leading up to the following): (A)
the assertion, to secure any Unfunded Benefit Liabilities, of any Lien
against the assets of NAI, against the assets of any Plan or
Multiemployer Plan or against any interest of BNPLC or NAI in the
Property, or (B) the taking of any action by the PBGC or any other
governmental authority against NAI to terminate any Plan of NAI or any
ERISA Affiliate of NAI or to cause the appointment of a trustee or
receiver to administer any such Plan ; and
(viii) such other information respecting the condition or
operations, financial or otherwise, of NAI, of any of its Subsidiaries
or of the Property as BNPLC or any Participant through BNPLC may from
time to time reasonably request.
BNPLC is hereby authorized to deliver a copy of any information or certificate
delivered to it pursuant to this subparagraph 13(a) to BNPLC's Parent, to the
Participants and to any regulatory body having jurisdiction over BNPLC or
BNPLC's Parent or any Participant that requires or requests it.
14. ASSIGNMENT AND SUBLETTING BY NAI.
(a) BNPLC's Consent Required. Without the prior consent of BNPLC,
NAI shall not assign, transfer, mortgage, pledge or hypothecate this Land Lease
or any interest of NAI hereunder and shall not sublet all or any part of the
Property, by operation of law or otherwise; provided, that this provision will
not be construed to prohibit (I) any sublease of space within Improvements
expressly permitted by the Other Lease Agreement and (II) subject to
subparagraph 14(c) below, this provision shall not be construed to prohibit any
Premises Lease described in the Other Common Definitions and Provisions
Agreement or any transfer or sublease by a lessee thereunder which is authorized
by the Premises Lease.
(b) Standard for BNPLC's Consent to Assignments and Certain Other
Matters. Consents and approvals of BNPLC which are required by this Paragraph 14
will not be unreasonably withheld or delayed, but NAI acknowledges that BNPLC's
withholding of such consent or approval
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shall be reasonable if BNPLC determines in good faith that (1) giving the
approval may materially increase BNPLC's risk of liability for any existing or
future environmental problem, or (2) giving the approval is likely to increase
BNPLC's administrative burden of complying with or monitoring NAI's compliance
with the requirements of this Land Lease.
(c) Consent Not a Waiver. No consent by BNPLC to a sale,
assignment, transfer, mortgage, pledge or hypothecation of this Land Lease or
NAI's interest hereunder, and no assignment or subletting of the Property or any
part thereof in accordance with this Land Lease or otherwise with BNPLC's
consent, shall release NAI from liability hereunder; and any such consent shall
apply only to the specific transaction thereby authorized and shall not relieve
NAI from any requirement of obtaining the prior consent of BNPLC to any further
sale, assignment, transfer, mortgage, pledge or hypothecation of this Land Lease
or any interest of NAI hereunder.
15. ASSIGNMENT BY BNPLC.
(a) Restrictions on Transfers. Except by a Permitted Transfer,
BNPLC shall not assign, transfer, mortgage, pledge, encumber or hypothecate this
Land Lease or the other Operative Documents or any interest of BNPLC in and to
the Property during the Term without the prior consent of NAI, which consent NAI
may withhold in its sole discretion. Further, notwithstanding anything to the
contrary herein contained, if withholding taxes are imposed on the rents and
other amounts payable to BNPLC hereunder because of BNPLC's assignment of this
Land Lease to any citizen of, or any corporation or other entity formed under
the laws of, a country other than the United States, NAI shall not be required
to compensate BNPLC or any such assignee for the withholding tax. If, in breach
of this subparagraph, BNPLC transfer the Property or any part thereof by a
conveyance or that does not constitute a Permitted Transfer, with the result
that additional transfer taxes or other Impositions are assessed against the
Property or the owner thereof, BNPLC shall be required to pay such additional
transfer taxes or other Impositions.
(b) Effect of Permitted Transfer or other Assignment by BNPLC. If,
without breaching subparagraph 15(a), BNPLC sells or otherwise transfers the
Property and assigns all of its rights under this Land Lease and the other
Operative Documents, then BNPLC shall thereby be released from any obligations
arising after such assumption under this Land Lease or the other Operative
Documents, and NAI shall look solely to each successor in interest of BNPLC for
performance of such obligations.
16. BNPLC'S RIGHT OF ACCESS.
(a) During the Term, BNPLC and BNPLC's representatives may (subject
to subparagraph 16(c)) enter the Property at any reasonable time after five
Business Days advance written notice to NAI for the purpose of making
inspections or performing any work BNPLC is authorized to undertake by the next
subparagraph or for the purpose confirming whether NAI has complied with the
requirements of this Land Lease or the other Operative Documents.
(b) If NAI fails to perform any act or to take any action required
of it by this Land Lease or the Closing Certificate, or to pay any money which
NAI is required by this Land Lease or the Closing Certificate to pay, and if
such failure or action constitutes an Event of Default or renders BNPLC or any
director, officer, employee or Affiliate of BNPLC at risk of criminal
prosecution or
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renders BNPLC's interest in the Property or any part thereof at risk of
forfeiture by forced sale or otherwise, then in addition to any other remedies
specified herein or otherwise available, BNPLC may, perform or cause to be
performed such act or take such action or pay such money. Any expenses so
incurred by BNPLC, and any money so paid by BNPLC, shall be a demand obligation
owing by NAI to BNPLC. Further, BNPLC, upon making such payment, shall be
subrogated to all of the rights of the person, corporation or body politic
receiving such payment. But nothing herein shall imply any duty upon the part of
BNPLC to do any work which under any provision of this Land Lease NAI may be
required to perform, and the performance thereof by BNPLC shall not constitute a
waiver of NAI's default. BNPLC may during the progress of any such work
permitted by BNPLC hereunder on or in the Property keep and store upon the
Property all necessary materials, tools, and equipment. BNPLC shall not in any
event be liable for inconvenience, annoyance, disturbance, loss of business, or
other damage to NAI or the subtenants or invitees of NAI by reason of making
such repairs or the performance of any such work on or in the Property, or on
account of bringing materials, supplies and equipment into or through the
Property during the course of such work (except for any liability in excess of
the liability insurance limits established in Exhibit B resulting from death or
injury or damage to the property of third parties caused by the Established
Misconduct of BNPLC or its officers, employees, or agents in connection
therewith), and the obligations of NAI under this Land Lease shall not thereby
be excused in any manner.
(c) NAI shall have no obligation to provide proprietary information
(as defined in the next sentence) to BNPLC, except and to the extent that (1)
BNPLC reasonably determines that BNPLC cannot accomplish the purposes of BNPLC's
inspection of the Property or exercise of other rights granted pursuant to the
various express provisions of this Land Lease and the other Operative Documents
without evaluating such information. For purposes of this Land Lease
"PROPRIETARY INFORMATION" includes NAI's intellectual property, trade secrets
and other confidential information of value to NAI about, among other things,
NAI's manufacturing processes, products, marketing and corporate strategies, but
in no event will "proprietary information" include any disclosure of substances
and materials (and their chemical composition) which are or previously have been
present in, on or under the Property at the time of any inspections by BNPLC,
nor will "proprietary information" include any additional disclosures reasonably
required to permit BNPLC to determine whether the presence of such substances
and materials has constituted a violation of Environmental Laws. In addition,
under no circumstances shall NAI have any obligation to disclose to BNPLC or any
other party any proprietary information of NAI (including, without limitation,
any pending applications for patents or trademarks, any research and design and
any trade secrets) except if and to the limited extent reasonably necessary to
comply with the express provisions of this Land Lease or the other Operative
Documents.
17. EVENTS OF DEFAULT. Each of the following events shall be an "EVENT
OF Default" by NAI under this Land Lease:
(a) NAI shall fail to pay when due any installment of Rent due
hereunder and such failure shall continue for three (3) Business Days after NAI
is notified in writing thereof.
(b) NAI shall fail to cause any representation or warranty of NAI
contained herein or in the Closing Certificate that was false or misleading in
any material respect when made to be made true and not misleading (other than as
described in the other clauses of this Paragraph 17), or NAI shall fail to
comply with any term, provision or covenant of this Land Lease or the Closing
Certificate (other
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than as described in the other clauses of this Paragraph 17), and in either case
shall not cure such failure prior to the earlier of (A) thirty days after
written notice thereof is sent to NAI or (B) the date any writ or order is
issued for the levy or sale of any property owned by BNPLC (including the
Property) or any criminal prosecution is instituted or overtly threatened
against BNPLC or any of its directors, officers or employees because of such
failure; provided, however, that so long as no such writ or order is issued and
no such criminal prosecution is instituted or overtly threatened, the period
within which such failure may be cured by NAI shall be extended for a further
period (not to exceed an additional sixty days) as shall be necessary for the
curing thereof with diligence, if (but only if) (x) such failure is susceptible
of cure but cannot with reasonable diligence be cured within such thirty day
period, (y) NAI shall promptly have commenced to cure such failure and shall
thereafter continuously prosecute the curing thereof with reasonable diligence
and (z) the extension of the period for cure will not, in any event, cause the
period for cure to extend beyond five days prior to the expiration of this Land
Lease.
(c) NAI shall abandon the Property.
(d) NAI or any Subsidiary shall fail to make any payment or
payments of principal, premium or interest, of Debt of NAI described in the next
sentence when due (taking into consideration the time NAI may have to cure such
failure, if any, under the documents governing such Debt). As used in this
clause "DEBT" shall include only Debt (as defined in the Common Definitions and
Provisions Agreement (Phase V - Land)) of NAI or any of its Subsidiaries now
existing or arising in the future (a) payable to BNPLC or any Affiliate of
BNPLC, or (B) payable to any other Person and with respect to which $3,000,000
or more is actually due and payable because of acceleration or otherwise.
(e) NAI: (a) shall generally not, or be unable to, or shall admit
in writing its inability to, pay its debts as such debts become due; or (b)
shall make an assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for it or a
substantial part of its assets; or (c) shall file any petition or application to
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (d) shall have had any such
petition or application filed against it; or (e) by any act or omission shall
indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a custodian,
receiver or trustee for all or any substantial part of its property; or (f)
shall suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of sixty days or more.
(f) One or more final judgments, decrees or orders for the
payment of money in excess of $3,000,000 in the aggregate shall be rendered
against NAI and such judgments, decrees or orders shall continue unsatisfied and
in effect for a period of thirty consecutive days without NAI's having obtained
an agreement (or after the expiration or termination of an agreement) of the
Persons entitled to enforce such judgment, decrees or orders not to enforce the
same pending negotiations with NAI concerning the satisfaction or other
discharge of the same.
(g) NAI shall breach the requirements of Paragraph 12, which by
reference to Schedule 1 establishes certain financial covenants and other
requirements.
(h) as of the effective date of this Land Lease, any of the
representations or warranties of NAI contained in subparagraphs 2(A) - (J) of
the Closing Certificate shall be false or misleading in any material respect.
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(i) NAI shall fail to pay the full amount of any Supplemental
Payment required by the Purchase Agreement on the Designated Sale Date or shall
fail to provide Collateral as and when due pursuant to the Pledge Agreement
Documents.
(j)NAI shall fail to comply with any term, provision or condition
of the Pledge Agreements after the expiration of any applicable notice and cure
period set forth in the Pledge Agreement.
18. REMEDIES.
(a) Basic Remedies. At any time after an Event of Default and after
BNPLC has given any notice required by subparagraph 18(b), BNPLC shall be
entitled at BNPLC's option (and without limiting BNPLC in the exercise of any
other right or remedy BNPLC may have, and without any further demand or notice
except as expressly described in this subparagraph 18(a)), to exercise any one
or more of the following remedies:
(i) By notice to NAI, BNPLC may terminate NAI's right to
possession of the Property. A notice given in connection with unlawful
detainer proceedings specifying a time within which to cure a default
shall terminate NAI's right to possession if NAI fails to cure the
default within the time specified in the notice.
(ii) Upon termination of NAI's right to possession and without
further demand or notice, BNPLC may re-enter the Property in any manner
not prohibited by Applicable Law and take possession of all
improvements, additions, alterations, equipment and fixtures thereon and
remove any persons in possession thereof. Any property on the Land may
be removed and stored in a warehouse or elsewhere at the expense and
risk of and for the account of NAI.
(iii) Upon termination of NAI's right to possession, this Land
Lease shall terminate and BNPLC may recover from NAI:
a) The worth at the time of award of the unpaid Rent which
had been earned at the time of termination;
b) The worth at the time of award of the amount by which
the unpaid Rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss
that NAI proves could have been reasonably avoided;
c) The worth at the time of award of the amount by which
the unpaid Rent for the balance of the scheduled Term after the
time of award exceeds the amount of such rental loss that NAI
proves could be reasonably avoided; and
d) Any other amount necessary to compensate BNPLC for all
the detriment proximately caused by NAI's failure to perform
NAI's obligations under this Land Lease or which in the ordinary
course of things would be likely to result therefrom, including
the costs and expenses (including Attorneys' Fees, advertising
costs and brokers' commissions) of recovering possession of the
Property, removing persons or property therefrom, placing the
Property in good order, condition, and repair, preparing and
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altering the Property for reletting, all other costs and expenses
of reletting, and any loss incurred by BNPLC as a result of NAI's
failure to perform NAI's obligations under the other Operative
Documents.
The "WORTH AT THE TIME OF AWARD" of the amounts referred to in
subparagraph 18(a)(iii)a and subparagraph 18(a)(iii)b) shall be
computed by allowing interest at the Default Rate. The "WORTH AT
THE TIME OF AWARD" of the amount referred to in subparagraph
18(a)(iii)c) shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).
e) Such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable
California law.
(iv) BNPLC shall have the remedy described in California Civil
Code Section 1951.4 (lessor may continue lease in force even after
lessee's breach and abandonment and recover rent as it becomes due, if
lessee has right to sublet or assign, subject only to reasonable
limitations). Accordingly, even if NAI has breached this Land Lease and
abandoned the Property, this Land Lease shall continue in effect for so
long as BNPLC does not terminate NAI's right to possession, and BNPLC
may enforce all of BNPLC's rights and remedies under this Land Lease,
including the right to recover the Rent as it becomes due under this
Land Lease. NAI's right to possession shall not be deemed to have been
terminated by BNPLC except pursuant to subparagraph 18(a)(i) hereof. The
following shall not constitute a termination of NAI's right to
possession:
a) Acts of maintenance or preservation or efforts to relet
the Property;
b) The appointment of a receiver upon the initiative of
BNPLC to protect BNPLC's interest under this Land Lease; or
c) Reasonable withholding of consent to an assignment or
subletting, or terminating a subletting or assignment by NAI.
(b) Notice Required So Long As the Purchase Option and NAI's
Initial Remarketing Rights and Obligations Continue Under the Purchase
Agreement. So long as NAI remains in possession of the Property and
there has been no termination of the Purchase Option and NAI's Initial
Remarketing Rights and Obligations as provided Paragraph 4 of the
Purchase Agreement, BNPLC's right to exercise remedies provided in
subparagraph 18(a) will be subject to the condition precedent that BNPLC
shall have notified NAI, at a time when an Event of Default shall have
occurred and be continuing, of BNPLC's intent to exercise remedies
provided in subparagraph 18(a) at least sixty days prior to exercising
the remedies. The condition precedent is intended to provide NAI with an
opportunity to exercise the Purchase Option or NAI's Initial Remarketing
Rights and Obligations before losing possession of the Property pursuant
to subparagraph 18(a). The condition precedent is not, however, intended
to extend any period for curing an Event of Default. Accordingly, if an
Event of Default has occurred, and regardless of whether any Event of
Default is then continuing, BNPLC may proceed immediately to exercise
remedies provided in subparagraph 18(a) at any time after the earlier of
(i) sixty days after BNPLC has given such a notice to NAI, (ii) any date
upon which NAI relinquishes possession
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of the Property, or (iii) any termination of the Purchase Option and NAI's
Initial Remarketing Rights and Obligations.
(c) Enforceability. This Paragraph 18 shall be enforceable to the
maximum extent not prohibited by Applicable Law, and the unenforceability of any
provision in this Paragraph shall not render any other provision unenforceable.
(d) Remedies Cumulative. No right or remedy herein conferred upon or
reserved to BNPLC is intended to be exclusive of any other right or remedy, and
each and every such right and remedy shall be cumulative and in addition to any
other right or remedy given to BNPLC hereunder or now or hereafter existing in
favor of BNPLC under Applicable Law or in equity. In addition to other remedies
provided in this Land Lease, BNPLC shall be entitled, to the extent permitted by
Applicable Law or in equity, to injunctive relief in case of the violation, or
attempted or threatened violation, of any of the covenants, agreements,
conditions or provisions of this Land Lease, or to a decree compelling
performance of any of the other covenants, agreements, conditions or provisions
of this Land Lease to be performed by NAI, or to any other remedy allowed to
BNPLC at law or in equity. Nothing contained in this Land Lease shall limit or
prejudice the right of BNPLC to prove for and obtain in proceedings for
bankruptcy or insolvency of NAI by reason of the termination of this Land Lease,
an amount equal to the maximum allowed by any statute or rule of law in effect
at the time when, and governing the proceedings in which, the damages are to be
proved, whether or not the amount be greater, equal to, or less than the amount
of the loss or damages referred to above. Without limiting the generality of the
foregoing, nothing contained herein shall modify, limit or impair any of the
rights and remedies of BNPLC under the Purchase Documents, and BNPLC shall not
be required to give the sixty day notice described in subparagraph 18(b) as a
condition precedent to any acceleration of the Designated Sale Date or to taking
any action to enforce the Purchase Documents.
19. DEFAULT BY BNPLC. If BNPLC should default in the performance of any
of its obligations under this Land Lease, BNPLC shall have the time reasonably
required, but in no event less than thirty days, to cure such default after
receipt of notice from NAI specifying such default and specifying what action
NAI believes is necessary to cure the default. If NAI prevails in any litigation
brought against BNPLC because of BNPLC's failure to cure a default within the
time required by the preceding sentence, then NAI shall be entitled to an award
against BNPLC for the monetary damages proximately caused to NAI by such
default.
Notwithstanding the foregoing, BNPLC's right to cure as provided in this
Paragraph 19 will not in any event extend the time within which BNPLC must
remove Liens Removable by BNPLC as required by Paragraph 20 beyond the
Designated Sale Date.
30
36
20. QUIET ENJOYMENT. Provided NAI pays the Base Rent and all Additional
Rent payable hereunder as and when due and payable and keeps and fulfills all of
the terms, covenants, agreements and conditions to be performed by NAI
hereunder, BNPLC shall not during the Term disturb NAI's peaceable and quiet
enjoyment of the Property; however, such enjoyment shall be subject to the
terms, provisions, covenants, agreements and conditions of this Land Lease, to
Permitted Encumbrances, to Development Documents and to any other claims not
constituting Liens Removable by BNPLC. If any Lien Removable by BNPLC is claimed
against the Property, BNPLC will remove the Lien Removable by BNPLC promptly.
Any breach by BNPLC of this Paragraph shall render BNPLC liable to NAI for any
monetary damages proximately caused thereby, but as more specifically provided
in subparagraph 4(b) above, no such breach shall entitle NAI to terminate this
Land Lease or excuse NAI from its obligation to pay Rent.
21. SURRENDER UPON TERMINATION. Unless NAI or an Applicable Purchaser
purchases or has purchased BNPLC's entire interest in the Property pursuant to
the terms of the Purchase Agreement and BNPLC's entire interest in the
Improvements and other "Property" under (and as defined in) the Other Purchase
Agreement, NAI shall, upon the termination of NAI's right to occupancy,
surrender to BNPLC the Property, including Improvements constructed by NAI and
fixtures and furnishings included in the Property, free of all Hazardous
Substances (including Permitted Hazardous Substances) and tenancies and with all
Improvements in substantially the same condition as of the date the same were
initially completed, excepting only (i) ordinary wear and tear that occurs
between the maintenance, repairs and replacements required by other provisions
of this Land Lease or the Other Lease Agreement, and (ii) demolition,
alterations and additions which are expressly permitted by the terms of this
Land Lease or the Other Lease Agreement and which have been completed by NAI in
a good and workmanlike manner in accordance with all Applicable Laws. Any
movable furniture or movable personal property belonging to NAI or any party
claiming under NAI, if not removed at the time of such termination and if BNPLC
shall so elect, shall be deemed abandoned and become the property of BNPLC
without any payment or offset therefor. If BNPLC shall not so elect, BNPLC may
remove such property from the Property and store it at NAI's risk and expense.
22. HOLDING OVER BY NAI. Should NAI not purchase BNPLC's right, title
and interest in the Property as provided in the Purchase Agreement, but
nonetheless continue to hold the Property after the termination of this Land
Lease without BNPLC's consent, whether such termination occurs by lapse of time
or otherwise, such holding over shall constitute and be construed as a tenancy
from day to day only, at a daily Base Rent equal to: (i) Stipulated Loss Value
on the day in question, times (ii) the Default Rate for such day; divided by
(iii) three hundred and sixty; subject, however, to all of the terms,
provisions, covenants and agreements on the part of NAI hereunder. No payments
of money by NAI to BNPLC after the termination of this Land Lease shall
reinstate, continue or extend the Term of this Land Lease and no extension of
this Land Lease after the termination thereof shall be valid unless and until
the same shall be reduced to writing and signed by both BNPLC and NAI.
31
37
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS.
NAI acknowledges and agrees that nothing contained in this Land Lease shall
limit, modify or otherwise affect any of NAI's obligations under the other
Operative Documents, which obligations are intended to be separate, independent
and in addition to, and not in lieu of, the obligations set forth herein. In the
event of any inconsistency between the express terms and provisions of the
Purchase Documents and the express terms and provisions of this Land Lease, the
express terms and provisions of the Purchase Documents shall control. In the
event of any inconsistency between the express terms and provisions of the
Closing Certificate and the express terms and provisions of this Land Lease, the
express terms and provisions of this Land Lease shall control; provided, nothing
herein will limit or impair NAI's obligations under the Closing Certificate
following any expiration of termination of this Land Lease.
[The signature pages follow.]
32
38
IN WITNESS WHEREOF, NAI and BNPLC have caused this Land Lease to be
executed as of March 1, 2000.
"NAI"
NETWORK APPLIANCE, INC.
By:
---------------------------------------
Jeffry R. Allen, Chief Financial Officer
39
[Continuation of signature pages to Land Lease dated to be effective as of March
1, 2000.]
"BNPLC"
BNP LEASING CORPORATION
By:
----------------------------------------
Lloyd G. Cox, Vice President
40
EXHIBIT A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
41
EXHIBIT B
INSURANCE REQUIREMENTS
I. LIABILITY INSURANCE:
A. NAI must maintain commercial general liability ("CGL") insurance on
an occurrence basis, affording immediate protection to the limit of not less
than $20,000,000 combined single limit for bodily and personal injury, death and
property damage in respect of any one occurrence. The CGL insurance must be
primary to, and shall receive no contribution from, any insurance policies or
self-insurance programs otherwise afforded to or available to the Interested
Parties, collectively or individually. Further, the CGL insurance must include
blanket contractual liability coverage which insures contractual liability under
the indemnifications set forth in this Land Lease (though such coverage or the
amount thereof shall in no way limit such indemnifications).
B. Any deductible or self-insured retention applicable to the CGL
insurance shall not exceed $1,000 at any time when NAI shall continue to have
the right to exercise any Issue 97-10 Election under (and as defined in) the
Other Lease Agreement, or shall have previously exercised an Issue 97-10
Election. After the expiration of NAI's right to exercise any Issue 97-10
Election, and provided no Issue 97-10 Election has been exercised by NAI, NAI
may increase any deductible or self-insured retention applicable to such
insurance, but not to an amount in excess of $500,000.
C. The forms of insurance policies (including endorsements) used to
provide the CGL insurance required by this Land Lease, and the insurance company
or companies providing the CGL insurance, must be acceptable to BNPLC. BNPLC
shall have the right from time to time and at any time to review and approve
such policy forms (including endorsements) and the insurance company or
companies providing the insurance. Without limiting the generality of the
foregoing, BNPLC may reasonably require (and unless and until NAI is otherwise
notified by BNPLC, BNPLC does require) that such insurance be provided under
forms and by companies consistent with the following:
(i) Forms: CGL Insurance must be provided on Insurance
Services Office ("ISO") forms CG 0001 1093 or CG 0001
0196 or equivalent substitute forms providing the same
or greater coverage.
(ii) Rating Requirements: Insurance must be provided through
insurance or reinsurance companies rated by the A.M.
Best Company of Oldwick, New Jersey as having a
policyholder's rating of A or better and a reported
financial information rating of X or better.
(iii) Required Endorsements: CGL Insurance must be endorsed to
provide or include:
(a) in any policy containing a general aggregate limit,
ISO form amendment "Aggregate Limits of Insurance Per
Location" CG 2504 1185 or equivalent substitute form;
(b) a waiver of subrogation, using ISO form CG 2404 1093
or equivalent substitute form (and under the commercial
umbrella, if any), in favor of "BNP Leasing Corporation
and other Interested Parties (as defined in the Common
42
Definitions and Provisions Agreement (Phase V - Land)
between Network Appliance, Inc. and BNP Leasing
Corporation dated March 1, 2000)";
(c) ISO additional insured form CG 2026 1185 or
equivalent substitute form, without modification (and
under the commercial umbrella, if any), designating as
additional insureds "BNPLC and other Interested Parties,
as defined in the Common Definitions and Provisions
Agreement (Phase V - Land) between Network Appliance,
Inc. and BNP Leasing Corporation dated March 1, 2000)";
and
(d) provisions entitling BNPLC to 30 days' notice from
the insurer prior to any cancellation, nonrenewal or
material modification to the CGL coverage.
(iv) Other Insurance: Each policy to contain standard CGL
"other insurance" wording, unmodified in any way that
would make it excess over or contributory with the
additional insured's own commercial general liability
coverage.
II. INTENTIONALLY DELETED.
III. OTHER INSURANCE RELATED REQUIREMENTS:
A. BNPLC must be notified in writing immediately by NAI of claims
against NAI that might cause a reduction below seventy-five percent (75%) of any
aggregate limit of any policy.
B. Intentionally Deleted..
C. NAI's CGL insurance must be evidenced by ACORD form 25 "Certificate
of Insurance" completed and interlineated in a manner satisfactory to BNPLC to
show compliance with the requirements of this Exhibit. Copies of endorsements to
the CGL insurance must be attached to such form.
D. Such evidence of required insurance must be delivered upon execution
of this Land Lease and new certificate or evidence of insurance must be
delivered no later than 10 days prior to expiration of existing policy.
E. NAI shall not cancel, fail to renew, or make or permit any material
reduction in any of the policies or certificates described in this Exhibit
without the prior written consent of BNPLC. The certificates (ACORD forms 25)
described in this Exhibit must contain the following express provision:
"This is to certify that the policies of insurance described
herein have been issued to the insured Network Appliance, Inc.
for whom this certificate is executed and are in force at this
time. In the event of cancellation, non-renewal, or material
reduction in coverage affecting the certificate holder, at least
sixty days prior notice shall be given to the certificate
holder."
F. The limits of liability under the liability insurance required by
this Land Lease may be provided by a single policy of insurance or by a
combination of primary and umbrella policies, but in no
Exhibit B-Page 2
43
event shall the total limits of liability available for any one occurrence or
accident be less than those required by this Exhibit.
G. NAI shall provide copies, certified as complete and correct by an
authorized agent of the applicable insurer, of all insurance policies required
by this Exhibit within ten days after receipt of a request for such copies from
BNPLC.
Exhibit B-Page 3
44
EXHIBIT C
NOTICE OF LIBOR PERIOD ELECTION
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: George Fung
Re: Lease Agreement (Phase V - Improvements) and Lease Agreement (Phase
V - Land), both dated as of March 1, 2000, and both between Network Appliance,
Inc., as tenant, and BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the two Lease Agreements referenced above. This letter
constitutes notice to you that the LIBOR Period Election under both of the Lease
Agreements shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or after:
--------------, ----.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE NUMBER OF MONTHS
SPECIFIED ABOVE IS NOT A PERMITTED NUMBER UNDER THE DEFINITION OF "LIBOR PERIOD
ELECTION" IN THE COMMON DEFINITIONS AND PROVISIONS AGREEMENTS REFERENCED IN THE
LEASE AGREEMENTS, OR IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF
THE LIBOR PERIOD ELECTION IS LESS THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF
THIS NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY US IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Executed this _____ day of ______________, 2000.
45
Network Appliance, Inc.
Name:
-------------------------------------
Title:
------------------------------------
[cc all Participants]
Exhibit C-Page 2
46
SCHEDULE 1
FINANCIAL COVENANTS
This Schedule 1 is attached to and made a part of (a) the Lease
Agreement (Phase V Improvements) (the "IMPROVEMENTS LEASE") dated to be
effective as of March 1, 2000 (the "EFFECTIVE DATE"), between BNP Leasing
Corporation, a Delaware corporation ("BNPLC") and Network Appliance, Inc., a
California corporation ("NAI"), (b) the Lease Agreement (Phase V - Land) (the
"LAND LEASE" and, together with the Improvements Lease, the "LEASES") dated to
be effective as of the Effective Date, between BNPLC and NAI, (c) the Pledge
Agreement (Phase V - Improvements) (the "PLEDGE AGREEMENT (IMPROVEMENTS)") dated
to be effective as of the Effective Date, among BNPLC, NAI, and Banque Nationale
de Paris, as a Participant and as agent for any financial institutions that
become Participants thereunder from time to time, and (d) the Pledge Agreement
(Phase V - Land) (collectively with the Pledge Agreement (Improvements), the
"PLEDGE AGREEMENTS") dated to be effective as of the Effective Date, among
BNPLC, NAI, and Banque Nationale de Paris, as a Participant and as agent for any
financial institutions that become Participants thereunder from time to time.
PART I - DEFINED TERMS
In this Schedule 1, capitalized terms used but not defined herein shall
have the meaning assigned to them in the Leases or the Common Definitions and
Provisions Agreements referenced in the Leases; and the following capitalized
terms shall have the following meanings:
"ADJUSTED NET INCOME" means, for any fiscal period of NAI, the
aggregate net income earned (or net losses incurred) during such
period by NAI and its Subsidiaries (determined on a consolidated
basis), plus any Permitted Non-Cash Charges deducted in
determining such net income (or net loss).
"ADJUSTED EBIT" means, for any accounting period, net income (or
net loss) of NAI and its Subsidiaries (determined on a
consolidated basis), plus the amounts (if any) which, in the
determination of net income (or net loss) for such period, have
been deducted for (a) interest expense, (b) income tax expense
(c) rent expense under leases of property, and (d) Permitted
Non-Cash Charges.
"COLLATERAL TEST DATES" mean the Base Rent Commencement Date and
the earlier of the following dates after each fiscal quarter of
NAI that ends after the Base Rent Commencement Date : (1) the
seventh Business Day after the release by NAI of its financial
statements for the fiscal quarter; or (2) the first Business Day
of the third calendar month following the end of the fiscal
quarter.
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of (1) the
total assets, other than Intangible Assets, of NAI and its
Subsidiaries (determined on a consolidated basis) over (2) the
total liabilities of NAI and its Subsidiaries (determined on a
consolidated basis).
"DEBT" as used in this Exhibit shall have the meaning assigned
to it in the Common Definitions and Provisions Agreements, where
"Debt" of any Person is defined to mean (without duplication of
any item): (a) indebtedness of such Person for borrowed money;
Schedule 1-Page 1
47
(b) indebtedness of such Person for the deferred purchase price
of property or services (except trade payables and accrued
expenses constituting current liabilities in the ordinary course
of business); (c) the face amount of any outstanding letters of
credit issued for the account of such Person; (d) obligations of
such Person arising under acceptance facilities; (e) guaranties,
endorsements (other than for collection in the ordinary course
of business) and other contingent obligations of such Person to
purchase, to provide funds for payment, to provide funds to
invest in any Person, or otherwise to assure a creditor against
loss; (f) obligations of others secured by any Lien on property
of such Person; (g) obligations of such Person as lessee under
Capital Leases; and (h) the obligations of such Person,
contingent or otherwise, under any lease of property or related
documents (including a separate purchase agreement) which
provide that such Person or any of its Affiliates must purchase
or cause another Person to purchase any interest in the leased
property and thereby guarantee a minimum residual value of the
leased property to the lessor. For purposes of this definition,
the amount of the obligations described in clause (h) of the
preceding sentence with respect to any lease classified
according to GAAP as an "operating lease," shall equal the sum
of (1) the present value of rentals and other minimum lease
payments required in connection with such lease [calculated in
accordance with SFAS 13 and other GAAP relevant to the
determination of the whether such lease must be accounted for as
an operating lease or capital lease], plus (2) the fair value of
the property covered by the lease; provided, however, that such
amount shall not exceed the price, as of the date a
determination of Debt is required hereunder, for which the
lessee can purchase the leased property pursuant to any valid
ongoing purchase option if, upon such a purchase, the lessee
shall be excused from paying rentals or other minimum lease
payments that would otherwise accrue after the purchase.
"FIXED CHARGES" means, for any accounting period, the sum
(without duplication of any item) of the following charges or
costs incurred or paid by NAI and its Subsidiaries (determined
on a consolidated basis): (a) gross interest expense, plus (b)
amortization of principal or debt discount in respect of all
Debt during such period, plus (c) rent payable under all leases
of property during such period, plus (d) taxes payable during
such period.
"INTANGIBLE ASSETS" means assets of NAI and its Subsidiaries
(determined on a consolidated basis) that are properly
classified as "INTANGIBLE ASSETS" in accordance with GAAP and,
in any event, shall include goodwill, patents, trade names,
trademarks, copyrights, franchises, experimental expense,
organization expense, unamortized debt discount and expense, and
deferred charges (other than prepaid insurance, prepaid taxes
and current deferred taxes to the extent any such prepaid or
deferred items are classified on the balance sheet of NAI and
its consolidated Subsidiaries as current assets in accordance
with GAAP and with the concurrence of NAI's independent public
accountants).
"MANDATORY COLLATERAL PERIOD" means any period during which,
notwithstanding any contrary designation of a Collateral
Percentage by NAI under the Pledge Agreements, the Collateral
Percentage for purposes of the Pledge Agreements shall be one
hundred percent (100%), determined as set forth in Part III of
this Schedule 1.
Schedule 1-Page 2
48
"PERMITTED NON-CASH CHARGES" means the amounts (if any) which,
in the determination of net income (or net loss) for any
relevant fiscal period, have been deducted by NAI or its
Subsidiaries for non-cash charges made to write down goodwill or
research and development costs in connection with acquisitions
permitted by this Schedule 1.
"QUICK RATIO" means the ratio of:
(A) the sum (without duplication of any item) of the
following assets of NAI and its Subsidiaries (determined on a
consolidated basis): Collateral delivered and pledged under the
Pledge Agreements in accordance with the requirements thereof
(if any); plus unencumbered cash; plus unencumbered short term
cash investments; plus other unencumbered marketable securities
which are classified as short term investments in accordance
with GAAP; plus unencumbered accounts receivable, computed net
of reserves for uncollectible amounts as determined in
accordance with GAAP, to
(B) the sum (without duplication of any item) of (1) all
liabilities of NAI and its Subsidiaries (determined on a
consolidated basis) treated as current liabilities in accordance
with GAAP, plus (2) other obligations included in total Debt of
NAI and its Subsidiaries (determined on a consolidated basis),
the payment of which is due on demand or will become due within
one year after the date on which the applicable determination of
Quick Ratio is required hereunder.
"ROLLING FOUR QUARTER PERIOD" means a period of four consecutive
fiscal quarters of NAI, the last of which quarters ends after
December 31, 1999.
PART II - FINANCIAL COVENANTS FOR LEASE AGREEMENT
NAI covenants that it shall not at any time suffer or permit:
1. Minimum Unencumbered Cash and Cash Equivalents. The sum (without
duplication of any item) of the unrestricted cash, Collateral delivered
and pledged under the Pledge Agreements in accordance with the
requirements thereof (if any), unencumbered short term cash investments
and unencumbered marketable securities classified as short term
investments according to GAAP of NAI and its Subsidiaries (determined on
a consolidated basis) to be less than total Debt of NAI and its
Subsidiaries (determined on a consolidated basis).
2. Minimum Tangible Net Worth. Consolidated Tangible Net Worth to be less
than the sum of: (a) ninety percent of the Consolidated Tangible Net
Worth as of October 30, 1998; plus (b) seventy-five percent of NAI's net
income (computed without deduction for net losses in any fiscal quarter)
earned in each fiscal quarter since October 30, 1998; plus (c)
one-hundred percent of the net proceeds of sales of stock in NAI or its
Subsidiaries (other than sales to NAI or its Subsidiaries) after October
30, 1998; less (d) Permitted Non-Cash Charges for any period after
October 30, 1998.
3. Minimum Quick Ratio. The Quick Ratio to be less than 1.50 to 1.00.
Schedule 1-Page 3
49
4. Minimum Fixed Charge Coverage. The ratio of (a) Adjusted EBIT for any
Rolling Four Quarter Period to (b) Fixed Charges for the same Rolling
Four Quarter Period, to be less than 1.50 to 1.00.
5. Minimum Profitability. Adjusted Net Income to be less than $1.00 in more
than one fiscal quarter of any Rolling Four Quarter Period.
6. Maximum Leverage Ratio. the ratio of (a) total Debt of NAI and its
Subsidiaries (determined on a consolidated basis) at the end of any
Rolling Four Quarter Period to (b) the Adjusted EBIT for the same Four
Quarter Rolling Period, to exceed 3.00 to 1.00.
PART II - TESTS FOR MANDATORY COLLATERAL PERIODS
If, as of the end of the latest fiscal quarter of NAI ending before any
Collateral Test Date, NAI shall have either:
(A) failed to maintain a ratio of (1) the sum (without
duplication of any item) of Collateral delivered and pledged
under the Pledge Agreements in accordance with the requirements
thereof (if any), unencumbered cash, unencumbered short term
cash investments and unencumbered marketable securities
classified as short term investments according to GAAP of NAI
and its Subsidiaries (determined on a consolidated basis) to (2)
all Debt of NAI and its Subsidiaries (determined on a
consolidated basis), of at least 1.5 to 1.00; or
(B) failed to maintain a ratio of (i) all Debt of NAI
and its Subsidiaries (determined on a consolidated basis) to
(ii) Consolidated Tangible Net Worth of NAI, of no more than
0.45 to 1.00;
such Collateral Test Date shall constitute a "FAILED COLLATERAL TEST DATE" for
purposes of the determination of Mandatory Collateral Periods. A Mandatory
Collateral Period shall commence on each Failed Collateral Test, and such
Mandatory Collateral Period shall continue until the second of any two
subsequent CONSECUTIVE Collateral Test Dates, neither of which constitutes a
Failed Collateral Test Date.
For purposes of illustration only, assume that the following dates are
consecutive Collateral Test Dates, some of which are Failed Collateral Test
Dates and some of which are not, as indicated opposite each date:
Date Failed Collateral Test Date?
---- ----------------------------
February 15, 2001 Yes
May 12, 2001 No
August 16, 2001 Yes
November 11, 2001 No
February 18, 2002 No
May 14, 2002 Yes
August 18, 2002 Yes
Schedule 1-Page 4
50
November 18, 2002 No
February 15, 2003 No
Under these assumptions, the entire period from February 15, 2001 to February
18, 2002 falls within one or more Mandatory Collateral Periods. Also, the entire
period commencing May 14, 2002 and ending February 15, 2003 falls within one or
more Mandatory Collateral Periods. The period from February 18, 2002 to May 14,
2002 does not constitute Mandatory Collateral Period.
PART III - OTHER COVENANTS
Without limiting NAI's obligations under the other provisions of the Operative
Documents, during the Term, NAI shall not, without the prior written consent of
BNPLC in each case:
A. Liens. Create, incur, assume or suffer to exist, or permit any of its
Consolidated Subsidiaries to create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
provided that the following shall be permitted except to the extent that they
would encumber any interest in the Property in violation of other provisions of
the Operative Documents:
1. Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if they are being contested in good
faith by appropriate proceedings and for which appropriate reserves are
maintained;
2. Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which
are not past due for more than thirty (30) days, or which are being
contested in good faith by appropriate proceedings and for which
appropriate reserves have been established;
3. Liens under workmen's compensation, unemployment insurance,
social security or similar laws (other than ERISA);
4. Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money),
leases, public or statutory obligations, surety, stay, appeal,
indemnity, performance or other similar bonds, or other similar
obligations arising in the ordinary course of business;
5. Judgment and other similar Liens against assets other than the
Property or any part thereof in an aggregate amount not in excess of
$3,000,000 arising in connection with court proceedings; provided that
the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good
faith by appropriate proceedings;
6. Easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with
the occupation, use and enjoyment by NAI or any such Consolidated
Subsidiary of the property or assets encumbered thereby in the normal
course of its business or materially impair the value of the property
subject thereto;
Schedule 1-Page 5
51
7. Liens securing obligations of such a Consolidated Subsidiary
to NAI or to another such Consolidated Subsidiary;
8. Liens not otherwise permitted by this subparagraph A (and not
encumbering the Property or any Collateral) incurred in connection with
the incurrence of additional Debt or asserted to secure Unfunded Benefit
Liabilities, provided that (a) the sum of the aggregate principal amount
of all outstanding obligations secured by Liens incurred pursuant to
this clause shall not at any time exceed five percent (5%) of
Consolidated Tangible Net Worth at such time; and (b) such Liens do not
constitute Liens against NAI's interest in any material Subsidiary or
blanket Liens against all or substantially all of the inventory,
receivables, general intangibles or equipment of NAI or of any material
Subsidiary of NAI (for purposes of this clause, a "material Subsidiary"
means any subsidiary whose assets represent a substantial part of the
total assets of NAI and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP); and
9. Liens incurred in connection with any renewals, extensions or
refundings of any Debt secured by Liens described in the preceding
clauses of this subparagraph A, provided that there is no increase in
the aggregate principal amount of Debt secured thereby from that which
was outstanding as of the date of such renewal, extension or refunding
and no additional property is encumbered.
B. Transactions with Affiliates. Enter into or permit any Subsidiary of
NAI to enter into any material transactions (including, without limitation, the
purchase, sale or exchange of property or the rendering of any service) with any
Affiliates of NAI except on terms (1) that would not cause or result in a
Default by NAI under the financial covenants set forth in Part II of this
Schedule, and (2) that are no less favorable to NAI or the relevant Subsidiary
than those that would have been obtained in a comparable transaction on an arm's
length basis from an unrelated Person.
C. Compliance. Fail to preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; or fail to comply with the provisions of all documents
pursuant to which NAI is organized and/or which govern NAI's continued existence
and with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to NAI and/or its business.
D. Insurance. Fail to maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to that of NAI,
including but not limited to fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to BNPLC, or fail to deliver to BNPLC from
time to time at BNPLC's request schedules setting forth all insurance then in
effect.
E. Facilities. fail to keep all properties useful or necessary to NAI's
business in good repair and condition, or to from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.
F. Taxes and Other Liabilities. Fail to pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as NAI may in good faith contest
or as to which a bona fide dispute may arise, and (b) for which NAI has made
provisions, to
Schedule 1-Page 6
52
BNPLC's satisfaction, for eventual payment thereof in the event that NAI is
obligated to make such payment.
G. Capital Expenditures. Make any additional investment in fixed assets
in any fiscal year in excess of an aggregate of twenty percent (20%) of NAI's
total assets as of the end of the prior fiscal year.
H. Merger, Consolidation, Transfer of Assets. Merge into or consolidate
with any other entity (unless NAI is the surviving entity and remains in
compliance of all provisions of the Operative Documents); or make any
substantial change in the nature of NAI's business as conducted as of the date
hereof; or sell, lease, transfer or otherwise dispose of all or a substantial or
material portion of NAI's assets except in the ordinary course of its business.
I. Loans, Advances, Investments. Make any loans or advances to or
investments in any person or entity, except (a) any of the foregoing existing as
of, and disclosed to BNPLC prior to, the date hereof, (b) loans to employees for
travel advances, relocation loans and other loans in the ordinary course of
business, (c) investments in accordance with NAI's investment policy, as in
effect from time to time, (d) existing investments in subsidiaries and joint
ventures which have been disclosed to BNPLC in writing prior to the date hereof,
and new investments in subsidiaries and joint ventures in amounts up to an
aggregated of $10,000,000.00, (e) loans to employees, officers, directors to
finance or refinance the purchase of equity securities of NAI.
J. Dividends, Distributions. Declare or pay any dividend or distribution
either in cash, stock or any other property on NAI's stock now or hereafter
outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of
any class of NAI's stock now or hereafter outstanding.
Schedule 1-Page 7
53
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(PHASE V - LAND)
BETWEEN
BNP LEASING CORPORATION
AND
NETWORK APPLIANCE, INC.
DATED AS OF MARCH 1, 2000
54
TABLE OF CONTENTS
Page
----
ARTICLE I - LIST OF DEFINED TERMS...................................................................1
"Active Negligence".........................................................................1
"Additional Rent"...........................................................................2
"Adjusted EBIT".............................................................................2
"Advance Date"..............................................................................2
"Affiliate".................................................................................2
"Applicable Laws"...........................................................................2
"Applicable Purchaser"......................................................................2
"Attorneys' Fees"...........................................................................2
"Banking Rules Change"......................................................................2
"Base Rate".................................................................................3
"Base Rent".................................................................................3
"Base Rent Commencement Date"...............................................................3
"Base Rent Commencement Date (Building 4)"..................................................3
"Base Rent Commencement Date (Building 5)"..................................................3
"Base Rent Commencement Deadline"...........................................................3
"Base Rent Date"............................................................................3
"Base Rent Period"..........................................................................4
"BNPLC".....................................................................................4
"BNPLC's Parent"............................................................................4
"Breakage Costs"............................................................................4
"Break Even Price"..........................................................................5
"Business Day"..............................................................................5
"Capital Adequacy Charges"..................................................................5
"Capital Lease".............................................................................5
"Closing Certificate".......................................................................5
"Code"......................................................................................5
"Collateral"................................................................................5
"Collateral Percentage".....................................................................5
"Common Definitions and Provisions Agreement (Phase V - Land)"..............................6
"Completion Notice (Building 4)"............................................................6
"Completion Notice (Final)".................................................................6
"Construction Management Agreement".........................................................6
"Construction Project"......................................................................6
"Current AS IS Market Value"................................................................6
"Debt"......................................................................................7
"Default"...................................................................................8
(i)
55
"Default Rate"..............................................................................8
"Defaulting Participant"....................................................................8
"Deposit Taker".............................................................................8
"Deposit Taker Losses"......................................................................8
"Designated Sale Date"......................................................................8
"Development Documents".....................................................................9
"Direct Payments to Participants"...........................................................9
"Effective Date"............................................................................9
"Effective Rate"............................................................................9
"Environmental Laws"........................................................................9
"Environmental Cutoff Date"................................................................10
"Environmental Losses".....................................................................10
"Environmental Reports"....................................................................10
"ERISA"....................................................................................10
"ERISA Affiliate"..........................................................................10
"Escrowed Proceeds"........................................................................10
"Established Misconduct"...................................................................11
"Eurocurrency Liabilities".................................................................11
"Eurodollar Rate Reserve Percentage".......................................................11
"Event of Default".........................................................................12
"Excluded Taxes"...........................................................................12
"Existing Contract"........................................................................12
"Failed Collateral Test Date"..............................................................12
"Fed Funds Rate"...........................................................................12
"GAAP".....................................................................................12
"Hazardous Substance"......................................................................12
"Hazardous Substance Activity".............................................................13
"Impositions"..............................................................................13
"Improvements".............................................................................13
"Initial Funding Advance"..................................................................13
"Interested Party".........................................................................14
"Issue 97-1 Non-performance-related Subjective Event of Default"...........................14
"Land".....................................................................................14
"Land Lease"...............................................................................14
"LIBOR"....................................................................................15
"LIBOR Period Election"....................................................................15
"Lien".....................................................................................15
"Liens Removable by BNPLC".................................................................16
"Losses"...................................................................................16
"Mandatory Collateral Period"..............................................................16
"Material Environmental Communication".....................................................16
"Maximum Remarketing Obligation"...........................................................17
"Minimum Extended Remarketing Price".......................................................17
"Multiemployer Plan".......................................................................17
"NAI"......................................................................................17
"NAI's Extended Remarketing Period"........................................................17
(ii)
56
"NAI's Extended Remarketing Right".........................................................17
"NAI's Initial Remarketing Rights and Obligations".........................................17
"Operative Documents"......................................................................17
"Other Common Definitions and Provisions Agreement"........................................17
"Other Lease Agreement"....................................................................17
"Other Purchase Agreement".................................................................17
"Participant"..............................................................................17
"Participation Agreement"..................................................................18
"PBGC".....................................................................................18
"Permitted Encumbrances"...................................................................18
"Permitted Hazardous Substance Use"........................................................18
"Permitted Hazardous Substances"...........................................................19
"Permitted Transfer".......................................................................19
"Person"...................................................................................19
"Personal Property"........................................................................19
"Plan".....................................................................................19
"Pledge Agreement".........................................................................19
"Premises Lease"...........................................................................20
"Prime Rate"...............................................................................20
"Property".................................................................................20
"Purchase Agreement".......................................................................20
"Purchase Documents".......................................................................20
"Purchase Option"..........................................................................20
"Qualified Affiliate"......................................................................20
"Qualified Prepayments"....................................................................20
"Real Property"............................................................................21
"Remedial Work"............................................................................21
"Rent".....................................................................................21
"Residual Risk Percentage".................................................................21
"Responsible Financial Officer"............................................................21
"Sale Closing Documents"...................................................................21
"Secured Spread"...........................................................................21
"Seller"...................................................................................21
"Stipulated Loss Value"....................................................................22
"Stipulated Loss Value (Building 4/Land)"..................................................22
"Subsidiary"...............................................................................22
"Supplemental Payment".....................................................................23
"Term".....................................................................................23
"Third Party Price"........................................................................23
"Third Party Sale Notice"..................................................................23
"Third Party Sale Proposal"................................................................23
"Third Party Target Price".................................................................23
"Transaction Expenses".....................................................................23
"Unfunded Benefit Liabilities".............................................................23
"Unsecured Spread".........................................................................23
"Voluntary Retention of the Property"......................................................24
(iii)
57
ARTICLE II - RULES OF INTERPRETATION...............................................................24
1. Notices.............................................................................24
2. Severability........................................................................26
3. No Merger...........................................................................26
4. No Implied Waiver...................................................................26
5. Entire and Only Agreements..........................................................27
6. Binding Effect......................................................................27
7. Time is of the Essence..............................................................27
8. Governing Law.......................................................................27
9. Paragraph Headings..................................................................27
10. Negotiated Documents................................................................27
11. Terms Not Expressly Defined in an Operative Document................................27
12. Other Terms and References..........................................................27
13. Execution in Counterparts...........................................................28
14. Not a Partnership, Etc..............................................................28
(iv)
58
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(PHASE V - LAND)
This Common Definitions and Provisions Agreement (Phase V - Land), by
and between BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), and
NETWORK APPLIANCE, INC., a California corporation ("NAI"), is dated as of March
1, 2000, the Effective Date.
RECITALS
Contemporaneously with the execution of this Common Definitions and
Provisions Agreement (Phase V - Improvements), NAI is executing the Closing
Certificate (as defined below) in favor of BNPLC, and BNPLC and NAI are
executing the Land Lease (as defined below) and the Purchase Agreement (as
defined below), both of which concern the Property (as defined below). Each of
the Closing Certificate, the Land Lease and the Purchase Agreement (together
with this Common Definitions and Provisions Agreement (Phase V - Land) and the
Pledge Agreement [as defined below], the "OPERATIVE DOCUMENTS") are intended to
create separate and independent obligations upon the parties thereto. However,
NAI and BNPLC intend that all of the Operative Documents share certain
consistent definitions and other miscellaneous provisions. To that end, the
parties are executing this Common Definitions and Provisions Agreement (Phase II
- - Land) and incorporating it by reference into each of the other Operative
Documents.
AGREEMENTS
ARTICLE I - LIST OF DEFINED TERMS
UNLESS A CLEAR CONTRARY INTENTION APPEARS, THE FOLLOWING TERMS SHALL
HAVE THE RESPECTIVE INDICATED MEANINGS AS USED HEREIN AND IN THE OTHER OPERATIVE
DOCUMENTS:
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is
limited to, the negligent conduct on the Property (and not mere omissions) by
such Person or by others acting and authorized to act on such Person's behalf in
a manner that proximately causes actual bodily injury or property damage for
which NAI does not carry (and is not obligated by the Land Lease to carry)
insurance. "ACTIVE NEGLIGENCE" shall not include (1) any negligent failure of
BNPLC to act when the duty to act would not have been imposed but for BNPLC's
status as owner of the Land, the Improvements or any interest in any other
Property or as a party to the transactions described in the Land Lease or the
other Operative Documents or in the Other Lease Agreement or the Other Purchase
Agreement, (2) any negligent failure of any other Interested Party to act when
the duty to act would not have been imposed but for such party's contractual or
other relationship to BNPLC or participation or facilitation in any manner,
directly or indirectly, of the transactions described in the Land Lease or other
Operative Documents or in the Other Lease Agreement or Other Purchase Agreement,
or (3) the exercise in a lawful manner by BNPLC (or any party lawfully claiming
through or under BNPLC) of any right or remedy provided in or under
Page 1
59
the Land Lease or the other Operative Documents or in the Other Lease Agreement
or Other Purchase Agreement.
"ADDITIONAL RENT" shall have the meaning assigned to it in subparagraph
3(d) of the Land Lease.
"ADJUSTED EBIT" shall have the meaning assigned to it in Part I of
Schedule 1 attached to the Land Lease and to the Pledge Agreement.
"ADVANCE DATE" means the first Business Day of every calendar month,
beginning with the first Business Day in April, 2000 and continuing regularly
thereafter to and including the Base Rent Commencement Date.
"AFFILIATE" of any Person means any other Person controlling, controlled
by or under common control with such Person. For purposes of this definition,
the term "control" when used with respect to any Person means the power to
direct the management of policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to NAI or the Property or the Land Lease or the other Operative
Documents: restrictive covenants; zoning ordinances and building codes; flood
disaster laws; health, safety and environmental laws and regulations; the
Americans with Disabilities Act and other laws pertaining to disabled persons;
and other laws, statutes, ordinances, rules, permits, regulations, orders,
determinations and court decisions.
"APPLICABLE PURCHASER" means any third party designated by NAI to
purchase BNPLC's interest in the Property and in any Escrowed Proceeds as
provided in the Purchase Agreement.
"ATTORNEYS' FEES" means the expenses and reasonable fees of counsel to
the parties incurring the same, excluding costs or expenses of in-house counsel
(whether or not accounted for as general overhead or administrative expenses),
but otherwise including printing, photostating, duplicating and other expenses,
air freight charges, and fees billed for law clerks, paralegals, librarians and
others not admitted to the bar but performing services under the supervision of
an attorney. Such terms shall also include all such fees and expenses incurred
with respect to appeals, arbitrations and bankruptcy proceedings, and whether or
not any manner of proceeding is brought with respect to the matter for which
such fees and expenses were incurred.
"BANKING RULES CHANGE" means either: (1) the introduction of or any
change in any law or regulation applicable to BNPLC, BNPLC's Parent or any other
Participant, or in the generally accepted interpretation by the institutional
lending community of any such law or regulation, or in the interpretation of any
such law or regulation asserted by any regulator, court or other governmental
authority (other than any change by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) or (2) the
compliance by BNPLC, BNPLC's Parent or any other Participant with any new
guideline or new request from any central bank or other governmental authority
(whether or not having the force of law).
Page 2
60
"BASE RATE" for any Base Rent Period means a rate equal to the higher of
(1) the Prime Rate in effect on the first day of such period, or (2) the rate
which is fifty basis points (50/100 of 1%) above the Fed Funds Rate for that
period.
"BASE RENT" means the rent payable by NAI pursuant to subparagraph 3(a)
of the Land Lease.
"BASE RENT COMMENCEMENT DATE" means the later of (1) the Base Rent
Commencement Date (Building 4), or (2) the Base Rent Commencement Date (Building
5). If, contrary to the expectations of BNPLC and NAI as of the Effective Date,
the Base Rent Commencement Date (Building 4) and the Base Rent Commencement Date
(Building 5) occur on the same day, that day shall constitute the Base Rent
Commencement Date.
"BASE RENT COMMENCEMENT DATE (BUILDING 4)" means the earlier of (A) the
first Business Day of the first calendar month to follow by twenty days or more
the day upon which any Completion Notice (Building 4) or Completion Notice
(Final) is given, or (B) the Base Rent Commencement Deadline.
"BASE RENT COMMENCEMENT DATE (BUILDING 5)" means the earlier of (A) the
first Business Day of the first calendar month to follow by twenty days or more
the day upon which any Completion Notice (Final) is given, or (B) the Base Rent
Commencement Deadline.
"BASE RENT COMMENCEMENT DEADLINE" shall have the meaning assigned to it
in the Other Common Definitions and Provisions Agreement.
"BASE RENT DATE" means a date upon which Base Rent must be paid under
the Land Lease, all of which dates shall be the first Business Day of a calendar
month. Any first Business Day of a calendar month that falls after the Base Rent
Commencement Date (Building 4) and on or before the Base Rent Commencement Date
shall constitute a Base Rent Date. The first Base Rent Date after the Base Rent
Commencement Date shall be determined as follows:
a) If a LIBOR Period Election of one month is in effect on
the Base Rent Commencement Date, then the first Business Day of
the first calendar month following the Base Rent Commencement
Date shall be the first Base Rent Date thereafter.
b) If the LIBOR Period Election in effect on the Base Rent
Commencement Date is three months or six months, then the first
Business Day of the third calendar month following the Base Rent
Commencement Date shall be the first Base Rent Date thereafter.
Each successive Base Rent Date after the first Base Rent Date following the Base
Rent Commencement Date shall be the first Business Day of the first or third
calendar month following the calendar month which includes the preceding Base
Rent Date, determined as follows:
(1) If a LIBOR Period Election of one month is in effect
on a Base Rent Date, then the first Business Day of the first
calendar month following such Base Rent Date shall be the next
following Base Rent Date.
Page 3
61
(2) If a LIBOR Period Election of three months or six
months is in effect on a Base Rent Date, then the first Business
Day of the third calendar month following such Base Rent Date
shall be the next following Base Rent Date.
Thus, for example, if the Base Rent Commencement Date falls on the first
Business Day of January, 2001 and a LIBOR Period Election of two months
commences on the Base Rent Commencement Date, then the first Base Rent Date
shall be the first Business Day of March, 2001.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the Land Lease, each of which periods shall correspond to the LIBOR Period
Election for such period. The first Base Rent Period shall begin on and include
the Base Rent Commencement Date (Building 4), and each successive Base Rent
Period shall begin on and include the Base Rent Date upon which the preceding
Base Rent Period ends. Any Base Rent Period which begins prior to the Base Rent
Commencement Date shall end on but not include the first Business Day of the
first calendar month after such Base Rent Period begins. The Base Rent Period
that begins on and includes the Base Rent Commencement Date, and each successive
Base Rent Period thereafter, shall end on but not include the first or second
Base Rent Date after the Base Rent Date upon which such period began, determined
as follows:
(1) If the LIBOR Period Election for a Base Rent Period is
one month or three months, then such Base Rent Period shall end
on the first Base Rent Date after the Base Rent Date upon which
such period began.
(2) If the LIBOR Period Election for a Base Rent Period is
six months, then such Base Rent Period shall end on the second
Base Rent Date after the Base Rent Date upon which such period
began.
The determination of Base Rent Periods can be illustrated by two examples:
1) If NAI makes a LIBOR Period Election of three months
for a hypothetical Base Rent Period beginning on the first
Business Day in January, 2002, then such Base Rent Period will
end on but not include the first Base Rent Date after it begins;
that is, such Base Rent Period will end on the first Business Day
in April, 2002, the third calendar month after January, 2002.
2) If, however, NAI makes a LIBOR Period Election of six
months for the hypothetical Base Rent Period beginning the first
Business Day in January, 2002, then such Base Rent Period will
end on but not include the second Base Rent Date after it begins;
that is, the first Business Day in July, 2002.
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a
bank organized and existing under the laws of France and any successors of such
bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent (as a Participant or otherwise) or any other
Participant, for which BNPLC's Parent or
Page 4
62
the Participant shall request reimbursement from BNPLC, because of the resulting
liquidation or redeployment of deposits or other funds:
(1) used to make or maintain the Initial Funding Advance
upon application of a Qualified Prepayment or upon any sale of
the Property pursuant to the Purchase Agreement, if such
application or sale occurs on any day other than an Advance Date
or the last day of a Base Rent Period; or
(2) used to make or maintain the Initial Funding Advance
upon the acceleration of the end of any Base Rent Period pursuant
subparagraph 3(c)(iii) of the Land Lease.
Breakage Costs will include, for example, losses attributable to any decline in
LIBOR as of the effective date of any application described in the clause (1)
preceding, as compared to LIBOR used to determine the Effective Rate then in
effect. Each determination by BNPLC's Parent or the applicable Participant of
Breakage Costs shall, in the absence of clear and demonstrable error, be
conclusive and binding upon NAI.
"BREAK EVEN PRICE" shall have the meaning assigned to it in subparagraph
1(B)(1) of the Purchase Agreement.
"BUSINESS DAY" means any day that is (1) not a Saturday, Sunday or day
on which commercial banks are generally closed or required to be closed in New
York City, New York or San Francisco, California, and (2) a day on which
dealings in deposits of dollars are transacted in the London interbank market;
provided that if such dealings are suspended indefinitely for any reason,
"Business Day" shall mean any day described in clause (1).
"CAPITAL ADEQUACY CHARGES" means any additional amounts BNPLC's Parent
or any other Participant requests BNPLC to pay as compensation for an increase
in required capital as provided in subparagraph 5(b)(ii) of the Land Lease.
"CAPITAL LEASE" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP or for federal income tax
purposes.
"CLOSING CERTIFICATE" means the Closing Certificate and Agreement dated
as of March 1, 2000 executed by NAI in favor of BNPLC, as such Closing
Certificate may be extended, supplemented, amended, restated or otherwise
modified from time to time in accordance with its terms.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall have the meaning assigned to it in the Pledge
Agreement.
"COLLATERAL PERCENTAGE" for each Base Rent Period means the Collateral
Percentage for such period determined under (and as defined in) the Pledge
Agreement; provided, however, for purposes of the Land Lease, the Collateral
Percentage for any Base Rent Period shall not exceed a fraction; the numerator
of which fraction shall equal the value (determined as provided in the Pledge
Agreement) of
Page 5
63
all Collateral (a) that is, on the first day of such period, held by the Deposit
Takers under (and as defined in) the Pledge Agreement subject to a Qualifying
Security Interest (as defined below), (b) that is free from claims or security
interests held or asserted by any third party, and (c) that is not in excess of
Stipulated Loss Value; and the denominator of which fraction shall equal the
Stipulated Loss Value on the first day of such period. "QUALIFYING SECURITY
INTEREST" means a first priority perfected security interest under the Pledge
Agreement.
"COMMON DEFINITIONS AND PROVISIONS AGREEMENT (PHASE V - LAND)" means
this Agreement, which is incorporated by reference into each of the other
Operative Documents.
"COMPLETION NOTICE (BUILDING 4)" means a notice given by NAI to BNPLC as
described in subparagraph 1(B) of the Construction Management Agreement,
advising BNPLC when the renovation of the portion of the Improvements designated
by NAI as "Building 4" are substantially complete and ready for occupancy by
NAI.
"COMPLETION NOTICE (FINAL)" means (1) a notice required by subparagraph
1(B) of the Construction Management Agreement from NAI to BNPLC, advising BNPLC
when construction of the Construction Project is substantially complete, or (2)
a notice permitted by subparagraph 6.(g) of the Improvements Lease from BNPLC to
NAI, advising NAI after any Landlord's Election to Complete Construction when
construction of the Construction Project is substantially complete or that BNPLC
no longer intends to continue such construction.
"CONSTRUCTION MANAGEMENT AGREEMENT" means the Construction Management
Agreement dated as of March 1, 2000 between BNPLC and NAI, as such Management
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"CONSTRUCTION PROJECT" means the new buildings or other substantial
Improvements to be constructed, or the alteration of existing Improvements, as
described generally in Exhibit B attached to the Construction Management
Agreement.
"CURRENT AS IS MARKET VALUE" means an amount equal to the fair market
value of BNPLC's interest in the Property (or any applicable portion thereof),
AS IS, WHERE IS AND WITH ALL FAULTS on the date in question. Whenever a
determination of Current AS IS Market Value is required by the express terms of
any Operative Document, it will be determined accordance with the following
procedure unless BNPLC and NAI have otherwise agreed in writing upon a Current
AS IS Market Value at that time:
(a) BNPLC and NAI shall each, within ten days after written
notice from either to the other, select an appraiser. If
either BNPLC or NAI fails to select an appraiser within
the required period, then the appraiser who has been
timely selected shall conclusively determine the fair
market value of the Property (or applicable portion
thereof) in accordance with this definition within
forty-five days after his or her selection.
(b) Upon the selection of the two appraisers as provided
above, such appraisers shall
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64
proceed to determine the fair market value of BNPLC's
interest in the Property (or applicable portion thereof)
in accordance with this clause (v). Such appraisals
shall be submitted in writing no later than forty-five
days after selection of the second appraiser. If the
fair market value as determined by such appraisers is
identical, such sum shall be Current AS IS Market Value.
If the fair market value indicated by the lower
appraisal differs from the fair market value indicated
by the higher appraisal by less than five percent (5%)
of the fair market value indicated by the higher
appraisal, then Current AS IS Market Value shall be the
sum of the two appraisal figures divided by two (2). If
either appraiser fails to timely submit his or her
appraisal, the timely submitted appraisal shall be
determinative of Current AS IS Market Value.
(c) If the fair market value indicated by the lower
appraisal differs from the fair market value indicated
by the higher appraisal by more than five percent (5%)
of the fair market value indicated by the higher
appraisal, then the two appraisers previously selected
shall select a third appraiser. The name of such
appraiser shall be submitted at the same time the
written appraisals are due. Such third appraiser shall
then review the previously submitted appraisals and
select the one that, in his professional opinion, more
closely reflects the fair market value of BNPLC's
interest in the Property (or applicable portion
thereof), such selection to be submitted in writing no
later than ten days after selection of the third
appraiser. Such selection shall be determinative of
Current AS IS Market Value.
(d) In making any such determination of fair market value,
the appraisers shall assume that any improvements then
located on the Property (or applicable portion thereof)
or under construction thereon constitute the highest and
best use, and that neither the Land Lease nor the
Purchase Agreement add any value to the Property. Each
appraiser selected hereunder shall be an independent
MAI-designated appraiser with not less than ten years'
experience in commercial real estate appraisal in
Sunnyvale, California and surrounding areas.
"DEBT" of any Person means (without duplication of any item): (a)
indebtedness of such Person for borrowed money; (b) indebtedness of such Person
for the deferred purchase price of property or services (except trade payables
and accrued expenses constituting current liabilities in the ordinary course of
business); (c) the face amount of any outstanding letters of credit issued for
the account of such Person; (d) obligations of such Person arising under
acceptance facilities; (e) guaranties, endorsements (other than for collection
in the ordinary course of business) and other contingent obligations of such
Person to purchase, to provide funds for payment, to provide funds to invest in
any Person, or otherwise to assure a creditor against loss; (f) obligations of
others secured by any Lien on property of such Person; (g) obligations of such
Person as lessee under Capital Leases; and (h) the obligations of such Person,
contingent or otherwise, under any lease of property or related documents
(including a separate purchase agreement) which provide that such Person or any
of its Affiliates must purchase or cause another Person to purchase any interest
in the leased property and thereby guarantee a minimum residual value of the
leased property to the lessor. For purposes of this definition, the amount of
the obligations described in clause (h) of the preceding sentence with respect
to any lease classified
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according to GAAP as an "operating lease," shall equal the sum of (1) the
present value of rentals and other minimum lease payments required in connection
with such lease [calculated in accordance with SFAS 13 and other GAAP relevant
to the determination of the whether such lease must be accounted for as an
operating lease or capital lease], plus (2) the fair value of the property
covered by the lease; provided, however, that such amount shall not exceed the
price, as of the date a determination of Debt is required hereunder, for which
the lessee can purchase the leased property pursuant to any valid ongoing
purchase option if, upon such a purchase, the lessee shall be excused from
paying rentals or other minimum lease payments that would otherwise accrue after
the purchase.
"DEFAULT" means any event which, with the passage of time or the giving
of notice or both, would (if not cured within any applicable cure period)
constitute an Event of Default.
"DEFAULT RATE" means, for any period prior to the Designated Sale Date,
a floating per annum rate equal to two percent (2%) above the Prime Rate, and
for any period commencing on or after the Designated Sale Date, Default Rate
shall mean a floating per annum rate equal to five percent (5%) above the Prime
Rate. However, in no event will the "Default Rate" at any time exceed the
maximum interest rate permitted by law.
"DEFAULTING PARTICIPANT" shall have the meaning assigned to it in
Section 1 of the Participation Agreement.
"DEPOSIT TAKER" shall have the meaning assigned to it in the Pledge
Agreement.
"DEPOSIT TAKER LOSSES" shall have the meaning assigned to it in the
Pledge Agreement.
"DESIGNATED SALE DATE" means the earlier of:
(1) the first Business Day of March, 2005; or
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by NAI to BNPLC; provided, that to be
effective for purposes of this definition, any such notice from
NAI to BNPLC must designate a Business Day that is more than
thirty days after the date of such notice; and provided, further,
to be effective for purposes of this definition, the notice must
include an express, unconditional, unequivocal and irrevocable
acknowledgment by NAI that because of NAI's election to
accelerate the Designated Sale Date, the Maximum Remarketing
Obligation will equal the Break Even Price under the Purchase
Agreement; or
(3) any Business Day designated as such in a notice given
by BNPLC to NAI after the effective date of any termination of
the Construction Management Agreement as provided in
subparagraphs 5(D) or 5(E) thereof; provided, that to be
effective for purposes of this definition, any such notice from
BNPLC to NAI must designate a Business Day that is more than
thirty days after the date of such notice; or
(4) [intentionally deleted]; or
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(5) any Business Day designated as such in a notice given
by BNPLC to NAI when any Event of Default has occurred and is
continuing; provided, that to be effective for purposes of this
definition, any such notice from BNPLC to NAI must designate a
Business Day that is more than thirty days after the date of such
notice.
"DEVELOPMENT DOCUMENTS" means the contracts, ordinances and other
documents described in Exhibit C attached to the Closing Certificate, as the
same may be modified from time to time in accordance with the Land Lease and the
Closing Certificate, and any applications, permits or certificates concerning or
affecting the use or development of the Property that may be submitted, issued
or executed from time to time as contemplated in such contracts, ordinances and
other documents or that BNPLC may hereafter execute, approve or consent to at
the request of NAI.
"DIRECT PAYMENTS TO PARTICIPANTS" means the amounts paid or required to
be paid directly to Participants on the Designated Sale Date as provided in
Section 6.2 of the Pledge Agreement at the direction of and for NAI by the
collateral agent appointed pursuant to the Pledge Agreement from all or any part
of the Collateral described therein.
"EFFECTIVE DATE" means March 1, 2000.
"EFFECTIVE RATE" means for each Base Rent Period, the per annum rate
determined by dividing (A) LIBOR for such Base Rent Period, as the case may be,
by (B) one hundred percent (100%) minus the Eurodollar Rate Reserve Percentage
for such Base Rent Period. If LIBOR or the Eurodollar Rate Reserve Percentage
changes from Base Rent Period to Base Rent Period, then the Effective Rate shall
be automatically increased or decreased as of the date of such change, as the
case may be, without prior notice to NAI. If for any reason BNPLC determines
that it is impossible or unreasonably difficult to determine the Effective Rate
with respect to a given Base Rent Period in accordance with the foregoing, then
the "EFFECTIVE RATE" for that Base Rent Period shall equal any published index
or per annum interest rate determined in good faith by BNPLC's Parent to be
comparable to LIBOR at the beginning of the first day of that period. A
comparable interest rate might be, for example, the then existing yield on short
term United States Treasury obligations (as compiled by and published in the
then most recently published United States Federal Reserve Statistical Release
H.15(519) or its successor publication), plus or minus a fixed adjustment based
on BNPLC's Parent's comparison of past eurodollar market rates to past yields on
such Treasury obligations. Any determination by BNPLC of the Effective Rate
under this definition shall, in the absence of clear and demonstrable error, be
conclusive and binding upon NAI.
"ENVIRONMENTAL LAWS" means any and all existing and future Applicable
Laws pertaining to safety, health or the environment, or to Hazardous Substances
or Hazardous Substance Activities, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, "CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, "RCRA").
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"ENVIRONMENTAL CUTOFF DATE" means the later of the dates upon which (i)
the Land Lease terminates, or (ii) NAI surrenders possession and control of the
Property and ceases to have interest in the Land or Improvements or rights with
respect thereto under any of the Operative Documents.
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by BNPLC or any
other Interested Party, directly or indirectly, relating to or arising out of,
based on or as a result of any of the following: (i) any Hazardous Substance
Activity on or prior to the Environmental Cutoff Date; (ii) any violation on or
prior to the Environmental Cutoff Date of any applicable Environmental Laws
relating to the Property or to the ownership, use, occupancy or operation
thereof; (iii) any investigation, inquiry, order, hearing, action, or other
proceeding by or before any governmental or quasi-governmental agency or
authority in connection with any Hazardous Substance Activity that occurs or is
alleged to have occurred on or prior to the Environmental Cutoff Date; or (iv)
any claim, demand, cause of action or investigation, or any action or other
proceeding, whether meritorious or not, brought or asserted against any
Interested Party which directly or indirectly relates to, arises from, is based
on, or results from any of the matters described in clauses (i), (ii), or (iii)
of this definition or any allegation of any such matters. For purposes of
determining whether Losses constitute "Environmental Losses," as the term is
used in the Land Lease, any actual or alleged Hazardous Substance Activity or
violation of Environmental Laws relating to the Property will be presumed to
have occurred prior to the Environmental Cutoff Date unless NAI establishes by
clear and convincing evidence to the contrary that the relevant Hazardous
Substance Activity or violation of Environmental Laws did not occur or commence
prior to the Environmental Cutoff Date.
"ENVIRONMENTAL REPORTS" means collectively the following reports
(whether one or more), which were provided by NAI to BNPLC prior to the
Effective Date: Phase I Environmental Site Assessment for 1260 Crossman Avenue
Property, Sunnyvale, California, dated September 1999 by Romig Consulting
Engineers.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA
is a member of NAI's controlled group, or under common control with NAI, within
the meaning of Section 414 of the Internal Revenue Code, and the regulations
promulgated and rulings issued thereunder.
"ESCROWED PROCEEDS" means, subject to the exclusions specified in the
next sentence, any money that is received by BNPLC from time to time during the
Term (and any interest earned thereon) from any party (1) under any property
insurance policy as a result of damage to the Property, (2) as compensation for
any restriction imposed by any governmental authority upon the use or
development of the Property or for the condemnation of the Property or any
portion thereof, (3) because of any judgment, decree or award for physical
damage to the Property or (4) as compensation under any title insurance policy
or otherwise as a result of any title defect or claimed title defect with
respect to the Property; provided, however, in determining the amount of
"Escrowed Proceeds" there shall be deducted all expenses and costs of every
type, kind and nature (including Attorneys' Fees) incurred by BNPLC to collect
such proceeds. Notwithstanding the foregoing, "Escrowed Proceeds" will not
include (A) any payment to BNPLC by a Participant or an Affiliate of BNPLC that
is made to compensate
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BNPLC for the Participant's or Affiliate's share of any Losses BNPLC may incur
as a result of any of the events described in the preceding clauses (1) through
(4), (B) any money or proceeds that have been applied as a Qualified Prepayment
or to pay any Breakage Costs or other costs incurred in connection with a
Qualified Prepayment, (C) any money or proceeds that, after no less than ten
days notice to NAI, BNPLC returns or pays to a third party because of BNPLC's
good faith belief that such return or payment is required by law, (D) any money
or proceeds paid by BNPLC to NAI or offset against any amount owed by NAI, or
(E) any money or proceeds used by BNPLC in accordance with the Land Lease for
repairs or the restoration of the Property or to obtain development rights or
the release of restrictions that will inure to the benefit of future owners or
occupants of the Property. Until Escrowed Proceeds are paid to NAI pursuant to
Paragraph 10 of the Land Lease, transferred to a purchaser under the Purchase
Agreement as therein provided or applied as a Qualified Prepayment or as
otherwise described in the preceding sentence, BNPLC shall keep the same
deposited in one or more interest bearing accounts, and all interest earned on
such account shall be added to and made a part of Escrowed Proceeds.
"ESTABLISHED MISCONDUCT" of a Person means, and is limited to: (1) if
the Person is bound by the Operative Documents or the Participation Agreement, a
breach by such Person of the express provisions of the Operative Documents or
the Participation Agreement, as applicable, that continues beyond any period for
cure provided therein, and (2) conduct of such Person or its Affiliates that has
been determined to constitute wilful misconduct or Active Negligence in or as a
necessary element of a final judgment rendered against such Person by a court
with jurisdiction to make such determination. Established Misconduct of one
Interested Party shall not be attributed to a second Interested Party unless the
second Interested Party is an Affiliate of the first. Negligence which does not
constitute Active Negligence shall not in any event constitute Established
Misconduct. For purposes of this definition, "conduct of a Person" will include
(1) the conduct of an employee of that Person, but only to the extent that the
employee is acting within the scope of his employment by that Person, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination, and (2) the
conduct of an agent of that Person (such as an independent environmental
consultant engaged by that Person), but only to the extent that the agent is, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination, (x) acting
within the scope of the authority granted to him by such Person, (y) not acting
with the consent or approval of or under the direction of NAI or NAI's
Affiliates, employees or agents, and (z) not acting in good faith to mitigate
Losses that such Person may suffer because of a breach or repudiation by NAI of
the Land Lease or the Purchase Documents.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining
the Effective Rate for any Base Rent Period, the reserve percentage applicable
two Business Days before the first day of such period under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) for BNPLC's
Parent with respect to liabilities or deposits consisting of or including
Eurocurrency Liabilities (or with respect to any other
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category or liabilities by reference to which LIBOR is determined) having a term
comparable to such period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in subparagraph
17 of the Land Lease.
"EXCLUDED TAXES" means (1) all federal, state and local income taxes
upon Base Rent, any interest paid to BNPLC or any Participant pursuant to
subparagraph 3(j) of the Land Lease, and any additional compensation claimed by
BNPLC pursuant to subparagraph 5(b)(ii) of the Land Lease; (2) any transfer or
change of ownership taxes assessed because of BNPLC's transfer or conveyance to
any third party of any rights or interest in the Land Lease, the Purchase
Agreement or the Property (other than any such taxes assessed because of any
Permitted Transfer under clauses (1), (3), (4), (5), (6) or (7) of the
definition of Permitted Transfer in this Agreement), (3) all federal, state and
local income taxes upon any amounts paid as reimbursement for or to satisfy
Losses incurred by BNPLC or any Participant to the extent such taxes are offset
by a corresponding reduction of BNPLC's or the applicable Participant's income
taxes because of BNPLC's or such Participant's deduction of the reimbursed
Losses from its taxable income or because of any tax credits attributable
thereto. If, however, a change in Applicable Laws after the Effective Date
results in an increase in such taxes for any reason other than an increase in
the applicable tax rates (e.g., a disallowance of deductions that would
otherwise be available against payments described in clause (A) of this
definition), then for purposes of the Operative Documents, the term "Excluded
Taxes" will not include the increase in such taxes attributable to the change.
"EXISTING CONTRACT" means the Purchase Agreement covering the Land
between NAI and Seller, dated September 9, 1999.
"FAILED COLLATERAL TEST DATE" means any date upon which commences a
Mandatory Collateral Period as described in Part III of Schedule 1 attached to
the Land Lease.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rates are not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by BNPLC's Parent from three Federal funds brokers of
recognized standing selected by BNPLC's Parent. All determinations of the Fed
Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon NAI.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
subparagraph 13(a) of the Land Lease (except for changes with which NAI's
independent public accountants concur).
"HAZARDOUS SUBSTANCE" means (i) any chemical, compound, material,
mixture or substance that is now or hereafter defined or listed in, regulated
under, or otherwise classified pursuant to, any
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Environmental Laws as a "hazardous substance," "hazardous material," "hazardous
waste," "extremely hazardous waste or substance," "infectious waste," "toxic
substance," "toxic pollutant," or any other formulation intended to define, list
or classify substances by reason of deleterious properties, including
ignitability, corrosiveness, reactivity, carcinogenicity, toxicity or
reproductive toxicity; (ii) petroleum, any fraction of petroleum, natural gas,
natural gas liquids, liquified natural gas, synthetic gas usable for fuel (or
mixtures of natural gas and such synthetic gas), and ash produced by a resource
recovery facility utilizing a municipal solid waste stream, and drilling fluids,
produced waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iii) asbestos and
any asbestos containing material; and (v) any other material that, because of
its quantity, concentration or physical or chemical characteristics, poses a
significant present or potential hazard to human health or safety or to the
environment if released into the workplace or the environment.
"HAZARDOUS SUBSTANCE ACTIVITY" means any actual, proposed or threatened
use, storage, holding, release (including any spilling, leaking, leaching,
pumping, pouring, emitting, emptying, dumping, disposing into the environment,
and the continuing migration into or through soil, surface water, groundwater or
any body of water), discharge, deposit, placement, generation, processing,
construction, treatment, abatement, removal, disposal, disposition, handling or
transportation of any Hazardous Substance from, under, in, into or on the
Property, including the movement or migration of any Hazardous Substance from
surrounding property, surface water, groundwater or any body of water under, in,
into or onto the Property and any resulting residual Hazardous Substance
contamination in, on or under the Property. "HAZARDOUS SUBSTANCE ACTIVITY" also
means any existence of Hazardous Substances on the Property that would cause the
Property or the owner or operator thereof to be in violation of, or that would
subject the Property to any remedial obligations under, any Environmental Laws,
including CERCLA and RCRA, assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances pertaining to
the Property.
"IMPOSITIONS" means all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes, levies, fees,
charges, surcharges, assessments or penalties which arise out of or are
attributable to the Land Lease or which are imposed upon BNPLC or the Property
because of the ownership, leasing, occupancy, sale or operation of the Property,
or any part thereof or interest therein, or relating to or required to be paid
by any of the Permitted Encumbrances or the Development Documents, excluding
only Excluded Taxes. "IMPOSITIONS" shall include real estate taxes imposed
because of a change of use or ownership of the Property on or prior to the date
of any sale by BNPLC pursuant to the Purchase Agreement.
"IMPROVEMENTS" means any and all (1) buildings and other real property
improvements now or hereafter erected on the Land, and (2) equipment (e.g., HVAC
systems, elevators and plumbing fixtures) attached to the buildings or other
real property improvements, the removal of which would cause structural or other
material damage to the buildings or other real property improvements or would
materially and adversely affect the value or use of the buildings or other real
property improvements.
"INITIAL FUNDING ADVANCE" means the advance made by BNPLC's Parent
(directly or through one or more of its Affiliates) to or on behalf of BNPLC on
or prior to the Effective Date to cover the cost of BNPLC's acquisition of the
Property and certain Transaction Expenses and other amounts described in this
definition. The amount of the Initial Funding Advance may be confirmed by a
separate
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closing certificate executed by NAI as of the Effective Date. To the extent that
BNPLC does not itself use the entire Initial Funding Advance to pay Transaction
Expenses incurred by BNPLC, the remainder thereof will be advanced to NAI, with
the understanding that NAI shall use any such amount advanced for one or more of
the following purposes: (1) the payment or reimbursement of Transaction Expenses
incurred by NAI; (2) the maintenance of the Property; or (3) the payment of
Rents next due.
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) any other Participants and their permitted
successors and assigns under the Participation Agreement; provided, however,
none of the following shall constitute an Interested Party: (a) any Person to
whom BNPLC may transfer an interest in the Property by a conveyance that is not
a Permitted Transfer and others that cannot lawfully claim an interest in the
Property except through or under such a transfer by BNPLC, (b) NAI or any Person
that cannot lawfully claim an interest in the Property except through or under a
conveyance from NAI, or (c) any Applicable Purchaser under the Purchase
Agreement and any Person that cannot lawfully claim an interest in the Property
except through or under a conveyance from such Applicable Purchaser.
"ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT" means
an Event of Default that is unrelated to the Property or the use or maintenance
thereof and that results solely from (A) a breach by NAI of a provision in any
Operative Document, the occurrence of which breach cannot be objectively
determined, or (B) any other event described in subparagraph 17(e) of the Land
Lease, the occurrence of which event cannot be objectively determined. For
example, an Event of Default under subparagraph 17(e) of the Land Lease
resulting solely from a failure of NAI to "generally" pay its debts as such
debts become due (in contrast to a failure of NAI to pay Rent to BNPLC as it
becomes due under the Land Lease) would constitute an Issue 97-1
Non-performance-related Subjective Event of Default. In no event, however, will
the term "Issue 97-1 Non-performance-related Subjective Event of Default"
include an Event of Default resulting from (1) a failure of NAI to make any
payment required to BNPLC under the Operative Documents, (2) a breach by NAI of
the provisions set forth in Schedule 1 attached to the Land Lease (which set
forth financial covenants), (3) any failure of NAI to use, maintain and insure
the Property in accordance with the requirements of the Land Lease, or (4) any
failure of NAI to pay the full amount of any Supplemental Payment on the
Designated Sale Date as required by the Purchase Agreement. Except as provided
in subparagraph 1(A)(2)(c)(i) of the Purchase Agreement, the characterization of
any Event of Default as an Issue 97-1 Non-performance-related Subjective Event
of Default will not affect the rights or remedies available to BNPLC because of
the Event of Default.
"LAND" means the land covered by the land described in Exhibit A
attached to the Closing Certificate, the Land Lease and the Purchase Agreement.
"LAND LEASE" means the Lease Agreement (Phase V - Land") dated as of
March 1, 2000 between BNPLC, as landlord, and NAI, as tenant, pursuant to which
NAI has agreed to lease BNPLC's interest in the Property, as such Lease
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
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"LIBOR" means, for purposes of determining the Effective Rate for each
Base Rent Period, the rate determined by BNPLC's Parent to be the average rate
of interest per annum (rounded upwards, if necessary, to the next 1/16 of 1%) of
the rates at which deposits of dollars are offered or available to BNPLC's
Parent in the London interbank market at approximately 11:00 a.m. (London time)
on the second Business Day preceding the first day of such period. BNPLC shall
instruct BNPLC's Parent to consider deposits, for purposes of making the
determination described in the preceding sentence, that are offered: (i) for
delivery on the first day of such Base Rent Period, as the case may be, (ii) in
an amount equal or comparable to the total (projected on the applicable date of
determination by BNPLC's Parent) Stipulated Loss Value on the first day of such
period, and (iii) for a time equal or comparable to the length of such period.
If BNPLC's Parent so chooses, it may determine LIBOR for any period by reference
to the rate reported by the British Banker's Association on Page 3750 of the
Telerate Service at approximately 11:00 a.m. (London time) on the second
Business Day preceding the first day of such period. If for any reason BNPLC's
Parent determines that it is impossible or unreasonably difficult to determine
LIBOR with respect to a given Base Rent Period in accordance with the foregoing,
or if BNPLC's Parent shall determine that it is unlawful (or any central bank or
governmental authority shall assert that it is unlawful) for BNPLC, BNPLC's
Parent or any Participant to provide or maintain the Initial Funding Advance
during any Base Rent Period for which Base Rent is computed by reference to
LIBOR, then "LIBOR" for that period shall equal the Base Rate for that period.
All determinations of LIBOR by BNPLC's Parent shall, in the absence of clear and
demonstrable error, be binding and conclusive upon NAI.
"LIBOR PERIOD ELECTION" for any Base Rent Period means a period of one
month, three months or six months as designated by NAI at least five Business
Days prior to the commencement of such Base Rent Period by a notice given to
BNPLC in the form of Exhibit C attached to the Land Lease. (For purposes of the
Land Lease a LIBOR Period Election for any Base Rent Period shall also be
considered the LIBOR Period Election in effect on the Base Rent Date, or Base
Rent Commencement Date, upon which such Base Rent Period begins.) Any LIBOR
Period Election so designated by NAI shall remain in effect for the entire Base
Rent Period specified in NAI's notice to BNPLC (provided such Base Rent Period
commences at least ten Business Days after BNPLC's receipt of the notice) and
for all subsequent Base Rent Periods until a new designation becomes effective
in accordance with the provisions set forth in this definition. Notwithstanding
the foregoing, however: (1) NAI shall not be entitled to designate a LIBOR
Period Election that would cause a Base Rent Period to extend beyond the end of
the scheduled Term; (2) changes in the LIBOR Period Election shall become
effective only upon the commencement of a new Base Rent Period; (3) for each
Base Rent Period that commences prior the Base Rent Commencement Date or that
occurs within any Mandatory Collateral Period, the LIBOR Period Election shall
be one month; (4) no LIBOR Period Election designated by NAI hereunder shall be
different than the LIBOR Period Election specified under (and as defined in) the
Other Common Definitions and Provisions Agreement; and (5) if NAI fails to make
a LIBOR Period Election consistent with the foregoing requirements for any Base
Rent Period, or if an Event of Default shall have occurred and be continuing on
the third Business Day preceding the commencement of any Base Rent Period, the
LIBOR Period Election for such Base Rent Period shall be deemed to be one month.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing
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of or agreement to give any financing statement under the Uniform Commercial
Code of any jurisdiction). In addition, for purposes of subparagraph A.(8) of
Part IV of Schedule 1 attached to the Land Lease, "Lien" includes any Liens
under ERISA relating to Unfunded Benefit Liabilities of which NAI is required to
notify BNPLC under subparagraph 13(a)(vii) of the Land Lease (irrespective of
whether NAI actually notifies BNPLC as required thereunder).
"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering
the Property that are asserted (1) other than as contemplated in the Operative
Documents, by BNPLC itself, (2) by third parties lawfully claiming through or
under BNPLC (which for purposes of the Land Lease shall include any judgment
liens established against the Property because of a judgment rendered against
BNPLC and shall also include any liens established against the Property to
secure past due Excluded Taxes), or (3) by third parties lawfully claiming under
a deed or other instrument duly executed by BNPLC; provided, however, Liens
Removable by BNPLC shall not include (A) any Permitted Encumbrances or
Development Documents (regardless of whether claimed through or under BNPLC),
(B) the Operative Documents or any other document executed by BNPLC with the
knowledge of (and without objection by) NAI's counsel contemporaneously with the
execution and delivery of the Operative Documents, (C) Liens which are neither
lawfully claimed through or under BNPLC (as described above) nor claimed under a
deed or other instrument duly executed by BNPLC, (D) Liens claimed by NAI or
claimed through or under a conveyance made by NAI, (E) Liens arising because of
BNPLC's compliance with Applicable Law, the Operative Documents, Permitted
Encumbrances, the Development Documents or any written request made by NAI, (F)
Liens securing the payment of property taxes or other amounts assessed against
the Property by any governmental authority, other than to secure the payment of
past due Excluded Taxes or to secure damages caused by (and attributed by any
applicable principles of comparative fault to) BNPLC's own Established
Misconduct, (G) Liens resulting from or arising in connection with any breach by
NAI of the Operative Documents; or (H) Liens resulting from or arising in
connection with any Permitted Transfer that occurs more than thirty days after
any Designated Sale Date upon which, for any reason, NAI or an Affiliate of NAI
or any Applicable Purchaser shall not purchase BNPLC's interest in the Property
pursuant to the Purchase Agreement for a cash price to BNPLC (when taken
together with any Supplemental Payment made by NAI pursuant to Paragraph 1(A)(2)
of the Purchase Agreement, in the case of a purchase by an Applicable Purchaser)
equal to the Break Even Price.
"LOSSES" means the following: any and all losses, liabilities, damages
(whether actual, consequential, punitive or otherwise denominated), demands,
claims, administrative or legal proceedings, actions, judgments, causes of
action, assessments, fines, penalties, costs and expenses (including Attorneys'
Fees and the fees of outside accountants and environmental consultants), of any
and every kind or character, foreseeable and unforeseeable, liquidated and
contingent, proximate and remote.
"MANDATORY COLLATERAL PERIOD" shall have the meaning assigned to it in
Part I of Schedule 1 attached to the Land Lease and to the Pledge Agreement.
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between NAI
or its agents and a regulatory agency or third party, which causes, or
potentially could cause (whether by
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implementation of or response to said communication), a material change in the
scope, duration, or nature of any Remedial Work.
"MAXIMUM REMARKETING OBLIGATION" shall have the meaning indicated in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"MINIMUM EXTENDED REMARKETING PRICE" shall have the meaning assigned to
it in subparagraph 2(B) of the Purchase Agreement.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
3(37) of ERISA to which contributions have been made by NAI or any ERISA
Affiliate during the preceding six years and which is covered by Title IV of
ERISA.
"NAI" means Network Appliance, Inc., a California corporation.
"NAI'S EXTENDED REMARKETING PERIOD" shall have the meaning assigned to
it in subparagraph 2(A) of the Purchase Agreement.
"NAI'S EXTENDED REMARKETING RIGHT" shall have the meaning assigned to it
in subparagraph 2(A) of the Purchase Agreement.
"NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS" shall have the
meaning assigned to it in subparagraph 1(A)(2) of the Purchase Agreement.
"OPERATIVE DOCUMENTS" means the Closing Certificate, the Land Lease, the
Purchase Agreement, the Pledge Agreement and this Common Definitions and
Provisions Agreement (Phase V - Land).
"OTHER COMMON DEFINITIONS AND PROVISIONS AGREEMENT" means the Common
Definitions and Provisions Agreement (Phase V - Improvements), dated as of the
March 1, 2000, between BNPLC and NAI, as such Common Definitions and Provisions
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"OTHER LEASE AGREEMENT" means the Lease Agreement (Phase V -
Improvements), dated as of March 1, 2000, between BNPLC and NAI, as such Lease
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"OTHER PURCHASE AGREEMENT" means the Purchase Agreement (Phase V -
Improvements), dated as of March 1, 2000, between BNPLC and NAI, as such
Purchase Agreement may be extended, supplemented, amended, restated or otherwise
modified from time to time in accordance with its terms.
"PARTICIPANT" means BNPLC's Parent and any other Person that, upon
becoming a party to the Participation Agreement and the Pledge Agreement by
executing supplements as contemplated therein, agrees from time to time to
participate in all or some of the risks and rewards to BNPLC of the Land Lease
and the Purchase Documents. As of the Effective Date, the only Participant is
BNPLC's Parent, but BNPLC may agree after the Effective Date to share in risks
and rewards of the Land Lease and the
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Purchase Documents with other Participants. However, no Person other than
BNPLC's Parent and its Affiliates shall qualify as a Participant for purposes of
the Operative Documents or other agreements concerning the Property to which NAI
is a party unless such Person, during the continuance of an Event of Default or
otherwise with NAI's prior written approval (which approval will not be
unreasonably withheld), became a party to the Pledge Agreement and to the
Participation Agreement by executing supplements to those agreements as
contemplated therein.
"PARTICIPATION AGREEMENT" means the Participation Agreement between
BNPLC and BNPLC's Parent dated as of the March 1, 2000, pursuant to which
BNPLC's Parent has agreed to participate in the risks and rewards to BNPLC of
the Land Lease and the other Operative Documents, as such Participation
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED ENCUMBRANCES" means (i) the encumbrances and other matters
affecting the Property that are set forth in Exhibit B attached to the Closing
Certificate, (ii) any easement agreement or other document affecting title to
the Property executed by BNPLC at the request of or with the consent of NAI
(including the Other Lease Agreement, the Other Purchase Agreement and all
documents executed by BNPLC pursuant to the Other Purchase Agreement), (iii) the
Premises Lease, (iv) any Liens securing the payment of Impositions which are not
delinquent or claimed to be delinquent or which are being contested in
accordance with subparagraph 5(a) of the Land Lease, and (iv) mechanics' and
materialmen's liens for amounts not past due or claimed to be past due or which
are being contested in accordance with subparagraph 11(c) of the Land Lease.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage
and offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not:
(1) exceed that reasonably required for the construction
of the Construction Project in accordance with the Other Lease
Agreement and the Construction Management Agreement or for the
operation of the Property for the purposes expressly permitted
under subparagraph 2(a) of the Land Lease; or
(2) include any disposal, discharge or other release of
Hazardous Substances from the Property in any manner that might
allow such substances to reach surface water or groundwater,
except (i) through a lawful and properly authorized discharge (A)
to a publicly owned treatment works or (B) with rainwater or
storm water runoff in accordance with Applicable Laws and any
permits obtained by NAI that govern such runoff; or (ii) any such
disposal, discharge or other release of Hazardous Substances for
which no permits are required and which are not otherwise
regulated under applicable Environmental Laws.
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Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for the construction of the Construction Project or for the
use of the Property by NAI and its permitted subtenants and assigns for the
purposes expressly permitted by subparagraph 2(a) of the Land Lease, in either
case in strict compliance with all Environmental Laws and with due care given
the nature of the Hazardous Substances involved. Without limiting the generality
of the foregoing, Permitted Hazardous Substances shall include usual and
customary office, laboratory and janitorial products.
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance by BNPLC of rights and interests in favor of any
Participant pursuant to the Participation Agreement; (2) the creation or
conveyance of rights and interests in favor of or to Banque Nationale de Paris
(through its San Francisco Branch or otherwise), as BNPLC's Parent, or any other
Qualified Affiliate of BNPLC, provided that NAI must be notified before any such
conveyance to Banque Nationale de Paris or another Qualified Affiliate of (A)
any interest in the Property or any portion thereof by an assignment or other
document which will be recorded in the real property records of San Mateo
County, California or (B) BNPLC's entire interest in the Land and the Property;
(3) any assignment or conveyance by BNPLC or its permitted successors or assigns
to any present or future Participant of any lien or security interest against
the Property (in contrast to a conveyance of BNPLC's fee estate in the Land and
Improvements) or of any interest in Rent, payments required by or under the
Purchase Documents or payments to be generated from the Property after the Term,
provided that such assignment or conveyance is made expressly subject to the
rights of NAI under the Operative Documents; (4) any agreement to exercise or
refrain from exercising rights or remedies under the Operative Documents made by
BNPLC with any present or future Participant; (5) any assignment or conveyance
by BNPLC requested by NAI or required by any Permitted Encumbrance, by the
Purchase Agreement, by the Existing Contract, by any other Development Contract
or by Applicable Laws; or (6) any assignment or conveyance after a Designated
Sale Date on which NAI shall not have purchased or caused an Applicable
Purchaser to purchase BNPLC's interest in the Property and, if applicable, after
the expiration of the thirty day cure period specified in Paragraph 4(D) of the
Purchase Agreement.
"PERSON" means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or agency or political subdivision
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
"PERSONAL PROPERTY" shall have the meaning assigned to it on page 2 of
the Land Lease.
"PLAN" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by NAI or any ERISA
Affiliate of NAI during the preceding six years and which is covered by Title IV
of ERISA, other than a Multiemployer Plan.
"PLEDGE AGREEMENT" means the Pledge Agreement (Phase V - Land) dated as
of the date hereof between BNPLC and NAI, pursuant to which NAI may pledge
certificates of deposit as security for NAI's obligations under the Purchase
Agreement (and for the corresponding obligations of BNPLC to
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the Participants under the Participation Agreement), as such Pledge Agreement
may be extended, supplemented, amended, restated or otherwise modified from time
to time in accordance with its terms.
"PREMISES LEASE" means the sublease of space within the Improvements,
between NAI, as landlord, and Lockheed Martin, a Maryland corporation, as
tenant, executed of even date herewith, and any subleases or other transfers
under and permitted by the terms of any such lease.
"PRIME RATE" means the prime interest rate or equivalent charged by
BNPLC's Parent in the United States of America as announced or published by
BNPLC's Parent from time to time, which need not be the lowest interest rate
charged by BNPLC's Parent. If for any reason BNPLC's Parent does not announce or
publish a prime rate or equivalent, the prime rate or equivalent announced or
published by either CitiBank, N.A. or any New York branch or office of Credit
Commercial de France as selected by BNPLC shall be used to compute the rate
describe in the preceding sentence. The prime rate or equivalent announced or
published by such bank need not be the lowest rate charged by it. The Prime Rate
may change from time to time after the Effective Date without notice to NAI as
of the effective time of each change in rates described in this definition.
"PROPERTY" means the Personal Property and the Real Property,
collectively. Any rights, titles and interests acquired by BNPLC under the
Existing Contract, to the extent not covered by the Land Lease and thus not
encompassed within this definition of Property, are intended to be covered by
the Other Lease Agreement and encompassed within the term "Property" as defined
in the Other Common Definitions and Provisions Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement (Phase V - Land) dated
as of March 1, 2000 between BNPLC and NAI, as such Purchase Agreement may be
extended, supplemented, amended, restated or otherwise modified from time to
time in accordance with its terms.
"PURCHASE DOCUMENTS" means collectively (1) the Purchase Agreement, (2)
the Memorandum of Purchase Agreement executed by BNPLC and NAI as of the
Effective Date and recorded to provide notice of the Purchase Agreement; and (3)
the Pledge Agreement and all financing statements, notices, acknowledgments and
certificates of deposit executed or delivered from time to time by NAI, BNPLC or
the other parties to the Pledge Agreement pursuant to and as expressly provided
therein.
"PURCHASE OPTION" shall have the meaning assigned to it in subparagraph
1(A)(1) of the Purchase Agreement.
"QUALIFIED AFFILIATE" means any Person that is one hundred percent
(100%) owned, directly or indirectly, by Banque Nationale de Paris or any
successor of such bank; provided, that such Person can make (and has in writing
made) the same representations to NAI that BNPLC has made in Paragraphs 3(D) and
3(E) of the Closing Certificate; and, provided, further, that such Person is not
insolvent.
"QUALIFIED PREPAYMENTS" means any payments received by BNPLC from time
to time during the Term (1) under any property insurance policy as a result of
damage to the Property, (2) as compensation for any restriction placed upon the
use or development of the Property or for the condemnation of the Property or
any portion thereof, (3) because of any judgment, decree or award for
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injury or damage to the Property or (4) under any title insurance policy or
otherwise as a result of any title defect or claimed title defect with respect
to the Property; provided, however, that (x) in determining the amount of
"Qualified Prepayments", there shall be deducted all expenses and costs of every
kind, type and nature (including taxes, Breakage Costs and Attorneys' Fees)
incurred by BNPLC with respect to the collection or application of such
payments, (y) "Qualified Prepayments" shall not include any payment to BNPLC by
a Participant or an Affiliate of BNPLC that is made to compensate BNPLC for the
Participant's or Affiliate's share of any Losses BNPLC may incur as a result of
any of the events described in the preceding clauses (1) through (4) and (z)
"Qualified Prepayments" shall not include any payments received by BNPLC that
BNPLC has paid or is obligated to pay to NAI for the restoration or repair of
the Property or that BNPLC is holding as Escrowed Proceeds pursuant to Paragraph
10 of the Land Lease or any other provision of the Land Lease. For purposes of
computing the total Qualified Prepayments (and other amounts dependent upon
Qualified Prepayments, such as Stipulated Loss Value) paid to or received by
BNPLC as of any date, payments described in the preceding clauses (1) through
(4) will be considered as Escrowed Proceeds, not Qualified Prepayments, until
they are actually applied as Qualified Prepayments by BNPLC as provided in the
Paragraph 10 of the Land Lease.
"REAL PROPERTY" shall have the meaning assigned to it on page 1 of the
Land Lease.
"REMEDIAL WORK" means any investigation, monitoring, clean-up,
containment, remediation, removal, payment of response costs, or restoration
work and the preparation and implementation of any closure or other required
remedial plans that any governmental agency or political subdivision requires or
approves (or could reasonably be expected to require if it was aware of all
relevant circumstances concerning the Property), whether by judicial order or
otherwise, because of the presence of or suspected presence of Hazardous
Substances in, on, under or about the Property or because of any prior Hazardous
Substance Activity. Without limiting the generality of the foregoing, Remedial
Work also means any obligations imposed upon or undertaken by NAI pursuant to
Development Documents or any recommendations or proposals made therein.
"RENT" means the Base Rent and all Additional Rent.
"RESIDUAL RISK PERCENTAGE" means fifteen percent (15%).
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of NAI.
"SALE CLOSING DOCUMENTS" shall have the meaning assigned to it in
subparagraph 1(C) of the Purchase Agreement.
"SECURED SPREAD" means thirty basis points (30/100 of 1%); provided,
however, that for purposes of calculating the Base Rent for any Mandatory
Collateral Period, the Secured Spread shall equal one-half of the Unsecured
Spread for the same period.
"SELLER" means Trinet Essential Facilities XII, Inc., a Maryland
corporation.
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"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum
of the Initial Funding Advance, minus all funds actually received by BNPLC and
applied as Qualified Prepayments on or prior to such date. Under no
circumstances will any payment of Base Rent reduce Stipulated Loss Value.
"STIPULATED LOSS VALUE (BUILDING 4/LAND)" as of any date means the
amount equal to the sum of portion of Stipulated Loss Value attributable to the
portion of the Land under or used primarily to support the portion of the
Improvements known as "Building 4" (in this definition, the "Building 4 Land")
determined in accordance with the following provisions:
(1) The Initial Funding Advance will be allocated between
Stipulated Loss Value (Building 4/Land) and the remainder of
Stipulated Loss Value as reasonably determined by NAI, subject to
the approval of BNPLC, in a manner that fairly reflects the cost
of the Building 4 Land under or used primarily to support
Building 4 relative to the cost of all the Land.
(2) The application of Qualified Prepayments, if any, will
be allocated between Stipulated Loss Value (Building 4/Land) and
the remainder of Stipulated Loss Value as determined by NAI,
subject to the approval of BNPLC, in a manner that fairly
reflects the impact upon the value of the Building 4 Land,
relative to the value of all Land, resulting from the event or
circumstances that generated such Qualified Prepayments. (For
example, condemnation proceeds paid because of a taking of a
portion of the Building 4 Land, and no other part of the Land,
would, if applied as Qualified Prepayments, reduce Stipulated
Loss Value (Building 4/Land) dollar for dollar.)
(3) In any Completion Notice (Building 4), as defined in
the Other Common Definitions and Provisions Agreement, NAI will
specify its determination of Stipulated Loss Value (Building
4/Land), as well as NAI's determination of the Stipulated Loss
Value (Building 4) under and as defined in the Other Common
Definitions and Provisions Agreement, which determinations will
be binding upon NAI for purposes of the Operative Documents
unless BNPLC notifies NAI of BNPLC's disapproval of such
determinations, in which case BNPLC shall itself be entitled to
make such determinations.
(4) In any event, if NAI has not notified BNPLC of NAI's
determination of Stipulated Loss Value (Building 4/Land) at the
time a determination thereof is needed under the Operative
Documents, BNPLC shall itself be entitled to make such
determination in goof faith on the basis of any information then
available to BNPLC, and any such determination by BNPLC shall, in
the absence of clear and demonstrable error, be binding and
conclusive for purposes of the Operative Documents.
"SUBSIDIARY" means, with respect to any Person, any Affiliate of which
at least a majority of the securities or other ownership interests having
ordinary voting power then exercisable for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by such Person.
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"SUPPLEMENTAL PAYMENT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"TERM" shall have the meaning assigned to it in subparagraph 1(a) of the
Land Lease.
"THIRD PARTY PRICE" shall have the meaning assigned to it in
subparagraph 1(A)(2) of the Purchase Agreement.
"THIRD PARTY SALE NOTICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY SALE PROPOSAL" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY TARGET PRICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"TRANSACTION EXPENSES" means costs incurred in connection with the
preparation and negotiation of the Operative Documents and related documents and
the consummation of the transactions contemplated therein.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan or
Multiemployer Plan, the amount (if any) by which the present value of all
benefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under
the Plan or Multiemployer Plan exceeds the market value of all Plan or
Multiemployer assets allocable to such benefit liabilities, as determined on the
most recent valuation date of the Plan or Multiemployer Plan and in accordance
with the provisions of ERISA for calculating the potential liability of NAI or
any ERISA Affiliate of NAI under Title IV of ERISA.
"UNSECURED SPREAD" means, for each period beginning on and including the
Base Rent Commencement Date or a Base Rent Date and ending on but not including
the next Base Rent Date, the amount established as described below in this
definition on the date (in this definition, the "SPREAD TEST DATE") that is two
Business Days prior to such period by reference to the ratio calculated by
dividing (1) Adjusted EBIT for the then latest Rolling Four Quarters Period that
ended prior to (and for which NAI has reported earnings as necessary to compute
Adjusted EBIT) into (2) the total Debt of NAI and its Subsidiaries (determined
on a consolidated basis) as of the end of such Rolling Four Quarters Period. The
Unsecured Spread shall be established at the Level in the pricing grid below
which corresponds to such ratio; provided, that:
(a) for any period commencing on or prior to the first Business
Day of April, 2000, the Unsecured Spread will be the amount indicated
for Level III in the pricing grid below;
(b) promptly after earnings are reported by NAI for the latest
quarter in any Rolling Four Quarters Period, NAI must notify BNPLC of
any resulting change in the Unsecured Spread under this definition, and
no reduction in the Unsecured Spread from one period to the next will be
effective for purposes of the Operative Documents unless, prior to the
Spread Test Date for
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the next period, NAI shall have provided BNPLC with a written notice
setting forth and certifying the calculation under this definition that
justifies the reduction; and
(c) notwithstanding anything to the contrary in this definition,
on any date when an Event of Default has occurred and is continuing, the
Unsecured Spread shall equal the Default Rate less the Effective Rate.
LEVELS RATIO OF TOTAL DEBT TO ADJUSTED EBIT UNSECURED SPREAD
-------- ------------------------------------ ------------------
Level I less than 0.5 125.0 basis points
Level II greater than or equal to 0.5, but 137.5 basis points
less than 1.0
Level III greater than or equal to 1.0, but 150.0 basis points
less than 1.5
Level IV greater than or equal to 1.5, but 175.0 basis points
less than 2.0
Level V greater than or equal to 2.0 200.0 basis points
All determinations of the Unsecured Spread by BNPLC shall, in the absence of
clear and demonstrable error, be binding and conclusive for purposes of the Land
Lease. Further BNPLC may, but shall not be required, to rely on the
determination of the Unsecured Spread set forth in any notice delivered by NAI
as described above in clause (b) of this definition.
"VOLUNTARY RETENTION OF THE PROPERTY" means an affirmative election made
by BNPLC to keep the Property pursuant to, and under the circumstances described
in, the second sentence of subparagraph 1(A)(2)(a) of the Purchase Agreement.
ARTICLE II - RULES OF INTERPRETATION
THE FOLLOWING PROVISIONS WILL APPLY TO AND GOVERN THE INTERPRETATION OF
EACH OF THE OPERATIVE DOCUMENTS:
1. NOTICES. The provision of any Operative Document, or of any
Applicable Laws with reference to the sending, mailing or delivery of any notice
or demand under any Operative Document or with reference to the making of any
payment required under any Operative Document, shall be deemed to be complied
with when and if the following steps are taken:
(i) All Rent and other amounts required to be paid by NAI
to BNPLC shall be paid to BNPLC in immediately available funds by wire
transfer to:
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Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Sunnyvale Synthetic Land Lease (Phase V)
or at such other place and in such other manner as BNPLC may
designate in a notice to NAI.
(ii) All Collateral required to be paid by NAI to the
Agent shall be paid in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Collateral Payment
or at such other place and in such other manner as Agent may
designate in a notice to NAI.
(iii) All notices, demands, approvals, consents and other
communications to be made under any Operative Document to or by the
parties thereto must, to be effective for purpose of such Operative
Document, be in writing. Notices, demands and other communications
required or permitted under any Operative Document are to be sent to the
addresses set forth below (or in the case of communications to
Participants, at the addresses set forth in Schedule 1 to the
Participation Agreement) and shall be given by any of the following
means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex,
telegram or telecopying (if confirmed in writing sent by United States
first class mail, return receipt requested); or (C) registered or
certified first class mail, return receipt requested. Such addresses may
be changed by notice to the other parties given in the same manner as
provided above. Any notice or other communication sent pursuant to
clause (A) or (B) hereof shall be deemed received upon such personal
service or upon dispatch by electronic means, and, if sent pursuant to
clause (C) shall be deemed received five days following deposit in the
mail.
Address of BNPLC:
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telecopy: (972) 788-9191
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With a copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Gavin Holles
Telecopy: (415) 296-8954
And for draw requests and funding notices, with a
copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: George Fung
Telecopy: (415) 956-4230
Address of NAI:
Network Appliance, Inc.
Attn: Leslie Paulides
2770 San Thomas Expressway
Santa Clara, CA 95051
Telecopy: (408) 367-3452
2. SEVERABILITY. If any term or provision of any Operative Document or
the application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of such document, or
the application of such term or provision other than to the extent to which it
is invalid or unenforceable, shall not be affected thereby.
3. NO MERGER. There shall be no merger of the Land Lease or of the
leasehold estate created by the Land Lease with any other interest in the
Property by reason of the fact that the same person may acquire or hold,
directly or indirectly, the Land Lease or the leasehold estate created hereby
and any other interest in the Property, unless all Persons with an interest in
the Property that would be adversely affected by any such merger specifically
agree in writing that such a merger shall occur. There shall be no merger of the
Purchase Agreement or of the purchase options or obligations created by the
Purchase Agreement with any other interest in the Property by reason of the fact
that the same person may acquire or hold, directly or indirectly, the Land Lease
or the leasehold estate created hereby and any other interest in the Property,
unless all Persons with an interest in the Property that would be adversely
affected by any such merger specifically agree in writing that such a merger
shall occur.
4. NO IMPLIED WAIVER. The failure of BNPLC or NAI to insist at any time
upon the strict performance of any covenant or agreement or to exercise any
option, right, power or remedy contained in any Operative Document shall not be
construed as a waiver or a relinquishment thereof for the future. The failure of
Agent to insist at any time upon the strict performance of any covenant or
agreement or to exercise any option, right, power or remedy contained in the
Pledge Agreement shall not be construed as a waiver or a relinquishment thereof
for the future. The waiver of or redress for any breach of any
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Operative Document by any party thereto shall not prevent a similar subsequent
act from constituting a violation. Any express waiver of any provision of any
Operative Document shall affect only the term or condition specified in such
waiver and only for the time and in the manner specifically stated therein. No
waiver by any party to any Operative Document of any provision therein shall be
deemed to have been made unless expressed in writing and signed by the party to
be bound by the waiver. A receipt by BNPLC of any Rent with knowledge of the
breach by NAI of any covenant or agreement contained in the Land Lease or any
other Operative Document shall not be deemed a waiver of such breach. A receipt
by Agent of any Collateral or other payment under the Pledge Agreement with
knowledge of the breach by NAI of any covenant or agreement contained in the
Pledge Agreement shall not be deemed a waiver of such breach.
5. ENTIRE AND ONLY AGREEMENTS. The Operative Documents supersede any
prior negotiations and agreements between BNPLC, Agent and NAI concerning the
Property or the Collateral, and no amendment or modification of any Operative
Document shall be binding or valid unless expressed in a writing executed by all
parties to such Operative Document.
6. BINDING EFFECT. Except to the extent, if any, expressly provided to
the contrary in any Operative Document with respect to assignments thereof, all
of the covenants, agreements, terms and conditions to be observed and performed
by the parties to the Operative Documents shall be applicable to and binding
upon their respective successors and, to the extent assignment is permitted
thereunder, their respective assigns.
7. TIME IS OF THE ESSENCE. Time is of the essence as to all obligations
of NAI and BNPLC and all notices required of NAI and BNPLC under the Operative
Documents.
8. GOVERNING LAW. Each Operative Document shall be governed by and
construed in accordance with the laws of the State of California without regard
to conflict or choice of laws (subject, however, in the case of the Pledge
Agreement to any contrary provisions of the "UCC," as defined in the Pledge
Agreement).
9. PARAGRAPH HEADINGS. The paragraph and section headings contained in
the Operative Documents are for convenience only and shall in no way enlarge or
limit the scope or meaning of the various and several provisions thereof.
10. NEGOTIATED DOCUMENTS. All the parties to each Operative Document and
their counsel have reviewed and revised or requested revisions to such Operative
Document, and the usual rule of construction that any ambiguities are to be
resolved against the drafting party shall not apply to the construction or
interpretation of any Operative Documents or any amendments thereof.
11. TERMS NOT EXPRESSLY DEFINED IN AN OPERATIVE DOCUMENT. As used in any
Operative Document, a capitalized term that is not defined therein or in this
Common Definitions and Provisions Agreement (Phase V - Land), but is defined in
another Operative Document, shall have the meaning ascribed to it in the other
Operative Document.
12. OTHER TERMS AND REFERENCES. Words of any gender used in each
Operative Document shall be held and construed to include any other gender, and
words in the singular number
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85
shall be held to include the plural and vice versa, unless the context otherwise
requires. References in any Operative Document to Paragraphs, subparagraphs,
Sections, subsections or other subdivisions shall refer to the corresponding
Paragraphs, subparagraphs, Sections, subsections or subdivisions of that
Operative Document, unless specific reference is made to another document or
instrument. References in any Operative Document to any Schedule or Exhibit
shall refer to the corresponding Schedule or Exhibit attached to that Operative
Document, which shall be made a part thereof by such reference. All capitalized
terms used in each Operative Document which refer to other documents shall be
deemed to refer to such other documents as they may be renewed, extended,
supplemented, amended or otherwise modified from time to time, provided such
documents are not renewed, extended or modified in breach of any provision
contained in the Operative Documents or, in the case of any other document to
which BNPLC is a party or of which BNPLC is an intended beneficiary, without the
consent of BNPLC. All accounting terms used but not specifically defined in any
Operative Document shall be construed in accordance with GAAP. The words "this
[Agreement]", "herein", "hereof", "hereby", "hereunder" and words of similar
import when used in each Operative Document refer to that Operative Document as
a whole and not to any particular subdivision unless expressly so limited. The
phrases "this Paragraph", "this subparagraph", "this Section", "this subsection"
and similar phrases used in any operative document refer only to the Paragraph,
subparagraph, Section, subsection or other subdivision described in which the
phrase occurs. As used in the Operative Documents the word "or" is not
exclusive. As used in the Operative Documents, the words "include", "including"
and similar terms shall be construed as if followed by "without limitation to".
13. EXECUTION IN COUNTERPARTS. To facilitate execution, each Operative
Document may be executed in as many identical counterparts as may be required.
It shall not be necessary that the signature of, or on behalf of, each party, or
that the signature of all persons required to bind any party, appear on each
counterpart. All counterparts, taken together, shall collectively constitute a
single instrument. It shall not be necessary in making proof of any Operative
Document to produce or account for more than a single counterpart containing the
respective signatures of, or on behalf of, each of the parties hereto. Any
signature page to any counterpart may be detached from such counterpart without
impairing the legal effect of the signatures thereon and thereafter attached to
another counterpart identical thereto except having attached to it additional
signature pages.
14. NOT A PARTNERSHIP, ETC. NOTHING IN ANY OPERATIVE DOCUMENT IS
INTENDED TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE
BETWEEN BNPLC AND NAI. NEITHER THE EXECUTION OF ANY OPERATIVE DOCUMENT NOR THE
ADMINISTRATION THEREOF OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY
OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO ANY OPERATIVE
DOCUMENT IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY OBLIGATIONS OF BNPLC TO
NAI.
[The signature pages follows.]
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86
IN WITNESS WHEREOF, NAI and BNPLC have caused this Common Definitions
and Provisions Agreement (Phase V - Land) to be executed as of March 1, 2000.
"NAI"
NETWORK APPLIANCE, INC.
By:
----------------------------------------
Jeffry R. Allen, Chief Financial Officer
87
[Continuation of signature pages to Common Definitions and Provisions Agreement
(Phase V - Land) dated to be effective March 1, 2000.]
"BNPLC"
BNP LEASING CORPORATION
By:
----------------------------------------
Lloyd G. Cox, Vice President
1
EXHIBIT 10.59
================================================================================
LEASE AGREEMENT
(PHASE V - IMPROVEMENTS)
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
NETWORK APPLIANCE, INC.
("NAI")
MARCH 1, 2000
(SUNNYVALE, CALIFORNIA)
================================================================================
2
TABLE OF CONTENTS
Page
----
1. TERM..............................................................................................................2
(a) Scheduled Term......................................................................................2
(b) Automatic Termination as of the Base Rent Commencement Date Resulting From an Election by NAI to
Terminate the Purchase Option and NAI's Initial Remarketing Rights and Obligations..................2
(c) Election by BNPLC to Terminate After an Issue 97-10 Election........................................2
(d) Election by NAI to Terminate After Accelerating the Designated Sale Date............................2
(e) Extension of the Term...............................................................................3
2. USE AND CONDITION OF THE PROPERTY.................................................................................3
(a) Use.................................................................................................3
(b) Condition of the Property...........................................................................4
(c) Consideration for and Scope of Waiver...............................................................4
3. RENT..............................................................................................................4
(a) Base Rent Generally.................................................................................4
(b) Impact of Collateral Upon Formulas..................................................................5
(c) Calculation of and Due Dates for Base Rent..........................................................5
(i) Amount Payable for Base Rent Periods Ending On or Prior to the Base
Rent Commencement Date...............................................................5
(ii) Additional Amount Payable On the Base Rent Commencement Date.........................6
(iii) Determination of Payment Due Dates After the Base Rent
Commencement Date, Generally.........................................................6
(iv) Special Adjustments to Base Rent Payment Dates and Periods...........................6
(v) Base Rent Formula for Periods After the Base Rent Commencement Date and
During Which The Collateral Percentage is 100%.......................................6
(vi) Base Rent Formula for Periods After the Base Rent Commencement Date and
During Which The Collateral Percentage is Greater Than Zero and Less Than 100%.......7
(vii) Base Rent Formula for Periods After the Base Rent Commencement Date
and During Which The Collateral Percentage is Zero...................................8
(d) Additional Rent.....................................................................................8
(e) Arrangement Fee.....................................................................................8
(f) Commitment Fees.....................................................................................9
(g) Administrative Agency Fees..........................................................................9
(h) [Intentionally deleted].............................................................................9
(i) Issue 97-10 Prepayments.............................................................................9
(j) No Demand or Setoff.................................................................................9
(k) Default Interest and Order of Application...........................................................9
4. NATURE OF THIS AGREEMENT.........................................................................................10
(a) "Net"Lease Generally...............................................................................10
(b) No Termination.....................................................................................10
(c) Tax Reporting......................................................................................11
(d) Characterization of this Improvements Lease........................................................11
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5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY....................................................12
(a) Impositions........................................................................................12
(b) Increased Costs; Capital Adequacy Charges..........................................................12
(c) NAI's Payment of Other Losses; General Indemnification.............................................13
(d) Exceptions and Qualifications to Indemnities.......................................................14
6. CONSTRUCTION.....................................................................................................16
(a) Construction Advances; Outstanding Construction Allowance..........................................16
(b) Calculation of Carrying Costs, Generally...........................................................16
(c) Limits on the Amount of Carrying Costs.............................................................17
(d) NAI's Right to Control the Construction Project....................................................17
(e) Landlord's Election to Continue Construction.......................................................17
(f) Powers Coupled With an Interest....................................................................19
(g) Final Completion Notice............................................................................19
7. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC.........................................................19
8. ENVIRONMENTAL....................................................................................................20
(a) Environmental Covenants by NAI.....................................................................20
(b) Right of BNPLC to do Remedial Work Not Performed by NAI............................................20
(c) Environmental Inspections and Reviews..............................................................20
(d) Communications Regarding Environmental Matters.....................................................21
9. INSURANCE REQUIRED AND CONDEMNATION..............................................................................22
(a) Liability Insurance................................................................................22
(b) Property Insurance.................................................................................22
(c) Failure to Obtain Insurance........................................................................22
(d) Condemnation.......................................................................................22
(e) Waiver of Subrogation..............................................................................23
10. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS...............................................................23
(a) Collection and Application of Insurance and Condemnation Proceeds Generally........................23
(b) Advances of Escrowed Proceeds to NAI...............................................................23
(c) Special Provisions Applicable After a CMA Termination Event or an Event of Default.................24
(d) NAI's Obligation to Restore........................................................................24
(e) Takings of All or Substantially All of the Property on or after the Base Rent Commencement Date....25
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI CONCERNING THE PROPERTY..............................25
(a) Compliance with Covenants and Laws.................................................................25
(b) Operation of the Property..........................................................................25
(c) Debts for Construction, Maintenance, Operation or Development......................................26
(d) Repair, Maintenance, Alterations and Additions.....................................................27
(e) Permitted Encumbrances and Development Documents...................................................27
(f) Books and Records Concerning the Property..........................................................27
II
4
12. FINANCIAL COVENANTS AND OTHER COVENANTS INCORPORATED BY REFERENCE TO SCHEDULE 1..................................27
13. FINANCIAL STATEMENTS AND OTHER REPORTS...........................................................................27
(a) Financial Statements; Required Notices; Certificates...............................................27
14. ASSIGNMENT AND SUBLETTING BY NAI.................................................................................29
(a) BNPLC's Consent Required...........................................................................29
(b) Standard for BNPLC's Consent to Assignments and Certain Other Matters..............................29
(c) Consent Not a Waiver...............................................................................29
15. ASSIGNMENT BY BNPLC..............................................................................................30
(a) Restrictions on Transfers..........................................................................30
(b) Effect of Permitted Transfer or other Assignment by BNPLC..........................................30
16. BNPLC'S RIGHT OF ACCESS..........................................................................................30
17. EVENTS OF DEFAULT................................................................................................31
18. REMEDIES.........................................................................................................32
(a) Basic Remedies.....................................................................................32
(b) Notice Required So Long As the Purchase Option and NAI's Initial Remarketing Rights
and Obligations Continue Under the Purchase Agreement..............................................34
(c) Enforceability.....................................................................................34
19. DEFAULT BY BNPLC.................................................................................................34
20. QUIET ENJOYMENT..................................................................................................35
21. SURRENDER UPON TERMINATION.......................................................................................35
22. HOLDING OVER BY NAI..............................................................................................35
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS...............................................35
III
5
EXHIBITS AND SCHEDULES
Exhibit A........................................................................................................Legal Description
Exhibit B...................................................................................................Insurance Requirements
Exhibit C...............................................................................................LIBOR Period Election Form
Schedule 1..............................................................................Financial Covenants and Other Requirements
IV
6
LEASE AGREEMENT
(PHASE V - IMPROVEMENTS)
This LEASE AGREEMENT (PHASE V - IMPROVEMENTS) (this "IMPROVEMENTS
LEASE"), by and between BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"), and NETWORK APPLIANCE, INC., a California corporation ("NAI") is made
and dated as of March 1, 2000, the Effective Date. ("EFFECTIVE DATE" and other
capitalized terms used and not otherwise defined in this Improvements Lease are
intended to have the meanings assigned to them in the Common Definitions and
Provisions Agreement (Phase V - Improvements) executed by BNPLC and NAI
contemporaneously with this Improvements Lease. By this reference, the Common
Definitions and Provisions Agreement (Phase V - Improvements) is incorporated
into and made a part of this Improvements Lease for all purposes.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC is acquiring the Land and the Improvements and any
appurtenances thereto from Seller contemporaneously with the execution of this
Improvements Lease.
In anticipation of BNPLC's acquisition of the Improvements under the
Existing Contract, BNPLC and NAI have reached agreement as to the terms and
conditions upon which BNPLC is willing to lease the Improvements to NAI, and by
this Improvements Lease BNPLC and NAI desire to evidence such agreement.
GRANTING CLAUSES
BNPLC does hereby LEASE, DEMISE and LET unto NAI for the term
hereinafter set forth all right, title and interest of BNPLC, now owned or
hereafter acquired, in and to:
(1) any and all Improvements; and
(2) all easements and other rights appurtenant to the
Improvements, whether now owned or hereafter acquired by BNPLC.
BNPLC's interest in all property described in clauses (1) and (2) above are
hereinafter referred to collectively as the "REAL PROPERTY". The Real Property
does not include the Land itself, it being understood that the Other Lease
Agreement will constitute a separate lease of the Land and the appurtenances
thereto, and only the Land and the appurtenances thereto, from BNPLC to NAI.
To the extent, but only to the extent, that assignable rights or
interests in, to or under the following have been or will be acquired by BNPLC
under the Existing Contract or acquired by BNPLC pursuant to Paragraph 7 below,
BNPLC also hereby grants and assigns to NAI for the term of this Improvements
Lease the right to use and enjoy (and, in the case of contract rights, to
enforce) such rights or interests of BNPLC:
(a) any goods, equipment, furnishings, furniture and other
tangible personal property of whatever nature that are located on the
Land and all renewals or replacements of or substitutions for any of the
foregoing;
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(b) the benefits, if any, conferred upon the owner of the Real
Property by the Permitted Encumbrances (including the right to receive
rents under and to otherwise enforce the Premises Lease) and Development
Documents; and
(c) any permits, licenses, franchises, certificates, and other
rights and privileges against third parties related to the Real
Property.
Such rights and interests of BNPLC, whether now existing or hereafter arising,
are hereinafter collectively called the "PERSONAL PROPERTY". The Real Property
and the Personal Property are hereinafter sometimes collectively called the
"PROPERTY."
However, the leasehold estate conveyed hereby and NAI's rights hereunder
are expressly made subject and subordinate to the terms and conditions of this
Improvements Lease, to the Premises Lease and all other Permitted Encumbrances,
and to any other claims or encumbrances not constituting Liens Removable by
BNPLC.
GENERAL TERMS AND CONDITIONS
The Property is leased by BNPLC to NAI and is accepted and is to be used
and possessed by NAI upon and subject to the following terms and conditions:
1. TERM.
(a) Scheduled Term. The term of this Improvements Lease (the "TERM")
shall commence on and include the Effective Date, and end on the first Business
Day of March, 2005, unless sooner terminated as expressly herein provided.
(b) Automatic Termination as of the Base Rent Commencement Date
Resulting From an Election by NAI to Terminate the Purchase Option and NAI's
Initial Remarketing Rights and Obligations. If NAI terminates the Purchase
Option and NAI's Initial Remarketing Rights and Obligations prior to the Base
Rent Commencement Date pursuant to subparagraph 4(B) of the Purchase Agreement,
then this Improvements Lease shall terminate automatically on the Base Rent
Commencement Date. Just as any such termination of the Purchase Option and NAI's
Initial Remarketing Rights and Obligations shall be subject to the condition
(set forth in subparagraph 4(B) of the Purchase Agreement) that NAI pay an Issue
97-10 Prepayment to BNPLC, so too will the termination of this Improvements
Lease pursuant to this subparagraph be subject the condition that NAI make the
Issue 97-10 Prepayment to BNPLC.
(c) Election by BNPLC to Terminate After an Issue 97-10 Election. By
notice to NAI BNPLC shall be entitled to terminate this Improvements Lease, as
BNPLC deems appropriate in its sole and absolute discretion, at any time after
receiving a notice given by NAI to make any Issue 97-10 Election. Upon any
termination of this Improvements Lease by BNPLC pursuant to this subparagraph,
NAI shall become obligated to pay to BNPLC an Issue 97-10 Prepayment, which
obligation will survive the termination of this Improvements Lease.
(d) Election by NAI to Terminate After Accelerating the Designated
Sale Date. Provided NAI has not made any Issue 97-10 Election, NAI shall be
entitled to accelerate the Designated Sale Date (and thus accelerate the
purchase of BNPLC's interest in the Property by NAI or by an Applicable
Purchaser pursuant to the Purchase Agreement) by sending a notice to BNPLC as
provided in clause (2) of the definition of "Designated Sale Date" in the Common
Definitions and Provisions Agreement (Phase V - Improvements). In the event,
because of NAI's election to so accelerate the
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Designated Sale Date or for any other reason, the Designated Sale Date occurs
before the end of the scheduled Term, NAI may terminate this Improvements Lease
on or after the Designated Sale Date; provided, however, as a condition to any
such termination by NAI, NAI must have done the following prior to the
termination:
(i) purchased or caused an Applicable Purchaser to
purchase the Property pursuant to the Purchase Agreement and
satisfied all of NAI's other obligations under the Purchase
Agreement;
(ii) paid to BNPLC all Base Rent, all Commitment Fees and
all other Rent due on or before or accrued through the Designated
Sale Date; and
(iii) paid any Breakage Costs caused by BNPLC's sale of
the Property pursuant to the Purchase Agreement.
(e) Extension of the Term. The Term may be extended at the option of
NAI for two successive periods of five years each; provided, however, that prior
to any such extension the following conditions must have been satisfied: (A) at
least ninety days prior to the commencement of any such extension, BNPLC and NAI
must have agreed in writing upon, and received the consent and approval of
BNPLC's Parent and all other Participants to (1) a corresponding extension not
only to the date for the expiration of the Term specified above in this Section,
but also to the date specified in clause (1) of the definition of Designated
Sale Date in the Common Definitions and Provisions Agreement (Phase V -
Improvements), and (2) an adjustment to the Rent that NAI will be required to
pay for the extension, it being expected that the Rent for the extension may be
different than the Rent required for the original Term, and it being understood
that the Rent for any extension must in all events be satisfactory to both BNPLC
and NAI, each in its sole and absolute discretion; (B) no Event of Default shall
have occurred and be continuing at the time of NAI's exercise of its option to
extend; (C) prior to any such extension, NAI must have completed the
Construction Project in accordance with the Construction Management Agreement
and must not have made any Issue 97-10 Election; and (D) immediately prior to
any such extension, this Improvements Lease must remain in effect. With respect
to the condition that BNPLC and NAI must have agreed upon the Rent required for
any extension of the Term, neither NAI nor BNPLC is willing to submit itself to
a risk of liability or loss of rights hereunder for being judged unreasonable.
Accordingly, both NAI and BNPLC hereby disclaim any obligation express or
implied to be reasonable in negotiating the Rent for any such extension. Subject
to the changes to the Rent payable during any extension of the Term as provided
in this Paragraph, if NAI exercises its option to extend the Term as provided in
this Paragraph, this Improvements Lease shall continue in full force and effect,
and the leasehold estate hereby granted to NAI shall continue without
interruption and without any loss of priority over other interests in or claims
against the Property that may be created or arise after the date hereof and
before the extension.
2. USE AND CONDITION OF THE PROPERTY.
(a) Use. Subject to the Permitted Encumbrances, the Development
Documents and the terms hereof, NAI may use and occupy the Property during the
Term, but only for the following purposes and other lawful purposes incidental
thereto:
(i) construction and development of the Construction
Project;
(ii) administrative and office space;
(iii) activities related to NAI's research and development
or production of
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products that are of substantially the same type and character as
those regularly sold by NAI in the ordinary course of its business as
of the Effective Date;
(iv) cafeteria and other support facilities that NAI may
provide to its employees; and
(v) other lawful purposes (including NAI's research and
development or production of products that are not of substantially
the same type and character as those regularly sold by NAI in the
ordinary course of its business as of the Effective Date) approved in
advance and in writing by BNPLC, which approval will not be
unreasonably withheld after completion of the Construction Project
(but NAI acknowledges that BNPLC's withholding of such approval shall
be reasonable if BNPLC determines in good faith that (1) giving the
approval may materially increase BNPLC's risk of liability for any
existing or future environmental problem, or (2) giving the approval
is likely to substantially increase BNPLC's administrative burden of
complying with or monitoring NAI's compliance with the requirements
of this Improvements Lease or other Operative Documents).
Nothing in this subparagraph will prevent a tenant under a
Premises Lease executed by NAI, as Landlord, prior to or concurrently
with the Effective Date, from using the space covered thereby for
purposes expressly authorized by the terms and conditions of such
Premises Lease.
(b) Condition of the Property. NAI acknowledges that it has carefully
and fully inspected the Property and accepts the Property in its present state,
AS IS, and without any representation or warranty, express or implied, as to the
condition of such property or as to the use which may be made thereof. NAI also
accepts the Property without any covenant, representation or warranty, express
or implied, by BNPLC or its Affiliates regarding the title thereto or the rights
of any parties in possession of any part thereof, except as expressly set forth
in Paragraph 20. BNPLC shall not be responsible for any latent or other defect
or change of condition in the Land or in Improvements, fixtures and personal
property forming a part of the Property or for any violations with respect
thereto of Applicable Laws. Further, though NAI may obtain from third parties
any facilities or services to which NAI is entitled by reason of the assignment
and lease of Personal Property set forth on page of this Improvements Lease,
BNPLC shall not be required to furnish to NAI any facilities or services of any
kind, including water, steam, heat, gas, air conditioning, electricity, light or
power.
(c) Consideration for and Scope of Waiver. The provisions of
subparagraph 2(b) above have been negotiated by BNPLC and NAI after due
consideration for the Rent payable hereunder and are intended to be a complete
exclusion and negation of any representations or warranties of BNPLC or its
Affiliates, express or implied, with respect to the Property that may arise
pursuant to any law now or hereafter in effect or otherwise, except as expressly
set forth herein.
However, such exclusion of representations and warranties by BNPLC is
not intended to impair any representations or warranties made by other parties,
the benefit of which may pass to NAI during the Term because of the definition
of Personal Property and Property above.
3. RENT.
(a) Base Rent Generally. On the Base Rent Commencement Date and on
each Base Rent Date through the end of the Term, NAI shall pay BNPLC rent ("BASE
RENT"). Each payment of Base Rent must be received by BNPLC no later than 10:00
a.m. (Pacific time) on the date it becomes due; if received after 10:00 a.m.
(Pacific time) it will be considered for purposes of this Improvements Lease as
received on the next following Business Day. At least five days prior to any
Base Rent Commencement
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Date or Base Rent Date upon which an installment of Base Rent shall become due,
BNPLC shall notify NAI in writing of the amount of each installment, calculated
as provided below. Any failure by BNPLC to so notify NAI, however, shall not
constitute a waiver of BNPLC's right to payment, but absent such notice NAI
shall not be in default hereunder for any underpayment resulting therefrom if
NAI, in good faith, reasonably estimates the payment required, makes a timely
payment of the amount so estimated and corrects any underpayment within three
Business Days after being notified by BNPLC of the underpayment.
(b) Impact of Collateral Upon Formulas. To ease the administrative
burden of this Improvements Lease and the Pledge Agreement, the formulas for
calculating Base Rent set out below in subparagraph 3(c) reflect a reduction in
the Base Rent equal to the interest that would accrue on any Collateral provided
in accordance with the requirements of the Pledge Agreement from time to time if
the Accounts (as defined in the Pledge Agreement) bore interest at the Effective
Rate. BNPLC has agreed to such reduction to provide NAI with the economic
equivalent of interest on such Collateral, and in return NAI has agreed to the
provisions of the Pledge Agreement that excuse the actual payment of interest on
the Accounts. By incorporating such reduction of Base Rent into the formulas
below, and by providing for noninterest bearing Accounts in the Pledge
Agreement, the parties will avoid an unnecessary and cumbersome periodic
exchange of equal payments. It is not, however, the intent of BNPLC or NAI to
understate Base Rent or interest for financial reporting purposes. Accordingly,
for purposes of any financial reports that this Improvements Lease requires of
NAI from time to time, NAI may report Base Rent as if there had been no such
reduction and as if the Collateral from time to time provided in accordance with
the requirements of the Pledge Agreement had been maintained in Accounts bearing
interest at the Effective Rate.
(c) Calculation of and Due Dates for Base Rent. Payments of Base Rent
shall be calculated and become due as follows:
(i) Amount Payable for Base Rent Periods Ending On or Prior to
the Base Rent Commencement Date. The Base Rent for any Base Rent Period that
ends prior to the Base Rent Commencement Date shall be payable on the Base Rent
Date upon which such period ends and shall equal:
- Stipulated Loss Value (Building 4) on the first day of such Base Rent
Period, times
- the sum of (a) the Effective Rate with respect to such Base Rent
Period, plus (b) the Unsecured Spread for the period from and including the
first day of such Base Rent Period, times
- the number of days in the such Base Rent Period, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that Stipulated Loss Value
(Building 4) on the first day of a hypothetical Base Rent Period that ends prior
to the Base Rent Commencement Date is $10,000,000; that the Effective Rate for
the Base Rent Period is 6%; that the Unsecured Spread is one hundred fifty basis
points (150/100 of 1%) upon the commencement of such Base Rent Period; and that
such Base Rent Period contains exactly thirty days. Under such assumptions, the
Base Rent for the hypothetical Base Rent Period will equal:
$10,000,000 x (6% + 1.50%) x 30/360 = $62,500
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Base Rent for any Base Rent Period ending on the Base Rent Commencement
Date will also be calculated pursuant to the formula set out in this
subparagraph and will be payable on the Base Rent Commencement Date, if
(consistent with the parties expectations as of the Effective Date) the Base
Rent Commencement Date (Building 4) occurs prior to the Base Rent Commencement
Date (Building 5).
(ii) Additional Amount Payable On the Base Rent Commencement
Date. In addition to any Base Rent payable as provided in the last sentence of
the preceding subparagraph 3(c)(i), Base Rent shall be payable on the Base Rent
Commencement Date equal the difference (if any) between (a) the total amount
that would have been added to the Outstanding Construction Allowance as Carrying
Costs on such date if not for the limit set forth in subparagraph 66(e)(ii), and
(b) the Carrying Costs actually added on such date to the Outstanding
Construction Allowance.
(iii) Determination of Payment Due Dates After the Base Rent
Commencement Date, Generally. For all Base Rent Periods subject to a LIBOR
Period Election of one month or three months, Base Rent shall be due in one
installment on the Base Rent Date upon which the Base Rent Period ends. For Base
Rent Periods subject to a LIBOR Period Election of six months, Base Rent shall
be payable in two installments, with the first installment becoming due on the
Base Rent Date that occurs on the first Business Day of the third calendar month
following the commencement of such Base Rent Period, and with the second
installment becoming due on the Base Rent Date upon which the Base Rent Period
ends.
(iv) Special Adjustments to Base Rent Payment Dates and Periods.
Notwithstanding the foregoing:
a) Any Base Rent Period that begins before, and does not
otherwise end before, a Failed Collateral Test Date shall end upon but
not include such Failed Collateral Test Date, and such Failed Collateral
Test Date shall constitute a Base Rent Date, upon which NAI must pay all
accrued, unpaid Base Rent for the Base Rent Period just ended.
b) Consistent with clause (3) of the definition of LIBOR Period
Election in the Common Definitions and Provisions Agreement (Phase V -
Improvements), each successive Base Rent Date after any such Failed
Collateral Test Date shall be the first Business Day of the first
calendar month following the calendar month which includes the preceding
Base Rent Date, so long as any Mandatory Collateral Period shall
continue.
c) In addition to Base Rent due on a Failed Collateral Test
Date, NAI must pay the Breakage Costs, if any, resulting from any early
ending of a Base Rent Period on the Failed Collateral Test Date pursuant
to the preceding clause.
d) If NAI or any Applicable Purchaser purchases BNPLC's interest
in the Property pursuant to the Purchase Agreement, any accrued unpaid
Base Rent and all outstanding Additional Rent shall be due on the date
of purchase in addition to the purchase price and other sums due BNPLC
under the Purchase Agreement.
(v) Base Rent Formula for Periods After the Base Rent Commencement Date
and During Which The Collateral Percentage is 100%. Each installment of Base
Rent payable for any Base Rent Period that commences on or after the Base Rent
Commencement Date and during which the Collateral Percentage is one hundred
percent (100%) shall equal:
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- Stipulated Loss Value on the first day of such Base Rent Period, times
- the Secured Spread for the period from and including the preceding
Base Rent Date to but not including the Base Rent Date upon which the
installment is due, times
- the number of days in the period from and including the preceding Base
Rent Date to but not including the Base Rent Date upon which the installment is
due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the Collateral
Percentage for a hypothetical Base Rent Period is one hundred percent (100%);
that prior to the first day of such Base Rent Period the Construction Allowance
has been fully funded, but Qualified Prepayments have been received by BNPLC,
leaving a Stipulated Loss Value of $20,000,000; that the Secured Spread is
thirty basis points (30/100 of 1%); and that such Base Rent Period contains
exactly thirty days. Under such assumptions, the Base Rent for the hypothetical
Base Rent Period will equal:
$20,000,000 x .30% x 30/360 = $5,000
(vi) Base Rent Formula for Periods After the Base Rent Commencement
Date and During Which The Collateral Percentage is Greater Than Zero and Less
Than 100%. Each installment of Base Rent payable for any Base Rent Period that
commences on or after the Base Rent Commencement Date and during which the
Collateral Percentage is greater than zero and less than one hundred percent
(100%) shall equal:
- Stipulated Loss Value on the first day of such Base Rent Period, times
- the sum of:
(A) the product of:
(1) the Collateral Percentage for such Base
Rent Period, times
(2) the Secured Spread for the period from
and including the preceding Base Rent
Date to but not including the Base Rent
Date upon which the installment is due,
plus
(B) the product of:
(1) one minus the Collateral Percentage for
such Base Rent Period, times
(2) the sum of (a) the Effective Rate with
respect to such Base Rent Period, plus
(b) the Unsecured Spread for the period
from and including the preceding Base
Rent Date to but not including the Base
Rent Date upon which the installment is
due, times
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- the number of days in the period from and including the preceding Base
Rent Date to but not including the Base Rent Date upon which the installment is
due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the
Collateral Percentage for a hypothetical Base Rent Period is forty
percent (40%); that prior to the first day of such Base Rent Period the
Construction Allowance has been fully funded, but Qualified Prepayments
have been received by BNPLC, leaving a Stipulated Loss Value of
$20,000,000; that the Effective Rate for the Base Rent Period is 6%;
that the Secured Spread is thirty basis points (30/100 of 1%); that upon
the commencement of such Base Rent Period the Unsecured Spread is one
hundred fifty basis points (150/100 of 1%); and that such Base Rent
Period contains exactly thirty days. Under such assumptions, the Base
Rent for the hypothetical Base Rent Period will equal:
$20,000,000 x {(40% x .30%) + ([1 - 40%] x [6% + 1.50%])} x
30/360 = $77,000
(vii) Base Rent Formula for Periods After the Base Rent Commencement
Date and During Which The Collateral Percentage is Zero. Each installment of
Base Rent payable for any Base Rent Period that commences after the Base Rent
Commencement Date and during which the Collateral Percentage is zero shall
equal:
- Stipulated Loss Value on the first day of such Base Rent Period,
times
- the sum of (a) the Effective Rate with respect to such Base Rent
Period, plus (b) the Unsecured Spread for the period from and including the
preceding Base Rent Date to but not including the Base Rent Date upon which the
installment is due, times
- the number of days in the period from and including the preceding
Base Rent Date to but not including the Base Rent Date upon which the
installment is due, divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the
Collateral Percentage for a hypothetical Base Rent Period is zero
percent (0%); that prior to the first day of such Base Rent Period
the Construction Allowance has been fully funded, but a total
Qualified Prepayments have been received by BNPLC, leaving a
Stipulated Loss Value of $20,000,000; that the Effective Rate for the
Base Rent Period is 6%; that the Unsecured Spread is one hundred
fifty basis points (150/100 of 1%) upon the commencement of such Base
Rent Period; and that such Base Rent Period contains exactly thirty
days. Under such assumptions, the Base Rent for the hypothetical Base
Rent Period will equal:
$20,000,000 x (6% + 1.50%) x 30/360 = $125,000
(d) Additional Rent. All amounts which NAI is required to pay to
or on behalf of BNPLC pursuant to this Improvements Lease, together with every
charge, premium, interest and cost set forth herein which may be added for
nonpayment or late payment thereof, shall constitute rent (all such amounts,
other than Base Rent, are herein called "ADDITIONAL RENT", and together Base
Rent and Additional Rent are herein sometimes called "RENT").
(e) Arrangement Fee. Upon execution and delivery of this
Improvements Lease by BNPLC, an Arrangement Fee (the "ARRANGEMENT FEE") will be
paid to BNPLC from the Initial Funding
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Advance (and thus be included in Stipulated Loss Value) in the amount provided
in the letter dated as of February 11, 2000 from BNPLC to NAI.
(f) Commitment Fees. For each Construction Period NAI shall pay
BNPLC a fee (a "COMMITMENT FEE") from Construction Advances made pursuant to the
Construction Management Agreement equal to:
- the Commitment Fee Rate for such Construction Period, times an amount
equal to:
(i) the Maximum Construction Allowance, less
(ii) the Funded Construction Allowance on the first day of such
Construction Period; times
- the number of days in such Construction Period; divided by
- three hundred sixty.
NAI shall pay Commitment Fees in arrears on the first Business Day of
May, August, November and February of each calendar year, beginning
with the first Business Day of May 2000 and continuing regularly
throughout the Term so long as Commitment Fees have accrued and
remain unpaid. However, if any Commitment Fees shall have accrued and
remain unpaid on the Designated Sale Date, such accrued unpaid
Commitment Fees shall be due on the Designated Sale Date.
(g) Administrative Agency Fees. Upon execution and delivery of this
Improvements Lease by BNPLC, an administrative agency fee (an "ADMINISTRATIVE
AGENCY FEE") will be paid to BNPLC from the Initial Funding Advance (and thus be
included in Stipulated Loss Value) in the amount provided in the letter dated as
of February 11, 2000 from BNPLC to NAI. Also, on each anniversary of the date
hereof, NAI shall pay to BNPLC an administrative agency fee (also, an
"ADMINISTRATIVE AGENCY FEE") in the amount set forth in the letter agreement
dated as of February 11, 2000 from BNPLC to NAI.
(h) [Intentionally deleted]
(i) Issue 97-10 Prepayments. Following any Issue 97-10 Election or
any CMA Termination Event under (and as defined in) the Construction Management
Agreement, NAI shall make an Issue 97-10 Prepayment to BNPLC within three
Business Days after receipt of any demand for such a payment. BNPLC may demand
an Issue 97-10 Prepayment pursuant to this subparagraph at any time and from
time to time (as Project Costs increase) after any Issue 97-10 Election or CMA
Termination Event.
(j) No Demand or Setoff. Except as expressly provided herein, NAI
shall pay all Rent without notice or demand and without counterclaim, deduction,
setoff or defense.
(k) Default Interest and Order of Application. All Rent shall bear
interest, if not paid when first due, at the Default Rate in effect from time to
time from the date due until paid; provided, that nothing herein contained will
be construed as permitting the charging or collection of interest at a rate
exceeding the maximum rate permitted under Applicable Laws. BNPLC shall be
entitled to apply any amounts paid by or on behalf of NAI against any Rent then
past due in the order the same became due or in such other order as BNPLC may
elect.
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4. NATURE OF THIS AGREEMENT.
(a) "Net" Lease Generally. Subject only to the exceptions listed in
subparagraph 5(d) below, it is the intention of BNPLC and NAI that Base Rent,
the Arrangement Fees, the Upfront Syndication Fees, Administrative Agency Fees,
Commitment Fees and other payments herein specified shall be absolutely net to
BNPLC and that NAI shall pay all costs, expenses and obligations of every kind
relating to the Property or this Improvements Lease which may arise or become
due, including: (i) any taxes payable by virtue of BNPLC's receipt of amounts
paid to or on behalf of BNPLC in accordance with Paragraph 5; (ii) any amount
for which BNPLC is or becomes liable with respect to the Permitted Encumbrances
or the Development Documents; and (iii) any costs incurred by BNPLC (including
Attorneys' Fees) because of BNPLC's acquisition or ownership of any interest in
the Property or because of this Improvements Lease or the transactions
contemplated herein.
However, neither this subparagraph 4(a) nor the indemnity in this
subparagraph 4(a) shall be construed to make NAI liable for (I) an allocation of
general overhead or internal administrative expenses of BNPLC or any other
Interested Party or (II) any duplicate payment of the same Loss to both BNPLC
and another Interested Party. (If, for example, BNPLC were required to make a
$10 fine because of a failure of the Property to comply with Applicable Laws,
and a Participant were required by the Participation Agreement to reimburse
BNPLC for 20% of the $10, NAI would not be required by this subparagraph 4(a) or
by subparagraph 5(c)(i) to pay both $10 to BNPLC and $2 to the Participant on
account of the fine.)
(b) No Termination. Except as expressly provided in this Improvements
Lease itself, this Improvements Lease shall not terminate, nor shall NAI have
any right to terminate this Improvements Lease, nor shall NAI be entitled to any
abatement of the Rent, nor shall the obligations of NAI under this Improvements
Lease be excused, for any reason whatsoever, including any of the following: (i)
any damage to or the destruction of all or any part of the Property from
whatever cause, (ii) the taking of the Property or any portion thereof by
eminent domain or otherwise for any reason, (iii) the prohibition, limitation or
restriction of NAI's use or development of all or any portion of the Property or
any interference with such use by governmental action or otherwise, (iv) any
eviction of NAI or of anyone claiming through or under NAI, (v) any default on
the part of BNPLC under this Improvements Lease or under any other agreement to
which BNPLC and NAI are parties, (vi) the inadequacy in any way whatsoever of
the design, construction, assembly or installation of any improvements, fixtures
or tangible personal property included in the Property (it being understood that
BNPLC has not made, does not make and will not make any representation express
or implied as to the adequacy thereof), (vii) any latent or other defect in the
Property or any change in the condition thereof or the existence with respect to
the Property of any violations of Applicable Laws, (viii) any breach of the
Premises Lease by the lessee thereunder or (ix) any other cause whether similar
or dissimilar to the foregoing. It is the intention of the parties hereto that
the obligations of NAI hereunder shall be separate and independent of the
covenants and agreements of BNPLC, that Base Rent and all other sums payable by
NAI hereunder shall continue to be payable in all events and that the
obligations of NAI hereunder shall continue unaffected, unless the requirement
to pay or perform the same shall have been terminated or limited pursuant to an
express provision of this Improvements Lease. Without limiting the foregoing,
NAI waives to the extent permitted by Applicable Laws, except as otherwise
expressly provided herein, all rights to which NAI may now or hereafter be
entitled by law (including any such rights arising because of any implied
"warranty of suitability" or other warranty under Applicable Laws) (i) to quit,
terminate or surrender this Improvements Lease or the Property or any part
thereof or (ii) to any abatement, suspension, deferment or reduction of the
Rent.
However, nothing in this subparagraph 4(b) shall be construed as a
waiver by NAI of any right NAI may have at law or in equity to the following
remedies, whether because of BNPLC's failure to
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remove a Lien Removable by BNPLC or because of any other default by BNPLC under
this Improvements Lease that continues beyond the period for cure provided in
Paragraph 19: (i) the recovery of monetary damages, (ii) injunctive relief in
case of the violation, or attempted or threatened violation, by BNPLC of any of
the express covenants, agreements, conditions or provisions of this Improvements
Lease which are binding upon BNPLC (including the confidentiality provisions set
forth in subparagraph 16(c) below), or (iii) a decree compelling performance by
BNPLC of any of the express covenants, agreements, conditions or provisions of
this Improvements Lease which are binding upon BNPLC.
(c) Tax Reporting. BNPLC and NAI shall report this Improvements Lease
and the Purchase Agreement for federal income tax purposes as a conditional sale
unless prohibited from doing so by the Internal Revenue Service. If the Internal
Revenue Service shall challenge BNPLC's characterization of this Improvements
Lease and the Purchase Agreement as a conditional sale for federal income tax
reporting purposes, BNPLC shall notify NAI in writing of such challenge and
consider in good faith any reasonable suggestions by NAI about an appropriate
response. In any event, NAI shall (subject only to the limitations set forth in
this subparagraph) indemnify and hold harmless BNPLC from and against all
liabilities, costs, additional taxes (other than Excluded Taxes) and other
expenses that may arise or become due because of such challenge or because of
any resulting recharacterization required by the Internal Revenue Service,
including any additional taxes that may become due upon any sale under the
Purchase Agreement to the extent (if any) that such additional taxes are not
offset by tax savings resulting from additional depreciation deductions or other
tax benefits to BNPLC of the recharacterization. If BNPLC receives a written
notice of any challenge by the Internal Revenue Service that BNPLC believes will
be covered by this Paragraph, then BNPLC shall promptly furnish a copy of such
notice to NAI. The failure to so provide a copy of the notice to NAI shall not
excuse NAI from its obligations under this Paragraph; provided, that if none of
the officers of NAI and none of the employees of NAI responsible for tax matters
are aware of the challenge described in the notice and such failure by BNPLC
renders unavailable defenses that NAI might otherwise assert, or precludes
actions that NAI might otherwise take, to minimize its obligations hereunder,
then NAI shall be excused from its obligation to indemnify BNPLC against
liabilities, costs, additional taxes and other expenses, if any, which would not
have been incurred but for such failure. For example, if BNPLC fails to provide
NAI with a copy of a notice of a challenge by the Internal Revenue Service
covered by the indemnities set out in this Improvements Lease and NAI is not
otherwise already aware of such challenge, and if as a result of such failure
BNPLC becomes liable for penalties and interest covered by the indemnities in
excess of the penalties and interest that would have accrued if NAI had been
promptly provided with a copy of the notice, then NAI will be excused from any
obligation to BNPLC to pay the excess.
(d) Characterization of this Improvements Lease. For purposes of
determining the appropriate financial accounting for this Improvements Lease and
for purposes of determining their respective rights and remedies under state
law, BNPLC and NAI believe and intend that (i) this Improvements Lease
constitutes a true lease, not a mere financing arrangement, enforceable in
accordance with its express terms, and the preceding subparagraph is not
intended to affect the enforcement of any other provisions of this Improvements
Lease or the Purchase Agreement, and (ii) the Purchase Agreement shall
constitute a separate and independent contract, enforceable in accordance with
the express terms and conditions set forth therein. In this regard, NAI
acknowledges that NAI asked BNPLC to participate in the transactions evidenced
by this Improvements Lease and the Purchase Agreement as a landlord and owner of
the Property, not as a lender. Although other transactions might have been used
to accomplish similar results, NAI expects to receive certain material
accounting and other advantages through the use of a lease transaction.
Accordingly, and notwithstanding the reporting for income tax purposes described
in the preceding subparagraph, NAI cannot equitably deny that this Improvements
Lease and the Purchase Agreement should be construed and enforced in accordance
with their respective terms, rather than as a mortgage or other security device,
in any action brought by
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BNPLC to enforce this Improvements Lease or the Purchase Agreement.
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.
(a) Impositions. Subject only to the exceptions listed in
subparagraph 5(d) below, NAI shall pay or cause to be paid prior to delinquency
all ad valorem taxes assessed against the Property and other Impositions. If
requested by BNPLC from time to time, NAI shall furnish BNPLC with receipts
showing payment of all Impositions prior to the applicable delinquency date
therefor.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
Imposition, and pending such contest NAI shall not be deemed in default under
any of the provisions of this Improvements Lease because of the Imposition if
(1) NAI diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (2) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs,
penalties and interest thereon, promptly after such judgment becomes final;
provided, however, in any event each such contest shall be concluded and the
contested Impositions must be paid by NAI prior to the earlier of (i) the date
that any criminal prosecution is instituted or overtly threatened against BNPLC
or its directors, officers or employees because of the nonpayment thereof or
(ii) the date any writ or order is issued under which any property owned or
leased by BNPLC (including the Property) may be seized or sold or any other
action is taken against BNPLC or against any property owned or leased by BNPLC
because of the nonpayment thereof, or (iii) any Designated Sale Date upon which,
for any reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to the Break Even Price.
(b) Increased Costs; Capital Adequacy Charges. Subject only to the
exceptions listed in subparagraph 5(d) below:
(i) If after the Effective Date there shall be any increase in
the cost to BNPLC's Parent or any other Participant agreeing to make or
making, funding or maintaining advances to BNPLC in connection with the
Property because of any Banking Rules Change, then NAI shall from time
to time, pay to BNPLC for the account of BNPLC's Parent or such other
Participant, as the case may be, additional amounts sufficient to
compensate BNPLC's Parent or the Participant for such increased cost. An
increase in costs resulting from any imposition or increase of reserve
requirements applicable to Collateral held from time to time by BNPLC's
Parent or other Participants pursuant to the Pledge Agreement would be
an increase covered by the preceding sentence. A certificate as to the
amount of such increased cost, submitted to BNPLC and NAI by BNPLC's
Parent or the other Participant, shall be conclusive and binding upon
NAI, absent clear and demonstrable error.
(ii) BNPLC's Parent or any other Participant may demand
additional payments ("CAPITAL ADEQUACY CHARGES") if BNPLC's Parent or
the other Participant determines that any Banking Rules Change affects
the amount of capital to be maintained by it and that the amount of such
capital is increased by or based upon the existence of advances made or
to be made to BNPLC to permit BNPLC to maintain BNPLC's investment in
the Property or to make Construction Advances. To the extent that
BNPLC's Parent or another Participant demands Capital Adequacy Charges
as compensation for the additional capital requirements reasonably
allocable to such investment or advances, NAI shall pay to BNPLC for the
account of BNPLC's Parent or the other Participant, as the case may be,
the amount so demanded. Without limiting the foregoing, BNPLC and NAI
hereby acknowledge and agree that the provisions for calculating
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Base Rent set forth herein reflect the assumption that the Pledge
Agreement will cause a zero percent (0%) risk weight to be assigned to a
percentage (equal to the Collateral Percentage) of the collective
investment of BNPLC and the Participants in the Property pursuant to 12
Code of Federal Regulations, part 225, as from time to time supplemented
or amended, or pursuant to any other similar or successor statute or
regulation applicable to BNPLC and the Participants. If and so long as
such risk weight is increased the assumed amount of zero percent (0%)
because of a Banking Rules Change, Capital Adequacy Charges may be
collected to yield the same rate of return to BNPLC, BNPLC's Parent and
any other Participants (net of their costs of maintaining required
capital) that they would have enjoyed from this Improvements Lease
absent such increase.
(iii) Any amount required to be paid by NAI under this
subparagraph 5(d) shall be due ten days after a demand for such payment
is received by NAI.
(c) NAI's Payment of Other Losses; General Indemnification. Subject only
to the exceptions listed in subparagraph 5(d) below:
(i) All Losses (including Environmental Losses) asserted against
or incurred or suffered by BNPLC or other Interested Parties at any time
and from time to time by reason of, in connection with or arising out of
(A) their ownership or alleged ownership of any interest in the Property
or the Rents, (B) the use and operation of the Property, (C) the
negotiation, administration or enforcement of the Operative Documents,
(D) the making of Funding Advances, (E) the Construction Project or the
Premises Lease; (F) the breach by NAI of this Improvements Lease or any
other document executed by NAI in connection herewith, (G) any failure
of the Property or NAI itself to comply with Applicable Laws, (H)
Permitted Encumbrances, (I) Hazardous Substance Activities, including
those occurring prior to Effective Date, (J) any obligations under the
Existing Contract that survive the closing thereunder, or (K) any bodily
or personal injury or death or property damage occurring in or upon or
in the vicinity of the Property through any cause whatsoever, shall be
paid by NAI, and NAI shall indemnify and defend BNPLC and other
Interested Parties from and against all such Losses.
(ii) THE INDEMNITIES AND RELEASES PROVIDED HEREIN FOR THE
BENEFIT OF BNPLC AND OTHER INTERESTED PARTIES, INCLUDING THE INDEMNITY
SET FORTH IN THE PRECEDING - SUBPARAGRAPH 5(c)(i), SHALL APPLY EVEN IF
AND WHEN THE SUBJECT MATTERS OF THE INDEMNITIES AND RELEASES ARE CAUSED
BY OR ARISE OUT OF THE NEGLIGENCE OR STRICT LIABILITY OF BNPLC OR
ANOTHER INTERESTED PARTY. FURTHER, SUCH INDEMNITIES AND RELEASES WILL
APPLY EVEN IF INSURANCE OBTAINED BY NAI OR REQUIRED OF NAI BY THIS
IMPROVEMENTS LEASE OR OTHER OPERATIVE DOCUMENTS IS NOT ADEQUATE TO COVER
LOSSES AGAINST OR FOR WHICH THE INDEMNITIES AND RELEASES ARE PROVIDED.
NAI'S LIABILITY, HOWEVER, FOR ANY FAILURE TO OBTAIN INSURANCE REQUIRED
BY THIS IMPROVEMENTS LEASE OR OTHER OPERATIVE DOCUMENTS WILL NOT BE
LIMITED TO LOSSES AGAINST WHICH INDEMNITIES ARE PROVIDED HEREIN, IT
BEING UNDERSTOOD THAT SUCH INSURANCE IS INTENDED TO DO MORE THAN PROVIDE
A SOURCE OF PAYMENT FOR LOSSES AGAINST WHICH BNPLC AND OTHER INTERESTED
PARTIES ARE ENTITLED TO INDEMNIFICATION BY THIS IMPROVEMENTS LEASE.
(iii) Costs and expenses for which NAI shall be responsible
pursuant to this
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subparagraph 5(c) will include appraisal fees, filing and recording
fees, inspection fees, survey fees, taxes, brokerage fees and
commissions, abstract fees, title policy fees, Uniform Commercial Code
search fees, escrow fees and Attorneys' Fees incurred by BNPLC with
respect to the Property, whether such costs and expenses are incurred at
the time of execution of this Improvements Lease or at any time during
the Term. Such costs and expenses will also include Attorneys' Fees or
other costs incurred to evaluate lien releases and other information
submitted by NAI with requests for Construction Advances.
(iv) NAI's obligations under this subparagraph 5(c) shall
survive the termination or expiration of this Improvements Lease. Any
amount to be paid by NAI under this subparagraph 5(c) shall be due ten
days after a demand for such payment is received by NAI.
(v) If an Interested Party notifies NAI of any claim or
proceeding included in, or any investigation or allegation concerning,
Losses for which NAI is responsible pursuant to this subparagraph 5(c),
NAI shall assume on behalf of the Interested Party and conduct with due
diligence and in good faith the investigation and defense thereof and
the response thereto with counsel selected by NAI, but satisfactory to
the Interested Party; provided, that the Interested Party shall have the
right to be represented by advisory counsel of its own selection and at
its own expense; and provided further, that if any such claim,
proceeding, investigation or allegation involves both NAI and the
Interested Party and the Interested Party shall have reasonably
concluded that there are legal defenses available to it which are
inconsistent with or in addition to those available to NAI, then the
Interested Party shall have the right to select separate counsel to
participate in the investigation and defense of and response to such
claim, proceeding, investigation or allegation on its own behalf, and
NAI shall pay or reimburse the Interested Party for all Attorney's Fees
incurred by the Interested Party because of the selection of such
separate counsel. If NAI fails to assume promptly (and in any event
within fifteen days after being notified of the applicable claim,
proceeding, investigation or allegation) the defense of the Interested
Party, then the Interested Party may contest (or settle, with the prior
consent of NAI, which consent will not be unreasonably withheld) the
claim, proceeding, investigation or allegation at NAI's expense using
counsel selected by the Interested Party. Moreover, if any such failure
by NAI continues for forty-five days or more after NAI is notified of
any such claim, proceeding, investigation or allegation, the Interested
Party may elect not to contest or continue contesting the same and
instead, in accordance with the written advice of counsel, settle (or
pay in full) all claims related thereto without NAI's consent and
without releasing NAI from any obligations to the Interested Party under
this subparagraph 5(c).
(d) Exceptions and Qualifications to Indemnities.
(i) BNPLC acknowledges and agrees that nothing in subparagraph
4(a) or the preceding subparagraphs of this Paragraph 5 shall be
construed to require NAI to pay or reimburse an Interested Party for (w)
any costs or expenses incurred by BNPLC or any transferee to accomplish
any Permitted Transfers described in clauses (2), (3), (4), (6) or (7)
of the definition thereof in the Common Definitions and Provisions
Agreement (Phase V - Improvements), (x) Excluded Taxes, (y) Losses
incurred or suffered by such Interested Party that are proximately
caused by (and attributed by any applicable principles of comparative
fault to) the Established Misconduct of that Interested Party, or (z)
Losses incurred or suffered by Participants in connection with their
negotiation or execution of the Participation Agreement or Pledge
Agreement (or supplements making them parties thereto) or in connection
with any due diligence they may undertake before entering into the
Participation Agreement or Pledge Agreement. Further, without limiting
BNPLC's rights (as provided in other provisions of this Improvements
Lease and other Operative Documents) to include the following in the
calculation
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of the Outstanding Construction Allowance, Stipulated Loss Value, the
Break Even Price and the Maximum Permitted Prepayment (as applicable) or
to collect Base Rent, Issue 97-10 Prepayments, a Supplemental Payment
and other amounts, the calculation of which depends upon the Outstanding
Construction Allowance, Stipulated Loss Value, the Break Even Price, and
the Maximum Permitted Prepayment, BNPLC acknowledges and agrees that
nothing in subparagraph 4(a) or the preceding subparagraphs of this
Paragraph 5 shall be construed to require NAI to pay or reimburse an
Interested Party for
a) costs paid by BNPLC with the proceeds of the Initial
Funding Advance as part of the Transaction Expenses, or
b) Construction Advances, including costs and
expenditures incurred or paid by or on behalf of BNPLC after any
Landlord's Election to Continue Construction, to the extent that
such costs and expenditures are considered to be Construction
Advances pursuant to subparagraph 6(e).
Further, if an Interested Party receives a written notice of Losses that such
Interested Party believes are covered by the indemnity in subparagraph 5(c)(i),
then such Interested Party will be expected to promptly furnish a copy of such
notice to NAI. The failure to so provide a copy of the notice to NAI shall not
excuse NAI from its obligations under subparagraph 5(c)(i); provided, that if
NAI is unaware of the matters described in the notice and such failure renders
unavailable defenses that NAI might otherwise assert, or precludes actions that
NAI might otherwise take, to minimize its obligations, then NAI shall be excused
from its obligation to indemnify such Interested Party (and any Affiliate of
such Interested Party) against the Losses, if any, which would not have been
incurred or suffered but for such failure. For example, if BNPLC fails to
provide NAI with a copy of a notice of an obligation covered by the indemnity
set out in subparagraph 5(c)(i) and NAI is not otherwise already aware of such
obligation, and if as a result of such failure BNPLC becomes liable for
penalties and interest covered by the indemnity in excess of the penalties and
interest that would have accrued if NAI had been promptly provided with a copy
of the notice, then NAI will be excused from any obligation to BNPLC (or any
Affiliate of BNPLC) to pay the excess.
(ii) Notwithstanding anything to the contrary in subparagraph
4(a) or the preceding subparagraphs of this Paragraph 5, NAI's liability
for payments required by the preceding subparagraphs of this Paragraph
5, and not excused by the preceding subparagraph 5(c)(i), prior to
substantial completion of the Construction Project ("Construction-Period
Indemnity Payments") shall be subject to the following provisions:
a) NAI may decline to pay any Construction-Period
Indemnity Payments other than the following (it being understood
that NAI's payment of the following Construction-Period
Indemnity Payments shall not be subject to any abatement or
deferral by anything contained in this subparagraph 5(d)(ii)):
(1) Construction-Period Indemnity Payments eligible
for reimbursement to NAI under the terms and
conditions of the Construction Management
Agreement; and
(2) Construction-Period Indemnity Payments that
constitute Absolute NAI Construction
Obligations.
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b) Any Construction-Period Indemnity Payment NAI is
excused from paying by this subparagraph 5(d)(ii), together with
interest thereon at the Default Rate, will be included in the
calculation of the Break Even Price under (and as defined in)
the Purchase Agreement.
6. CONSTRUCTION.
(a) Construction Advances; Outstanding Construction Allowance. The
Construction Management Agreement entitles NAI to receive from BNPLC - subject
to the terms and conditions set forth in the Construction Management Agreement -
Construction Advances on Advance Dates from time to time to pay or reimburse NAI
for the costs of the Construction Project and certain other costs described in
the Construction Management Agreement. In addition, BNPLC may from time to time
make expenditures or incur costs constituting Construction Advances after a
Landlord's Election to Continue Construction as described in subparagraph 6(e).
As used herein, references to the "Outstanding Construction Allowance" mean the
difference on the date in question (but not less than zero) of (A) the total
Construction Advances made by or on behalf of BNPLC on or prior to the date in
question, plus (B) all Carrying Costs added on or prior to the date in question,
less (C) any funds received and applied as Qualified Prepayments on or prior to
the date in question. Charges ("CARRYING COSTS") shall accrue as described below
for each Construction Period and will be added to (and thereafter be included
in) the Outstanding Construction Allowance on the last day of such Construction
Period (i.e., generally on the Advance Date upon which such Construction Period
ends). However, if for any reason Stipulated Loss Value (and thus the
Outstanding Construction Allowance included as a component thereof) must be
determined as of any date between Advance Dates, the Outstanding Construction
Allowance determined on such date shall include not only Carrying Costs added on
or before the immediately preceding Advance Date computed as described below,
but also Carrying Costs accruing on and after such preceding Advance Date to but
not including the date in question.
(b) Calculation of Carrying Costs, Generally. Carrying Costs accruing
for any Construction Period shall equal:
- the sum on the first day of such Construction Period of (i) Stipulated
Loss Value under (and as defined in) the Common Definitions and Provisions
Agreement (Phase V Improvements) and (ii) Stipulated Loss Value under (and as
defined in) the Other Common Definitions and Provisions Agreement, times
- the sum of (a) the Effective Rate with respect to such Construction
Period, plus (b) the Unsecured Spread for such Construction Period, times
- the number of days in the period from and including the preceding
Advance Date to but not including the Advance Date upon which the period ends,
divided by
- three hundred sixty.
Assume, only for the purpose of illustration: that the
Collateral Percentage for a hypothetical Construction Period is
zero percent (0%); that on the first day of such Construction
Period Combined Stipulated Loss Value is $15,000,000; that the
Effective Rate for the Construction Period is 6%; that the
Unsecured Spread for such Construction Period is one hundred
fifty basis points (150/100 of 1%); and that such Construction
Period contains exactly thirty days. Under such assumptions, the
Carrying Costs for the hypothetical Construction Period will
equal:
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$15,000,000 x (6% + 1.50%) x 30/360 = $93,750
(c) Limits on the Amount of Carrying Costs. Notwithstanding the
foregoing, the total amount of Carrying Costs that will be charged against the
Construction Allowance and added to Stipulated Loss value shall be subject to
the following limitations:
(i) Any Construction Periods which commence on or after the Base
Rent Commencement Date (Building 4) and end on or before the Base Rent
Commencement Date (Building 5) shall also constitute a Base Rent
Periods. For any such Construction Period, Carrying Costs as computed in
accordance with formula set out in the preceding subparagraph will be
reduced by the sum of (1) Base Rent paid for the same period in
accordance with subparagraph 5, plus (2) Base Rent (under and as defined
in the Other Lease) paid for the same period in accordance with
subparagraph 3(c)(i) of the Other Lease.
(ii) Because the Construction Allowance available to NAI under
the Construction Management Agreement is limited in amount to the
Maximum Construction Allowance, and because Carrying Costs are to be
charged against the Construction Allowance, Carrying Costs added to the
Outstanding Construction Allowance on the Base Rent Commencement Date
shall not exceed the amount that can be added without causing the Funded
Construction Allowance to exceed the Maximum Construction Allowance. If,
because of an extension of the Base Rent Commencement Deadline by BNPLC
(as described in the definition thereof in the Common Definitions and
Provisions Agreement (Phase V - Improvements)) or because of any
Landlord's Election to Continue Construction, the Funded Construction
Allowance already exceeds the Maximum Construction Allowance on the Base
Rent Commencement Date, then no Carrying Costs will be added to the
Outstanding Construction Allowance on the Base Rent Commencement Date.
(d) NAI's Right to Control the Construction Project. Subject to
BNPLC's rights under subparagraph 6.(e) of this Improvements Lease, the
Construction Management Agreement grants to NAI the sole right and
responsibility for designing and constructing the Construction Project, it being
understood that although title to all Improvements will pass directly to BNPLC
(as more particularly provided in Paragraph 7), BNPLC's obligation with respect
to the Construction Project shall be limited to the making of advances under and
subject to the conditions set forth in the Construction Management Agreement. No
contractor or other third party shall be entitled to require BNPLC to make
advances as a third party beneficiary of this Improvements Lease or of the
Construction Management Agreement or otherwise.
(e) Landlord's Election to Continue Construction. Without limiting
BNPLC's other rights and remedies under this Improvements Lease, and without
terminating this Improvements Lease or NAI's obligations hereunder or under any
of the other documents referenced herein, in the event of any termination of the
Construction Management Agreement as provided in subparagraph 5(D) or
subparagraph 5(E) thereof, BNPLC shall be entitled (but not obligated) to take
whatever action it deems necessary or appropriate by the use of legal
proceedings or otherwise to continue or complete the Construction Project in a
manner substantially consistent (to the extent practicable under Applicable
Laws) with the general description of the Construction Project set forth in
Exhibit B to the Construction Management Agreement and with the permitted use of
the Property set forth in subparagraph 2(a). (As used herein, "Landlord's
Election to Continue Construction" means any election by BNPLC to continue or
complete the Construction Project pursuant to the preceding sentence.) After any
Landlord's Election to Continue Construction, BNPLC may do any one or more of
the following pursuant to this subparagraph without further notice and
regardless of whether any Event of Default is then continuing:
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(i) Take Control of the Property. BNPLC may cause NAI and any
contractors or other parties on the Property to vacate the Property until the
Construction Project is complete or BNPLC elects not to continue work on the
Construction Project.
(ii) Continuation of Construction. BNPLC may perform or cause to
be performed any work to complete or continue the construction of the
Construction Project. In this regard, so long as work ordered or undertaken by
BNPLC is substantially consistent (to the extent practicable under Applicable
Laws) with the general description of the Construction Project set forth in
Exhibit B to the Construction Management Agreement and the permitted use of the
Property set forth in subparagraph 2(a), BNPLC shall have complete discretion
to:
a) proceed with construction according to such plans and
specifications as BNPLC may from time to time approve;
b) establish and extend construction deadlines as BNPLC from
time to time deems appropriate, without obligation to adhere to the
deadlines for Construction Milestones set forth in the Construction
Management Agreement;
c) hire, fire and replace architects, engineers, contractors,
construction managers and other consultants as BNPLC from time to time
deems appropriate, without obligation to use, consider or compensate
architects, engineers, contractors, construction managers or other
consultants previously selected or engaged by NAI;
d) determine the compensation that any architect, engineer,
contractor, construction manager or other consultant engaged by BNPLC
will be paid, and the terms and conditions that will govern the payment
of such compensation (including whether payment will be due in advance,
over the course of construction or on some other basis and including
whether contracts will be let on a fixed price basis, a cost plus a fee
basis or some other basis), as BNPLC from time to time deems
appropriate;
e) pay, settle or compromise existing or future bills and claims
which are or may be liens against the Property or as BNPLC considers
necessary or desirable for the completion of the Construction Project or
the removal of any clouds on title to the Property;
f) prosecute and defend all actions or proceedings in connection
with the construction of the Construction Project;
g) select and change interior and exterior finishes for the
Improvements and landscaping as BNPLC from time to time deems
appropriate; and
h) generally do anything that NAI itself might have done if NAI
had satisfied or obtained BNPLC's waiver of the conditions specified
therein.
(iii) Arrange for Turnkey Construction. Without limiting the
generality of the foregoing, BNPLC may engage any contractor or real estate
developer BNPLC believes to be reputable to take over and complete construction
of the Construction Project on a "turnkey" basis.
(iv) Suspension or Termination of Construction. Notwithstanding
any Landlord's Election to Continue Construction, BNPLC may subsequently elect
at any time to suspend or terminate further construction without obligation to
NAI.
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For purposes of this Improvements Lease and other Operative
Documents (including the determination of the Outstanding Construction
Allowance, Stipulated Loss Value, the Break Even Price and the Maximum
Permitted Prepayment), after any Landlord's Election to Continue
Construction, all costs and expenditures incurred or paid by or on
behalf of BNPLC to complete or continue construction as provided in this
subparagraph shall be considered Construction Advances and Project
Costs, regardless of whether they cause the Funded Construction
Allowance to exceed the Maximum Construction Allowance. Further, as used
in the preceding sentence, "costs incurred" by BNPLC will include costs
that BNPLC has become obligated to pay to any third party that is not an
Affiliate of BNPLC (including any contractor), even if the payments for
which BNPLC has become so obligated will constitute prepayments for work
or services to be rendered after payment and notwithstanding that
BNPLC's obligations for the payments may be conditioned upon matters
beyond BNPLC's control. For example, even if a construction contract
between BNPLC and a contractor excused BNPLC from making further
progress payments to the contractor upon NAI's failure to make any
required Issue 97-10 Prepayment hereunder, the obligation to make a
progress payment would nonetheless be "incurred" by BNPLC, for purposes
of determining whether BNPLC has incurred costs considered to be Project
Costs and Construction Advances, when BNPLC's obligation to pay it
became subject only to NAI's payment of an Issue 97-10 Prepayment or
other conditions beyond BNPLC's control. If and to the extent, however,
BNPLC does incur costs considered as Construction Advances under this
subparagraph, but (1) BNPLC does not actually pay the costs and after
incurring them BNPLC is fully and finally excused from the obligation to
pay them for any reason other than a breach by NAI of this Improvements
Lease or other Operative Documents, or (2) BNPLC receives a refund of
such costs, then the costs BNPLC is excused from paying or refunded to
BNPLC shall be considered Qualified Prepayments.
(f) Powers Coupled With an Interest. BNPLC's rights under
subparagraph 6(e) are intended to constitute powers coupled with an interest
which cannot be revoked.
(g) Final Completion Notice. After any Landlord's Election to
Continue Construction, BNPLC may provide a notice (a "COMPLETION NOTICE
(FINAL)") to NAI, advising NAI that construction of the Construction Project is
substantially complete or that BNPLC no longer intends to continue such
construction at that time.
7. STATUS OF PROPERTY ACQUIRED WITH FUNDS PROVIDED BY BNPLC. All
Improvements constructed during the term of this Improvements Lease shall be
owned by BNPLC and shall constitute "Property" covered by this Improvements
Lease. Further, to the extent heretofore or hereafter acquired (in whole or in
part) with any portion of the Initial Funding Advance or with any Construction
Advances or with other funds for which NAI has received or hereafter receives
reimbursement from the Initial Funding Advance or Construction Advances, all
furnishings, furniture, chattels, permits, licenses, franchises, certificates
and other personal property of whatever nature shall have been acquired on
behalf of BNPLC by NAI, shall be owned by BNPLC and shall constitute "Property"
covered by this Improvements Lease, as shall all renewals or replacements of or
substitutions for any such Property. NAI shall not authorize or permit the
transfer of title to the Improvements or to any other such Property to pass
through NAI or NAI's Affiliates before it is transferred to BNPLC from
contractors, suppliers, vendors or other third Persons. Nothing herein shall
constitute authorization of NAI by BNPLC to bind BNPLC to any construction
contract or other agreement with a third Person, but any construction contract
or other agreement executed by NAI for the acquisition or construction of
Improvements or other components of the Property may provide for the transfer of
title as required by the preceding sentence. Upon request of BNPLC, but not more
often than once in any period of twelve consecutive months, NAI shall deliver to
BNPLC an inventory describing all significant items of Personal Property (and,
in the case of tangible personal property, showing the make, model, serial
number and
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location thereof) other than Improvements, with a certification by NAI that such
inventory is true and complete and that all items specified in the inventory are
covered by this Improvements Lease free and clear of any Lien other than the
Permitted Encumbrances or Liens Removable by BNPLC.
8. ENVIRONMENTAL.
(a) Environmental Covenants by NAI. NAI covenants that:
(i) NAI shall not conduct or permit others to conduct Hazardous
Substance Activities, except Permitted Hazardous Substance Use and
Remedial Work.
(ii) NAI shall not discharge or permit the discharge of anything
on or from the Property that would require any permit under applicable
Environmental Laws, other than (1) storm water runoff, (2) waste water
discharges through a publicly owned treatment works, (3) discharges that
are a necessary part of any Remedial Work, and (4) other similar
discharges consistent with the definition herein of Permitted Hazardous
Substance Use, in each case in strict compliance with Environmental
Laws.
(iii) Following any discovery that Remedial Work is required by
Environmental Laws or otherwise believed by BNPLC to be reasonably
required, and to the extent not inconsistent with the other provisions
of this Improvements Lease, NAI shall promptly perform and diligently
and continuously pursue such Remedial Work, in each case in strict
compliance with Environmental Laws.
(iv) If requested by BNPLC in connection with any Remedial Work
required by this subparagraph, NAI shall retain independent
environmental consultants acceptable to BNPLC to evaluate any
significant new information generated during NAI's implementation of the
Remedial Work and to discuss with NAI whether such new information
indicates the need for any additional measures that NAI should take to
protect the health and safety of persons (including employees,
contractors and subcontractors and their employees) or to protect the
environment. NAI shall implement any such additional measures to the
extent required with respect to the Property by Environmental Laws or
otherwise believed by BNPLC to be reasonably required and to the extent
not inconsistent with the other provisions of this Improvements Lease.
(b) Right of BNPLC to do Remedial Work Not Performed by NAI. If NAI's
failure to cure any breach of the covenants set forth in subparagraph 8(a)
continues beyond the Environmental Cure Period (as defined below), BNPLC may, in
addition to any other remedies available to it, conduct all or any part of the
Remedial Work. To the extent that Remedial Work is done by BNPLC pursuant to the
preceding sentence (including any removal of Hazardous Substances), the cost
thereof shall be a demand obligation owing by NAI to BNPLC. As used in this
subparagraph, "ENVIRONMENTAL CURE PERIOD" means the period ending on the earlier
of: (1) one hundred eighty days after NAI is notified of the breach which must
be cured within such period, (2) the date that any writ or order is issued for
the levy or sale of any property owned by BNPLC (including the Property) because
of such breach, (3) the date that any criminal action is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such breach, or (4) any Designated Sale Date upon which, for any reason, NAI
or an Affiliate of NAI or any Applicable Purchaser shall not purchase BNPLC's
interest in the Property pursuant to the Purchase Agreement for a net price to
BNPLC (when taken together with any Supplemental Payment made by NAI pursuant to
Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value.
(c) Environmental Inspections and Reviews. BNPLC reserves the right
to retain
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environmental consultants to review any report prepared by NAI or to conduct
BNPLC's own investigation to confirm whether NAI is complying with the
requirements of this Paragraph 8. NAI grants to BNPLC and to BNPLC's agents,
employees, consultants and contractors the right to enter upon the Property at
any time to inspect the Property and to perform such tests as BNPLC deems
necessary or appropriate to review or investigate Hazardous Substances in, on,
under or about the Property or any discharge or suspected discharge of Hazardous
Substances into groundwater or surface water from the Property. NAI shall
promptly reimburse BNPLC for the fees of its environmental consultants and the
costs of any such inspections and tests.
(d) Communications Regarding Environmental Matters.
(i) NAI shall immediately advise BNPLC of (1) any discovery of
any event or circumstance which would render any of the representations
of NAI herein or in the Closing Certificate concerning environmental
matters materially inaccurate or misleading if made at the time of such
discovery and assuming that NAI was aware of all relevant facts, (2) any
Remedial Work (or change in Remedial Work) required or undertaken by NAI
or its Affiliates in response to any (A) discovery of any Hazardous
Substances on, under or about the Property other than Permitted
Hazardous Substances or (B) any claim for damages resulting from
Hazardous Substance Activities, (3) NAI's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the
Property which could cause the Property or any part thereof to be
subject to any ownership, occupancy, transferability or use restrictions
under Environmental Laws, or (4) any investigation or inquiry of any
failure or alleged failure by NAI to comply with Environmental Laws
affecting the Property by any governmental authority responsible for
enforcing Environmental Laws. In such event, NAI shall deliver to BNPLC
within thirty days after BNPLC's request, a preliminary written
environmental plan setting forth a general description of the action
that NAI proposes to take with respect thereto, if any, to bring the
Property into compliance with Environmental Laws or to correct any
breach by NAI of this Paragraph 8, including any proposed Remedial Work,
the estimated cost and time of completion, the name of the contractor
and a copy of the construction contract, if any, and such additional
data, instruments, documents, agreements or other materials or
information as BNPLC may request.
(ii) NAI shall provide BNPLC with copies of all material written
communications with federal, state and local governments, or agencies
relating to the matters listed in the preceding clause (i). NAI shall
also provide BNPLC with copies of any correspondence from third Persons
which threaten litigation over any significant failure or alleged
significant failure of NAI to maintain or operate the Property in
accordance with Environmental Laws.
(iii) Prior to NAI's submission of a Material Environmental
Communication to any governmental or regulatory agency or third party,
NAI shall, to the extent practicable, deliver to BNPLC a draft of the
proposed submission (together with the proposed date of submission), and
in good faith assess and consider any comments of BNPLC regarding the
same. Promptly after BNPLC's request, NAI shall meet with BNPLC to
discuss the submission, shall provide any additional information
requested by BNPLC and shall provide a written explanation to BNPLC
addressing the issues raised by comments (if any) of BNPLC regarding the
submission, including a reasoned analysis supporting any decision by NAI
not to modify the submission in accordance with comments of BNPLC.
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9. INSURANCE REQUIRED AND CONDEMNATION.
(a) Liability Insurance. Throughout the Term NAI shall maintain
commercial general liability insurance against claims for bodily and personal
injury, death and property damage occurring in or upon or resulting from any
occurrence in or upon the Property under one or more insurance policies that
satisfy the requirements set forth in Exhibit B. NAI shall deliver and maintain
with BNPLC for each liability insurance policy required by this Improvements
Lease written confirmation of the policy and the scope of the coverage provided
thereby issued by the applicable insurer or its authorized agent, which
confirmation must also satisfy the requirements set forth in Exhibit B.
(b) Property Insurance. Throughout the Term NAI will keep all
Improvements (including all alterations, additions and changes made to the
Improvements) insured against fire and other casualty under one or more property
insurance policies that satisfy the requirements set forth in Exhibit B. NAI
shall deliver and maintain with BNPLC for each property insurance policy
required by this Improvements Lease written confirmation of the policy and the
scope of the coverage provided thereby issued by the applicable insurer or its
authorized agent, which confirmation must also satisfy the requirements set
forth in Exhibit B. If any of the Property is destroyed or damaged by fire,
explosion, windstorm, hail or by any other casualty against which insurance
shall have been required hereunder, (i) BNPLC may, but shall not be obligated
to, make proof of loss if not made promptly by NAI after notice from BNPLC, (ii)
each insurance company concerned is hereby authorized and directed to make
payment for such loss directly to BNPLC for application as required by Paragraph
10, and (iii) BNPLC may settle, adjust or compromise any and all claims for
loss, damage or destruction under any policy or policies of insurance (provided,
that if any such claim is for less than $500,000, if no CMA Termination Event
shall have occurred and no Event of Default shall have occurred and be
continuing, NAI shall have the right to settle, adjust or compromise the claim
as NAI deems appropriate; and, provided further, that so long as no CMA
Termination Event shall have occurred and no Event of Default shall have
occurred and be continuing, BNPLC must provide NAI with at least forty-five days
notice of BNPLC's intention to settle any such claim before settling it unless
NAI shall already have approved of the settlement by BNPLC). If any casualty
shall result in damage to or loss or destruction of the Property, NAI shall give
immediate notice thereof to BNPLC and Paragraph 10 shall apply.
(c) Failure to Obtain Insurance. If NAI fails to obtain any insurance
or to provide confirmation of any such insurance as required by this
Improvements Lease, BNPLC shall be entitled (but not required) to obtain the
insurance that NAI has failed to obtain or for which NAI has not provided the
required confirmation and, without limiting BNPLC's other remedies under the
circumstances, BNPLC may require NAI to reimburse BNPLC for the cost of such
insurance and to pay interest thereon computed at the Default Rate from the date
such cost was paid by BNPLC until the date of reimbursement by NAI (provided,
however, that any such insurance cost paid by BNPLC prior to the Base Rent
Commencement Date will be charged against the Construction Allowance under the
Construction Management Agreement as if it had been paid by NAI).
(d) Condemnation. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Property or any
portion thereof, or any other similar governmental or quasi-governmental
proceedings arising out of injury or damage to the Property or any portion
thereof, each party shall notify the other (provided, however, BNPLC shall have
no liability for its failure to provide such notice) of the pendency of such
proceedings. NAI shall, at its expense, diligently prosecute any such
proceedings and shall consult with BNPLC, its attorneys and experts and
cooperate with them as requested in the carrying on or defense of any such
proceedings. All proceeds of condemnation awards or proceeds of sale in lieu of
condemnation with respect to the Property and all judgments, decrees and awards
for injury or damage to the Property shall be paid to BNPLC as Escrowed
Proceeds, and all such proceeds will be applied as provided in Paragraph 10.
BNPLC is hereby
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authorized, in the name of NAI, at any time after a CMA Termination Event or
when an Event of Default shall have occurred and be continuing, or otherwise
with NAI's prior consent, to execute and deliver valid acquittances for, and to
appeal from, any such judgment, decree or award concerning condemnation of any
of the Property. BNPLC shall not be in any event or circumstances liable or
responsible for failure to collect, or to exercise diligence in the collection
of, any such proceeds, judgments, decrees or awards.
(e) Waiver of Subrogation. NAI, for itself and for any Person
claiming through it (including any insurance company claiming by way of
subrogation), waives any and every claim which arises or may arise in its favor
against BNPLC or any other Interested Party and the officers, directors, and
employees of the Interested Parties for any and all Losses, to the extent that
NAI is compensated by insurance or would be compensated by the insurance
policies contemplated in this Improvements Lease, but for any deductible or
self-insured retention maintained under such insurance or but for a failure of
NAI to maintain the insurance as required by this Improvements Lease. NAI agrees
to have such insurance policies properly endorsed so as to make them valid
notwithstanding this waiver, if such endorsement is required to prevent a loss
of insurance.
10. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.
(a) Collection and Application of Insurance and Condemnation
Proceeds Generally. This Paragraph 10 shall govern the application of proceeds
received by BNPLC or NAI during the Term from any third party (1) under any
property insurance policy as a result of damage to the Property (including
proceeds payable under any insurance policy covering the Property which is
maintained by NAI), (2) as compensation for any restriction placed upon the use
or development of the Property or for the condemnation of the Property or any
portion thereof, or (3) because of any judgment, decree or award for injury or
damage to the Property; excluding, however, any funds paid to BNPLC by BNPLC's
Parent, by an Affiliate of BNPLC or by any Participant that is made to
compensate BNPLC for any Losses BNPLC may suffer or incur in connection with
this Improvements Lease or the Property. NAI will promptly pay over to BNPLC any
insurance, condemnation or other proceeds covered by this Paragraph 10 which NAI
may receive from any insurer, condemning authority or other third party. All
proceeds covered by this Paragraph 10, including those received by BNPLC from
NAI or third parties, shall be applied as follows:
(i) First, proceeds covered by this Paragraph 10 will be used to
reimburse BNPLC for any costs and expenses, including Attorneys' Fees,
that BNPLC incurred to collect the proceeds.
(ii) Second, the proceeds remaining after such reimbursement to
BNPLC (hereinafter, the "REMAINING PROCEEDS") will be applied, as
hereinafter more particularly provided, either as a Qualified Prepayment
or to reimburse NAI or BNPLC for the actual out-of-pocket costs of
repairing or restoring the Property. Until, however, any Remaining
Proceeds received by BNPLC are applied by BNPLC as a Qualified
Prepayment or applied by BNPLC to reimburse costs of repairs to or
restoration of the Property pursuant to this Paragraph 10, BNPLC shall
hold and maintain such Remaining Proceeds as Escrowed Proceeds in an
interest bearing account, and all interest earned on such account shall
be added to and made a part of such Escrowed Proceeds.
(b) Advances of Escrowed Proceeds to NAI. Except as otherwise
provided below in this Paragraph 10, BNPLC shall advance all Remaining Proceeds
held by it as Escrowed Proceeds to reimburse NAI for the actual out-of-pocket
cost to NAI of repairing or restoring the Property in accordance with the
requirements of this Improvements Lease and the other Operative Documents as the
applicable repair or restoration progresses and upon compliance by NAI with such
terms, conditions and
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requirements as may be reasonably imposed by BNPLC. In no event, however, shall
BNPLC be required to pay Escrowed Proceeds to NAI in excess of the actual
out-of-pocket cost to NAI of the applicable repair or restoration, as evidenced
by invoices or other documentation satisfactory to BNPLC, it being understood
that BNPLC may retain and apply any such excess as a Qualified Prepayment.
(b) Application of Escrowed Proceeds as a Qualified Prepayment.
Provided NAI has completed the Construction Project pursuant to the Construction
Management Agreement and no Event of Default shall have occurred and be
continuing, BNPLC shall apply any Remaining Proceeds paid to it (or other
amounts available for application as a Qualified Prepayment) as a Qualified
Prepayment on any date that BNPLC is directed to do so by a notice from NAI;
however, if such a notice from NAI specifies an effective date for a Qualified
Prepayment that is less than five Business Days after BNPLC's actual receipt of
the notice, BNPLC may postpone the date of the Qualified Prepayment to any date
not later than five Business Days after BNPLC's receipt of the notice. In any
event, except when BNPLC is required by the preceding sentence to apply
Remaining Proceeds or other amounts as a Qualified Prepayment on an Advance Date
or a Base Rent Date, BNPLC may deduct Breakage Costs incurred in connection with
any Qualified Prepayment from the Remaining Proceeds or other amounts available
for application as the Qualified Prepayment, and NAI will reimburse BNPLC upon
request for any such Breakage Costs that BNPLC incurs but does not deduct.
(c) Special Provisions Applicable After a CMA Termination Event or an
Event of Default. Notwithstanding the foregoing, after any CMA Termination
Event, and when any Event of Default shall have occurred and be continuing,
BNPLC shall be entitled to receive and collect all insurance, condemnation or
other proceeds governed by this Paragraph 10 and to apply all Remaining
Proceeds, when and to the extent deemed appropriate by BNPLC in its sole
discretion, either (A) to the reimbursement of NAI or BNPLC for the
out-of-pocket cost of repairing or restoring the Property, or (B) as Qualified
Prepayments.
(d) NAI's Obligation to Restore. Regardless of the adequacy of any
Remaining Proceeds available to NAI hereunder, and notwithstanding other
provisions of this Improvements Lease to the contrary:
(i) If, prior to the Base Rent Commencement Date, the Property
is damaged by fire or other casualty or any part of the Property is
taken by condemnation, NAI shall to the maximum extent possible, as part
of the Work contemplated in the Construction Management Agreement,
restore the Property or the remainder thereof and continue construction
of the Construction Project on and subject to the terms and conditions
set forth in the Construction Management Agreement. However, any
additional costs required to complete the Construction Project resulting
from such a casualty or taking prior to the Base Rent Commencement Date
shall, to the extent not covered by Remaining Proceeds paid to NAI as
provided in this Improvements Lease, be subject to reimbursement by
BNPLC under the Construction Management Agreement on the same terms and
conditions that apply to reimbursements of other costs of the Work
thereunder.
(ii) If, on or after the Base Rent Commencement Date, the
Property is damaged by fire or other casualty or less than all or
substantially all of the Property is taken by condemnation, NAI must:
a) increase the value of the Property or the remainder
thereof by restoring or improving the same (in a manner
consistent with the requirements and limitations imposed by this
Improvements Lease and the other Operative Documents or
otherwise acceptable to BNPLC), or decrease Stipulated Loss
Value by tendering a
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payment to BNPLC for application as a Qualified Prepayment, as
necessary to cause Current AS IS Market Value to be not less
than sixty percent (60%) of Stipulated Loss Value; and
b) restore the Property or the remainder thereof to a
reasonably safe and sightly condition.
(e) Takings of All or Substantially All of the Property on or after
the Base Rent Commencement Date. In the event of any taking of all or
substantially all of the Property on or after the Base Rent Commencement Date,
BNPLC shall be entitled to apply all Remaining Proceeds as a Qualified
Prepayment. In addition, if Stipulated Loss Value immediately prior to any such
taking exceeds the sum of the Remaining Proceeds resulting from such
condemnation, then BNPLC shall be entitled to recover the excess from NAI upon
demand as an additional Qualified Prepayment, whereupon this Improvements Lease
shall terminate. Any taking of so much of the Real Property as, in BNPLC's
reasonable good faith judgment, makes it impracticable to restore or improve the
remainder thereof as required by part (2) of the preceding subparagraph shall be
considered a taking of substantially all the Property for purposes of this
Paragraph 10.
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAI
CONCERNING THE PROPERTY. NAI represents, warrants and covenants as follows:
(a) Compliance with Covenants and Laws. The use of the Property
permitted by this Improvements Lease complies, or will comply after NAI obtains
available permits as the tenant under this Improvements Lease, in all material
respects with all Applicable Laws. NAI has obtained or will promptly obtain all
utility, building, health and operating permits as may be required by any
governmental authority or municipality having jurisdiction over the Property for
the construction contemplated herein and the use of the Property permitted by
this Improvements Lease.
(b) Operation of the Property. During the Term, NAI shall operate
the Property in a good and workmanlike manner and substantially in compliance
with all Applicable Laws and will pay or cause to be paid all fees or charges of
any kind in connection therewith. (If NAI does not promptly correct any failure
of the Property to comply with Applicable Laws that is the subject of a written
notice given to NAI or BNPLC by any governmental authority, then for purposes of
the preceding sentence, NAI shall be considered not to have maintained the
Property "substantially in accordance with Applicable Laws" whether or not the
noncompliance would be substantial in the absence of the notice.) During the
Term, NAI shall not use or occupy, or allow the use or occupancy of, the
Property in any manner which violates any Applicable Law or which constitutes a
public or private nuisance or which makes void, voidable or cancelable any
insurance then in force with respect thereto. During the Term, to the extent
that any of the following would, individually or in the aggregate, increase the
likelihood of a CMA Termination Event under the Construction Management
Agreement or materially and adversely affect the value of the Property or NAI's
use, occupancy or operations on the Property, NAI shall not, without BNPLC's
prior consent: (i) initiate or permit any zoning reclassification of the
Property; (ii) seek any variance under existing zoning ordinances applicable to
the Property; (iii) use or permit the use of the Property in a manner that would
result in such use becoming a nonconforming use under applicable zoning
ordinances or similar laws, rules or regulations; (iv) execute or file any
subdivision plat affecting the Property; or (v) consent to the annexation of the
Property to any municipality. If (A) a change in the zoning or other Applicable
Laws affecting the permitted use or development of the Property shall occur
after the Base Rent Commencement Date that reduces the value of the Property, or
(B) conditions or circumstances on or about the Property are discovered after
the Base Rent Commencement Date (such as the presence of an endangered species)
which substantially impede development and thereby reduce the value of the
Property, and if after any such reduction under clause (A) or (B) preceding the
Current AS IS
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Market Value of the Property is less than sixty percent (60%) of Stipulated Loss
Value, then NAI shall pay BNPLC upon request the amount by which Current AS IS
Market Value is less than sixty percent (60%) of Stipulated Loss Value, for
application as a Qualified Prepayment. During the Term, NAI shall not cause or
permit any drilling or exploration for, or extraction, removal or production of,
minerals from the surface or subsurface of the Property, and NAI shall not do
any act whereby the market value of the Property may reasonably be expected to
be materially lessened. During the Term, if NAI receives a written notice or
claim from any federal, state or other governmental entity that the Property is
not in compliance in any material respect with any Applicable Law, or that any
action may be taken against the owner of the Property because the Property does
not comply with Applicable Law, NAI shall promptly furnish a copy of such notice
or claim to BNPLC.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity and applicability of any Applicable Law with
respect to the Property, and pending such contest NAI shall not be deemed in
default hereunder because of the violation of such Applicable Law, if NAI
diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and if NAI promptly causes the Property to comply with
any such Applicable Law upon a final determination by a court of competent
jurisdiction that the same is valid and applicable to the Property; provided,
however, in any event such contest shall be concluded and the violation of such
Applicable Law must be corrected by NAI and any claims asserted against BNPLC or
the Property because of such violation must be paid by NAI, all prior to the
earlier of (i) the date that any criminal prosecution is instituted or overtly
threatened against BNPLC or any of its directors, officers or employees because
of such violation, (ii) the date that any action is taken by any governmental
authority against BNPLC or any property owned by BNPLC (including the Property)
because of such violation, or (iii) a Designated Sale Date upon which, for any
reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to Paragraph 1(A)(2) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to the Break Even Price.
(c) Debts for Construction, Maintenance, Operation or Development.
NAI shall cause all debts and liabilities incurred in the construction,
maintenance, operation or development of the Property, including all debts and
liabilities for labor, material and equipment and all debts and charges for
utilities servicing the Property, to be promptly paid; provided, that nothing in
this subparagraph will be construed to require NAI to remove Liens Removable by
BNPLC.
Notwithstanding the foregoing, NAI may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
mechanic's or materialmen's lien and pending such contest NAI shall not be
deemed in default under this subparagraph because of the contested lien if (1)
within sixty days after being asked to do so by BNPLC, NAI bonds over to BNPLC's
reasonable satisfaction all such contested liens against the Property alleged to
secure an amount in excess of $500,000 (individually or in the aggregate), (2)
NAI diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (3) NAI promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs and
interest thereon, promptly after such judgment becomes final; provided, however,
that in any event each such contest shall be concluded and the lien, interest
and costs must be paid by NAI prior to the earlier of (i) the date that any
criminal prosecution is instituted or overtly threatened against BNPLC or its
directors, officers or employees because of the nonpayment thereof, (ii) the
date that any writ or order is issued under which the Property or any other
property in which BNPLC has an interest may be seized or sold or any other
action is taken against BNPLC or any property in which BNPLC has an interest
because of the nonpayment thereof, or (iii) a Designated Sale Date upon which,
for any reason, NAI or an Affiliate of NAI or any Applicable Purchaser shall not
purchase BNPLC's interest in the Property pursuant to the Purchase Agreement for
a price to BNPLC (when taken together with any additional payments made by NAI
pursuant to
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Paragraph 1(A)(2) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to the Break Even Price.
(d) Repair, Maintenance, Alterations and Additions. NAI shall keep
the Property in good order, operating condition and appearance and shall cause
all necessary repairs, renewals and replacements to be promptly made. NAI will
not allow any of the Property to be materially misused, abused or wasted, and
NAI shall promptly replace any worn-out fixtures and Personal Property with
fixtures and Personal Property comparable to the replaced items when new. NAI
shall not, without the prior consent of BNPLC, (i) remove from the Property any
fixture or Personal Property having significant value except such as are
replaced by NAI by fixtures or Personal Property of equal suitability and value,
free and clear of any lien or security interest (and for purposes of this clause
"significant value" will mean any fixture or Personal Property that has a value
of more than $100,000 or that, when considered together with all other fixtures
and Personal Property removed and not replaced by NAI by items of equal
suitability and value, has an aggregate value of $500,000 or more) or (ii) make
material new Improvements or alter Improvements in any material respect, except
as part of the Work performed in accordance with the Construction Management
Agreement. Without limiting the foregoing, NAI will notify BNPLC before making
any significant alterations to the Improvements after the completion of the
Construction Project. Nothing in this subparagraph, however, is intended to
limit NAI's rights and obligations under other express provisions of this
Improvements Lease and the Construction Management Agreement with respect to the
Construction Project.
(e) Permitted Encumbrances and Development Documents. NAI shall
during the Term comply with and will cause to be performed all of the covenants,
agreements and obligations imposed upon the owner of any interest in the
Property by the Permitted Encumbrances (including the Premises Lease) or the
Development Documents. Without limiting the foregoing, NAI shall cause all
amounts to be paid when due, the payment of which is secured by any Lien against
the Property created by the Permitted Encumbrances. Without the prior consent of
BNPLC, NAI shall not enter into, initiate, approve or consent to any
modification of any Permitted Encumbrance or Development Document that would
create or expand or purport to create or expand obligations or restrictions
which would encumber BNPLC's interest in the Property. (Whether BNPLC must give
any such consent requested by NAI during the Term of this Improvements Lease
shall be governed by subparagraph 3(A) of the Closing Certificate and
Agreement.)
(f) Books and Records Concerning the Property. NAI shall keep books
and records that are accurate and complete in all material respects for the
Property and, subject to Paragraph 16(c), will permit all such books and records
(including all contracts, statements, invoices, bills and claims for labor,
materials and services supplied for the construction and operation of any
Improvements) to be inspected and copied by BNPLC. This subparagraph shall not
be construed as requiring NAI to regularly maintain separate books and records
relating exclusively to the Property; provided, however, that upon request, NAI
shall construct or abstract from its regularly maintained books and records
information required by this subparagraph relating to the Property.
12. FINANCIAL COVENANTS AND OTHER COVENANTS INCORPORATED BY REFERENCE TO
SCHEDULE 1. Throughout the Term of this Improvements Lease, NAI shall comply
with the requirements of Schedule 1 attached hereto.
13. FINANCIAL STATEMENTS AND OTHER REPORTS.
(a) Financial Statements; Required Notices; Certificates. Throughout
the Term of this Improvements Lease, NAI shall deliver to BNPLC and to each
Participant:
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(i) as soon as available and in any event within one hundred
twenty days after the end of each fiscal year of NAI, a consolidated
balance sheet of NAI and its Consolidated Subsidiaries as of the end of
such fiscal year and a consolidated income statement and statement of
cash flows of NAI and its Consolidated Subsidiaries for such fiscal
year, all in reasonable detail and all prepared in accordance with GAAP
and accompanied by a report and opinion of accountants of national
standing selected by NAI, which report and opinion shall be prepared in
accordance with generally accepted auditing standards and shall not be
subject to any qualifications or exceptions as to the scope of the audit
nor to any qualification or exception which BNPLC determines, in BNPLC's
reasonable discretion, is unacceptable;
(ii) as soon as available and in any event within sixty days
after the end of each of the first three quarters of each fiscal year of
NAI, the consolidated balance sheet of NAI and its Consolidated
Subsidiaries as of the end of such quarter and the consolidated income
statement and the consolidated statement of cash flows of NAI and its
Consolidated Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, all in
reasonable detail and all prepared in accordance with GAAP and certified
by the chief financial officer or controller of NAI (subject to year-end
adjustments);
(iii) together with the financial statements furnished in
accordance with subparagraph 13(a)(ii) and, a certificate of the chief
financial officer or controller of NAI: (i) certifying that to the
knowledge of NAI no Default or Event of Default under this Improvements
Lease has occurred and is continuing or, if a Default or Event of
Default has occurred and is continuing, a brief statement as to the
nature thereof and the action which is proposed to be taken with respect
thereto, (ii) certifying that the representations of NAI set forth in
the Operative Documents are true and correct in all material respects as
of the date thereof as though made on and as of the date thereof or, if
not then true and correct, a brief statement as to why such
representations are no longer true and correct, and (iii) with
computations demonstrating compliance with the financial covenants
contained in Schedule 1;
(iv) within five days after the end of each calendar month, a
certificate of the chief financial officer or controller of NAI
certifying that at the end of the preceding calendar month, NAI had
sufficient cash and other assets described in Paragraph 1 of Part II of
Schedule 1 to comply with the requirements of that paragraph;
(v) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports which NAI sends to
NAI's stockholders, and copies of all regular, periodic and special
reports, and all registration statements (other than registration
statements on Form S-8 or any form substituted therefor) which NAI files
with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or with any national
securities exchange;
(vi) upon request by BNPLC, a statement in writing certifying
that the Operative Documents are unmodified and in full effect (or, if
there have been modifications, that the Operative Documents are in full
effect as modified, and setting forth such modifications) and the dates
to which the Base Rent has been paid and either stating that to the
knowledge of NAI no Default or Event of Default under this Improvements
Lease has occurred and is continuing or, if a Default or Event of
Default under this Improvements Lease has occurred and is continuing, a
brief statement as to the nature thereof; it being intended that any
such statement by NAI may be relied upon by any prospective purchaser or
mortgagee of the Property and by the Participants
(vii) as soon as possible after, and in any event within ten
days after NAI
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becomes aware that, any of the following has occurred, with respect to
which the potential aggregate liability to NAI relating thereto is
$500,000 or more, a notice signed by a senior financial officer of NAI
setting forth details of the following and the response, if any, which
NAI or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC
by NAI or an ERISA Affiliate with respect to any of the following or the
events or conditions leading up to the following): (A) the assertion, to
secure any Unfunded Benefit Liabilities, of any Lien against the assets
of NAI, against the assets of any Plan or Multiemployer Plan or against
any interest of BNPLC or NAI in the Property, or (B) the taking of any
action by the PBGC or any other governmental authority against NAI to
terminate any Plan of NAI or any ERISA Affiliate of NAI or to cause the
appointment of a trustee or receiver to administer any such Plan ; and
(viii) such other information respecting the condition or
operations, financial or otherwise, of NAI, of any of its Subsidiaries
or of the Property as BNPLC or any Participant through BNPLC may from
time to time reasonably request.
BNPLC is hereby authorized to deliver a copy of any information or certificate
delivered to it pursuant to this subparagraph 13(a) to BNPLC's Parent, to the
Participants and to any regulatory body having jurisdiction over BNPLC or
BNPLC's Parent or any Participant that requires or requests it.
14. ASSIGNMENT AND SUBLETTING BY NAI.
(a) BNPLC's Consent Required. Without the prior consent of BNPLC,
NAI shall not assign, transfer, mortgage, pledge or hypothecate this
Improvements Lease or any interest of NAI hereunder and shall not sublet all or
any part of the Property, by operation of law or otherwise; provided, that
subject to subparagraph 14(c) below, (I) this provision shall not be construed
to prohibit any Premises Lease described in the Common Definitions and
Provisions Agreement (Phase V - Improvements) or any transfer or sublease by a
lessee thereunder which is authorized by the Premises Lease, and (II) if (and
after) NAI completes the Construction Project pursuant to the Construction
Management Agreement and so long as no Event of Default has occurred and is
continuing: (1) NAI shall be entitled to sublet no more than forty-nine percent
(49%) (computed on the basis of square footage) of the useable space in then
existing and completed building Improvements, if any, so long as (i) any
sublease by NAI is made expressly subject and subordinate to the terms hereof,
and (ii) such sublease has a term equal to or less than the remainder of the
then effective Term of this Improvements Lease; and (2) NAI shall be entitled to
assign or transfer this Improvements Lease or any interest of NAI hereunder to
an Affiliate of NAI if both NAI and its Affiliate confirm their joint and
several liability hereunder by written notice given to BNPLC.
(b) Standard for BNPLC's Consent to Assignments and Certain Other
Matters. Consents and approvals of BNPLC which are required by this Paragraph 14
will not be unreasonably withheld or delayed, but NAI acknowledges that BNPLC's
withholding of such consent or approval shall be reasonable if BNPLC determines
in good faith that (1) giving the approval may materially increase BNPLC's risk
of liability for any existing or future environmental problem, or (2) giving the
approval is likely to increase BNPLC's administrative burden of complying with
or monitoring NAI's compliance with the requirements of this Improvements Lease.
(c) Consent Not a Waiver. No consent by BNPLC to a sale, assignment,
transfer, mortgage, pledge or hypothecation of this Improvements Lease or NAI's
interest hereunder, and no assignment or subletting of the Property or any part
thereof in accordance with this Improvements Lease or otherwise with BNPLC's
consent, shall release NAI from liability hereunder; and any such consent shall
apply only to the specific transaction thereby authorized and shall not relieve
NAI from any
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requirement of obtaining the prior consent of BNPLC to any further sale,
assignment, transfer, mortgage, pledge or hypothecation of this Improvements
Lease or any interest of NAI hereunder.
15. ASSIGNMENT BY BNPLC.
(a) Restrictions on Transfers. Except by a Permitted Transfer, BNPLC
shall not assign, transfer, mortgage, pledge, encumber or hypothecate this
Improvements Lease or the other Operative Documents or any interest of BNPLC in
and to the Property during the Term without the prior consent of NAI, which
consent NAI may withhold in its sole discretion. Further, notwithstanding
anything to the contrary herein contained, if withholding taxes are imposed on
the rents and other amounts payable to BNPLC hereunder because of BNPLC's
assignment of this Improvements Lease to any citizen of, or any corporation or
other entity formed under the laws of, a country other than the United States,
NAI shall not be required to compensate BNPLC or any such assignee for the
withholding tax. If, in breach of this subparagraph, BNPLC transfer the Property
or any part thereof by a conveyance or that does not constitute a Permitted
Transfer, with the result that additional transfer taxes or other Impositions
are assessed against the Property or the owner thereof, BNPLC shall be required
to pay such additional transfer taxes or other Impositions.
(b) Effect of Permitted Transfer or other Assignment by BNPLC. If,
without breaching subparagraph 15(a), BNPLC sells or otherwise transfers the
Property and assigns all of its rights under this Improvements Lease and the
other Operative Documents, then BNPLC shall thereby be released from any
obligations arising after such assumption under this Improvements Lease or the
other Operative Documents (other than any liability for a breach of any
continuing obligation to provide Construction Advances under the Construction
Management Agreement), and NAI shall look solely to each successor in interest
of BNPLC for performance of such obligations.
16. BNPLC'S RIGHT OF ACCESS.
(a) During the Term, BNPLC and BNPLC's representatives may (subject
to subparagraph 16(c)) enter the Property at any reasonable time after five
Business Days advance written notice to NAI for the purpose of making
inspections or performing any work BNPLC is authorized to undertake by the next
subparagraph or for the purpose confirming whether NAI has complied with the
requirements of this Improvements Lease or the other Operative Documents.
(b) If NAI fails to perform any act or to take any action required
of it by this Improvements Lease or the Closing Certificate, or to pay any money
which NAI is required by this Improvements Lease or the Closing Certificate to
pay, and if such failure or action constitutes an Event of Default or renders
BNPLC or any director, officer, employee or Affiliate of BNPLC at risk of
criminal prosecution or renders BNPLC's interest in the Property or any part
thereof at risk of forfeiture by forced sale or otherwise, then in addition to
any other remedies specified herein or otherwise available, BNPLC may, perform
or cause to be performed such act or take such action or pay such money. Any
expenses so incurred by BNPLC, and any money so paid by BNPLC, shall be a demand
obligation owing by NAI to BNPLC. Further, BNPLC, upon making such payment,
shall be subrogated to all of the rights of the person, corporation or body
politic receiving such payment. But nothing herein shall imply any duty upon the
part of BNPLC to do any work which under any provision of this Improvements
Lease NAI may be required to perform, and the performance thereof by BNPLC shall
not constitute a waiver of NAI's default. BNPLC may during the progress of any
such work permitted by BNPLC hereunder on or in the Property keep and store upon
the Property all necessary materials, tools, and equipment. BNPLC shall not in
any event be liable for inconvenience, annoyance, disturbance, loss of business,
or other damage to NAI or the subtenants or invitees of NAI by reason of making
such repairs or the performance of any such work on or in the Property, or on
account of bringing materials, supplies and equipment into or
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through the Property during the course of such work (except for any liability in
excess of the liability insurance limits established in Exhibit resulting from
death or injury or damage to the property of third parties caused by the
Established Misconduct of BNPLC or its officers, employees, or agents in
connection therewith), and the obligations of NAI under this Improvements Lease
shall not thereby be excused in any manner.
(c) NAI shall have no obligation to provide proprietary information
(as defined in the next sentence) to BNPLC, except and to the extent that (1)
BNPLC reasonably determines that BNPLC cannot accomplish the purposes of BNPLC's
inspection of the Property or exercise of other rights granted pursuant to the
various express provisions of this Improvements Lease and the other Operative
Documents without evaluating such information. For purposes of this Improvements
Lease "proprietary information" includes NAI's intellectual property, trade
secrets and other confidential information of value to NAI about, among other
things, NAI's manufacturing processes, products, marketing and corporate
strategies, but in no event will "proprietary information" include any
disclosure of substances and materials (and their chemical composition) which
are or previously have been present in, on or under the Property at the time of
any inspections by BNPLC, nor will "proprietary information" include any
additional disclosures reasonably required to permit BNPLC to determine whether
the presence of such substances and materials has constituted a violation of
Environmental Laws. In addition, under no circumstances shall NAI have any
obligation to disclose to BNPLC or any other party any proprietary information
of NAI (including, without limitation, any pending applications for patents or
trademarks, any research and design and any trade secrets) except if and to the
limited extent reasonably necessary to comply with the express provisions of
this Improvements Lease or the other Operative Documents.
17. EVENTS OF DEFAULT. Each of the following events shall be an "EVENT
OF DEFAULT" by NAI under this Improvements Lease:
(a) NAI shall fail to pay when due any installment of Rent due
hereunder and such failure shall continue for three (3) Business Days after NAI
is notified in writing thereof.
(b) NAI shall fail to cause any representation or warranty of NAI
contained herein or in the Construction Management Agreement or the Closing
Certificate that was false or misleading in any material respect when made to be
made true and not misleading (other than as described in the other clauses of
this Paragraph 17), or NAI shall fail to comply with any term, provision or
covenant of this Improvements Lease or of the Construction Management Agreement
or the Closing Certificate (other than as described in the other clauses of this
Paragraph 17), and in either case shall not cure such failure prior to the
earlier of (A) thirty days after written notice thereof is sent to NAI or (B)
the date any writ or order is issued for the levy or sale of any property owned
by BNPLC (including the Property) or any criminal prosecution is instituted or
overtly threatened against BNPLC or any of its directors, officers or employees
because of such failure; provided, however, that so long as no such writ or
order is issued and no such criminal prosecution is instituted or overtly
threatened, the period within which such failure may be cured by NAI shall be
extended for a further period (not to exceed an additional sixty days) as shall
be necessary for the curing thereof with diligence, if (but only if) (x) such
failure is susceptible of cure but cannot with reasonable diligence be cured
within such thirty day period, (y) NAI shall promptly have commenced to cure
such failure and shall thereafter continuously prosecute the curing thereof with
reasonable diligence and (z) the extension of the period for cure will not, in
any event, cause the period for cure to extend beyond five days prior to the
expiration of this Improvements Lease.
(c) NAI shall abandon the Property.
(d) NAI or any Subsidiary shall fail to make any payment or payments
of principal, premium or interest, of Debt of NAI described in the next sentence
when due (taking into consideration
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the time NAI may have to cure such failure, if any, under the documents
governing such Debt). As used in this clause , "DEBT" shall include only Debt
(as defined in the Common Definitions and Provisions Agreement (Phase V -
Improvements)) of NAI or any of its Subsidiaries now existing or arising in the
future (a) payable to BNPLC or any Affiliate of BNPLC, or (B) payable to any
other Person and with respect to which $3,000,000 or more is actually due and
payable because of acceleration or otherwise.
(e) NAI: (a) shall generally not, or be unable to, or shall admit in
writing its inability to, pay its debts as such debts become due; or (b) shall
make an assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for it or a
substantial part of its assets; or (c) shall file any petition or application to
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (d) shall have had any such
petition or application filed against it; or (e) by any act or omission shall
indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a custodian,
receiver or trustee for all or any substantial part of its property; or (f)
shall suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of sixty days or more.
(f) One or more final judgments, decrees or orders for the payment
of money in excess of $3,000,000 in the aggregate shall be rendered against NAI
and such judgments, decrees or orders shall continue unsatisfied and in effect
for a period of thirty consecutive days without NAI's having obtained an
agreement (or after the expiration or termination of an agreement) of the
Persons entitled to enforce such judgment, decrees or orders not to enforce the
same pending negotiations with NAI concerning the satisfaction or other
discharge of the same.
(g) NAI shall breach the requirements of Paragraph 12, which by
reference to Schedule 1 establishes certain financial covenants and other
requirements.
(h) as of the effective date of this Improvements Lease, any of the
representations or warranties of NAI contained in subparagraphs 2(A) - (J) of
the Closing Certificate shall be false or misleading in any material respect.
(i) NAI shall fail to pay the full amount of any Supplemental
Payment required by the Purchase Agreement on the Designated Sale Date or shall
fail to provide Collateral as and when due pursuant to the Pledge Agreement
Documents.
(j) NAI shall fail to comply with any term, provision or condition
of the Pledge Agreements after the expiration of any applicable notice and cure
period set forth in the Pledge Agreement.
18. REMEDIES.
(a) Basic Remedies. At any time after an Event of Default and after
BNPLC has given any notice required by subparagraph 18(b), BNPLC shall be
entitled at BNPLC's option (and without limiting BNPLC in the exercise of any
other right or remedy BNPLC may have, and without any further demand or notice
except as expressly described in this subparagraph 18(a)), to exercise any one
or more of the following remedies:
(i) By notice to NAI, BNPLC may terminate NAI's right to
possession of the Property. A notice given in connection with unlawful
detainer proceedings specifying a time within which to cure a default
shall terminate NAI's right to possession if NAI fails to cure the
default within the time specified in the notice.
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(ii) Upon termination of NAI's right to possession and without
further demand or notice, BNPLC may re-enter the Property in any manner
not prohibited by Applicable Law and take possession of all
improvements, additions, alterations, equipment and fixtures thereon and
remove any persons in possession thereof. Any property in the
Improvements may be removed and stored in a warehouse or elsewhere at
the expense and risk of and for the account of NAI.
(iii) Upon termination of NAI's right to possession, this
Improvements Lease shall terminate and BNPLC may recover from NAI:
a) The worth at the time of award of the unpaid Rent
which had been earned at the time of termination;
b) The worth at the time of award of the amount by which
the unpaid Rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss
that NAI proves could have been reasonably avoided;
c) The worth at the time of award of the amount by which
the unpaid Rent for the balance of the scheduled Term after the
time of award exceeds the amount of such rental loss that NAI
proves could be reasonably avoided; and
d) Any other amount necessary to compensate BNPLC for
all the detriment proximately caused by NAI's failure to perform
NAI's obligations under this Improvements Lease or which in the
ordinary course of things would be likely to result therefrom,
including the costs and expenses (including Attorneys' Fees,
advertising costs and brokers' commissions) of recovering
possession of the Property, removing persons or property
therefrom, placing the Property in good order, condition, and
repair, preparing and altering the Property for reletting, all
other costs and expenses of reletting, and any loss incurred by
BNPLC as a result of NAI's failure to perform NAI's obligations
under the other Operative Documents.
The "WORTH AT THE TIME OF AWARD" of the amounts referred to in
subparagraph 18(a)(iii)a) and subparagraph 18(a)(iii)b) shall be
computed by allowing interest at the Default Rate. The "WORTH AT
THE TIME OF AWARD" of the amount referred to in subparagraph
18(a)(iii)c) shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at
the time of award plus one percent (1%).
e) Such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable
California law.
(iv) BNPLC shall have the remedy described in California Civil
Code Section 1951.4 (lessor may continue lease in force even after
lessee's breach and abandonment and recover rent as it becomes due, if
lessee has right to sublet or assign, subject only to reasonable
limitations). Accordingly, even if NAI has breached this Improvements
Lease and abandoned the Property, this Improvements Lease shall continue
in effect for so long as BNPLC does not terminate NAI's right to
possession, and BNPLC may enforce all of BNPLC's rights and remedies
under this Improvements Lease, including the right to recover the Rent
as it becomes due under this Improvements Lease. NAI's right to
possession shall not be deemed to have been terminated by BNPLC except
pursuant to subparagraph 18(a)(i) hereof. The following shall not
constitute a termination of NAI's right to possession:
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39
a) Acts of maintenance or preservation or efforts to
relet the Property;
b) The appointment of a receiver upon the initiative of
BNPLC to protect BNPLC's interest under this Improvements Lease;
or
c) Reasonable withholding of consent to an assignment or
subletting, or terminating a subletting or assignment by NAI.
(b) Notice Required So Long As the Purchase Option and NAI's Initial
Remarketing Rights and Obligations Continue Under the Purchase Agreement. So
long as NAI remains in possession of the Property and there has been no
termination of the Purchase Option and NAI's Initial Remarketing Rights and
Obligations as provided Paragraph 4 of the Purchase Agreement, BNPLC's right to
exercise remedies provided in subparagraph 18(a) will be subject to the
condition precedent that BNPLC shall have notified NAI, at a time when an Event
of Default shall have occurred and be continuing, of BNPLC's intent to exercise
remedies provided in subparagraph 18(a) at least sixty days prior to exercising
the remedies. The condition precedent is intended to provide NAI with an
opportunity to exercise the Purchase Option or NAI's Initial Remarketing Rights
and Obligations before losing possession of the Property pursuant to
subparagraph 18(a). The condition precedent is not, however, intended to extend
any period for curing an Event of Default. Accordingly, if an Event of Default
has occurred, and regardless of whether any Event of Default is then continuing,
BNPLC may proceed immediately to exercise remedies provided in subparagraph
18(a) at any time after the earlier of (i) sixty days after BNPLC has given such
a notice to NAI, (ii) any date upon which NAI relinquishes possession of the
Property, or (iii) any termination of the Purchase Option and NAI's Initial
Remarketing Rights and Obligations.
(c) Enforceability. This Paragraph 18 shall be enforceable to the
maximum extent not prohibited by Applicable Law, and the unenforceability of any
provision in this Paragraph shall not render any other provision unenforceable.
(c) Remedies Cumulative. No right or remedy herein conferred upon or
reserved to BNPLC is intended to be exclusive of any other right or remedy, and
each and every such right and remedy shall be cumulative and in addition to any
other right or remedy given to BNPLC hereunder or now or hereafter existing in
favor of BNPLC under Applicable Law or in equity. In addition to other remedies
provided in this Improvements Lease, BNPLC shall be entitled, to the extent
permitted by Applicable Law or in equity, to injunctive relief in case of the
violation, or attempted or threatened violation, of any of the covenants,
agreements, conditions or provisions of this Improvements Lease, or to a decree
compelling performance of any of the other covenants, agreements, conditions or
provisions of this Improvements Lease to be performed by NAI, or to any other
remedy allowed to BNPLC at law or in equity. Nothing contained in this
Improvements Lease shall limit or prejudice the right of BNPLC to prove for and
obtain in proceedings for bankruptcy or insolvency of NAI by reason of the
termination of this Improvements Lease, an amount equal to the maximum allowed
by any statute or rule of law in effect at the time when, and governing the
proceedings in which, the damages are to be proved, whether or not the amount be
greater, equal to, or less than the amount of the loss or damages referred to
above. Without limiting the generality of the foregoing, nothing contained
herein shall modify, limit or impair any of the rights and remedies of BNPLC
under the Purchase Documents, and BNPLC shall not be required to give the sixty
day notice described in subparagraph 18(b) as a condition precedent to any
acceleration of the Designated Sale Date or to taking any action to enforce the
Purchase Documents.
19. DEFAULT BY BNPLC. If BNPLC should default in the performance of any
of its obligations under this Improvements Lease, BNPLC shall have the time
reasonably required, but in no event less than thirty days, to cure such default
after receipt of notice from NAI specifying such default
34
40
and specifying what action NAI believes is necessary to cure the default. If NAI
prevails in any litigation brought against BNPLC because of BNPLC's failure to
cure a default within the time required by the preceding sentence, then NAI
shall be entitled to an award against BNPLC for the monetary damages proximately
caused to NAI by such default.
Notwithstanding the foregoing, BNPLC's right to cure as provided in this
Paragraph 19 will not in any event extend the time within which BNPLC must
remove Liens Removable by BNPLC as required by Paragraph 20 beyond the
Designated Sale Date.
20. QUIET ENJOYMENT. Provided NAI pays the Base Rent and all Additional
Rent payable hereunder as and when due and payable and keeps and fulfills all of
the terms, covenants, agreements and conditions to be performed by NAI
hereunder, BNPLC shall not during the Term disturb NAI's peaceable and quiet
enjoyment of the Property; however, such enjoyment shall be subject to the
terms, provisions, covenants, agreements and conditions of this Improvements
Lease, to Permitted Encumbrances, to Development Documents and to any other
claims not constituting Liens Removable by BNPLC. If any Lien Removable by BNPLC
is claimed against the Property, BNPLC will remove the Lien Removable by BNPLC
promptly. Any breach by BNPLC of this Paragraph shall render BNPLC liable to NAI
for any monetary damages proximately caused thereby, but as more specifically
provided in subparagraph 4(b) above, no such breach shall entitle NAI to
terminate this Improvements Lease or excuse NAI from its obligation to pay Rent.
21. SURRENDER UPON TERMINATION. Unless NAI or an Applicable Purchaser
purchases or has purchased BNPLC's entire interest in the Property pursuant to
the terms of the Purchase Agreement and BNPLC's entire interest in the
Improvements and other "Property" under (and as defined in) the Other Purchase
Agreement, NAI shall, upon the termination of NAI's right to occupancy,
surrender to BNPLC the Property, including Improvements constructed by NAI and
fixtures and furnishings included in the Property, free of all Hazardous
Substances (including Permitted Hazardous Substances) and tenancies and with all
Improvements in substantially the same condition as of the date the same were
initially completed, excepting only (i) ordinary wear and tear that occurs
between the maintenance, repairs and replacements required by other provisions
of this Improvements Lease or the Other Lease Agreement, and (ii) demolition,
alterations and additions which are expressly permitted by the terms of this
Improvements Lease or the Other Lease Agreement and which have been completed by
NAI in a good and workmanlike manner in accordance with all Applicable Laws. Any
movable furniture or movable personal property belonging to NAI or any party
claiming under NAI, if not removed at the time of such termination and if BNPLC
shall so elect, shall be deemed abandoned and become the property of BNPLC
without any payment or offset therefor. If BNPLC shall not so elect, BNPLC may
remove such property from the Property and store it at NAI's risk and expense.
22. HOLDING OVER BY NAI. Should NAI not purchase BNPLC's right, title
and interest in the Property as provided in the Purchase Agreement, but
nonetheless continue to hold the Property after the termination of this
Improvements Lease without BNPLC's consent, whether such termination occurs by
lapse of time or otherwise, such holding over shall constitute and be construed
as a tenancy from day to day only, at a daily Base Rent equal to: (i) Stipulated
Loss Value on the day in question, times (ii) the Default Rate for such day;
divided by (iii) three hundred and sixty; subject, however, to all of the terms,
provisions, covenants and agreements on the part of NAI hereunder. No payments
of money by NAI to BNPLC after the termination of this Improvements Lease shall
reinstate, continue or extend the Term of this Improvements Lease and no
extension of this Improvements Lease after the termination thereof shall be
valid unless and until the same shall be reduced to writing and signed by both
BNPLC and NAI.
23. INDEPENDENT OBLIGATIONS EVIDENCED BY THE OTHER OPERATIVE DOCUMENTS.
NAI acknowledges and agrees that nothing contained in this Improvements Lease
shall limit, modify or
35
41
otherwise affect any of NAI's obligations under the other Operative Documents,
which obligations are intended to be separate, independent and in addition to,
and not in lieu of, the obligations set forth herein. In the event of any
inconsistency between the express terms and provisions of the Purchase Documents
and the express terms and provisions of this Improvements Lease, the express
terms and provisions of the Purchase Documents shall control. In the event of
any inconsistency between the express terms and provisions of the Construction
Management Agreement or the Closing Certificate and the express terms and
provisions of this Improvements Lease, the express terms and provisions of this
Improvements Lease shall control; provided, nothing herein will limit or impair
NAI's obligations under the Construction Management Agreement or the Closing
Certificate following any expiration of termination of this Improvements Lease.
[The signature pages follow.]
36
42
IN WITNESS WHEREOF, NAI and BNPLC have caused this Improvements Lease to
be executed as of March 1, 2000.
"NAI"
NETWORK APPLIANCE, INC.
By:
-----------------------------------------
Jeffry R. Allen, Chief Financial Officer
43
[Continuation of signature pages to Improvements Lease dated to be
effective as of March 1, 2000.]
"BNPLC"
BNP LEASING CORPORATION
By:
-----------------------------------------
Lloyd G. Cox, Vice President
44
Exhibit A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18(degree) 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71(degree) 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9(degree) 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11(degree) 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2(degree) 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23(degree) 25' 59" an arc
length of 44.58 feet; (2) South 25(degree) 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9(degree) 00' 00" in an arc length of 17.12
feet; (4) South 34(degree) 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50(degree) 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34(degree) 36' 17" West 57.40 feet;
thence North 50(degree) 50' 13" West 32.20 feet; thence North 34(degree) 36' 17"
West 205.73 feet to the true point of beginning.
1
Exhibit A
45
Exhibit B
INSURANCE REQUIREMENTS
I. LIABILITY INSURANCE:
A. NAI must maintain commercial general liability ("CGL") insurance on
an occurrence basis, affording immediate protection to the limit of not less
than $20,000,000 combined single limit for bodily and personal injury, death and
property damage in respect of any one occurrence. The CGL insurance must be
primary to, and shall receive no contribution from, any insurance policies or
self-insurance programs otherwise afforded to or available to the Interested
Parties, collectively or individually. Further, the CGL insurance must include
blanket contractual liability coverage which insures contractual liability under
the indemnifications set forth in this Improvements Lease (though such coverage
or the amount thereof shall in no way limit such indemnifications).
B. Any deductible or self-insured retention applicable to the CGL
insurance shall not exceed $1,000 at any time when NAI shall continue to have
the right to exercise any Issue 97-10 Election, or shall have previously
exercised an Issue 97-10 Election. After the expiration of NAI's right to
exercise any Issue 97-10 Election, and provided no Issue 97-10 Election has been
exercised by NAI, NAI may increase any deductible or self-insured retention
applicable to such insurance, but not to an amount in excess of $500,000.
C. The forms of insurance policies (including endorsements) used to
provide the CGL insurance required by this Improvements Lease, and the insurance
company or companies providing the CGL insurance, must be acceptable to BNPLC.
BNPLC shall have the right from time to time and at any time to review and
approve such policy forms (including endorsements) and the insurance company or
companies providing the insurance. Without limiting the generality of the
foregoing, BNPLC may reasonably require (and unless and until NAI is otherwise
notified by BNPLC, BNPLC does require) that such insurance be provided under
forms and by companies consistent with the following:
(1) Forms: CGL Insurance must be provided on Insurance Services
Office ("ISO") forms CG 0001 1093 or CG 0001 0196 or equivalent
substitute forms providing the same or greater coverage.
(2) Rating Requirements: Insurance must be provided through
insurance or reinsurance companies rated by the A.M. Best
Company of Oldwick, New Jersey as having a policyholder's rating
of A or better and a reported financial information rating of X
or better.
(3) Required Endorsements: CGL Insurance must be endorsed to provide
or include:
(a) in any policy containing a general aggregate limit, ISO
form amendment "Aggregate Limits of Insurance Per
Location" CG 2504 1185 or equivalent substitute form;
(b) a waiver of subrogation, using ISO form CG 2404 1093 or
equivalent substitute form (and under the commercial
umbrella, if any), in favor of "BNP Leasing Corporation
and other Interested Parties (as defined in the Common
Definitions and Provisions Agreement (Phase V -
Improvements) between Network Appliance, Inc. and BNP
Leasing Corporation dated March 1, 2000)";
1
Exhibit B
46
(c) ISO additional insured form CG 2026 1185 or equivalent
substitute form, without modification (and under the
commercial umbrella, if any), designating as additional
insureds "BNPLC and other Interested Parties, as defined
in the Common Definitions and Provisions Agreement
(Phase V - Improvements) between Network Appliance, Inc.
and BNP Leasing Corporation dated March 1, 2000)"; and
(d) provisions entitling BNPLC to 30 days' notice from the
insurer prior to any cancellation, nonrenewal or
material modification to the CGL coverage.
(4) Other Insurance: Each policy to contain standard CGL "other
insurance" wording, unmodified in any way that would make it
excess over or contributory with the additional insured's own
commercial general liability coverage.
II. PROPERTY INSURANCE: From and after the commencement of any construction
of Improvements on or about the Land or the delivery of any materials in
anticipation of such construction:
A. NAI must maintain property insurance in "special form" (including
theft) or against "all risks," providing the broadest available coverage for all
Improvements (as defined in the Common Provisions and Definitions Agreement but
excluding those Improvements to be demolished by NAI prior to the commencement
of construction contemplated in the Construction Management Agreement) and
equipment included in the Property, on a blanket basis if multiple buildings are
involved, with no exclusions for vandalism, malicious mischief, or sprinkler
leakage, and including coverage against earthquake and all coverage perils
normally included within the definitions of extended coverage, vandalism,
malicious mischief and, if the Property is in a flood zone, flood. In addition,
boiler and machinery coverage must be maintained at all times by endorsement to
the property insurance policy or by separate policy. Also, during any period of
significant construction on any Improvements, the property insurance must
include builder's completed value risk insurance for such Improvements, with no
protective safeguard endorsement, and (without limiting the other requirements
of this Exhibit) builder's completed value risk insurance must provide the
following coverages:
(1) materials and supplies at other locations awaiting installation;
(2) materials and supplies in transit to the worksite for
installation;
(3) loss of use or consequential loss;
(4) pollutant cleanup and removal;
(5) freezing;
(6) collapse during construction, resulting from fault, defect,
error or omission in design, plan, specification or workmanship;
(7) construction ordinance or law;
(8) mechanical or electrical breakdown;
(9) debris removal additional limit;
2
Exhibit B
47
(10) preservation of property;
(11) fire department service charge;
(12) additional interest on construction loan due to delays in the
completion of construction;
(13) loss of rental income;
(14) legal/professional fees (in the amount of no less than
$1,500,000) and other soft costs as reasonably determined by
NAI, subject to BNPLC's approval.
B. The property insurance required hereby must provide coverage in the
amount no less than replacement value (exclusive of land, foundation, footings,
excavations and grading) with endorsements for contingent liability from
operation of building laws, increased cost of construction and demolition costs
which may be necessary to comply with building laws. Subject to the approval of
BNPLC, NAI will be responsible for determining the amount of property insurance
to be maintained from time to time, but NAI must maintain such coverage on an
agreed value basis to eliminate the effects of coinsurance.
C. Any deductible or self-insured retention applicable to the property
insurance shall not exceed $50,000 at any time when NAI shall continue to have
the right to exercise any Issue 97-10 Election, or shall have previously
exercised an Issue 97-10 Election; provided, that with respect to earthquake
coverage the deductible may be as high as five percent of the value of the
Improvements. After the expiration of NAI's right to exercise any Issue 97-10
Election, and provided no Issue 97-10 Election has been exercised by NAI, NAI
may increase any deductible or self-insured retention applicable to such
insurance, provided the increased amount shall not exceed (1) $500,000 for all
coverages other than earthquake coverage, and (2) for earthquake coverage only,
five percent of the aggregate amount of the property insurance required to
satisfy this Improvements Lease, calculated as described in the preceding
paragraph.
D. The property insurance shall cover not only the value of NAI's
interest in the Improvements, but also the interest of BNPLC, with BNPLC shown
as an insured as its interests may appear.
E. The forms of insurance policies (including endorsements) used to
provide the property insurance required by this Improvements Lease, and the
insurance company or companies providing the property insurance, must be
acceptable to BNPLC. BNPLC shall have the right from time to time and at any
time to review and approve such policy forms (including endorsements) and the
insurance company or companies providing such insurance. Without limiting the
generality of the foregoing, BNPLC may reasonably require (and unless and until
NAI is otherwise notified by BNPLC, BNPLC does require) that such insurance be
provided under forms and by companies consistent with the following:
(1) Rating Requirements: Insurance to be provided through insurance or
reinsurance companies rated by the A.M. Best Company of Oldwick, New
Jersey as having (a) a policyholder's rating of A or better, (b) a
reported financial information rating of no less than X, and (c) in the
case of each insurance or reinsurance company, a reported financial
information rating which indicates an adjusted policyholders' surplus
equal to or greater than the underwriting exposure that such company has
under the insurance or reinsurance it is providing for the Property.
3
Exhibit B
48
(2) Required Endorsements: NAI's property insurance must be endorsed to
provide or include:
(a) a waiver of subrogation in favor of "BNPLC and other
Interested Parties, as defined in the Common Definitions
and Provisions Agreement (Phase V - Improvements)
between Network Appliance, Inc. and BNP Leasing
Corporation dated March 1, 2000)";
(b) that NAI's insurance is primary, with any policies of
BNPLC or other Interested Parties being excess,
secondary and noncontributing;
(c) that the protection afforded to BNPLC by such insurance
shall not be reduced or impaired by acts or omissions of
NAI or any other beneficiary or insured; and
(d) that BNPLC must be notified at least thirty days prior
to any cancellation, nonrenewal or reduction of
insurance coverage.
III. OTHER INSURANCE RELATED REQUIREMENTS:
A. BNPLC must be notified in writing immediately by NAI of claims
against NAI that might cause a reduction below seventy-five percent (75%) of any
aggregate limit of any policy.
B. NAI's property insurance must be evidenced by ACORD form 27 "Evidence
of Property Insurance" completed and interlineated in a manner satisfactory to
BNPLC to show compliance with the requirements of this Exhibit. Copies of
endorsements to the property insurance must be attached to such form.
C. NAI's CGL insurance must be evidenced by ACORD form 25 "Certificate
of Insurance" completed and interlineated in a manner satisfactory to BNPLC to
show compliance with the requirements of this Exhibit. Copies of endorsements to
the CGL insurance must be attached to such form.
D. Such evidence of required insurance must be delivered upon execution
of this Improvements Lease and new certificate or evidence of insurance must be
delivered no later than 10 days prior to expiration of existing policy.
E. NAI shall not cancel, fail to renew, or make or permit any material
reduction in any of the policies or certificates described in this Exhibit
without the prior written consent of BNPLC. The certificates (ACORD forms 27 and
25) described in this Exhibit must contain the following express provision:
"This is to certify that the policies of insurance described herein have
been issued to the insured Network Appliance, Inc. for whom this
certificate is executed and are in force at this time. In the event of
cancellation, non-renewal, or material reduction in coverage affecting
the certificate holder, at least sixty days prior notice shall be given
to the certificate holder."
F. The limits of liability under the liability insurance required by
this Improvements Lease may be provided by a single policy of insurance or by a
combination of primary and umbrella policies, but in no event shall the total
limits of liability available for any one occurrence or accident be less than
those required by this Exhibit.
4
Exhibit B
49
G. NAI shall provide copies, certified as complete and correct by an
authorized agent of the applicable insurer, of all insurance policies required
by this Exhibit within ten days after receipt of a request for such copies from
BNPLC.
5
Exhibit B
50
Exhibit C
NOTICE OF LIBOR PERIOD ELECTION
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: George Fung
Re: Lease Agreement (Phase V - Improvements) and Lease
Agreement (Phase V - Land), both dated as of March 1,
2000, and both between Network Appliance, Inc., as tenant,
and BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the two Lease Agreements referenced above. This letter
constitutes notice to you that the LIBOR Period Election under both of the Lease
Agreements shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or after:
___________________, ____.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE NUMBER OF MONTHS
SPECIFIED ABOVE IS NOT A PERMITTED NUMBER UNDER THE DEFINITION OF "LIBOR PERIOD
ELECTION" IN THE COMMON DEFINITIONS AND PROVISIONS AGREEMENTS REFERENCED IN THE
LEASE AGREEMENTS, OR IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF
THE LIBOR PERIOD ELECTION IS LESS THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF
THIS NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY US IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Executed this _____ day of ______________, 2000.
Network Appliance, Inc.
Name:
--------------------------
Title:
-------------------------
[cc all Participants]
Exhibit C
51
Schedule 1
FINANCIAL COVENANTS
This Schedule 1 is attached to and made a part of (a) the Lease
Agreement (Phase V - Improvements) (the "IMPROVEMENTS LEASE") dated to be
effective as of March 1, 2000 (the "EFFECTIVE DATE"), between BNP Leasing
Corporation, a Delaware corporation ("BNPLC") and Network Appliance, Inc., a
California corporation ("NAI"), (b) the Lease Agreement (Phase V - Land) (the
"LAND LEASE" and, together with the Improvements Lease, the "LEASES") dated to
be effective as of the Effective Date, between BNPLC and NAI, (c) the Pledge
Agreement (Phase V - Improvements) (the "PLEDGE AGREEMENT (IMPROVEMENTS)") dated
to be effective as of the Effective Date, among BNPLC, NAI, and Banque Nationale
de Paris, as a Participant and as agent for any financial institutions that
become Participants thereunder from time to time, and (d) the Pledge Agreement
(Phase V - Land) (collectively with the Pledge Agreement (Improvements), the
"PLEDGE AGREEMENTS") dated to be effective as of the Effective Date, among
BNPLC, NAI, and Banque Nationale de Paris, as a Participant and as agent for any
financial institutions that become Participants thereunder from time to time.
PART I - DEFINED TERMS
In this Schedule 1, capitalized terms used but not defined herein shall
have the meaning assigned to them in the Leases or the Common Definitions and
Provisions Agreements referenced in the Leases; and the following capitalized
terms shall have the following meanings:
1. "ADJUSTED NET INCOME" means, for any fiscal period of NAI, the aggregate net
income earned (or net losses incurred) during such period by NAI and its
Subsidiaries (determined on a consolidated basis), plus any Permitted Non-Cash
Charges deducted in determining such net income (or net loss).
2. "ADJUSTED EBIT" means, for any accounting period, net income (or net loss) of
NAI and its Subsidiaries (determined on a consolidated basis), plus the amounts
(if any) which, in the determination of net income (or net loss) for such
period, have been deducted for (a) interest expense, (b) income tax expense (c)
rent expense under leases of property, and (d) Permitted Non-Cash Charges.
3. "COLLATERAL TEST DATES" mean the Base Rent Commencement Date and the earlier
of the following dates after each fiscal quarter of NAI that ends after the Base
Rent Commencement Date: (1) the seventh Business Day after the release by NAI of
its financial statements for the fiscal quarter; or (2) the first Business Day
of the third calendar month following the end of the fiscal quarter.
4. "CONSOLIDATED TANGIBLE NET WORTH" means the excess of (1) the total assets,
other than Intangible Assets, of NAI and its Subsidiaries (determined on a
consolidated basis) over (2) the total liabilities of NAI and its Subsidiaries
(determined on a consolidated basis).
5. "DEBT" as used in this Exhibit shall have the meaning assigned to it in the
Common Definitions and Provisions Agreements, where "Debt" of any Person is
defined to mean (without duplication of any item): (a) indebtedness of such
Person for borrowed money; (b) indebtedness of such Person for the deferred
purchase price of property or services (except trade payables and accrued
expenses constituting current liabilities in the ordinary course of business);
(c) the face
1
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52
amount of any outstanding letters of credit issued for the account of such
Person; (d) obligations of such Person arising under acceptance facilities; (e)
guaranties, endorsements (other than for collection in the ordinary course of
business) and other contingent obligations of such Person to purchase, to
provide funds for payment, to provide funds to invest in any Person, or
otherwise to assure a creditor against loss; (f) obligations of others secured
by any Lien on property of such Person; (g) obligations of such Person as lessee
under Capital Leases; and (h) the obligations of such Person, contingent or
otherwise, under any lease of property or related documents (including a
separate purchase agreement) which provide that such Person or any of its
Affiliates must purchase or cause another Person to purchase any interest in the
leased property and thereby guarantee a minimum residual value of the leased
property to the lessor. For purposes of this definition, the amount of the
obligations described in clause (h) of the preceding sentence with respect to
any lease classified according to GAAP as an "operating lease," shall equal the
sum of (1) the present value of rentals and other minimum lease payments
required in connection with such lease [calculated in accordance with SFAS 13
and other GAAP relevant to the determination of the whether such lease must be
accounted for as an operating lease or capital lease], plus (2) the fair value
of the property covered by the lease; provided, however, that such amount shall
not exceed the price, as of the date a determination of Debt is required
hereunder, for which the lessee can purchase the leased property pursuant to any
valid ongoing purchase option if, upon such a purchase, the lessee shall be
excused from paying rentals or other minimum lease payments that would otherwise
accrue after the purchase.
6. "FIXED CHARGES" means, for any accounting period, the sum (without
duplication of any item) of the following charges or costs incurred or paid by
NAI and its Subsidiaries (determined on a consolidated basis): (a) gross
interest expense, plus (b) amortization of principal or debt discount in respect
of all Debt during such period, plus (c) rent payable under all leases of
property during such period, plus (d) taxes payable during such period.
7. "INTANGIBLE ASSETS" means assets of NAI and its Subsidiaries (determined on a
consolidated basis) that are properly classified as "INTANGIBLE ASSETS" in
accordance with GAAP and, in any event, shall include goodwill, patents, trade
names, trademarks, copyrights, franchises, experimental expense, organization
expense, unamortized debt discount and expense, and deferred charges (other than
prepaid insurance, prepaid taxes and current deferred taxes to the extent any
such prepaid or deferred items are classified on the balance sheet of NAI and
its consolidated Subsidiaries as current assets in accordance with GAAP and with
the concurrence of NAI's independent public accountants).
8. "MANDATORY COLLATERAL PERIOD" means any period during which, notwithstanding
any contrary designation of a Collateral Percentage by NAI under the Pledge
Agreements, the Collateral Percentage for purposes of the Pledge Agreements
shall be one hundred percent (100%), determined as set forth in Part III of this
Schedule 1.
9. "PERMITTED NON-CASH CHARGES" means the amounts (if any) which, in the
determination of net income (or net loss) for any relevant fiscal period, have
been deducted by NAI or its Subsidiaries for non-cash charges made to write down
goodwill or research and development costs in connection with acquisitions
permitted by this Schedule 1.
10. "QUICK RATIO" means the ratio of:
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53
(A) the sum (without duplication of any item) of the following
assets of NAI and its Subsidiaries (determined on a consolidated basis):
Collateral delivered and pledged under the Pledge Agreements in
accordance with the requirements thereof (if any); plus unencumbered
cash; plus unencumbered short term cash investments; plus other
unencumbered marketable securities which are classified as short term
investments in accordance with GAAP; plus unencumbered accounts
receivable, computed net of reserves for uncollectible amounts as
determined in accordance with GAAP, to
(B) the sum (without duplication of any item) of (1) all
liabilities of NAI and its Subsidiaries (determined on a consolidated
basis) treated as current liabilities in accordance with GAAP, plus (2)
other obligations included in total Debt of NAI and its Subsidiaries
(determined on a consolidated basis), the payment of which is due on
demand or will become due within one year after the date on which the
applicable determination of Quick Ratio is required hereunder.
11. "ROLLING FOUR QUARTER PERIOD" means a period of four consecutive fiscal
quarters of NAI, the last of which quarters ends after December 31, 1999.
PART II - FINANCIAL COVENANTS FOR LEASE AGREEMENT
NAI covenants that it shall not at any time suffer or permit:
1. Minimum Unencumbered Cash and Cash Equivalents. The sum (without
duplication of any item) of the unrestricted cash, Collateral delivered
and pledged under the Pledge Agreements in accordance with the
requirements thereof (if any), unencumbered short term cash investments
and unencumbered marketable securities classified as short term
investments according to GAAP of NAI and its Subsidiaries (determined on
a consolidated basis) to be less than total Debt of NAI and its
Subsidiaries (determined on a consolidated basis).
2. Minimum Tangible Net Worth. Consolidated Tangible Net Worth to be less
than the sum of: (a) ninety percent of the Consolidated Tangible Net
Worth as of October 30, 1998; plus (b) seventy-five percent of NAI's net
income (computed without deduction for net losses in any fiscal quarter)
earned in each fiscal quarter since October 30, 1998; plus (c)
one-hundred percent of the net proceeds of sales of stock in NAI or its
Subsidiaries (other than sales to NAI or its Subsidiaries) after October
30, 1998; less (d) Permitted Non-Cash Charges for any period after
October 30, 1998.
3. Minimum Quick Ratio. The Quick Ratio to be less than 1.50 to 1.00.
4. Minimum Fixed Charge Coverage. The ratio of (a) Adjusted EBIT for any
Rolling Four Quarter Period to (b) Fixed Charges for the same Rolling
Four Quarter Period, to be less than 1.50 to 1.00.
5. Minimum Profitability. Adjusted Net Income to be less than $1.00 in more
than one fiscal quarter of any Rolling Four Quarter Period.
6. Maximum Leverage Ratio. the ratio of (a) total Debt of NAI and its
Subsidiaries (determined on a consolidated basis) at the end of any
Rolling Four Quarter Period to (b) the Adjusted EBIT for the same Four
Quarter Rolling Period, to exceed 3.00 to 1.00.
3
Schedule 1
54
PART III - TESTS FOR MANDATORY COLLATERAL PERIODS
If, as of the end of the latest fiscal quarter of NAI ending before any
Collateral Test Date, NAI shall have either:
(A) failed to maintain a ratio of (1) the sum (without
duplication of any item) of Collateral delivered and pledged under the
Pledge Agreements in accordance with the requirements thereof (if any),
unencumbered cash, unencumbered short term cash investments and
unencumbered marketable securities classified as short term investments
according to GAAP of NAI and its Subsidiaries (determined on a
consolidated basis) to (2) all Debt of NAI and its Subsidiaries
(determined on a consolidated basis), of at least 1.5 to 1.00; or
(B) failed to maintain a ratio of (i) all Debt of NAI and its
Subsidiaries (determined on a consolidated basis) to (ii) Consolidated
Tangible Net Worth of NAI, of no more than 0.45 to 1.00;
such Collateral Test Date shall constitute a "FAILED COLLATERAL TEST DATE" for
purposes of the determination of Mandatory Collateral Periods. A Mandatory
Collateral Period shall commence on each Failed Collateral Test, and such
Mandatory Collateral Period shall continue until the second of any two
subsequent CONSECUTIVE Collateral Test Dates, neither of which constitutes a
Failed Collateral Test Date.
For purposes of illustration only, assume that the following dates are
consecutive Collateral Test Dates, some of which are Failed Collateral Test
Dates and some of which are not, as indicated opposite each date:
Date Failed Collateral Test Date?
---- ----------------------------
February 15, 2001 Yes
May 12, 2001 No
August 16, 2001 Yes
November 11, 2001 No
February 18, 2002 No
May 14, 2002 Yes
August 18, 2002 Yes
November 18, 2002 No
February 15, 2003 No
Under these assumptions, the entire period from February 15, 2001 to February
18, 2002 falls within one or more Mandatory Collateral Periods. Also, the entire
period commencing May 14, 2002 and ending February 15, 2003 falls within one or
more Mandatory Collateral Periods. The period from February 18, 2002 to May 14,
2002 does not constitute Mandatory Collateral Period.
PART IV - OTHER COVENANTS
Without limiting NAI's obligations under the other provisions of the Operative
Documents, during the Term, NAI shall not, without the prior written consent of
BNPLC in each case:
A. Liens. Create, incur, assume or suffer to exist, or permit any of its
Consolidated Subsidiaries to create, incur, assume or suffer to exist,
any Lien, upon or with respect to any of its properties, now owned or
hereafter acquired, provided that the following shall be permitted
except to the extent that they would encumber any interest in the
Property in violation of other provisions of the Operative Documents:
4
Schedule 1
55
1. Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if they are being contested in good
faith by appropriate proceedings and for which appropriate reserves are
maintained;
2. Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which
are not past due for more than thirty (30) days, or which are being
contested in good faith by appropriate proceedings and for which
appropriate reserves have been established;
3. Liens under workmen's compensation, unemployment insurance,
social security or similar laws (other than ERISA);
4. Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money),
leases, public or statutory obligations, surety, stay, appeal,
indemnity, performance or other similar bonds, or other similar
obligations arising in the ordinary course of business;
5. judgment and other similar Liens against assets other than
the Property or any part thereof in an aggregate amount not in excess of
$3,000,000 arising in connection with court proceedings; provided that
the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good
faith by appropriate proceedings;
6. easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with
the occupation, use and enjoyment by NAI or any such Consolidated
Subsidiary of the property or assets encumbered thereby in the normal
course of its business or materially impair the value of the property
subject thereto;
7. Liens securing obligations of such a Consolidated Subsidiary
to NAI or to another such Consolidated Subsidiary;
8. Liens not otherwise permitted by this subparagraph A (and not
encumbering the Property or any Collateral) incurred in connection with
the incurrence of additional Debt or asserted to secure Unfunded Benefit
Liabilities, provided that (a) the sum of the aggregate principal amount
of all outstanding obligations secured by Liens incurred pursuant to
this clause shall not at any time exceed five percent (5%) of
Consolidated Tangible Net Worth at such time; and (b) such Liens do not
constitute Liens against NAI's interest in any material Subsidiary or
blanket Liens against all or substantially all of the inventory,
receivables, general intangibles or equipment of NAI or of any material
Subsidiary of NAI (for purposes of this clause, a "material Subsidiary"
means any subsidiary whose assets represent a substantial part of the
total assets of NAI and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP); and
9. Liens incurred in connection with any renewals, extensions or
refundings of any Debt secured by Liens described in the preceding
clauses of this subparagraph A, provided that there is no increase in
the aggregate principal amount of Debt secured thereby from that which
was outstanding as of the date of such renewal, extension or refunding
and no additional property is encumbered.
B. Transactions with Affiliates. Enter into or permit any Subsidiary of
NAI to enter into any material transactions (including, without limitation, the
purchase, sale or exchange of property or the
5
Schedule 1
56
rendering of any service) with any Affiliates of NAI except on terms (1) that
would not cause or result in a Default by NAI under the financial covenants set
forth in Part II of this Schedule, and (2) that are no less favorable to NAI or
the relevant Subsidiary than those that would have been obtained in a comparable
transaction on an arm's length basis from an unrelated Person.
C. Compliance. Fail to preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; or fail to comply with the provisions of all documents
pursuant to which NAI is organized and/or which govern NAI's continued existence
and with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to NAI and/or its business.
D. Insurance. Fail to maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to that of NAI,
including but not limited to fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to BNPLC, or fail to deliver to BNPLC from
time to time at BNPLC's request schedules setting forth all insurance then in
effect.
E. Facilities. Fail to keep all properties useful or necessary to NAI's
business in good repair and condition, or to from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.
F. Taxes and Other Liabilities. Fail to pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as NAI may in good faith contest
or as to which a bona fide dispute may arise, and (b) for which NAI has made
provisions, to BNPLC's satisfaction, for eventual payment thereof in the event
that NAI is obligated to make such payment.
G. Capital Expenditures. Make any additional investment in fixed assets
in any fiscal year in excess of an aggregate of twenty percent (20%) of NAI's
total assets as of the end of the prior fiscal year.
H. Merger, Consolidation, Transfer of Assets. Merge into or consolidate
with any other entity (unless NAI is the surviving entity and remains in
compliance of all provisions of the Operative Documents); or make any
substantial change in the nature of NAI's business as conducted as of the date
hereof; or sell, lease, transfer or otherwise dispose of all or a substantial or
material portion of NAI's assets except in the ordinary course of its business.
I. Loans, Advances, Investments. Make any loans or advances to or
investments in any person or entity, except (a) any of the foregoing existing as
of, and disclosed to BNPLC prior to, the date hereof, (b) loans to employees for
travel advances, relocation loans and other loans in the ordinary course of
business, (c) investments in accordance with NAI's investment policy, as in
effect from time to time, (d) existing investments in subsidiaries and joint
ventures which have been disclosed to BNPLC in writing prior to the date hereof,
and new investments in subsidiaries and joint ventures in amounts up to an
aggregated of $10,000,000.00, (e) loans to employees, officers, directors to
finance or refinance the purchase of equity securities of NAI.
J. Dividends, Distributions. Declare or pay any dividend or distribution
either in cash, stock or any other property on NAI's stock now or hereafter
outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of
any class of NAI's stock now or hereafter outstanding.
6
Schedule 1
57
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(PHASE V - IMPROVEMENTS)
BETWEEN
BNP LEASING CORPORATION
AND
NETWORK APPLIANCE, INC.
DATED AS OF MARCH 1, 2000
58
TABLE OF CONTENTS
Page
----
LIST OF DEFINED TERMS........................................................................1
"Absolute NAI Construction Obligations".......................................1
"Active Negligence"...........................................................2
"Additional Rent".............................................................3
"Administrative Agency Fee"...................................................3
"Adjusted EBIT"...............................................................3
"Advance Date"................................................................3
"Affiliate"...................................................................3
"Applicable Laws".............................................................3
"Applicable Purchaser"........................................................3
"Arrangement Fee".............................................................3
"Attorneys' Fees".............................................................3
"Balance of Unpaid Construction-Period Indemnity Payments"....................3
"Banking Rules Change"........................................................3
"Base Rate"...................................................................4
"Base Rent"...................................................................4
"Base Rent Commencement Date".................................................4
"Base Rent Commencement Date (Building 4)"....................................4
"Base Rent Commencement Date (Building 5)"....................................4
"Base Rent Commencement Deadline".............................................4
"Base Rent Date"..............................................................5
"Base Rent Period"............................................................5
"BNPLC".......................................................................6
"BNPLC's Parent"..............................................................6
"Breakage Costs"..............................................................6
"Break Even Price"............................................................6
"Business Day"................................................................6
"Capital Adequacy Charges"....................................................7
"Capital Lease"...............................................................7
"Carrying Costs"..............................................................7
"Closing Certificate".........................................................7
"CMA Suspension Event"........................................................7
"CMA Suspension Notice".......................................................7
"CMA Suspension Period".......................................................7
"CMA Termination Event".......................................................7
"Code"........................................................................7
"Collateral"..................................................................7
"Collateral Percentage".......................................................7
"Commitment Fee Rate".........................................................7
"Common Definitions and Provisions Agreement (Phase V - Improvements)"........8
"Completion Notice (Building 4)"..............................................8
"Completion Notice (Final)"...................................................8
"Construction Advances".......................................................9
"Construction Advance Request"................................................9
"Construction Allowance"......................................................9
"Construction Management Agreement"...........................................9
i
59
"Construction Milestone"......................................................9
"Construction Period".........................................................9
"Construction-Period Indemnity Payments"......................................9
"Construction Project"........................................................9
"Current AS IS Market Value"..................................................9
"Debt".......................................................................10
"Default"....................................................................11
"Defaulting Participant".....................................................11
"Default Rate"...............................................................11
"Defective Work".............................................................11
"Deposit Taker"..............................................................11
"Deposit Taker Losses".......................................................11
"Designated Sale Date".......................................................11
"Development Documents"......................................................11
"Direct Payments to Participants"............................................12
"Effective Date".............................................................12
"Effective Rate".............................................................12
"Environmental Laws".........................................................12
"Environmental Cutoff Date"..................................................12
"Environmental Losses".......................................................12
"Environmental Reports"......................................................13
"ERISA"......................................................................13
"ERISA Affiliate"............................................................13
"Escrowed Proceeds"..........................................................13
"Established Misconduct".....................................................13
"Eurocurrency Liabilities"...................................................14
"Eurodollar Rate Reserve Percentage".........................................14
"Event of Default"...........................................................14
"Excluded Taxes".............................................................14
"Existing Contract"..........................................................14
"Failed Collateral Test Date"................................................15
"Fed Funds Rate".............................................................15
"FOCB Notice"................................................................15
"Funded Construction Allowance"..............................................15
"Funding Advances"...........................................................15
"Future Work"................................................................15
"GAAP".......................................................................15
"Hazardous Substance"........................................................15
"Hazardous Substance Activity"...............................................16
"Impositions"................................................................16
"Improvements"...............................................................16
"Improvements Lease".........................................................16
"Initial Funding Advance"....................................................16
"Interested Party"...........................................................16
"Issue 97-1 Non-performance-related Subjective Event of Default".............17
"Issue 97-10 Election".......................................................17
"Issue 97-10 Prepayment".....................................................17
"Land".......................................................................17
"Landlord's Election to Continue Construction"...............................17
"LIBOR"......................................................................17
"LIBOR Period Election"......................................................18
ii
60
"Lien".......................................................................18
"Liens Removable by BNPLC"...................................................18
"Losses".....................................................................19
"Mandatory Collateral Period"................................................19
"Material Environmental Communication".......................................19
"Maximum Construction Allowance".............................................19
"Maximum Permitted Termination Fees".........................................19
"Maximum Permitted Prepayment"...............................................19
"Maximum Remarketing Obligation".............................................20
"Minimum Extended Remarketing Price".........................................20
"Multiemployer Plan".........................................................20
"NAI"........................................................................20
"NAI's Extended Remarketing Period"..........................................20
"NAI's Extended Remarketing Right"...........................................20
"NAI's Initial Remarketing Rights and Obligations"...........................20
"Normal Tenant Improvements".................................................20
"Notice of NAI's Intent to Terminate"........................................20
"Operative Documents"........................................................20
"Other Common Definitions and Provisions Agreement"..........................20
"Other Lease Agreement"......................................................20
"Other Purchase Agreement"...................................................20
"Outstanding Construction Allowance".........................................21
"Participant"................................................................21
"Participation Agreement"....................................................21
"PBGC".......................................................................21
"Period".....................................................................21
"Permitted Encumbrances".....................................................21
"Permitted Hazardous Substance Use"..........................................21
"Permitted Hazardous Substances".............................................22
"Permitted Transfer "........................................................22
"Person".....................................................................22
"Personal Property"..........................................................22
"Plan".......................................................................22
"Pledge Agreement"...........................................................23
"Pre-Commencement Casualty"..................................................23
"Preemptive Notice"..........................................................23
"Premises Lease".............................................................23
"Prime Rate".................................................................23
"Prior Work".................................................................23
"Project Costs"..............................................................23
"Projected Cost Overruns"....................................................24
"Property"...................................................................24
"Purchase Agreement".........................................................24
"Purchase Documents".........................................................24
"Purchase Option"............................................................24
"Qualified Affiliate"........................................................24
"Qualified Prepayments"......................................................25
"Real Property"..............................................................25
"Reimbursable Construction-Period Costs".....................................25
"Remedial Work"..............................................................25
"Rent".......................................................................25
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61
"Residual Risk Percentage"...................................................25
"Responsible Financial Officer"..............................................25
"Sale Closing Documents".....................................................25
"Scope Change"...............................................................25
"Secured Spread".............................................................26
"Seller".....................................................................26
"Stipulated Loss Value"......................................................26
"Stipulated Loss Value (Building 4)".........................................26
"Subsidiary".................................................................27
"Supplemental Payment".......................................................27
"Term".......................................................................27
"Third Party Contract".......................................................27
"Third Party Price"..........................................................27
"Third Party Sale Notice"....................................................27
"Third Party Sale Proposal"..................................................27
"Third Party Target Price"...................................................27
"Transaction Expenses".......................................................27
"Unfunded Benefit Liabilities"...............................................27
"Unsecured Spread"...........................................................27
"Upfront Syndication Fees"...................................................28
"Voluntary NAI Construction Contributions"...................................28
"Voluntary Retention of the Property"........................................28
"Work".......................................................................28
RULES OF INTERPRETATION.....................................................................29
1. Notices......................................................................29
2. Severability.................................................................30
3. No Merger....................................................................30
4. No Implied Waiver............................................................31
5. Entire and Only Agreements...................................................31
6. Binding Effect...............................................................31
7. Time is of the Essence.......................................................31
8. Governing Law................................................................31
9. Paragraph Headings...........................................................31
10. Negotiated Documents.........................................................31
11. Terms Not Expressly Defined in an Operative Document.........................32
12. Other Terms and References...................................................32
13. Execution in Counterparts....................................................32
14. Not a Partnership, Etc.......................................................32
iv
62
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(PHASE V - IMPROVEMENTS)
This Common Definitions and Provisions Agreement (Phase V -
Improvements), by and between BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"), and NETWORK APPLIANCE, INC., a California corporation ("NAI"), is
dated as of March 1, 2000, the Effective Date.
RECITALS
Contemporaneously with the execution of this Common Definitions and
Provisions Agreement (Phase V - Improvements), NAI is executing the Closing
Certificate (as defined below) in favor of BNPLC, and BNPLC and NAI are
executing the Improvements Lease (as defined below), the Construction Management
Agreement (as defined below), and the Purchase Agreement (as defined below), all
of which concern the Property (as defined below). Each of the Closing
Certificate, the Improvements Lease, the Construction Management Agreement and
the Purchase Agreement (together with this Common Definitions and Provisions
Agreement (Phase V - Improvements) and the Pledge Agreement [as defined below],
the "OPERATIVE DOCUMENTS") are intended to create separate and independent
obligations upon the parties thereto. However, NAI and BNPLC intend that all of
the Operative Documents share certain consistent definitions and other
miscellaneous provisions. To that end, the parties are executing this Common
Definitions and Provisions Agreement (Phase V - Improvements) and incorporating
it by reference into each of the other Operative Documents.
AGREEMENTS
ARTICLE I-LIST OF DEFINED TERMS
UNLESS A CLEAR CONTRARY INTENTION APPEARS, THE FOLLOWING TERMS SHALL
HAVE THE RESPECTIVE INDICATED MEANINGS AS USED HEREIN AND IN THE OTHER OPERATIVE
DOCUMENTS:
"ABSOLUTE NAI CONSTRUCTION OBLIGATIONS" means the following:
(1) Construction-Period Indemnity Payments required
because of or in connection with or arising out of Environmental
Losses incurred or suffered by any Interested Party;
(2) Construction-Period Indemnity Payments required
because of or in connection with or arising out of Losses
incurred or suffered by BNPLC that BNPLC would not have incurred
or suffered but for any act or any omission of NAI or of any
NAI's contractors or subcontractors during the period that the
Construction Management Agreement remains in force or during any
other period that NAI remains in possession or control of the
Construction Project (excluding, however, as described below
certain Losses consisting of claims related to any failure by NAI
to complete the Construction Project);
(3) Construction-Period Indemnity Payments required
because of or in connection with or arising out of Losses
incurred or suffered by BNPLC that would not have been incurred
but for any fraud, misapplication of funds (including
Construction Advances), illegal acts, or willful misconduct on
the part of the NAI or its employees or agents or any other party
for whom NAI is responsible; and
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63
(4) Construction-Period Indemnity Payments required
because of or in connection with or arising out of Losses
incurred or suffered by BNPLC that would not have been incurred
but for any bankruptcy proceeding involving NAI.
For purposes of clause (2) of this definition, "acts and omissions of
NAI" shall include (i) any decision by NAI to make a Scope Change
without the prior approval of BNPLC, (ii) any failure of NAI to maintain
insurance required by the Improvements Lease or the Construction
Management Agreement, (iii) any decision not to continue or complete
Work under the Construction Management Agreement because of a change in
NAI's facility needs or in NAI's plans to meet its facility needs (such
as, for example, a decision by NAI to lease or acquire another less
expensive facility as an alternative to the Improvements), (iv) any
failure by NAI to reserve termination rights in Third Party Contracts as
required by subparagraph 1(A)(2)(b) of the Construction Management
Agreement, and (v) any other breach by NAI of the Construction
Management Agreement.
Thus, for example, if a third party asserts a claim for damages against
BNPLC because of injuries the third party sustained while on the Land as
a result of NAI's breach of its obligation under the Construction
Management Agreement to keep the Land and the Improvements thereon in a
reasonably safe condition as Work progresses under NAI's direction and
control, then any Construction-Period Indemnity Payment required because
of such third party claim will constitute an Absolute NAI Construction
Obligation under clause (2) of this definition. Similarly, if a claim
against BNPLC by a third party injured on the Land during the progress
of the Work is uninsured or under-insured only because of NAI's failure
to obtain liability insurance in accordance with the requirements of the
Improvements Lease (the premiums for which insurance are reimbursable
from Construction Advances as provided in the Construction Management
Agreement), then Construction-Period Indemnity Payments to BNPLC for the
uninsured or under-insured Losses arising out of the third party claim
will constitute Absolute NAI Construction Obligations under clause (2)
of this definition.
It is understood, however, that a failure of NAI to complete
construction of the Construction Project will not necessarily constitute
a breach of the Construction Management Agreement, given that NAI may
elect to terminate the Construction Management Agreement as provided in
subparagraph 5(D) thereof. In the event the Construction Management
Agreement is terminated by NAI pursuant to subparagraph 5(D) thereof or
by BNPLC pursuant to subparagraph 5(E) thereof, clause (2) of this
definition will not be construed to include Construction-Period
Indemnity Payments, the sole reason for which are Losses suffered by
BNPLC consisting of claims related to NAI's failure to complete the
Construction Project.
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is
limited to, the negligent conduct on the Property (and not mere omissions) by
such Person or by others acting and authorized to act on such Person's behalf in
a manner that proximately causes actual bodily injury or property damage for
which NAI does not carry (and is not obligated by the Improvements Lease to
carry) insurance. "ACTIVE NEGLIGENCE" shall not include (1) any negligent
failure of BNPLC to act when the duty to act would not have been imposed but for
BNPLC's status as owner of the Land, the Improvements or any interest in any
other Property or as a party to the transactions described in the Improvements
Lease or the other Operative Documents or in the Other Lease Agreement or the
Other Purchase Agreement, (2) any negligent failure of any other Interested
Party to act when the duty to act would not have been imposed but for such
party's contractual or other relationship to BNPLC or participation or
facilitation in any manner, directly or indirectly, of the transactions
described in the Improvements Lease or other Operative Documents or in the Other
Lease Agreement or Other Purchase Agreement, or (3) the exercise in a lawful
manner by BNPLC (or any party lawfully claiming through or under BNPLC) of any
right or remedy
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provided in or under the Improvements Lease or the other Operative Documents, or
in the Other Lease Agreement or Other Purchase Agreement.
"ADDITIONAL RENT" shall have the meaning assigned to it in subparagraph
3.(d) of the Improvements Lease.
"ADMINISTRATIVE AGENCY FEE" shall have the meaning assigned to it in
subparagraph 3.(g) of the Improvements Lease.
"ADJUSTED EBIT" shall have the meaning assigned to it in Part I of
Schedule 1 attached to the Improvements Lease and to the Pledge Agreement.
"ADVANCE DATE" means, regardless of whether any Construction Advance
shall actually be made thereon, the first Business Day of every calendar month,
beginning with the first Business Day in April, 2000 and continuing regularly
thereafter to and including the Base Rent Commencement Date.
"AFFILIATE" of any Person means any other Person controlling, controlled
by or under common control with such Person. For purposes of this definition,
the term "control" when used with respect to any Person means the power to
direct the management of policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to NAI or the Property or the Improvements Lease or the other
Operative Documents: restrictive covenants; zoning ordinances and building
codes; flood disaster laws; health, safety and environmental laws and
regulations; the Americans with Disabilities Act and other laws pertaining to
disabled persons; and other laws, statutes, ordinances, rules, permits,
regulations, orders, determinations and court decisions.
"APPLICABLE PURCHASER" means any third party designated by NAI to
purchase BNPLC's interest in the Property and in any Escrowed Proceeds as
provided in the Purchase Agreement.
"ARRANGEMENT FEE" shall have the meaning assigned to it in subparagraph
3(e) of the Improvements Lease.
"ATTORNEYS' FEES" means the expenses and reasonable fees of counsel to
the parties incurring the same, excluding costs or expenses of in-house counsel
(whether or not accounted for as general overhead or administrative expenses),
but otherwise including printing, photostating, duplicating and other expenses,
air freight charges, and fees billed for law clerks, paralegals, librarians and
others not admitted to the bar but performing services under the supervision of
an attorney. Such terms shall also include all such fees and expenses incurred
with respect to appeals, arbitrations and bankruptcy proceedings, and whether or
not any manner of proceeding is brought with respect to the matter for which
such fees and expenses were incurred.
"BALANCE OF UNPAID CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" shall have
the meaning assigned to it in subparagraph 1(B)(1) of the Purchase Agreement.
"BANKING RULES CHANGE" means either: (1) the introduction of or any
change in any law or regulation applicable to BNPLC, BNPLC's Parent or any other
Participant, or in the generally accepted interpretation by the institutional
lending community of any such law or regulation, or in the interpretation of any
such law or regulation asserted by any regulator, court or other governmental
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authority (other than any change by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) or (2) the
compliance by BNPLC, BNPLC's Parent or any other Participant with any new
guideline or new request from any central bank or other governmental authority
(whether or not having the force of law).
"BASE RATE" for any Construction Period or Base Rent Period means a rate
equal to the higher of (1) the Prime Rate in effect on the first day of such
period, or (2) the rate which is fifty basis points (50/100 of 1%) above the Fed
Funds Rate for that period.
"BASE RENT" means the rent payable by NAI pursuant to subparagraph 3(a)
of the Improvements Lease.
"BASE RENT COMMENCEMENT DATE" means the later of (1) the Base Rent
Commencement Date (Building 4), or (2) the Base Rent Commencement Date (Building
5). If, contrary to the expectations of BNPLC and NAI as of the Effective Date,
the Base Rent Commencement Date (Building 4) and the Base Rent Commencement Date
(Building 5) occur on the same day, that day shall constitute the Base Rent
Commencement Date.
"BASE RENT COMMENCEMENT DATE (BUILDING 4)" means the earlier of (A) the
first Business Day of the first calendar month to follow by twenty days or more
the day upon which any Completion Notice (Building 4) or Completion Notice
(Final) is given, or (B) the Base Rent Commencement Deadline.
"BASE RENT COMMENCEMENT DATE (BUILDING 5)" means the earlier of (A) the
first Business Day of the first calendar month to follow by twenty days or more
the day upon which any Completion Notice (Final) is given, or (B) the Base Rent
Commencement Deadline.
"BASE RENT COMMENCEMENT DEADLINE" means the earlier of (1) the first
Business Day of September, 2001, or (2) the first Business Day of the first
calendar month upon which the Funded Construction Allowance shall equal or
exceed the Maximum Construction Allowance. For example, if on the first Business
Day of November, 2000 construction of the Construction Project is continuing,
the Funded Construction Allowance is $22,055,000 (before adding any Carrying
Costs for the preceding month) and the Maximum Construction Allowance is
$22,065,000, and if Carrying Costs of $17,500 would be added to the Funded
Construction Allowance on such day if the Construction Allowance were not
limited to the Maximum Construction Allowance, then (absent an extension by
BNPLC as described below) such day shall be the Base Rent Commencement Deadline
and on such day $10,000 will be added to the Funded Construction Allowance as
Carrying Cost and $7,500 will be payable as Base Rent pursuant to subparagraph
3.(c)(i) of the Improvements Lease. Notwithstanding the forgoing, if for any
reason (including a termination of the Construction Management Agreement) NAI
has not completed the Construction Project thirty days in advance of the
scheduled Base Rent Commencement Deadline determined pursuant to the first
sentence of this definition, BNPLC shall be entitled (but not obligated) to
extend the Base Rent Commencement Deadline one or more times and at any time
before the Construction Project actually is complete and ready for occupancy. To
so extend the Base Rent Commencement Deadline, BNPLC shall notify NAI thereof
and of the date to which the Base Rent Commencement Deadline is extended, which
may be the first Business Day of any calendar month designated by BNPLC in the
notice of extension, provided that BNPLC will not so designate any date more
than sixty days after the date upon which the Construction Project is expected
by BNPLC (at the time of the designation) to be complete.
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"BASE RENT DATE" means a date upon which Base Rent must be paid under
the Improvements Lease, all of which dates shall be the first Business Day of a
calendar month. Any first Business Day of a calendar month that falls after the
Base Rent Commencement Date (Building 4) and on or before the Base Rent
Commencement Date shall constitute a Base Rent Date (and also an Advance Date).
The first Base Rent Date after the Base Rent Commencement Date shall be
determined as follows:
(a) If a LIBOR Period Election of one month is in effect
on the Base Rent Commencement Date, then the first Business Day
of the first calendar month following the Base Rent Commencement
Date shall be the first Base Rent Date thereafter.
(b) If the LIBOR Period Election in effect on the Base
Rent Commencement Date is three months or six months, then the
first Business Day of the third calendar month following the Base
Rent Commencement Date shall be the first Base Rent Date
thereafter.
Each successive Base Rent Date after the first Base Rent Date following the Base
Rent Commencement Date shall be the first Business Day of the first or third
calendar month following the calendar month which includes the preceding Base
Rent Date, determined as follows:
(1) If a LIBOR Period Election of one month is in effect
on a Base Rent Date, then the first Business Day of the first
calendar month following such Base Rent Date shall be the next
following Base Rent Date.
(2) If a LIBOR Period Election of three months or six
months is in effect on a Base Rent Date, then the first Business
Day of the third calendar month following such Base Rent Date
shall be the next following Base Rent Date.
Thus, for example, if the Base Rent Commencement Date falls on the first
Business Day of January, 2001 and a LIBOR Period Election of two months
commences on the Base Rent Commencement Date, then the first Base Rent Date
shall be the first Business Day of March, 2001.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the Improvements Lease, each of which periods shall correspond to the LIBOR
Period Election for such period. The first Base Rent Period shall begin on and
include the Base Rent Commencement Date (Building 4), and each successive Base
Rent Period shall begin on and include the Base Rent Date upon which the
preceding Base Rent Period ends. Any Base Rent Period which begins prior to the
Base Rent Commencement Date shall end on but not include the first Business Day
of the first calendar month after such Base Rent Period begins. The Base Rent
Period that begins on and includes the Base Rent Commencement Date, and each
successive Base Rent Period thereafter, shall end on but not include the first
or second Base Rent Date after the Base Rent Date upon which such period began,
determined as follows:
(1) If the LIBOR Period Election for a Base Rent Period is
one month or three months, then such Base Rent Period shall end
on the first Base Rent Date after the Base Rent Date upon which
such period began.
(2) If the LIBOR Period Election for a Base Rent Period is
six months, then such Base Rent Period shall end on the second
Base Rent Date after the Base Rent Date upon which such period
began.
The determination of Base Rent Periods can be illustrated by two examples:
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1) if NAI makes a LIBOR Period Election of three months
for a hypothetical Base Rent Period beginning on the first
Business Day in January, 2002, then such Base Rent Period will
end on but not include the first Base Rent Date after it begins;
that is, such Base Rent Period will end on the first Business Day
in April, 2002, the third calendar month after January, 2002.
2) if, however, NAI makes a LIBOR Period Election of six
months for the hypothetical Base Rent Period beginning the first
Business Day in January, 2002, then such Base Rent Period will
end on but not include the second Base Rent Date after it begins;
that is, the first Business Day in July, 2002.
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a
bank organized and existing under the laws of France and any successors of such
bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent (as a Participant or otherwise) or any other
Participant, for which BNPLC's Parent or the Participant shall request
reimbursement from BNPLC, because of the resulting liquidation or redeployment
of deposits or other funds:
(1) used to make or maintain Funding Advances upon
application of a Qualified Prepayment or upon any sale of the Property
pursuant to the Purchase Agreement, if such application or sale occurs
on any day other than the last day of a Construction Period or Base Rent
Period; or
(2) reserved to provide a Construction Advance that NAI
requests, but thereafter declines to take for any reason, or that NAI
requests but is not permitted to take because of its failure to satisfy
any of the conditions specified in the Construction Management
Agreement; or
(3) used to make or maintain Funding Advances upon the
acceleration of the end of any Base Rent Period pursuant subparagraph
3(c)(iv) of the Improvements Lease.
Breakage Costs will include, for example, losses attributable to any decline in
LIBOR as of the effective date of any application described in the clause (1)
preceding, as compared to LIBOR used to determine the Effective Rate then in
effect. Each determination by BNPLC's Parent or the applicable Participant of
Breakage Costs shall, in the absence of clear and demonstrable error, be
conclusive and binding upon NAI.
"BREAK EVEN PRICE" shall have the meaning assigned to it in subparagraph
1(B)(1) of the Purchase Agreement.
"BUSINESS DAY" means any day that is (1) not a Saturday, Sunday or day
on which commercial banks are generally closed or required to be closed in New
York City, New York or San Francisco, California, and (2) a day on which
dealings in deposits of dollars are transacted in the London interbank market;
provided that if such dealings are suspended indefinitely for any reason,
"Business Day" shall mean any day described in clause (1).
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"CAPITAL ADEQUACY CHARGES" means any additional amounts BNPLC's Parent
or any other Participant requests BNPLC to pay as compensation for an increase
in required capital as provided in subparagraph 5(b)(ii) of the Improvements
Lease.
"CAPITAL LEASE" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP or for federal income tax
purposes.
"CARRYING COSTS" means the charges added to and made a part of the
Outstanding Construction Allowance (and thus also added to and made a part of
the Funded Construction Allowance) from time to time on and before the Base Rent
Commencement Date pursuant to and as more particularly described in subparagraph
6.(a) of the Improvements Lease.
"CLOSING CERTIFICATE" means the Closing Certificate and Agreement dated
as of March 1, 2000 executed by NAI in favor of BNPLC, as such Closing
Certificate may be extended, supplemented, amended, restated or otherwise
modified from time to time in accordance with its terms.
"CMA SUSPENSION EVENT" shall have the meaning assigned to it in
subparagraph 5(A) of the Construction Management Agreement.
"CMA SUSPENSION NOTICE" shall have the meaning assigned to it in
subparagraph 5(B)(1) of the Construction Management Agreement.
"CMA SUSPENSION PERIOD" shall have the meaning assigned to it in
subparagraph 5(C) of the Construction Management Agreement.
"CMA TERMINATION EVENT" shall have the meaning assigned to it in
subparagraph 5(B)(3) of the Construction Management Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall have the meaning assigned to it in the Pledge
Agreement.
"COLLATERAL PERCENTAGE" for each Base Rent Period means the Collateral
Percentage for such period determined under (and as defined in) the Pledge
Agreement; provided, however, for purposes of the Improvements Lease, the
Collateral Percentage for any Base Rent Period shall not exceed a fraction; the
numerator of which fraction shall equal the value (determined as provided in the
Pledge Agreement) of all Collateral (a) that is, on the first day of such
period, held by the Deposit Takers under (and as defined in) the Pledge
Agreement subject to a Qualifying Security Interest (as defined below), (b) that
is free from claims or security interests held or asserted by any third party,
and (c) that is not in excess of Stipulated Loss Value; and the denominator of
which fraction shall equal the Stipulated Loss Value on the first day of such
period. "QUALIFYING SECURITY INTEREST" means a first priority perfected security
interest under the Pledge Agreement.
"COMMITMENT FEE RATE" means, for each Construction Period, the amount
established as described below in this definition on the date (in this
definition, the "CFR TEST DATE") that is two Business Days prior to such
Construction Period by reference to the ratio calculated be dividing (1)
Adjusted EBIT for the then latest Rolling Four Quarters Period that ended prior
to (and for which NAI has reported earnings as necessary to compute Adjusted
EBIT) into (2) the total Debt of NAI and its Subsidiaries (determined on a
consolidated basis) as of the end of such Rolling Four Quarters Period.
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The Commitment Fee Rate shall be established at the Level in the pricing grid
below which corresponds to such ratio; provided, that:
(a) for any Construction Period commencing on or prior to
the first Business Day of April, 2000, the Commitment Fee Rate
will be the amount indicated for Level III in the pricing grid
below;
(b) promptly after earnings are reported by NAI for the
latest quarter in any Rolling Four Quarters Period, NAI must
notify BNPLC of any resulting change in the Commitment Fee Rate
under this definition, and no reduction in the Commitment Fee
Rate from one period to the next will be effective for purposes
of the Operative Documents unless, prior to the CFR Test Date for
the next period, NAI shall have provided BNPLC with a written
notice setting forth and certifying the calculation under this
definition that justifies the reduction; and
(c) notwithstanding anything to the contrary in this
definition, on any date when an Event of Default has occurred and
is continuing, the Commitment Fee Rate shall equal the amount
indicated for Level V in the pricing grid below.
LEVELS RATIO OF TOTAL DEBT TO ADJUSTED EBIT COMMITMENT FEE RATE
-------- ------------------------------------ -------------------
Level I less than 0.50 25.0 basis points
Level II greater than or equal to 0.50, but 25.0 basis points
less than 1.0
Level III greater than or equal to 1.0, but 32.5 basis points
less than 1.5
Level IV greater than or equal to 1.5, but 50.0 basis points
less than 2.0
Level V greater than or equal to 2.0 50.0 basis points
All determinations of the Commitment Fee Rate by BNPLC shall, in the absence of
clear and demonstrable error, be binding and conclusive for purposes of the
Improvements Lease. Further BNPLC may, but shall not be required, to rely on the
determination of the Commitment Fee Rate set forth in any notice delivered by
NAI as described above in clause (b) of this definition.
"COMMON DEFINITIONS AND PROVISIONS AGREEMENT (PHASE V - IMPROVEMENTS)"
means this Agreement, which is incorporated by reference into each of the other
Operative Documents.
"COMPLETION NOTICE (BUILDING 4)" means a notice given by NAI to BNPLC as
described in subparagraph 1(B) of the Construction Management Agreement,
advising BNPLC when the renovation of the portion of the Improvements designated
by NAI as "Building 4" are substantially complete and ready for occupancy by
NAI.
"COMPLETION NOTICE (FINAL)" means (1) a notice required by subparagraph
1(B) of the Construction Management Agreement from NAI to BNPLC, advising BNPLC
when construction of the Construction Project is substantially complete, or (2)
a notice permitted by subparagraph 6.(g) of the Improvements Lease from BNPLC to
NAI, advising NAI after any Landlord's Election to Complete Construction when
construction of the Construction Project is substantially complete or that BNPLC
no longer intends to continue such construction.
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"CONSTRUCTION ADVANCES" means (1) actual advances of funds made by or on
behalf of BNPLC to or on behalf of NAI pursuant to Paragraph 2 of the
Construction Management Agreement, and (2) amounts considered as Construction
Advances pursuant to subparagraph 6.(e) of the Improvements Lease.
"CONSTRUCTION ADVANCE REQUEST" shall have the meaning assigned to it in
subparagraph 2(C)(1) of the Construction Management Agreement.
"CONSTRUCTION ALLOWANCE" means the allowance, consisting of Construction
Advances and Carrying Costs, which is to be provided for the Construction
Project as more particularly described in the Construction Management Agreement
and Paragraph 6 of the Improvements Lease.
"CONSTRUCTION MANAGEMENT AGREEMENT" means the Construction Management
Agreement dated as of March 1, 2000 between BNPLC and NAI, as such Management
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"CONSTRUCTION MILESTONE" shall have the meaning assigned to it in
subparagraph 5(B)(2) of the Construction Management Agreement.
"CONSTRUCTION PERIOD" means each successive period of approximately one
month, with the first Construction Period beginning on and including the
Effective Date and ending on but not including the first Advance Date. Each
successive Construction Period after the first Construction Period shall begin
on and include the day on which the preceding Construction Period ends and shall
end on but not include the next following Advance Date, until the last
Construction Period, which shall end on but not include the earlier of the Base
Rent Commencement Date or any Designated Sale Date upon which NAI or any
Applicable Purchaser shall purchase BNPLC's interest in the Property pursuant to
the Purchase Agreement.
"CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" shall have the meaning assigned
to it in subparagraph 5.(d)(ii) of the Improvements Lease.
"CONSTRUCTION PROJECT" means the new buildings or other substantial
Improvements to be constructed, or the alteration of existing Improvements, as
described generally in Exhibit B attached to the Construction Management
Agreement.
"CURRENT AS IS MARKET VALUE" means an amount equal to the fair market
value of BNPLC's interest in the Property (or any applicable portion thereof),
AS IS, WHERE IS AND WITH ALL FAULTS on the date in question. Whenever a
determination of Current AS IS Market Value is required by the express terms of
any Operative Document, it will be determined accordance with the following
procedure unless BNPLC and NAI have otherwise agreed in writing upon a Current
AS IS Market Value at that time:
(A) BNPLC and NAI shall each, within ten days after written notice
from either to the other, select an appraiser. If either BNPLC
or NAI fails to select an appraiser within the required period,
then the appraiser who has been timely selected shall
conclusively determine the fair market value of the Property (or
applicable portion thereof) in accordance with this definition
within forty-five days after his or her selection.
(B) Upon the selection of the two appraisers as provided above, such
appraisers shall proceed to determine the fair market value of
BNPLC's interest in the Property (or applicable
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portion thereof) in accordance with this clause (v). Such
appraisals shall be submitted in writing no later than
forty-five days after selection of the second appraiser. If the
fair market value as determined by such appraisers is identical,
such sum shall be Current AS IS Market Value. If the fair market
value indicated by the lower appraisal differs from the fair
market value indicated by the higher appraisal by less than five
percent (5%) of the fair market value indicated by the higher
appraisal, then Current AS IS Market Value shall be the sum of
the two appraisal figures divided by two (2). If either
appraiser fails to timely submit his or her appraisal, the
timely submitted appraisal shall be determinative of Current AS
IS Market Value.
(C) If the fair market value indicated by the lower appraisal
differs from the fair market value indicated by the higher
appraisal by more than five percent (5%) of the fair market
value indicated by the higher appraisal, then the two appraisers
previously selected shall select a third appraiser. The name of
such appraiser shall be submitted at the same time the written
appraisals are due. Such third appraiser shall then review the
previously submitted appraisals and select the one that, in his
professional opinion, more closely reflects the fair market
value of BNPLC's interest in the Property (or applicable portion
thereof), such selection to be submitted in writing no later
than ten days after selection of the third appraiser. Such
selection shall be determinative of Current AS IS Market Value.
(D) In making any such determination of fair market value, the
appraisers shall assume that any improvements then located on
the Property (or applicable portion thereof) or under
construction thereon constitute the highest and best use, and
that neither the Improvements Lease nor the Purchase Agreement
add any value to the Property. Each appraiser selected hereunder
shall be an independent MAI-designated appraiser with not less
than ten years' experience in commercial real estate appraisal
in Sunnyvale, California and surrounding areas.
"DEBT" of any Person means (without duplication of any item): (a)
indebtedness of such Person for borrowed money; (b) indebtedness of such Person
for the deferred purchase price of property or services (except trade payables
and accrued expenses constituting current liabilities in the ordinary course of
business); (c) the face amount of any outstanding letters of credit issued for
the account of such Person; (d) obligations of such Person arising under
acceptance facilities; (e) guaranties, endorsements (other than for collection
in the ordinary course of business) and other contingent obligations of such
Person to purchase, to provide funds for payment, to provide funds to invest in
any Person, or otherwise to assure a creditor against loss; (f) obligations of
others secured by any Lien on property of such Person; (g) obligations of such
Person as lessee under Capital Leases; and (h) the obligations of such Person,
contingent or otherwise, under any lease of property or related documents
(including a separate purchase agreement) which provide that such Person or any
of its Affiliates must purchase or cause another Person to purchase any interest
in the leased property and thereby guarantee a minimum residual value of the
leased property to the lessor. For purposes of this definition, the amount of
the obligations described in clause (h) of the preceding sentence with respect
to any lease classified according to GAAP as an "operating lease," shall equal
the sum of (1) the present value of rentals and other minimum lease payments
required in connection with such lease [calculated in accordance with SFAS 13
and other GAAP relevant to the determination of the whether such lease must be
accounted for as an operating lease or capital lease], plus (2) the fair value
of the property covered by the lease; provided, however, that such amount shall
not exceed the price, as of the date a determination of Debt is required
hereunder, for which the lessee can purchase the leased property pursuant to any
valid ongoing purchase option if, upon such a purchase, the lessee shall be
excused from paying rentals or other minimum lease payments that would otherwise
accrue after the purchase.
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"DEFAULT" means any event which, with the passage of time or the giving
of notice or both, would (if not cured within any applicable cure period)
constitute an Event of Default.
"DEFAULTING PARTICIPANT" shall have the meaning assigned to it in
Section 1 of the Participation Agreement.
"DEFAULT RATE" means, for any period prior to the Designated Sale Date,
a floating per annum rate equal to two percent (2%) above the Prime Rate, and
for any period commencing on or after the Designated Sale Date, Default Rate
shall mean a floating per annum rate equal to five percent (5%) above the Prime
Rate. However, in no event will the "Default Rate" at any time exceed the
maximum interest rate permitted by law.
"DEFECTIVE WORK" shall have the meaning assigned to it in subparagraph
1(A)(2)(f) of the Construction Management Agreement.
"DEPOSIT TAKER" shall have the meaning assigned to it in the Pledge
Agreement.
"DEPOSIT TAKER LOSSES" shall have the meaning assigned to it in the
Pledge Agreement.
"DESIGNATED SALE DATE" means the earlier of:
(1) the first Business Day of March; or
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by NAI to BNPLC before NAI has made an
Issue 97-10 Election; provided, that to be effective for purposes
of this definition, any such notice from NAI to BNPLC must
designate a Business Day that is more than thirty days after the
date of such notice; and provided, further, to be effective for
purposes of this definition, the notice must include an express,
unconditional, unequivocal and irrevocable (A) waiver by NAI of
any remaining right NAI may have under any of the Operative
Documents to make any Issue 97-10 Election, and (B)
acknowledgment by NAI that because of NAI's election to
accelerate the Designated Sale Date, the Maximum Remarketing
Obligation will equal the Break Even Price under the Purchase
Agreement; or
(3) any Business Day designated as such in a notice given
by BNPLC to NAI after the effective date of any termination of
the Construction Management Agreement as provided in
subparagraphs 5(D) or 5(E) thereof; provided, that to be
effective for purposes of this definition, any such notice from
BNPLC to NAI must designate a Business Day that is more than
thirty days after the date of such notice; or
(4) the first Business Date after any termination by NAI
of the Purchase Option and NAI's Initial Remarketing Rights and
Obligations as provided in subparagraph 4(B) of the Purchase
Agreement; or
(5) any Business Day designated as such in a notice given
by BNPLC to NAI when any Event of Default has occurred and is
continuing; provided, that to be effective for purposes of this
definition, any such notice from BNPLC to NAI must designate a
Business Day that is more than thirty days after the date of such
notice.
"DEVELOPMENT DOCUMENTS" means the contracts, ordinances and other
documents described in Exhibit C attached to the Closing Certificate, as the
same may be modified from time to time in
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accordance with the Improvements Lease and the Closing Certificate, and any
applications, permits or certificates concerning or affecting the use or
development of the Property that may be submitted, issued or executed from time
to time as contemplated in such contracts, ordinances and other documents or
that BNPLC may hereafter execute, approve or consent to at the request of NAI.
"DIRECT PAYMENTS TO PARTICIPANTS" means the amounts paid or required to
be paid directly to Participants on the Designated Sale Date as provided in
Section 6.2 of the Pledge Agreement at the direction of and for NAI by the
collateral agent appointed pursuant to the Pledge Agreement from all or any part
of the Collateral described therein.
"EFFECTIVE DATE" means March 1, 2000.
"EFFECTIVE RATE" means for each Construction Period and for each Base
Rent Period, the per annum rate determined by dividing (A) LIBOR for such
Construction Period or Base Rent Period, as the case may be, by (B) one hundred
percent (100%) minus the Eurodollar Rate Reserve Percentage for such
Construction Period or Base Rent Period. If LIBOR or the Eurodollar Rate Reserve
Percentage changes from Construction Period to Construction Period or from Base
Rent Period to Base Rent Period, then the Effective Rate shall be automatically
increased or decreased as of the date of such change, as the case may be,
without prior notice to NAI. If for any reason BNPLC determines that it is
impossible or unreasonably difficult to determine the Effective Rate with
respect to a given Construction Period or Base Rent Period in accordance with
the foregoing, then the "EFFECTIVE RATE" for that Construction Period or Base
Rent Period shall equal any published index or per annum interest rate
determined in good faith by BNPLC's Parent to be comparable to LIBOR at the
beginning of the first day of that period. A comparable interest rate might be,
for example, the then existing yield on short term United States Treasury
obligations (as compiled by and published in the then most recently published
United States Federal Reserve Statistical Release H.15(519) or its successor
publication), plus or minus a adjustment based on BNPLC's Parent's comparison of
past eurodollar market rates to past yields on such Treasury obligations. Any
determination by BNPLC of the Effective Rate under this definition shall, in the
absence of clear and demonstrable error, be conclusive and binding upon NAI.
"ENVIRONMENTAL LAWS" means any and all existing and future Applicable
Laws pertaining to safety, health or the environment, or to Hazardous Substances
or Hazardous Substance Activities, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, "CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, "RCRA").
"ENVIRONMENTAL CUTOFF DATE" means the later of the dates upon which (i)
the Improvements Lease terminates, or (ii) NAI surrenders possession and control
of the Property and ceases to have interest in the Land or Improvements or
rights with respect thereto under any of the Operative Documents.
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by BNPLC or any
other Interested Party, directly or indirectly, relating to or arising out of,
based on or as a result of any of the following: (i) any Hazardous Substance
Activity on or prior to the Environmental Cutoff Date; (ii) any violation on or
prior to the Environmental Cutoff Date of any applicable Environmental Laws
relating to the Property or to the ownership, use, occupancy or operation
thereof; (iii) any investigation, inquiry, order, hearing, action, or other
proceeding by or before any governmental or quasi-governmental agency or
authority in connection with any Hazardous Substance Activity that occurs or is
alleged to have occurred on or prior to the Environmental Cutoff Date; or (iv)
any claim, demand, cause of action or
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investigation, or any action or other proceeding, whether meritorious or not,
brought or asserted against any Interested Party which directly or indirectly
relates to, arises from, is based on, or results from any of the matters
described in clauses (i), (ii), or (iii) of this definition or any allegation of
any such matters. For purposes of determining whether Losses constitute
"Environmental Losses," as the term is used in the Improvements Lease, any
actual or alleged Hazardous Substance Activity or violation of Environmental
Laws relating to the Property will be presumed to have occurred prior to the
Environmental Cutoff Date unless NAI establishes by clear and convincing
evidence to the contrary that the relevant Hazardous Substance Activity or
violation of Environmental Laws did not occur or commence prior to the
Environmental Cutoff Date.
"ENVIRONMENTAL REPORTS" means collectively the following reports
(whether one or more), which were provided by NAI to BNPLC prior to the
Effective Date: Phase I Environmental Site Assessment for 1260 Crossman Avenue
property, Sunnyvale, California, dated September, 1999 by Romig Consulting
Engineers.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA
is a member of NAI's controlled group, or under common control with NAI, within
the meaning of Section 414 of the Internal Revenue Code, and the regulations
promulgated and rulings issued thereunder.
"ESCROWED PROCEEDS" means, subject to the exclusions specified in the
next sentence, any money that is received by BNPLC from time to time during the
Term (and any interest earned thereon) from any party (1) under any property
insurance policy as a result of damage to the Property, (2) as compensation for
any restriction imposed by any governmental authority upon the use or
development of the Property or for the condemnation of the Property or any
portion thereof, (3) because of any judgment, decree or award for physical
damage to the Property or (4) as compensation under any title insurance policy
or otherwise as a result of any title defect or claimed title defect with
respect to the Property; provided, however, in determining the amount of
"Escrowed Proceeds" there shall be deducted all expenses and costs of every
type, kind and nature (including Attorneys' Fees) incurred by BNPLC to collect
such proceeds. Notwithstanding the foregoing, "Escrowed Proceeds" will not
include (A) any payment to BNPLC by a Participant or an Affiliate of BNPLC that
is made to compensate BNPLC for the Participant's or Affiliate's share of any
Losses BNPLC may incur as a result of any of the events described in the
preceding clauses (1) through (4), (B) any money or proceeds that have been
applied as a Qualified Prepayment or to pay any Breakage Costs or other costs
incurred in connection with a Qualified Prepayment, (C) any money or proceeds
that, after no less than ten days notice to NAI, BNPLC returns or pays to a
third party because of BNPLC's good faith belief that such return or payment is
required by law, (D) any money or proceeds paid by BNPLC to NAI or offset
against any amount owed by NAI, or (E) any money or proceeds used by BNPLC in
accordance with the Improvements Lease for repairs or the restoration of the
Property or to obtain development rights or the release of restrictions that
will inure to the benefit of future owners or occupants of the Property. Until
Escrowed Proceeds are paid to NAI pursuant to Paragraph 10 of the Improvements
Lease, transferred to a purchaser under the Purchase Agreement as therein
provided or applied as a Qualified Prepayment or as otherwise described in the
preceding sentence, BNPLC shall keep the same deposited in one or more interest
bearing accounts, and all interest earned on such account shall be added to and
made a part of Escrowed Proceeds.
"ESTABLISHED MISCONDUCT" of a Person means, and is limited to: (1) if
the Person is bound by the Operative Documents or the Participation Agreement, a
breach by such Person of the express provisions of the Operative Documents or
the Participation Agreement, as applicable, that continues beyond any period for
cure provided therein, and (2) conduct of such Person or its Affiliates that has
been
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determined to constitute wilful misconduct or Active Negligence in or as a
necessary element of a final judgment rendered against such Person by a court
with jurisdiction to make such determination. Established Misconduct of one
Interested Party shall not be attributed to a second Interested Party unless the
second Interested Party is an Affiliate of the first. Negligence which does not
constitute Active Negligence shall not in any event constitute Established
Misconduct. For purposes of this definition, "conduct of a Person" will include
(1) the conduct of an employee of that Person, but only to the extent that the
employee is acting within the scope of his employment by that Person, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination, and (2) the
conduct of an agent of that Person (such as an independent environmental
consultant engaged by that Person), but only to the extent that the agent is, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination, (x) acting
within the scope of the authority granted to him by such Person, (y) not acting
with the consent or approval of or under the direction of NAI or NAI's
Affiliates, employees or agents, and (z) not acting in good faith to mitigate
Losses that such Person may suffer because of a breach or repudiation by NAI of
the Improvements Lease or the Purchase Documents.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining
the Effective Rate for any Construction Period or Base Rent Period, the reserve
percentage applicable two Business Days before the first day of such period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for BNPLC's Parent with respect to liabilities or deposits
consisting of or including Eurocurrency Liabilities (or with respect to any
other category or liabilities by reference to which LIBOR is determined) having
a term comparable to such period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in subparagraph
17 of the Improvements Lease.
"EXCLUDED TAXES" means (1) all federal, state and local income taxes
upon Base Rent, Administrative Agency Fees, Commitment Fees, any interest paid
to BNPLC or any Participant pursuant to subparagraph 3(k) of the Improvements
Lease, and any additional compensation claimed by BNPLC pursuant to subparagraph
5(b)(ii) of the Improvements Lease; (2) any transfer or change of ownership
assessed because of BNPLC's transfer or conveyance to any third party of any
rights or interest in the Improvements Lease, the Purchase Agreement or the
Property (other than any such assessed because of any Permitted Transfer under
clauses (1), (3), (4), (5), (6) or (7) of the definition of Permitted Transfer
in this Agreement), (3) all federal, state and local income upon any amounts
paid as reimbursement for or to satisfy Losses incurred by BNPLC or any
Participant to the extent such are offset by a corresponding reduction of
BNPLC's or the applicable Participant's income taxes because of BNPLC's or such
Participant's deduction of the reimbursed Losses from its taxable income or
because of any tax credits attributable thereto. If, however, a change in
Applicable Laws after the Effective Date results in an increase in such for any
reason other than an increase in the applicable tax rates (e.g., a disallowance
of deductions that would otherwise be available against payments described in
clause (A) of this definition), then for purposes of the Operative Documents,
the term "Excluded" will not include the increase in such taxes attributable to
the change.
"EXISTING CONTRACT" means the Purchase Agreement covering the Land
between NAI and Seller, dated September 9, 1999.
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"FAILED COLLATERAL TEST DATE" shall have the meaning indicated in Part
III of Schedule 1 attached to the Improvements Lease.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rates are not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by BNPLC's Parent from three Federal funds brokers of
recognized standing selected by BNPLC's Parent. All determinations of the Fed
Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon NAI.
"FOCB NOTICE" shall have the meaning assigned to it in subparagraph
5(B)(1) of the Construction Management Agreement.
"FUNDED CONSTRUCTION ALLOWANCE" means on any day the Outstanding
Construction Allowance on that day, including all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
that day, plus the amount of any Qualified Prepayments deducted on or prior to
that day in the calculation of such Outstanding Construction Allowance, less any
Voluntary NAI Construction Contributions added on or prior to that day in the
calculation of such Qualified Prepayments.
"FUNDING ADVANCES" means (1) the Initial Funding Advance and (2) all
future advances made by BNPLC's Parent or any other Participant to or on behalf
of BNPLC to allow BNPLC to provide the Construction Allowance.
"FUTURE WORK" shall have the meaning assigned to it in subparagraph
2(C)(2)(b) of the Construction Management Agreement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
subparagraph 13(a) of the Improvements Lease (except for changes with which
NAI's independent public accountants concur).
"HAZARDOUS SUBSTANCE" means (i) any chemical, compound, material,
mixture or substance that is now or hereafter defined or listed in, regulated
under, or otherwise classified pursuant to, any Environmental Laws as a
"hazardous substance," "hazardous material," "hazardous waste," "extremely
hazardous waste or substance," "infectious waste," "toxic substance," "toxic
pollutant," or any other formulation intended to define, list or classify
substances by reason of deleterious properties, including ignitability,
corrosiveness, reactivity, carcinogenicity, toxicity or reproductive toxicity;
(ii) petroleum, any fraction of petroleum, natural gas, natural gas liquids,
liquified natural gas, synthetic gas usable for fuel (or mixtures of natural gas
and such synthetic gas), and ash produced by a resource recovery facility
utilizing a municipal solid waste stream, and drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iii) asbestos and any asbestos
containing material; and (v) any other material that, because of its quantity,
concentration or physical or chemical characteristics, poses a significant
present or potential hazard to human health or safety or to the environment if
released into the workplace or the environment.
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"HAZARDOUS SUBSTANCE ACTIVITY" means any actual, proposed or threatened
use, storage, holding, release (including any spilling, leaking, leaching,
pumping, pouring, emitting, emptying, dumping, disposing into the environment,
and the continuing migration into or through soil, surface water, groundwater or
any body of water), discharge, deposit, placement, generation, processing,
construction, treatment, abatement, removal, disposal, disposition, handling or
transportation of any Hazardous Substance from, under, in, into or on the
Property, including the movement or migration of any Hazardous Substance from
surrounding property, surface water, groundwater or any body of water under, in,
into or onto the Property and any resulting residual Hazardous Substance
contamination in, on or under the Property. "HAZARDOUS SUBSTANCE ACTIVITY" also
means any existence of Hazardous Substances on the Property that would cause the
Property or the owner or operator thereof to be in violation of, or that would
subject the Property to any remedial obligations under, any Environmental Laws,
including CERCLA and RCRA, assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances pertaining to
the Property.
"IMPOSITIONS" means all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes, levies, fees,
charges, surcharges, assessments or penalties which arise out of or are
attributable to the Improvements Lease or which are imposed upon BNPLC or the
Property because of the ownership, leasing, occupancy, sale or operation of the
Property, or any part thereof or interest therein, or relating to or required to
be paid by any of the Permitted Encumbrances or the Development Documents,
excluding only Excluded. "IMPOSITIONS" shall include real estate taxes imposed
because of a change of use or ownership of the Property on or prior to the date
of any sale by BNPLC pursuant to the Purchase Agreement.
"IMPROVEMENTS" means any and all (1) buildings and other real property
improvements now or hereafter erected on the Land, and (2) equipment (e.g., HVAC
systems, elevators and plumbing fixtures) attached to the buildings or other
real property improvements, the removal of which would cause structural or other
material damage to the buildings or other real property improvements or would
materially and adversely affect the value or use of the buildings or other real
property improvements.
"IMPROVEMENTS LEASE" means the Lease Agreement (Phase V - Improvements")
dated as of March 1, 2000 between BNPLC, as landlord, and NAI, as tenant,
pursuant to which NAI has agreed to lease BNPLC's interest in the Property, as
such Lease Agreement may be extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with its terms.
"INITIAL FUNDING ADVANCE" means the advance made by BNPLC's Parent
(directly or through one or more of its Affiliates) to or on behalf of BNPLC on
or prior to the Effective Date to cover the cost of BNPLC's acquisition of the
Property and certain Transaction Expenses and other amounts described in this
definition. The amount of the Initial Funding Advance may be confirmed by a
separate closing certificate executed by NAI as of the Effective Date. To the
extent that BNPLC does not itself use the entire Initial Funding Advance to pay
Transaction Expenses incurred by BNPLC, the remainder thereof will be advanced
to NAI, with the understanding that NAI shall use any such amount advanced for
one or more of the following purposes: (1) the payment or reimbursement of
Transaction Expenses incurred by NAI; (2) the payment or reimbursement of
expenses incurred by NAI in connection with the Construction Project, including
the planning, design, engineering, construction and permitting of thereof; (3)
the maintenance of the Property; or (4) the payment of Rents next due.
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) any other Participants and their permitted
successors and assigns under the Participation Agreement; provided, however,
none of the following shall constitute an Interested Party: (a) any Person to
whom BNPLC may
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transfer an interest in the Property by a conveyance that is not a Permitted
Transfer and others that cannot lawfully claim an interest in the Property
except through or under such a transfer by BNPLC, (b) NAI or any Person that
cannot lawfully claim an interest in the Property except through or under a
conveyance from NAI, or (c) any Applicable Purchaser under the Purchase
Agreement and any Person that cannot lawfully claim an interest in the Property
except through or under a conveyance from such Applicable Purchaser.
"ISSUE 97-1 NON-PERFORMANCE-RELATED SUBJECTIVE EVENT OF DEFAULT" means
an Event of Default that is unrelated to the Property or the use or maintenance
thereof and that results solely from (A) a breach by NAI of a provision in any
Operative Document, the occurrence of which breach cannot be objectively
determined, or (B) any other event described in subparagraph 17(e) of the
Improvements Lease, the occurrence of which event cannot be objectively
determined. For example, an Event of Default under subparagraph 17(e) of the
Improvements Lease resulting solely from a failure of NAI to "generally" pay its
debts as such debts become due (in contrast to a failure of NAI to pay Rent to
BNPLC as it becomes due under the Improvements Lease) would constitute an Issue
97-1 Non-performance-related Subjective Event of Default. In no event, however,
will the term "Issue 97-1 Non-performance-related Subjective Event of Default"
include an Event of Default resulting from (1) a failure of NAI to make any
payment required to BNPLC under the Operative Documents, (2) a breach by NAI of
the provisions set forth in Schedule 1 attached to the Improvements Lease
(which set forth financial covenants), (3) any failure of NAI to use, maintain
and insure the Property in accordance with the requirements of the Improvements
Lease, or (4) any failure of NAI to pay the full amount of any Supplemental
Payment on the Designated Sale Date as required by the Purchase Agreement.
Except as provided in subparagraph 1(A)(2)(c)(i) of the Purchase Agreement, the
characterization of any Event of Default as an Issue 97-1
Non-performance-related Subjective Event of Default will not affect the rights
or remedies available to BNPLC because of the Event of Default.
"ISSUE 97-10 ELECTION" means any of the following elections by NAI: (1)
an election to terminate the Construction Management Agreement as provided in
subparagraph 5(D) thereof; and (2) an election to terminate NAI's Initial
Remarketing Rights and Obligations as provided in subparagraph 4(B) of the
Purchase Agreement.
"ISSUE 97-10 PREPAYMENT" means a payment to BNPLC, required by
subparagraph 3.(i) of the Improvements Lease or by subparagraphs 4(B) or 4(C) of
the Purchase Agreement, equal in each case to (A) the Maximum Permitted
Prepayment, computed as of the date on which the payment becomes due, less (B)
the accreted value of any prior payments actually received by BNPLC from NAI
constituting Issue 97-10 Prepayments or Voluntary NAI Construction
Contributions. For purposes of the preceding sentence, "accreted value" of a
payment shall mean the amount of the payment plus an amount equal to the
interest that would have accrued on the payment if it bore interest at the
Effective Rate.
"LAND" means the land covered by the land described in Exhibit A
attached to the Closing Certificate, the Improvements Lease and the Purchase
Agreement.
"LANDLORD'S ELECTION TO CONTINUE CONSTRUCTION" shall have the meaning
assigned to it in subparagraph 6.(e) of the Improvements Lease.
"LIBOR" means, for purposes of determining the Effective Rate for each
Construction Period or Base Rent Period, the rate determined by BNPLC's Parent
to be the average rate of interest per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) of the rates at which deposits of dollars are offered or
available to BNPLC's Parent in the London interbank market at approximately
11:00 a.m. (London time) on the second Business Day preceding the first day of
such period. BNPLC shall instruct
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BNPLC's Parent to consider deposits, for purposes of making the determination
described in the preceding sentence, that are offered: (i) for delivery on the
first day of such Construction Period or Base Rent Period, as the case may be,
(ii) in an amount equal or comparable to the total (projected on the applicable
date of determination by BNPLC's Parent) Stipulated Loss Value on the first day
of such period, and (iii) for a time equal or comparable to the length of such
period. If BNPLC's Parent so chooses, it may determine LIBOR for any period by
reference to the rate reported by the British Banker's Association on Page 3750
of the Telerate Service at approximately 11:00 a.m. (London time) on the second
Business Day preceding the first day of such period. If for any reason BNPLC's
Parent determines that it is impossible or unreasonably difficult to determine
LIBOR with respect to a given Construction Period or Base Rent Period in
accordance with the foregoing, or if BNPLC's Parent shall determine that it is
unlawful (or any central bank or governmental authority shall assert that it is
unlawful) for BNPLC, BNPLC's Parent or any Participant to provide or maintain
Funding Advances during any Construction Period or Base Rent Period for which
Carrying Costs or Base Rent is computed by reference to LIBOR, then "LIBOR" for
that period shall equal the Base Rate for that period. All determinations of
LIBOR by BNPLC's Parent shall, in the absence of clear and demonstrable error,
be binding and conclusive upon NAI.
"LIBOR PERIOD ELECTION" for any Base Rent Period means a period of one
month, three months or six months as designated by NAI at least five Business
Days prior to the commencement of such Base Rent Period by a notice given to
BNPLC in the form of Exhibit attached to the Improvements Lease. (For purposes
of the Improvements Lease a LIBOR Period Election for any Base Rent Period shall
also be considered the LIBOR Period Election in effect on the Base Rent Date, or
Base Rent Commencement Date, upon which such Base Rent Period begins.) Any LIBOR
Period Election so designated by NAI shall remain in effect for the entire Base
Rent Period specified in NAI's notice to BNPLC (provided such Base Rent Period
commences at least ten Business Days after BNPLC's receipt of the notice) and
for all subsequent Base Rent Periods until a new designation becomes effective
in accordance with the provisions set forth in this definition. Notwithstanding
the foregoing, however: (1) NAI shall not be entitled to designate a LIBOR
Period Election that would cause a Base Rent Period to extend beyond the end of
the scheduled Term; (2) changes in the LIBOR Period Election shall become
effective only upon the commencement of a new Base Rent Period; (3) for each
Base Rent Period that commences prior the Base Rent Commencement Date or that
occurs within any Mandatory Collateral Period, the LIBOR Period Election shall
be one month; (4) no LIBOR Period Election designated by NAI hereunder shall be
different than the LIBOR Period Election specified under (and as defined in) the
Other Common Definitions and Provisions Agreement; and (5) if NAI fails to make
a LIBOR Period Election consistent with the foregoing requirements for any Base
Rent Period, or if an Event of Default shall have occurred and be continuing on
the third Business Day preceding the commencement of any Base Rent Period, the
LIBOR Period Election for such Base Rent Period shall be deemed to be one month.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction). In addition, for purposes of subparagraph A.(8) of Part IV of
Schedule 1 attached to the Improvements Lease, "LIEN" includes any Liens under
ERISA relating to Unfunded Benefit Liabilities of which NAI is required to
notify BNPLC under subparagraph 13(a)(vii) of the Improvements Lease
(irrespective of whether NAI actually notifies BNPLC as required thereunder).
"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering
the Property that are asserted (1) other than as contemplated in the Operative
Documents, by BNPLC itself, (2) by third parties lawfully claiming through or
under BNPLC (which for purposes of the Improvements Lease shall include any
judgment liens established against the Property because of a judgment rendered
against
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BNPLC and shall also include any liens established against the Property to
secure past due Excluded), or (3) by third parties lawfully claiming under a
deed or other instrument duly executed by BNPLC; provided, however, Liens
Removable by BNPLC shall not include (A) any Permitted Encumbrances or
Development Documents (regardless of whether claimed through or under BNPLC),
(B) the Operative Documents or any other document executed by BNPLC with the
knowledge of (and without objection by) NAI's counsel contemporaneously with the
execution and delivery of the Operative Documents, (C) Liens which are neither
lawfully claimed through or under BNPLC (as described above) nor claimed under a
deed or other instrument duly executed by BNPLC, (D) Liens claimed by NAI or
claimed through or under a conveyance made by NAI, (E) Liens arising because of
BNPLC's compliance with Applicable Law, the Operative Documents, Permitted
Encumbrances, the Development Documents or any written request made by NAI, (F)
Liens securing the payment of property or other amounts assessed against the
Property by any governmental authority, other than to secure the payment of past
due Excluded or to secure damages caused by (and attributed by any applicable
principles of comparative fault to) BNPLC's own Established Misconduct, (G)
Liens resulting from or arising in connection with any breach by NAI of the
Operative Documents; or (H) Liens resulting from or arising in connection with
any Permitted Transfer that occurs more than thirty days after any Designated
Sale Date upon which, for any reason, NAI or an Affiliate of NAI or any
Applicable Purchaser shall not purchase BNPLC's interest in the Property
pursuant to the Purchase Agreement for a cash price to BNPLC (when taken
together with any Supplemental Payment made by NAI pursuant to Paragraph 1(A)(2)
of the Purchase Agreement, in the case of a purchase by an Applicable Purchaser)
equal to the Break Even Price.
"LOSSES" means the following: any and all losses, liabilities, damages
(whether actual, consequential, punitive or otherwise denominated), demands,
claims, administrative or legal proceedings, actions, judgments, causes of
action, assessments, fines, penalties, costs and expenses (including Attorneys'
Fees and the fees of outside accountants and environmental consultants), of any
and every kind or character, foreseeable and unforeseeable, liquidated and
contingent, proximate and remote.
"MANDATORY COLLATERAL PERIOD" shall have the meaning assigned to it in
Part I of Schedule 1 attached to the Improvements Lease and to the Pledge
Agreement.
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between NAI
or its agents and a regulatory agency or third party, which causes, or
potentially could cause (whether by implementation of or response to said
communication), a material change in the scope, duration, or nature of any
Remedial Work.
"MAXIMUM CONSTRUCTION ALLOWANCE" means an amount equal to $51,000,000,
less the sum of the Initial Funding Advance under and defined in the Other
Common Definitions and Provisions Agreement and the Initial Funding Advance
under and as defined in this Agreement.
"MAXIMUM PERMITTED TERMINATION FEES" shall have the meaning indicated in
subparagraph 1(A)(2)(b) of the Construction Management Agreement.
"MAXIMUM PERMITTED PREPAYMENT" as of any date means the amount equal to
the lesser of the following:
(1) eighty-nine and nine-tenths of one percent (89.9%) of
the aggregate of (i) all Project Costs paid or incurred on or
prior to such date, plus (ii) ninety-seven percent (97%) of (a)
Carrying Costs added to the Outstanding Construction Allowance on
or prior to such date, and (b) Commitment Fees reimbursed
pursuant to the Construction Management Agreement on or prior to
such date, plus (iii) any Upfront Syndication Fees paid to
Participants pursuant to the Closing Certificate and Agreement
and reimbursed
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pursuant to the Construction Management Agreement on or prior to
such date; or
(2) eighty-nine and nine-tenths of one percent (89.9%) of
Stipulated Loss Value on such date.
"MAXIMUM REMARKETING OBLIGATION" shall have the meaning indicated in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"MINIMUM EXTENDED REMARKETING PRICE" shall have the meaning assigned to
it in subparagraph 2(B) of the Purchase Agreement.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
3(37) of ERISA to which contributions have been made by NAI or any ERISA
Affiliate during the preceding six years and which is covered by Title IV of
ERISA.
"NAI" means Network Appliance, Inc., a California corporation.
"NAI'S EXTENDED REMARKETING PERIOD" shall have the meaning assigned to
it in subparagraph 2(A) of the Purchase Agreement.
"NAI'S EXTENDED REMARKETING RIGHT" shall have the meaning assigned to it
in subparagraph 2(A) of the Purchase Agreement.
"NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS" shall have the
meaning assigned to it in subparagraph 1(A)(2) of the Purchase Agreement.
"NORMAL TENANT IMPROVEMENTS" shall have the meaning assigned to it in
subparagraph 3(A) of the Construction Management Agreement.
"NOTICE OF NAI'S INTENT TO TERMINATE" shall have the meaning assigned to
it in subparagraph 5(D) of the Construction Management Agreement.
"OPERATIVE DOCUMENTS" means the Closing Certificate, the Improvements
Lease, the Construction Management Agreement, the Purchase Agreement, the Pledge
Agreement and this Common Definitions and Provisions Agreement (Phase V -
Improvements).
"OTHER COMMON DEFINITIONS AND PROVISIONS AGREEMENT" means the Common
Definitions and Provisions Agreement (Phase V - Land), dated as of March 1,
2000, between BNPLC and NAI, as such Common Definitions and Provisions Agreement
may be extended, supplemented, amended, restated or otherwise modified from time
to time in accordance with its terms.
"OTHER LEASE AGREEMENT" means the Lease Agreement (Phase V - Land),
dated as of March 1, 2000, between BNPLC and NAI, as such Lease Agreement may be
extended, supplemented, amended, restated or otherwise modified from time to
time in accordance with its terms.
"OTHER PURCHASE AGREEMENT" means the Purchase Agreement (Phase V -
Land), dated March 1, 2000, between BNPLC and NAI, as such Purchase Agreement
may be extended, supplemented, amended, restated or otherwise modified from time
to time in accordance with its terms.
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"OUTSTANDING CONSTRUCTION ALLOWANCE" shall have the meaning assigned to
it in subparagraph 6.(a) of the Improvements Lease.
"PARTICIPANT" means BNPLC's Parent and any other Person that, upon
becoming a party to the Participation Agreement and the Pledge Agreement by
executing supplements as contemplated therein, agrees from time to time to
participate in all or some of the risks and rewards to BNPLC of the Improvements
Lease and the Purchase Documents. As of the Effective Date, the only Participant
is BNPLC's Parent, but BNPLC may agree after the Effective Date to share in
risks and rewards of the Improvements Lease and the Purchase Documents with
other Participants. However, no Person other than BNPLC's Parent and its
Affiliates shall qualify as a Participant for purposes of the Operative
Documents or other agreements concerning the Property to which NAI is a party
unless such Person, during the continuance of an Event of Default or otherwise
with NAI's prior written approval (which approval will not be unreasonably
withheld), became a party to the Pledge Agreement and to the Participation
Agreement by executing supplements to those agreements as contemplated therein.
"PARTICIPATION AGREEMENT" means the Participation Agreement between
BNPLC and BNPLC's Parent dated as of the Effective Date, pursuant to which
BNPLC's Parent has agreed to participate in the risks and rewards to BNPLC of
the Improvements Lease and the other Operative Documents, as such Participation
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms. It is understood, however, that
because the Participation Agreement expressly makes NAI a third party
beneficiary of the Participant's obligations thereunder to make advances to
BNPLC in connection with Construction Advances under the Construction Management
Agreement, NAI's consent will be required to any amendment of the Participation
Agreement that purports to limit or excuse such obligations.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PERIOD" means a Construction Period or a Base Rent Period, as the
context requires.
"PERMITTED ENCUMBRANCES" means (i) the encumbrances and other matters
affecting the Property that are set forth in Exhibit B attached to the Closing
Certificate, (ii) any easement agreement or other document affecting title to
the Property executed by BNPLC at the request of or with the consent of NAI
(including the Other Lease Agreement, the Other Purchase Agreement and all
documents executed by BNPLC pursuant to the Other Purchase Agreement), (iii) the
Premises Lease, (iv) any Liens securing the payment of Impositions which are not
delinquent or claimed to be delinquent or which are being contested in
accordance with subparagraph 5(a) of the Improvements Lease, and (iv) mechanics'
and materialmen's liens for amounts not past due or claimed to be past due or
which are being contested in accordance with subparagraph 11(c) of the
Improvements Lease.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage
and offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not:
(1) exceed that reasonably required for the construction
of the Construction Project in accordance with the Improvements
Lease and the Construction Management Agreement or for the
operation of the Property for the purposes expressly permitted
under subparagraph 2(a) of the Improvements Lease; or
(2) include any disposal, discharge or other release of
Hazardous Substances
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from the Property in any manner that might allow such substances
to reach surface water or groundwater, except (i) through a
lawful and properly authorized discharge (A) to a publicly owned
treatment works or (B) with rainwater or storm water runoff in
accordance with Applicable Laws and any permits obtained by NAI
that govern such runoff; or (ii) any such disposal, discharge or
other release of Hazardous Substances for which no permits are
required and which are not otherwise regulated under applicable
Environmental Laws.
Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for the construction of the Construction Project or for the
use of the Property by NAI and its permitted subtenants and assigns for the
purposes expressly permitted by subparagraph 2(a) of the Improvements Lease, in
either case in strict compliance with all Environmental Laws and with due care
given the nature of the Hazardous Substances involved. Without limiting the
generality of the foregoing, Permitted Hazardous Substances shall include usual
and customary office, laboratory and janitorial products.
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance by BNPLC of rights and interests in favor of any
Participant pursuant to the Participation Agreement; (2) the creation or
conveyance of rights and interests in favor of or to Banque Nationale de Paris
(through its San Francisco Branch or otherwise), as BNPLC's Parent, or any other
Qualified Affiliate of BNPLC, provided that NAI must be notified before any such
conveyance to Banque Nationale de Paris or another Qualified Affiliate of (A)
any interest in the Property or any portion thereof by an assignment or other
document which will be recorded in the real property records of San Mateo
County, California or (B) BNPLC's entire interest in the Land and the Property;
(3) any assignment or conveyance by BNPLC or its permitted successors or assigns
to any present or future Participant of any lien or security interest against
the Property (in contrast to a conveyance of BNPLC's fee estate in the Land and
Improvements) or of any interest in Rent, payments required by or under the
Purchase Documents or payments to be generated from the Property after the Term,
provided that such assignment or conveyance is made expressly subject to the
rights of NAI under the Operative Documents; (4) any agreement to exercise or
refrain from exercising rights or remedies under the Operative Documents made by
BNPLC with any present or future Participant; (5) any assignment or conveyance
by BNPLC requested by NAI or required by any Permitted Encumbrance, by the
Purchase Agreement, by the Existing Contract, by any other Development Contract
or by Applicable Laws; or (6) any assignment or conveyance after a Designated
Sale Date on which NAI shall not have purchased or caused an Applicable
Purchaser to purchase BNPLC's interest in the Property and, if applicable, after
the expiration of the thirty day cure period specified in Paragraph 4(D) of the
Purchase Agreement.
"PERSON" means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or agency or political subdivision
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
"PERSONAL PROPERTY" shall have the meaning assigned to it on page of the
Improvements Lease.
"PLAN" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by NAI or any ERISA
Affiliate of NAI during the preceding six years and which is covered by Title IV
of ERISA, other than a Multiemployer Plan.
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"PLEDGE AGREEMENT" means the Pledge Agreement (Phase V - Improvements)
dated as of the date hereof between BNPLC and NAI, pursuant to which NAI may
pledge certificates of deposit as security for NAI's obligations under the
Purchase Agreement (and for the corresponding obligations of BNPLC to the
Participants under the Participation Agreement), as such Pledge Agreement may be
extended, supplemented, amended, restated or otherwise modified from time to
time in accordance with its terms.
"PRE-COMMENCEMENT CASUALTY" shall have the meaning assigned to it in
subparagraph 1(A)(2)(a) of the Construction Management Agreement.
"PREEMPTIVE NOTICE" shall have the meaning assigned to it in
subparagraph 5(B)(2) of the Construction Management Agreement.
"PREMISES LEASE" means the sublease of space within the Improvements,
between NAI, as landlord, and Lockheed Martin, a Maryland corporation as tenant,
executed of even date herewith, and any subleases or other transfers under and
permitted by the terms of any such lease.
"PRIME RATE" means the prime interest rate or equivalent charged by
BNPLC's Parent in the United States of America as announced or published by
BNPLC's Parent from time to time, which need not be the lowest interest rate
charged by BNPLC's Parent. If for any reason BNPLC's Parent does not announce or
publish a prime rate or equivalent, the prime rate or equivalent announced or
published by either CitiBank, N.A. or any New York branch or office of Credit
Commercial de France as selected by BNPLC shall be used to compute the rate
describe in the preceding sentence. The prime rate or equivalent announced or
published by such bank need not be the lowest rate charged by it. The Prime Rate
may change from time to time after the Effective Date without notice to NAI as
of the effective time of each change in rates described in this definition.
"PRIOR WORK" shall have the meaning assigned to it in subparagraph
2(C)(2)(b) of the Construction Management Agreement.
"PROJECT COSTS" means the following:
(a) costs incurred for the Work (as defined in the Construction
Management Agreement), including not only hard costs incurred for the new
Improvements described in Exhibit C attached to the Construction Management
Agreement, but also the following costs to the extent reasonably incurred in
connection with the Construction Project:
- soft costs, such as architectural fees, engineering fees and fees and
costs paid in connection with obtaining project permits and approvals required
by governmental authorities or the Development Documents,
- site preparation costs, and
- costs of offsite and other public improvements required as conditions
of governmental approvals for the Construction Project;
(b) costs incurred to maintain insurance required by (and consistent
with the requirements of) the Improvements Lease prior to the Base Rent
Commencement Date, and costs of repairing any damage to the Improvements by fire
or other casualty prior to the Base Rent Commencement Date, to the extent
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such cost is not covered by insurance proceeds made available to NAI as provided
in the Improvements Lease;
(c) a fraction of the cost of any title insurance policy or binder
provided to BNPLC in connection with its acquisition of the Land and
Improvements, the numerator of which fraction is the difference computed by
subtracting the price paid by BNPLC for the Land from the maximum dollar amount
of coverage provided by the title insurance, and the denominator of which
fraction is equal to such maximum dollar amount of coverage;
(d) Impositions that have accrued or become due under the Improvements
Lease prior to the Base Rent Commencement Date; and
(e) cancellation or termination fees or other compensation payable by
NAI or BNPLC pursuant to any contract concerning the Construction Project made
by NAI or BNPLC with any general contractor, architect, engineer or other third
party because of any election by NAI or BNPLC to cancel or terminate such
contract.
Project Costs will include costs incurred by BNPLC to continue or complete the
Construction Project after any Landlord's Election to Continue Construction as
provided in subparagraph 6.(e) of the Improvements Lease.
"PROJECTED COST OVERRUNS" shall have the meaning assigned to it in
subparagraph 4(A) of the Construction Management Agreement.
"PROPERTY" means the Personal Property and the Real Property,
collectively. The fee interest in the Land itself will not be included in the
Property. Any rights, titles and interests acquired by BNPLC under the Existing
Contract, to the extent not covered by the Improvements Lease and thus not
encompassed within this definition of Property, are intended to be covered by
the Other Lease Agreement and encompassed within the term "PROPERTY" as defined
in the Other Common Definitions and Provisions.
"PURCHASE AGREEMENT" means the Purchase Agreement (Phase V -
Improvements) dated as of March 1, 2000 between BNPLC and NAI, as such Purchase
Agreement may be extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
"PURCHASE DOCUMENTS" means collectively (1) the Purchase Agreement, (2)
the Memorandum of Purchase Agreement executed by BNPLC and NAI as of the
Effective Date and recorded to provide notice of the Purchase Agreement; and (3)
the Pledge Agreement and all financing statements, notices, acknowledgments and
certificates of deposit executed or delivered from time to time by NAI, BNPLC or
the other parties to the Pledge Agreement pursuant to and as expressly provided
therein.
"PURCHASE OPTION" shall have the meaning assigned to it in subparagraph
1(A)(1) of the Purchase Agreement.
"QUALIFIED AFFILIATE" means any Person that is one hundred percent
(100%) owned, directly or indirectly, by Banque Nationale de Paris or any
successor of such bank; provided, that such Person can make (and has in writing
made) the same representations to NAI that BNPLC has made in Paragraphs 3(D) and
3(E) of the Closing Certificate; and, provided, further, that such Person is not
insolvent.
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"QUALIFIED PREPAYMENTS" means (A) any Issue 97-10 Prepayments received
by BNPLC, (B) any Voluntary NAI Construction Contributions received by BNPLC
pursuant to subparagraph 4(C) of the Construction Management Agreement, and (C)
any payments received by BNPLC from time to time during the Term (1) under any
property insurance policy as a result of damage to the Property, (2) as
compensation for any restriction placed upon the use or development of the
Property or for the condemnation of the Property or any portion thereof, (3)
because of any judgment, decree or award for injury or damage to the Property or
(4) under any title insurance policy or otherwise as a result of any title
defect or claimed title defect with respect to the Property; provided, however,
that (x) in determining the amount of "Qualified Prepayments", there shall be
deducted all expenses and costs of every kind, type and nature (including taxes,
Breakage Costs and Attorneys' Fees) incurred by BNPLC with respect to the
collection or application of such payments, (y) "Qualified Prepayments" shall
not include any payment to BNPLC by a Participant or an Affiliate of BNPLC that
is made to compensate BNPLC for the Participant's or Affiliate's share of any
Losses BNPLC may incur as a result of any of the events described in the
preceding clauses (1) through (4) and (z) "Qualified Prepayments" shall not
include any payments received by BNPLC that BNPLC has paid or is obligated to
pay to NAI for the restoration or repair of the Property or that BNPLC is
holding as Escrowed Proceeds pursuant to Paragraph 10 of the Improvements Lease
or any other provision of the Improvements Lease. For purposes of computing the
total Qualified Prepayments (and other amounts dependent upon Qualified
Prepayments, such as Stipulated Loss Value and the Outstanding Construction
Allowance) paid to or received by BNPLC as of any date, payments described in
the preceding clauses (1) through (4) will be considered as Escrowed Proceeds,
not Qualified Prepayments, until they are actually applied as Qualified
Prepayments by BNPLC as provided in the Paragraph 10 of the Improvements Lease.
"REAL PROPERTY" shall have the meaning assigned to it on page of the
Improvements Lease.
"REIMBURSABLE CONSTRUCTION-PERIOD COSTS" shall have the meaning assigned
to it in Paragraph 2 of the Construction Management Agreement.
"REMEDIAL WORK" means any investigation, monitoring, clean-up,
containment, remediation, removal, payment of response costs, or restoration
work and the preparation and implementation of any closure or other required
remedial plans that any governmental agency or political subdivision requires or
approves (or could reasonably be expected to require if it was aware of all
relevant circumstances concerning the Property), whether by judicial order or
otherwise, because of the presence of or suspected presence of Hazardous
Substances in, on, under or about the Property or because of any prior Hazardous
Substance Activity. Without limiting the generality of the foregoing, Remedial
Work also means any obligations imposed upon or undertaken by NAI pursuant to
Development Documents or any recommendations or proposals made therein.
"RENT" means the Base Rent and all Additional Rent.
"RESIDUAL RISK PERCENTAGE" means fifteen percent (15%).
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of NAI.
"SALE CLOSING DOCUMENTS" shall have the meaning assigned to it in
subparagraph 1(C) of the Purchase Agreement.
"SCOPE CHANGE" shall have the meaning assigned to it in subparagraph
1(A)(1)(b) of the Construction Management Agreement.
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"SECURED SPREAD" means thirty basis points (30/100 of 1%); provided,
however, that for purposes of calculating the Base Rent for any period
commencing on a Failed Collateral Test Date and continuing through the next
Collateral Test Date (under and as defined in Schedule 1 attached to the Lease)
that does not constitute a Failed Collateral Test Date, the Secured Spread shall
equal one-half of the Unsecured Spread.
"SELLER" means Trinet Essential Facilities II, Inc., a Maryland
corporation.
"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum
of the Initial Funding Advance plus the sum of all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
such date, minus all funds actually received by BNPLC and applied as Qualified
Prepayments on or prior to such date. Under no circumstances will any payment of
Base Rent, the Arrangement Fee, the Upfront Syndication Fees, or Administrative
Agency Fees or Commitment Fees reduce Stipulated Loss Value.
"STIPULATED LOSS VALUE (BUILDING 4)" as of any date means the amount
equal to the sum of portion of Stipulated Loss Value attributable to the portion
of the Improvements known as "Building 4," determined in accordance with the
following provisions:
(1) All Funding Advances (including the Initial Funding
Advance) will be allocated between Stipulated Loss Value
(Building 4) and the remainder of Stipulated Loss Value as
reasonably determined by NAI, subject to the approval of BNPLC,
in a manner that fairly reflects the cost of Building 4 relative
to the cost of both buildings included in the Improvements. In
the case of each Construction Advance, the allocation so
determined by NAI will be set forth in the Construction Advance
Request submitted for such advance, as contemplated in the form
of request attached as an exhibit to the Construction Management
Agreement.
(2) The application of Qualified Prepayments, if any, will
be allocated between Stipulated Loss Value (Building 4) and the
remainder of Stipulated Loss Value as determined by NAI, subject
to the approval of BNPLC, in a manner that fairly reflects the
impact upon the value of Building 4, relative to the value of
both buildings included in the Improvements, resulting from the
event or circumstances that generated such Qualified Prepayments.
(For example, insurance proceeds paid because of a fire damaging
only Building 4 would, if applied as Qualified Prepayments,
reduce Stipulated Loss Value (Building 4) dollar for dollar.)
(3) In any Completion Notice (Building 4), NAI will
specify its determination of Stipulated Loss Value (Building 4),
as well as NAI's determination of the Stipulated Loss Value
(Building 4/Land) under and as defined in the Other Common
Definitions and Provisions Agreement, which determinations will
be binding upon NAI for purposes of the Operative Documents
unless BNPLC notifies NAI of BNPLC's disapproval of such
determinations, in which case BNPLC shall itself be entitled to
make such determinations.
(4) In any event, if NAI has not notified BNPLC of NAI's
determination of Stipulated Loss Value (Building 4) at the time a
determination thereof is needed under the Operative Documents,
BNPLC shall itself be entitled to make such determination in good
faith on the basis of any information then available to BNPLC,
and any such determination by BNPLC shall, in the absence of
clear and demonstrable error, be binding and conclusive for
purposes of the Operative Documents.
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"SUBSIDIARY" means, with respect to any Person, any Affiliate of which
at least a majority of the securities or other ownership interests having
ordinary voting power then exercisable for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by such Person.
"SUPPLEMENTAL PAYMENT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(c) of the Purchase Agreement.
"TERM" shall have the meaning assigned to it in subparagraph 1(a) of the
Improvements Lease.
"THIRD PARTY CONTRACT" shall have the meaning assigned to it in
subparagraph 1(A)(2)(b) of the Construction Management Agreement.
"THIRD PARTY PRICE" shall have the meaning assigned to it in
subparagraph 1(A)(2) of the Purchase Agreement.
"THIRD PARTY SALE NOTICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY SALE PROPOSAL" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"THIRD PARTY TARGET PRICE" shall have the meaning assigned to it in
subparagraph 2(C) of the Purchase Agreement.
"TRANSACTION EXPENSES" means costs incurred in connection with the
preparation and negotiation of the Operative Documents and related documents and
the consummation of the transactions contemplated therein.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan or
Multiemployer Plan, the amount (if any) by which the present value of all
benefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under
the Plan or Multiemployer Plan exceeds the market value of all Plan or
Multiemployer assets allocable to such benefit liabilities, as determined on the
most recent valuation date of the Plan or Multiemployer Plan and in accordance
with the provisions of ERISA for calculating the potential liability of NAI or
any ERISA Affiliate of NAI under Title IV of ERISA.
"UNSECURED SPREAD" means, for each Construction Period or any period
beginning on and including the Base Rent Commencement Date or a Base Rent Date
and ending on but not including the next Base Rent Date, the amount established
as described below in this definition on the date (in this definition, the
"SPREAD TEST DATE") that is two Business Days prior to such period by reference
to the ratio calculated by dividing (1) Adjusted EBIT for the then latest
Rolling Four Quarters Period that ended prior to (and for which NAI has reported
earnings as necessary to compute Adjusted EBIT) into (2) the total Debt of NAI
and its Subsidiaries (determined on a consolidated basis) as of the end of such
Rolling Four Quarters Period. The Unsecured Spread shall be established at the
Level in the pricing grid below which corresponds to such ratio; provided, that:
(a) for any period commencing on or prior to the first
Business Day of April, 2000, the Unsecured Spread will be the
amount indicated for Level III in the pricing grid below;
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(b) promptly after earnings are reported by NAI for the
latest quarter in any Rolling Four Quarters Period, NAI must
notify BNPLC of any resulting change in the Unsecured Spread
under this definition, and no reduction in the Unsecured Spread
from one period to the next will be effective for purposes of the
Operative Documents unless, prior to the Spread Test Date for the
next period, NAI shall have provided BNPLC with a written notice
setting forth and certifying the calculation under this
definition that justifies the reduction; and
(c) notwithstanding anything to the contrary in this
definition, on any date when an Event of Default has occurred and
is continuing, the Unsecured Spread shall equal the Default Rate
less the Effective Rate.
LEVELS RATIO OF TOTAL DEBT TO ADJUSTED EBIT UNSECURED SPREAD
-------- ------------------------------------ ------------------
Level I less than 0.5 125.0 basis points
Level II greater than or equal to 0.5, but 137.5 basis points
less than 1.0
Level III greater than or equal to 1.0, but 150.0 basis points
less than 1.5
Level IV greater than or equal to 1.5, but 175.0 basis points
less than 2.0
Level V greater than or equal to 2.0 200.0 basis points
All determinations of the Unsecured Spread by BNPLC shall, in the absence of
clear and demonstrable error, be binding and conclusive for purposes of the
Improvements Lease. Further BNPLC may, but shall not be required, to rely on the
determination of the Unsecured Spread set forth in any notice delivered by NAI
as described above in clause (b) of this definition.
"UPFRONT SYNDICATION FEES" shall have the meaning assigned to it in
subparagraph 2(M) of the Closing Certificate and Agreement.
"VOLUNTARY NAI CONSTRUCTION CONTRIBUTIONS" shall have the meaning
assigned to it in subparagraph 4(C) of the Construction Management Agreement.
"VOLUNTARY RETENTION OF THE PROPERTY" means an affirmative election made
by BNPLC to keep the Property pursuant to, and under the circumstances described
in, the second sentence of subparagraph 1(A)(2)(a) of the Purchase Agreement.
"WORK" shall have the meaning assigned to it in subparagraph 1(A)(2)(a)
of the Construction Management Agreement.
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ARTICLE II - RULES OF INTERPRETATION
THE FOLLOWING PROVISIONS WILL APPLY TO AND GOVERN THE INTERPRETATION OF
EACH OF THE OPERATIVE DOCUMENTS:
1. NOTICES. The provision of any Operative Document, or of any
Applicable Laws with reference to the sending, mailing or delivery of any notice
or demand under any Operative Document or with reference to the making of any
payment required under any Operative Document, shall be deemed to be complied
with when and if the following steps are taken:
(i) All Rent and other amounts required to be paid by NAI
to BNPLC shall be paid to BNPLC in immediately available funds by wire
transfer to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Sunnyvale Synthetic Improvements Lease
(Phase V)
or at such other place and in such other manner as BNPLC may designate
in a notice to NAI.
(ii) All Collateral required to be paid by NAI to the
Agent shall be paid in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
/BNP/ BNP San Francisco
/AC/ 14334000176
/Ref/ NAI Collateral Payment
or at such other place and in such other manner as Agent may designate
in a notice to NAI.
(iii) All advances paid to NAI by BNPLC under the
Construction Management Agreement or in connection therewith shall be
paid to NAI in immediately available funds at such place and in such
manner as NAI may reasonably designate from time to time by notice to
BNPLC signed by a Responsible Financial Officer of NAI.
(iv) All notices, demands, approvals, consents and other
communications to be made under any Operative Document to or by the
parties thereto must, to be effective for purpose of such Operative
Document, be in writing. Notices, demands and other communications
required or permitted under any Operative Document are to be sent to the
addresses set forth below (or in the case of communications to
Participants, at the addresses set forth in Schedule 1 to the
Participation Agreement) and shall be given by any of the following
means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex,
telegram or telecopying (if confirmed in writing sent by United States
first class mail, return receipt requested); or (C) registered or
certified first class mail, return receipt requested. Such addresses may
be changed by notice to the other parties given in the same manner as
provided above. Any notice or other communication sent pursuant to
clause (A) or (B)
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hereof shall be deemed received upon such personal service or upon
dispatch by electronic means, and, if sent pursuant to clause (C) shall
be deemed received five days following deposit in the mail.
Address of BNPLC:
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telecopy: (972) 788-9191
With a copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Gavin Holles
Telecopy: (415) 296-8954
And for draw requests and funding notices, with a
copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: George Fung
Telecopy: (415) 956-4230
Address of NAI:
Network Appliance, Inc.
Attn: Leslie Paulides
2770 San Thomas Expressway
Santa Clara, CA 95051
Telecopy: (408) 367-3452
2. SEVERABILITY. If any term or provision of any Operative Document or
the application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of such document, or
the application of such term or provision other than to the extent to which it
is invalid or unenforceable, shall not be affected thereby.
3. NO MERGER. There shall be no merger of the Improvements Lease or of
the leasehold estate created by the Improvements Lease with any other interest
in the Property by reason of the fact that the same person may acquire or hold,
directly or indirectly, the Improvements Lease or the leasehold estate created
hereby and any other interest in the Property, unless all Persons with an
interest in the Property that would be adversely affected by any such merger
specifically agree in writing that such a merger shall occur. There shall be no
merger of the Purchase Agreement or of the purchase options or obligations
created by the Purchase Agreement with any other interest in the Property by
reason of the fact that the same person may acquire or hold, directly or
indirectly, the Improvements Lease or the
30
92
leasehold estate created hereby and any other interest in the Property, unless
all Persons with an interest in the Property that would be adversely affected by
any such merger specifically agree in writing that such a merger shall occur.
4. NO IMPLIED WAIVER. The failure of BNPLC or NAI to insist at any time
upon the strict performance of any covenant or agreement or to exercise any
option, right, power or remedy contained in any Operative Document shall not be
construed as a waiver or a relinquishment thereof for the future. The failure of
Agent to insist at any time upon the strict performance of any covenant or
agreement or to exercise any option, right, power or remedy contained in the
Pledge Agreement shall not be construed as a waiver or a relinquishment thereof
for the future. The waiver of or redress for any breach of any Operative
Document by any party thereto shall not prevent a similar subsequent act from
constituting a violation. Any express waiver of any provision of any Operative
Document shall affect only the term or condition specified in such waiver and
only for the time and in the manner specifically stated therein. No waiver by
any party to any Operative Document of any provision therein shall be deemed to
have been made unless expressed in writing and signed by the party to be bound
by the waiver. A receipt by BNPLC of any Rent with knowledge of the breach by
NAI of any covenant or agreement contained in the Improvements Lease or any
other Operative Document shall not be deemed a waiver of such breach. A receipt
by Agent of any Collateral or other payment under the Pledge Agreement with
knowledge of the breach by NAI of any covenant or agreement contained in the
Pledge Agreement shall not be deemed a waiver of such breach.
5. ENTIRE AND ONLY AGREEMENTS. The Operative Documents supersede any
prior negotiations and agreements between BNPLC, Agent and NAI concerning the
Property or the Collateral, and no amendment or modification of any Operative
Document shall be binding or valid unless expressed in a writing executed by all
parties to such Operative Document.
6. BINDING EFFECT. Except to the extent, if any, expressly provided to
the contrary in any Operative Document with respect to assignments thereof, all
of the covenants, agreements, terms and conditions to be observed and performed
by the parties to the Operative Documents shall be applicable to and binding
upon their respective successors and, to the extent assignment is permitted
thereunder, their respective assigns.
7. TIME IS OF THE ESSENCE. Time is of the essence as to all obligations
of NAI and BNPLC and all notices required of NAI and BNPLC under the Operative
Documents.
8. GOVERNING LAW. Each Operative Document shall be governed by and
construed in accordance with the laws of the State of California without regard
to conflict or choice of laws (subject, however, in the case of the Pledge
Agreement to any contrary provisions of the "UCC," as defined in the Pledge
Agreement).
9. PARAGRAPH HEADINGS. The paragraph and section headings contained in
the Operative Documents are for convenience only and shall in no way enlarge or
limit the scope or meaning of the various and several provisions thereof.
10. NEGOTIATED DOCUMENTS. All the parties to each Operative Document and
their counsel have reviewed and revised or requested revisions to such Operative
Document, and the usual rule of construction that any ambiguities are to be
resolved against the drafting party shall not apply to the construction or
interpretation of any Operative Documents or any amendments thereof.
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93
11. TERMS NOT EXPRESSLY DEFINED IN AN OPERATIVE DOCUMENT. As used in any
Operative Document, a capitalized term that is not defined therein or in this
Common Definitions and Provisions Agreement (Phase V - Improvements), but is
defined in another Operative Document, shall have the meaning ascribed to it in
the other Operative Document.
12. OTHER TERMS AND REFERENCES. Words of any gender used in each
Operative Document shall be held and construed to include any other gender, and
words in the singular number shall be held to include the plural and vice versa,
unless the context otherwise requires. References in any Operative Document to
Paragraphs, subparagraphs, Sections, subsections or other subdivisions shall
refer to the corresponding Paragraphs, subparagraphs, Sections, subsections or
subdivisions of that Operative Document, unless specific reference is made to
another document or instrument. References in any Operative Document to any
Schedule or Exhibit shall refer to the corresponding Schedule or Exhibit
attached to that Operative Document, which shall be made a part thereof by such
reference. All capitalized terms used in each Operative Document which refer to
other documents shall be deemed to refer to such other documents as they may be
renewed, extended, supplemented, amended or otherwise modified from time to
time, provided such documents are not renewed, extended or modified in breach of
any provision contained in the Operative Documents or, in the case of any other
document to which BNPLC is a party or of which BNPLC is an intended beneficiary,
without the consent of BNPLC. All accounting terms used but not specifically
defined in any Operative Document shall be construed in accordance with GAAP.
The words "this [Agreement]", "herein", "hereof", "hereby", "hereunder" and
words of similar import when used in each Operative Document refer to that
Operative Document as a whole and not to any particular subdivision unless
expressly so limited. The phrases "this Paragraph", "this subparagraph", "this
Section", "this subsection" and similar phrases used in any operative document
refer only to the Paragraph, subparagraph, Section, subsection or other
subdivision described in which the phrase occurs. As used in the Operative
Documents the word "or" is not exclusive. As used in the Operative Documents,
the words "include", "including" and similar terms shall be construed as if
followed by "without limitation to".
13. EXECUTION IN COUNTERPARTS. To facilitate execution, each Operative
Document may be executed in as many identical counterparts as may be required.
It shall not be necessary that the signature of, or on behalf of, each party, or
that the signature of all persons required to bind any party, appear on each
counterpart. All counterparts, taken together, shall collectively constitute a
single instrument. It shall not be necessary in making proof of any Operative
Document to produce or account for more than a single counterpart containing the
respective signatures of, or on behalf of, each of the parties hereto. Any
signature page to any counterpart may be detached from such counterpart without
impairing the legal effect of the signatures thereon and thereafter attached to
another counterpart identical thereto except having attached to it additional
signature pages.
14. NOT A PARTNERSHIP, ETC. NOTHING IN ANY OPERATIVE DOCUMENT IS
INTENDED TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE
BETWEEN BNPLC AND NAI. NEITHER THE EXECUTION OF ANY OPERATIVE DOCUMENT NOR THE
ADMINISTRATION THEREOF OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY
OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO ANY OPERATIVE
DOCUMENT IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY OBLIGATIONS OF BNPLC TO
NAI.
[The signature pages follow.]
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94
IN WITNESS WHEREOF, NAI and BNPLC have caused this Common Definitions
and Provisions Agreement (Phase V - Improvements) to be executed as of March 1,
2000.
"NAI"
NETWORK APPLIANCE, INC.
By:
---------------------------------------
Jeffrey R. Allen, Chief Financial
Officer
95
[Continuation of signature pages to Common Definitions and Provisions Agreement
(Phase V - Improvements) dated to be effective March 1, 2000]
"BNPLC"
BNP LEASING CORPORATION
By:
----------------------------------------
Lloyd G. Cox, Vice President
1
EXHIBIT 10.60
================================================================================
PURCHASE AGREEMENT
(PHASE V - LAND)
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
NETWORK APPLIANCE, INC.
("NAI")
MARCH 1, 2000
(SUNNYVALE, CALIFORNIA)
================================================================================
2
TABLE OF CONTENTS
Page
----
1. NAI'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE........................... 1
(A) Right to Purchase; Right and Obligation to Remarket.......................... 1
(B) Determinations Concerning Price.............................................. 3
(C) Designation of the Purchaser................................................. 4
(D) Effect of the Purchase Option and NAI's Initial Remarketing Rights and
Obligations on Subsequent Title Encumbrances................................. 4
(E) Security for the Purchase Option and NAI's Initial Remarketing Rights
and Obligations.............................................................. 4
(F) Delivery of Books and Records If BNPLC Retains the Property.................. 4
2. NAI'S RIGHTS AND OPTIONS AFTER THE DESIGNATED SALE DATE............................. 5
(A) NAI's Extended Right to Remarket............................................. 5
(B) Definition of Minimum Extended Remarketing Price............................. 5
(C) BNPLC's Right to Sell........................................................ 6
(D) NAI's Right to Excess Sales Proceeds......................................... 7
(E) Permitted Transfers During NAI's Extended Remarketing Period................. 7
3. TERMS OF CONVEYANCE UPON PURCHASE................................................... 7
4. SURVIVAL AND TERMINATION OF THE RIGHTS AND OBLIGATIONS OF NAI AND BNPLC ............ 8
(A) Status of this Agreement Generally........................................... 8
(B) Intentionally Deleted........................................................ 8
(C) Intentionally Deleted........................................................ 8
(D) Automatic Termination of NAI's Rights........................................ 8
(E) Termination of NAI's Extended Remarketing Rights to Permit a Sale by
BNPLC........................................................................ 9
(F) Payment Only to BNPLC........................................................ 9
(G) Remedies Under the Other Operative Documents................................. 9
(H) Occupancy by NAI Prior to Closing of a Sale.................................. 9
5. SECURITY FOR NAI'S OBLIGATIONS; RETURN OF FUNDS..................................... 9
6. CERTAIN REMEDIES CUMULATIVE......................................................... 10
7. ATTORNEYS' FEES AND LEGAL EXPENSES.................................................. 10
8. ESTOPPEL CERTIFICATE................................................................ 10
9. SUCCESSORS AND ASSIGNS.............................................................. 10
3
Exhibits and Schedules
Exhibit A..........................................................Legal Description
Exhibit B.......................Requirements Re: Form of Grant Deed and Ground Lease
Exhibit C................................................Bill of Sale and Assignment
Exhibit D..............................................Acknowledgment and Disclaimer
Exhibit E....................................................Secretary's Certificate
Exhibit F.....................................Certificate Concerning Tax Withholding
4
PURCHASE AGREEMENT
(PHASE V - LAND)
This PURCHASE AGREEMENT (PHASE V - LAND) (this "AGREEMENT"), by and
between BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), and NETWORK
APPLIANCE, INC., a California corporation ("NAI"), is made and dated as of March
1, 2000, the Effective Date. ("EFFECTIVE DATE" and other capitalized terms used
and not otherwise defined in this Agreement are intended to have the meanings
assigned to them in the Common Definitions and Provisions Agreement (Phase V -
Land) executed by BNPLC and NAI contemporaneously with this Agreement. By this
reference, the Common Definitions and Provisions Agreement (Phase V - Land) is
incorporated into and made a part of this Agreement for all purposes.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC is acquiring the Land and any appurtenances thereto from Seller
contemporaneously with the execution of this Agreement. Pursuant to the Lease
Agreement (Phase V - Land) executed by BNPLC and NAI contemporaneously with this
Agreement (the "LAND LEASE"), BNPLC is leasing the Land to NAI. (All of BNPLC's
interests, including those created by the documents delivered at the closing
under the Existing Contracts, in the Land and in all other real and personal
property from time to time covered by the Land Lease and included within the
"Property" as defined therein are hereinafter collectively referred to as the
"PROPERTY". The Property does not include the Improvements, it being understood
that the Other Purchase Agreement constitutes a separate agreement providing for
the possible sale of the Improvements and the appurtenances thereto, and only
the Improvements and the appurtenances thereto, from BNPLC to NAI or a third
party designated by NAI.)
NAI and BNPLC have reached agreement upon the terms and conditions upon
which NAI will purchase or arrange for the purchase of the Property, and by this
Agreement they desire to evidence such agreement.
AGREEMENTS
1. NAI'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE.
(A) Right to Purchase; Right and Obligation to Remarket. Whether or not
an Event of Default shall have occurred and be continuing or the Land Lease
shall have been terminated, but subject to Paragraph 4 below:
(1) NAI shall have the right (the "PURCHASE OPTION") to purchase
or cause an Affiliate of NAI to purchase the Property and BNPLC's
interest in Escrowed Proceeds, if any, on the Designated Sale Date for a
cash price equal to the Break Even Price (as defined below).
(2) If neither NAI nor an Affiliate of NAI purchases the
Property and BNPLC's interest in any Escrowed Proceeds on the Designated
Sale Date as provided in the preceding subparagraph 1(A)(1), then NAI
shall have the following rights and obligations (collectively, "NAI'S
INITIAL REMARKETING RIGHTS AND OBLIGATIONS"):
5
(a) First, NAI shall have the right (but not the obligation)
to cause an Applicable Purchaser who is not an Affiliate of NAI
to purchase the Property and BNPLC's interest in any Escrowed
Proceeds on the Designated Sale Date for a cash purchase price
(the "THIRD PARTY PRICE") determined as provided below. If,
however, the Break Even Price exceeds the sum of any Third Party
Price tendered or to be tendered to BNPLC by an Applicable
Purchaser and any Supplemental Payment paid by NAI as described
below, then BNPLC may affirmatively elect to decline such tender
from the Applicable Purchaser and to keep the Property and any
Escrowed Proceeds rather than sell to the Applicable Purchaser
pursuant to this subparagraph (a "VOLUNTARY RETENTION OF THE
PROPERTY").
(b) Second, if the Third Party Price actually paid by an
Applicable Purchaser to BNPLC on the Designated Sale Date
exceeds the Break Even Price, NAI shall be entitled to such
excess, subject, however, to BNPLC's right to offset against
such excess any and all sums that are then due from NAI to BNPLC
under the other Operative Documents.
(c) Third, if for any reason whatsoever (including a
Voluntary Retention of the Property or a decision by NAI not to
exercise its right to purchase or cause an Applicable Purchaser
to purchase from BNPLC as described above) neither NAI nor an
Applicable Purchaser pays a net cash price to BNPLC on the
Designated Sale Date equal to or in excess of the Break Even
Price in connection with a sale of the Property and BNPLC's
interest in any Escrowed Proceeds pursuant to this Agreement,
then NAI shall have the obligation to pay to BNPLC on the
Designated Sale Date a supplemental payment (the "SUPPLEMENTAL
PAYMENT") equal to the lesser of (1) the amount by which the
Break Even Price exceeds such net cash price (if any) actually
received by BNPLC on the Designated Sale Date (such excess being
hereinafter called a "DEFICIENCY") or (2) the Maximum
Remarketing Obligation. As used herein, the "MAXIMUM REMARKETING
OBLIGATION" means a dollar amount determined in accordance with
the following provisions:
1) The "MAXIMUM REMARKETING OBLIGATION" will equal the
product of (i) Stipulated Loss Value on the Designated Sale
Date, times (ii) 100% minus the Residual Risk Percentage,
provided that both of the following conditions are
satisfied:
(x) NAI shall not have elected to accelerate
the Designated Sale Date as provided in clause (2)
of the definition of Designated Sale Date in the
Common Definitions and Provisions Agreement
(Phase V - Land).
(y) No Event of Default, other than an Issue
97-1 Non-performance-related Subjective Event of
Default, shall occur on or be continuing on the
Designated Sale Date.
2) If either of the conditions listed in subparagraph
1) preceding are not satisfied, the "MAXIMUM REMARKETING
OBLIGATION" will equal the Break Even Price.
2
6
If any Supplemental Payment or other amount payable to BNPLC pursuant to this
subparagraph 1(A) is not actually paid to BNPLC on the Designated Sale Date, NAI
shall pay interest on the past due amount computed at the Default Rate from the
Designated Sale Date.
(B) Determinations Concerning Price.
(1) Determination of the Break Even Price. As used herein, "BREAK
EVEN Price" means an amount equal, on the Designated Sale Date, to Stipulated
Loss Value, plus all out-of-pocket costs and expenses (including appraisal
costs, withholding taxes (if any) not constituting Excluded Taxes, and
Attorneys' Fees) incurred by BNPLC in connection with any sale of BNPLC's
interests in the Property under this Agreement or in connection with collecting
payments due hereunder, but less the aggregate amounts (if any) of Direct
Payments to Participants and Deposit Taker Losses.
(2) Determination of Third Party Price. The Third Party Price
required of any Applicable Purchaser purchasing from BNPLC under subparagraph
1(A)(2)(a) will be determined as follows:
(a) NAI may give a notice (a "REMARKETING NOTICE") to BNPLC and
to each of the Participants no earlier than one hundred twenty days
before the Designated Sale Date and no later than ninety days before the
Designated Sale Date, specifying an amount as the Third Party Price that
NAI believes in good faith to constitute reasonably equivalent value for
the Property and any Escrowed Proceeds. Once given, a Remarketing Notice
shall not be rescinded or modified without BNPLC's written consent.
(b) If BNPLC believes in good faith that the Third Party Price
specified by NAI in a Remarketing Notice does not constitute reasonably
equivalent value for the Property and any Escrowed Proceeds, BNPLC may
at any time before sixty days prior to the Designated Sale Date respond
to the Remarketing Notice with a notice back to NAI, objecting to the
Third Party Price so specified by NAI. If BNPLC receives a Remarketing
Notice, yet does not respond with an objection as provided in the
preceding sentence, the Third Party Price suggested by NAI in the
Remarketing Notice will be the Third Party Price for purposes of this
Agreement. If, however, BNPLC does respond with an objection as provided
in this subparagraph, and if NAI and BNPLC do not otherwise agree in
writing upon a Third Party Price, then the Third Party Price will be the
lesser of (I) fair market value of the Property, plus the amount of any
Escrowed Proceeds, as determined by a professional independent appraiser
satisfactory to BNPLC, or (II) the Break Even Price.
(c) If for any reason, including an acceleration of the
Designated Sale Date as provided in the definition thereof in the Common
Definitions and Provisions Agreement (Phase V - Land), NAI does not
deliver a Remarketing Notice to BNPLC within the time period specified
above, then the Third Party Price will be an amount determined in good
faith by BNPLC as constituting reasonably equivalent value for the
Property and any Escrowed Proceeds, but in no event more than the Break
Even Price.
If any payment to BNPLC by an Applicable Purchaser hereunder is held to
constitute a preference or a voidable transfer under Applicable Law, or must for
any other reason be refunded by BNPLC to the Applicable Purchaser or to another
Person, and if such payment to BNPLC reduced or had the effect of
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7
reducing a Supplemental Payment or increased or had the effect of increasing any
excess sale proceeds paid to NAI pursuant to subparagraph 1(A)(2)(b) or pursuant
to subparagraph 2(D), then NAI shall pay to BNPLC upon demand an amount equal to
the reduction of the Supplemental Payment or to the increase of the excess sale
proceeds paid to NAI, as applicable, and this Agreement shall continue to be
effective or shall be reinstated as necessary to permit BNPLC to enforce its
right to collect such amount from NAI.
(C) Designation of the Purchaser. To give BNPLC the opportunity
before the Designated Sale Date to prepare the deed and other documents that
BNPLC must tender pursuant to Paragraph 3 (collectively, the "SALE CLOSING
DOCUMENTS"), NAI must, by a notice to BNPLC given at least seven days prior to
the Designated Sale Date, specify irrevocably, unequivocally and with
particularity the party who will purchase the Property in order to satisfy the
obligations of NAI set forth in subparagraph 1(A). If for any reason NAI fails
to so specify a party who will in accordance with the terms and conditions set
forth herein purchase the Property (be it NAI itself, an Affiliate of NAI or
another Applicable Purchaser), BNPLC shall be entitled to postpone the tender of
the Sale Closing Documents until a date after the Designated Sale Date and not
more than twenty days after NAI finally does so specify a party, but such
postponement will not relieve or postpone the obligation of NAI to make a
Supplemental Payment on the Designated Sale Date as provided in Paragraph
1(A)(2)(c).
(D) Effect of the Purchase Option and NAI's Initial Remarketing
Rights and Obligations on Subsequent Title Encumbrances. Any conveyance of the
Property to NAI or any Applicable Purchaser pursuant to this Paragraph 1(A)
shall cut off and terminate any interest in the Land or other Property claimed
by, through or under BNPLC, including any interest claimed by the Participants
and including any Liens Removable by BNPLC (such as, but not limited to, any
judgment liens established against the Property because of a judgment rendered
against BNPLC and any leasehold or other interests conveyed by BNPLC in the
ordinary course of BNPLC's business), but not including personal obligations of
NAI to BNPLC under the Land Lease or other Operative Documents (including
obligations arising under the indemnities therein). Anyone accepting or taking
any interest in the Property by or through BNPLC after the date of this
Agreement shall acquire such interest subject to the Purchase Option and NAI's
Initial Remarketing Rights and Obligations. Further, NAI and any Applicable
Purchaser shall be entitled to pay any payment required by this Agreement for
the purchase of the Property directly to BNPLC notwithstanding any prior
conveyance or assignment by BNPLC, voluntary or otherwise, of any right or
interest in this Agreement or the Property, and neither NAI nor any Applicable
Purchaser shall be responsible for the proper distribution or application of any
such payments by BNPLC; and any such payment to BNPLC shall discharge the
obligation of NAI to cause such payment to all Persons claiming an interest in
such payment. Contemporaneously with the execution of this Agreement, the
parties shall record a memorandum of this Agreement for purposes of effecting
constructive notice to all Persons of NAI's rights under this Agreement,
including its rights under this subparagraph.
(E) Security for the Purchase Option and NAI's Initial
Remarketing Rights and Obligations. To secure BNPLC's obligation to sell the
Property pursuant to Paragraph 1(A) and to pay any damages to NAI caused by a
breach of such obligations, including any such breach caused by a rejection or
termination of this Agreement in any bankruptcy or insolvency proceeding
instituted by or against BNPLC, as debtor, BNPLC does hereby grant to NAI a lien
and security interest against all rights, title and interests of BNPLC from time
to time in and to the Land and other Property. NAI may
4
8
enforce such lien and security interest judicially after any such breach by
BNPLC, but not otherwise. Contemporaneously with the execution of this
Agreement, NAI and BNPLC will execute a memorandum of this Agreement which is in
recordable form and which specifically references the lien granted in this
subparagraph, and NAI shall be entitled to record such memorandum at any time
prior to the Designated Sale Date.
(F) Delivery of Books and Records If BNPLC Retains the Property.
Unless NAI or its Affiliate or another Applicable Purchaser purchases the
Property pursuant to Paragraph 1(A), promptly after the Designated Sale Date NAI
shall deliver to BNPLC copies of books and records of NAI which will be
necessary or useful to any future owner's or occupant's use of the Property in
the manner permitted by the Land Lease.
2. NAI'S RIGHTS AND OPTIONS AFTER THE DESIGNATED SALE DATE.
(A) NAI's Extended Right to Remarket. During the two years
following the Designated Sale Date ("NAI'S EXTENDED REMARKETING PERIOD"), NAI
shall have the right ("NAI'S EXTENDED REMARKETING RIGHT") to cause an Applicable
Purchaser who is not an Affiliate of NAI to purchase the Property for a cash
purchase price not below the lesser of (I) the Minimum Extended Remarketing
Price (as defined below), or (II) if applicable, the Third Party Target Price
(as defined below) specified in any Third Party Sale Notice (as defined below)
given by BNPLC pursuant to subparagraph 2(C)(2) within the ninety days prior to
the date (the "FINAL SALE DATE") upon which BNPLC receives such purchase price
from the Applicable Purchaser. NAI's Extended Remarketing Right shall, however,
be subject to all of the following conditions:
(1) The Property and BNPLC's interest in Escrowed Proceeds, if
any, shall not have been sold on the Designated Sale Date as provided in
Paragraph 1.
(2) No Voluntary Retention of the Property shall have occurred
as described in subparagraph 1(A)(2)(a).
(3) NAI's Extended Remarketing Right shall not have been
terminated pursuant to subparagraph 4(D) below because of NAI's failure
to make any Supplemental Payment required on the Designated Sale Date.
(4) NAI's Extended Remarketing Right shall not have been
terminated by BNPLC pursuant to subparagraph 4(E) below to facilitate
BNPLC's sale of the Property to a third party in accordance with
subparagraph 2(C).
(5) At least thirty days prior to the Final Sale Date, NAI shall
have notified BNPLC of (x) the date proposed by NAI as the Final Sale
Date (which must be a Business Day), (y) the full legal name of the
Applicable Purchaser and such other information as will be required to
prepare the Sale Closing Documents, and (z) the amount of the purchase
price that the Applicable Purchaser will pay (consistent with the
minimum required pursuant to the other provisions of this subparagraph
2(A)) for the Property.
(B) Definition of Minimum Extended Remarketing Price. As used
herein, "MINIMUM EXTENDED REMARKETING PRICE" means an amount equal to the sum of
the following:
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9
(1) the amount by which the Break Even Price computed on the
Designated Sale Date exceeds any Supplemental Payment actually paid to
BNPLC on the Designated Sale Date, together with interest on such excess
computed at the Default Rate from the period commencing on the
Designated Sale Date and ending on the Final Sale Date, plus
(2) all out-of-pocket costs and expenses (including withholding
taxes [if any], other than Excluded Taxes, and Attorneys' Fees) incurred
by BNPLC in connection with the sale to the Applicable Purchaser, to the
extent not already included in the computation of Break Even Price, and
plus
(3) the sum of all Impositions, insurance premiums and other
Losses of every kind suffered or incurred by BNPLC or any other
Interested Party with respect to the ownership, operation or maintenance
of the Property on or after the Designated Sale Date (except to the
extent already reimbursed by any lessee of the Property after the
Designated Sale Date), together with interest on such Impositions,
insurance premiums and other Losses computed at the Default Rate from
the date paid or incurred to the Final Sale Date.
If, however, Losses described in the preceding clause (3) consist of claims
against BNPLC or another Interested Party that have not been liquidated prior to
the Final Sale Date (and, thus, such Losses have yet to be fixed in amount as of
the Final Sale Date), then NAI may elect to exclude any such Losses from the
computation of the Minimum Extended Remarketing Price by providing to BNPLC, for
the benefit of BNPLC and other Interested Parties, a written agreement to
indemnify and defend BNPLC and other Interested Parties against such Losses. To
be effective hereunder for purposes of reducing the Minimum Extended Remarketing
Price (and, thus, the Break Even Price), any such written indemnity must be
fully executed and delivered by NAI on or prior to the Final Sale Date, must
include provisions comparable to subparagraphs 5(c)(ii), (iii), (iv) and (v) of
the Land Lease and otherwise must be in form and substance satisfactory to
BNPLC.
(C) BNPLC's Right to Sell. After the Designated Sale Date, if the
Property has not already been sold by BNPLC pursuant to Paragraph 1 or this
Paragraph 2, BNPLC shall have the right to sell the Property or offer the
Property for sale to any third party on any terms believed to be appropriate by
BNPLC in its sole good faith business judgment; provided, however, that so long
as the conditions to NAI's Extended Remarketing Rights specified in subparagraph
2(A) continue to be satisfied:
(1) BNPLC shall not sell the Property to an Affiliate of BNPLC
on terms less favorable than those which BNPLC would require from a
prospective purchaser not an Affiliate of BNPLC;
(2) If BNPLC receives or desires to make a written proposal
(whether in the form of a "letter of intent" or other nonbinding
expression of interest or in the form of a more definitive purchase and
sale agreement) for a sale of the Property to a prospective purchaser (a
"THIRD PARTY SALE PROPOSAL"), and if on the basis of such Third Party
Sale Proposal BNPLC expects to enter into or to pursue negotiations for
a definitive purchase and sale agreement with the prospective purchaser,
then prior to executing any such definitive agreement, BNPLC shall
submit the Third Party Sale Proposal to NAI with a notice (the "THIRD
PARTY SALE NOTICE") explaining that (A) BNPLC is then prepared to accept
a price not below an amount specified in
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10
such Third Party Sale Notice (the "THIRD PARTY TARGET PRICE") if BNPLC
and the prospective purchaser reach agreement on other terms and
conditions to be incorporated into a definitive purchase and sale
agreement, and (B) NAI's Extended Remarketing Right may be terminated
pursuant to subparagraph 4(E) of this Agreement unless NAI causes an
Applicable Purchaser to consummate a purchase of the Property pursuant
to this Paragraph 2 within ninety days after the date of such Third
Party Sale Notice.
(D) NAI's Right to Excess Sales Proceeds. If the cash price
actually paid by any third party purchasing the Property from BNPLC during NAI's
Extended Remarketing Period, including any price paid by an Applicable Purchaser
purchasing from BNPLC pursuant to this Paragraph 2, exceeds the Minimum Extended
Remarketing Price, then NAI shall be entitled to the excess; provided, that
BNPLC may offset and retain from the excess any and all sums that are then due
and unpaid from NAI to BNPLC under any of the Operative Documents.
(E) Permitted Transfers During NAI's Extended Remarketing Period.
Any "Permitted Transfer" described in clause (6) of the definition thereof in
the Common Definitions and Provisions Agreement (Phase V - Land) to an Affiliate
of BNPLC or that covers BNPLC's entire interest in the Land will be subject to
NAI's Extended Remarketing Right if, at the time of the Permitted Transfer,
NAI's Extended Remarketing Right has not expired or been terminated as provided
herein. Any other Permitted Transfer described in clause (6) of the definition
thereof, however, will not be subject to NAI's Extended Remarketing Right. Thus,
for example, BNPLC's conveyance of a utility easement or space lease more than
thirty days after the Designated Sale Date to a Person not an Affiliate of BNPLC
shall not be subject to NAI's Extended Remarketing Right, though following the
conveyance of the lesser estate, NAI's Extended Remarketing Right may continue
to apply to BNPLC's remaining interest in the Land and any Personal Property.
3. TERMS OF CONVEYANCE UPON PURCHASE. As necessary to consummate any
sale of the Property to NAI or an Applicable Purchaser pursuant to this
Agreement, BNPLC must, subject to any postponement permitted by subparagraph
1(C), promptly after the tender of the purchase price and any other payments to
BNPLC required pursuant to Paragraph 1 or Paragraph 2, as applicable, convey all
of BNPLC's right, title and interest in the Land and other Property to NAI or
the Applicable Purchaser, as the case may be, by BNPLC's execution,
acknowledgment (where appropriate) and delivery of the Sale Closing Documents.
Such conveyance by BNPLC will be subject only to the Permitted Encumbrances and
any other encumbrances that do not constitute Liens Removable by BNPLC. However,
such conveyance shall not include the rights of BNPLC or other Interested
Parties under the indemnities provided in the Operative Documents, including
rights to any payments then due from NAI under the indemnities or that may
become due thereafter because of any expense or liability incurred by BNPLC or
another Interested Party resulting in whole or in part from events or
circumstances occurring or alleged to have occurred before such conveyance. All
costs, both foreseen and unforeseen, of any purchase by NAI or an Applicable
Purchaser hereunder shall be the responsibility of the purchaser. The Sale
Closing Documents used to accomplish such conveyance shall consist of the
following: (1) a Corporation Grant Deed in the form attached as Exhibit B-1 or
Exhibit B-2 or Exhibit B-4, as required by Exhibit B, (2) if required by Exhibit
B, a Ground Lease in the form attached as Exhibit B-3, which NAI or the
Applicable Purchase must execute and return to BNPLC, (3) a Bill of Sale and
Assignment in the form attached as Exhibit C, (4) an Acknowledgment of
Disclaimer of Representations and Warranties, in the form attached as Exhibit D,
which NAI or the Applicable Purchaser must execute and
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return to BNPLC, (5) a Secretary's Certificate in the form attached as Exhibit
E, and (6) a certificate concerning tax withholding in the form attached as
Exhibit F. If for any reason BNPLC fails to tender the Sale Closing Documents as
required by this Paragraph 3, BNPLC may cure such refusal at any time before
thirty days after receipt of a demand for such cure from NAI.
4. SURVIVAL AND TERMINATION OF THE RIGHTS AND OBLIGATIONS OF NAI AND
BNPLC.
(A) Status of this Agreement Generally. Except as expressly
provided herein, this Agreement shall not terminate; nor shall NAI have any
right to terminate this Agreement; nor shall NAI be entitled to any reduction of
the Break Even Price, any Deficiency, the Maximum Remarketing Obligation, any
Supplemental Payment or the Minimum Extended Remarketing Price hereunder; nor
shall the obligations of NAI to BNPLC under Paragraph 1 be affected, by reason
of (i) any damage to or the destruction of all or any part of the Property from
whatever cause (though it is understood that NAI will receive any remaining
Escrowed Proceeds yet to be applied as provided in the Land Lease that may
result from such damage if NAI purchases the Property and the Escrowed Proceeds
as herein provided), (ii) the taking of or damage to the Property or any portion
thereof by eminent domain or otherwise for any reason (though it is understood
that NAI will receive any remaining Escrowed Proceeds yet to be applied as
provided in the Land Lease that may result from such taking or damage if NAI
purchases the Property and the Escrowed Proceeds as herein provided), (iii) the
prohibition, limitation or restriction of NAI's use of all or any portion of the
Property or any interference with such use by governmental action or otherwise,
(iv) any eviction of NAI or any party claiming under NAI by paramount title or
otherwise, (v) NAI's prior acquisition or ownership of any interest in the
Property, (vi) any default on the part of BNPLC under this Agreement, the Land
Lease or any other agreement to which BNPLC is a party, or (vii) any other
cause, whether similar or dissimilar to the foregoing, any existing or future
law to the contrary notwithstanding. It is the intention of the parties hereto
that the obligations of NAI to make payment to BNPLC hereunder shall be separate
and independent covenants and agreements from BNPLC's obligations under this
Agreement or any other agreement between BNPLC and NAI; provided, however, that
nothing in this subparagraph shall excuse BNPLC from its obligation to tender
the Sale Closing Documents in substantially the form attached hereto as exhibits
when required by Paragraph 3. Further, nothing in this subparagraph shall be
construed as a waiver by NAI of any right NAI may have at law or in equity to
the following remedies, whether because of BNPLC's failure to remove a Lien
Removable by BNPLC or because of any other default by BNPLC under this
Agreement: (i) the recovery of monetary damages, (ii) injunctive relief in case
of the violation, or attempted or threatened violation, by BNPLC of any of the
express covenants, agreements, conditions or provisions of this Agreement which
are binding upon BNPLC, or (iii) a decree compelling performance by BNPLC of any
of the express covenants, agreements, conditions or provisions of this Agreement
which are binding upon BNPLC.
(B) Intentionally Deleted.
(C) Intentionally Deleted.
(D) Automatic Termination of NAI's Rights. Without limiting
BNPLC's right to enforce NAI's obligation to pay any Supplemental Payment or
other amounts required by this Agreement, the rights of NAI (to be distinguished
from the obligations of NAI) included in NAI's Initial Remarketing Rights and
Obligations, the Purchase Option and NAI's Extended Remarketing Rights shall all
terminate automatically if NAI shall fail to pay the full amount of any
Supplemental Payment
8
12
required by subparagraph 1(A)(2)(c) on the Designated Sale Date or if BNPLC
shall elect a Voluntary Retention of the Property as provided in subparagraph
1(A)(2)(a). However, notwithstanding anything in this subparagraph to the
contrary, even after a failure to pay any required Supplemental Payment on the
Designated Sale Date, NAI may nonetheless tender to BNPLC the full Break Even
Price and all amounts then due under the Operative Documents, together with
interest on the total Break Even Price computed at the Default Rate from the
Designated Sale Date to the date of tender, on any Business Day within thirty
days after the Designated Sale Date, and if presented with such a tender within
thirty days after the Designated Sale Date, BNPLC must accept it and promptly
thereafter deliver any Escrowed Proceeds and the Sale Closing Documents listed
in Paragraph 3 to NAI.
(E) Termination of NAI's Extended Remarketing Rights to Permit a
Sale by BNPLC. At any time more than ninety days after BNPLC has delivered a
Third Party Sale Notice to NAI as described in subparagraph 2(C)(2), BNPLC may
terminate NAI's Extended Remarketing Rights contemporaneously with the
consummation of a sale of the Property by BNPLC to any third party (be it the
prospective purchaser named in the Third Party Sale Notice or another third
party) at a price equal to or in excess of the Third Party Target Price
specified in the Third Party Sale Notice, so as to permit the sale of the
Property unencumbered by NAI's Extended Remarketing Rights.
(F) Payment Only to BNPLC. All amounts payable under this
Agreement by NAI and, if applicable, by an Applicable Purchaser must be paid
directly to BNPLC, and no payment to any other party shall be effective for the
purposes of this Agreement. In addition to the payments required under
subparagraph 1(A), on the Designated Sale Date NAI must pay all amounts then due
to BNPLC under the Land Lease or other Operative Documents.
(G) Remedies Under the Other Operative Documents. No repossession
of or re-entering upon the Property or exercise of any other remedies available
to BNPLC under the Land Lease or other Operative Documents shall terminate NAI's
rights or obligations hereunder, all of which shall survive BNPLC's exercise of
remedies under the other Operative Documents. NAI acknowledges that the
consideration for this Agreement is separate and independent of the
consideration for the Land Lease and the Closing Certificate, and NAI's
obligations hereunder shall not be affected or impaired by any event or
circumstance that would excuse NAI from performance of its obligations under
such other Operative Documents.
(H) Occupancy by NAI Prior to Closing of a Sale. Prior to the
closing of any sale of the Property to NAI or an Applicable Purchaser hereunder,
NAI's occupancy of the Land and its use of the Property shall continue to be
subject to the terms and conditions of the Land Lease, including the terms
setting forth NAI's obligation to pay rent, prior to any termination or
expiration of the Land Lease pursuant to its express terms and conditions.
5. SECURITY FOR NAI'S OBLIGATIONS; RETURN OF FUNDS. NAI's obligations
under this Agreement are secured by the Pledge Agreement, reference to which is
hereby made for a description of the Collateral covered thereby and the rights
and remedies provided to BNPLC thereby. Although the collateral agent appointed
for BNPLC as provided in the Pledge Agreement shall be entitled to hold all
Collateral as security for the full and faithful performance by NAI of NAI's
covenants and obligations under this Agreement, the Collateral shall not be
considered an advance payment of the Break Even Price or any Supplemental
Payment or a measure of BNPLC's damages should NAI breach this Agreement. If NAI
does breach this Agreement and fails to cure the same within any time specified
9
13
herein for the cure, BNPLC may, from time to time, without prejudice to any
other remedy and without notice to NAI, require the collateral agent to
immediately apply the proceeds of any disposition of the Collateral (and any
cash included in the Collateral) to amounts then due hereunder from NAI. If by a
Permitted Transfer BNPLC conveys its interest in the Property before the
Designated Sale Date, BNPLC may also assign BNPLC's interest in the Collateral
to the transferee. BNPLC shall be entitled to return any Collateral not sold or
used to satisfy the obligations secured by the Pledge Agreement directly to NAI
notwithstanding any prior actual or attempted conveyance or assignment by NAI,
voluntary or otherwise, of any right to receive the same; neither BNPLC nor the
collateral agent named in the Pledge Agreement shall be responsible for the
proper distribution or application by NAI of any such Collateral returned to
NAI; and any such return of Collateral to NAI shall discharge any obligation of
BNPLC to deliver such Collateral to all Persons claiming an interest in the
Collateral. Further, BNPLC shall be entitled to deliver any Escrowed Proceeds it
holds on the Designated Sale Date directly to NAI or to any Applicable Purchaser
purchasing BNPLC's interest in the Property and the Escrowed Proceeds pursuant
to this Agreement notwithstanding any prior actual or attempted conveyance or
assignment by NAI, voluntary or otherwise, of any right to receive the same;
BNPLC shall not be responsible for the proper distribution or application by NAI
or any Applicable Purchaser of any such Escrowed Proceeds paid over to NAI or
the Applicable Purchaser; and any such payment of Escrowed Proceeds to NAI or an
Applicable Purchaser shall discharge any obligation of BNPLC to deliver the same
to all Persons claiming an interest therein.
6. CERTAIN REMEDIES CUMULATIVE. No right or remedy herein conferred upon
or reserved to BNPLC is intended to be exclusive of any other right or remedy
BNPLC has with respect to the Property, and each and every right and remedy
shall be cumulative and in addition to any other right or remedy given hereunder
or now or hereafter existing at law or in equity or by statute. In addition to
other remedies available under this Agreement, either party shall be entitled,
to the extent permitted by applicable law, to a decree compelling performance of
any of the other party's agreements hereunder.
7. ATTORNEYS' FEES AND LEGAL EXPENSES. If either party to this Agreement
commences any legal action or other proceeding to enforce any of the terms of
this Agreement, or because of any breach by the other party or dispute
hereunder, the party prevailing in such action or proceeding shall be entitled
to recover from the other party all Attorneys' Fees incurred in connection
therewith, whether or not such controversy, claim or dispute is prosecuted to a
final judgment. Any such Attorneys' Fees incurred by either party in enforcing a
judgment in its favor under this Agreement shall be recoverable separately from
such judgment, and the obligation for such Attorneys' Fees is intended to be
severable from other provisions of this Agreement and not to be merged into any
such judgment.
8. ESTOPPEL CERTIFICATE. Upon request by BNPLC, NAI shall execute,
acknowledge and deliver a written statement certifying that this Agreement is
unmodified and in full effect (or, if there have been modifications, that this
Agreement is in full effect as modified, and setting forth such modification)
and either stating that no default exists hereunder or specifying each such
default of which NAI has knowledge. Any such statement may be relied upon by any
Participant or prospective purchaser or assignee of BNPLC with respect to the
Property.
9. SUCCESSORS AND ASSIGNS. The terms, provisions, covenants and
conditions hereof shall be binding upon NAI and BNPLC and their respective
permitted successors and assigns and shall inure to the benefit of NAI and BNPLC
and all permitted transferees, mortgagees, successors and assignees of NAI and
BNPLC with respect to the Property; provided, that (A) the rights of BNPLC
hereunder shall
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not pass to NAI or any Applicable Purchaser or any subsequent owner claiming
through NAI or an Applicable Purchaser, (B) BNPLC shall not assign this
Agreement or any rights hereunder except pursuant to a Permitted Transfer, and
(C) NAI shall not assign this Agreement or any rights hereunder without the
prior written consent of BNPLC.
[Signature pages follow.]
11
15
IN WITNESS WHEREOF, NAI and BNPLC have caused this Purchase Agreement
(Phase V - Land) to be executed as of March 1, 2000.
"NAI"
NETWORK APPLIANCE, INC.
By:
----------------------------------------
Jeffry R. Allen, Chief Financial Officer
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16
[Continuation of signature pages to Purchase Agreement (Phase V - Land) dated to
be effective March 1, 2000.]
"BNPLC"
BNP LEASING CORPORATION
By:
-------------------------------------
Lloyd G. Cox, Vice President
13
17
EXHIBIT A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
18
EXHIBIT B
REQUIREMENTS RE: FORM OF GRANT DEED AND GROUND LEASE
The form of deed to be used to convey BNPLC's interest in the Land to NAI or an
Applicable Purchaser will depend upon whether BNPLC's interest in the
Improvements has been or is being conveyed at the same time to the same party.
If BNPLC's interests in BOTH the Land and the Improvements are to be conveyed to
NAI or an Applicable Purchaser at the same time, because a sale under this
Purchase Agreement and a sale under the Other Purchase Agreement (covering the
Improvements) are being consummated at the same time and to the same party, then
the one deed in form attached as Exhibit B-1 will be used to convey both.
If, however, a sale of BNPLC's interest in the Improvements pursuant to the
Other Purchase Agreement has not been consummated before, and is not being
consummated contemporaneously with the sale of BNPLC's interest in the Land
under this Agreement, then BNPLC's interest in the Land will be conveyed by a
deed in the from attached as Exhibit B-2, and BNPLC and the grantee under such
deed shall, as a condition to BNPLC's obligation to deliver the deed, execute
and deliver a Ground Lease covering the Land in the form attached hereto as
Exhibit B-3.
Finally, BNPLC's interest in the Land will be conveyed by a deed in the from
attached as Exhibit B-4 if BNPLC's interest in the Improvements has been sold
pursuant to the Other Purchase Agreement before a sale of BNPLC's interest in
the Land under this Agreement, or if BNPLC's interest in the Improvements is
being sold contemporaneously with a sale of BNPLC's interest in the Land, but
the purchaser of the Improvements is not the same as the purchaser of the Land.
19
EXHIBIT B-1
CORPORATION GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
MAIL TAX STATEMENTS TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
CORPORATION GRANT DEED
(Covering Land and Improvements)
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, BNP
LEASING CORPORATION, a Delaware corporation ("Grantor"), hereby grants to [NAI
or the Applicable Purchaser] ("Grantee") all of Grantor's interest in the land
situated in Sunnyvale, California, described on Annex A attached hereto and
hereby made a part hereof and all improvements on such land, together with the
any other right, title and interest of Grantor in and to any easements,
rights-of-way, privileges and other rights appurtenant to such land or the
improvements thereon; provided, however, that this grant is subject to the
encumbrances described on Annex B (the "Permitted Encumbrances"). Grantee hereby
assumes the obligations (including any personal obligations) of Grantor, if any,
created by or under, and agrees to be bound by the terms and conditions of, the
Permitted Encumbrances to the extent that the same concern or apply to the land
or improvements conveyed by this deed.
20
BNP LEASING CORPORATION
Date: As of ___________ By ___________________________________
Its
Attest___________________________________
Its
[NAI or Applicable Purchaser]
Date: As of ___________ By ___________________________________
Its
Attest___________________________________
Its
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, , personally appeared and , personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
persons whose names are subscribed to the within instrument and acknowledged to
me that they executed the same in their authorized capacities, and that by their
signatures on the instrument the person, or the entity upon behalf of which the
persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature ___________________
EXHIBIT B-1 - PAGE 2
21
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, , personally appeared and , personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
persons whose names are subscribed to the within instrument and acknowledged to
me that they executed the same in their authorized capacities, and that by their
signatures on the instrument the person, or the entity upon behalf of which the
persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature ____________________
EXHIBIT B-1 - PAGE 3
22
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
EXHIBIT B-1 - PAGE 4
23
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY
BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW, SUCH ADDITIONAL
ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND THIS "DRAFTING NOTE" WILL BE
DELETED BEFORE THIS DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS
"PERMITTED ENCUMBRANCES" UNDER THE LAND LEASE OR THE OTHER LEASE AGREEMENT FROM
TIME TO TIME OR BECAUSE OF NAI'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL TO AN
ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the Common Definitions and Provisions
Agreement (Phase V - Land) incorporated by reference into the Lease Agreement
(Phase V - Land) referenced in the last item of the list below), including the
following matters to the extent the same are still valid and in force:
1. TAXES for the fiscal year 2000-2001, a lien not yet due or payable.
2. THE LIEN of supplemental taxes, if any, assessed pursuant to Chapter 3.5
commencing with Section 75 of the California Revenue and Taxation Code,
resulting from changes of ownership or completion of construction on or
after the date hereof.
3. EASEMENT for the purposes stated herein and incidents thereto
Purpose : 16-foot slope easement
Granted to : City of Sunnyvale, a municipal corporation of the State of California
Recorded : October 9, 1964 in Book 6695, Page 389, Official Records
Affects : Southerly 16 feet abutting Moffett Park Drive, as shown on a survey
at entitled "ALTA/ACSM Land Title Surveyed for
Network Appliance, 1260 Crossman Avenue," dated
January 21, 2000, prepared by Kier & Wright
Civil Engineers and Surveyors, Job No. 99274.
4. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Slope easement
Granted to : City of Sunnyvale, a municipal corporation of the State of California
Recorded : October 9, 1964 in Book 6695, Page 409, Official Records
Affects : Northwesterly 16 feet abutting Crossman Road, as shown on a survey
plat entitled "ALTA/ACSM Land Title Surveyed
for Network Appliance, 1260 Crossman Avenue,"
dated January 21, 2000, prepared by Kier &
Wright Civil Engineers and Surveyors, Job No.
99274.
5. EASEMENT for the purposes stated herein and incidents
thereto
Purpose : Public Utilities Easement
Granted to : City of Sunnyvale, a municipal corporation of the State of California
Recorded : October 9, 1964 in Book 6695, Page 457, Official Records
Affects : Northwesterly 7 feet abutting Crossman Road, as shown on a survey
EXHIBIT B-1 - PAGE 5
24
plat entitled "ALTA/ACSM Land Title Surveyed for Network Appliance,
1260 Crossman Avenue," dated January 21, 2000, prepared by Kier & Wright
Civil Engineers and Surveyors, Job No. 99274.
6. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utility Easement
Granted to : City of Sunnyvale, a municipal corporation of the State of California
Recorded : September 24, 1965 in Book 7116, Page 489, Official Records,
Affects : Southerly 7 feet abutting Moffett Park Drive, as shown on a survey
plat entitled "ALTA/ACSM Land Title Surveyed
for Network Appliance, 1260 Crossman Avenue,"
dated January 21, 2000, prepared by Kier &
Wright Civil Engineers and Surveyors, Job No.
99274.
7. AGREEMENT on the terms and conditions contained therein
For : Construction of Storm Drainage Facilities
Between : City of Sunnyvale
And : Moffett Park Associates, a joint venture partnership
Recorded : November 2, 1966 in Book 7552, Page 688, Official Records
An amendment to said agreement recorded in an instrument recorded April 21, 1967
in Book 7700, Page 638, Official Records.
An amendment to said agreement recorded in an instrument recorded February 23,
1968 in Book 8034, Page 631, Official Records.
Notice affecting said real property-waiver of construction credit dated
September 22, 1976 has been executed by Moffett Park Association (MPA) a joint
venture partnership, recorded September 28, 1976 in Book C307, Page 346,
Official Records.
8. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utilities Easement
Recorded : July 18, 1978 in Book 423 of Maps, at page 13
Affects : Northwesterly 9 feet, Southwesterly 15 feet from the Southernmost 9
feet of said land, as shown on a survey plat entitled "ALTA/ACSM
Land Title Surveyed for Network Appliance, 1260 Crossman
Avenue," dated January 21, 2000, prepared by Kier & Wright Civil
Engineers and Surveyors, Job No. 99274.
9. Limitations, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting any covenant,
condition or restriction indicating a preference, limitation or
discrimination based on race, color, religion, sex, handicap, familial
status, or national origin to the extent such covenants, conditions or
restrictions violate 42 U.S.C. 3604(c), contained in the document
recorded March 8, 1978 in Book D511, Page 396, Official Records.
And re-recorded December 12, 1978 in Book E157, Page 147, Official
Records.
EXHIBIT B-1 - PAGE 6
25
EXHIBIT B-2
CORPORATION GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
MAIL TAX STATEMENTS TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
CORPORATION GRANT DEED
(Covering Land but not the Improvements On the Land)
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, BNP
LEASING CORPORATION, a Delaware corporation ("Grantor"), hereby grants to [NAI
or the Applicable Purchaser] ("Grantee") all of Grantor's interest in the land
situated in Sunnyvale, California, described on Annex A attached hereto and
hereby made a part hereof (the "Land"), together with the any other right, title
and interest of Grantor in and to any easements, rights-of-way, privileges and
other rights appurtenant to the Land; provided, however, that this grant is
subject to the encumbrances described on Annex B (the "Permitted Encumbrances")
and any reservations or qualifications set forth below. Grantee hereby assumes
the obligations (including any personal obligations) of Grantor, if any, created
by or under, and agrees to be bound by the terms and conditions of, the
Permitted Encumbrances to the extent that the same concern or apply to the Land.
Although this deed conveys Grantor's interest in the Land itself, this deed does
not convey any interest in any buildings or other improvements on the Land
(collectively, "Improvements") or any rights or easements appurtenant to
Improvements. Grantor retains and reserves all right, title and interest of
Grantor in and to Improvements and any rights and easements appurtenant to
Improvements, together with a leasehold estate in and to the Land and any rights
and easements appurtenant to the Land, which leasehold estate will permit the
construction, maintenance and use of Improvements by Grantor and Grantor's
successors and assigns on and subject to the terms and conditions set forth in
the Ground Lease dated of even date herewith, executed by Grantee, as lessor,
and Grantor, as lessee. Reference is made to such Ground Lease, all the terms
and conditions of which are incorporated into this deed as if set forth herein.
26
BNP LEASING CORPORATION
Date: As of ___________ By __________________________________
Its
Attest_________________________________
Its
[NAI or Applicable Purchaser]
Date: As of ___________ By __________________________________
Its
Attest_________________________________
Its
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, , personally appeared and , personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
persons whose names are subscribed to the within instrument and acknowledged to
me that they executed the same in their authorized capacities, and that by their
signatures on the instrument the person, or the entity upon behalf of which the
persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature ____________________
EXHIBIT B-2 - PAGE 2
27
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, ___________, personally appeared
_________ and _________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ____________________
EXHIBIT B-2 - PAGE 3
28
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parce 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
EXHIBIT B-2 - PAGE 4
29
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY
BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW, SUCH ADDITIONAL
ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND THIS "DRAFTING NOTE" WILL BE
DELETED BEFORE THIS DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS
"PERMITTED ENCUMBRANCES" UNDER THE LAND LEASE OR THE OTHER LEASE AGREEMENT FROM
TIME TO TIME OR BECAUSE OF NAI'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL TO AN
ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the Common Definitions and Provisions
Agreement (Phase V - Land) incorporated by reference into the Lease Agreement
(Phase V - Land) referenced in the last item of the list below), including the
following matters to the extent the same are still valid and in force:
1. TAXES for the fiscal year 2000-2001, a lien not yet due or payable.
2. THE LIEN of supplemental taxes, if any, assessed pursuant to Chapter 3.5
commencing with Section 75 of the California Revenue and Taxation Code,
resulting from changes of ownership or completion of construction on or
after the date hereof.
3. EASEMENT for the purposes stated herein and incidents thereto
Purpose : 16-foot slope easement
Granted to : City of Sunnyvale, a municipal corporation of the State of California
Recorded : October 9, 1964 in Book 6695, Page 389, Official Records
Affects : Southerly 16 feet abutting Moffett Park Drive, as shown on a survey plat
entitled "ALTA/ACSM Land Title Surveyed for Network
Appliance, 1260 Crossman Avenue," dated January 21,
2000, prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
4. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Slope easement
Granted to : City of Sunnyvale, a municipal corporation of the State of California
Recorded : October 9, 1964 in Book 6695, Page 409, Official Records
Affects : Northwesterly 16 feet abutting Crossman Road, as shown on a survey plat
entitled "ALTA/ACSM Land Title Surveyed for Network Appliance, 1260
Crossman Avenue," dated January 21, 2000, prepared by Kier & Wright
Civil Engineers and Surveyors, Job No. 99274.
5. EASEMENT for the purposes stated herein and incidents
thereto
Purpose : Public Utilities Easement
Granted to : City of Sunnyvale, a municipal corporation of the State of California
Recorded : October 9, 1964 in Book 6695, Page 457, Official Records
EXHIBIT B-2 - PAGE 5
30
Affects : Northwesterly 7 feet abutting Crossman Road, as shown on a survey
plat entitled "ALTA/ACSM Land Title Surveyed for Network Appliance,
1260 Crossman Avenue," dated January 21, 2000, prepared by Kier &
Wright Civil Engineers and Surveyors, Job No. 99274.
6. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utility Easement
Granted to : City of Sunnyvale, a municipal corporation of the State of California
Recorded : September 24, 1965 in Book 7116, Page 489, Official Records,
Affects : Southerly 7 feet abutting Moffett Park Drive, as shown on a survey plat
entitled "ALTA/ACSM Land Title Surveyed for Network Appliance, 1260
Crossman Avenue," dated January 21, 2000, prepared by Kier & Wright
Civil Engineers and Surveyors, Job No. 99274
7. AGREEMENT on the terms and conditions contained therein
For : Construction of Storm Drainage Facilities
Between : City of Sunnyvale
And : Moffett Park Associates, a joint venture partnership
Recorded : November 2, 1966 in Book 7552, Page 688, Official Records
An amendment to said agreement recorded in an instrument
recorded April 21, 1967 in Book 7700, Page 638, Official Records.
An amendment to said agreement recorded in an instrument
recorded February 23, 1968 in Book 8034, Page 631, Official Records.
Notice affecting said real property-waiver of construction
credit dated September 22, 1976 has been executed by Moffett Park
Association (MPA) a joint venture partnership, recorded September 28,
1976 in Book C307, Page 346, Official Records.
8. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utilities Easement
Recorded : July 18, 1978 in Book 423 of Maps, at page 13
Affects : Northwesterly 9 feet, Southwesterly 15 feet from the Southernmost 9 feet
of said land, as shown on a survey plat entitled "ALTA/ACSM Land Title Surveyed for Network
Appliance, 1260 Crossman Avenue," dated January 21, 2000, prepared by Kier & Wright
Civil Engineers and Surveyors, Job No. 99274.
9. Limitations, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting any covenant,
condition or restriction indicating a preference, limitation or
discrimination based on race, color, religion, sex, handicap, familial
status, or national origin to the extent such covenants, conditions or
restrictions violate 42 U.S.C. 3604(c), contained in the document
recorded March 8, 1978 in Book D511, Page 396, Official Records.
And re-recorded December 12, 1978 in Book E157, Page 147, Official
Records.
EXHIBIT B-2 - PAGE 6
31
EXHIBIT B-3
GROUND LEASE
This GROUND LEASE (this "GROUND LEASE"), by and between BNP LEASING
CORPORATION, a Delaware corporation ("BNPLC"), whose address is 12201 Merit
Drive, Suite 860,Dallas, Texas 75251, and NAI or the Applicable Purchaser], a
___________ ("LESSOR"), whose address is ____________________, as of
____________, ____ (the "GL EFFECTIVE DATE").
RECITALS
This Ground Lease is being executed pursuant to a Purchase Agreement
(Phase V - Land) dated as of March 1, 2000 (the "PURCHASE AGREEMENT"), between
BNP Leasing Corporation and Network Appliance, Inc., covering the land described
in Annex 1 attached hereto (the "LAND"). Incorporated by reference into the
Purchase Agreement is a Common Definitions and Provisions Agreement (Phase V -
Land) dated as of the effective date of the Purchase Agreement (the "CDPA"),
between BNP Leasing Corporation and Network Appliance, Inc. The CDPA is hereby
incorporated into and made a part of this Ground Lease for all purposes.
Capitalized terms defined in the CDPA and used but not otherwise defined herein
are intended in this Ground Lease to have the respective meanings ascribed to
them in the CDPA. The provisions in Article II of the CDPA are intended to apply
to this Ground Lease as if set forth herein and as if this Ground Lease were one
of the "Operative Documents" as defined therein.
Lessor and BNPLC have reached agreement as to the terms and conditions
upon which Lessor is willing to lease the Land described in Annex 1 to BNPLC for
a term of approximately just less that 35 years, and by this Ground Lease Lessor
and BNPLC desire to evidence such agreement.
GRANTING CLAUSES
NOW, THEREFORE, in consideration of the rent to be paid and the
covenants and agreements to be performed by BNPLC, as hereinafter set forth,
Lessor does hereby LEASE, DEMISE and LET unto BNPLC for the term hereinafter set
forth the Land, together with:
1. all easements and rights-of-way now owned or hereafter
acquired by Lessor for use in connection with the Land
or as a means of access thereto; and
2. all right, title and interest of Lessor, now owned or
hereafter acquired, in and to (A) any land lying within
the right-of-way of any street, open or proposed,
adjoining the Land, (B) any and all sidewalks and alleys
adjacent to the Land and (C) any strips and gores
between the Land and any abutting land not owned by
Lessor.
The Land and all of the property described in the preceding clauses (1) and (2)
are hereinafter referred to collectively as the "REAL PROPERTY".
To the extent, but only to the extent, that assignable rights or
interests in, to or under the following have been or will be acquired by Lessor
as the owner of any interest in the Real Property, Lessor also hereby grants and
assigns to BNPLC for the term of this Ground Lease (and thereafter, if BNPLC
purchases the Real Property from Lessor pursuant to the Repurchase Option
described in
32
Paragraph 12) the right to use and enjoy (and, in the case of contract rights,
to enforce) such rights or interests of Lessor:
(a) the Permitted Encumbrances; and
(b) any general intangibles, permits, licenses, franchises,
certificates, and other rights and privileges related to the Real
Property that BNPLC (rather than Lessor) would have acquired if BNPLC
had itself acquired the fee estate in the Real Property (excluding,
however, any rights and privileges of Lessor under this Ground Lease,
any rights or privileges of Lessor under the Purchase Agreement or other
Operative Documents, and [without limiting Lessor's obligations under
subparagraphs 4(B), 6(B) or 6(C)] any rights and privileges of Lessor
under the Development Documents described in Annex 3).
Such rights and interests of Lessor, whether now existing or hereafter arising,
are hereinafter collectively called the "GL PERSONAL PROPERTY". The Real
Property and the GL Personal Property are hereinafter sometimes collectively
called the "GL PROPERTY."
Provided, however, the leasehold estate conveyed hereby and BNPLC's
rights hereunder are expressly made subject and subordinate to the Permitted
Encumbrances, including those listed on Annex 2. FURTHER, IF AND SO LONG AS THE
OTHER LEASE AGREEMENT AND THE OTHER PURCHASE AGREEMENT (BOTH AS DEFINED IN THE
CDPA) REMAIN IN FORCE, THE RIGHTS AND OBLIGATIONS OF LESSOR AND BNPLC HEREUNDER
SHALL BE SUBJECT TO ANY CONTRARY PROVISIONS THEREIN. ACCORDINGLY, BNPLC'S RIGHTS
UNDER PARAGRAPH 7 BELOW SHALL BE SUBJECT TO THE PROVISIONS GOVERNING INSURANCE
AND CONDEMNATION IN THE OTHER LEASE AGREEMENT, IF AND SO LONG AS THE OTHER LEASE
AGREEMENT REMAINS IN FORCE.
GENERAL TERMS AND CONDITIONS
The GL Property is leased by Lessor to BNPLC and is accepted and is to
be used and possessed by BNPLC upon and subject to the following terms and
conditions:
1. GROUND LEASE TERM AND EARLY TERMINATION BY BNPLC. The term of this
Ground Lease (the "GROUND LEASE TERM") shall commence on and include the GL
Effective Date and end on last Business Day prior to the thirty-fifth
anniversary of the GL Effective Date. However, subject to the prior approval of
any Leasehold Mortgagee, BNPLC shall have the right to terminate this Ground
Lease by giving a notice to Lessor stating that BNPLC unequivocally elects to
terminate effective as of a date specified in such notice, which may be any date
more than thirty days after the notice and after the expiration or termination
of the Lease pursuant to its terms.
2. NO OTHER GROUND LEASE TERMINATION. Except as expressly provided
herein, this Ground Lease shall not terminate, nor shall Lessor have any right
to terminate this Ground Lease, nor shall the obligations of Lessor under this
Ground Lease be excused, for any reason whatsoever, including any of the
following: (i) any damage to or the destruction of all or any part of the GL
Property from whatever cause, (ii) the taking of the GL Property or any portion
thereof by eminent domain or otherwise for any reason, (iii) any default on the
part of BNPLC under this Ground Lease or under any
EXHIBIT B-3 - PAGE 2
33
other agreement to which Lessor and BNPLC are parties, or (iv) any other cause
whether similar or dissimilar to the foregoing, any existing or future law to
the contrary notwithstanding. It is the intention of the parties hereto that the
obligations of Lessor hereunder shall be separate and independent of the
covenants and agreements of BNPLC. However, nothing in this Paragraph shall be
construed as a waiver by Lessor of any right Lessor may have at law or in equity
to recover monetary damages for any default under this Ground Lease by BNPLC.
3. GROUND LEASE RENT. On each anniversary of the GL Effective Date,
BNPLC shall make a payment to Lessor of rent for the then preceding year
("GROUND LEASE RENT"), in currency that at the time of payment is legal tender
for public and private debts in the United States of America. Each such payment
of Ground Lease Rent shall equal the Fair Rental Value, determined as provided
in Annex 4.
4. USE OF GL PROPERTY.
(A) Permitted Uses and Construction of Improvements. Subject to
the Permitted Encumbrances and the terms hereof, BNPLC may use and occupy the GL
Property for any purpose permitted by Applicable Laws and may construct,
maintain and use any Improvements on the Land which are permitted by Applicable
Laws.
(B) Cooperation by Lessor and its Affiliates.
(1) After the expiration or any earlier termination of the
Lease, if a use of the GL Property by BNPLC or any new Improvements or
any removal or modification of Improvements proposed by BNPLC would
violate any Permitted Encumbrance, Development Document or Applicable
Law unless Lessor or any of its Affiliates, as an owner of adjacent
property or otherwise, gave its consent or approval thereto or agreed to
join in a modification of a Permitted Encumbrance or Development
Document, then Lessor shall give and cause its Affiliates to give such
consent or approval or join in such modification.
(2) To the extent, if any, that any Permitted Encumbrance,
Development Document or Applicable Law requires the consent or approval
of Lessor or any of its Affiliates or of the City of South San Francisco
or any other Person to an assignment of this Ground Lease or a transfer
of any interest in the GL Property by BNPLC or its successors or
assigns, Lessor will without charge give and cause its Affiliates to
give such consent or approval and will cooperate in any way reasonably
requested by BNPLC to assist BNPLC to obtain such consent or approval
from the City or any other Person; provided, however, the assignment or
transfer is not then prohibited by the Lease.
(3) Lessor's obligations under this subparagraph 4(B) shall be
binding upon any successor or assign of Lessor with respect to the Land
and other properties encumbered by the Permitted Encumbrances or subject
to the Development Documents, and such obligations shall survive any
sale of Lessor's interest in the GL Property to BNPLC because of BNPLC's
exercise of the Repurchase Option (as defined in Paragraph 12).
EXHIBIT B-3 - PAGE 3
34
(C) Title to Improvements. Any and all Improvements of whatever
nature at any time constructed, placed or maintained upon any part of the Land
shall be and remain the property of BNPLC and BNPLC's sublessee's, assignees,
licensees and concessionaires, as their interests may appear; provided, any such
Improvements which remain on the Land when this Ground Lease expires or is
terminated shall become and thereupon be the property of Lessor, free and clear
of any Liens Removable by BNPLC. It is the intention of Lessor and BNPLC that
severance of fee title to the Land and the Improvements shall not change the
character of the Improvements as real property. BNPLC may at any time after
Lessor ceases to have possession of the GL Property as tenant under the Lease
and prior to the expiration or termination of this Ground Lease remove all or
any Improvements from the Land without the consent of Lessor and without any
obligation to Lessor or its Affiliates to provide compensation or to construct
other Improvements on or about the Land.
5. ASSIGNMENT AND SUBLETTING; PASS THROUGH OF BNPLC'S LIABILITY
INSURANCE AND INDEMNITY RIGHTS. BNPLC may sublet or assign this Ground Lease
without the consent of Lessor or any of its Affiliates, subject only to
limitations set forth in the Lease for the benefit of Lessor so long as those
limitations remain in force.
To the extent that BNPLC may from time to time after the expiration or
earlier termination of the Other Lease Agreement require any subtenant to agree
to maintain liability insurance against claims of third parties and agree to
make BNPLC an additional or named insured under such insurance, BNPLC shall also
require the subtenant to agree to make Lessor an additional or named insured.
However, BNPLC shall have no liability to Lessor for a breach by the subtenant
of any such agreements, and to the extent that BNPLC's rights as an additional
or named insured are subject to exceptions or limitations concerning BNPLC's own
acts or omissions or the acts or omissions of anyone other than the subtenant,
so too may Lessor's rights as an additional or named insured be subject to
exceptions or limitations concerning Lessor's own acts or omissions or the acts
or omissions of anyone other than the subtenant.
To the extent that BNPLC may itself from time to time after the
expiration or earlier termination of the Other Lease Agreement maintain
liability insurance against claims of third parties which may arise because of
any occurrence on or alleged to have occurred on or about the GL Property, BNPLC
shall cause Lessor to be an additional or named insured under such insurance,
provided Lessor pays or reimburses BNPLC for any additional insurance premium
required to have Lessor made an insured.
To the extent that BNPLC may from time to time after the expiration or
earlier termination of the Other Lease Agreement require any subtenant to agree
to indemnify BNPLC against Environmental Losses or other Losses concerning the
GL Property, BNPLC shall also require the subtenant to agree to indemnify
Lessor. However, BNPLC shall have no liability to Lessor for a breach by the
subtenant of any such agreement, and to the extent that BNPLC's rights as an
indemnitee of the subtenant are subject to exceptions or limitations concerning
BNPLC's own acts or omissions or the acts or omissions of anyone other than the
subtenant, so too may Lessor's rights as an indemnitee be subject to exceptions
or limitations concerning Lessor's own acts or omissions or the acts or
omissions of anyone other than the subtenant.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR CONCERNING THE
PROPERTY. Lessor represents, warrants and covenants as follows:
EXHIBIT B-3 - PAGE 4
35
(A) Title to the Property. This Ground Lease shall vest in BNPLC
good and marketable title to a leasehold estate in the Land, subject only to the
terms and conditions hereof, the Permitted Encumbrances, the Development
Documents and any Liens Removable by BNPLC. Lessor shall not, without the prior
consent of BNPLC, create, place or authorize, or through any act or failure to
act, acquiesce in the placing of, any deed of trust, mortgage or other Lien,
whether statutory, constitutional or contractual against or covering the GL
Property or any part thereof (other than Permitted Encumbrances and Liens
Removable by BNPLC), regardless of whether the same are expressly or otherwise
subordinate to the Operative Documents or BNPLC's interest in the Property.
(B) Modification of Permitted Encumbrances and Development
Documents. Without the prior consent of BNPLC, Lessor shall not enter into,
initiate, approve or consent to any modification of any Permitted Encumbrance or
Development Document that would create or expand or purport to create or expand
obligations or restrictions which would encumber the GL Property or any
improvements constructed thereon.
(C) Performance and Preservation of the Development Documents and
Permitted Encumbrances for the Benefit of BNPLC. Not only during the term of the
Other Lease Agreement, but thereafter throughout the term of this Ground Lease,
Lessor shall comply with and perform the obligations imposed by the Permitted
Encumbrances and the Development Documents upon Lessor or upon any owner of the
Land, and shall do whatever is required to preserve the rights and benefits
conferred or intended to be conferred by the Permitted Encumbrances and the
Development Documents, as necessary to facilitate the construction of the
Construction Project on the Land as contemplated in the Other Lease Agreement
and the use of the Improvements included in the Construction Project by BNPLC
and its successors, assigns and subtenants under this Ground Lease after the
expiration or any earlier termination of the Other Lease Agreement. Further, if
Lessor or any Affiliate of Lessor now or hereafter owns, acquires or leases land
(other than the Land) that is the subject of a Permitted Encumbrance or
Development Document, then Lessor shall, and shall cause its Affiliate to,
assume liability for and indemnify BNPLC and other Interested Parties and defend
and hold them harmless from and against all Losses (including Losses caused by
any decline in the value of the Property or of the Improvements) that they would
not have incurred or suffered but for (i) a termination of such Permitted
Encumbrance or Development Document, to which Lessor or its Affiliate agreed, or
which resulted from a breach thereof by Lessor or its Affiliate, or (ii) a
refusal of Lessor or its Affiliate to agree to any waiver or modification
requested by BNPLC of restrictions upon the Property or the transfer thereof
imposed by such Permitted Encumbrance or Development Document, or (iii) anything
done, authorized or suffered by Lessor or its Affiliate in violation of such
Permitted Encumbrance or Development Document. Lessor's obligations under this
subparagraph 6(C) shall be binding upon any successor or assign of Lessor or its
Affiliates with respect to their interest in properties subject to the
Development Documents and Permitted Encumbrances.
7. INSURANCE AND CONDEMNATION.
(A) Entitlement to Insurance and Condemnation Proceeds. All
insurance and condemnation proceeds payable with respect to any damage to or
taking of the GL Property shall be payable to and become the property of BNPLC;
provided, however, Lessor shall be entitled to receive condemnation proceeds
awarded for the value of Lessor's remainder interest in the Land exclusive of
EXHIBIT B-3 - PAGE 5
36
the Improvements. BNPLC is authorized to take all action necessary on behalf of
both BNPLC and Lessor (as lessor under this Ground Lease) to collect insurance
and condemnation proceeds.
(B) Collection of Insurance Proceeds. In the event any of the GL
Property is destroyed or damaged by fire, explosion, windstorm, hail or by any
other casualty against which insurance shall have been required hereunder, (i)
BNPLC may make proof of loss, (ii) each insurance company concerned is hereby
authorized and directed to make payment for such loss directly to BNPLC for
application as required by subparagraph 7(A), and (iii) BNPLC's consent must be
obtained for any settlement, adjustment or compromise of any claims for loss,
damage or destruction under any policy or policies of insurance.
(C) Collection of Condemnation Proceeds. All proceeds of
condemnation awards or proceeds of sale in lieu of condemnation with respect to
the GL Property and all judgments, decrees and awards for injury or damage to
the GL Property shall be paid to BNPLC and applied as provided in subparagraph
7(A) above. BNPLC is hereby authorized, in the name of Lessor, to execute and
deliver valid acquittances for, and to appeal from, any such judgment, decree or
award concerning condemnation of any of the GL Property. BNPLC shall not be, in
any event or circumstances, liable or responsible for failure to collect, or to
exercise diligence in the collection of, any such proceeds, judgments, decrees
or awards.
8. LEASEHOLD MORTGAGES.
(A) By Leasehold Mortgage BNPLC may encumber BNPLC's leasehold estate in
the GL Property created by this Ground Lease, as well as BNPLC's rights and
interests in buildings, fixtures, equipment and Improvements situated on the
Land and rents, issues, profits, revenues and other income to be derived by
BNPLC therefrom.
(B) Any Leasehold Mortgagee or other party, including any corporation
formed by a Leasehold Mortgagee, may become the legal owner of the leasehold
estate created by this Ground Lease, and of the Improvements, equipment,
fixtures and other property assigned as additional security pursuant to a
Leasehold Mortgage, by foreclosure of a Leasehold Mortgage or as a result of the
assignment or conveyance in lieu of foreclosure. Further, any such Leasehold
Mortgagee or other party may itself, after becoming the legal owner and holder
of the leasehold estate created by this Ground Lease, or of any Improvements,
equipment, fixtures and other property assigned as additional security pursuant
to a Leasehold Mortgage, convey or pledge the same without the consent of
Lessor.
(C) Lessor shall serve notice of any default by BNPLC hereunder upon any
Leasehold Mortgagee. No notice of a default by BNPLC shall be deemed effective
until it is so served. Any Leasehold Mortgagee shall have the right to correct
or cure any such default within the same period of time after receipt of such
notice as is given to BNPLC under this Ground Lease to correct or cure defaults,
plus an additional period of thirty days thereafter. Lessor will accept
performance by any Leasehold Mortgagee of any covenant, condition or agreement
on BNPLC's part to be performed hereunder with the same force and effect as
though performed by BNPLC.
(D) If this Ground Lease should terminate by reason of a disaffirmance
or rejection of this Ground Lease by BNPLC or any receiver, liquidator or
trustee for the property of
EXHIBIT B-3 - PAGE 6
37
BNPLC, or by any governmental authority which had taken possession of the
business or property of BNPLC by reason of the insolvency or alleged insolvency
of BNPLC, then:
(1) Lessor shall give notice thereof to each Leasehold
Mortgagee; and upon request of any Leasehold Mortgagee made within sixty
days after Lessor has given such notice, Lessor shall enter into a new
ground lease of the GL Property with such Leasehold Mortgagee for the
remainder of the Ground Lease Term, at the same Ground Lease Rent and on
the same terms and conditions as contained in this Ground Lease.
(2) The estate of the Leasehold Mortgagee, as lessee under the
new lease, shall have priority equal to the estate of BNPLC hereunder.
That is, there shall be no charge, lien or burden upon the GL Property
prior to or superior to the estate granted by such new lease which was
not prior to or superior to the estate of BNPLC under this Ground Lease
as of the date immediately preceding the termination of this Ground
Lease.
(3) Notwithstanding the foregoing, if Lessor shall receive
requests to enter into a new ground lease from more than one Leasehold
Mortgagee, Lessor shall be required to enter into only one new ground
lease, and the new ground lease shall be to the requesting Leasehold
Mortgagee who holds the highest priority lien or interest in BNPLC's
leasehold estate in the Land. If the liens or security interests of two
or more such requesting Leasehold Mortgagees which shared the highest
priority just prior to the termination of this Ground Lease, the new
ground lease shall name all such Leasehold Mortgagees as co-tenants
thereunder.
(E) If BNPLC has agreed with any Leasehold Mortgagee that such Leasehold
Mortgagee's consent will be required to any modification or early termination of
this Ground Lease by BNPLC, and if Lessor has been notified of such agreement,
such consent will be required.
(F) No Leasehold Mortgagee will assume any liability under this Ground
Lease either by virtue of its Leasehold Mortgage or by any subsequent receipt or
collection of rents or profits generated from the GL Property, unless and until
the Leasehold Mortgagee acquires BNPLC's leasehold estate in the GL Property at
foreclosure or by deed in lieu of foreclosure.
(G) Although the foregoing provisions concerning Leasehold Mortgages and
Leasehold Mortgagees will be self operative, Lessor agrees to include, in
addition to the items specified in Paragraph 11, confirmation of the foregoing
in any statement provided to a Leasehold Mortgagee or prospective Leasehold
Mortgagee pursuant to Paragraph 11.
9. EVENTS OF DEFAULT.
(A) Definition of Ground Lease Default. Each of the following
events shall be deemed to be a "GROUND LEASE DEFAULT" by BNPLC under this Ground
Lease:
(1) BNPLC shall fail to pay when due any installment of Ground
Lease Rent due hereunder and such failure shall continue for sixty days
after BNPLC receives notice thereof.
EXHIBIT B-3 - PAGE 7
38
(2) BNPLC shall fail to comply with any term, provision or
covenant of this Ground Lease (other than as described in the other
clauses of this subparagraph 9(A)), and shall not cure such failure
prior to the earlier of (A) ninety days after notice thereof is sent to
BNPLC, or (B) the date any writ or order is issued for the levy or sale
of any property owned by Lessor or its Affiliates (including the GL
Property) because of such failure or any criminal action is instituted
against BNPLC or any of its directors, officers or employees because of
such failure; provided, however, that so long as no such writ or order
is issued and no such criminal actions is instituted, if such failure is
susceptible of cure but cannot with reasonable diligence be cured within
such ninety day period, and if BNPLC shall promptly have commenced to
cure the same and shall thereafter prosecute the curing thereof with
reasonable diligence, the period within which such failure may be cured
shall be extended for such further period as shall be necessary for the
curing thereof with reasonable diligence.
(B) Remedy. Upon the occurrence of a Ground Lease Default which
is not cured within any applicable period expressly permitted by subparagraph
9(A), Lessor's sole and exclusive remedies shall be to sue BNPLC for the
collection of any amount due under this Ground Lease, to sue for the specific
enforcement of BNPLC's obligations hereunder, or to enjoin the continuation of
the Ground Lease Default; provided, however, no limitation of Lessor's remedies
contained herein will prevent Lessor from recovering any reasonable costs Lessor
may incur to mitigate its damages by curing a Ground Lease Default that BNPLC
has failed to cure itself (so long as the cure by Lessor is pursued in a lawful
manner and the costs Lessor seeks to recover do not exceed the actual damages to
be mitigated). Lessor may not terminate this Ground Lease or BNPLC's right to
possession under this Ground Lease. Any judgment which Lessor may obtain against
BNPLC for amounts due under this Ground Lease may be collected only through
resort of a judgement lien against BNPLC's interest in the GL Property and any
Improvements. BNPLC shall have no personal liability for the payment amounts due
under this or for the performance of any obligations of BNPLC under this Ground
Lease.
10. QUIET ENJOYMENT. Neither Lessor nor any third party lawfully
claiming any right or interest in the GL Property shall during the Ground Lease
Term disturb BNPLC's peaceable and quiet enjoyment of the GL Property; however,
such enjoyment shall be subject to the terms, provisions, covenants, agreements
and conditions of this Ground Lease and the Permitted Encumbrances, to which
this Ground Lease is subject and subordinate as herein above set forth.
11. ESTOPPEL CERTIFICATE. Lessor shall from time to time, within ten
days after receipt of request by BNPLC, deliver a statement in writing
certifying:
(A) that this Ground Lease is unmodified and in full force and
effect (or if modified that this Ground Lease as so modified is in full force
and effect);
(B) that to the knowledge of Lessor BNPLC has not previously
assigned or hypothecated its rights or interests under this Ground Lease, except
as is described in such statement with as much specificity as Lessor is able to
provide;
(C) the term of this Ground Lease and the Ground Lease Rent then
in effect and any additional charges;
EXHIBIT B-3 - PAGE 8
39
(D) that BNPLC is not in default under any provision of this
Ground Lease (or if in default, the nature thereof in detail) and a statement as
to any outstanding obligations on the part of Lessor or BNPLC; and
(E) such other matters as are reasonably requested by BNPLC.
Lessor's failure to deliver such statement within such time shall be
conclusive upon BNPLC (i) that this Ground Lease is in full force and effect,
without modification except as may be represented by BNPLC, (ii) that there are
no uncured defaults in BNPLC's performance hereunder.
12. OPTION TO REPURCHASE. Subject to the terms and conditions set forth
in Annex 5, BNPLC (and any assignee of BNPLC's entire interest in the GL
Property, but not any subtenant or assignee of a lesser interest) shall have the
option (the "REPURCHASE OPTION") to purchase Lessor's interest in the GL
Property. To secure BNPLC's right to recover any damages caused by a breach of
the Repurchase Option or other provisions of this Ground Lease by Lessor,
including any such breach caused by a rejection or termination of this Ground
Lease in any bankruptcy or insolvency proceeding instituted by or against
Lessor, as debtor, Lessor does hereby grant to BNPLC a lien and security
interest against the Land and against all rights, title and interests of Lessor
from time to time in and to the GL Property.
[The signature pages follow.]
EXHIBIT B-3 - PAGE 9
40
IN WITNESS WHEREOF, this Ground Lease is hereby executed in multiple
originals as of the date first written above.
"Lessor"
[NAI or the Applicable Purchaser]
By:
---------------------------------------
Name:
------------------------------
Title:
-----------------------------
EXHIBIT B-3 - PAGE 10
41
[Continuation of signature pages to GROUND LEASE dated as of ___________,_____.]
"BNPLC"
BNP LEASING CORPORATION
By:
---------------------------------------
Name:
------------------------------
Title:
-----------------------------
EXHIBIT B-3 - PAGE 11
42
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, _________, personally appeared
_________ and _________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ______________________
EXHIBIT B-3 - PAGE 12
43
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, _________, personally appeared
_________ and _________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ______________________
EXHIBIT B-3 - PAGE 13
44
ANNEX 1
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
All that certain real property situate in the City of Sunnyvale, State of
California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
EXHIBIT B-3 - PAGE 14
45
ANNEX 2
PERMITTED ENCUMBRANCES
The leasehold and other interests in the Land hereby conveyed by Lessor are
conveyed subject to the following matters to the extent the same are still valid
and in force:
[THE SAME LIST OF PERMITTED ENCUMBRANCES ATTACHED TO THE GRANT DEED FROM BNPLC
TO NAI OR THE APPLICABLE PURCHASER SHALL BE INSERTED HERE.]
EXHIBIT B-3 - PAGE 15
46
ANNEX 3
LIST OF DEVELOPMENT DOCUMENTS
NONE
EXHIBIT B-3 - PAGE 16
47
ANNEX 4
DETERMINATION OF FAIR RENTAL VALUE
Each annual payment of Ground Lease Rent will equal the Fair Rental
Value, computed as of the most recent Rental Determination Date when such
payment becomes due. As used in this Annex:
"FAIR RENTAL VALUE" means (and all appraisers and other persons
involved in the determination of the Fair Rental Value will be so
advised) the annual rent, as determined in accordance with this Annex,
that would be agreed upon between a willing tenant, under no compulsion
to lease, and a willing landlord, under no compulsion to lease, for
unimproved land comparable in size and location to the Land, exclusive
of any Improvements but assuming that there is no higher and better use
for such land than as a site for improvements of comparable size and
utility to the Improvements, at the time a determination is required
under hereunder and taking into consideration the condition of the Land,
the encumbrances affecting the title to the Land and all applicable
zoning, land use approvals and other governmental permits relating to
the Land at the time of such determination; and
"RENTAL DETERMINATION DATE" means the GL Effective Date and each
fifth anniversary of the GL Effective Date.
If Lessor and BNPLC have not agreed upon Fair Rental Value as of any
Rental Determination Date within one hundred eighty days after the such date,
then Fair Rental Value will be determined as follows:
(a) Lessor and BNPLC shall each appoint a real estate
appraiser who is familiar with rental values for properties in
the vicinity of the Land and who has not previously acted for
either party. Each party will make the appointment no later than
ten days after receipt of notice from the other party that the
appraisal process described in this Annex has been invoked. The
agreement of the two appraisers as to Fair Rental Value will be
binding upon Lessor and BNPLC. If the two appraisers cannot
agree upon the Fair Rental Value within ten days following their
appointment, they shall within another ten days agree upon a
third real estate appraiser. Immediately thereafter, each of the
first two appraisers will submit his best estimate of the
appropriate Fair Rental Value (together with a written report
supporting such estimate) to the third appraiser and the third
appraiser will choose between the two estimates. The estimate of
Fair Rental Value chosen by the third appraiser as the closest
to the prevailing annual fair rental value will be binding upon
Lessor and BNPLC. Notification in writing of this estimate shall
be made to Lessor and BNPLC within fifteen days following the
selection of the third appraiser.
(b) If appraisers must be selected under the procedure set
out above and either BNPLC or Lessor fails to appoint an
appraiser or fails to notify the other party of such appointment
within fifteen days after receipt of notice that the prescribed
time for appointing the appraisers has passed, then the other
party's appraiser will determine the Fair Rental Value. All
appraisers selected for the appraisal process set out in this
Annex will be
EXHIBIT B-3 - PAGE 17
48
disinterested, reputable, qualified real estate appraisers with
the designation of MAI or equivalent and with at least 5 years
experience in appraising properties comparable to the Land.
(c) If a third appraiser must be chosen under the procedure
set out above, he or she will be chosen on the basis of
objectivity and competence, not on the basis of his relationship
with the other appraisers or the parties to this Ground Lease,
and the first two appraisers will be so advised. Although the
first two appraisers will be instructed to attempt in good faith
to agree upon the third appraiser, if for any reason they cannot
agree within the prescribed time, either Lessor and BNPLC may
require the first two appraisers to immediately submit its top
choice for the third appraiser to the then highest ranking
officer of the California Bar Association who will agree to help
and who has no attorney/client or other significant relationship
to either Lessor or BNPLC. Such officer will have complete
discretion to select the most objective and competent third
appraiser from between the choices of each of the first two
appraisers, and will do so within twenty days after such choices
are submitted to him.
(d) Either Lessor or BNPLC may notify the appraiser selected
by the other party to demand the submission of an estimate of
Fair Rental Value or a choice of a third appraiser as required
under the procedure described above; and if the submission of
such an estimate or choice is required but the other party's
appraiser fails to comply with the demand within fifteen days
after receipt of such notice, then the Fair Rental Value or
choice of the third appraiser, as the case may be, selected by
the other appraiser (i.e., the notifying party's appraiser) will
be binding upon Lessor and BNPLC.
(e) Lessor and BNPLC shall each bear the expense of the
appraiser appointed by it, and the expense of the third
appraiser and of any officer of the California Bar Association
who participates in the appraisal process described above will
be shared equally by Lessor and BNPLC.
EXHIBIT B-3 - PAGE 18
49
ANNEX 5
REPURCHASE OPTION
Subject to the terms of this Annex, BNPLC shall have an option (the
"OPTION") to buy Lessor's fee interest in the GL Property at any time during the
term of this Ground Lease for a purchase price (the "OPTION PRICE") to Lessor
equal to the fair market value of the GL Property, determined as described in
the next paragraph.
For the purposes of this Annex, "fair market value" of the GL Property
means (and all appraisers and other persons involved in the determination of the
Option Price will be so advised) the price that would be agreed upon between a
willing buyer, under no compulsion to buy, and a willing seller, under no
compulsion to sell, for the Land, exclusive of any Improvements as if the Land
were unimproved, but assuming that there is no higher and better use for the
Land than as a site for the construction of improvements of comparable size and
utility to the Improvements, at the time of BNPLC's exercise of the Option and
taking into consideration the encumbrances affecting the title to the Land and
all applicable zoning, land use approvals and other governmental permits
relating to the Land at the time of the exercise of the Option.
If BNPLC exercises the Option, which BNPLC may do by notifying Lessor
that BNPLC has elected to buy Lessor's interest in the GL Property as provided
herein, then:
(a) To the extent, if any, required as a condition imposed
by law to the conveyance of the fee interest in the GL Property
to BNPLC, Lessor shall promptly at its expense do whatever is
necessary to obtain approvals of a new Parcel Map or lot line
adjustments.
(b) Upon BNPLC's tender of the Option Price to Lessor,
Lessor will convey to BNPLC by general warranty deed and
assignment, subject only to the Permitted Encumbrances, good and
marketable title to the fee estate in the Land , to Lessor's
interest in all other GL Property and, to the extent still in
force, to Lessor's Extended Remarketing Rights under the
Purchase Agreement.
(c) BNPLC's obligation to close the purchase shall be
subject to the following terms and conditions, all of which are
for the benefit of BNPLC: (1) BNPLC shall have been furnished
with evidence satisfactory to BNPLC that Lessor can convey title
as required by the preceding subparagraph; (2) nothing shall
have occurred or been discovered after BNPLC exercised the
Option that could significantly and adversely affect title to
the GL Property or BNPLC's use thereof, (3) all of the
representations of Lessor in this Ground Lease shall continue to
be true as if made effective on the date of the closing and,
with respect to any such representations which may be limited to
the knowledge of Lessor or any of Lessor's representatives,
would continue to be true on the date of the closing if all
relevant facts and circumstances were known to Lessor and such
representatives, (4) BNPLC shall find the Option Price
acceptable after it is determined as provided in this Annex, and
(5) BNPLC
EXHIBIT B-3 - PAGE 19
50
shall have been tendered the deed and other documents which are
described in this Annex as documents to be delivered to BNPLC at
the closing of BNPLC's purchase.
(d) Closing of the purchase will be scheduled on the first
Business Day following thirty days after the Option Price is
established in accordance with the terms and conditions of this
Annex and after any approvals described in subparagraph (a)
above are obtained, and prior to closing BNPLC's occupancy of
the GL Property shall continue to be subject to the terms and
conditions of this Ground Lease, including the terms setting
forth BNPLC's obligation to pay rent. Closing shall take place
at the offices of any title insurance company reasonably
selected by BNPLC to insure title under the title insurance
policy described below.
(e) Any transfer taxes or notices or registrations required
by law in connection with the sale contemplated by this Annex
will be the responsibility of Lessor.
(f) Lessor will deliver a certificate of nonforeign status
to BNPLC at closing as needed to comply with the provisions of
the Foreign Investors Real Property Tax Act (FIRPTA) or any
comparable federal, state or local law in effect at the time.
(g) Lessor will also pay for and deliver to BNPLC at the
closing an owner's title insurance policy in the full amount of
the Option Price, issued by a title insurance company designated
by BNPLC (or written confirmation from the title company that it
is then prepared to issue such a policy), and subject only to
standard printed exceptions which the title insurance company
refuses to delete or modify in a manner acceptable to BNPLC and
to Permitted Encumbrances.
(h) Lessor shall also deliver at the closing all other
documents or things reasonably required to be delivered to BNPLC
or by the title insurance company to evidence Lessor's ability
to transfer the GL Property to BNPLC.
If Lessor and BNPLC do not otherwise agree upon the amount of the Option
Price within twenty days after BNPLC exercises the Option, the Option Price
shall be determined in accordance with the following procedure:
1) Lessor and BNPLC shall each appoint a real estate
appraiser who is familiar with properties in the vicinity of
the Land and who has not previously acted for either party.
Each party will make the appointment no later than ten days
after receipt of notice from the other party that the
appraisal process described in this Annex has been invoked.
The agreement of the two appraisers as to the Option Price
will be binding upon Lessor and BNPLC. If the two appraisers
cannot agree upon the Option Price within ten days following
their appointment, they shall within another ten days agree
upon a third real estate appraiser. Immediately thereafter,
each of the first two appraisers will submit his best
estimate of the appropriate Option Price (together with a
written report supporting such estimate) to the third
appraiser and the third appraiser will choose between the
two estimates. The estimate of Option Price chosen by the
EXHIBIT B-3 - PAGE 20
51
third appraiser as the closest to the prevailing fair market
value will be binding upon Lessor and BNPLC. Notification in
writing of the Option Price shall be made to Lessor and
BNPLC within fifteen days following the selection of the
third appraiser.
2) If appraisers must be selected under the procedure
set out above and either BNPLC or Lessor fails to appoint an
appraiser or fails to notify the other party of such
appointment within fifteen days after receipt of notice that
the prescribed time for appointing the appraisers has
passed, then the other party's appraiser will determine the
Option Price. All appraisers selected for the appraisal
process set out in this Annex will be disinterested,
reputable, qualified real estate appraisers with the
designation of MAI or equivalent and with at least 5 years
experience in appraising properties comparable to the Land.
3) If a third appraiser must be chosen under the
procedure set out above, he will be chosen on the basis of
objectivity and competence, not on the basis of his
relationship with the other appraisers or the parties to
this Ground Lease, and the first two appraisers will be so
advised. Although the first two appraisers will be
instructed to attempt in good faith to agree upon the third
appraiser, if for any reason they cannot agree within the
prescribed time, either Lessor and BNPLC may require the
first two appraisers to immediately submit its top choice
for the third appraiser to the then highest ranking officer
of the California Bar Association who will agree to help and
who has no attorney/client or other significant relationship
to either Lessor or BNPLC. Such officer will have complete
discretion to select the most objective and competent third
appraiser from between the choices of each of the first two
appraisers, and will do so within ten days after such
choices are submitted to him.
4) Either Lessor or BNPLC may notify the appraiser
selected by the other party to demand the submission of an
estimate of Option Price or a choice of a third appraiser as
required under the procedure described above; and if the
submission of such an estimate or choice is required but the
other party's appraiser fails to comply with the demand
within fifteen days after receipt of such notice, then the
Option Price or choice of the third appraiser, as the case
may be, selected by the other appraiser (i.e., the notifying
party's appraiser) will be binding upon Lessor and BNPLC.
5) Lessor and BNPLC shall each bear the expense of the
appraiser appointed by it, and the expense of the third
appraiser and of any officer of the California Bar
Association who participates in the appraisal process
described above will be shared equally by Lessor and BNPLC.
EXHIBIT B-3 - PAGE 21
52
EXHIBIT C
BILL OF SALE AND ASSIGNMENT
Reference is made to: (1) that certain Purchase Agreement (Phase V -
Land) between BNP Leasing Corporation ("ASSIGNOR") and Network Appliance, Inc.,
dated as of March 1, 2000, (the "PURCHASE AGREEMENT") and (2) that certain Lease
Agreement (Phase V - Land) between Assignor, as landlord, and Network Appliance,
Inc., as tenant, dated as of March 1, 2000 (the "LAND LEASE"). (Capitalized
terms used and not otherwise defined in this document are intended to have the
meanings assigned to them in the Common Definitions and Provisions Agreement
(Phase V - Land) incorporated by reference into both the Purchase Agreement and
Land Lease.)
As contemplated by the Purchase Agreement, Assignor hereby sells,
transfers and assigns unto [NAI OR THE APPLICABLE PURCHASER, AS THE CASE MAY
BE], a _____________ ("ASSIGNEE"), all of Assignor's right, title and interest
in and to the following property, if any, to the extent such property is
assignable:
(a) the Land Lease;
(b) any pending or future award made because of any
condemnation affecting the Property or because of any conveyance
to be made in lieu thereof, and any unpaid award for damage to
the Property and any unpaid proceeds of insurance or claim or
cause of action for damage, loss or injury to the Property; and
(c) all other property included within the definition of
"Property" as set forth in the Purchase Agreement.
Provided, however, excluded from this conveyance and reserved to Assignor are
any rights or privileges of Assignor under the following ("EXCLUDED RIGHTS"):
(1) the indemnities set forth in the Land Lease, whether such rights are
presently known or unknown, including rights of the Assignor to be indemnified
against environmental claims of third parties as provided in the Land Lease
which may not presently be known, (2) provisions in the Land Lease that
establish the right of Assignor to recover any accrued unpaid rent under the
Land Lease which may be outstanding as of the date hereof, (3) agreements
between Assignor and "BNPLC's Parent" or any "Participant," both as defined in
the Land Lease, or any modification or extension thereof, or (4) any other
instrument being delivered to Assignor contemporaneously herewith pursuant to
the Purchase Agreement. To the extent that this conveyance does include any
rights to receive future payments under the Land Lease, such rights ("INCLUDED
RIGHTS") shall be subordinate to Assignor's Excluded Rights, and Assignee hereby
waives any rights to enforce Included Rights until such time as Assignor has
received all payments to which it remains entitled by reason of Excluded Rights.
If any amount shall be paid to Assignee on account of any Included Rights at any
time before Assignor has received all payments to which it is entitled because
of Excluded Rights, such amount shall be held in trust by Assignee for the
benefit of Assignor, shall be segregated from the other funds of Assignee and
shall forthwith be paid over to Assignor to be held by Assignor as collateral
for, or then or at any time thereafter applied in whole or in part by Assignor
against, the payments due to Assignor because of Excluded Rights, whether
matured or unmatured, in such order as Assignor shall elect.
53
Assignor does for itself and its successors covenant and agree to
warrant and defend the title to the property assigned herein against the just
and lawful claims and demands of any person claiming under or through a Lien
Removable by BNPLC, but not otherwise.
Assignee hereby assumes and agrees to keep, perform and fulfill
Assignor's obligations, if any, relating to any permits or contracts, under
which Assignor has rights being assigned herein.
IN WITNESS WHEREOF, the parties have executed this instrument as of
_______________, _____.
ASSIGNOR:
BNP LEASING CORPORATION, a Delaware
corporation
By:
-----------------------------------
Its:
----------------------------------
ASSIGNEE:
[NAI or the Applicable Purchaser], a
____________
By:
-----------------------------------
Its:
----------------------------------
EXHIBIT C - PAGE 2
54
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, _________, personally appeared
_________ and _________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature______________________
STATE OF ____________ )
) SS
COUNTY OF ___________ )
On ___________________ before me, _________, personally appeared
_________ and _________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ______________________
EXHIBIT C - PAGE 3
55
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DOCUMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
EXHIBIT C - PAGE 4
56
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
EXHIBIT C - PAGE 5
57
EXHIBIT D
ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
(this "CERTIFICATE") is made as of ___________________, ____, by [NAI or the
Applicable Purchaser, as the case may be], a ___________________ ("GRANTEE").
Contemporaneously with the execution of this Certificate, BNP Leasing
Corporation, a Delaware corporation ("BNPLC"), is executing and delivering to
Grantee (1) a corporate grant deed and (2) a Bill of Sale and Assignment (the
foregoing documents and any other documents to be executed in connection
therewith are herein called the "CONVEYANCING DOCUMENTS" and any of the
properties, rights or other matters assigned, transferred or conveyed pursuant
thereto are herein collectively called the "SUBJECT PROPERTY").
Notwithstanding any provision contained in the Conveyancing Documents to
the contrary, Grantee acknowledges that BNPLC makes no representations or
warranties of any nature or kind, whether statutory, express or implied, with
respect to environmental matters or the physical condition of the Subject
Property, and Grantee, by acceptance of the Conveyancing Documents, accepts the
Subject Property "AS IS," "WHERE IS," "WITH ALL FAULTS" and without any such
representation or warranty by Grantor as to environmental matters, the physical
condition of the Subject Property, compliance with subdivision or platting
requirements or construction of any improvements. Without limiting the
generality of the foregoing, Grantee hereby further acknowledges and agrees that
warranties of merchantability and fitness for a particular purpose are excluded
from the transaction contemplated by the Conveyancing Documents, as are any
warranties arising from a course of dealing or usage of trade. Grantee hereby
assumes all risk and liability (and agrees that BNPLC shall not be liable for
any special, direct, indirect, consequential, or other damages) resulting or
arising from or relating to the ownership, use, condition, location,
maintenance, repair, or operation of the Subject Property, except for damages
proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of BNPLC. As used in the
preceding sentence, "Established Misconduct" is intended to have, and be limited
to, the meaning given to it in the Common Definitions and Provisions Agreement
(Phase V - Land) incorporated by reference into the Purchase Agreement (Phase
V-Land) between BNPLC and Network Appliance, Inc. dated December ___, 1999,
pursuant to which Purchase Agreement BNPLC is delivering the Conveyancing
Documents.
The provisions of this Certificate shall be binding on Grantee, its
successors and assigns and any other party claiming through Grantee. Grantee
hereby acknowledges that BNPLC is entitled to rely and is relying on this
Certificate.
EXECUTED as of ________________, ____.
[NAI or the Applicable Purchaser],
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
58
EXHIBIT E
SECRETARY'S CERTIFICATE
The undersigned, [Secretary or Assistant Secretary] of BNP Leasing
Corporation, a Delaware corporation (the "Corporation"), hereby certifies as
follows:
1. That he is the duly, elected, qualified and acting Secretary [or
Assistant Secretary] of the Corporation and has custody of the corporate
records, minutes and corporate seal.
2. That the following named persons have been properly designated,
elected and assigned to the office in the Corporation as indicated below; that
such persons hold such office at this time and that the specimen signature
appearing beside the name of such officer is his or her true and correct
signature.
[THE FOLLOWING BLANKS MUST BE COMPLETED WITH THE NAMES AND SIGNATURES OF THE
OFFICERS WHO WILL BE SIGNING THE DEED AND OTHER SALE CLOSING DOCUMENTS ON BEHALF
OF THE CORPORATION.]
Name Title Signature
- ---- ----- ---------
- ------------------ ------------------ ------------------
- ------------------ ------------------ ------------------
3. That the resolutions attached hereto and made a part hereof were duly
adopted by the Board of Directors of the Corporation in accordance with the
Corporation's Articles of Incorporation and Bylaws. Such resolutions have not
been amended, modified or rescinded and remain in full force and effect.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Corporation on this ____ day of ________________, ____.
-------------------------------
[signature and title]
59
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Purchase Agreement (Phase V - Land)
(herein called the "Purchase Agreement") dated as of March 1, 2000, by and
between BNP Leasing Corporation (the "Corporation") and [NAI OR THE APPLICABLE
PURCHASER AS THE CASE MAY BE] ("Purchaser"), the Corporation agreed to sell and
Purchaser agreed to purchase or cause the Applicable Purchaser (as defined in
the Purchase Agreement) to purchase the Corporation's interest in the property
(the "Property") located in Sunnyvale, California more particularly described
therein.
NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Corporation, in its best business judgment, deems it in the best interest of the
Corporation and its shareholders that the Corporation convey the Property to
Purchaser or the Applicable Purchaser pursuant to and in accordance with the
terms of the Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed in the name and on behalf of the
Corporation to cause the Corporation to fulfill its obligations under the
Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed to take or cause to be taken any and
all actions and to prepare or cause to be prepared and to execute and deliver
any and all deeds and other documents, instruments and agreements that shall be
necessary, advisable or appropriate, in such officer's sole and absolute
discretion, to carry out the intent and to accomplish the purposes of the
foregoing resolutions.
EXHIBIT E - PAGE 2
60
EXHIBIT F
FIRPTA STATEMENT
Section 1445 of the Internal Revenue Code of 1986, as amended, provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person. Sections 18805, 18815 and 26131 of the
California Revenue and Taxation Code, as amended, provide that a transferee of a
California real property interest must withhold income tax if the transferor is
a nonresident seller.
To inform [NAI OR THE APPLICABLE PURCHASER] (the "Transferee") that
withholding of tax is not required upon the disposition of a California real
property interest by transferor, BNP Leasing Corporation (the "Seller"), the
undersigned hereby certifies the following on behalf of the Seller:
1. The Seller is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. The United States employer identification number for the Seller is
_____________________;
3. The office address of the Seller is _______________________________.
4. The Seller is qualified to do business in California.
The Seller understands that this certification may be disclosed to the
Internal Revenue Service and/or to the California Franchise Tax Board by the
Transferee and that any false statement contained herein could be punished by
fine, imprisonment, or both.
The Seller understands that the Transferee is relying on this affidavit
in determining whether withholding is required upon said transfer.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Seller.
Dated: ___________, ____.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
1
EXHIBIT 10.61
================================================================================
PURCHASE AGREEMENT
(PHASE V - IMPROVEMENTS)
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
NETWORK APPLIANCE, INC.
("NAI")
MARCH 1, 2000
(SUNNYVALE, CALIFORNIA)
================================================================================
2
TABLE OF CONTENTS
Page
----
1. NAI's Options and Obligations on the Designated Sale Date............................1
(A) Right to Purchase; Right and Obligation to Remarket...........................1
(B) Determinations Concerning Price...............................................3
(C) Designation of the Purchaser..................................................5
(D) Effect of the Purchase Option and NAI's Initial Remarketing Rights and
Obligations on Subsequent Title Encumbrances.........................................5
(E) Security for the Purchase Option and NAI's Initial Remarketing Rights
and Obligations......................................................................5
(F) Delivery of Books and Records If BNPLC Retains the Property...................6
2. NAI's Rights and Options After the Designated Sale Date..............................6
(A) NAI's Extended Right to Remarket..............................................6
(B) Definition of Minimum Extended Remarketing Price..............................6
(C) BNPLC's Right to Sell.........................................................7
(D) NAI's Right to Excess Sales Proceeds..........................................8
(E) Permitted Transfers During NAI's Extended Remarketing Period..................8
3. Terms of Conveyance Upon Purchase....................................................8
4. Survival and Termination of the Rights and Obligations of NAI and BNPLC..............9
(A) Status of this Agreement Generally............................................9
(B) Election by NAI to Terminate the Purchase Option and NAI's Initial
Remarketing Rights and Obligations Prior to the Base Rent Commencement
Date................................................................................10
(C) Election by BNPLC to Terminate the Purchase Option and NAI's Initial
Remarketing Rights and Obligations..................................................10
(D) Automatic Termination of NAI's Rights........................................10
i
3
(E) Termination of NAI's Extended Remarketing Rights to Permit a Sale by BNPLC .....11
(F) Payment Only to BNPLC...........................................................11
(G) Remedies Under the Other Operative Documents....................................11
(H) Occupancy by NAI Prior to Closing of a Sale.....................................11
5. SECURITY FOR NAI'S OBLIGATIONS; RETURN OF FUNDS.....................................12
6. CERTAIN REMEDIES CUMULATIVE.........................................................12
7. ATTORNEYS' FEES AND LEGAL EXPENSES..................................................12
8. ESTOPPEL CERTIFICATE................................................................13
9. SUCCESSORS AND ASSIGNS..............................................................13
Exhibits and Schedules
Exhibit A......................................................Legal Description
Exhibit B...........................................Grant Deed Form Requirements
Exhibit C............................................Bill of Sale and Assignment
Exhibit D..........................................Acknowledgment and Disclaimer
Exhibit E................................................Secretary's Certificate
Exhibit F.................................Certificate Concerning Tax Withholding
Exhibit K.................................Notice by NAI of Election to Terminate
ii
4
PURCHASE AGREEMENT
(PHASE V - IMPROVEMENTS)
This PURCHASE AGREEMENT (PHASE V - IMPROVEMENTS) (this "AGREEMENT"), by
and between BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), and
NETWORK APPLIANCE, INC., a California corporation ("NAI"), is made and dated as
of March 1, 2000, the Effective Date. ("EFFECTIVE DATE" and other capitalized
terms used and not otherwise defined in this Agreement are intended to have the
meanings assigned to them in the Common Definitions and Provisions Agreement
(Phase V - Improvements) executed by BNPLC and NAI contemporaneously with this
Agreement. By this reference, the Common Definitions and Provisions Agreement
(Phase V - Improvements) is incorporated into and made a part of this Agreement
for all purposes.)
RECITALS
Pursuant to the Existing Contract, which covers the Land described in
Exhibit A, BNPLC is acquiring the Land and any appurtenances thereto and the
existing Improvements thereon from Seller contemporaneously with the execution
of this Agreement. Pursuant to the Lease Agreement (Phase V - Improvements) (the
"IMPROVEMENTS LEASE") and the Construction Management Agreement (the
"Construction Management Agreement"), each executed by BNPLC and NAI
contemporaneously with this Agreement, BNPLC is agreeing to provide funding for
the construction and completion of Improvements on the Land, all of which will
be owned by BNPLC, and BNPLC is leasing the Improvements to NAI. (All of BNPLC's
interests, including those created by the documents delivered at the closing
under the Existing Contracts, in the Improvements and in all other real and
personal property from time to time covered by the Improvements Lease and
included within the "Property" as defined therein are hereinafter collectively
referred to as the "PROPERTY". The Property does not include the fee estate in
the Land itself, it being understood that the Other Purchase Agreement
constitutes a separate agreement providing for the possible sale of the Land and
the appurtenances thereto, and only the Land and the appurtenances thereto, from
BNPLC to NAI or a third party designated by NAI.)
NAI and BNPLC have reached agreement upon the terms and conditions upon
which NAI will purchase or arrange for the purchase of the Property, and by this
Agreement they desire to evidence such agreement.
AGREEMENTS
1. NAI'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE.
(A) Right to Purchase; Right and Obligation to Remarket. Whether
or not an Event of Default shall have occurred and be continuing or the
Improvements Lease shall have been terminated, but subject to Paragraph 4 below:
5
(1) NAI shall have the right (the "PURCHASE OPTION") to
purchase or cause an Affiliate of NAI to purchase the Property and
BNPLC's interest in Escrowed Proceeds, if any, on the Designated Sale
Date for a cash price equal to the Break Even Price (as defined below).
(2) If neither NAI nor an Affiliate of NAI purchases the
Property and BNPLC's interest in any Escrowed Proceeds on the Designated
Sale Date as provided in the preceding subparagraph 1(A)(1), then NAI
shall have the following rights and obligations (collectively, "NAI'S
INITIAL REMARKETING RIGHTS AND OBLIGATIONS"):
(a) First, NAI shall have the right (but not the
obligation) to cause an Applicable Purchaser who is not an
Affiliate of NAI to purchase the Property and BNPLC's interest
in any Escrowed Proceeds on the Designated Sale Date for a cash
purchase price (the "THIRD PARTY PRICE") determined as provided
below. If, however, the Break Even Price exceeds the sum of any
Third Party Price tendered or to be tendered to BNPLC by an
Applicable Purchaser and any Supplemental Payment paid by NAI as
described below, then BNPLC may affirmatively elect to decline
such tender from the Applicable Purchaser and to keep the
Property and any Escrowed Proceeds rather than sell to the
Applicable Purchaser pursuant to this subparagraph (a "VOLUNTARY
RETENTION OF THE PROPERTY").
(b) Second, if the Third Party Price actually
paid by an Applicable Purchaser to BNPLC on the Designated Sale
Date exceeds the Break Even Price, NAI shall be entitled to such
excess, subject, however, to BNPLC's right to offset against
such excess any and all sums that are then due from NAI to BNPLC
under the other Operative Documents.
(c) Third, if for any reason whatsoever
(including a Voluntary Retention of the Property or a decision
by NAI not to exercise its right to purchase or cause an
Applicable Purchaser to purchase from BNPLC as described above)
neither NAI nor an Applicable Purchaser pays a net cash price to
BNPLC on the Designated Sale Date equal to or in excess of the
Break Even Price in connection with a sale of the Property and
BNPLC's interest in any Escrowed Proceeds pursuant to this
Agreement, then NAI shall have the obligation to pay to BNPLC on
the Designated Sale Date a supplemental payment (the
"SUPPLEMENTAL PAYMENT") equal to the lesser of (1) the amount by
which the Break Even Price exceeds such net cash price (if any)
actually received by BNPLC on the Designated Sale Date (such
excess being hereinafter called a "DEFICIENCY") or (2) the
Maximum Remarketing Obligation. As used herein, the "MAXIMUM
REMARKETING OBLIGATION" means a dollar amount determined in
accordance with the following provisions:
1) The "MAXIMUM REMARKETING
OBLIGATION" will equal the product of (i)
Stipulated Loss Value on the Designated Sale
Date, times (ii) 100% minus the Residual Risk
Percentage, provided that both of the following
conditions are satisfied:
2
6
(x) NAI shall not have elected
to accelerate the Designated Sale Date as
provided in clause (2) of the definition of
Designated Sale Date in the Common Definitions
and Provisions Agreement (Phase V -
Improvements).
(y) No Event of Default, other than an
Issue 97-1 Non-performance-related Subjective
Event of Default, shall occur on or be
continuing on the Designated Sale Date.
2) If either of the conditions listed in
subparagraph 1) preceding are not satisfied, the
"MAXIMUM REMARKETING OBLIGATION" will equal the Break
Even Price.
If any Supplemental Payment or other amount payable to BNPLC pursuant to
this subparagraph 1(A) is not actually paid to BNPLC on the Designated
Sale Date, NAI shall pay interest on the past due amount computed at the
Default Rate from the Designated Sale Date.
(B) Determinations Concerning Price.
(1) Determination of the Break Even Price. As used
herein, "BREAK EVEN PRICE" means an amount equal, on the Designated Sale
Date, to Stipulated Loss Value, plus all out-of-pocket costs and
expenses (including appraisal costs, withholding taxes (if any) not
constituting Excluded Taxes, and Attorneys' Fees) incurred by BNPLC in
connection with any sale of BNPLC's interests in the Property under this
Agreement or in connection with collecting payments due hereunder, and
plus an amount equal to the Balance of Unpaid Construction-Period
Indemnity Payments, but less the aggregate amounts (if any) of Direct
Payments to Participants and Deposit Taker Losses. As used herein, the
"Balance of Unpaid Construction-Period Indemnity Payments" means an
amount equal to the sum of Construction-Period Indemnity Payments, if
any, that NAI declined to pay pursuant to subparagraph 5(d)(ii) of the
Improvements Lease, plus interest accruing at the Default Rate,
compounded annually, on each such payment from the date such payment
would have become due but for NAI's right to decline to pay it as
described in subparagraph 5(d)(ii) of the Improvements Lease. If,
however, Losses for which NAI has so declined to pay any
Construction-Period Indemnity Payment consist of claims against BNPLC or
another Interested Party that have not been liquidated prior to the
Designated Sale Date (and, thus, such Losses have yet to be fixed in
amount as of the Designated Sale Date), then NAI may elect to exclude
any Construction-Period Indemnity Payment attributable to such Losses by
providing to BNPLC, for the benefit of BNPLC and other Interested
Parties, a written agreement to indemnify and defend BNPLC and other
Interested Parties against such Losses. To be effective hereunder for
purposes of reducing the Balance of Unpaid Construction-Period Indemnity
Payments (and, thus, the Break Even Price), any such written indemnity
must be fully executed and delivered by NAI on or prior to the
Designated Sale Date, must include provisions comparable to
subparagraphs 5(c)(ii), (iii), (iv) and (v) of the Improvements Lease
and otherwise must be in form and substance satisfactory to BNPLC.
3
7
(2) Determination of Third Party Price. The Third Party
Price required of any Applicable Purchaser purchasing from BNPLC under
subparagraph 1(A)(2)(a) will be determined as follows:
(a) NAI may give a notice (a "REMARKETING
NOTICE") to BNPLC and to each of the Participants no earlier
than one hundred twenty days before the Designated Sale Date and
no later than ninety days before the Designated Sale Date,
specifying an amount as the Third Party Price that NAI believes
in good faith to constitute reasonably equivalent value for the
Property and any Escrowed Proceeds. Once given, a Remarketing
Notice shall not be rescinded or modified without BNPLC's
written consent.
(b) If BNPLC believes in good faith that the
Third Party Price specified by NAI in a Remarketing Notice does
not constitute reasonably equivalent value for the Property and
any Escrowed Proceeds, BNPLC may at any time before sixty days
prior to the Designated Sale Date respond to the Remarketing
Notice with a notice back to NAI, objecting to the Third Party
Price so specified by NAI. If BNPLC receives a Remarketing
Notice, yet does not respond with an objection as provided in
the preceding sentence, the Third Party Price suggested by NAI
in the Remarketing Notice will be the Third Party Price for
purposes of this Agreement. If, however, BNPLC does respond with
an objection as provided in this subparagraph, and if NAI and
BNPLC do not otherwise agree in writing upon a Third Party
Price, then the Third Party Price will be the lesser of (I) fair
market value of the Property, plus the amount of any Escrowed
Proceeds, as determined by a professional independent appraiser
satisfactory to BNPLC, or (II) the Break Even Price.
(c) If for any reason, including an acceleration
of the Designated Sale Date as provided in the definition
thereof in the Common Definitions and Provisions Agreement
(Phase V - Improvements), NAI does not deliver a Remarketing
Notice to BNPLC within the time period specified above, then the
Third Party Price will be an amount determined in good faith by
BNPLC as constituting reasonably equivalent value for the
Property and any Escrowed Proceeds, but in no event more than
the Break Even Price.
If any payment to BNPLC by an Applicable Purchaser hereunder is held to
constitute a preference or a voidable transfer under Applicable Law, or
must for any other reason be refunded by BNPLC to the Applicable
Purchaser or to another Person, and if such payment to BNPLC reduced or
had the effect of reducing a Supplemental Payment or increased or had
the effect of increasing any excess sale proceeds paid to NAI pursuant
to subparagraph 1(A)(2)(b) or pursuant to subparagraph 2(D), then NAI
shall pay to BNPLC upon demand an amount equal to the reduction of the
Supplemental Payment or to the increase of the excess sale proceeds paid
to NAI, as applicable, and this Agreement shall continue to be effective
or shall be reinstated as necessary to permit BNPLC to enforce its right
to collect such amount from NAI.
4
8
(C) Designation of the Purchaser. To give BNPLC the opportunity
before the Designated Sale Date to prepare the deed and other documents that
BNPLC must tender pursuant to Paragraph 3 (collectively, the "SALE CLOSING
DOCUMENTS"), NAI must, by a notice to BNPLC given at least seven days prior to
the Designated Sale Date, specify irrevocably, unequivocally and with
particularity the party who will purchase the Property in order to satisfy the
obligations of NAI set forth in subparagraph 1(A). If for any reason NAI fails
to so specify a party who will in accordance with the terms and conditions set
forth herein purchase the Property (be it NAI itself, an Affiliate of NAI or
another Applicable Purchaser), BNPLC shall be entitled to postpone the tender of
the Sale Closing Documents until a date after the Designated Sale Date and not
more than twenty days after NAI finally does so specify a party, but such
postponement will not relieve or postpone the obligation of NAI to make a
Supplemental Payment on the Designated Sale Date as provided in Paragraph
1(A)(2)(c).
(D) Effect of the Purchase Option and NAI's Initial Remarketing
Rights and Obligations on Subsequent Title Encumbrances. Any conveyance of the
Property to NAI or any Applicable Purchaser pursuant to this Paragraph 1(A)
shall cut off and terminate any interest in the Improvements or other Property
claimed by, through or under BNPLC, including any interest claimed by the
Participants and including any Liens Removable by BNPLC (such as, but not
limited to, any judgment liens established against the Property because of a
judgment rendered against BNPLC and any leasehold or other interests conveyed by
BNPLC in the ordinary course of BNPLC's business), but not including personal
obligations of NAI to BNPLC under the Improvements Lease or other Operative
Documents (including obligations arising under the indemnities therein). Anyone
accepting or taking any interest in the Property by or through BNPLC after the
date of this Agreement shall acquire such interest subject to the Purchase
Option and NAI's Initial Remarketing Rights and Obligations. Further, NAI and
any Applicable Purchaser shall be entitled to pay any payment required by this
Agreement for the purchase of the Property directly to BNPLC notwithstanding any
prior conveyance or assignment by BNPLC, voluntary or otherwise, of any right or
interest in this Agreement or the Property, and neither NAI nor any Applicable
Purchaser shall be responsible for the proper distribution or application of any
such payments by BNPLC; and any such payment to BNPLC shall discharge the
obligation of NAI to cause such payment to all Persons claiming an interest in
such payment. Contemporaneously with the execution of this Agreement, the
parties shall record a memorandum of this Agreement for purposes of effecting
constructive notice to all Persons of NAI's rights under this Agreement,
including its rights under this subparagraph.
(E) Security for the Purchase Option and NAI's Initial
Remarketing Rights and Obligations. To secure BNPLC's obligation to sell the
Property pursuant to Paragraph 1(A) and to pay any damages to NAI caused by a
breach of such obligations, including any such breach caused by a rejection or
termination of this Agreement in any bankruptcy or insolvency proceeding
instituted by or against BNPLC, as debtor, BNPLC does hereby grant to NAI a lien
and security interest against all rights, title and interests of BNPLC from time
to time in and to the Improvements and other Property. NAI may enforce such lien
and security interest judicially after any such breach by BNPLC, but not
otherwise. Contemporaneously with the execution of this Agreement, NAI and BNPLC
will execute a memorandum of this Agreement which is in recordable form and
which specifically references the lien granted in this subparagraph, and NAI
shall be entitled to record such memorandum at any time prior to the Designated
Sale Date.
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(F) Delivery of Books and Records If BNPLC Retains the Property.
Unless NAI or its Affiliate or another Applicable Purchaser purchases the
Property pursuant to Paragraph 1(A), promptly after the Designated Sale Date NAI
shall deliver to BNPLC copies of all plans and specifications for the Property
prepared in connection with the construction contemplated by the Construction
Management Agreement and the Improvements Lease, together with all other books
and records of NAI which will be necessary or useful to any future owner's or
occupant's use of the Property in the manner permitted by the Improvements
Lease.
2. NAI'S RIGHTS AND OPTIONS AFTER THE DESIGNATED SALE DATE.
(A) NAI's Extended Right to Remarket. During the two years
following the Designated Sale Date ("NAI'S EXTENDED REMARKETING PERIOD"), NAI
shall have the right ("NAI'S EXTENDED REMARKETING RIGHT") to cause an Applicable
Purchaser who is not an Affiliate of NAI to purchase the Property for a cash
purchase price not below the lesser of (I) the Minimum Extended Remarketing
Price (as defined below), or (II) if applicable, the Third Party Target Price
(as defined below) specified in any Third Party Sale Notice (as defined below)
given by BNPLC pursuant to subparagraph 2(C)(2) within the ninety days prior to
the date (the "FINAL SALE DATE") upon which BNPLC receives such purchase price
from the Applicable Purchaser. NAI's Extended Remarketing Right shall, however,
be subject to all of the following conditions:
(1) The Property and BNPLC's interest in Escrowed
Proceeds, if any, shall not have been sold on the Designated Sale Date
as provided in Paragraph 1.
(2) No Voluntary Retention of the Property shall have
occurred as described in subparagraph 1(A)(2)(a).
(3) NAI's Extended Remarketing Right shall not have been
terminated pursuant to subparagraph 4(D) below because of NAI's failure
to make any Supplemental Payment required on the Designated Sale Date.
(4) NAI's Extended Remarketing Right shall not have been
terminated by BNPLC pursuant to subparagraph 4(E) below to facilitate
BNPLC's sale of the Property to a third party in accordance with
subparagraph 2(C)
(5) At least thirty days prior to the Final Sale Date,
NAI shall have notified BNPLC of (x) the date proposed by NAI as the
Final Sale Date (which must be a Business Day), (y) the full legal name
of the Applicable Purchaser and such other information as will be
required to prepare the Sale Closing Documents, and (z) the amount of
the purchase price that the Applicable Purchaser will pay (consistent
with the minimum required pursuant to the other provisions of this
subparagraph 2(A)) for the Property.
(B) Definition of Minimum Extended Remarketing Price. As used
herein, "MINIMUM EXTENDED REMARKETING PRICE" means an amount equal to the sum of
the following:
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(1) the amount by which the Break Even Price computed on
the Designated Sale Date exceeds any Supplemental Payment actually paid
to BNPLC on the Designated Sale Date, together with interest on such
excess computed at the Default Rate from the period commencing on the
Designated Sale Date and ending on the Final Sale Date, plus
(2) all out-of-pocket costs and expenses (including
withholding taxes [if any], other than Excluded Taxes, and Attorneys'
Fees) incurred by BNPLC in connection with the sale to the Applicable
Purchaser, to the extent not already included in the computation of
Break Even Price, and plus
(3) the sum of all Impositions, insurance premiums and
other Losses of every kind suffered or incurred by BNPLC or any other
Interested Party with respect to the ownership, operation or maintenance
of the Property on or after the Designated Sale Date (except to the
extent already reimbursed by any lessee of the Property after the
Designated Sale Date), together with interest on such Impositions,
insurance premiums and other Losses computed at the Default Rate from
the date paid or incurred to the Final Sale Date.
If, however, Losses described in the preceding clause (3) consist of
claims against BNPLC or another Interested Party that have not been
liquidated prior to the Final Sale Date (and, thus, such Losses have yet
to be fixed in amount as of the Final Sale Date), then NAI may elect to
exclude any such Losses from the computation of the Minimum Extended
Remarketing Price by providing to BNPLC, for the benefit of BNPLC and
other Interested Parties, a written agreement to indemnify and defend
BNPLC and other Interested Parties against such Losses. To be effective
hereunder for purposes of reducing the Minimum Extended Remarketing
Price (and, thus, the Break Even Price), any such written indemnity must
be fully executed and delivered by NAI on or prior to the Final Sale
Date, must include provisions comparable to subparagraphs 5(c)(ii),
(iii), (iv) and (v) of the Improvements Lease and otherwise must be in
form and substance satisfactory to BNPLC. (C) BNPLC's Right to Sell.
After the Designated Sale Date, if the Property has not already been
sold by BNPLC pursuant to Paragraph 1 or this Paragraph 2, BNPLC shall have the
right to sell the Property or offer the Property for sale to any third party on
any terms believed to be appropriate by BNPLC in its sole good faith business
judgment; provided, however, that so long as the conditions to NAI's Extended
Remarketing Rights specified in subparagraph 2(A) continue to be satisfied:
(1) BNPLC shall not sell the Property to an Affiliate of
BNPLC on terms less favorable than those which BNPLC would require from
a prospective purchaser not an Affiliate of BNPLC;
(2) If BNPLC receives or desires to make a written
proposal (whether in the form of a "letter of intent" or other
nonbinding expression of interest or in the form of a more definitive
purchase and sale agreement) for a sale of the Property to a prospective
purchaser (a "THIRD PARTY SALE PROPOSAL"), and if on the basis of such
Third
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Party Sale Proposal BNPLC expects to enter into or to pursue
negotiations for a definitive purchase and sale agreement with the
prospective purchaser, then prior to executing any such definitive
agreement, BNPLC shall submit the Third Party Sale Proposal to NAI with
a notice (the "THIRD PARTY SALE NOTICE") explaining that (A) BNPLC is
then prepared to accept a price not below an amount specified in such
Third Party Sale Notice (the "THIRD PARTY TARGET PRICE") if BNPLC and
the prospective purchaser reach agreement on other terms and conditions
to be incorporated into a definitive purchase and sale agreement, and
(B) NAI's Extended Remarketing Right may be terminated pursuant to
subparagraph 4(E) of this Agreement unless NAI causes an Applicable
Purchaser to consummate a purchase of the Property pursuant to this
Paragraph 2 within ninety days after the date of such Third Party Sale
Notice.
(D) NAI's Right to Excess Sales Proceeds. If the cash price
actually paid by any third party purchasing the Property from BNPLC during NAI's
Extended Remarketing Period, including any price paid by an Applicable Purchaser
purchasing from BNPLC pursuant to this Paragraph 2, exceeds the Minimum Extended
Remarketing Price, then NAI shall be entitled to the excess; provided, that
BNPLC may offset and retain from the excess any and all sums that are then due
and unpaid from NAI to BNPLC under any of the Operative Documents.
(E) Permitted Transfers During NAI's Extended Remarketing
Period. Any "Permitted Transfer" described in clause (6) of the definition
thereof in the Common Definitions and Provisions Agreement (Phase V -
Improvements) to an Affiliate of BNPLC or that covers BNPLC's entire interest in
the Improvements will be subject to NAI's Extended Remarketing Right if, at the
time of the Permitted Transfer, NAI's Extended Remarketing Right has not expired
or been terminated as provided herein. Any other Permitted Transfer described in
clause (6) of the definition thereof, however, will not be subject to NAI's
Extended Remarketing Right. Thus, for example, BNPLC's conveyance of a utility
easement or space lease more than thirty days after the Designated Sale Date to
a Person not an Affiliate of BNPLC shall not be subject to NAI's Extended
Remarketing Right, though following the conveyance of the lesser estate, NAI's
Extended Remarketing Right may continue to apply to BNPLC's remaining interest
in the Improvements and any Personal Property.
3. TERMS OF CONVEYANCE UPON PURCHASE. As necessary to consummate any
sale of the Property to NAI or an Applicable Purchaser pursuant to this
Agreement, BNPLC must, subject to any postponement permitted by subparagraph
1(C), promptly after the tender of the purchase price and any other payments to
BNPLC required pursuant to Paragraph 1 or Paragraph 2, as applicable, convey all
of BNPLC's right, title and interest in the Improvements and other Property to
NAI or the Applicable Purchaser, as the case may be, by BNPLC's execution,
acknowledgment (where appropriate) and delivery of the Sale Closing Documents.
Such conveyance by BNPLC will be subject only to the Permitted Encumbrances and
any other encumbrances that do not constitute Liens Removable by BNPLC. However,
such conveyance shall not include the rights of BNPLC or other Interested
Parties under the indemnities provided in the Operative Documents, including
rights to any payments then due from NAI under the indemnities or that may
become due thereafter because of any expense or liability incurred by BNPLC or
another Interested Party resulting in whole or in part from events or
circumstances occurring or alleged to have occurred before such conveyance. All
costs, both foreseen and unforeseen, of any purchase by NAI or an Applicable
Purchaser
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hereunder shall be the responsibility of the purchaser. The Sale Closing
Documents used to accomplish such conveyance shall consist of the following: (1)
a Corporation Grant Deed in the form attached as Exhibit B-1 or Exhibit B-2 or
Exhibit B-3, as required by Exhibit B, (2) a Bill of Sale and Assignment in the
form attached as Exhibit C, (3) an Acknowledgment of Disclaimer of
Representations and Warranties, in the form attached as Exhibit D, which NAI or
the Applicable Purchaser must execute and return to BNPLC, (4) a Secretary's
Certificate in the form attached as Exhibit E, and (5) a certificate concerning
tax withholding in the form attached as Exhibit F. If for any reason BNPLC fails
to tender the Sale Closing Documents as required by this Paragraph 3, BNPLC may
cure such refusal at any time before thirty days after receipt of a demand for
such cure from NAI.
4. SURVIVAL AND TERMINATION OF THE RIGHTS AND OBLIGATIONS OF NAI AND
BNPLC
(A) Status of this Agreement Generally. Except as expressly
provided herein, this Agreement shall not terminate; nor shall NAI have any
right to terminate this Agreement; nor shall NAI be entitled to any reduction of
the Break Even Price, any Deficiency, the Maximum Remarketing Obligation, any
Supplemental Payment or the Minimum Extended Remarketing Price hereunder; nor
shall the obligations of NAI to BNPLC under Paragraph 1 be affected, by reason
of (i) any damage to or the destruction of all or any part of the Property from
whatever cause (though it is understood that NAI will receive any remaining
Escrowed Proceeds yet to be applied as provided in the Improvements Lease that
may result from such damage if NAI purchases the Property and the Escrowed
Proceeds as herein provided), (ii) the taking of or damage to the Property or
any portion thereof by eminent domain or otherwise for any reason (though it is
understood that NAI will receive any remaining Escrowed Proceeds yet to be
applied as provided in the Improvements Lease that may result from such taking
or damage if NAI purchases the Property and the Escrowed Proceeds as herein
provided), (iii) the prohibition, limitation or restriction of NAI's use of all
or any portion of the Property or any interference with such use by governmental
action or otherwise, (iv) any eviction of NAI or any party claiming under NAI by
paramount title or otherwise, (v) NAI's prior acquisition or ownership of any
interest in the Property, (vi) any default on the part of BNPLC under this
Agreement, the Improvements Lease or any other agreement to which BNPLC is a
party, or (vii) any other cause, whether similar or dissimilar to the foregoing,
any existing or future law to the contrary notwithstanding. It is the intention
of the parties hereto that the obligations of NAI to make payment to BNPLC
hereunder shall be separate and independent covenants and agreements from
BNPLC's obligations under this Agreement or any other agreement between BNPLC
and NAI; provided, however, that nothing in this subparagraph shall excuse BNPLC
from its obligation to tender the Sale Closing Documents in substantially the
form attached hereto as exhibits when required by Paragraph 3. Further, nothing
in this subparagraph shall be construed as a waiver by NAI of any right NAI may
have at law or in equity to the following remedies, whether because of BNPLC's
failure to remove a Lien Removable by BNPLC or because of any other default by
BNPLC under this Agreement: (i) the recovery of monetary damages, (ii)
injunctive relief in case of the violation, or attempted or threatened
violation, by BNPLC of any of the express covenants, agreements, conditions or
provisions of this Agreement which are binding upon BNPLC, or (iii) a decree
compelling performance by BNPLC of any of the express covenants, agreements,
conditions or provisions of this Agreement which are binding upon BNPLC.
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(B) Election by NAI to Terminate the Purchase Option and NAI's
Initial Remarketing Rights and Obligations Prior to the Base Rent Commencement
Date. At any time prior to the Base Rent Commencement Date, NAI may elect to
terminate both the Purchase Option and NAI's Initial Remarketing Rights and
Obligations, subject to the following conditions:
(1) To be effective, any such election to terminate must
be made prior to the Base Rent Commencement Date and must be made after
(x) NAI shall have given Notice of NAI's Election to Terminate pursuant
to Paragraph 5(D) of the Construction Management Agreement, (y) BNPLC
shall have given any FOCB Notice as provided in Paragraph 5(E) of the
Construction Management Agreement, or (z) BNPLC shall have given notice
of its election to accelerate the Designated Sale Date when an Event of
Default has occurred and is continuing as provided in clause (5) of the
definition "Designated Sale Date" in the Common Definitions and
Provisions Agreement (Phase V - Improvements).
(2) To be effective, any such election to terminate must
be made by giving BNPLC and the Participants a notice thereof in the
form attached as Exhibit F prior to the Base Rent Commencement Date.
(3) No termination pursuant to this subparagraph 4(B)
shall be effective, notwithstanding any notice NAI may have given as
described in the preceding clause (2), unless contemporaneously with the
giving of the notice (and in any event prior to the Base Rent
Commencement Date) NAI shall deliver to BNPLC an Issue 97-10 Prepayment.
(4) If for any reason whatsoever, including any bona
fide dispute over the amount of any required Issue 97-10 Prepayment,
BNPLC does not receive both the notice described in the preceding clause
(2) and a full Issue 97-10 Prepayment as described in the preceding
clause (3) prior to the Base Rent Commencement Date, then without any
notice or other action by the parties to this Agreement NAI shall cease
to have any option to terminate pursuant to this subparagraph 4(B).
(C) Election by BNPLC to Terminate the Purchase Option and NAI's
Initial Remarketing Rights and Obligations. By notice to NAI BNPLC shall be
entitled to terminate both the Purchase Option and NAI's Initial Remarketing
Rights and Obligations, as BNPLC deems appropriate in its sole and absolute
discretion, at any time after receiving a notice given by NAI to make or attempt
to make any Issue 97-10 Election. Upon any such termination by BNPLC, NAI shall
become immediately obligated to pay BNPLC an Issue 97-10 Prepayment.
(D) Automatic Termination of NAI's Rights. Without limiting
BNPLC's right to enforce NAI's obligation to pay any Supplemental Payment or
other amounts required by this Agreement, the rights of NAI (to be distinguished
from the obligations of NAI) included in NAI's Initial Remarketing Rights and
Obligations, the Purchase Option and NAI's Extended Remarketing Rights shall all
terminate automatically if NAI shall fail to pay the full amount of any
Supplemental Payment required by subparagraph 1(A)(2)(c) on the Designated Sale
Date or if BNPLC shall elect a Voluntary Retention of the Property as provided
in
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subparagraph 1(A)(2)(a). If, however, NAI's Initial Remarketing Rights and
Obligations are effectively terminated pursuant to subparagraph 4(B) or 4(C)
prior to the Designated Sale Date, thereby excusing NAI from the obligation to
make any Supplemental Payment pursuant to subparagraph 1(A)(2)(c) and precluding
any Voluntary Retention of the Property pursuant to subparagraph 1(A)(2)(a),
then NAI's Extended Remarketing Rights will not automatically terminate pursuant
to this subparagraph. Further, notwithstanding anything in this subparagraph to
the contrary, even after a failure to pay any required Supplemental Payment on
the Designated Sale Date, NAI may nonetheless tender to BNPLC the full Break
Even Price and all amounts then due under the Operative Documents, together with
interest on the total Break Even Price computed at the Default Rate from the
Designated Sale Date to the date of tender, on any Business Day within thirty
days after the Designated Sale Date, and if presented with such a tender within
thirty days after the Designated Sale Date, BNPLC must accept it and promptly
thereafter deliver any Escrowed Proceeds and the Sale Closing Documents listed
in Paragraph 3 to NAI.
(E) Termination of NAI's Extended Remarketing Rights to Permit a
Sale by BNPLC. At any time more than ninety days after BNPLC has delivered a
Third Party Sale Notice to NAI as described in subparagraph 2(C)(2), BNPLC may
terminate NAI's Extended Remarketing Rights contemporaneously with the
consummation of a sale of the Property by BNPLC to any third party (be it the
prospective purchaser named in the Third Party Sale Notice or another third
party) at a price equal to or in excess of the Third Party Target Price
specified in the Third Party Sale Notice, so as to permit the sale of the
Property unencumbered by NAI's Extended Remarketing Rights.
(F) Payment Only to BNPLC. All amounts payable under this
Agreement by NAI and, if applicable, by an Applicable Purchaser must be paid
directly to BNPLC, and no payment to any other party shall be effective for the
purposes of this Agreement. In addition to the payments required under
subparagraph 1(A), on the Designated Sale Date NAI must pay all amounts then due
to BNPLC under the Improvements Lease or other Operative Documents.
(G) Remedies Under the Other Operative Documents. No
repossession of or re-entering upon the Property or exercise of any other
remedies available to BNPLC under the Improvements Lease or other Operative
Documents shall terminate NAI's rights or obligations hereunder, all of which
shall survive BNPLC's exercise of remedies under the other Operative Documents.
NAI acknowledges that the consideration for this Agreement is separate and
independent of the consideration for the Improvements Lease, the Construction
Management Agreement and the Closing Certificate, and NAI's obligations
hereunder shall not be affected or impaired by any event or circumstance that
would excuse NAI from performance of its obligations under such other Operative
Documents.
(H) Occupancy by NAI Prior to Closing of a Sale. Prior to the
closing of any sale of the Property to NAI or an Applicable Purchaser hereunder,
NAI's occupancy of the Improvements and its use of the Property shall continue
to be subject to the terms and conditions of the Improvements Lease, including
the terms setting forth NAI's obligation to pay rent, prior to any termination
or expiration of the Improvements Lease pursuant to its express terms and
conditions.
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5. SECURITY FOR NAI'S OBLIGATIONS; RETURN OF FUNDS. NAI's obligations
under this Agreement are secured by the Pledge Agreement, reference to which is
hereby made for a description of the Collateral covered thereby and the rights
and remedies provided to BNPLC thereby. Although the collateral agent appointed
for BNPLC as provided in the Pledge Agreement shall be entitled to hold all
Collateral as security for the full and faithful performance by NAI of NAI's
covenants and obligations under this Agreement, the Collateral shall not be
considered an advance payment of the Break Even Price or any Supplemental
Payment or a measure of BNPLC's damages should NAI breach this Agreement. If NAI
does breach this Agreement and fails to cure the same within any time specified
herein for the cure, BNPLC may, from time to time, without prejudice to any
other remedy and without notice to NAI, require the collateral agent to
immediately apply the proceeds of any disposition of the Collateral (and any
cash included in the Collateral) to amounts then due hereunder from NAI. If by a
Permitted Transfer BNPLC conveys its interest in the Property before the
Designated Sale Date, BNPLC may also assign BNPLC's interest in the Collateral
to the transferee. BNPLC shall be entitled to return any Collateral not sold or
used to satisfy the obligations secured by the Pledge Agreement directly to NAI
notwithstanding any prior actual or attempted conveyance or assignment by NAI,
voluntary or otherwise, of any right to receive the same; neither BNPLC nor the
collateral agent named in the Pledge Agreement shall be responsible for the
proper distribution or application by NAI of any such Collateral returned to
NAI; and any such return of Collateral to NAI shall discharge any obligation of
BNPLC to deliver such Collateral to all Persons claiming an interest in the
Collateral. Further, BNPLC shall be entitled to deliver any Escrowed Proceeds it
holds on the Designated Sale Date directly to NAI or to any Applicable Purchaser
purchasing BNPLC's interest in the Property and the Escrowed Proceeds pursuant
to this Agreement notwithstanding any prior actual or attempted conveyance or
assignment by NAI, voluntary or otherwise, of any right to receive the same;
BNPLC shall not be responsible for the proper distribution or application by NAI
or any Applicable Purchaser of any such Escrowed Proceeds paid over to NAI or
the Applicable Purchaser; and any such payment of Escrowed Proceeds to NAI or an
Applicable Purchaser shall discharge any obligation of BNPLC to deliver the same
to all Persons claiming an interest therein.
6. CERTAIN REMEDIES CUMULATIVE. No right or remedy herein conferred upon
or reserved to BNPLC is intended to be exclusive of any other right or remedy
BNPLC has with respect to the Property, and each and every right and remedy
shall be cumulative and in addition to any other right or remedy given hereunder
or now or hereafter existing at law or in equity or by statute. In addition to
other remedies available under this Agreement, either party shall be entitled,
to the extent permitted by applicable law, to a decree compelling performance of
any of the other party's agreements hereunder.
7. ATTORNEYS' FEES AND LEGAL EXPENSES. If either party to this Agreement
commences any legal action or other proceeding to enforce any of the terms of
this Agreement, or because of any breach by the other party or dispute
hereunder, the party prevailing in such action or proceeding shall be entitled
to recover from the other party all Attorneys' Fees incurred in connection
therewith, whether or not such controversy, claim or dispute is prosecuted to a
final judgment. Any such Attorneys' Fees incurred by either party in enforcing a
judgment in its favor under this Agreement shall be recoverable separately from
such judgment, and the obligation for such Attorneys' Fees is intended to be
severable from other provisions of this Agreement and not to be merged into any
such judgment.
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8. ESTOPPEL CERTIFICATE. Upon request by BNPLC, NAI shall execute,
acknowledge and deliver a written statement certifying that this Agreement is
unmodified and in full effect (or, if there have been modifications, that this
Agreement is in full effect as modified, and setting forth such modification)
and either stating that no default exists hereunder or specifying each such
default of which NAI has knowledge. Any such statement may be relied upon by any
Participant or prospective purchaser or assignee of BNPLC with respect to the
Property.
9. SUCCESSORS AND ASSIGNS. The terms, provisions, covenants and
conditions hereof shall be binding upon NAI and BNPLC and their respective
permitted successors and assigns and shall inure to the benefit of NAI and BNPLC
and all permitted transferees, mortgagees, successors and assignees of NAI and
BNPLC with respect to the Property; provided, that (A) the rights of BNPLC
hereunder shall not pass to NAI or any Applicable Purchaser or any subsequent
owner claiming through NAI or an Applicable Purchaser, (B) BNPLC shall not
assign this Agreement or any rights hereunder except pursuant to a Permitted
Transfer, and (C) NAI shall not assign this Agreement or any rights hereunder
without the prior written consent of BNPLC.
[Signature pages follow.]
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IN WITNESS WHEREOF, NAI and BNPLC have caused this Purchase Agreement
(Phase V - Improvements) to be executed as of March 1, 2000.
"NAI"
NETWORK APPLIANCE, INC.
By:
---------------------------------
Jeffry R. Allen, Chief Financial
Officer
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[Continuation of signature pages to Purchase Agreement (Phase V - Improvements)
dated to be effective March 1, 2000]
"BNPLC"
BNP LEASING CORPORATION
By:
---------------------------------
Lloyd G. Cox, Vice President
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EXHIBIT A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
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EXHIBIT B
REQUIREMENTS RE: FORM OF GRANT DEED
The form of deed to be used to convey BNPLC's interest in the Improvements to
NAI or an Applicable Purchaser will depend upon whether BNPLC's interest in the
Land has been or is being conveyed at the same time to the same party.
If BNPLC's interests in BOTH the Land and the Improvements are to be conveyed to
NAI or an Applicable Purchaser at the same time, because a sale under this
Purchase Agreement and a sale under the Other Purchase Agreement (covering the
Land) are being consummated at the same time and to the same party, then the one
deed in form attached as Exhibit B-1 will be used to convey both.
If, however, BNPLC's interest in the Land pursuant to the Other Purchase
Agreement has not been consummated before, and is not being consummated
contemporaneously with, the sale of BNPLC's interest in the Improvements under
this Agreement, then BNPLC's interest in the Improvements will be conveyed by a
deed in the from attached as Exhibit B-2.
Finally, BNPLC's interest in the Improvements will be conveyed by a deed in the
from attached as Exhibit B-3 if BNPLC's interest in the Land has been sold
pursuant to the Other Purchase Agreement before a sale of BNPLC's interest in
the Improvements under this Agreement, or BNPLC's interest in the Improvements
is being sold contemporaneously with a sale of BNPLC's interest in the Land, but
the purchaser of the Improvements is not the same as the purchaser of the Land.
21
EXHIBIT B-1
CORPORATION GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS:
-------------------------
ATTN:
-------------------------
CITY:
-------------------------
STATE:
-------------------------
Zip:
-------------------------
MAIL TAX STATEMENTS TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS:
-------------------------
ATTN:
-------------------------
CITY:
-------------------------
STATE:
-------------------------
Zip:
-------------------------
CORPORATION GRANT DEED
(Covering Land and Improvements)
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
BNP LEASING CORPORATION, a Delaware corporation ("Grantor"), hereby
grants to [NAI or the Applicable Purchaser] ("Grantee") all of Grantor's
interest in the land situated in Sunnyvale, California, described on
Annex A attached hereto and hereby made a part hereof and all
improvements on such land, together with the any other right, title and
interest of Grantor in and to any easements, rights-of-way, privileges
and other rights appurtenant to such land or the improvements thereon;
provided, however, that this grant is subject to the encumbrances
described on Annex B (the "Permitted Encumbrances"). Grantee hereby
assumes the obligations (including any personal obligations) of Grantor,
if any, created by or under, and agrees to be bound by the terms and
conditions of, the Permitted Encumbrances to the extent that the same
concern or apply to the land or improvements conveyed by this deed.
22
BNP LEASING CORPORATION
Date: As of By
----------- ---------------------------------
Its
Attest
---------------------------------
Its
[NAI or Applicable Purchaser]
Date: As of By
----------- ---------------------------------
Its
Attest
---------------------------------
Its
STATE OF _____________)
) SS
COUNTY OF ____________)
On ___________________ before me, _________, personally appeared
_________ and _________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature
---------------------------
EXHIBIT B-1 - PAGE 2
23
STATE OF _____________)
) SS
COUNTY OF ____________)
On ___________________ before me, _________, personally appeared
_________ and _________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature
---------------------------
EXHIBIT B-1 - PAGE 3
24
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
EXHIBIT B-1 - PAGE 4
25
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS
REMOVABLE BY BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED
BELOW, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND
THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THIS DEED IS ACTUALLY
EXECUTED AND DELIVERED BY BNPLC. SUCH ADDITIONAL ENCUMBRANCES WOULD
INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS "PERMITTED
ENCUMBRANCES" UNDER THE LAND LEASE OR THE OTHER LEASE AGREEMENT FROM
TIME TO TIME OR BECAUSE OF NAI'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL
TO AN ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the Common Definitions and Provisions
Agreement (Phase V - Improvements) incorporated by reference into the Lease
Agreement (Phase V Improvements) referenced in the last item of the list below),
including the following matters to the extent the same are still valid and in
force:
1. TAXES for the fiscal year 2000-2001, a lien not yet due or payable.
2. THE LIEN of supplemental taxes, if any, assessed pursuant to Chapter 3.5
commencing with Section 75 of the California Revenue and Taxation Code,
resulting from changes of ownership or completion of construction on or
after the date hereof.
3. EASEMENT for the purposes stated herein and incidents thereto
Purpose : 16-foot slope easement
Granted to : City of Sunnyvale, a municipal corporation of the State of
California
Recorded : October 9, 1964 in Book 6695, Page 389, Official Records
Affects : Southerly 16 feet abutting Moffett Park Drive, as shown on
a survey plat entitled "ALTA/ACSM Land Title Surveyed
for Network Appliance, 1260 Crossman Avenue," dated
January 21, 2000, prepared by Kier & Wright Civil Engineers
and Surveyors, Job No. 99274.
4. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Slope easement
Granted to : City of Sunnyvale, a municipal corporation of the State of
California
Recorded : October 9, 1964 in Book 6695, Page 409, Official Records
Affects : Northwesterly 16 feet abutting Crossman Road, as shown on a
survey plat entitled "ALTA/ACSM Land Title Surveyed for
Network Appliance, 1260 Crossman Avenue," dated January 21,
2000, prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
5. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utilities Easement
Granted to : City of Sunnyvale, a municipal corporation of the State of
California
Recorded : October 9, 1964 in Book 6695, Page 457, Official Records
Affects : Northwesterly 7 feet abutting Crossman Road, as shown on a
survey plat entitled "ALTA/ACSM Land Title Surveyed for
Network Appliance, 1260
EXHIBIT B-1 - PAGE 5
26
Crossman Avenue," dated January 21, 2000, prepared by
Kier & Wright Civil Engineers and Surveyors, Job No. 99274.
6. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utility Easement
Granted to : City of Sunnyvale, a municipal corporation of the State of
California
Recorded : September 24, 1965 in Book 7116, Page 489, Official
Records,
Affects : Southerly 7 feet abutting Moffett Park Drive, as shown on a
survey plat entitled "ALTA/ACSM Land Title Surveyed for
Network Appliance, 1260 Crossman Avenue," dated January 21,
2000, prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
7. AGREEMENT on the terms and conditions contained therein
For : Construction of Storm Drainage Facilities
Between : City of Sunnyvale And : Moffett Park Associates, a joint
venture partnership
Recorded : November 2, 1966 in Book 7552, Page 688, Official Records
An amendment to said agreement recorded in an instrument
recorded April 21, 1967 in Book 7700, Page 638, Official
Records.
An amendment to said agreement recorded in an instrument recorded
February 23, 1968 in Book 8034, Page 631, Official Records.
Notice affecting said real property-waiver of construction credit dated
September 22, 1976 has been executed by Moffett Park Association (MPA) a
joint venture partnership, recorded September 28, 1976 in Book C307,
Page 346, Official Records.
8. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utilities Easement
Recorded : July 18, 1978 in Book 423 of Maps, at page 13
Affects : Northwesterly 9 feet, Southwesterly 15 feet from the
Southernmost 9 feet of said land, as shown on a survey plat
entitled "ALTA/ACSM Land Title Surveyed for Network
Appliance, 1260 Crossman Avenue," dated January 21, 2000,
prepared by Kier & Wright Civil Engineers and Surveyors,
Job No. 99274.
9. Limitations, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting any covenant,
condition or restriction indicating a preference, limitation or
discrimination based on race, color, religion, sex, handicap, familial
status, or national origin to the extent such covenants, conditions or
restrictions violate 42 U.S.C. 3604(c), contained in the document
recorded March 8, 1978 in Book D511, Page 396, Official Records.
And re-recorded December 12, 1978 in Book E157, Page 147, Official
Records.
EXHIBIT B-1 - PAGE 6
27
EXHIBIT B-2
CORPORATION GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS:
-------------------------
ATTN:
-------------------------
CITY:
-------------------------
STATE:
-------------------------
Zip:
-------------------------
MAIL TAX STATEMENTS TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS:
-------------------------
ATTN:
-------------------------
CITY:
-------------------------
STATE:
-------------------------
Zip:
-------------------------
CORPORATION GRANT DEED
(Covering Improvements but not the Land under the Improvements)
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, BNP
LEASING CORPORATION, a Delaware corporation ("Grantor"), hereby grants to [NAI
or the Applicable Purchaser] ("Grantee") all of Grantor's interest in the
buildings and other improvements (the "Improvements") on the land situated in
Sunnyvale, California, described on Annex A attached hereto and hereby made a
part hereof (the "Land"), together with the any other right, title and interest
of Grantor in and to any easements, rights-of-way, privileges and other rights
appurtenant to the Improvements; provided, however, that this grant is subject
to the encumbrances described on Annex B (the "Permitted Encumbrances") and any
reservations or qualifications set forth below. Grantee hereby assumes the
obligations (including any personal obligations) of Grantor, if any, created by
or under, and agrees to be bound by the terms and conditions of, the Permitted
Encumbrances to the extent that the same concern or apply to the Improvements.
Although this deed conveys Grantor's interest in the Improvements, this deed
does not convey any interest in the Land under the Improvements or any rights or
easements appurtenant to Land. Grantor retains and reserves all right, title and
interest of Grantor in and to the Land and any rights and easements appurtenant
to Land. Further, this deed does not convey any right of access over or right to
use the Land, it being understood that the right of Grantee or its successors
and assigns to maintain or
28
use the improvements conveyed hereby shall be on and subject to the terms and
conditions of any separate ground lease or deed that Grantee may from time to
time obtain from the owner of the Land. If Grantee does not obtain a separate
deed or ground lease giving Grantee the authority to maintain the Improvements
on the Land, Grantee shall remove or abandon the Improvements promptly upon
request of the owner of the Land. Nothing herein or in the agreements pursuant
to which this deed is being delivered shall be construed as an obligation on the
part of Grantor to deliver or cooperate reasonably in obtaining for Grantee any
deed or ground lease covering the Land described on Annex A.
EXHIBIT B2 - PAGE 2
29
BNP LEASING CORPORATION
Date: As of By
----------- ---------------------------------
Its
Attest
---------------------------------
Its
[NAI or Applicable Purchaser]
Date: As of By
----------- ---------------------------------
Its
Attest
---------------------------------
Its
STATE OF _____________)
) SS
COUNTY OF ____________)
On ___________________ before me, _________, personally appeared
_________ and _________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature
---------------------------------
EXHIBIT B2 - PAGE 3
30
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
Legal Description
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
EXHIBIT B2 - PAGE 4
31
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS
REMOVABLE BY BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED
BELOW, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND
THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THIS DEED IS ACTUALLY
EXECUTED AND DELIVERED BY BNPLC. SUCH ADDITIONAL ENCUMBRANCES WOULD
INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS "PERMITTED
ENCUMBRANCES" UNDER THE LAND LEASE OR THE OTHER LEASE AGREEMENT FROM
TIME TO TIME OR BECAUSE OF NAI'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL
TO AN ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the Common Definitions and Provisions
Agreement (Phase V - Improvements) incorporated by reference into the Lease
Agreement (Phase V Improvements referenced in the last item of the list below),
including the following matters to the extent the same are still valid and in
force:
1. TAXES for the fiscal year 2000-2001, a lien not yet due or payable.
2. THE LIEN of supplemental taxes, if any, assessed pursuant to Chapter 3.5
commencing with Section 75 of the California Revenue and Taxation Code,
resulting from changes of ownership or completion of construction on or
after the date hereof.
3. EASEMENT for the purposes stated herein and incidents thereto
Purpose : 16-foot slope easement
Granted to : City of Sunnyvale, a municipal corporation of the
State of California
Recorded : October 9, 1964 in Book 6695, Page 389, Official Records
Affects : Southerly 16 feet abutting Moffett Park Drive, as shown
on a survey plat entitled "ALTA/ACSM Land Title Surveyed
for Network Appliance, 1260 Crossman Avenue," dated January
21, 2000, prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
4. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Slope easement
Granted to : City of Sunnyvale, a municipal corporation of the
State of California
Recorded : October 9, 1964 in Book 6695, Page 409, Official Records
Affects : Northwesterly 16 feet abutting Crossman Road, as shown on
a survey plat entitled "ALTA/ACSM Land Title Surveyed for
Network Appliance, 1260 Crossman Avenue," dated January 21,
2000, prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
5. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utilities Easement
Granted to : City of Sunnyvale, a municipal corporation of the
State of California
Recorded : October 9, 1964 in Book 6695, Page 457, Official Records
Affects : Northwesterly 7 feet abutting Crossman Road, as shown on
a survey plat entitled "ALTA/ACSM Land Title Surveyed for
Network Appliance,
EXHIBIT B2 - PAGE 5
32
1260 Crossman Avenue," dated January 21, 2000, prepared
by Kier & Wright Civil Engineers and Surveyors, Job No.
99274.
6. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utility Easement
Granted to : City of Sunnyvale, a municipal corporation of the
State of California
Recorded : September 24, 1965 in Book 7116, Page 489, Official
Records,
Affects : Southerly 7 feet abutting Moffett Park Drive, as shown on
a survey plat entitled "ALTA/ACSM Land Title Surveyed for
Network Appliance, 1260 Crossman Avenue," dated January 21,
2000, prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
7. AGREEMENT on the terms and conditions contained therein
For : Construction of Storm Drainage Facilities
Between : City of Sunnyvale
And : Moffett Park Associates, a joint venture partnership
Recorded : November 2, 1966 in Book 7552, Page 688, Official Records
An amendment to said agreement recorded in an instrument recorded April
21, 1967 in Book 7700, Page 638, Official Records.
An amendment to said agreement recorded in an instrument recorded
February 23, 1968 in Book 8034, Page 631, Official Records.
Notice affecting said real property-waiver of construction credit dated
September 22, 1976 has been executed by Moffett Park Association (MPA) a
joint venture partnership, recorded September 28, 1976 in Book C307,
Page 346, Official Records.
EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utilities Easement
Recorded : July 18, 1978 in Book 423 of Maps, at page 13
Affects : Northwesterly 9 feet, Southwesterly 15 feet from the
Southernmost 9 feet of said land, as shown on a survey plat
entitled "ALTA/ACSM Land Title Surveyed for Network
Appliance, 1260 Crossman Avenue," dated January 21, 2000,
prepared by Kier & Wright Civil Engineers and Surveyors,
Job No. 99274.
8. Limitations, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting any covenant,
condition or restriction indicating a preference, limitation or
discrimination based on race, color, religion, sex, handicap, familial
status, or national origin to the extent such covenants, conditions or
restrictions violate 42 U.S.C. 3604(c), contained in the document
recorded March 8, 1978 in Book D511, Page 396, Official Records.
And re-recorded December 12, 1978 in Book E157, Page 147, Official
Records.
EXHIBIT B2 - PAGE 6
33
EXHIBIT B-3
CORPORATION GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS:
-------------------------
ATTN:
-------------------------
CITY:
-------------------------
STATE:
-------------------------
Zip:
-------------------------
MAIL TAX STATEMENTS TO:
NAME: [NAI or the Applicable Purchaser]
ADDRESS:
-------------------------
ATTN:
-------------------------
CITY:
-------------------------
STATE:
-------------------------
Zip:
-------------------------
CORPORATION GRANT DEED
(Covering Improvements but not Land under the Improvements)
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, BNP
LEASING CORPORATION, a Delaware corporation ("Grantor"), hereby grants to [NAI
or the Applicable Purchaser] ("Grantee") all of Grantor's interest in the
buildings and other improvements (the "Improvements") on the land situated in
Sunnyvale, California, described on Annex A attached hereto and hereby made a
part hereof (the "Land"), together with the any other right, title and interest
of Grantor in and to any easements, rights-of-way, privileges and other rights
appurtenant to the Improvements; provided, however, that this grant is subject
to the encumbrances described on Annex B (the "Permitted Encumbrances") and any
reservations or qualifications set forth below. Grantee hereby assumes the
obligations (including any personal obligations) of Grantor, if any, created by
or under, and agrees to be bound by the terms and conditions of, the Permitted
Encumbrances to the extent that the same concern or apply to the Improvements.
Although this deed conveys Grantor's interest in the Improvements on the Land,
this deed does not convey any interest in the Land itself or any rights or
easements appurtenant to Land. Prior to or contemporaneously with the delivery
of this deed, Grantor has conveyed or is conveying the Land and appurtenant
rights and easements to another party, subject to the terms and conditions of a
Ground Lease dated ________, filed or to be filed for record in the Santa Clara
County records. Grantor is assigning it's rights as lessee under the Ground
Lease to Grantee by a separate instrument dated of even date herewith.
34
BNP LEASING CORPORATION
Date: As of By
----------- ---------------------------------
Its
Attest
---------------------------------
Its
[NAI or Applicable Purchaser]
Date: As of By
----------- ---------------------------------
Its
Attest
---------------------------------
Its
STATE OF _____________)
) SS
COUNTY OF ____________)
On ___________________ before me, _________, personally appeared
_________ and _________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature
---------------------------------
EXHIBIT B3 - PAGE 2
35
STATE OF _____________)
) SS
COUNTY OF ____________)
On ___________________ before me, _________, personally appeared
_________ and _________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature
---------------------------------
EXHIBIT B3 - PAGE 3
36
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE LAND LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.] Legal Description
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
EXHIBIT B3 - PAGE 4
37
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS
REMOVABLE BY BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED
BELOW, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND
THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THIS DEED IS ACTUALLY
EXECUTED AND DELIVERED BY BNPLC. SUCH ADDITIONAL ENCUMBRANCES WOULD
INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS "PERMITTED
ENCUMBRANCES" UNDER THE LAND LEASE OR THE OTHER LEASE AGREEMENT FROM
TIME TO TIME OR BECAUSE OF NAI'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL
TO AN ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a "Lien
Removable by BNPLC" (as defined in the Common Definitions and Provisions
Agreement (Phase V - Improvements) incorporated by reference into the Lease
Agreement (Phase V Improvements referenced in the last item of the list below),
including the following matters to the extent the same are still valid and in
force:
1. TAXES for the fiscal year 2000-2001, a lien not yet due or payable.
2. THE LIEN of supplemental taxes, if any, assessed pursuant to Chapter 3.5
commencing with Section 75 of the California Revenue and Taxation Code,
resulting from changes of ownership or completion of construction on or
after the date hereof.
3. EASEMENT for the purposes stated herein and incidents thereto
Purpose : 16-foot slope easement
Granted to : City of Sunnyvale, a municipal corporation of the
State of California
Recorded : October 9, 1964 in Book 6695, Page 389, Official Records
Affects : Southerly 16 feet abutting Moffett Park Drive, as shown
on a survey plat entitled "ALTA/ACSM Land Title Surveyed
for Network Appliance, 1260 Crossman Avenue," dated January
21, 2000, prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
4. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Slope easement
Granted to : City of Sunnyvale, a municipal corporation of the
State of California
Recorded : October 9, 1964 in Book 6695, Page 409, Official Records
Affects : Northwesterly 16 feet abutting Crossman Road, as shown on
a survey plat entitled "ALTA/ACSM Land Title Surveyed for
Network Appliance, 1260 Crossman Avenue," dated January 21,
2000, prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
5. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utilities Easement
Granted to : City of Sunnyvale, a municipal corporation of the
State of California
Recorded : October 9, 1964 in Book 6695, Page 457, Official Records
EXHIBIT B3 - PAGE 5
38
Affects : Northwesterly 7 feet abutting Crossman Road, as shown on
a survey plat entitled "ALTA/ACSM Land Title Surveyed for
Network Appliance, 1260 Crossman Avenue," dated January 21,
2000, prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
6. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utility Easement
Granted to : City of Sunnyvale, a municipal corporation of the
State of California
Recorded : September 24, 1965 in Book 7116, Page 489, Official
Records,
Affects : Southerly 7 feet abutting Moffett Park Drive, as shown on
survey plat entitled "ALTA/ACSM Land Title Surveyed for
Network Appliance, 1260 Crossman Avenue," dated January 21,
20, prepared by Kier & Wright Civil Engineers and
Surveyors, Job No. 99274.
7. AGREEMENT on the terms and conditions contained therein
For : Construction of Storm Drainage Facilities
Between : City of Sunnyvale
And : Moffett Park Associates, a joint venture partnership
Recorded : November 2, 1966 in Book 7552, Page 688, Official Records
An amendment to said agreement recorded in an instrument recorded April
21, 1967 in Book 7700, Page 638, Official Records.
An amendment to said agreement recorded in an instrument recorded
February 23, 1968 in Book 8034, Page 631, Official Records.
Notice affecting said real property-waiver of construction credit dated
September 22, 1976 has been executed by Moffett Park Association (MPA) a
joint venture partnership, recorded September 28, 1976 in Book C307,
Page 346, Official Records.
8. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Public Utilities Easement
Recorded : July 18, 1978 in Book 423 of Maps, at page 13
Affects : Northwesterly 9 feet, Southwesterly 15 feet from the
Southernmost 9 feet of said land, as shown on a survey plat
entitled "ALTA/ACSM Land Title Surveyed for Network
Appliance, 1260 Crossman Avenue," dated January 21, 2000,
prepared by Kier & Wright Civil Engineers and Surveyors,
Job No. 99274.
9. Limitations, covenants, conditions, restrictions, reservations,
exceptions, terms, liens or charges, but deleting any covenant,
condition or restriction indicating a preference, limitation or
discrimination based on race, color, religion, sex, handicap, familial
status, or national origin to the extent such covenants, conditions or
restrictions violate 42 U.S.C. 3604(c), contained in the document
recorded March 8, 1978 in Book D511, Page 396, Official Records.
And re-recorded December 12, 1978 in Book E157, Page 147, Official
Records.
EXHIBIT B3 - PAGE 6
39
EXHIBIT C
BILL OF SALE AND ASSIGNMENT
Reference is made to: (1) that certain Purchase Agreement (Phase V -
Improvements) between BNP Leasing Corporation ("ASSIGNOR") and Network
Appliance, Inc., dated as of March 1, 2000, (the "PURCHASE AGREEMENT") and (2)
that certain Lease Agreement (Phase V Improvements) between Assignor, as
landlord, and Network Appliance, Inc., as tenant, dated as of March 1, 2000 (the
"IMPROVEMENTS LEASE"). (Capitalized terms used and not otherwise defined in this
document are intended to have the meanings assigned to them in the Common
Definitions and Provisions Agreement (Phase V - Improvements) incorporated by
reference into both the Purchase Agreement and Improvements Lease.)
As contemplated by the Purchase Agreement, Assignor hereby sells,
transfers and assigns unto [NAI OR THE APPLICABLE PURCHASER, AS THE CASE MAY
BE], a _____________ ("ASSIGNEE"), all of Assignor's right, title and interest
in and to the following property, if any, to the extent such property is
assignable:
(a) the Improvements Lease [DRAFTING NOTE: THE FOLLOWING WILL BE ADDED
ONLY IF APPLICABLE BECAUSE OF THE SIMULTANEOUS DELIVERY OF A GRANT DEED IN THE
FORM OF EXHIBIT B-3: and the Ground Lease dated _________, between _________, as
lessor, and Assignor, as lessee, filed for record on in ___________ of Santa
Clara County records (the "GROUND LEASE")];
(b) any pending or future award made because of any condemnation
affecting the Property or because of any conveyance to be made in lieu thereof,
and any unpaid award for damage to the Property and any unpaid proceeds of
insurance or claim or cause of action for damage, loss or injury to the
Property; and
(c) all other property included within the definition of "Property" as
set forth in the Purchase Agreement, including but not limited to any of the
following transferred to Assignor by the tenant pursuant to Paragraph 7 of the
Improvements Lease or otherwise acquired by Assignor, at the time of the
execution and delivery of the Improvements Lease and Purchase Agreement or
thereafter, by reason of Assignor's status as the owner of any interest in the
Property: 1) any goods, equipment, furnishings, furniture, chattels and tangible
personal property of whatever nature that are located on the Property and all
renewals or replacements of or substitutions for any of the foregoing; (ii) the
rights of Assignor, existing at the time of the execution of the Improvements
Lease and Purchase Agreement or thereafter arising, under Permitted Encumbrances
or Development Documents (both as defined in the Improvements Lease); and (iii)
any other permits, licenses, franchises, certificates, and other rights and
privileges related to the Property that Assignee would have acquired if Assignee
had itself acquired the Improvements covered by the Improvements Lease and
constructed the Improvements included in the Property.
Provided, however, excluded from this conveyance and reserved to Assignor are
any rights or privileges of Assignor under the following ("EXCLUDED RIGHTS"):
(1) the indemnities set forth in the Improvements Lease, whether such rights are
presently known or unknown, including rights of the Assignor to be indemnified
against environmental claims of third parties as provided in the Improvements
Lease which may not presently be known, (2) provisions in the Improvements Lease
that establish the right of Assignor to recover any accrued unpaid rent under
the Improvements Lease which may be outstanding as of the date hereof, (3)
agreements between Assignor and "BNPLC's Parent" or any "Participant," both as
defined in the Improvements Lease, or any modification or
40
extension thereof, or (4) any other instrument being delivered to Assignor
contemporaneously herewith pursuant to the Purchase Agreement. To the extent
that this conveyance does include any rights to receive future payments under
the Improvements Lease, such rights ("INCLUDED RIGHTS") shall be subordinate to
Assignor's Excluded Rights, and Assignee hereby waives any rights to enforce
Included Rights until such time as Assignor has received all payments to which
it remains entitled by reason of Excluded Rights. If any amount shall be paid to
Assignee on account of any Included Rights at any time before Assignor has
received all payments to which it is entitled because of Excluded Rights, such
amount shall be held in trust by Assignee for the benefit of Assignor, shall be
segregated from the other funds of Assignee and shall forthwith be paid over to
Assignor to be held by Assignor as collateral for, or then or at any time
thereafter applied in whole or in part by Assignor against, the payments due to
Assignor because of Excluded Rights, whether matured or unmatured, in such order
as Assignor shall elect.
Assignor does for itself and its successors covenant and agree to
warrant and defend the title to the property assigned herein against the just
and lawful claims and demands of any person claiming under or through a Lien
Removable by BNPLC, but not otherwise.
Assignee hereby assumes and agrees to keep, perform and fulfill
Assignor's obligations, if any, relating to any permits or contracts, under
which Assignor has rights being assigned herein.
IN WITNESS WHEREOF, the parties have executed this instrument as of
_______________, ______.
ASSIGNOR:
BNP LEASING CORPORATION a Delaware
corporation
By:
---------------------------------
Its:
--------------------------------
ASSIGNEE:
[NAI or the Applicable Purchaser], a
--------------------
By:
---------------------------------
Its:
--------------------------------
EXHIBIT C - PAGE 2
41
STATE OF _____________)
) SS
COUNTY OF ____________)
On ___________________ before me, _________, personally appeared
_________ and _________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature
---------------------------------
STATE OF _____________)
) SS
COUNTY OF ____________)
On ___________________ before me, _________, personally appeared
_________ and _________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature
---------------------------------
EXHIBIT C - PAGE 3
42
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE OTHER LEASE CHANGES
FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPLC'S CONSENT
OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH
CHANGES WILL BE INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE"
WILL BE DELETED BEFORE THE DOCUMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS
ACTUALLY EXECUTED AND DELIVERED.]
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
EXHIBIT C - PAGE 4
43
EXHIBIT D
ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
(this "CERTIFICATE") is made as of ___________________, ____, by [NAI or the
Applicable Purchaser, as the case may be], a ___________________ ("GRANTEE").
Contemporaneously with the execution of this Certificate, BNP Leasing
Corporation, a Delaware corporation ("BNPLC"), is executing and delivering to
Grantee (1) a corporate grant deed and (2) a Bill of Sale and Assignment (the
foregoing documents and any other documents to be executed in connection
therewith are herein called the "CONVEYANCING DOCUMENTS" and any of the
properties, rights or other matters assigned, transferred or conveyed pursuant
thereto are herein collectively called the "SUBJECT PROPERTY").
NOTWITHSTANDING ANY PROVISION CONTAINED IN THE CONVEYANCING DOCUMENTS TO
THE CONTRARY, GRANTEE ACKNOWLEDGES THAT BNPLC MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY NATURE OR KIND, WHETHER STATUTORY, EXPRESS OR IMPLIED, WITH
RESPECT TO ENVIRONMENTAL MATTERS OR THE PHYSICAL CONDITION OF THE SUBJECT
PROPERTY, AND GRANTEE, BY ACCEPTANCE OF THE CONVEYANCING DOCUMENTS, ACCEPTS THE
SUBJECT PROPERTY "AS IS," "WHERE IS," "WITH ALL FAULTS" AND WITHOUT ANY SUCH
REPRESENTATION OR WARRANTY BY GRANTOR AS TO ENVIRONMENTAL MATTERS, THE PHYSICAL
CONDITION OF THE SUBJECT PROPERTY, COMPLIANCE WITH SUBDIVISION OR PLATTING
REQUIREMENTS OR CONSTRUCTION OF ANY IMPROVEMENTS. Without limiting the
generality of the foregoing, Grantee hereby further acknowledges and agrees that
warranties of merchantability and fitness for a particular purpose are excluded
from the transaction contemplated by the Conveyancing Documents, as are any
warranties arising from a course of dealing or usage of trade. Grantee hereby
assumes all risk and liability (and agrees that BNPLC shall not be liable for
any special, direct, indirect, consequential, or other damages) resulting or
arising from or relating to the ownership, use, condition, location,
maintenance, repair, or operation of the Subject Property, except for damages
proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of BNPLC. As used in the
preceding sentence, "ESTABLISHED MISCONDUCT" is intended to have, and be limited
to, the meaning given to it in the Common Definitions and Provisions Agreement
(Phase V - Improvements) incorporated by reference into the Purchase Agreement
(Phase V- Improvements) between BNPLC and Network Appliance, Inc. dated March 1,
2000, pursuant to which Purchase Agreement BNPLC is delivering the Conveyancing
Documents.
The provisions of this Certificate shall be binding on Grantee, its
successors and assigns and any other party claiming through Grantee. Grantee
hereby acknowledges that BNPLC is entitled to rely and is relying on this
Certificate.
EXECUTED as of ________________, ____.
[NAI or the Applicable Purchaser]
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
44
EXHIBIT E
SECRETARY'S CERTIFICATE
The undersigned, [Secretary or Assistant Secretary] of BNP Leasing
Corporation, a Delaware corporation (the "Corporation"), hereby certifies as
follows:
1. That he is the duly, elected, qualified and acting Secretary [or
Assistant Secretary] of the Corporation and has custody of the corporate
records, minutes and corporate seal.
2. That the following named persons have been properly designated,
elected and assigned to the office in the Corporation as indicated below; that
such persons hold such office at this time and that the specimen signature
appearing beside the name of such officer is his or her true and correct
signature.
[THE FOLLOWING BLANKS MUST BE COMPLETED WITH THE NAMES AND SIGNATURES OF THE
OFFICERS WHO WILL BE SIGNING THE DEED AND OTHER SALE CLOSING DOCUMENTS ON BEHALF
OF THE CORPORATION.]
Name Title Signature
- ---- ----- ---------
- ---------------------- ---------------- -------------------------
- ---------------------- ---------------- -------------------------
3. That the resolutions attached hereto and made a part hereof were duly
adopted by the Board of Directors of the Corporation in accordance with the
Corporation's Articles of Incorporation and Bylaws. Such resolutions have not
been amended, modified or rescinded and remain in full force and effect.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Corporation on this _____ day of __________, _____.
[signature and title]
45
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Purchase Agreement (Phase V -
Improvements) (herein called the "Purchase Agreement") dated as of March 1,
2000, by and between BNP Leasing Corporation (the "Corporation") and [NAI OR THE
APPLICABLE PURCHASER AS THE CASE MAY BE] ("Purchaser"), the Corporation agreed
to sell and Purchaser agreed to purchase or cause the Applicable Purchaser (as
defined in the Purchase Agreement) to purchase the Corporation's interest in the
property (the "Property") located in Sunnyvale, California more particularly
described therein.
NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Corporation, in its best business judgment, deems it in the best interest of the
Corporation and its shareholders that the Corporation convey the Property to
Purchaser or the Applicable Purchaser pursuant to and in accordance with the
terms of the Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed in the name and on behalf of the
Corporation to cause the Corporation to fulfill its obligations under the
Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each
of them, are hereby authorized and directed to take or cause to be taken any and
all actions and to prepare or cause to be prepared and to execute and deliver
any and all deeds and other documents, instruments and agreements that shall be
necessary, advisable or appropriate, in such officer's sole and absolute
discretion, to carry out the intent and to accomplish the purposes of the
foregoing resolutions.
EXHIBIT E - PAGE 2
46
EXHIBIT F
FIRPTA STATEMENT
Section 1445 of the Internal Revenue Code of 1986, as amended, provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person. Sections 18805, 18815 and 26131 of the
California Revenue and Taxation Code, as amended, provide that a transferee of a
California real property interest must withhold income tax if the transferor is
a nonresident seller.
To inform [NAI OR THE APPLICABLE PURCHASER] (the "Transferee") that
withholding of tax is not required upon the disposition of a California real
property interest by transferor, BNP Leasing Corporation (the "Seller"), the
undersigned hereby certifies the following on behalf of the Seller:
1. The Seller is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. The United States employer identification number for the Seller is
_________________;
3. The office address of the Seller is ________ ______________________
_________________.
4. The Seller is qualified to do business in California.
The Seller understands that this certification may be disclosed to the
Internal Revenue Service and/or to the California Franchise Tax Board by the
Transferee and that any false statement contained herein could be punished by
fine, imprisonment, or both.
The Seller understands that the Transferee is relying on this affidavit
in determining whether withholding is required upon said transfer.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Seller.
Dated: ___________, ____.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
47
EXHIBIT K
NOTICE OF ELECTION TO TERMINATE THE PURCHASE OPTION AND
NAI'S INITIAL REMARKETING RIGHTS AND OBLIGATIONS
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Purchase Agreement (Phase V - Improvements) dated as of March 1, 2000 (the
"Purchase Agreement"), between Network Appliance, Inc. ("NAI") and BNP Leasing
Corporation ("BNPLC")
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings assigned
to them in the Purchase Agreement referenced above. This letter shall constitute
a notice, given before the Base Rent Commencement Date pursuant to subparagraph
4(B) of the Purchase Agreement, of NAI's election to terminate the Purchase
Option and NAI's Initial Remarketing Rights and Obligations. NAI irrevocably
elects to terminate the Purchase Option and NAI's Initial Remarketing Rights and
Obligations effective immediately, subject only to the conditions described
below.
NAI acknowledges that the election made by NAI described above constitutes an
Issue 97-10 Election under and as defined in the Operative Documents.
NAI also acknowledges that its right to terminate the Purchase Option and NAI's
Initial Remarketing Rights and Obligations is subject to the condition precedent
that (x) NAI shall have given Notice of NAI's Election to Terminate pursuant to
Paragraph 5(D) of the Construction Management Agreement, or (y) BNPLC shall have
given any FOCB Notice as provided in Paragraph 5(E) of the Construction
Management Agreement, or (z) BNPLC shall have given notice of its election to
accelerate the Designated Sale Date when an Event of Default has occurred and is
continuing as provided in clause (5) of the definition Designated Sale Date in
the Common Definitions and Provisions Agreement (Phase V - Improvements).
Accordingly, if none of the notices described in the preceding sentence have
been given, the Purchase Option and NAI's Initial Remarketing Rights and
Obligations shall not terminate by reason of this notice.
NAI further acknowledges that no termination of the Purchase Option and NAI's
Initial Remarketing Rights and Obligations by NAI pursuant to this notice shall
be effective, unless contemporaneously with the giving of this notice NAI shall
deliver to BNPLC a full Issue 97-10 Prepayment. NAI hereby covenants to pay, if
NAI has not already done so, a full Issue 97-10 Prepayment to BNPLC.
48
Finally, NAI acknowledges that a termination of the Purchase Option and NAI's
Initial Remarketing Rights and Obligations pursuant to this notice shall cause
the Improvements Lease to terminate as of the Base Rent Commencement Date
pursuant to subparagraph 1(b) of the Improvements Lease.
Executed this _____ day of ______________, 2000.
NETWORK APPLIANCE, INC.
Name:
Title:
[cc all Participants]
EXHIBIT K-PAGE 2
1
EXHIBIT 10.62
================================================================================
PLEDGE AGREEMENT
(PHASE V - LAND)
AMONG
BNP LEASING CORPORATION
("BNPLC")
BANQUE NATIONALE DE PARIS, AS AGENT
("AGENT")
NETWORK APPLIANCE, INC.
("NAI")
AND
PARTICIPANTS AS DESCRIBED HEREIN
MARCH 1, 2000
================================================================================
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS AND INTERPRETATION....................................................1
1.1 Capitalized Terms Used But Not Defined in This Agreement......................1
1.2 Definitions...................................................................2
1.3 Attachments...................................................................7
1.4 Amendment of Defined Instruments..............................................7
1.5 References and Titles.........................................................7
ARTICLE II SECURITY INTEREST................................................................8
2.1 Pledge and Grant of Security Interest.........................................8
2.2 Return of Collateral After the Secured Obligations are Satisfied in Full......8
ARTICLE III DESIGNATION OF MINIMUM COLLATERAL PERCENTAGE....................................8
3.1 Determination of Minimum Collateral Percentage Generally......................8
3.2 Limitations on NAI's Right to Lower the Collateral Percentage.................9
3.3 Mandatory Collateral Periods..................................................9
ARTICLE IV PROVISIONS CONCERNING DEPOSIT TAKERS.............................................9
4.1 Qualification of Deposit Takers Generally.....................................9
4.2 Existing Deposit Takers......................................................10
4.3 Replacement of Participants Proposed by NAI..................................10
4.4 Mandatory Substitution for Disqualified Deposit Takers.......................11
4.5 Voluntary Substitution of Deposit Takers.....................................11
4.6 Delivery of Notice of Security Interest by NAI and Agent.....................11
4.7 Constructive Possession of Collateral........................................11
4.8 Attempted Setoff by Deposit Takers...........................................11
4.9 Deposit Taker Losses.........................................................12
4.10 Losses Resulting from Failure of Deposit Taker to Comply with this
Agreement....................................................................12
ARTICLE V DELIVERY AND MAINTENANCE OF CASH COLLATERAL......................................12
5.1 Delivery of Funds by NAI.....................................................12
5.2 Transition Account...........................................................13
5.3 Allocation of Cash Collateral Among Deposit Takers...........................13
5.4 Issuance and Redemption of Certificates of Deposit...........................13
5.5 Status of the Accounts Under the Reserve Requirement Regulations.............14
5.6 Acknowledgment by NAI that Requirements of this Agreement are
Commercially Reasonable......................................................14
-i-
3
ARTICLE VI WITHDRAWAL OF CASH COLLATERAL...................................................15
6.1 Withdrawal of Collateral Prior to the Designated Sale Date...................15
6.2 Withdrawal and Application of Cash Collateral to Reduce or Satisfy the
Secured Obligations to the Participants......................................15
6.3 Withdrawal and Application of Cash Collateral to Reduce or Satisfy the
Secured Obligations to BNPLC.................................................16
6.4 Withdrawal of Cash Collateral From Accounts Maintained by Disqualified
Deposit Takers...............................................................16
ARTICLE VII REPRESENTATIONS AND COVENANTS OF NAI...........................................16
7.1 Representations of NAI.......................................................16
7.2 Covenants of NAI.............................................................17
ARTICLE VIII AUTHORIZED ACTION BY AGENT....................................................18
8.1 Power of Attorney............................................................18
ARTICLE IX DEFAULT AND REMEDIES............................................................19
9.1 Remedies.....................................................................19
ARTICLE X OTHER RECOURSE...................................................................19
10.1 Recovery Not Limited.........................................................19
ARTICLE XI PROVISIONS CONCERNING AGENT.....................................................20
11.1 Appointment and Authority....................................................20
11.2 Exculpation, Agent's Reliance, Etc...........................................20
11.3 Participant's Credit Decisions...............................................21
11.4 Indemnity....................................................................21
11.5 Agent's Rights as Participant and Deposit Taker..............................22
11.6 Investments..................................................................22
11.7 Benefit of Article XI........................................................22
11.8 Resignation..................................................................22
ARTICLE XII MISCELLANEOUS..................................................................23
12.1 Provisions Incorporated From Other Operative Documents.......................23
12.2 Cumulative Rights, etc.......................................................23
12.3 Survival of Agreements.......................................................23
12.4 Other Liable Party...........................................................23
12.5 Termination..................................................................23
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Attachment 1....................................................Form of Certificate of Deposit
Attachment 2...................................Supplement to Pledge Agreement (Phase V - Land)
Attachment 3......................Notice of NAI's Election to Change the Collateral Percentage
Attachment 4.......................................................Notice of Security Interest
Attachment 5..........................................................Examples of Calculations
Attachment 6....................Notice of NAI's Requirement to Withdraw Excess Cash Collateral
Attachment 7....................Notice of NAI's Requirement of Direct Payments to Participants
Attachment 8....................Notice of NAI's Requirement of Direct Payments to Participants
Attachment 9.......................................Notice of NAI's Requirement of a Withdrawal
of Cash Collateral from a Disqualified Deposit Taker
Schedule 1..........................................Financial Covenants and Negative Covenants
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PLEDGE AGREEMENT
(PHASE V - LAND)
This PLEDGE AGREEMENT (PHASE V - LAND) (this "AGREEMENT") is made as of
March 1, 2000 (the "EFFECTIVE DATE"), by NETWORK APPLIANCE, INC., a California
corporation ("NAI"); BNP LEASING CORPORATION, a Delaware corporation ("BNPLC");
BANQUE NATIONALE DE PARIS ("BNPLC'S PARENT"), as a "PARTICIPANT"; and BANQUE
NATIONALE DE PARIS, acting in its capacity as agent for BNPLC and the
Participants (in such capacity, "AGENT"), is made and dated as of the Effective
Date.
RECITALS
A. NAI and BNPLC are parties to: (i) a Common Definitions and Provisions
Agreement (Phase V - Land) dated as of the Effective Date (the "COMMON
DEFINITIONS AND PROVISIONS AGREEMENT (PHASE V - LAND)"); and (ii) a Purchase
Agreement (Phase V - Land) dated as of the Effective Date (the "PURCHASE
AGREEMENT"), pursuant to which NAI has agreed to make a "SUPPLEMENTAL PAYMENT"
(as defined in the Common Definitions and Provisions Agreement (Phase V -
Land)), in consideration of the rights granted to NAI by the Purchase Agreement.
B. Pursuant to a Participation Agreement dated as of March 1, 2000 (the
"PARTICIPATION AGREEMENT"), BNPLC's Parent has agreed with BNPLC to participate
in the risks and rewards to BNPLC of the Purchase Agreement and other Operative
Documents (as defined in the Common Definitions and Provisions Agreement (Phase
V - Land)), and the parties to this Agreement anticipate that other financial
institutions may become parties to the Participation Agreement as Participants,
agreeing to participate in the risks and rewards to BNPLC of the Purchase
Agreement and other Operative Documents.
C. NAI may from time to time deliver cash collateral for its obligations
to BNPLC under the Purchase Agreement and for BNPLC's corresponding obligations
to Participants under the Participation Agreement. This Agreement sets forth the
terms and conditions governing such cash collateral.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I DEFINITIONS AND INTERPRETATION
1.1 Capitalized Terms Used But Not Defined in This Agreement. All
capitalized terms used in this Agreement which are defined in Article I of the
Common Definitions and Provisions Agreement (Phase V - Land) and not otherwise
defined herein shall have the same meanings herein as set forth in the Common
Definitions and Provisions Agreement (Phase V - Land). All terms used in this
Agreement which are defined in the UCC and not
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otherwise defined herein shall have the same meanings herein as set forth
therein, except where the context otherwise requires.
1.2. Definitions. When used in this Agreement, the following terms shall
have the following respective meanings:
"ACCOUNT" shall mean any deposit account maintained by a Deposit
Taker into which Cash Collateral may be deposited at any time, excluding
the Transition Account.
"ACCOUNT OFFICE" shall mean, with respect to any Account
maintained by any Deposit Taker, the office of such Deposit Taker in
California or New York at which such Account is maintained as specified
in the applicable Deposit Taker's Acknowledgment and Agreement.
"AGENT" shall have the meaning given to that term in the
introductory paragraph hereof.
"BNPLC" shall have the meaning given to that term in the
introductory paragraph hereof.
"BNPLC'S CORRESPONDING OBLIGATIONS TO PARTICIPANTS" shall mean
BNPLC's obligations under the Participation Agreement to pay
Participants their respective Percentages of (or amounts equal to their
respective Percentages of) sums "actually received by BNPLC" (as defined
in the Participation Agreement) in satisfaction of NAI's Purchase
Agreement Obligations; provided, however, any modification of the
Participation Agreement executed after the date hereof without NAI's
written consent shall not be considered for purposes of determining
BNPLC's Corresponding Obligations to Participants under this Agreement.
"CASH COLLATERAL" shall mean (i) all money of NAI which NAI has
delivered to Agent for deposit with a Deposit Taker pursuant to this
Agreement, and (ii) any additional money delivered to Agent as
Collateral pursuant to Section 4.9.
"CERTIFICATE OF DEPOSIT" shall mean a certificate of deposit
issued by a Deposit Taker as required by Section 5.4 below to evidence
an Account into which Cash Collateral has been deposited pursuant to
this Agreement. Each Certificate of Deposit shall be issued in an amount
equal to the Value of the Account which it evidences and shall otherwise
be in the form set forth as ATTACHMENT 1.
"COLLATERAL" shall have the meaning given to that term in
Section 2.1 hereof.
"COLLATERAL IMBALANCE" shall mean on any date prior to the
Designated Sale Date that the Value (without duplication) of Accounts
maintained by and Certificates of Deposit issued by the Deposit Taker
for any Participant (other than a Disqualified Deposit Taker) does not
equal such Participant's Percentage, multiplied by the lesser of (1) the
Minimum Collateral Value in effect on such date, or (2) the aggregate
Value of all Collateral subject to this Agreement on such date. For
purposes of determining whether a Collateral Imbalance exists, the Value
of any Accounts maintained by a bank that is
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acting as Deposit Taker for two or more Participants will be deemed to
be held for them in proportion to their respective Percentages, and the
Value of any Accounts maintained by a bank as Deposit Taker for both a
Participant and BNPLC (as in the case of BNPLC's Parent acting as
Deposit Taker for itself, as a Participant, and for BNPLC) will be
deemed to be held for the Participant only to the extent necessary to
prevent or mitigate a Collateral Imbalance and otherwise for BNPLC.
"COLLATERAL PERCENTAGE" shall mean the percentage designated by
NAI or required during a Mandatory Collateral Period pursuant to Part
III of Schedule 1.
"DEFAULT" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the
passage of any requisite periods of time, constitute an Event of
Default.
"DEPOSIT TAKER" for BNPLC shall mean BNPLC's Parent and for each
Participant shall mean the Participant itself; provided, that each of
BNPLC and the Participants, for itself only, may from time to time
designate another Deposit Taker as provided in Sections 4.4 and 4.5
below.
"DEPOSIT TAKER LOSSES" shall mean the Value of any Cash
Collateral delivered to a Deposit Taker, but that the Deposit Taker will
not (because of the insolvency of the Deposit Taker, offsets by the
Deposit Taker in violation of the Deposit Taker's Acknowledgment and
Agreement, or otherwise) return to NAI or return to Agent for
disposition or application as provided herein or as required by
applicable law.
"DEPOSIT TAKER'S ACKNOWLEDGMENT AND AGREEMENT" shall have the
meaning given to that term in subsection 4.1.2 hereof.
"DISQUALIFIED DEPOSIT TAKER" shall mean any Deposit Taker with
whom Agent may decline to deposit Collateral pursuant to Section 4.1.
"EVENT OF DEFAULT" shall mean the occurrence of any of the
following:
(a) the failure by NAI to pay all or any part of NAI's
Purchase Agreement Obligations when due, after giving effect to
any applicable notice and grace periods expressly provided for
in the Purchase Agreement;
(b) the failure by NAI to provide funds as and when
required by Section 5.1 of this Agreement, if within seven
Business Days after such failure commences NAI does not (1) cure
such failure by delivering the funds required by Section 5.1,
and (2) pay to BNPLC as additional Rent under the Land Lease an
amount equal to interest at the Default Rate (as defined in the
Land Lease) on such funds for the period from which they were
first due to the date of receipt by Agent;
(c) the failure of the pledge or security interest
contemplated herein in the Transition Account or any Account,
Certificate of Deposit or Cash Collateral to be a Qualified
Pledge (regardless of the characterization of the Transition
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Account or any Accounts, Certificates of Deposit or Cash
Collateral as deposit accounts, instruments or general
intangibles under the UCC), if within five Business Days after
NAI becomes aware of such failure, NAI does not (1) notify
Agent, BNPLC and the Participants of such failure, and (2) cure
such failure, and (3) to the extent required by Section 7.2.9,
pay to BNPLC any additional Base Rent that has accrued under the
Land Lease because of (or that would have accrued if BNPLC had
been aware of) such failure, together with interest at the
Default Rate on any such additional Base Rent;
(d) the failure of any representation herein by NAI to
be true (other than a failure described in another clause of
this definition of Event of Default), if such failure is not
cured within thirty days after NAI receives written notice
thereof from Agent;
(e) the failure of any representation made by NAI in
subsection 7.1.1 to be true, if within fifteen (15) days after
NAI becomes aware of such failure, NAI does not (1) notify
Agent, BNPLC and the Participants of such failure, and (2) cure
such failure, and (3) pay to BNPLC any additional Base Rent that
has accrued under the Land Lease because of (or that would have
accrued if BNPLC had been aware of) such failure, and (4) pay to
BNPLC interest at the Default Rate on any such additional Base
Rent;
(f) the failure by NAI timely and properly to observe,
keep or perform any covenant, agreement, warranty or condition
herein required to be observed, kept or performed (other than a
failure described in another clause of this definition of Event
of Default), if such failure is not cured within thirty days
after NAI receives written notice thereof from Agent; and
(g) the failure by BNPLC to pay when due on or after the
Designated Sale Date any of BNPLC's Corresponding Obligations to
Participants, after giving effect to any applicable notice and
grace periods expressly provided for in the Participation
Agreement.
Notwithstanding the foregoing, if ever the aggregate Value of Cash Collateral
held by Agent and the Deposit Takers EXCEEDS the Minimum Collateral Value then
in effect, a failure of the pledge or security interest contemplated herein in
SUCH EXCESS Cash Collateral to be a valid, perfected, first priority pledge or
security interest shall not constitute an Event of Default under this Agreement.
Accordingly, to provide a cure as required to avoid an Event of Default under
clauses or (e) of this definition, NAI could deliver additional Cash Collateral
- - the pledge of which or security interest in which created by this Agreement is
a Qualified Pledge - sufficient in amount to cause the aggregate Value of the
Cash Collateral then held by Agent and the Deposit Takers subject to a Qualified
Pledge hereunder to equal or exceed the Minimum Collateral Value.
"FAILED COLLATERAL TEST DATE" means any date upon which
commences a Mandatory Collateral Period as described in Part III of
Schedule 1.
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"INITIALLY QUALIFIED DEPOSIT TAKER" means (1) Banque Nationale
de Paris, acting through any branch, office or agency that can lawfully
maintain an Account as a Deposit Taker hereunder, and (2) any of the
fifty largest (measured by total assets) U.S. banks, or one of the one
hundred largest (measured by total assets) banks in the world, with debt
ratings of at least (i) A- (in the case of long term debt) and A-1 (in
the case of short term debt) or the equivalent thereof by Standard and
Poor's Corporation, and (ii) A3 (in the case of long term debt) and P-2
(in the case of short term debt) or the equivalent thereof by Moody's
Investor Service, Inc. The parties believe it improbable that the
ratings systems used by Standard and Poor's Corporation and by Moody's
Investor Service, Inc. will be discontinued or changed, but if such
ratings systems are discontinued or changed, NAI shall be entitled to
select and use a comparable ratings systems as a substitute for the S&P
Rating or the Moody Rating, as the case may be, for purposes of
determining the status of any bank as an Initially Qualified Deposit
Taker.
"LIEN" shall mean, with respect to any property or assets, any
right or interest therein of a creditor to secure indebtedness of any
kind which is owed to him or any other arrangement with such creditor
which provides for the payment of such indebtedness out of such property
or assets or which allows him to have such indebtedness satisfied out of
such property or assets prior to the general creditors of any owner
thereof, including any lien, mortgage, security interest, pledge,
deposit, production payment, rights of a vendor under any title
retention or conditional sale agreement or lease substantially
equivalent thereto, tax lien, mechanic's or materialman's lien, or any
other charge or encumbrance for security purposes, whether arising by
law or agreement or otherwise, but excluding any right of setoff which
arises without agreement in the ordinary course of business. "Lien" also
means any filed financing statement, any registration with an issuer of
uncertificated securities, or any other arrangement which would serve to
perfect a Lien described in the preceding sentence, regardless of
whether such financing statement is filed, such registration is made, or
such arrangement is undertaken before or after such Lien exists.
"MATERIAL LEASE DEFAULT" shall mean any of the following:
(1) any "Event of Default" under and as defined in the Land Lease,
including any such Event of Default consisting of a failure of NAI to
comply with the requirements of Exhibit I attached to the Land Lease;
and
(2) (a) any failure of NAI to make any payment required by and when
first due under the Land Lease, regardless of whether any period
provided in the Land Lease for the cure of such failure by NAI shall
have expired, and (b) any other default, event or condition which would,
with the giving of any requisite notices and the passage of any
requisite periods of time, constitute an "Event of Default" under and as
defined in the Land Lease, if such other default, event or failure
involves a material noncompliance with Applicable Law. (For purposes of
this definition, "material" noncompliance with Applicable Law will
include any noncompliance, the correction of which has been requested by
a governmental authority, or because of which a threat of action against
the Property or BNPLC has been asserted by a governmental authority.)
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"MANDATORY COLLATERAL PERIOD" shall mean any period, as
determined in accordance with Part III of Schedule 1, during which NAI
is required to maintain a Collateral Percentage of one hundred percent
(100%) pursuant to Section 3.2.
"MINIMUM COLLATERAL VALUE" shall mean (1) as of the Designated
Sale Date or any prior date, an amount equal to the Collateral
Percentage multiplied by the Stipulated Loss Value determined as of that
date in accordance with the Land Lease; and (2) as of any date after the
Designated Sale Date, an amount equal to the Break Even Price plus any
unpaid interest accrued on past due amounts payable pursuant to
Paragraph 1(A) of the Purchase Agreement.
"NAI" shall have the meaning given to that term in the
introductory paragraph hereof.
"NAI'S PURCHASE AGREEMENT OBLIGATIONS" shall mean all of NAI's
obligations under the Purchase Agreement, including (i) NAI's obligation
to pay any Supplemental Payment as required under subparagraph 1(A) of
the Purchase Agreement, and (ii) any damages incurred by BNPLC because
of (A) NAI's breach of the Purchase Agreement or (B) the rejection by
NAI of the Purchase Agreement in any bankruptcy or insolvency
proceeding.
"NOTICE OF SECURITY INTEREST" shall have the meaning given to
that term in subsection 4.1.1 hereof.
"OTHER LIABLE PARTY" shall mean any Person, other than NAI, who
may now or may at any time hereafter be primarily or secondarily liable
for any of the Secured Obligations or who may now or may at any time
hereafter have granted to Agent a pledge of or security interest in any
of the Collateral.
"PARTICIPANTS" shall mean BNPLC's Parent and any other financial
institutions which may hereafter become parties to (i) this Agreement by
completing, executing and delivering to NAI and Agent a Supplement, and
(ii) the Participation Agreement.
"PARTICIPATION AGREEMENT" shall have the meaning given to such
term in Recital B hereof.
"PERCENTAGE" shall mean with respect to each Participant and the
Deposit Taker for such Participant, such Participant's "Percentage"
under and as defined in the Participation Agreement for purposes of
computing such Participant's right thereunder to receive payments of (or
amounts equal to a percentage of) any sales proceeds or Supplemental
Payment received by BNPLC under the Purchase Agreement. Percentages may
be adjusted from time to time as provided in the Participation Agreement
or as provided in supplements thereto executed as provided in the
Participation Agreement.
"QUALIFIED PLEDGE" means a pledge or security interest that
constitutes a valid, perfected, first priority pledge or security
interest.
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"SECURED OBLIGATIONS" shall mean and include both NAI's Purchase
Agreement Obligations and BNPLC's Corresponding Obligations to
Participants.
"SUPPLEMENT" shall mean a supplement to this Agreement in the
form of ATTACHMENT 2.
"TRANSACTION DOCUMENTS" shall mean, collectively, this
Agreement, the Land Lease, the Purchase Agreement and the Participation
Agreement.
"TRANSITION ACCOUNT" shall have the meaning given it in Section
5.2.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of California from time to time, and the Uniform Commercial Code
as in effect in any other jurisdiction which governs the perfection or
non-perfection of the pledge of and security interests in the Collateral
created by this Agreement.
"VALUE" shall mean with respect to any Account, Certificate of
Deposit or Cash Collateral on any date, a dollar value determined as
follows (without duplication):
(a) cash shall be valued at its face amount on such
date;
(b) an Account shall be valued at the principal balance
thereof on such date; and
(c) a Certificate of Deposit shall be valued at the face
amount thereof.
1.3 Attachments. All attachments to this Agreement are a part hereof for
all purposes.
1.4 Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided herein, references in this Agreement to a
particular agreement, instrument or document (including references to the Land
Lease, Purchase Agreement and Participation Agreement) also refer to and include
all valid renewals, extensions, amendments, modifications, supplements or
restatements of any such agreement, instrument or document; provided that
nothing contained in this Section shall be construed to authorize any Person to
execute or enter into any such renewal, extension, amendment, modification,
supplement or restatement.
1.5 References and Titles. All references in this Agreement to
Attachments, Articles, Sections, subsections, and other subdivisions refer to
the Attachments, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision are for convenience only and do not constitute any part of
any such subdivision and shall be disregarded in construing the language
contained in this Agreement. The words "this Agreement", "herein", "hereof",
"hereby", "hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited. The
phrases "this Article," "this Section" and "this subsection" and similar phrases
refer only to the Articles, Sections or subsections hereof in which the phrase
occurs. The word "or" is not exclusive, and the word "including" (in all of its
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forms) means "including without limitation". Pronouns in masculine, feminine and
neuter gender shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa unless the
context otherwise requires.
ARTICLE II SECURITY INTEREST
2.1 Pledge and Grant of Security Interest. As security for the Secured
Obligations, NAI hereby pledges and assigns to Agent (for the ratable benefit of
BNPLC and the Participants) and grants to Agent (for the ratable benefit of
BNPLC and the Participants) a continuing security interest and lien in and
against all right, title and interest of NAI in and to the following property,
whether now owned or hereafter acquired by NAI (collectively and severally, the
"COLLATERAL"):
(a) All Cash Collateral, all Accounts, the Transition Account
and all Certificates of Deposit issued from time to time and general intangibles
arising therefrom or relating thereto (however, "general intangibles" as used in
this clause shall not include any general intangibles not related to Cash
Collateral, Accounts, the Transition Account or Certificates of Deposit issued
from time to time, and thus will not include, without limitation, any
intellectual property of NAI); and all documents, instruments and agreements
evidencing the same; and all extensions, renewals, modifications and
replacements of the foregoing; and any interest or other amounts payable in
connection therewith; and
(b) All proceeds of the foregoing (including whatever is
receivable or received when Collateral or proceeds is invested, sold, collected,
exchanged, returned, substituted or otherwise disposed of, whether such
disposition is voluntary or involuntary, including rights to payment and return
premiums and insurance proceeds under insurance with respect to any Collateral,
and all rights to payment with respect to any cause of action affecting or
relating to the Collateral).
The pledge, assignment and grant of a security interest made by NAI hereunder is
for security of the Secured Obligations only; the parties to this Agreement do
not intend that NAI's delivery of the Collateral to Agent as herein provided
will constitute an advance payment of any Secured Obligations or liquidated
damages, nor do the parties intend that the Collateral increase the dollar
amount of the Secured Obligations.
2.2 Return of Collateral After the Secured Obligations are Satisfied in
Full. If any proceeds of Collateral remain after all Secured Obligations have
been paid in full, Agent will deliver or direct the Deposit Takers to deliver
such proceeds to NAI or other Persons entitled thereto by law.
ARTICLE III DESIGNATION OF MINIMUM COLLATERAL PERCENTAGE
3.1 Determination of Minimum Collateral Percentage Generally. Effective
as of the date of this Agreement, and until a new Collateral Percentage becomes
effective, the Collateral Percentage is zero percent (0%). Subject to the
provisions of this Article III, NAI may from time to time designate a new
Collateral Percentage between 0% and 100% by written notice delivered to Agent,
BNPLC and the Participants in the form of ATTACHMENT 3. Any new Collateral
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Percentage so designated shall not become effective, however, until the
commencement of the later of (A) the first Base Rent Period to commence on or
after the first Business Day of September, 2001, or (B) the next following Base
Rent Period which is at least ten Business Days after the receipt of such notice
by Agent, BNPLC and the Participants. Further, after the first change in the
Collateral Percentage resulting from a designation by NAI of a Collateral
Percentage greater than zero percent (0%), any subsequent change resulting from
NAI's designation of a new Collateral Percentage shall not become effective
before the first Business Day of the first Base Rent Period that commences at
least ninety days after the effective date of the last preceding change in the
Collateral Period. In any event, if NAI provides more than one notice of a
change in the Collateral Percentage to be effective on a particular Base Rent
Date, then the latest such notice from NAI which satisfies the requirements of
this Section (and of Sections 3.2 and 3.3) will control. After any Collateral
Percentage becomes effective as provided in this Article, it shall remain in
effect until a different Collateral Percentage becomes effective as provided in
this Article.
3.2 Limitations on NAI's Right to Lower the Collateral Percentage.
Notwithstanding the foregoing, no designation by NAI of a new Collateral
Percentage will be effective to reduce the Collateral Percentage if the
designation is given, or the reduction would otherwise become effective, on or
after the Designated Sale Date or when any of the following shall have occurred
and be continuing:
3.2.1 any Material Lease Default;
3.2.2 any Event of Default under and as defined in this
Agreement; or
3.2.3 any Default under and as defined in this Agreement -
excluding, however, any such Default limited to a failure of NAI described in
clause or clause (e) of the definition of Event of Default above, with respect
to which the time for cure specified in clause (c) or clause (e), as applicable,
has not expired.
3.3 Mandatory Collateral Periods. NOTWITHSTANDING ANYTHING TO THE
CONTRARY HEREIN CONTAINED, THE COLLATERAL PERCENTAGE DURING ANY MANDATORY
COLLATERAL PERIOD SHALL BE ONE HUNDRED PERCENT (100%). No later than five
Business Days prior to any Failed Collateral Test Date, NAI shall notify Agent,
BNPLC and the Participants of the conditions set forth in Part III of Schedule 1
that NAI will be unable to satisfy on the Failed Collateral Test Date.
ARTICLE IV PROVISIONS CONCERNING DEPOSIT TAKERS
4.1 Qualification of Deposit Takers Generally. Agent may decline to
deposit or maintain Collateral hereunder with any Person designated as a Deposit
Taker, if such Person has failed to satisfy or no longer satisfies the following
requirements:
4.1.1 Such Person must have received from Agent and NAI a
completed, executed Notice of Security Interest in the form of ATTACHMENT 4 (a
"NOTICE OF SECURITY INTEREST") which specifically identifies any and all
Accounts in which such Person shall hold
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Cash Collateral delivered to it pursuant to this Agreement and which designates
Account Offices with respect to all such Accounts in New York or California.
4.1.2 Such Person must have executed the Acknowledgment and
Agreement at the end of such Notice of Security Interest (the "DEPOSIT TAKER'S
ACKNOWLEDGMENT AND AGREEMENT") and returned the same to Agent. Further, such
Person must have complied with the Deposit Taker's Acknowledgment and Agreement,
and the representations set forth therein with respect to such Person must
continue to be true and correct.
4.1.3 Such Person must be a commercial bank, organized under the
laws of the United States of America or a state thereof or under the laws of
another country which is doing business in the United States of America; must be
authorized to maintain deposit accounts for others through Account Offices in
New York or California (as specified in the Deposit Taker's Acknowledgment and
Agreement); and must be an Affiliate of BNPLC or the Participant for whom such
Person will act as Deposit Taker or must have a combined capital, surplus and
undivided profits of at least $500,000,000.
4.1.4 Such Person must have complied with the provisions in this
Agreement applicable to Deposit Takers, including the provisions of Section 5.4
concerning the issuance and redemption of Certificates of Deposit.
4.2 Existing Deposit Takers. BNPLC's Parent (as Deposit Taker for itself
and for BNPLC) has received a Notice of Security Agreement dated the Effective
Date and has responded to such a notice with a Deposit Taker's Acknowledgment
and Agreement dated the Effective Date, as contemplated in subsections 4.1.1 and
4.1.2.
4.3 Replacement of Participants Proposed by NAI. So long as no Event of
Default has occurred and is continuing, BNPLC shall not unreasonably withhold
its approval for a substitution under the Participation Agreement of a new
Participant proposed by NAI for any Participant, the Deposit Taker for whom
would no longer meet the requirements for an Initially Qualified Deposit Taker;
provided, however, that (A) the proposed substitution can be accomplished
without a release or breach by BNPLC of its rights and obligations under the
Participation Agreement; (B) the new Participant will agree (by executing a
Supplement and a supplement to the Participation Agreement as contemplated
therein and by other agreements as may be reasonably required by BNPLC and NAI)
to become a party to the Participation Agreement and to this Agreement, to
designate an Initially Qualified Deposit Taker as the Deposit Taker for it under
this Agreement and to accept a Percentage under the Participation Agreement
equal to the Percentage of the Participant to be replaced; (C) the new
Participant (or NAI) will provide the funds required to pay the termination fee
by Section 6.4 of the Participation Agreement to accomplish the substitution;
(D) NAI (or the new Participant) agrees in writing to indemnify and defend BNPLC
for any and all Losses incurred by BNPLC in connection with or because of the
substitution, including the cost of preparing supplements to the Participation
Agreement and this Agreement and including any cost of defending and paying any
claim asserted by the Participant to be replaced because of the substitution
(but not including any liability of BNPLC to such Participant for damages caused
by BNPLC's bad faith or gross negligence in the performance of BNPLC's
obligations under the Participation Agreement prior to the substitution); (E)
the new Participant shall be a reputable financial institution having a net
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worth of no less than seven and one half percent (7.5%) of total assets and
total assets of no less than $10,000,000,000.00 (all according to then recent
audited financial statements); and (F) in no event will BNPLC be required to
approve a substitution pursuant to this Section 4.3 which will replace a
Participant that is an Affiliate of BNPLC. BNPLC shall attempt in good faith to
assist (and cause BNPLC's Parent to attempt in good faith to assist) NAI in
identifying a new Participant that NAI may propose to substitute for an existing
Participant pursuant to this Section, as NAI may reasonably request from time to
time. However, in no event shall BNPLC itself, or any of its Affiliates, be
required to take the Percentage of any Participant to be replaced.
4.4 Mandatory Substitution for Disqualified Deposit Takers. If any
Deposit Taker shall cease to satisfy the requirements set forth in Section 4.1,
the party for whom such Disqualified Deposit Taker has been designated as
Deposit Taker (i.e., BNPLC or the applicable Participant) shall promptly (1)
provide notice thereof to Agent and NAI, and (2) designate a substitute Deposit
Taker and cause the substitute to satisfy the requirements set forth in Section
4.1. Pending the designation of the substitute and the satisfaction by it of the
requirements set forth in Section 4.1, Agent may withdraw Collateral held by the
Disqualified Deposit Taker and deposit such Collateral with other Deposit
Takers, subject to Section 5.3 below.
4.5 Voluntary Substitution of Deposit Takers. With the written approval
of Agent, which approval will not be unreasonably withheld, BNPLC or any
Participant may at any time designate for itself a new Deposit Taker (in
replacement of any prior Deposit Taker acting for it hereunder); provided, the
Person so designated has satisfied the requirements set forth in Section 4.1;
and, provided further, unless the designation of a new Deposit Taker is required
by Section 4.4 to replace a Disqualified Deposit Taker, at the time of the
replacement such Person must be an Initially Qualified Deposit Taker.
4.6 Delivery of Notice of Security Interest by NAI and Agent. To the
extent required for the designation of a new Deposit Taker by BNPLC or any
Participant pursuant to Section 4.5, or to permit the substitution or
replacement of a Deposit Taker for BNPLC or any Participant as provided in
Sections 4.4 and 4.5, NAI and Agent shall promptly execute and deliver any
properly completed Notice of Security Interest requested by BNPLC or the
applicable Participant.
4.7 Constructive Possession of Collateral. The possession by a Deposit
Taker of any deposit accounts, money, instruments, chattel paper or other
property constituting Collateral or evidencing Collateral shall be deemed to be
possession by Agent or a person designated by Agent, for purposes of perfecting
the security interest granted to Agent hereunder pursuant to the UCC or other
Applicable Law; and notifications to a Deposit Taker by other Persons holding
any such property, and Acknowledgments, receipts or confirmations from any such
Persons delivered to a Deposit Taker, shall be deemed notifications to, or
Acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of such Deposit Taker for the benefit of Agent
for the purposes of perfecting such security interests under Applicable Law.
4.8 Attempted Setoff by Deposit Takers. By delivery of a Deposit Taker's
Acknowledgment and Agreement, each Deposit Taker shall be required to agree not
to setoff or attempt a setoff, WITHOUT IN EACH CASE FIRST OBTAINING THE PRIOR
WRITTEN AUTHORIZATION OF
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AGENT, Secured Obligations owed to it against any Collateral held by it from
time to time. Further, by delivery of a Deposit Taker's Acknowledgment and
Agreement, each Deposit Taker shall be required to agree not to setoff or
attempt a setoff, WITHOUT IN EACH CASE FIRST OBTAINING THE PRIOR WRITTEN
AUTHORIZATION OF BOTH NAI AND AGENT, obligations owed to it other than Secured
Obligations against any Collateral held by it from time to time. Any Deposit
Taker for BNPLC or a Participant shall not be permitted by BNPLC or the
applicable Participant, as the case may be, to violate such agreements. However,
NAI acknowledges and agrees (without limiting its right to recover damages from
a Deposit Taker that violates such agreements) that Agent shall not be
responsible for, or be deemed to have taken any action against NAI because of,
any Deposit Taker's violation of such agreements; and, neither BNPLC nor any
Participant shall be responsible for, or be deemed to have taken any action
against NAI because of, any violation of such agreements by a Deposit Taker for
another party.
4.9 Deposit Taker Losses. Agent shall not be responsible for any Deposit
Taker Losses. However, Deposit Taker Losses with respect to a Deposit Taker for
a particular Participant shall reduce the amount of BNPLC's Corresponding
Obligations to Participants which are payable to such Participant as provided in
Section 2.2 of the Participation Agreement. Further, when Deposit Taker Losses
with respect to a Deposit Taker for a particular Participant are incurred in
excess of the payments of Secured Obligations that such Participant would then
have been entitled to receive under the Participation Agreement but for such
Deposit Taker Losses, such Participant must immediately pay the excess to Agent
as additional Collateral hereunder, failing which NAI may recover any damages
suffered by it because of the Deposit Taker Losses from such Deposit Taker or
such Participant.
4.10 Losses Resulting from Failure of Deposit Taker to Comply with this
Agreement. Any Participant, the Deposit Taker for whom has failed to comply with
the requirements of this Agreement or any Notices of Security Interest and any
Deposit Taker's Acknowledgments and Agreements (the "RESPONSIBLE PARTICIPANT")
must defend, indemnify, and hold harmless BNPLC, Agent and the other
Participants from and against any Losses resulting from such failure. Without
limiting the foregoing, if the failure of a Deposit Taker for a Responsible
Participant to comply strictly with the terms of this Agreement (including,
without limitation, the provisions of Section 5.4 concerning the issuance and
redemption of Certificates of Deposit and the requirement that any cash deposits
be held in a deposit account located in either New York or California) causes,
in whole or in part, the security interest of Agent in the Collateral held by
such Deposit Taker to be unperfected, then any and all Losses suffered as a
result of such nonperfection shall be borne solely by the Responsible
Participant and shall not be shared by BNPLC, Agent or the other Participants.
ARTICLE V DELIVERY AND MAINTENANCE OF CASH COLLATERAL
5.1 Delivery of Funds by NAI. On each Base Rent Date, NAI must deliver
to Agent, subject to the pledge and security interest created hereby, funds as
Cash Collateral then needed (if any) to cause the Value of the Collateral to be
no less than the Minimum Collateral Value. Each delivery of funds required by
the preceding sentence must be received by Agent no later than 12:00 noon (San
Francisco time) on the date it is required; if received after 12:00 noon it will
be considered for purposes of the Land Lease as received on the next following
Business
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Day. At least five Business Days prior to any Base Rent Date upon which it is
expected that NAI will be required to deliver additional funds pursuant to this
Section, NAI shall notify BNPLC, Agent and each of the Participants thereof and
of the amount NAI expects to deliver to Agent as Cash Collateral on the
applicable Base Rent Date. In addition to required deliveries of Cash Collateral
as provided in the foregoing provisions, NAI may on any date (whether or not a
Base Rent Date) deliver additional Cash Collateral to Agent as necessary to
prevent any Default from becoming an Event of Default. Upon receipt of any funds
delivered to it by NAI as Cash Collateral, Agent shall immediately deposit the
same with the Deposit Takers in accordance with the requirements of Sections 5.3
and 5.4 below.
5.2 Transition Account. Pending deposit in the Accounts or other
application as provided herein, all Cash Collateral received by Agent shall be
credited to and held by Agent in an account (the "TRANSITION ACCOUNT") styled
"NAI Collateral Account, held for the benefit of BNP Leasing Corporation and the
Participants," separate and apart from all other property and funds of NAI or
other Persons, and no other property or funds shall be deposited in the
Transition Account. The books and records of Agent shall reflect that the
Transition Account and all Cash Collateral on deposit therein are owned by NAI,
subject to a pledge and security interest in favor of Agent for the benefit of
BNPLC and Participants.
5.3 Allocation of Cash Collateral Among Deposit Takers. Funds received
by Agent from NAI as Cash Collateral will be allocated for deposit among the
Deposit Takers as follows:
first, to the extent possible the funds will be allocated as required to
rectify and prevent any Collateral Imbalance; and
second, the funds will be allocated to the Deposit Taker for BNPLC,
unless the Deposit Taker for BNPLC has become a Disqualified Deposit
Taker, in which case the funds will be allocated to other Deposit Takers
who are not Disqualified Deposit Takers as Agent deems appropriate.
Further, if for any reason a Collateral Imbalance is determined by Agent to
exist, Agent shall, as required to rectify or mitigate the Collateral Imbalance,
promptly reallocate Collateral among Deposit Takers by withdrawing Cash
Collateral from some Accounts and redepositing it in other Accounts. (If any
party to this Agreement believes that the Value of the Accounts held by a
particular Deposit Taker causes a Collateral Imbalance to exist, that party will
promptly notify BNPLC, NAI and Agent.) Subject to the foregoing, and provided
that Agent does not thereby create or exacerbate a Collateral Imbalance, Agent
may withdraw and redeposit Cash Collateral in order to reallocate the same among
Deposit Takers from time to time as Agent deems appropriate. For purposes of
illustration only, examples of the allocations required by this Section are set
forth in ATTACHMENT 5.
5.4 Issuance and Redemption of Certificates of Deposit. Upon the receipt
of any deposit of Cash Collateral from Agent, each Deposit Taker shall issue a
Certificate of Deposit evidencing the Account into which such deposit is made
and deliver such Certificate of Deposit to Agent for the benefit of BNPLC and
the Participants. Each Certificate of Deposit shall be issued in an amount equal
to the Value of the Account which it evidences and shall otherwise be in the
form set forth as ATTACHMENT 1 to this Agreement. Upon depositing any Cash
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Collateral into an Account that is already evidenced by an outstanding
Certificate of Deposit, Agent will surrender the outstanding Certificate of
Deposit, and in exchange the Deposit Taker receiving the deposit will issue a
new Certificate of Deposit, evidencing the total amount of Cash Collateral in
the Account after the deposit. A Deposit Taker that has issued a Certificate of
Deposit may require the surrender of the Certificate of Deposit as a condition
to a withdrawal from the Account evidenced thereby, including any withdrawal
required or permitted by this Agreement. Upon surrender of a Certificate of
Deposit in connection with a withdrawal of less than all of the Cash Collateral
in the Account evidenced thereby, the applicable Deposit Taker will concurrently
issue a new Certificate of Deposit to Agent, evidencing the balance of the Cash
Collateral remaining on deposit in the Account after the withdrawal.
Notwithstanding the foregoing, if any Certificate of Deposit held by Agent shall
be destroyed, lost or stolen, the Deposit Taker that issued the Certificate,
upon the written request of Agent, shall issue a new Certificate of Deposit to
Agent in lieu of and in substitution for the Certificate of Deposit so
destroyed, lost or stolen. However, as applicant for the substitute Certificate
of Deposit, Agent must indemnify (at no cost to NAI) the applicable Deposit
Taker against any liability on the Certificate of Deposit destroyed, lost or
stolen, and Agent shall furnish to the Deposit Taker an affidavit of an officer
of Agent setting forth the fact of destruction, loss or theft and confirming the
status of Agent as holder of the Certificate of Deposit immediately prior to the
destruction, loss or theft. If any Certificate of Deposit held by Agent shall
become mutilated, the Deposit Taker that issued the Certificate, upon the
written request of Agent, shall issue a new Certificate of Deposit to Agent in
exchange and substitution for the mutilated Certificate of Deposit. Agent shall
hold all Certificates of Deposit for the benefit of BNPLC and the Participants,
subject to the pledge and security interest created hereby.
5.5 Status of the Accounts Under the Reserve Requirement Regulations.
Deposit Takers shall be permitted to structure the Accounts as nonpersonal time
deposits under 12 C.F.R., Part II, Chapter 204 (commonly known as "Regulation
D"). Accordingly, each Deposit Taker may require at least seven days advance
notice of any withdrawal or transfer of funds from Accounts it maintains and may
limit the number of withdrawals or transfers from such Accounts to no more than
six in any calendar month, notwithstanding anything to the contrary herein or in
any deposit agreement that NAI and any Deposit Taker may enter into with respect
to any Account. As necessary to satisfy the seven days notice requirement with
respect to withdrawals by Agent when required by NAI pursuant to the provisions
below, Agent shall notify Deposit Takers promptly after receipt of any notice
from NAI described in subsection 6.1.2 or 6.2.1 or in Section 6.3.
5.6 Acknowledgment by NAI that Requirements of this Agreement are
Commercially Reasonable. NAI acknowledges and agrees that the requirements set
forth herein concerning receipt, deposit, withdrawal, allocation, application
and distribution of Cash Collateral by Agent, including the requirements and
time periods set forth in the next Article, are commercially reasonable.
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ARTICLE VI WITHDRAWAL OF CASH COLLATERAL
NAI may not withdraw Cash Collateral, except as follows:
6.1 Withdrawal of Collateral Prior to the Designated Sale Date. NAI may
require Agent to present Certificates of Deposit for payment and withdraw Cash
Collateral from Accounts on any date prior to the Designated Sale Date and to
deliver such Cash Collateral to NAI (which delivery shall be free and clear of
all liens and security interests hereunder); provided, however, that in each
case:
6.1.1 Such withdrawal and delivery of the Cash Collateral to NAI
will not cause the Value of the remaining Collateral to be less than the Minimum
Collateral Value.
6.1.2 by a notice in the form of ATTACHMENT 6, NAI must give
Agent, BNPLC and the Participants notice of the required withdrawal at least ten
days prior to the date upon which the withdrawal is to occur.
6.1.3 No Default or Event of Default shall have occurred and be
continuing at the time NAI gives the notice required by the preceding subsection
or on the date upon which the withdrawal is required.
6.1.4 NAI must pay to Agent any and all costs incurred by Agent
in connection with the withdrawal.
6.1.5 Agent shall determine the Accounts from which to make any
withdrawal required by NAI pursuant to this Section as necessary to prevent or
mitigate any Collateral Imbalance.
6.2 Withdrawal and Application of Cash Collateral to Reduce or Satisfy
the Secured Obligations to the Participants. To reduce the "Break Even Price" or
"Supplemental Payment" required under (and as defined in) the Purchase Agreement
(and, thus, to reduce the Secured Obligations), NAI may require Agent to
withdraw Cash Collateral then held by or for Agent pursuant to this Agreement on
the Designated Sale Date and to deliver the same on the Designated Sale Date or
on any date thereafter prior to an Event of Default (which delivery shall be
free and clear of all liens and security interests hereunder) directly to the
Participants in proportion to their respective rights to payment of BNPLC's
Corresponding Obligations to Participants and for application thereto or the
reduction thereof pursuant to Section 2.2 of the Participation Agreement;
provided, that:
6.2.1 by a notice in the form of ATTACHMENT 7, NAI must have
notified Agent, BNPLC and each of the Participants of the required withdrawal
and payment to Participants at least ten days prior to the date upon which it is
to occur;
6.2.2 the required withdrawal shall be made as determined by
Agent, first, from the Accounts maintained by the Deposit Takers for the
Participants, and then (to the extent necessary) from the Accounts maintained by
the Deposit Taker for BNPLC; and
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6.2.3 in any event, no withdrawals or payments directly to
Participants shall be required by this Section 6.2 (or permitted over the
objection of BNPLC) in excess of those required to satisfy BNPLC's Corresponding
Obligations to Participants or to reduce such obligations to zero under the
Participation Agreement.
6.3 Withdrawal and Application of Cash Collateral to Reduce or Satisfy
the Secured Obligations to BNPLC. To satisfy NAI's Purchase Agreement
Obligations, NAI may require Agent to withdraw any Cash Collateral held by the
Deposit Taker for BNPLC pursuant to this Agreement on the Designated Sale Date
and to deliver the same on the Designated Sale Date or on any date thereafter
prior to an Event of Default (which delivery shall be free and clear of all
liens and security interests hereunder) directly to BNPLC as a payment on behalf
of NAI of amounts due under the Purchase Agreement; provided, that by a notice
in the form of ATTACHMENT 8, NAI must have notified Agent and BNPLC of the
required withdrawal and payment to BNPLC at least ten days prior to the date
upon which it is to occur.
6.4 Withdrawal of Cash Collateral From Accounts Maintained by
Disqualified Deposit Takers. NAI may from time to time prior to the Designated
Sale Date (regardless of the existence of any Default or Event of Default)
require Agent to withdraw any or all Cash Collateral from any Account maintained
by a Disqualified Deposit Taker and deposit it, still subject to the pledge and
grant of security interest hereunder, with other Deposit Takers who are not
Disqualified Deposit Takers (in accordance with the requirements of Sections 5.3
and 5.4) on any date prior to the Designated Sale Date; provided, that by a
notice in the form of ATTACHMENT 9, NAI must have notified Agent, BNPLC and each
of the Participants of the required withdrawal at least ten days prior to the
date upon which it is to occur.
ARTICLE VII REPRESENTATIONS AND COVENANTS OF NAI
7.1 Representations of NAI. NAI represents to BNPLC, Agent and the
Participants as follows:
7.1.1 NAI is the legal and beneficial owner of the Collateral
(or, in the case of after-acquired Collateral, at the time NAI acquires rights
in the Collateral, will be the legal and beneficial owner thereof). No other
Person has (or, in the case of after-acquired Collateral, at the time NAI
acquires rights therein, will have) any right, title, claim or interest (by way
of Lien, purchase option or otherwise) in, against or to the Collateral, except
for rights created hereunder.
7.1.2 Agent has (or in the case of after-acquired Collateral, at
the time NAI acquires rights therein, will have) a valid, first priority,
perfected pledge of and security interest in the Collateral, regardless of the
characterization of the Collateral as deposit accounts, instruments or general
intangibles under the UCC, but assuming that the representations of each Deposit
Taker in its Deposit Taker's Acknowledgment and Agreement are true.
7.1.3 NAI has delivered to Agent, together with all necessary
stock powers, endorsements, assignments and other necessary instruments of
transfer, the originals of all documents, instruments and agreements evidencing
Accounts, Certificates of Deposit or Cash Collateral.
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7.1.4 NAI's chief executive office is located at the address of
NAI set forth in Article II of the Common Definitions and Provisions Agreement
(Phase V - Land) or at another address in California specified in a notice that
NAI has given to Agent as required by Section 7.2.4.
7.1.5 To the knowledge of NAI, neither the ownership or the
intended use of the Collateral by NAI, nor the pledge of Accounts or the grant
of the security interest by NAI to Agent herein, nor the exercise by Agent of
its rights or remedies hereunder, will (i) violate any provision of (a)
Applicable Law, (b) the articles or certificate of incorporation, charter or
bylaws of NAI, or (c) any agreement, judgment, license, order or permit
applicable to or binding upon NAI, or (ii) result in or require the creation of
any Lien, charge or encumbrance upon any assets or properties of NAI except as
expressly contemplated in this Agreement. Except as expressly contemplated in
this Agreement, to the knowledge of NAI no consent, approval, authorization or
order of, and no notice to or filing with any court, governmental authority or
third party is required in connection with the pledge or grant by NAI of the
security interest contemplated herein or the exercise by Agent of its rights and
remedies hereunder.
7.2 Covenants of NAI. NAI hereby agrees as follows:
7.2.1 NAI, at NAI's expense, shall promptly procure, execute and
deliver to Agent all documents, instruments and agreements and perform all acts
which are necessary, or which Agent may reasonably request, to establish,
maintain, preserve, protect and perfect the Collateral, the pledge thereof to
Agent or the security interest granted to Agent therein and the first priority
of such pledge or security interest or to enable Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the preceding sentence, NAI shall (A) procure,
execute and deliver to Agent all stock powers, endorsements, assignments,
financing statements and other instruments of transfer requested by Agent, (B)
deliver to Agent promptly upon receipt all originals of Collateral consisting of
instruments, documents and chattel paper, (C) cause the security interest of
Agent in any Collateral consisting of securities to be recorded or registered in
the books of any financial intermediary or clearing corporation requested by
Agent, and (D) reimburse Agent upon request for any legal opinion Agent may
elect to obtain from a nationally recognized commercial law firm authorized to
practice in New York concerning the enforceability, first priority and
perfection of Agent's security interest in any Collateral maintained in New
York, if BNPLC or any Participant should at any time elect to use a Deposit
Taker that will maintain one or more Accounts in New York.
7.2.2 NAI shall not use or consent to any use of any Collateral
in violation of any provision of the this Agreement or any other Transaction
Document or any Applicable Law.
7.2.3 NAI shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges now or hereafter imposed
upon, relating to or affecting any Collateral.
7.2.4 Without thirty days' prior written notice to Agent, NAI
shall not change NAI's name or place of business (or, if NAI has more than one
place of business, its chief executive office).
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7.2.5 NAI shall appear in and defend, on behalf of Agent, any
action or proceeding which may affect NAI's title to or Agent's interest in the
Collateral.
7.2.6 Subject to the express rights of NAI under Article VI, NAI
shall not surrender or lose possession of (other than to Agent or a Deposit
Taker pursuant hereto), sell, encumber, lease, rent, option, or otherwise
dispose of or transfer any Collateral or right or interest therein, and NAI
shall keep the Collateral free of all Liens.
7.2.7 NAI will not take any action which would in any manner
impair the value or enforceability of Agent's pledge of or security interest in
any Collateral, nor will NAI fail to take any action which is required to
prevent (and which NAI knows is required to prevent) an impairment of the value
or enforceability of Agent's pledge of or security interest in any Collateral.
7.2.8 NAI shall pay (and shall indemnify and hold harmless Agent
from and against) all Losses incurred by Agent in connection with or because of
(A) the interest acquired by Agent in any Collateral pursuant to this Agreement,
or (B) the negotiation or administration of this Agreement, whether such Losses
are incurred at the time of execution of this Agreement or at any time in the
future. Costs and expenses included in such Losses may include, without
limitation, all filing and recording fees, taxes, UCC search fees and Attorneys'
Fees incurred by Agent with respect to the Collateral.
7.2.9 Without limiting the foregoing, within five Business Days
after NAI becomes aware of any failure of the pledge or security interest
contemplated herein in the Transition Account or any Account, Certificate of
Deposit or Cash Collateral to be a valid, perfected, first priority pledge or
security interest (regardless of the characterization of the Transition Account
or any Accounts, Certificates of Deposit or Cash Collateral as deposit accounts,
instruments or general intangibles under the UCC), NAI shall notify Agent, BNPLC
and the Participants of such failure. In addition, if the failure would not
exist but for NAI's delivery of Cash Collateral to Agent subject to prior Liens
or other claims by one or more third parties, or but for the grant by NAI itself
of any Lien or other interest in the Collateral to one or more third parties,
then, in addition to any other remedies available to BNPLC or Agent under the
circumstances, NAI must pay to BNPLC any additional Base Rent that has accrued
under the Land Lease because of (or that would have accrued if BNPLC had been
aware of) the failure, together with interest at the Default Rate on any such
additional Base Rent.
ARTICLE VIII AUTHORIZED ACTION BY AGENT
8.1 Power of Attorney. NAI hereby irrevocably appoints Agent as NAI's
attorney-in-fact for the purpose of authorizing Agent to perform (but Agent
shall not be obligated to and shall incur no liability to NAI or any third party
for failure to perform) any act which NAI is obligated by this Agreement to
perform, and to exercise, consistent with the other provisions of this
Agreement, such rights and powers as NAI might exercise with respect to the
Collateral during any period in which a Default or Event of Default has occurred
and is continuing, including the right to (a) collect by legal proceedings or
otherwise and endorse, receive and receipt for all dividends, interest,
payments, proceeds and other sums and property now or
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hereafter payable on or on account of the Collateral; (b) enter into any
extension, reorganization, deposit, merger, consolidation or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for the Collateral; (c) insure, process, preserve and enforce the
Collateral; (d) make any compromise or settlement, and take any action it deems
advisable, with respect to the Collateral; (e) pay any indebtedness of NAI
relating to the Collateral; and (f) execute UCC financing statements and other
documents, instruments and agreements required hereunder. NAI agrees that such
care as Agent gives to the safekeeping of its own property of like kind shall
constitute reasonable care of the Collateral when in Agent's possession;
provided, however, that Agent shall not be obligated to NAI to give any notice
or take any action to preserve rights against any other Person in connection
with the Secured Obligations or with respect to the Collateral.
ARTICLE IX DEFAULT AND REMEDIES
9.1 Remedies. In addition to all other rights and remedies granted to
Agent, BNPLC or the Participants by this Agreement, the Land Lease, the Purchase
Agreement, the Participation Agreement, the UCC and other Applicable Laws, Agent
may, upon the occurrence and during the continuance of any Event of Default,
exercise any one or more of the following rights and remedies, all of which will
be in furtherance of its rights as a secured party under the UCC:
(a) Agent may collect, receive, appropriate or realize upon the
Collateral or otherwise foreclose or enforce the pledge of or security interests
in any or all Collateral in any manner permitted by Applicable Law or in this
Agreement; and
(b) Agent may notify any or all Deposit Takers to pay all or any
portion of the Collateral held by such Deposit Taker(s) directly to Agent.
Agent shall distribute the proceeds of all Collateral received by Agent after
the occurrence of an Event of Default to BNPLC and the Participants for
application to the Secured Obligations. If any proceeds of Collateral remain
after all Secured Obligations have been paid in full, Agent will deliver or
direct the Deposit Takers to deliver such proceeds to NAI or other Persons
entitled thereto. In any case where notice of any sale or disposition of any
Collateral is required, NAI hereby agrees that seven (7) Business Days notice of
such sale or disposition is reasonable.
ARTICLE X OTHER RECOURSE
10.1 Recovery Not Limited. To the fullest extent permitted by applicable
law, NAI waives any right to require that Agent, BNPLC or the Participants
proceed against any other Person, exhaust any Collateral or other security for
the Secured Obligations, or to have any Other Liable Party joined with NAI in
any suit arising out of the Secured Obligations or this Agreement, or pursue any
other remedy in their power. NAI waives any and all notice of acceptance of this
Agreement. NAI further waives notice of the creation, modification,
rearrangement, renewal or extension for any period of any of the Secured
Obligations of any Other Liable Party from time to time and any defense arising
by reason of any disability or other defense of any Other Liable Party or by
reason of the cessation from any cause whatsoever of the liability of any Other
Liable Party. Until all of the Secured Obligations shall have been paid in
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full, NAI shall have no right to subrogation, reimbursement, contribution or
indemnity against any Other Liable Party and NAI waives the right to enforce any
remedy which Agent, BNPLC or any Participant has or may hereafter have against
any Other Liable Party, and waives any benefit of and any right to participate
in any other security whatsoever now or hereafter held by Agent, BNPLC or any
Participant. NAI authorizes Agent, BNPLC and the Participants, without notice or
demand and without any reservation of rights against NAI and without affecting
NAI's liability hereunder or on the Secured Obligations, from time to time to
(a) take or hold any other property of any type from any other Person as
security for the Secured Obligations, and exchange, enforce, waive and release
any or all of such other property, (b) after any Event of Default, apply or
require the application of the Collateral (in accordance with this Agreement) or
such other property in any order they may determine and to direct the order or
manner of sale thereof as they may determine, (c) renew, extend for any period,
accelerate, modify, compromise, settle or release any of the obligations of any
Other Liable Party with respect to any or all of the Secured Obligations or
other security for the Secured Obligations, and (d) release or substitute any
Other Liable Party.
ARTICLE XI PROVISIONS CONCERNING AGENT
In the event of any conflict between the following and other provisions
in this Agreement, the following will control:
11.1 Appointment and Authority. BNPLC and each Participant hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to take all actions
and to exercise such powers under this Agreement as are specifically delegated
to Agent by the terms hereof, together with all other powers reasonably
incidental thereto. The relationship of Agent to the Participants is only that
of one commercial bank acting as collateral agent for others, and nothing herein
shall be construed to constitute Agent a trustee or other fiduciary for any
Participant or anyone claiming through or under a Participant nor to impose on
Agent duties and obligations other than those expressly provided for in this
Agreement. With respect to any matters not expressly provided for in this
Agreement and any matters which this Agreement places within the discretion of
Agent, Agent shall not be required to exercise any discretion or take any
action, and it may request instructions from BNPLC and Participants with respect
to any such matter, in which case it shall be required to act or to refrain from
acting (and shall be fully protected and free from liability to all Participants
in so acting or refraining from acting) upon the instructions of the Majority,
as defined in the Participation Agreement, including itself as a Participant and
BNPLC; provided, however, that Agent shall not be required to take any action
which exposes it to a risk of personal liability that it considers unreasonable
or which is contrary to this Agreement or the other documents referenced herein
or to Applicable Law.
11.2 Exculpation, Agent's Reliance, Etc. Neither Agent nor any of its
directors, officers, agents, attorneys, or employees shall be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement, INCLUDING THEIR NEGLIGENCE OF ANY KIND, EXCEPT THAT EACH SHALL
BE LIABLE FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Without limiting
the generality of the foregoing, Agent (1) may treat the rights of any
Participant under its Participation Agreement as continuing until Agent receives
written notice of the assignment or transfer of those rights in accordance with
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such Participation Agreement, signed by such Participant and in form
satisfactory to Agent; (2) may consult with legal counsel (including counsel for
NAI), independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts, unless the
action taken or omitted constitutes misconduct; (3) makes no warranty or
representation and shall not be responsible for any statements, warranties or
representations made in or in connection with this Agreement or the other
documents referenced herein; (4) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of the Transaction Documents on the part of any party thereto, or to
inspect the property (including the books and records) of any party thereto; (5)
shall not be responsible to any Participant for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Transaction
Document or any instrument or document furnished in connection therewith; (6)
may rely upon the representations and warranties of NAI, Participants and
Deposit Takers in exercising its powers hereunder; and (7) shall incur no
liability under or in respect of the Transaction Documents by acting upon any
notice, consent, certificate or other instrument or writing (including any
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper Person or Persons.
11.3 Participant's Credit Decisions. Each Participant acknowledges that
it has, independently and without reliance upon Agent or any other Participant,
made its own analysis of NAI and the transactions contemplated hereby and its
own independent decision to enter into the Transaction Documents to which it is
a party. Each Participant also acknowledges that it will, independently and
without reliance upon Agent or any other Participant and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Transaction
Documents.
11.4 Indemnity. Each Participant agrees to indemnify Agent (to the
extent not reimbursed by NAI within ten days after demand) from and against such
Participant's Percentage of any and all Losses of any kind or nature whatsoever
which to any extent (in whole or in part) may be imposed on, incurred by, or
asserted against Agent growing out of, resulting from or in any other way
associated with any of the Collateral, the Transaction Documents and the
transactions and events (including the enforcement thereof) at any time
associated therewith or contemplated therein. THE FOREGOING INDEMNIFICATION
SHALL APPLY WHETHER OR NOT SUCH LOSSES ARE IN ANY WAY OR TO ANY EXTENT OWED, IN
WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED,
IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,
PROVIDED ONLY THAT NO PARTICIPANT SHALL BE OBLIGATED UNDER THIS SECTION TO
INDEMNIFY AGENT FOR THAT PORTION, IF ANY, OF ANY LOSS WHICH IS PROXIMATELY
CAUSED BY AGENT'S OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS
DETERMINED IN A FINAL JUDGMENT RENDERED AGAINST AGENT. Cumulative of the
foregoing, each Participant agrees to reimburse Agent promptly upon demand for
such Participant's Percentage share of any costs and expenses to be paid to
Agent by NAI hereunder to the extent that Agent is not timely reimbursed by NAI
as provided in subsection 7.2.8. As used in this Section the term "Agent" shall
refer not only to the Person designated as such in the introductory paragraph of
this Agreement, but also to each director, officer, agent, attorney, employee,
representative and Affiliate of such Person.
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11.5 Agent's Rights as Participant and Deposit Taker. In its capacity as
a Participant, Banque Nationale de Paris shall have the same rights and
obligations as any Participant and may exercise such rights as though it were
not Agent. In its capacity as a Deposit Taker, Banque Nationale de Paris shall
have the same rights and obligations as any Deposit Taker and may exercise such
rights as though it were not Agent. Banque Nationale de Paris and any of its
Affiliates may accept deposits from, lend money to, act as Trustee under
indentures of, and generally engage in any kind of business with NAI or its
Affiliates, all as if Banque Nationale de Paris were not designated as the Agent
hereunder and without any duty to account therefor to any other Participant.
11.6 Investments. Whenever Agent in good faith determines that it is
uncertain about how to distribute any funds which it has received hereunder, or
whenever Agent in good faith determines that there is any dispute among BNPLC
and Participants about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to invest funds
pending distribution, Agent shall invest such funds pending distribution, all
interest on any such investment shall be distributed upon the distribution of
such investment and in the same proportion and to the same Persons as such
investment. All moneys received by Agent for distribution to BNPLC or
Participants shall be held by Agent pending such distribution solely as Agent
hereunder, and Agent shall have no equitable title to any portion thereof.
11.7 Benefit of Article XI. The provisions of this Article (other than
the following Section 11.8) are intended solely for the benefit of Agent, BNPLC
and Participants, and NAI shall not be entitled to rely on any such provision or
assert any such provision in a claim or defense against Agent, BNPLC or any
Participant. Agent, BNPLC and Participants may waive or amend such provisions as
they desire without any notice to or consent of NAI.
11.8 Resignation. Agent may resign at any time by giving written notice
thereof to BNPLC, Participants and NAI. Upon any such resignation the Majority
(as defined in the Participation Agreement) shall have the right to appoint a
successor Agent, subject to NAI's consent, such consent not to be unreasonably
withheld. A successor must be appointed for any retiring Agent, and such Agent's
resignation shall become effective when such successor accepts such appointment.
If, within thirty days after the date of the retiring Agent's resignation, no
successor Agent has been appointed and has accepted such appointment, then the
retiring Agent may appoint a successor Agent, which shall be a commercial bank
organized or licensed to conduct a banking or trust business under the laws of
the United States of America or of any state thereof. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation hereunder, the provisions of this Article 11 shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent.
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ARTICLE XII MISCELLANEOUS
12.1 Provisions Incorporated From Other Operative Documents. Reference
is made to the Common Definitions and Provisions Agreement (Phase V - Land), to
the Purchase Agreement and to the Participation Agreement for a statement of the
terms thereof. Without limiting the generality of the foregoing, the provisions
of Article II of the Common Definitions and Provisions Agreement (Phase V -
Land) are incorporated into this Agreement for all purposes as if set forth in
this Article.
12.2 Cumulative Rights, etc. Except as herein expressly provided to the
contrary, the rights, powers and remedies of Agent, BNPLC and the Participants
under this Agreement shall be in addition to all rights, powers and remedies
given to them by virtue of any Applicable Law, any other Transaction Document or
any other agreement, all of which rights, powers, and remedies shall be
cumulative and may be exercised successively or concurrently without impairing
their respective rights hereunder. NAI waives any right to require Agent, BNPLC
or any Participant to proceed against any Person or to exhaust any Collateral or
to pursue any remedy in Agent's, BNPLC's or such Participant's power.
12.3 Survival of Agreements. All representations and warranties of NAI
herein, and all covenants and agreements herein shall survive the execution and
delivery of this Agreement, the execution and delivery of any other Transaction
Documents and the creation of the Secured Obligations and continue until
terminated or released as provided herein.
12.4 Other Liable Party. Neither this Agreement nor the exercise by
Agent or the failure of Agent to exercise any right, power or remedy conferred
herein or by law shall be construed as relieving any Other Liable Party from
liability on the Secured Obligations or any deficiency thereon. This Agreement
shall continue irrespective of the fact that the liability of any Other Liable
Party may have ceased or irrespective of the validity or enforceability of any
other agreement evidencing or securing the Secured Obligations to which NAI or
any Other Liable Party may be a party, and notwithstanding the reorganization,
death, incapacity or bankruptcy of any Other Liable Party, or any other event or
proceeding affecting any Other Liable Party.
12.5 Termination. Following the Designated Sale Date, upon satisfaction
in full of all Secured Obligations and upon written request for the termination
hereof delivered by NAI to Agent, (i) this Agreement and the pledge and security
interest created hereby shall terminate and all rights to the Collateral shall
revert to NAI and (ii) Agent will, upon NAI's request and at NAI's expense
execute and deliver to NAI such documents as NAI shall reasonably request to
evidence such termination and release.
[The signature pages follow.]
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IN WITNESS WHEREOF, NAI, BNPLC, Agent and the Participants whose
signatures appear below have caused this Pledge Agreement (Phase V - Land) to be
executed as of March 1, 2000.
"NAI"
NETWORK APPLIANCE, INC.
By:
---------------------------------
Jeffry R. Allen, Chief Financial
Officer
29
[Continuation of signature pages to Pledge Agreement (Phase V - Land) dated to
be effective March 1, 2000.]
"BNPLC"
BNP LEASING CORPORATION
By:
---------------------------------
Lloyd G. Cox, Vice President
30
[Continuation of signature pages to Pledge Agreement (Phase V - Land) dated to
be effective March 1, 2000.]
"AGENT"
BANQUE NATIONALE DE PARIS
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
"PARTICIPANT"
BANQUE NATIONALE DE PARIS
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
31
ATTACHMENT 1
TO PLEDGE AGREEMENT
CERTIFICATE OF DEPOSIT
(No. _________)
[____________, _____]
[NAME OF THE ISSUING
DEPOSIT TAKER AND THE
ADDRESS OF ITS APPLICABLE
ACCOUNT OFFICE]
PAYABLE TO
THE ORDER OF: BANQUE NATIONALE DE PARIS, as Agent under the Pledge
Agreement (Phase V - Land) dated March 1, 2000, among
Network Appliance, Inc., BNP Leasing Corporation, Banque
Nationale de Paris and any other financial institutions
which are from time to time Participants under such
Pledge Agreement (Phase V - Land) and Banque Nationale
de Paris, acting in its capacity as agent for BNPLC and
the Participants
Dollars
- --------------------------------------------------------------------------------
in current funds, without interest, seven days after presentment of this
certificate properly endorsed.
The bank issuing this certificate acknowledges and
certifies that on the date indicated above the payee deposited the dollar amount
indicated above, and that such amount shall be payable as provided above.
------------------------------------
Authorized Signature
32
ATTACHMENT 2
TO PLEDGE AGREEMENT
SUPPLEMENT TO PLEDGE AGREEMENT
[____________, _____]
Banque Nationale de Paris
- --------------------
- --------------------
- --------------------
Network Appliance, Inc.
- --------------------
- --------------------
- --------------------
1. Reference is made to the Pledge Agreement (Phase V - Land) (the
"PLEDGE AGREEMENT") dated March 1, 2000 among Network Appliance, Inc. ("NAI"),
BNP Leasing Corporation ("BNPLC"), Banque Nationale de Paris and any other
financial institutions which are from time to time Participants under such
Pledge Agreement (collectively, the "PARTICIPANTS") and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the Participants (in such
capacity, "AGENT"). Unless otherwise defined herein, all capitalized terms used
in this Supplement have the respective meanings given to those terms in the
Pledge Agreement.
2. The undersigned hereby certifies to Agent and NAI that the
undersigned has become a party to the Participation Agreement by executing a
supplement as provided therein and that its Percentage thereunder is ______%.
3. The undersigned, by executing and delivering this Supplement to NAI
and Agent, hereby agrees to become a party to the Pledge Agreement and agrees to
be bound by all of the terms thereof applicable to Participants. The Deposit
Taker for the undersigned shall be _________________, until such time as another
Deposit Taker for the undersigned shall be designated in accordance with
Sections 4.4 or 4.5 of the Pledge Agreement. The undersigned certifies to Agent
and NAI that such Deposit Taker is an Initially Qualified Deposit Taker and
satisfies the requirements for a Deposit Taker set forth in Section 4.1 of the
Pledge Agreement.
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IN WITNESS WHEREOF, the undersigned has executed this Supplement as of
the day and year indicated above.
[ ]
----------------------------------
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
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ATTACHMENT 3
TO PLEDGE AGREEMENT
NOTICE OF NAI'S ELECTION TO CHANGE THE COLLATERAL PERCENTAGE
[____________, _____]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase V - Land) (the "PLEDGE
AGREEMENT") dated March 1, 2000 among Network Appliance,
Inc., BNP Leasing Corporation, Banque Nationale de Paris
and any other financial institutions which are from time
to time Participants under such Pledge Agreement and
Banque Nationale de Paris, acting in its capacity as
agent for BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement referenced above. This letter
constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to
Section 3.1 of the Pledge Agreement, NAI elects to change the Collateral
Percentage to:
__________ percent (___%),
on the following Base Rent Date:
____________, _____
NAI expects that multiplying the new Collateral Percentage specified
above against Stipulated Loss Value of:
____________________________ Dollars ($__________),
will result in an expected new Minimum Collateral Value of:
____________________________ Dollars ($__________).
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[NOTE: THE NEXT PARAGRAPH WILL BE INCLUDED ONLY IN A NOTICE OF AN INCREASE IN
THE COLLATERAL PERCENTAGE, BECAUSE OF WHICH NAI WILL BE REQUIRED TO DELIVER
ADDITIONAL CASH COLLATERAL TO SATISFY THE MINIMUM COLLATERAL VALUE REQUIREMENTS
IN SECTION 5.1 OF THE PLEDGE AGREEMENT:
Because of the increase in the Collateral Percentage which will result
from this notice and the corresponding increase in the Minimum Collateral Value,
NAI will deliver additional Cash Collateral to you as required by Section 5.1 of
the Pledge Agreement no later than 12:00 noon (San Francisco time) on the Base
Rent Date specified above, in the amount of:
____________________________ Dollars ($__________).]
To assure you that NAI has satisfied the conditions to its right to
change the Collateral Percentage as provided in this notice, and to induce you
to rely upon this notice in discharging your responsibilities under the Pledge
Agreement, NAI certifies to you that:
1. NAI is giving this notice to you, BNPLC and the Participants at least
ten Business Days prior to the Base Rent Date specified above, and such Base
Rent Date is the commencement of a Base Rent Period.
2. No Event of Default or other event or circumstance that would,
pursuant to Section 3.2 of the Pledge Agreement, preclude NAI from designating
the new Collateral Percentage above has occurred and is continuing, and NAI does
not anticipate that on the Base Rent Date specified above there will have
occurred and be continuing any such Event of Default or other event or
circumstance.
3. No Mandatory Collateral Period shall be in effect as of the effective
date specified above.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS ABOVE ARE
NOT CORRECT. HOWEVER, WE ASK THAT YOU NOTIFY NAI IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Network Appliance, Inc.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
[cc BNPLC and all Participants]
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ATTACHMENT 4
TO PLEDGE AGREEMENT
NOTICE OF SECURITY INTEREST
[____________, _____]
[Name of Deposit Taker]
[Address of Deposit Taker]
1. Reference is made to the Pledge Agreement (Phase V - Land) (the
"PLEDGE AGREEMENT") dated March 1, 2000 among Network Appliance, Inc. ("NAI"),
BNP Leasing Corporation ("BNPLC"), Banque Nationale de Paris and any other
financial institutions which are from time to time Participants under such
Pledge Agreement (collectively, the "PARTICIPANTS") and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the Participants (in such
capacity, "AGENT"). Unless otherwise defined herein, all capitalized terms used
in this Notice have the respective meanings given to those terms in the Pledge
Agreement.
2. NAI has informed Agent that NAI has established with the addressee of
this Notice (the "DEPOSIT TAKER") the following non-interest bearing Account(s)
to be maintained at the following Account Office(s):
Account Type Account Office Account Number
------------ -------------- --------------
Time Deposit ________ ________
Time Deposit ________ ________
Time Deposit ________ ________
NAI has further informed Agent that NAI intends to maintain Cash Collateral in
such Account(s), and that to evidence such Account(s) and the amount of Cash
Collateral held therein from time to time, NAI has authorized the Deposit Taker
to issue Certificates of Deposit payable to the order of Agent as provided in
the Pledge Agreement.
3. NAI and Agent hereby notify Deposit Taker that, pursuant to the
Pledge Agreement, NAI has granted to Agent, for the ratable benefit of BNPLC and
the Participants as security for the Secured Obligations, a pledge of and
security interest in all Accounts and other Collateral maintained by NAI with
Deposit Taker, including the Account(s) described in Section 2 above.
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38
4. In furtherance of such grant, NAI and Agent hereby authorize and
direct Deposit Taker to:
(a) hold all Collateral for Agent and as Agent's bailee,
separate and apart from all other property and funds of NAI and all other
Persons and to permit no other funds to be deposited or credited to the
Account(s);
(b) make a notation in its books and records of the interest of
Agent in the Collateral and that the Account(s) and all deposits therein or sums
credited thereto are subject to a pledge and security interest in favor of
Agent;
(c) issue and redeem Certificates of Deposit evidencing the
Account(s), as directed by Agent pursuant to the Pledge Agreement;
(d) take such other steps as Agent may reasonably request to
record, maintain, validate and perfect its pledge of and security interest in
the Collateral; and
(e) upon receipt of notice from Agent that an Event of Default
has occurred, transfer and deliver to Agent or its nominee, together with all
necessary endorsements, all or such portion of the Collateral held by Deposit
Taker as Agent shall direct; provided, however, that in connection therewith the
Deposit Taker may require compliance by Agent with the provisions in Section 5.4
of the Pledge Agreement for redemption of any outstanding Certificates of
Deposit which evidence the Account(s).
5. NAI and Agent agree that (a) the possession by Deposit Taker of all
money, instruments, chattel paper and other property constituting Collateral
shall be deemed to be possession by Agent or a person designated by Agent, for
purposes of perfecting the security interest granted to Agent hereunder pursuant
to Section 9305, 8313 or 8213 of the UCC (as the case may be), and (b)
notifications by Deposit Taker to other Persons holding any such property, and
Acknowledgments, receipts or confirmations from such Persons delivered to
Deposit Taker, shall be deemed notifications to, or Acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Deposit Taker for the benefit of Agent for the purposes of perfecting
such security interests under applicable law.
6. As contemplated by the Pledge Agreement, please acknowledge Deposit
Taker's receipt of, and consent to, this notice and confirm the representations
and agreements set forth in the Acknowledgment and Agreement attached hereto by
executing the same and returning this letter to Agent. For your files, a copy of
this letter is enclosed which you may retain. The authorizations and directions
set forth herein may not be revoked or modified without the written consent of
Agent.
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"AGENT"
BANQUE NATIONALE DE PARIS
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
"NAI"
Network Appliance, Inc.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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ACKNOWLEDGMENT AND AGREEMENT
OF DEPOSIT TAKER
Deposit Taker hereby acknowledges receipt of, and consents to, the above
notice, acknowledges that it will hold the Collateral for Agent and as Agent's
bailee, agrees to comply with the authorizations and directions set forth above
and represents to and agrees with NAI and Agent as follows:
(a) Deposit Taker is a commercial bank, organized under the laws
of the United States of America or a state thereof or under the laws of another
country which is doing business in the United States of America. Deposit Taker
is authorized to maintain deposit accounts for others through the Account
Offices specified in the above notice, and Deposit Taker will not move the
accounts described in the above notice to other offices without the prior
written authorization of Agent and NAI.
(b) Deposit Taker has a combined capital, surplus and undivided
profits of at least $500,000,000.
(c) The information set forth above regarding the Account(s) is
accurate. Such Account(s) is (are) currently open and Deposit Taker has no prior
notice of any other pledge, security interest, Lien, adverse claim or interest
in such Account(s).
(d) Deposit Taker shall promptly notify NAI and Agent if the
representations made by Deposit Taker above cease to be true and correct.
(e) Deposit Taker shall not (i) allow the withdrawal of funds
from any Account by any Person other than Agent, or (ii) WITHOUT IN EACH CASE
FIRST OBTAINING THE PRIOR WRITTEN AUTHORIZATION OF AGENT, setoff or attempt to
setoff any Secured Obligations owed to Deposit Taker against any Collateral held
from time to time by Deposit Taker, or (iii) WITHOUT IN EACH CASE FIRST
OBTAINING THE PRIOR WRITTEN AUTHORIZATION OF BOTH NAI AND AGENT, setoff or
attempt to setoff any obligations owed to Deposit Taker other than Secured
Obligations, against any Collateral held from time to time by Deposit Taker.
[ ]
----------------------------------
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
[Date]
41
ATTACHMENT 5
TO PLEDGE AGREEMENT
EXAMPLES OF CALCULATIONS REQUIRED
TO AVOID A COLLATERAL IMBALANCE
The examples below are provided to illustrate the calculations required
for allocations of Cash Collateral in a manner that will avoid a Collateral
Imbalance. The examples are not intended to reflect actual numbers under this
Agreement or actual Percentages of BNPLC or any of the Participants; nor are the
examples intended to provide a formula for the allocations that would be
appropriate in every case. The examples also reflect adjustments that would be
appropriate if the Collateral Percentage were adjusted from time to time from
and after the Base Rent Commencement Date, although this Agreement provides that
such percentage is not to increase above zero until the second anniversary of
the Effective Date (expected to be after the Base Rent Commencement Date),
except in a Mandatory Collateral Period, during which such percentage would be
100%.
EXAMPLE NO. 1
Assumptions:
1. Two Participants ("Participant A" and "Participant B") are parties to
the Participation Agreement with BNPLC. Participant A's Percentage is
50% and Participant B's Percentage is 45%, leaving BNPLC with a
Percentage of 5%.
2. On the Base Rent Commencement Date, Funding Advances (including those to
cover Carrying Costs under the Land Lease) totaled $12,000,000,
resulting in a Stipulated Loss Value of $12,000,000, allocable as
follows:
A. BNPLC's Parent (providing BNPLC's share) (5%)........ $ 600,000
B. Participant A (50%).................................. 6,000,000
C. Participant B (45%).................................. 5,400,000
-----------
TOTAL................................................ $12,000,000
3. The Minimum Collateral Value on the Base Rent Commencement Date was
$7,200,000 (reflecting a Collateral Percentage of 60% times Stipulated
Loss Value).
4. On the Base Rent Commencement Date, NAI had delivered to Agent Cash
Collateral of $7,200,000, equal to the Minimum Collateral Value, as
required by Section 5.1 of this Agreement.
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42
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the $7,200,000 to the
Deposit Takers for BNPLC and the Participants as follows:
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value)............... $ 360,000
B. Participant A's Deposit Taker (50% of Minimum Collateral Value)...... 3,600,000
C. Participant B's Deposit Taker (45% of Minimum Collateral Value)..... 3,240,000
----------
TOTAL................................................................ $7,200,000
EXAMPLE NO. 2..
Assumptions: Assume the same facts as in Example No. 1, and in addition assume
that:
1. Effective as of the first Base Rent Date, NAI increased its Collateral
Percentage from 60% to 80%, raising the Minimum Collateral Value to
$9,600,000. Because of such increase, NAI also delivered an additional
$2,400,000 as Cash Collateral to Agent on the first Base Rent Date,
bringing the total of all Cash Collateral delivered by NAI to $9,600,000
as required by Section 5.1 of this Agreement.
2. Also effective as of the first Base Rent Date, a new Participant
approved by NAI ("Participant C") became a party to this Agreement and
the Participation Agreement, taking a Percentage of 20%. Simultaneously,
Participant A and Participant B entered into supplements to the
Participation Agreement which reduced their Percentages to 40% and 35%,
respectively.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the Cash Collateral as
required to leave the Deposit Takers for BNPLC and the Participants with the
following amounts:
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value)............... $ 480,000
B. Participant A's Deposit Taker (40% of Minimum Collateral Value)...... 3,840,000
C. Participant B's Deposit Taker (35% of Minimum Collateral Value)...... 3,360,000
D. Participant C's Deposit Taker (20% of Minimum Collateral Value)..... 1,920,000
---------
TOTAL................................................................ $9,600,000
Thus, to prevent a Collateral Imbalance, Agent would have to allocate the
$2,400,000 of additional Cash Collateral it received on the first Base Rent Date
as follows:
A. BNPLC's Deposit Taker ($480,000 less $360,000 already on deposit)...... $ 120,000
B. Participant A's Deposit Taker ($3,840,000 less $3,600,000 already
on deposit)............................................................ 240,000
-2-
43
C. Participant B's Deposit Taker ($3,360,000 less $3,240,000 already
on deposit)............................................................ 120,000
D. Participant C's Deposit Taker ($1,920,000 less $0 already on deposit) 1,920,000
----------
TOTAL................................................................ $2,400,000
EXAMPLE NO. 3..
Assumptions: Assume the same facts as in Example No. 2, except that:
1. Instead of increasing its Collateral Percentage from 60% to 80%, NAI
increased its Collateral Percentage to 70% on the first Base Rent Date,
raising the Minimum Collateral Value to $8,400,000. Because of such
increase, NAI delivered an additional $1,200,000 as additional Cash
Collateral to Agent on the first Base Rent Date, bringing the total of
all Cash Collateral delivered by NAI to $8,400,000 as required by
Section 5.1 of this Agreement.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the Cash Collateral as
required to leave the Deposit Takers for BNPLC and the Participants with the
following amounts:
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value)................ $ 420,000
B. Participant A's Deposit Taker (40% of Minimum Collateral Value)....... 3,360,000
C. Participant B's Deposit Taker (35% of Minimum Collateral Value)....... 2,940,000
D. Participant C's Deposit Taker (20% of Minimum Collateral Value)...... 1,680,000
---------
TOTAL................................................................. $8,400,000
Thus, to prevent a Collateral Imbalance, Agent would have to allocate the
$1,200,000 of additional Cash Collateral it received on the first Base Rent Date
as follows:
A. BNPLC's Deposit Taker ($420,000 less $360,000 already on deposit)..... $ 60,000
B. Participant A's Deposit Taker ($3,360,000 less $3,600,000 already
on deposit)........................................................... (240,000)
C. Participant B's Deposit Taker ($2,940,000 less $3,240,000 already
on deposit)........................................................... (300,000)
D. Participant C's Deposit Taker ($1,680,000 less $0 already
on deposit)........................................................... 1,680,000
----------
TOTAL................................................................ $1,200,000
NOTE: THE NEGATIVE AMOUNTS (IN PARENTHESIS) ABOVE REPRESENT REQUIRED WITHDRAWALS
RATHER THAN DEPOSITS. AS EXAMPLE NO. 3 ILLUSTRATES, TO AVOID A COLLATERAL
IMBALANCE AGENT MAY FROM TIME TO TIME HAVE TO WITHDRAW CASH COLLATERAL HELD BY
THE DEPOSIT TAKER
-3-
44
FOR ONE PARTICIPANT AND DEPOSIT IT IN AN ACCOUNT MAINTAINED BY A DEPOSIT TAKER
FOR ANOTHER PARTICIPANT.
-4-
45
ATTACHMENT 6
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT TO
WITHDRAW EXCESS CASH COLLATERAL
[________, ___]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase V - Land) dated March 1, 2000
among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial
institutions which are from time to time Participants
under such Pledge Agreement (Phase V - Land) and Banque
Nationale de Paris, acting in its capacity as agent for
BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent under the
Pledge Agreement, that pursuant to Section 6.1 of the Pledge Agreement, NAI
requires you to withdraw from the Accounts and return to NAI the following
amount:
____________________________ Dollars ($__________)
on the following date:
________, ___
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that:
1. Your withdrawal and delivery of the amount specified above to NAI
will not cause the Value of the remaining Collateral to be less than the Minimum
Collateral Value. After giving effect to such withdrawal, the Collateral
remaining in the Accounts maintained by the Deposit Takers will be:
____________________________ Dollars ($__________),
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and the Minimum Collateral Value on the date specified above will equal:
____________________________ Dollars ($__________).
Such Minimum Collateral Value equals the Collateral Percentage of:
__________ percent (___%),
times the Stipulated Loss Value of:
____________________________ Dollars ($__________).
2. NAI is giving this notice to you, BNPLC and the Participants at least
ten days prior to the Base Rent Date specified above.
3. No Default or Event of Default has occurred and is continuing as of
the date of this notice, and NAI does not anticipate that any Default or Event
of Default will have occurred and be continuing on the date upon which the
withdrawal is required.
4. NAI agrees that you may determine the Accounts from which to make any
withdrawal required by NAI pursuant to this Section as necessary to prevent or
mitigate any Collateral Imbalance.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS ABOVE ARE
NOT CORRECT OR IF THE DATE FOR WITHDRAWAL SPECIFIED ABOVE IS LESS THAN TEN DAYS
AFTER YOUR RECEIPT OF THIS NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY NAI
IMMEDIATELY IF FOR ANY REASON YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to Deposit
Takers seven days prior to the withdrawal of Cash Collateral required by this
notice. For your convenience, we have attached a letter as Annex 1 to this
notice that you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth the
amounts NAI believes you must withdraw from each Account to avoid a Collateral
Imbalance.
-2-
47
Network Appliance, Inc.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
[cc BNPLC and all Participants]
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48
Annex 1
TO NAI'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH EXCESS COLLATERAL
[________, ___]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement (Phase V - Land) dated March 1, 2000
among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial
institutions which are from time to time Participants
under such Pledge Agreement (Phase V - Land) and Banque
Nationale de Paris, acting in its capacity as agent for
BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice from the undersigned, as
Agent under the Pledge Agreement, that pursuant to Section 6.1 of the Pledge
Agreement, NAI requires Agent to withdraw from the Accounts and return to NAI
the amounts listed below on the following date:
________, ___
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in connection with
such withdrawal:
Deposit Taker Account No. Amount
- ------------- ----------- ------
1. ___________________ $_____________
2. ___________________ $_____________
3. ___________________ $_____________
4. ___________________ $_____________
TOTAL WITHDRAWALS: $_____________
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BANQUE NATIONALE DE PARIS, AS AGENT
Name:
---------------------------------
Title:
------------------------------
[cc BNPLC and NAI]
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ATTACHMENT 7
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF
DIRECT PAYMENTS TO PARTICIPANTS
[________, ___]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase V - Land) dated March 1, 2000
among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial
institutions which are from time to time Participants
under such Pledge Agreement (Phase V - Land) and Banque
Nationale de Paris, acting in its capacity as agent for
BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent under the
Pledge Agreement, that pursuant to Section 6.2 of the Pledge Agreement, NAI
requires you to withdraw from the Accounts and pay directly to the Participants
(in proportion to their respective Percentages) the following amount:
____________________________ Dollars ($__________)
on the following date (which, NAI acknowledges, must be the Designated Sale Date
or a date thereafter prior to an Event of Default):
________, ___
The amount specified above equals the following percentage (equal to the
aggregate of all Participant's Percentages):
__________ percent (___%),
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times the total of all Cash Collateral presently pledged under the Pledge
Agreement:
____________________________ Dollars ($__________).
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that NAI is giving this notice to you, BNPLC and the
Participants at least ten days prior to the date of required withdrawal and
payment specified above.
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to Deposit
Takers seven days prior to the withdrawal of Cash Collateral required by this
notice. For your convenience, we have attached a letter as Annex 1 to this
notice that you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth the
amounts NAI believes you must withdraw from each Account to comply with
subsection 6.2.2 of the Pledge Agreement.
Network Appliance, Inc.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
[cc BNPLC and all Participants]
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Annex 1
TO NAI'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH COLLATERAL FOR
DIRECT PAYMENTS TO PARTICIPANTS
[________, ___]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement (Phase V - Land) dated March 1, 2000
among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial
institutions which are from time to time Participants
under such Pledge Agreement (Phase V - Land) and Banque
Nationale de Paris, acting in its capacity as agent for
BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice from the undersigned, as
Agent under the Pledge Agreement, that pursuant to Section 6.2 of the Pledge
Agreement, NAI requires Agent to withdraw from the Accounts and pay to the
Participants (in proportion to their respective Percentages) the amounts listed
below on the following date:
________, ___
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in connection with
such withdrawal:
Deposit Taker Account No. Amount
- ------------- ----------- ------
1. ___________________ $_____________
2. ___________________ $_____________
3. ___________________ $_____________
4. ___________________ $_____________
TOTAL WITHDRAWALS: $_____________
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BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-------------------------------
Title:
------------------------------
[cc BNPLC and NAI]
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ATTACHMENT 8
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF
DIRECT PAYMENT TO BNPLC
[________, ___]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase V - Land) dated March 1, 2000
among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial
institutions which are from time to time Participants
under such Pledge Agreement (Phase V - Land) and Banque
Nationale de Paris, acting in its capacity as agent for
BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent under the
Pledge Agreement, that pursuant to Section 6.3 of the Pledge Agreement, NAI
requires you to withdraw from the Account maintained by the Deposit Taker for
BNPLC and pay directly to BNPLC on behalf of NAI as a payment required by the
Purchase Agreement the following amount:
____________________________ Dollars ($__________)
on the following date (which, NAI acknowledges, must be the Designated Sale Date
or a date thereafter prior to an Event of Default):
________, ___
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that NAI is giving this notice to you and BNPLC at least ten
days prior to the date of required withdrawal and payment specified above.
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to the
Deposit Taker for BNPLC seven days prior to the withdrawal of Cash Collateral
required by this notice. For your convenience, we have attached a letter as
Annex 1 to this notice that you might execute and send to the Deposit Taker for
BNPLC to
-1-
55
advise it of your intent to withdraw and of your presentment of Certificates of
Deposit as required in connection therewith. The attached letter also sets forth
the amount NAI believes you must withdraw to comply with Section 6.3 of the
Pledge Agreement.
Network Appliance, Inc.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
[cc BNPLC]
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Annex 1
TO NAI'S NOTICE OF REQUIREMENT OF
DIRECT PAYMENT TO BNPLC
[________, ___]
[Name of the Deposit Taker for BNPLC]
[Address of such Deposit Taker]
Re: Pledge Agreement (Phase V - Land) dated March 1, 2000
among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial
institutions which are from time to time Participants
under such Pledge Agreement (Phase V - Land) and Banque
Nationale de Paris, acting in its capacity as agent for
BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice from the undersigned, as
Agent under the Pledge Agreement, that pursuant to Section 6.3 of the Pledge
Agreement, NAI requires Agent to withdraw from the Account maintained by you, as
Deposit Taker for BNPLC, the sum of:
____________________________ Dollars ($__________)
and pay the same to BNPLC as a payment required by the Purchase Agreement on the
following date:
________, ___
Accordingly, on such date, the undersigned intends to withdraw such
amount from the following Account maintained by you as Deposit Taker for BNPLC,
and with this letter the undersigned is presenting Certificate(s) of Deposit as
required in connection with such withdrawal.
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BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-------------------------------
Title:
------------------------------
[cc BNPLC and NAI]
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ATTACHMENT 9
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF A WITHDRAWAL
OF CASH COLLATERAL FROM
A DISQUALIFIED DEPOSIT TAKER
[________, ___]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase V - Land) dated March 1, 2000
among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial
institutions which are from time to time Participants
under such Pledge Agreement (Phase V - Land) and Banque
Nationale de Paris, acting in its capacity as agent for
BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent under the
Pledge Agreement, that pursuant to Section 6.4 of the Pledge Agreement, NAI
requires you to withdraw from the following Account maintained by the following
Deposit Taker:
Deposit Taker Account No.
___________________________________ _____________________
___________________________________ _____________________
Cash Collateral in the following amount:
____________________________ Dollars ($__________)
and to deposit such Cash Collateral with other Deposit Takers who are not
Disqualified Deposit Takers no later than ten days after the date upon which you
receive this notice.
To assure you that NAI has the right to require such withdrawal, and to induce
you to comply with this notice, NAI certifies to you that the Deposit Taker
specified above has become a Disqualified Deposit Taker because it no longer
satisfies the requirements listed in Section 4.1
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59
of the Pledge Agreement. Specifically, such Deposit Taker no longer satisfies
the following requirements:
[NAI MUST INSERT HERE A DESCRIPTION OF WHICH REQUIREMENTS THE DEPOSIT TAKER NO
LONGER SATISFIES AND HOW NAI HAS DETERMINED THAT THE REQUIREMENTS ARE NO LONGER
SATISFIED, ALL IN SUFFICIENT DETAIL TO PERMIT THE PARTICIPANT FOR WHOM SUCH
DEPOSIT TAKER HAS BEEN MAINTAINING AN ACCOUNT TO RESPOND IF IT BELIEVES THAT NAI
IS IN ERROR.]
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to the
Deposit Taker specified above seven days prior to the withdrawal of Cash
Collateral required by this notice. For your convenience, we have attached a
letter as Annex 1 to this notice that you might execute and send to such Deposit
Taker to advise it of your intent to withdraw and of your presentment of
Certificates of Deposit as required in connection therewith. The attached letter
also sets forth the amount NAI believes you must withdraw to comply with Section
6.4 of the Pledge Agreement.
Network Appliance, Inc.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
[cc BNPLC]
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Annex 1
TO NAI'S NOTICE OF REQUIREMENT OF A WITHDRAWAL
OF CASH COLLATERAL FROM
A DISQUALIFIED DEPOSIT TAKER
[________, ___]
[Name of the Deposit Taker for BNPLC]
[Address of such Deposit Taker]
Re: Pledge Agreement (Phase V - Land) dated March 1, 2000
among Network Appliance, Inc., BNP Leasing Corporation,
Banque Nationale de Paris and any other financial
institutions which are from time to time Participants
under such Pledge Agreement (Phase V - Land) and Banque
Nationale de Paris, acting in its capacity as agent for
BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Land) referenced above (the
"PLEDGE AGREEMENT"). This letter constitutes notice from the undersigned, as
Agent under the Pledge Agreement, that pursuant to Section 6.4 of the Pledge
Agreement, NAI has advised Agent that you are a Disqualified Deposit Taker, and
NAI requires Agent to withdraw from the Account maintained by you, as a Deposit
Taker under the Pledge Agreement, the sum of:
____________________________ Dollars ($__________)
no later than the following date:
________, ___
Accordingly, on such date, the undersigned intends to withdraw such
amount from the Account maintained by you as Deposit Taker (Account No.
__________), and with this letter the undersigned is presenting Certificate(s)
of Deposit as required in connection with such withdrawal.
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BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-------------------------------
Title:
------------------------------
[cc BNPLC and NAI]
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Schedule 1
FINANCIAL COVENANTS
This Schedule 1 is attached to and made a part of (a) the Lease
Agreement (Phase V Improvements) (the "IMPROVEMENTS LEASE") dated to be
effective as of March 1, 2000 (the "EFFECTIVE DATE"), between BNP Leasing
Corporation, a Delaware corporation ("BNPLC") and Network Appliance, Inc., a
California corporation ("NAI"), (b) the Lease Agreement (Phase V - Land) (the
"LAND LEASE" and, together with the Improvements Lease, the "LEASES") dated to
be effective as of the Effective Date, between BNPLC and NAI, (c) the Pledge
Agreement (Phase V - Improvements) (the "PLEDGE AGREEMENT (IMPROVEMENTS)") dated
to be effective as of the Effective Date, among BNPLC, NAI, and Banque Nationale
de Paris, as a Participant and as agent for any financial institutions that
become Participants thereunder from time to time, and (d) the Pledge Agreement
(Phase V - Land) (collectively with the Pledge Agreement (Improvements), the
"PLEDGE AGREEMENTS") dated to be effective as of the Effective Date, among
BNPLC, NAI, and Banque Nationale de Paris, as a Participant and as agent for any
financial institutions that become Participants thereunder from time to time.
PART I - DEFINED TERMS
In this Schedule 1, capitalized terms used but not defined herein shall
have the meaning assigned to them in the Leases or the Common Definitions and
Provisions Agreements referenced in the Leases; and the following capitalized
terms shall have the following meanings:
"ADJUSTED NET INCOME" means, for any fiscal period of NAI, the aggregate
net income earned (or net losses incurred) during such period by NAI and
its Subsidiaries (determined on a consolidated basis), plus any
Permitted Non-Cash Charges deducted in determining such net income (or
net loss).
"ADJUSTED EBIT" means, for any accounting period, net income (or net
loss) of NAI and its Subsidiaries (determined on a consolidated basis),
plus the amounts (if any) which, in the determination of net income (or
net loss) for such period, have been deducted for (a) interest expense,
(b) income tax expense (c) rent expense under leases of property, and
(d) Permitted Non-Cash Charges.
"COLLATERAL TEST DATES" mean the Base Rent Commencement Date and the
earlier of the following dates after each fiscal quarter of NAI that
ends after the Base Rent Commencement Date: (1) the seventh Business
Day after the release by NAI of its financial statements for the fiscal
quarter; or (2) the first Business Day of the third calendar month
following the end of the fiscal quarter.
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of (1) the total
assets, other than Intangible Assets, of NAI and its Subsidiaries
(determined on a consolidated basis) over (2) the total liabilities of
NAI and its Subsidiaries (determined on a consolidated basis).
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63
"DEBT" as used in this Exhibit shall have the meaning assigned to it in
the Common Definitions and Provisions Agreements, where "Debt" of any
Person is defined to mean (without duplication of any item): (a)
indebtedness of such Person for borrowed money; (b) indebtedness of such
Person for the deferred purchase price of property or services (except
trade payables and accrued expenses constituting current liabilities in
the ordinary course of business); (c) the face amount of any outstanding
letters of credit issued for the account of such Person; (d) obligations
of such Person arising under acceptance facilities; (e) guaranties,
endorsements (other than for collection in the ordinary course of
business) and other contingent obligations of such Person to purchase,
to provide funds for payment, to provide funds to invest in any Person,
or otherwise to assure a creditor against loss; (f) obligations of
others secured by any Lien on property of such Person; (g) obligations
of such Person as lessee under Capital Leases; and (h) the obligations
of such Person, contingent or otherwise, under any lease of property or
related documents (including a separate purchase agreement) which
provide that such Person or any of its Affiliates must purchase or cause
another Person to purchase any interest in the leased property and
thereby guarantee a minimum residual value of the leased property to the
lessor. For purposes of this definition, the amount of the obligations
described in clause (h) of the preceding sentence with respect to any
lease classified according to GAAP as an "operating lease," shall equal
the sum of (1) the present value of rentals and other minimum lease
payments required in connection with such lease [calculated in
accordance with SFAS 13 and other GAAP relevant to the determination of
the whether such lease must be accounted for as an operating lease or
capital lease], plus (2) the fair value of the property covered by the
lease; provided, however, that such amount shall not exceed the price,
as of the date a determination of Debt is required hereunder, for which
the lessee can purchase the leased property pursuant to any valid
ongoing purchase option if, upon such a purchase, the lessee shall be
excused from paying rentals or other minimum lease payments that would
otherwise accrue after the purchase.
"FIXED CHARGES" means, for any accounting period, the sum (without
duplication of any item) of the following charges or costs incurred or
paid by NAI and its Subsidiaries (determined on a consolidated basis):
(a) gross interest expense, plus (b) amortization of principal or debt
discount in respect of all Debt during such period, plus (c) rent
payable under all leases of property during such period, plus (d) taxes
payable during such period.
"INTANGIBLE ASSETS" means assets of NAI and its Subsidiaries (determined
on a consolidated basis) that are properly classified as "INTANGIBLE
ASSETS" in accordance with GAAP and, in any event, shall include
goodwill, patents, trade names, trademarks, copyrights, franchises,
experimental expense, organization expense, unamortized debt discount
and expense, and deferred charges (other than prepaid insurance, prepaid
taxes and current deferred taxes to the extent any such prepaid or
deferred items are classified on the balance sheet of NAI and its
consolidated Subsidiaries as current assets in accordance with GAAP and
with the concurrence of NAI's independent public accountants).
"MANDATORY COLLATERAL PERIOD" means any period during which,
notwithstanding any contrary designation of a Collateral Percentage by
NAI under the Pledge Agreements, the
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64
Collateral Percentage for purposes of the Pledge Agreements shall be one
hundred percent (100%), determined as set forth in Part III of this
Schedule 1.
"PERMITTED NON-CASH CHARGES" means the amounts (if any) which, in the
determination of net income (or net loss) for any relevant fiscal
period, have been deducted by NAI or its Subsidiaries for non-cash
charges made to write down goodwill or research and development costs in
connection with acquisitions permitted by this Schedule 1.
"QUICK RATIO" means the ratio of:
(A) the sum (without duplication of any item) of the
following assets of NAI and its Subsidiaries (determined on a
consolidated basis): Collateral delivered and pledged under the
Pledge Agreements in accordance with the requirements thereof
(if any); plus unencumbered cash; plus unencumbered short term
cash investments; plus other unencumbered marketable securities
which are classified as short term investments in accordance
with GAAP; plus unencumbered accounts receivable, computed net
of reserves for uncollectible amounts as determined in
accordance with GAAP, to
(B) the sum (without duplication of any item) of (1) all
liabilities of NAI and its Subsidiaries (determined on a
consolidated basis) treated as current liabilities in accordance
with GAAP, plus (2) other obligations included in total Debt of
NAI and its Subsidiaries (determined on a consolidated basis),
the payment of which is due on demand or will become due within
one year after the date on which the applicable determination of
Quick Ratio is required hereunder.
"ROLLING FOUR QUARTER PERIOD" means a period of four consecutive fiscal
quarters of NAI, the last of which quarters ends after December 31,
1999.
PART II - FINANCIAL COVENANTS
NAI covenants that it shall not at any time suffer or permit:
1. Minimum Unencumbered Cash and Cash Equivalents. The sum (without
duplication of any item) of the unrestricted cash, Collateral delivered
and pledged under the Pledge Agreements in accordance with the
requirements thereof (if any), unencumbered short term cash investments
and unencumbered marketable securities classified as short term
investments according to GAAP of NAI and its Subsidiaries (determined on
a consolidated basis) to be less than total Debt of NAI and its
Subsidiaries (determined on a consolidated basis).
2. Minimum Tangible Net Worth. Consolidated Tangible Net Worth to be less
than the sum of: (a) ninety percent of the Consolidated Tangible Net
Worth as of October 30, 1998; plus (b) seventy-five percent of NAI's net
income (computed without deduction for net losses in any fiscal quarter)
earned in each fiscal quarter since October 30, 1998; plus (c)
one-hundred percent of the net proceeds of sales of stock in NAI or its
Subsidiaries (other
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65
than sales to NAI or its Subsidiaries) after October 30, 1998; less (d)
Permitted Non-Cash Charges for any period after October 30, 1998.
3. Minimum Quick Ratio. The Quick Ratio to be less than 1.50 to 1.00.
4. Minimum Fixed Charge Coverage. The ratio of (a) Adjusted EBIT for any
Rolling Four Quarter Period to (b) Fixed Charges for the same Rolling
Four Quarter Period, to be less than 1.50 to 1.00.
5. Minimum Profitability. Adjusted Net Income to be less than $1.00 in more
than one fiscal quarter of any Rolling Four Quarter Period.
6. Maximum Leverage Ratio. the ratio of (a) total Debt of NAI and its
Subsidiaries (determined on a consolidated basis) at the end of any
Rolling Four Quarter Period to (b) the Adjusted EBIT for the same Four
Quarter Rolling Period, to exceed 3.00 to 1.00.
PART III - TESTS FOR MANDATORY COLLATERAL PERIODS
If, as of the end of the latest fiscal quarter of NAI ending before any
Collateral Test Date, NAI shall have either:
(A) failed to maintain a ratio of (1) the sum (without
duplication of any item) of Collateral delivered and pledged under the
Pledge Agreements in accordance with the requirements thereof (if any),
unencumbered cash, unencumbered short term cash investments and
unencumbered marketable securities classified as short term investments
according to GAAP of NAI and its Subsidiaries (determined on a
consolidated basis) to (2) all Debt of NAI and its Subsidiaries
(determined on a consolidated basis), of at least 1.5 to 1.00; or
(B) failed to maintain a ratio of (i) all Debt of NAI and its
Subsidiaries (determined on a consolidated basis) to (ii) Consolidated
Tangible Net Worth of NAI, of no more than 0.45 to 1.00;
such Collateral Test Date shall constitute a "FAILED COLLATERAL TEST DATE" for
purposes of the determination of Mandatory Collateral Periods. A Mandatory
Collateral Period shall commence on each Failed Collateral Test, and such
Mandatory Collateral Period shall continue until the second of any two
subsequent CONSECUTIVE Collateral Test Dates, neither of which constitutes a
Failed Collateral Test Date.
For purposes of illustration only, assume that the following dates are
consecutive Collateral Test Dates, some of which are Failed Collateral Test
Dates and some of which are not, as indicated opposite each date:
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Date Failed Collateral Test Date?
- ---- ----------------------------
February 15, 2001 Yes
May 12, 2001 No
August 16, 2001 Yes
November 11, 2001 No
February 18, 2002 No
May 14, 2002 Yes
August 18, 2002 Yes
November 18, 2002 No
February 15, 2003 No
Under these assumptions, the entire period from February 15, 2001 to February
18, 2002 falls within one or more Mandatory Collateral Periods. Also, the entire
period commencing May 14, 2002 and ending February 15, 2003 falls within one or
more Mandatory Collateral Periods. The period from February 18, 2002 to May 14,
2002 does not constitute Mandatory Collateral Period.
PART IV - OTHER COVENANTS
Without limiting NAI's obligations under the other provisions of the Operative
Documents, during the Term, NAI shall not, without the prior written consent of
BNPLC in each case:
A. Liens. Create, incur, assume or suffer to exist, or permit any of its
Consolidated Subsidiaries to create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
provided that the following shall be permitted except to the extent that they
would encumber any interest in the Property in violation of other provisions of
the Operative Documents:
1. Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if they are being contested in good
faith by appropriate proceedings and for which appropriate reserves are
maintained;
2. Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which
are not past due for more than thirty (30) days, or which are being
contested in good faith by appropriate proceedings and for which
appropriate reserves have been established;
3. Liens under workmen's compensation, unemployment insurance,
social security or similar laws (other than ERISA);
4. Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money),
leases, public or statutory obligations, surety, stay, appeal,
indemnity, performance or other similar bonds, or other similar
obligations arising in the ordinary course of business;
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5. judgment and other similar Liens against assets other than
the Property or any part thereof in an aggregate amount not in excess of
$3,000,000 arising in connection with court proceedings; provided that
the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good
faith by appropriate proceedings;
6. easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with
the occupation, use and enjoyment by NAI or any such Consolidated
Subsidiary of the property or assets encumbered thereby in the normal
course of its business or materially impair the value of the property
subject thereto;
7. Liens securing obligations of such a Consolidated Subsidiary
to NAI or to another such Consolidated Subsidiary;
8. Liens not otherwise permitted by this subparagraph A (and not
encumbering the Property or any Collateral) incurred in connection with
the incurrence of additional Debt or asserted to secure Unfunded Benefit
Liabilities, provided that (a) the sum of the aggregate principal amount
of all outstanding obligations secured by Liens incurred pursuant to
this clause shall not at any time exceed five percent (5%) of
Consolidated Tangible Net Worth at such time; and (b) such Liens do not
constitute Liens against NAI's interest in any material Subsidiary or
blanket Liens against all or substantially all of the inventory,
receivables, general intangibles or equipment of NAI or of any material
Subsidiary of NAI (for purposes of this clause, a "material Subsidiary"
means any subsidiary whose assets represent a substantial part of the
total assets of NAI and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP); and
9. Liens incurred in connection with any renewals, extensions or
refundings of any Debt secured by Liens described in the preceding
clauses of this subparagraph A, provided that there is no increase in
the aggregate principal amount of Debt secured thereby from that which
was outstanding as of the date of such renewal, extension or refunding
and no additional property is encumbered.
B. Transactions with Affiliates. Enter into or permit any Subsidiary of
NAI to enter into any material transactions (including, without limitation, the
purchase, sale or exchange of property or the rendering of any service) with any
Affiliates of NAI except on terms (1) that would not cause or result in a
Default by NAI under the financial covenants set forth in Part II of this
Schedule, and (2) that are no less favorable to NAI or the relevant Subsidiary
than those that would have been obtained in a comparable transaction on an arm's
length basis from an unrelated Person.
C. Compliance. Fail to preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; or fail to comply with the provisions of all documents
pursuant to which NAI is organized and/or which govern NAI's continued existence
and with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to NAI and/or its business.
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D. Insurance. Fail to maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to that of NAI,
including but not limited to fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to BNPLC, or fail to deliver to BNPLC from
time to time at BNPLC's request schedules setting forth all insurance then in
effect.
E. Facilities. Fail to keep all properties useful or necessary to NAI's
business in good repair and condition, or to from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.
F. Taxes and Other Liabilities. Fail to pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as NAI may in good faith contest
or as to which a bona fide dispute may arise, and (b) for which NAI has made
provisions, to BNPLC's satisfaction, for eventual payment thereof in the event
that NAI is obligated to make such payment.
G. Capital Expenditures. Make any additional investment in fixed assets
in any fiscal year in excess of an aggregate of twenty percent (20%) of NAI's
total assets as of the end of the prior fiscal year.
H. Merger, Consolidation, Transfer of Assets. Merge into or consolidate
with any other entity (unless NAI is the surviving entity and remains in
compliance of all provisions of the Operative Documents); or make any
substantial change in the nature of NAI's business as conducted as of the date
hereof; or sell, lease, transfer or otherwise dispose of all or a substantial or
material portion of NAI's assets except in the ordinary course of its business.
I. Loans, Advances, Investments. Make any loans or advances to or
investments in any person or entity, except (a) any of the foregoing existing as
of, and disclosed to BNPLC prior to, the date hereof, (b) loans to employees for
travel advances, relocation loans and other loans in the ordinary course of
business, (c) investments in accordance with NAI's investment policy, as in
effect from time to time, (d) existing investments in subsidiaries and joint
ventures which have been disclosed to BNPLC in writing prior to the date hereof,
and new investments in subsidiaries and joint ventures in amounts up to an
aggregated of $10,000,000.00, (e) loans to employees, officers, directors to
finance or refinance the purchase of equity securities of NAI.
J. Dividends, Distributions. Declare or pay any dividend or distribution
either in cash, stock or any other property on NAI's stock now or hereafter
outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of
any class of NAI's stock now or hereafter outstanding.
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EXHIBIT 10.63
================================================================================
PLEDGE AGREEMENT
(PHASE V - IMPROVEMENTS)
AMONG
BNP LEASING CORPORATION
("BNPLC")
BANQUE NATIONALE DE PARIS, AS AGENT
("AGENT")
NETWORK APPLIANCE, INC.
("NAI")
AND
PARTICIPANTS AS DESCRIBED HEREIN
MARCH 1, 2000
================================================================================
2
TABLE OF CONTENTS
Page
----
Article I DEFINITIONS AND INTERPRETATION....................................................1
1.1 Capitalized Terms Used But Not Defined in This Agreement..................1
1.2 Definitions...............................................................2
1.3 Attachments...............................................................7
1.4 Amendment of Defined Instruments..........................................7
1.5 References and Titles.....................................................7
Article II SECURITY INTEREST................................................................8
2.1 Pledge and Grant of Security Interest.....................................8
2.2 Return of Collateral After the Secured Obligations are Satisfied in
Full......................................................................8
Article III DESIGNATION OF MINIMUM COLLATERAL PERCENTAGE....................................8
3.1 Determination of Minimum Collateral Percentage Generally..................8
3.2 Limitations on NAI's Right to Lower the Collateral Percentage.............9
3.3 Mandatory Collateral Periods..............................................9
Article IV PROVISIONS CONCERNING DEPOSIT TAKERS.............................................9
4.1 Qualification of Deposit Takers Generally.................................9
4.2 Existing Deposit Takers..................................................10
4.3 Replacement of Participants Proposed by NAI..............................10
4.4 Mandatory Substitution for Disqualified Deposit Takers...................11
4.5 Voluntary Substitution of Deposit Takers.................................11
4.6 Delivery of Notice of Security Interest by NAI and Agent.................11
4.7 Constructive Possession of Collateral....................................11
4.8 Attempted Setoff by Deposit Takers.......................................12
4.9 Deposit Taker Losses.....................................................12
4.10 Losses Resulting from Failure of Deposit Taker to Comply with this
Agreement................................................................12
Article V DELIVERY AND MAINTENANCE OF CASH COLLATERAL......................................12
5.1 Delivery of Funds by NAI.................................................12
5.2 Transition Account.......................................................13
5.3 Allocation of Cash Collateral Among Deposit Takers.......................13
5.4 Issuance and Redemption of Certificates of Deposit.......................13
5.5 Status of the Accounts Under the Reserve Requirement Regulations.........14
5.6 Acknowledgment by NAI that Requirements of this Agreement are
Commercially Reasonable..................................................14
Article VI WITHDRAWAL OF CASH COLLATERAL...................................................15
6.1 Withdrawal of Collateral Prior to the Designated Sale Date...............15
6.2 Withdrawal and Application of Cash Collateral to Reduce or Satisfy
the Secured Obligations to the Participants..............................15
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6.3 Withdrawal and Application of Cash Collateral to Reduce or Satisfy
the Secured Obligations to BNPLC.........................................16
6.4 Withdrawal of Cash Collateral From Accounts Maintained by
Disqualified Deposit Takers..............................................16
Article VII REPRESENTATIONS AND COVENANTS OF NAI...........................................16
7.1 Representations of NAI...................................................16
7.2 Covenants of NAI.........................................................17
Article VIII AUTHORIZED ACTION BY AGENT....................................................19
8.1 Power of Attorney........................................................19
Article IX DEFAULT AND REMEDIES............................................................19
9.1 Remedies.................................................................19
Article X OTHER RECOURSE...................................................................20
10.1 Recovery Not Limited.....................................................20
Article XI PROVISIONS CONCERNING AGENT.....................................................20
11.1 Appointment and Authority................................................20
11.2 Exculpation, Agent's Reliance, Etc.......................................21
11.3 Participant's Credit Decisions...........................................21
11.4 Indemnity................................................................21
11.5 Agent's Rights as Participant and Deposit Taker..........................22
11.6 Investments..............................................................22
11.7 Benefit of Article XI....................................................22
11.8 Resignation..............................................................23
Article XII MISCELLANEOUS..................................................................23
12.1 Provisions Incorporated From Other Operative Documents...................23
12.2 Cumulative Rights, etc...................................................23
12.3 Survival of Agreements...................................................23
12.4 Other Liable Party.......................................................23
12.5 Termination..............................................................24
Attachment 1......................................Form of Certificate of Deposit
Attachment 2.............Supplement to Pledge Agreement (Phase V - Improvements)
Attachment 3........Notice of NAI's Election to Change the Collateral Percentage
Attachment 4.........................................Notice of Security Interest
Attachment 5............................................Examples of Calculations
Attachment 6......Notice of NAI's Requirement to Withdraw Excess Cash Collateral
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Attachment 7......Notice of NAI's Requirement of Direct Payments to Participants
Attachment 8......Notice of NAI's Requirement of Direct Payments to Participants
Attachment 9.........................Notice of NAI's Requirement of a Withdrawal
of Cash Collateral from a Disqualified Deposit Taker
Schedule 1............................Financial Covenants and Negative Covenants
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PLEDGE AGREEMENT
(PHASE V - IMPROVEMENTS)
This PLEDGE AGREEMENT (PHASE V - IMPROVEMENTS) (this "AGREEMENT") is
made as of March 1, 2000 (the "EFFECTIVE DATE"), by NETWORK APPLIANCE, INC., a
California corporation ("NAI"); BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"); BANQUE NATIONALE DE PARIS ("BNPLC'S PARENT"), as a "PARTICIPANT"; and
BANQUE NATIONALE DE PARIS, acting in its capacity as agent for BNPLC and the
Participants (in such capacity, "AGENT"), is made and dated as of the Effective
Date.
RECITALS
A. NAI and BNPLC are parties to: (i) a Common Definitions and Provisions
Agreement (Phase V - Improvements) dated as of the Effective Date (the "COMMON
DEFINITIONS AND PROVISIONS AGREEMENT (PHASE V - IMPROVEMENTS)"); and (ii) a
Purchase Agreement (Phase V - Improvements) dated as of the Effective Date (the
"PURCHASE AGREEMENT"), pursuant to which NAI has agreed to make a "SUPPLEMENTAL
PAYMENT" or "ISSUE 97-10 PREPAYMENT" (both as defined in the Common Definitions
and Provisions Agreement (Phase V - Improvements)), in consideration of the
rights granted to NAI by the Purchase Agreement.
B. Pursuant to a Participation Agreement dated the date hereof (the
"PARTICIPATION AGREEMENT"), BNPLC's Parent has agreed with BNPLC to participate
in the risks and rewards to BNPLC of the Purchase Agreement and other Operative
Documents (as defined in the Common Definitions and Provisions Agreement (Phase
V - Improvements)), and the parties to this Agreement anticipate that other
financial institutions may become parties to the Participation Agreement as
Participants, agreeing to participate in the risks and rewards to BNPLC of the
Purchase Agreement and other Operative Documents.
C. NAI may from time to time deliver cash collateral for its obligations
to BNPLC under the Purchase Agreement and for BNPLC's corresponding obligations
to Participants under the Participation Agreement. This Agreement sets forth the
terms and conditions governing such cash collateral.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Capitalized Terms Used But Not Defined in This Agreement. All
capitalized terms used in this Agreement which are defined in Article I of the
Common Definitions and Provisions Agreement (Phase V - Improvements) and not
otherwise defined herein shall have the
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same meanings herein as set forth in the Common Definitions and Provisions
Agreement (Phase V - Improvements). All terms used in this Agreement which are
defined in the UCC and not otherwise defined herein shall have the same meanings
herein as set forth therein, except where the context otherwise requires.
1.2 Definitions. When used in this Agreement, the following terms shall
have the following respective meanings:
"ACCOUNT" shall mean any deposit account maintained by a Deposit Taker
into which Cash Collateral may be deposited at any time, excluding the
Transition Account.
"ACCOUNT OFFICE" shall mean, with respect to any Account maintained by
any Deposit Taker, the office of such Deposit Taker in California or New York at
which such Account is maintained as specified in the applicable Deposit Taker's
Acknowledgment and Agreement.
"AGENT" shall have the meaning given to that term in the introductory
paragraph hereof.
"BNPLC" shall have the meaning given to that term in the introductory
paragraph hereof.
"BNPLC'S CORRESPONDING OBLIGATIONS TO PARTICIPANTS" shall mean BNPLC's
obligations under the Participation Agreement to pay Participants their
respective Percentages of (or amounts equal to their respective Percentages of)
sums "actually received by BNPLC" (as defined in the Participation Agreement) in
satisfaction of NAI's Purchase Agreement Obligations; provided, however, any
modification of the Participation Agreement executed after the date hereof
without NAI's written consent shall not be considered for purposes of
determining BNPLC's Corresponding Obligations to Participants under this
Agreement.
"CASH COLLATERAL" shall mean (i) all money of NAI which NAI has
delivered to Agent for deposit with a Deposit Taker pursuant to this Agreement,
and (ii) any additional money delivered to Agent as Collateral pursuant to
Section 4.9.
"CERTIFICATE OF DEPOSIT" shall mean a certificate of deposit issued by a
Deposit Taker as required by Section 4.9 below to evidence an Account into which
Cash Collateral has been deposited pursuant to this Agreement. Each Certificate
of Deposit shall be issued in an amount equal to the Value of the Account which
it evidences and shall otherwise be in the form set forth as ATTACHMENT 1.
"COLLATERAL" shall have the meaning given to that term in Section 2.1
hereof.
"COLLATERAL IMBALANCE" shall mean on any date prior to the Designated
Sale Date that the Value (without duplication) of Accounts maintained by and
Certificates of Deposit issued by the Deposit Taker for any Participant (other
than a Disqualified Deposit Taker) does not equal such Participant's Percentage,
multiplied by the lesser of (1) the Minimum Collateral Value in effect on such
date, or (2) the aggregate Value of all Collateral subject to this Agreement on
such date. For purposes of determining whether a Collateral Imbalance exists,
the Value of any Accounts maintained by a bank that is acting as Deposit Taker
for two or more Participants will be deemed to be held for them in proportion to
their respective Percentages, and the Value of any
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Accounts maintained by a bank as Deposit Taker for both a Participant and BNPLC
(as in the case of BNPLC's Parent acting as Deposit Taker for itself, as a
Participant, and for BNPLC) will be deemed to be held for the Participant only
to the extent necessary to prevent or mitigate a Collateral Imbalance and
otherwise for BNPLC.
"COLLATERAL PERCENTAGE" shall mean the percentage designated by NAI or
required during a Mandatory Collateral Period pursuant to Part III of Schedule
1.
"DEFAULT" means any Event of Default and any default, event or condition
which would, with the giving of any requisite notices and the passage of any
requisite periods of time, constitute an Event of Default.
"DEPOSIT TAKER" for BNPLC shall mean BNPLC's Parent and for each
Participant shall mean the Participant itself; provided, that each of BNPLC and
the Participants, for itself only, may from time to time designate another
Deposit Taker as provided in Section 4.4 and 4.4 below.
"DEPOSIT TAKER LOSSES" shall mean the Value of any Cash Collateral
delivered to a Deposit Taker, but that the Deposit Taker will not (because of
the insolvency of the Deposit Taker, offsets by the Deposit Taker in violation
of the Deposit Taker's Acknowledgment and Agreement, or otherwise) return to NAI
or return to Agent for disposition or application as provided herein or as
required by applicable law.
"DEPOSIT TAKER'S ACKNOWLEDGMENT AND AGREEMENT" shall have the meaning
given to that term in subsection 4.1.2 hereof.
"DISQUALIFIED DEPOSIT TAKER" shall mean any Deposit Taker with whom
Agent may decline to deposit Collateral pursuant to Section 4.1.
"EVENT OF DEFAULT" shall mean the occurrence of any of the following:
(a) the failure by NAI to pay all or any part of NAI's Purchase
Agreement Obligations when due, after giving effect to any applicable
notice and grace periods expressly provided for in the Purchase
Agreement;
(b) the failure by NAI to provide funds as and when required by
Section 5.1 of this Agreement, if within seven Business Days after such
failure commences NAI does not (1) cure such failure by delivering the
funds required by Section 5.1, and (2) pay to BNPLC as additional Rent
under the Improvements Lease an amount equal to interest at the Default
Rate (as defined in the Improvements Lease) on such funds for the period
from which they were first due to the date of receipt by Agent;
(c) the failure of the pledge or security interest contemplated
herein in the Transition Account or any Account, Certificate of Deposit
or Cash Collateral to be a Qualified Pledge (regardless of the
characterization of the Transition Account or any Accounts, Certificates
of Deposit or Cash Collateral as deposit accounts, instruments or
general intangibles under the UCC), if within five Business Days after
NAI becomes aware of such failure, NAI does not (1) notify Agent, BNPLC
and the Participants of
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such failure, and (2) cure such failure, and (3) to the extent required
by Section 7.2.9, pay to BNPLC any additional Base Rent that has accrued
under the Improvements Lease because of (or that would have accrued if
BNPLC had been aware of) such failure, together with interest at the
Default Rate on any such additional Base Rent;
(d) the failure of any representation herein by NAI to be true
(other than a failure described in another clause of this definition of
Event of Default), if such failure is not cured within thirty days after
NAI receives written notice thereof from Agent;
(e) the failure of any representation made by NAI in subsection
7.1.1 to be true, if within fifteen (15) days after NAI becomes aware of
such failure, NAI does not (1) notify Agent, BNPLC and the Participants
of such failure, and (2) cure such failure, and (3) pay to BNPLC any
additional Base Rent that has accrued under the Improvements Lease
because of (or that would have accrued if BNPLC had been aware of) such
failure, and (4) pay to BNPLC interest at the Default Rate on any such
additional Base Rent;
(f) the failure by NAI timely and properly to observe, keep or
perform any covenant, agreement, warranty or condition herein required
to be observed, kept or performed (other than a failure described in
another clause of this definition of Event of Default), if such failure
is not cured within thirty days after NAI receives written notice
thereof from Agent; and
(g) the failure by BNPLC to pay when due on or after the
Designated Sale Date any of BNPLC's Corresponding Obligations to
Participants, after giving effect to any applicable notice and grace
periods expressly provided for in the Participation Agreement.
Notwithstanding the foregoing, if ever the aggregate Value of Cash Collateral
held by Agent and the Deposit Takers EXCEEDS the Minimum Collateral Value then
in effect, a failure of the pledge or security interest contemplated herein in
SUCH EXCESS Cash Collateral to be a valid, perfected, first priority pledge or
security interest shall not constitute an Event of Default under this Agreement.
Accordingly, to provide a cure as required to avoid an Event of Default under
clauses (d) or (e) of this definition, NAI could deliver additional Cash
Collateral - the pledge of which or security interest in which created by this
Agreement is a Qualified Pledge - sufficient in amount to cause the aggregate
Value of the Cash Collateral then held by Agent and the Deposit Takers subject
to a Qualified Pledge hereunder to equal or exceed the Minimum Collateral Value.
"FAILED COLLATERAL TEST DATE" means any date upon which commences a
Mandatory Collateral Period as described in Part III of Schedule 1.
"INITIALLY QUALIFIED DEPOSIT TAKER" means (1) Banque Nationale de Paris,
acting through any branch, office or agency that can lawfully maintain an
Account as a Deposit Taker hereunder, and (2) any of the fifty largest (measured
by total assets) U.S. banks, or one of the one hundred largest (measured by
total assets) banks in the world, with debt ratings of at least (i) A- (in the
case of long term debt) and A-1 (in the case of short term debt) or the
equivalent thereof
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by Standard and Poor's Corporation, and (ii) A3 (in the case of long term debt)
and P-2 (in the case of short term debt) or the equivalent thereof by Moody's
Investor Service, Inc. The parties believe it improbable that the ratings
systems used by Standard and Poor's Corporation and by Moody's Investor Service,
Inc. will be discontinued or changed, but if such ratings systems are
discontinued or changed, NAI shall be entitled to select and use a comparable
ratings systems as a substitute for the S&P Rating or the Moody Rating, as the
case may be, for purposes of determining the status of any bank as an Initially
Qualified Deposit Taker.
"LIEN" shall mean, with respect to any property or assets, any right or
interest therein of a creditor to secure indebtedness of any kind which is owed
to him or any other arrangement with such creditor which provides for the
payment of such indebtedness out of such property or assets or which allows him
to have such indebtedness satisfied out of such property or assets prior to the
general creditors of any owner thereof, including any lien, mortgage, security
interest, pledge, deposit, production payment, rights of a vendor under any
title retention or conditional sale agreement or lease substantially equivalent
thereto, tax lien, mechanic's or materialman's lien, or any other charge or
encumbrance for security purposes, whether arising by law or agreement or
otherwise, but excluding any right of setoff which arises without agreement in
the ordinary course of business. "Lien" also means any filed financing
statement, any registration with an issuer of uncertificated securities, or any
other arrangement which would serve to perfect a Lien described in the preceding
sentence, regardless of whether such financing statement is filed, such
registration is made, or such arrangement is undertaken before or after such
Lien exists.
"MATERIAL LEASE DEFAULT" shall mean any of the following:
(1) any "Event of Default" under and as defined in the
Improvements Lease, including any such Event of Default consisting of a
failure of NAI to comply with the requirements of Exhibit I attached to
the Improvements Lease; and
(2)(a) any failure of NAI to make any payment required by and
when first due under the Improvements Lease, regardless of whether any
period provided in the Improvements Lease for the cure of such failure
by NAI shall have expired, and (b) any other default, event or condition
which would, with the giving of any requisite notices and the passage of
any requisite periods of time, constitute an "Event of Default" under
and as defined in the Improvements Lease, if such other default, event
or failure involves a material noncompliance with Applicable Law. (For
purposes of this definition, "material" noncompliance with Applicable
Law will include any noncompliance, the correction of which has been
requested by a governmental authority, or because of which a threat of
action against the Property or BNPLC has been asserted by a governmental
authority.)
"MANDATORY COLLATERAL PERIOD" shall mean any period, as determined in
accordance with Part III of Schedule 1, during which NAI is required to maintain
a Collateral Percentage of one hundred percent (100%) pursuant to Section 3.2.
"MINIMUM COLLATERAL VALUE" shall mean (1) as of the Designated Sale Date
or any prior date, an amount equal to the Collateral Percentage multiplied by
the Stipulated Loss Value
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determined as of that date in accordance with the Improvements Lease; and (2) as
of any date after the Designated Sale Date, an amount equal to the Break Even
Price plus any unpaid interest accrued on past due amounts payable pursuant to
Paragraph 1(a) of the Purchase Agreement.
"NAI" shall have the meaning given to that term in the introductory
paragraph hereof.
"NAI'S PURCHASE AGREEMENT OBLIGATIONS" shall mean all of NAI's
obligations under the Purchase Agreement, including (i) NAI's obligation to pay
any Supplemental Payment as required under subparagraph 1(A) of the Purchase
Agreement, (ii) NAI's obligation to pay any Issue 97-10 Prepayment as required
by subparagraph 4(C) of the Purchase Agreement, and (iii) any damages incurred
by BNPLC because of (A) NAI's breach of the Purchase Agreement or (B) the
rejection by NAI of the Purchase Agreement in any bankruptcy or insolvency
proceeding.
"NOTICE OF SECURITY INTEREST" shall have the meaning given to that term
in subsection 4.1.1 hereof.
"OTHER LIABLE PARTY" shall mean any Person, other than NAI, who may now
or may at any time hereafter be primarily or secondarily liable for any of the
Secured Obligations or who may now or may at any time hereafter have granted to
Agent a pledge of or security interest in any of the Collateral.
"PARTICIPANTS" shall mean BNPLC's Parent and any other financial
institutions which may hereafter become parties to (i) this Agreement by
completing, executing and delivering to NAI and Agent a Supplement, and (ii) the
Participation Agreement.
"PARTICIPATION AGREEMENT" shall have the meaning given to such term in
Recital B hereof.
"PERCENTAGE" shall mean with respect to each Participant and the Deposit
Taker for such Participant, such Participant's "Percentage" under and as defined
in the Participation Agreement for purposes of computing such Participant's
right thereunder to receive payments of (or amounts equal to a percentage of)
any sales proceeds or Supplemental Payment received by BNPLC under the Purchase
Agreement. Percentages may be adjusted from time to time as provided in the
Participation Agreement or as provided in supplements thereto executed as
provided in the Participation Agreement.
"QUALIFIED PLEDGE" means a pledge or security interest that constitutes
a valid, perfected, first priority pledge or security interest.
"SECURED OBLIGATIONS" shall mean and include both NAI's Purchase
Agreement Obligations and BNPLC's Corresponding Obligations to Participants.
"SUPPLEMENT" shall mean a supplement to this Agreement in the form of
ATTACHMENT 2.
"TRANSACTION DOCUMENTS" shall mean, collectively, this Agreement, the
Improvements Lease, the Purchase Agreement and the Participation Agreement.
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"TRANSITION ACCOUNT" shall have the meaning given it in Section 5.2.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of California from time to time, and the Uniform Commercial Code as in effect in
any other jurisdiction which governs the perfection or non-perfection of the
pledge of and security interests in the Collateral created by this Agreement.
"VALUE" shall mean with respect to any Account, Certificate of Deposit
or Cash Collateral on any date, a dollar value determined as follows (without
duplication):
(a) cash shall be valued at its face amount on such date;
(b) an Account shall be valued at the principal balance thereof
on such date; and
(c) a Certificate of Deposit shall be valued at the face amount
thereof.
1.3 Attachments. All attachments to this Agreement are a part hereof for
all purposes.
1.4 Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided herein, references in this Agreement to a
particular agreement, instrument or document (including references to the
Improvements Lease, Purchase Agreement and Participation Agreement) also refer
to and include all valid renewals, extensions, amendments, modifications,
supplements or restatements of any such agreement, instrument or document;
provided that nothing contained in this Section shall be construed to authorize
any Person to execute or enter into any such renewal, extension, amendment,
modification, supplement or restatement.
1.5 References and Titles. All references in this Agreement to
Attachments, Articles, Sections, subsections, and other subdivisions refer to
the Attachments, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision are for convenience only and do not constitute any part of
any such subdivision and shall be disregarded in construing the language
contained in this Agreement. The words "this Agreement", "herein", "hereof",
"hereby", "hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited. The
phrases "this Article," "this Section" and "this subsection" and similar phrases
refer only to the Articles, Sections or subsections hereof in which the phrase
occurs. The word "or" is not exclusive, and the word "including" (in all of its
forms) means "including without limitation". Pronouns in masculine, feminine and
neuter gender shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa unless the
context otherwise requires.
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ARTICLE II
SECURITY INTEREST
2.1 Pledge and Grant of Security Interest. As security for the Secured
Obligations, NAI hereby pledges and assigns to Agent (for the ratable benefit of
BNPLC and the Participants) and grants to Agent (for the ratable benefit of
BNPLC and the Participants) a continuing security interest and lien in and
against all right, title and interest of NAI in and to the following property,
whether now owned or hereafter acquired by NAI (collectively and severally, the
"COLLATERAL"):
(a) All Cash Collateral, all Accounts, the Transition Account and
all Certificates of Deposit issued from time to time and general
intangibles arising therefrom or relating thereto (however, "general
intangibles" as used in this clause shall not include any general
intangibles not related to Cash Collateral, Accounts, the Transition
Account or Certificates of Deposit issued from time to time, and thus
will not include, without limitation, any intellectual property of NAI);
and all documents, instruments and agreements evidencing the same; and
all extensions, renewals, modifications and replacements of the
foregoing; and any interest or other amounts payable in connection
therewith; and
(b) All proceeds of the foregoing (including whatever is
receivable or received when Collateral or proceeds is invested, sold,
collected, exchanged, returned, substituted or otherwise disposed of,
whether such disposition is voluntary or involuntary, including rights
to payment and return premiums and insurance proceeds under insurance
with respect to any Collateral, and all rights to payment with respect
to any cause of action affecting or relating to the Collateral).
The pledge, assignment and grant of a security interest made by NAI hereunder is
for security of the Secured Obligations only; the parties to this Agreement do
not intend that NAI's delivery of the Collateral to Agent as herein provided
will constitute an advance payment of any Secured Obligations or liquidated
damages, nor do the parties intend that the Collateral increase the dollar
amount of the Secured Obligations.
2.2 Return of Collateral After the Secured Obligations are Satisfied in
Full. If any proceeds of Collateral remain after all Secured Obligations have
been paid in full, Agent will deliver or direct the Deposit Takers to deliver
such proceeds to NAI or other Persons entitled thereto by law.
ARTICLE III
DESIGNATION OF MINIMUM COLLATERAL PERCENTAGE
3.1 Determination of Minimum Collateral Percentage Generally. Effective
as of the date of this Agreement, and until a new Collateral Percentage becomes
effective, the Collateral Percentage is zero percent (0%). Subject to the
provisions of this Article III, NAI may from time to time designate a new
Collateral Percentage between 0% and 100% by written notice delivered to Agent,
BNPLC and the Participants in the form of ATTACHMENT 3. Any new Collateral
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Percentage so designated shall not become effective, however, until the
commencement of the later of (A) the first Base Rent Period to commence on or
after the first Business Day of September, 2001, or (B) the next following Base
Rent Period which is at least ten Business Days after the receipt of such notice
by Agent, BNPLC and the Participants. Further, after the first change in the
Collateral Percentage resulting from a designation by NAI of a Collateral
Percentage greater than zero percent (0%), any subsequent change resulting from
NAI's designation of a new Collateral Percentage shall not become effective
before the first Business Day of the first Base Rent Period that commences at
least ninety days after the effective date of the last preceding change in the
Collateral Period. In any event, if NAI provides more than one notice of a
change in the Collateral Percentage to be effective on a particular Base Rent
Date, then the latest such notice from NAI which satisfies the requirements of
this Section (and of Sections 3.2 and 3.3) will control. After any Collateral
Percentage becomes effective as provided in this Article, it shall remain in
effect until a different Collateral Percentage becomes effective as provided in
this Article.
3.2 Limitations on NAI's Right to Lower the Collateral Percentage.
Notwithstanding the foregoing, no designation by NAI of a new Collateral
Percentage will be effective to reduce the Collateral Percentage if the
designation is given, or the reduction would otherwise become effective, on or
after the Designated Sale Date or when any of the following shall have occurred
and be continuing:
3.2.1 any Material Lease Default;
3.2.2 any Event of Default under and as defined in this
Agreement; or
3.2.3 any Default under and as defined in this Agreement -
excluding, however, any such Default limited to a failure of NAI
described in clause or clause (e) of the definition of Event of Default
above, with respect to which the time for cure specified in clause (c)
or clause (e), as applicable, has not expired.
3.3 Mandatory Collateral Periods. NOTWITHSTANDING ANYTHING TO THE
CONTRARY HEREIN CONTAINED, THE COLLATERAL PERCENTAGE DURING ANY MANDATORY
COLLATERAL PERIOD SHALL BE ONE HUNDRED PERCENT (100%). No later than five
Business Days prior to any Failed Collateral Test Date, NAI shall notify Agent,
BNPLC and the Participants of the conditions set forth in Part III of Schedule 1
that NAI will be unable to satisfy on the Failed Collateral Test Date.
ARTICLE IV
PROVISIONS CONCERNING DEPOSIT TAKERS
4.1 Qualification of Deposit Takers Generally. Agent may decline to
deposit or maintain Collateral hereunder with any Person designated as a Deposit
Taker, if such Person has failed to satisfy or no longer satisfies the following
requirements:
4.1.1 Such Person must have received from Agent and NAI a
completed, executed Notice of Security Interest in the form of
ATTACHMENT 4 (a "NOTICE OF
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SECURITY INTEREST") which specifically identifies any and all Accounts
in which such Person shall hold Cash Collateral delivered to it pursuant
to this Agreement and which designates Account Offices with respect to
all such Accounts in New York or California.
4.1.2 Such Person must have executed the Acknowledgment and
Agreement at the end of such Notice of Security Interest (the "DEPOSIT
TAKER'S ACKNOWLEDGMENT AND AGREEMENT") and returned the same to Agent.
Further, such Person must have complied with the Deposit Taker's
Acknowledgment and Agreement, and the representations set forth therein
with respect to such Person must continue to be true and correct.
4.1.3 Such Person must be a commercial bank, organized under the
laws of the United States of America or a state thereof or under the
laws of another country which is doing business in the United States of
America; must be authorized to maintain deposit accounts for others
through Account Offices in New York or California (as specified in the
Deposit Taker's Acknowledgment and Agreement); and must be an Affiliate
of BNPLC or the Participant for whom such Person will act as Deposit
Taker or must have a combined capital, surplus and undivided profits of
at least $500,000,000.
4.1.4 Such Person must have complied with the provisions in this
Agreement applicable to Deposit Takers, including the provisions of
Section 5.4 concerning the issuance and redemption of Certificates of
Deposit.
4.2 Existing Deposit Takers. BNPLC's Parent (as Deposit Taker for itself
and for BNPLC) has received a Notice of Security Agreement dated the Effective
Date and has responded to such a notice with a Deposit Taker's Acknowledgment
and Agreement dated the Effective Date, as contemplated in subsections 4.1.1 and
4.1.2.
4.3 Replacement of Participants Proposed by NAI. So long as no Event of
Default has occurred and is continuing, BNPLC shall not unreasonably withhold
its approval for a substitution under the Participation Agreement of a new
Participant proposed by NAI for any Participant, the Deposit Taker for whom
would no longer meet the requirements for an Initially Qualified Deposit Taker;
provided, however, that (A) the proposed substitution can be accomplished
without a release or breach by BNPLC of its rights and obligations under the
Participation Agreement; (B) the new Participant will agree (by executing a
Supplement and a supplement to the Participation Agreement as contemplated
therein and by other agreements as may be reasonably required by BNPLC and NAI)
to become a party to the Participation Agreement and to this Agreement, to
designate an Initially Qualified Deposit Taker as the Deposit Taker for it under
this Agreement and to accept a Percentage under the Participation Agreement
equal to the Percentage of the Participant to be replaced; (C) the new
Participant (or NAI) will provide the funds required to pay the termination fee
by Section 6.4 of the Participation Agreement to accomplish the substitution;
(D) NAI (or the new Participant) agrees in writing to indemnify and defend BNPLC
for any and all Losses incurred by BNPLC in connection with or because of the
substitution, including the cost of preparing supplements to the Participation
Agreement and this Agreement and including any cost of defending and paying any
claim asserted by the Participant to be replaced because of the substitution
(but not including any liability of BNPLC to such Participant for damages caused
by BNPLC's bad faith or gross negligence in the performance of BNPLC's
obligations under the Participation Agreement prior
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to the substitution); (E) the new Participant shall be a reputable financial
institution having a net worth of no less than seven and one half percent (7.5%)
of total assets and total assets of no less than $10,000,000,000.00 (all
according to then recent audited financial statements); and (F) in no event will
BNPLC be required to approve a substitution pursuant to this Section 4.3 which
will replace a Participant that is an Affiliate of BNPLC. BNPLC shall attempt in
good faith to assist (and cause BNPLC's Parent to attempt in good faith to
assist) NAI in identifying a new Participant that NAI may propose to substitute
for an existing Participant pursuant to this Section, as NAI may reasonably
request from time to time. However, in no event shall BNPLC itself, or any of
its Affiliates, be required to take the Percentage of any Participant to be
replaced.
4.4 Mandatory Substitution for Disqualified Deposit Takers. If any
Deposit Taker shall cease to satisfy the requirements set forth in Section 4.1,
the party for whom such Disqualified Deposit Taker has been designated as
Deposit Taker (i.e., BNPLC or the applicable Participant) shall promptly (1)
provide notice thereof to Agent and NAI, and (2) designate a substitute Deposit
Taker and cause the substitute to satisfy the requirements set forth in Section
4.1. Pending the designation of the substitute and the satisfaction by it of the
requirements set forth in Section 4.1, Agent may withdraw Collateral held by the
Disqualified Deposit Taker and deposit such Collateral with other Deposit
Takers, subject to Section 5.3 below.
4.5 Voluntary Substitution of Deposit Takers With the written approval
of Agent, which approval will not be unreasonably withheld, BNPLC or any
Participant may at any time designate for itself a new Deposit Taker (in
replacement of any prior Deposit Taker acting for it hereunder); provided, the
Person so designated has satisfied the requirements set forth in Section 4.1;
and, provided further, unless the designation of a new Deposit Taker is required
by Section 4.4 to replace a Disqualified Deposit Taker, at the time of the
replacement such Person must be an Initially Qualified Deposit Taker.
4.6 Delivery of Notice of Security Interest by NAI and Agent. To the
extent required for the designation of a new Deposit Taker by BNPLC or any
Participant pursuant to Section 4.5, or to permit the substitution or
replacement of a Deposit Taker for BNPLC or any Participant as provided in
Sections 4.4 and 4.5, NAI and Agent shall promptly execute and deliver any
properly completed Notice of Security Interest requested by BNPLC or the
applicable Participant.
4.7 Constructive Possession of Collateral. The possession by a Deposit
Taker of any deposit accounts, money, instruments, chattel paper or other
property constituting Collateral or evidencing Collateral shall be deemed to be
possession by Agent or a person designated by Agent, for purposes of perfecting
the security interest granted to Agent hereunder pursuant to the UCC or other
Applicable Law; and notifications to a Deposit Taker by other Persons holding
any such property, and Acknowledgments, receipts or confirmations from any such
Persons delivered to a Deposit Taker, shall be deemed notifications to, or
Acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of such Deposit Taker for the benefit of Agent
for the purposes of perfecting such security interests under Applicable Law.
4.8 Attempted Setoff by Deposit Takers. By delivery of a Deposit Taker's
Acknowledgment and Agreement, each Deposit Taker shall be required to agree not
to setoff or
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attempt a setoff, WITHOUT IN EACH CASE FIRST OBTAINING THE PRIOR WRITTEN
AUTHORIZATION OF AGENT, Secured Obligations owed to it against any Collateral
held by it from time to time. Further, by delivery of a Deposit Taker's
Acknowledgment and Agreement, each Deposit Taker shall be required to agree not
to setoff or attempt a setoff, WITHOUT IN EACH CASE FIRST OBTAINING THE PRIOR
WRITTEN AUTHORIZATION OF BOTH NAI AND AGENT, obligations owed to it other than
Secured Obligations against any Collateral held by it from time to time. Any
Deposit Taker for BNPLC or a Participant shall not be permitted by BNPLC or the
applicable Participant, as the case may be, to violate such agreements. However,
NAI acknowledges and agrees (without limiting its right to recover damages from
a Deposit Taker that violates such agreements) that Agent shall not be
responsible for, or be deemed to have taken any action against NAI because of,
any Deposit Taker's violation of such agreements; and, neither BNPLC nor any
Participant shall be responsible for, or be deemed to have taken any action
against NAI because of, any violation of such agreements by a Deposit Taker for
another party.
4.9 Deposit Taker Losses. Agent shall not be responsible for any Deposit
Taker Losses. However, Deposit Taker Losses with respect to a Deposit Taker for
a particular Participant shall reduce the amount of BNPLC's Corresponding
Obligations to Participants which are payable to such Participant as provided in
Section 2.2 of the Participation Agreement. Further, when Deposit Taker Losses
with respect to a Deposit Taker for a particular Participant are incurred in
excess of the payments of Secured Obligations that such Participant would then
have been entitled to receive under the Participation Agreement but for such
Deposit Taker Losses, such Participant must immediately pay the excess to Agent
as additional Collateral hereunder, failing which NAI may recover any damages
suffered by it because of the Deposit Taker Losses from such Deposit Taker or
such Participant.
4.10 Losses Resulting from Failure of Deposit Taker to Comply with this
Agreement. Any Participant, the Deposit Taker for whom has failed to comply with
the requirements of this Agreement or any Notices of Security Interest and any
Deposit Taker's Acknowledgments and Agreements (the "RESPONSIBLE PARTICIPANT")
must defend, indemnify, and hold harmless BNPLC, Agent and the other
Participants from and against any Losses resulting from such failure. Without
limiting the foregoing, if the failure of a Deposit Taker for a Responsible
Participant to comply strictly with the terms of this Agreement (including,
without limitation, the provisions of Section 5.4 concerning the issuance and
redemption of Certificates of Deposit and the requirement that any cash deposits
be held in a deposit account located in either New York or California) causes,
in whole or in part, the security interest of Agent in the Collateral held by
such Deposit Taker to be unperfected, then any and all Losses suffered as a
result of such nonperfection shall be borne solely by the Responsible
Participant and shall not be shared by BNPLC, Agent or the other Participants.
ARTICLE V
DELIVERY AND MAINTENANCE OF CASH COLLATERAL
5.1 Delivery of Funds by NAI. On each Base Rent Date, NAI must deliver
to Agent, subject to the pledge and security interest created hereby, funds as
Cash Collateral then needed (if any) to cause the Value of the Collateral to be
no less than the Minimum Collateral Value. Each delivery of funds required by
the preceding sentence must be received by Agent no later
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than 12:00 noon (San Francisco time) on the date it is required; if received
after 12:00 noon it will be considered for purposes of the Improvements Lease as
received on the next following Business Day. At least five Business Days prior
to any Base Rent Date upon which it is expected that NAI will be required to
deliver additional funds pursuant to this Section, NAI shall notify BNPLC, Agent
and each of the Participants thereof and of the amount NAI expects to deliver to
Agent as Cash Collateral on the applicable Base Rent Date. In addition to
required deliveries of Cash Collateral as provided in the foregoing provisions,
NAI may on any date (whether or not a Base Rent Date) deliver additional Cash
Collateral to Agent as necessary to prevent any Default from becoming an Event
of Default. Upon receipt of any funds delivered to it by NAI as Cash Collateral,
Agent shall immediately deposit the same with the Deposit Takers in accordance
with the requirements of Sections 5.3 and 5.4 below.
5.2 Transition Account. Pending deposit in the Accounts or other
application as provided herein, all Cash Collateral received by Agent shall be
credited to and held by Agent in an account (the "TRANSITION ACCOUNT") styled
"NAI Collateral Account, held for the benefit of BNP Leasing Corporation and the
Participants," separate and apart from all other property and funds of NAI or
other Persons, and no other property or funds shall be deposited in the
Transition Account. The books and records of Agent shall reflect that the
Transition Account and all Cash Collateral on deposit therein are owned by NAI,
subject to a pledge and security interest in favor of Agent for the benefit of
BNPLC and Participants.
5.3 Allocation of Cash Collateral Among Deposit Takers. Funds received
by Agent from NAI as Cash Collateral will be allocated for deposit among the
Deposit Takers as follows:
first, to the extent possible the funds will be allocated as required to
rectify and prevent any Collateral Imbalance; and
second, the funds will be allocated to the Deposit Taker for BNPLC,
unless the Deposit Taker for BNPLC has become a Disqualified Deposit
Taker, in which case the funds will be allocated to other Deposit Takers
who are not Disqualified Deposit Takers as Agent deems appropriate.
Further, if for any reason a Collateral Imbalance is determined by Agent to
exist, Agent shall, as required to rectify or mitigate the Collateral Imbalance,
promptly reallocate Collateral among Deposit Takers by withdrawing Cash
Collateral from some Accounts and redepositing it in other Accounts. (If any
party to this Agreement believes that the Value of the Accounts held by a
particular Deposit Taker causes a Collateral Imbalance to exist, that party will
promptly notify BNPLC, NAI and Agent.) Subject to the foregoing, and provided
that Agent does not thereby create or exacerbate a Collateral Imbalance, Agent
may withdraw and redeposit Cash Collateral in order to reallocate the same among
Deposit Takers from time to time as Agent deems appropriate. For purposes of
illustration only, examples of the allocations required by this Section are set
forth in ATTACHMENT 5.
5.4 Issuance and Redemption of Certificates of Deposit. Upon the receipt
of any deposit of Cash Collateral from Agent, each Deposit Taker shall issue a
Certificate of Deposit evidencing the Account into which such deposit is made
and deliver such Certificate of Deposit to Agent for the benefit of BNPLC and
the Participants. Each Certificate of Deposit shall be
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issued in an amount equal to the Value of the Account which it evidences and
shall otherwise be in the form set forth as ATTACHMENT 1 to this Agreement. Upon
depositing any Cash Collateral into an Account that is already evidenced by an
outstanding Certificate of Deposit, Agent will surrender the outstanding
Certificate of Deposit, and in exchange the Deposit Taker receiving the deposit
will issue a new Certificate of Deposit, evidencing the total amount of Cash
Collateral in the Account after the deposit. A Deposit Taker that has issued a
Certificate of Deposit may require the surrender of the Certificate of Deposit
as a condition to a withdrawal from the Account evidenced thereby, including any
withdrawal required or permitted by this Agreement. Upon surrender of a
Certificate of Deposit in connection with a withdrawal of less than all of the
Cash Collateral in the Account evidenced thereby, the applicable Deposit Taker
will concurrently issue a new Certificate of Deposit to Agent, evidencing the
balance of the Cash Collateral remaining on deposit in the Account after the
withdrawal. Notwithstanding the foregoing, if any Certificate of Deposit held by
Agent shall be destroyed, lost or stolen, the Deposit Taker that issued the
Certificate, upon the written request of Agent, shall issue a new Certificate of
Deposit to Agent in lieu of and in substitution for the Certificate of Deposit
so destroyed, lost or stolen. However, as applicant for the substitute
Certificate of Deposit, Agent must indemnify (at no cost to NAI) the applicable
Deposit Taker against any liability on the Certificate of Deposit destroyed,
lost or stolen, and Agent shall furnish to the Deposit Taker an affidavit of an
officer of Agent setting forth the fact of destruction, loss or theft and
confirming the status of Agent as holder of the Certificate of Deposit
immediately prior to the destruction, loss or theft. If any Certificate of
Deposit held by Agent shall become mutilated, the Deposit Taker that issued the
Certificate, upon the written request of Agent, shall issue a new Certificate of
Deposit to Agent in exchange and substitution for the mutilated Certificate of
Deposit. Agent shall hold all Certificates of Deposit for the benefit of BNPLC
and the Participants, subject to the pledge and security interest created
hereby.
5.5 Status of the Accounts Under the Reserve Requirement Regulations.
Deposit Takers shall be permitted to structure the Accounts as nonpersonal time
deposits under 12 C.F.R., Part II, Chapter 204 (commonly known as "Regulation
D"). Accordingly, each Deposit Taker may require at least seven days advance
notice of any withdrawal or transfer of funds from Accounts it maintains and may
limit the number of withdrawals or transfers from such Accounts to no more than
six in any calendar month, notwithstanding anything to the contrary herein or in
any deposit agreement that NAI and any Deposit Taker may enter into with respect
to any Account. As necessary to satisfy the seven days notice requirement with
respect to withdrawals by Agent when required by NAI pursuant to the provisions
below, Agent shall notify Deposit Takers promptly after receipt of any notice
from NAI described in subsection 6.1.2 or 6.2.1 or in Section 6.3.
5.6 Acknowledgment by NAI that Requirements of this Agreement are
Commercially Reasonable. NAI acknowledges and agrees that the requirements set
forth herein concerning receipt, deposit, withdrawal, allocation, application
and distribution of Cash Collateral by Agent, including the requirements and
time periods set forth in the next Article, are commercially reasonable.
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ARTICLE VI
WITHDRAWAL OF CASH COLLATERAL
NAI may not withdraw Cash Collateral, except as follows:
6.1 Withdrawal of Collateral Prior to the Designated Sale Date. NAI may
require Agent to present Certificates of Deposit for payment and withdraw Cash
Collateral from Accounts on any date prior to the Designated Sale Date and to
deliver such Cash Collateral to NAI (which delivery shall be free and clear of
all liens and security interests hereunder); provided, however, that in each
case:
6.1.1 Such withdrawal and delivery of the Cash Collateral to NAI
will not cause the Value of the remaining Collateral to be less than the
Minimum Collateral Value.
6.1.2 by a notice in the form of ATTACHMENT 6, NAI must give
Agent, BNPLC and the Participants notice of the required withdrawal at
least ten days prior to the date upon which the withdrawal is to occur.
6.1.3 No Default or Event of Default shall have occurred and be
continuing at the time NAI gives the notice required by the preceding
subsection or on the date upon which the withdrawal is required.
6.1.4 NAI must pay to Agent any and all costs incurred by Agent
in connection with the withdrawal.
6.1.5 Agent shall determine the Accounts from which to make any
withdrawal required by NAI pursuant to this Section as necessary to
prevent or mitigate any Collateral Imbalance.
6.2 Withdrawal and Application of Cash Collateral to Reduce or Satisfy
the Secured Obligations to the Participants. To reduce the "Break Even Price" or
"Supplemental Payment" required under (and as defined in) the Purchase Agreement
(and, thus, to reduce the Secured Obligations), NAI may require Agent to
withdraw Cash Collateral then held by or for Agent pursuant to this Agreement on
the Designated Sale Date and to deliver the same on the Designated Sale Date or
on any date thereafter prior to an Event of Default (which delivery shall be
free and clear of all liens and security interests hereunder) directly to the
Participants in proportion to their respective rights to payment of BNPLC's
Corresponding Obligations to Participants and for application thereto or the
reduction thereof pursuant to Section 2.2 of the Participation Agreement;
provided, that:
6.2.1 by a notice in the form of ATTACHMENT 7, NAI must have
notified Agent, BNPLC and each of the Participants of the required
withdrawal and payment to Participants at least ten days prior to the
date upon which it is to occur;
6.2.2 the required withdrawal shall be made as determined by
Agent, first, from the Accounts maintained by the Deposit Takers for the
Participants, and then (to the extent necessary) from the Accounts
maintained by the Deposit Taker for BNPLC; and
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6.2.3 in any event, no withdrawals or payments directly to
Participants shall be required by this Section 6.2 (or permitted over
the objection of BNPLC) in excess of those required to satisfy BNPLC's
Corresponding Obligations to Participants or to reduce such obligations
to zero under the Participation Agreement.
6.3 Withdrawal and Application of Cash Collateral to Reduce or Satisfy
the Secured Obligations to BNPLC. To satisfy NAI's Purchase Agreement
Obligations, NAI may require Agent to withdraw any Cash Collateral held by the
Deposit Taker for BNPLC pursuant to this Agreement on the Designated Sale Date
and to deliver the same on the Designated Sale Date or on any date thereafter
prior to an Event of Default (which delivery shall be free and clear of all
liens and security interests hereunder) directly to BNPLC as a payment on behalf
of NAI of amounts due under the Purchase Agreement; provided, that by a notice
in the form of ATTACHMENT 8, NAI must have notified Agent and BNPLC of the
required withdrawal and payment to BNPLC at least ten days prior to the date
upon which it is to occur.
6.4 Withdrawal of Cash Collateral From Accounts Maintained by
Disqualified Deposit Takers. NAI may from time to time prior to the Designated
Sale Date (regardless of the existence of any Default or Event of Default)
require Agent to withdraw any or all Cash Collateral from any Account maintained
by a Disqualified Deposit Taker and deposit it, still subject to the pledge and
grant of security interest hereunder, with other Deposit Takers who are not
Disqualified Deposit Takers (in accordance with the requirements of Sections 5.3
and 5.4) on any date prior to the Designated Sale Date; provided, that by a
notice in the form of ATTACHMENT 9, NAI must have notified Agent, BNPLC and each
of the Participants of the required withdrawal at least ten days prior to the
date upon which it is to occur.
ARTICLE VII
REPRESENTATIONS AND COVENANTS OF NAI
7.1 Representations of NAI. NAI represents to BNPLC, Agent and the
Participants as follows:
7.1.1 NAI is the legal and beneficial owner of the Collateral
(or, in the case of after-acquired Collateral, at the time NAI acquires
rights in the Collateral, will be the legal and beneficial owner
thereof). No other Person has (or, in the case of after-acquired
Collateral, at the time NAI acquires rights therein, will have) any
right, title, claim or interest (by way of Lien, purchase option or
otherwise) in, against or to the Collateral, except for rights created
hereunder.
7.1.2 Agent has (or in the case of after-acquired Collateral, at
the time NAI acquires rights therein, will have) a valid, first
priority, perfected pledge of and security interest in the Collateral,
regardless of the characterization of the Collateral as deposit
accounts, instruments or general intangibles under the UCC, but assuming
that the representations of each Deposit Taker in its Deposit Taker's
Acknowledgment and Agreement are true.
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7.1.3 NAI has delivered to Agent, together with all necessary
stock powers, endorsements, assignments and other necessary instruments
of transfer, the originals of all documents, instruments and agreements
evidencing Accounts, Certificates of Deposit or Cash Collateral.
7.1.4 NAI's chief executive office is located at the address of
NAI set forth in Article II of the Common Definitions and Provisions
Agreement (Phase V - Improvements) or at another address in California
specified in a notice that NAI has given to Agent as required by Section
7.2.4.
7.1.5 To the knowledge of NAI, neither the ownership or the
intended use of the Collateral by NAI, nor the pledge of Accounts or the
grant of the security interest by NAI to Agent herein, nor the exercise
by Agent of its rights or remedies hereunder, will (i) violate any
provision of (a) Applicable Law, (b) the articles or certificate of
incorporation, charter or bylaws of NAI, or (c) any agreement, judgment,
license, order or permit applicable to or binding upon NAI, or (ii)
result in or require the creation of any Lien, charge or encumbrance
upon any assets or properties of NAI except as expressly contemplated in
this Agreement. Except as expressly contemplated in this Agreement, to
the knowledge of NAI no consent, approval, authorization or order of,
and no notice to or filing with any court, governmental authority or
third party is required in connection with the pledge or grant by NAI of
the security interest contemplated herein or the exercise by Agent of
its rights and remedies hereunder.
7.2 Covenants of NAI. NAI hereby agrees as follows:
7.2.1 NAI, at NAI's expense, shall promptly procure, execute and
deliver to Agent all documents, instruments and agreements and perform
all acts which are necessary, or which Agent may reasonably request, to
establish, maintain, preserve, protect and perfect the Collateral, the
pledge thereof to Agent or the security interest granted to Agent
therein and the first priority of such pledge or security interest or to
enable Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
preceding sentence, NAI shall (A) procure, execute and deliver to Agent
all stock powers, endorsements, assignments, financing statements and
other instruments of transfer requested by Agent, (B) deliver to Agent
promptly upon receipt all originals of Collateral consisting of
instruments, documents and chattel paper, (C) cause the security
interest of Agent in any Collateral consisting of securities to be
recorded or registered in the books of any financial intermediary or
clearing corporation requested by Agent, and (D) reimburse Agent upon
request for any legal opinion Agent may elect to obtain from a
nationally recognized commercial law firm authorized to practice in New
York concerning the enforceability, first priority and perfection of
Agent's security interest in any Collateral maintained in New York, if
BNPLC or any Participant should at any time elect to use a Deposit Taker
that will maintain one or more Accounts in New York.
7.2.2 NAI shall not use or consent to any use of any Collateral
in violation of any provision of the this Agreement or any other
Transaction Document or any Applicable Law.
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7.2.3 NAI shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Collateral.
7.2.4 Without thirty days' prior written notice to Agent, NAI
shall not change NAI's name or place of business (or, if NAI has more
than one place of business, its chief executive office).
7.2.5 NAI shall appear in and defend, on behalf of Agent, any
action or proceeding which may affect NAI's title to or Agent's interest
in the Collateral.
7.2.6 Subject to the express rights of NAI under Article VI, NAI
shall not surrender or lose possession of (other than to Agent or a
Deposit Taker pursuant hereto), sell, encumber, lease, rent, option, or
otherwise dispose of or transfer any Collateral or right or interest
therein, and NAI shall keep the Collateral free of all Liens.
7.2.7 NAI will not take any action which would in any manner
impair the value or enforceability of Agent's pledge of or security
interest in any Collateral, nor will NAI fail to take any action which
is required to prevent (and which NAI knows is required to prevent) an
impairment of the value or enforceability of Agent's pledge of or
security interest in any Collateral.
7.2.8 NAI shall pay (and shall indemnify and hold harmless Agent
from and against) all Losses incurred by Agent in connection with or
because of (A) the interest acquired by Agent in any Collateral pursuant
to this Agreement, or (B) the negotiation or administration of this
Agreement, whether such Losses are incurred at the time of execution of
this Agreement or at any time in the future. Costs and expenses included
in such Losses may include, without limitation, all filing and recording
fees, taxes, UCC search fees and Attorneys' Fees incurred by Agent with
respect to the Collateral.
7.2.9 Without limiting the foregoing, within five Business Days
after NAI becomes aware of any failure of the pledge or security
interest contemplated herein in the Transition Account or any Account,
Certificate of Deposit or Cash Collateral to be a valid, perfected,
first priority pledge or security interest (regardless of the
characterization of the Transition Account or any Accounts, Certificates
of Deposit or Cash Collateral as deposit accounts, instruments or
general intangibles under the UCC), NAI shall notify Agent, BNPLC and
the Participants of such failure. In addition, if the failure would not
exist but for NAI's delivery of Cash Collateral to Agent subject to
prior Liens or other claims by one or more third parties, or but for the
grant by NAI itself of any Lien or other interest in the Collateral to
one or more third parties, then, in addition to any other remedies
available to BNPLC or Agent under the circumstances, NAI must pay to
BNPLC any additional Base Rent that has accrued under the Improvements
Lease because of (or that would have accrued if BNPLC had been aware of)
the failure, together with interest at the Default Rate on any such
additional Base Rent.
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ARTICLE VIII
AUTHORIZED ACTION BY AGENT
8.1 Power of Attorney. NAI hereby irrevocably appoints Agent as NAI's
attorney-in-fact for the purpose of authorizing Agent to perform (but Agent
shall not be obligated to and shall incur no liability to NAI or any third party
for failure to perform) any act which NAI is obligated by this Agreement to
perform, and to exercise, consistent with the other provisions of this
Agreement, such rights and powers as NAI might exercise with respect to the
Collateral during any period in which a Default or Event of Default has occurred
and is continuing, including the right to (a) collect by legal proceedings or
otherwise and endorse, receive and receipt for all dividends, interest,
payments, proceeds and other sums and property now or hereafter payable on or on
account of the Collateral; (b) enter into any extension, reorganization,
deposit, merger, consolidation or other agreement pertaining to, or deposit,
surrender, accept, hold or apply other property in exchange for the Collateral;
(c) insure, process, preserve and enforce the Collateral; (d) make any
compromise or settlement, and take any action it deems advisable, with respect
to the Collateral; (e) pay any indebtedness of NAI relating to the Collateral;
and (f) execute UCC financing statements and other documents, instruments and
agreements required hereunder. NAI agrees that such care as Agent gives to the
safekeeping of its own property of like kind shall constitute reasonable care of
the Collateral when in Agent's possession; provided, however, that Agent shall
not be obligated to NAI to give any notice or take any action to preserve rights
against any other Person in connection with the Secured Obligations or with
respect to the Collateral.
ARTICLE IX
DEFAULT AND REMEDIES
9.1 Remedies. In addition to all other rights and remedies granted to
Agent, BNPLC or the Participants by this Agreement, the Improvements Lease, the
Purchase Agreement, the Participation Agreement, the UCC and other Applicable
Laws, Agent may, upon the occurrence and during the continuance of any Event of
Default, exercise any one or more of the following rights and remedies, all of
which will be in furtherance of its rights as a secured party under the UCC:
(a) Agent may collect, receive, appropriate or realize upon the
Collateral or otherwise foreclose or enforce the pledge of or security
interests in any or all Collateral in any manner permitted by Applicable
Law or in this Agreement; and
(b) Agent may notify any or all Deposit Takers to pay all or any
portion of the Collateral held by such Deposit Taker(s) directly to
Agent.
Agent shall distribute the proceeds of all Collateral received by Agent after
the occurrence of an Event of Default to BNPLC and the Participants for
application to the Secured Obligations. If any proceeds of Collateral remain
after all Secured Obligations have been paid in full, Agent will deliver or
direct the Deposit Takers to deliver such proceeds to NAI or other Persons
entitled
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thereto. In any case where notice of any sale or disposition of any Collateral
is required, NAI hereby agrees that seven (7) Business Days notice of such sale
or disposition is reasonable.
ARTICLE X
OTHER RECOURSE
10.1 Recovery Not Limited. To the fullest extent permitted by applicable
law, NAI waives any right to require that Agent, BNPLC or the Participants
proceed against any other Person, exhaust any Collateral or other security for
the Secured Obligations, or to have any Other Liable Party joined with NAI in
any suit arising out of the Secured Obligations or this Agreement, or pursue any
other remedy in their power. NAI waives any and all notice of acceptance of this
Agreement. NAI further waives notice of the creation, modification,
rearrangement, renewal or extension for any period of any of the Secured
Obligations of any Other Liable Party from time to time and any defense arising
by reason of any disability or other defense of any Other Liable Party or by
reason of the cessation from any cause whatsoever of the liability of any Other
Liable Party. Until all of the Secured Obligations shall have been paid in full,
NAI shall have no right to subrogation, reimbursement, contribution or indemnity
against any Other Liable Party and NAI waives the right to enforce any remedy
which Agent, BNPLC or any Participant has or may hereafter have against any
Other Liable Party, and waives any benefit of and any right to participate in
any other security whatsoever now or hereafter held by Agent, BNPLC or any
Participant. NAI authorizes Agent, BNPLC and the Participants, without notice or
demand and without any reservation of rights against NAI and without affecting
NAI's liability hereunder or on the Secured Obligations, from time to time to
(a) take or hold any other property of any type from any other Person as
security for the Secured Obligations, and exchange, enforce, waive and release
any or all of such other property, (b) after any Event of Default, apply or
require the application of the Collateral (in accordance with this Agreement) or
such other property in any order they may determine and to direct the order or
manner of sale thereof as they may determine, (c) renew, extend for any period,
accelerate, modify, compromise, settle or release any of the obligations of any
Other Liable Party with respect to any or all of the Secured Obligations or
other security for the Secured Obligations, and (d) release or substitute any
Other Liable Party.
ARTICLE XI
PROVISIONS CONCERNING AGENT
In the event of any conflict between the following and other provisions
in this Agreement, the following will control:
11.1 Appointment and Authority. BNPLC and each Participant hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to take all actions
and to exercise such powers under this Agreement as are specifically delegated
to Agent by the terms hereof, together with all other powers reasonably
incidental thereto. The relationship of Agent to the Participants is only that
of one commercial bank acting as collateral agent for others, and nothing herein
shall be construed to constitute Agent a trustee or other fiduciary for any
Participant or anyone claiming
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through or under a Participant nor to impose on Agent duties and obligations
other than those expressly provided for in this Agreement. With respect to any
matters not expressly provided for in this Agreement and any matters which this
Agreement places within the discretion of Agent, Agent shall not be required to
exercise any discretion or take any action, and it may request instructions from
BNPLC and Participants with respect to any such matter, in which case it shall
be required to act or to refrain from acting (and shall be fully protected and
free from liability to all Participants in so acting or refraining from acting)
upon the instructions of the Majority, as defined in the Participation
Agreement, including itself as a Participant and BNPLC; provided, however, that
Agent shall not be required to take any action which exposes it to a risk of
personal liability that it considers unreasonable or which is contrary to this
Agreement or the other documents referenced herein or to Applicable Law.
11.2 Exculpation, Agent's Reliance, Etc. Neither Agent nor any of its
directors, officers, agents, attorneys, or employees shall be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement, INCLUDING THEIR NEGLIGENCE OF ANY KIND, EXCEPT THAT EACH SHALL
BE LIABLE FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Without limiting
the generality of the foregoing, Agent (1) may treat the rights of any
Participant under its Participation Agreement as continuing until Agent receives
written notice of the assignment or transfer of those rights in accordance with
such Participation Agreement, signed by such Participant and in form
satisfactory to Agent; (2) may consult with legal counsel (including counsel for
NAI), independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts, unless the
action taken or omitted constitutes misconduct; (3) makes no warranty or
representation and shall not be responsible for any statements, warranties or
representations made in or in connection with this Agreement or the other
documents referenced herein; (4) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of the Transaction Documents on the part of any party thereto, or to
inspect the property (including the books and records) of any party thereto; (5)
shall not be responsible to any Participant for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Transaction
Document or any instrument or document furnished in connection therewith; (6)
may rely upon the representations and warranties of NAI, Participants and
Deposit Takers in exercising its powers hereunder; and (7) shall incur no
liability under or in respect of the Transaction Documents by acting upon any
notice, consent, certificate or other instrument or writing (including any
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper Person or Persons.
11.3 Participant's Credit Decisions. Each Participant acknowledges that
it has, independently and without reliance upon Agent or any other Participant,
made its own analysis of NAI and the transactions contemplated hereby and its
own independent decision to enter into the Transaction Documents to which it is
a party. Each Participant also acknowledges that it will, independently and
without reliance upon Agent or any other Participant and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Transaction
Documents.
11.4 Indemnity. Each Participant agrees to indemnify Agent (to the
extent not reimbursed by NAI within ten days after demand) from and against such
Participant's Percentage
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of any and all Losses of any kind or nature whatsoever which to any extent (in
whole or in part) may be imposed on, incurred by, or asserted against Agent
growing out of, resulting from or in any other way associated with any of the
Collateral, the Transaction Documents and the transactions and events (including
the enforcement thereof) at any time associated therewith or contemplated
therein. THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LOSSES
ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR
THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT
ACT OR OMISSION OF ANY KIND BY AGENT, PROVIDED ONLY THAT NO PARTICIPANT SHALL BE
OBLIGATED UNDER THIS SECTION TO INDEMNIFY AGENT FOR THAT PORTION, IF ANY, OF ANY
LOSS WHICH IS PROXIMATELY CAUSED BY AGENT'S OWN INDIVIDUAL GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT RENDERED AGAINST AGENT.
Cumulative of the foregoing, each Participant agrees to reimburse Agent promptly
upon demand for such Participant's Percentage share of any costs and expenses to
be paid to Agent by NAI hereunder to the extent that Agent is not timely
reimbursed by NAI as provided in subsection 7.2.8. As used in this Section the
term "Agent" shall refer not only to the Person designated as such in the
introductory paragraph of this Agreement, but also to each director, officer,
agent, attorney, employee, representative and Affiliate of such Person.
11.5 Agent's Rights as Participant and Deposit Taker. In its capacity as
a Participant, Banque Nationale de Paris shall have the same rights and
obligations as any Participant and may exercise such rights as though it were
not Agent. In its capacity as a Deposit Taker, Banque Nationale de Paris shall
have the same rights and obligations as any Deposit Taker and may exercise such
rights as though it were not Agent. Banque Nationale de Paris and any of its
Affiliates may accept deposits from, lend money to, act as Trustee under
indentures of, and generally engage in any kind of business with NAI or its
Affiliates, all as if Banque Nationale de Paris were not designated as the Agent
hereunder and without any duty to account therefor to any other Participant.
11.6 Investments. Whenever Agent in good faith determines that it is
uncertain about how to distribute any funds which it has received hereunder, or
whenever Agent in good faith determines that there is any dispute among BNPLC
and Participants about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to invest funds
pending distribution, Agent shall invest such funds pending distribution, all
interest on any such investment shall be distributed upon the distribution of
such investment and in the same proportion and to the same Persons as such
investment. All moneys received by Agent for distribution to BNPLC or
Participants shall be held by Agent pending such distribution solely as Agent
hereunder, and Agent shall have no equitable title to any portion thereof.
11.7 Benefit of Article XI. The provisions of this Article (other than
the following Section 11.8) are intended solely for the benefit of Agent, BNPLC
and Participants, and NAI shall not be entitled to rely on any such provision or
assert any such provision in a claim or defense against Agent, BNPLC or any
Participant. Agent, BNPLC and Participants may waive or amend such provisions as
they desire without any notice to or consent of NAI.
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11.8 Resignation. Agent may resign at any time by giving written notice
thereof to BNPLC, Participants and NAI. Upon any such resignation the Majority
(as defined in the Participation Agreement) shall have the right to appoint a
successor Agent, subject to NAI's consent, such consent not to be unreasonably
withheld. A successor must be appointed for any retiring Agent, and such Agent's
resignation shall become effective when such successor accepts such appointment.
If, within thirty days after the date of the retiring Agent's resignation, no
successor Agent has been appointed and has accepted such appointment, then the
retiring Agent may appoint a successor Agent, which shall be a commercial bank
organized or licensed to conduct a banking or trust business under the laws of
the United States of America or of any state thereof. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation hereunder, the provisions of this Article 10.1,
10.1 shall continue to inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent.
ARTICLE XII
MISCELLANEOUS
12.1 Provisions Incorporated From Other Operative Documents. Reference
is made to the Common Definitions and Provisions Agreement (Phase V -
Improvements), to the Purchase Agreement and to the Participation Agreement for
a statement of the terms thereof. Without limiting the generality of the
foregoing, the provisions of Article II of the Common Definitions and Provisions
Agreement (Phase V - Improvements) are incorporated into this Agreement for all
purposes as if set forth in this Article.
12.2 Cumulative Rights, etc. Except as herein expressly provided to the
contrary, the rights, powers and remedies of Agent, BNPLC and the Participants
under this Agreement shall be in addition to all rights, powers and remedies
given to them by virtue of any Applicable Law, any other Transaction Document or
any other agreement, all of which rights, powers, and remedies shall be
cumulative and may be exercised successively or concurrently without impairing
their respective rights hereunder. NAI waives any right to require Agent, BNPLC
or any Participant to proceed against any Person or to exhaust any Collateral or
to pursue any remedy in Agent's, BNPLC's or such Participant's power.
12.3 Survival of Agreements. All representations and warranties of NAI
herein, and all covenants and agreements herein shall survive the execution and
delivery of this Agreement, the execution and delivery of any other Transaction
Documents and the creation of the Secured Obligations and continue until
terminated or released as provided herein.
12.4 Other Liable Party. Neither this Agreement nor the exercise by
Agent or the failure of Agent to exercise any right, power or remedy conferred
herein or by law shall be construed as relieving any Other Liable Party from
liability on the Secured Obligations or any deficiency thereon. This Agreement
shall continue irrespective of the fact that the liability of any Other Liable
Party may have ceased or irrespective of the validity or enforceability of any
other agreement evidencing or securing the Secured Obligations to which NAI or
any Other Liable Party may be a party, and notwithstanding the reorganization,
death, incapacity or
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bankruptcy of any Other Liable Party, or any other event or proceeding affecting
any Other Liable Party.
12.5 Termination. Following the Designated Sale Date, upon satisfaction
in full of all Secured Obligations and upon written request for the termination
hereof delivered by NAI to Agent, (i) this Agreement and the pledge and security
interest created hereby shall terminate and all rights to the Collateral shall
revert to NAI and (ii) Agent will, upon NAI's request and at NAI's expense
execute and deliver to NAI such documents as NAI shall reasonably request to
evidence such termination and release.
[The signature pages follow.]
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IN WITNESS WHEREOF, NAI, BNPLC, Agent and the Participants whose
signatures appear below have caused this Pledge Agreement (Phase V -
Improvements) to be executed as of March 1, 2000.
"NAI"
NETWORK APPLIANCE, INC.
By:
------------------------------------------
Jeffrey R. Allen, Chief Financial Officer
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[Continuation of signature pages to Pledge Agreement (Phase V - Improvements)
dated to be effective as of March 1, 2000]
"BNPLC"
BNP LEASING CORPORATION
By:
-------------------------------------------
Lloyd G. Cox, Vice President
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[Continuation of signature pages to Pledge Agreement (Phase V - Improvements)
dated to be effective as of March 1, 2000]
"AGENT"
BANQUE NATIONALE DE PARIS
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
"PARTICIPANT"
BANQUE NATIONALE DE PARIS
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
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ATTACHMENT 1
TO PLEDGE AGREEMENT
CERTIFICATE OF DEPOSIT
(No. _________)
[---------, -----]
[NAME OF THE ISSUING
DEPOSIT TAKER AND THE
ADDRESS OF ITS APPLICABLE
ACCOUNT OFFICE]
PAYABLE TO
THE ORDER OF: BANQUE NATIONALE DE PARIS, as Agent under the
Pledge Agreement (Phase V - Improvements) dated
March 1, 2000, among Network Appliance, Inc.,
BNP Leasing Corporation, Banque Nationale de
Paris and any other financial institutions which
are from time to time Participants under such
Pledge Agreement (Phase V - Improvements) and
Banque Nationale de Paris, acting in its
capacity as agent for BNPLC and the Participants
Dollars
- --------------------------------------------------------------------------------
in current funds, without interest, seven days after presentment of this
certificate properly endorsed.
The bank issuing this certificate acknowledges and certifies that on the
date indicated above the payee deposited the dollar amount indicated above, and
that such amount shall be payable as provided above.
----------------------------------------
Authorized Signature
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ATTACHMENT 2
TO PLEDGE AGREEMENT
SUPPLEMENT TO PLEDGE AGREEMENT
[----------, ----]
Banque Nationale de Paris
- -----------------------
- -----------------------
- -----------------------
Network Appliance, Inc.
- -----------------------
- -----------------------
- -----------------------
1. Reference is made to the Pledge Agreement (Phase V - Improvements)
(the "PLEDGE AGREEMENT") dated March 1, 2000 among Network Appliance, Inc.
("NAI"), BNP Leasing Corporation ("BNPLC"), Banque Nationale de Paris and any
other financial institutions which are from time to time Participants under such
Pledge Agreement (collectively, the "PARTICIPANTS") and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the Participants (in such
capacity, "AGENT"). Unless otherwise defined herein, all capitalized terms used
in this Supplement have the respective meanings given to those terms in the
Pledge Agreement.
2. The undersigned hereby certifies to Agent and NAI that the
undersigned has become a party to the Participation Agreement by executing a
supplement as provided therein and that its Percentage thereunder is ______%.
3. The undersigned, by executing and delivering this Supplement to NAI
and Agent, hereby agrees to become a party to the Pledge Agreement and agrees to
be bound by all of the terms thereof applicable to Participants. The Deposit
Taker for the undersigned shall be _________________, until such time as another
Deposit Taker for the undersigned shall be designated in accordance with
Sections 4.4 or 4.5 of the Pledge Agreement. The undersigned certifies to Agent
and NAI that such Deposit Taker is an Initially Qualified Deposit Taker and
satisfies the requirements for a Deposit Taker set forth in Section 4.1 of the
Pledge Agreement.
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34
IN WITNESS WHEREOF, the undersigned has executed this Supplement as of
the day and year indicated above.
[______________________________________]
By:_____________________________________
Name:___________________________________
Title:__________________________________
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ATTACHMENT 3
TO PLEDGE AGREEMENT
NOTICE OF NAI'S ELECTION TO CHANGE THE COLLATERAL PERCENTAGE
[---------, -----]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase V - Improvements) (the "PLEDGE
AGREEMENT") dated March 1, 2000 among Network Appliance,
Inc., BNP Leasing Corporation, Banque Nationale de Paris
and any other financial institutions which are from time
to time Participants under such Pledge Agreement and
Banque Nationale de Paris, acting in its capacity as agent
for BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement referenced above. This letter
constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to
Section 3.1 of the Pledge Agreement, NAI elects to change the Collateral
Percentage to:
__________ percent (___%),
on the following Base Rent Date:
----------, ----
NAI expects that multiplying the new Collateral Percentage specified
above against Stipulated Loss Value of:
____________________________ Dollars ($__________),
will result in an expected new Minimum Collateral Value of:
____________________________ Dollars ($__________).
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36
[NOTE: THE NEXT PARAGRAPH WILL BE INCLUDED ONLY IN A NOTICE OF AN INCREASE IN
THE COLLATERAL PERCENTAGE, BECAUSE OF WHICH NAI WILL BE REQUIRED TO DELIVER
ADDITIONAL CASH COLLATERAL TO SATISFY THE MINIMUM COLLATERAL VALUE REQUIREMENTS
IN SECTION 5.1 OF THE PLEDGE AGREEMENT:
Because of the increase in the Collateral Percentage which will result
from this notice and the corresponding increase in the Minimum Collateral Value,
NAI will deliver additional Cash Collateral to you as required by Section 5.1 of
the Pledge Agreement no later than 12:00 noon (San Francisco time) on the Base
Rent Date specified above, in the amount of:
____________________________ Dollars ($__________).]
To assure you that NAI has satisfied the conditions to its right to
change the Collateral Percentage as provided in this notice, and to induce you
to rely upon this notice in discharging your responsibilities under the Pledge
Agreement, NAI certifies to you that:
1. NAI is giving this notice to you, BNPLC and the Participants
at least ten Business Days prior to the Base Rent Date specified above,
and such Base Rent Date is the commencement of a Base Rent Period.
2. No Event of Default or other event or circumstance that would,
pursuant to Section 3.2 of the Pledge Agreement, preclude NAI from
designating the new Collateral Percentage above has occurred and is
continuing, and NAI does not anticipate that on the Base Rent Date
specified above there will have occurred and be continuing any such
Event of Default or other event or circumstance.
3. No Mandatory Collateral Period shall be in effect as of the
effective date specified above.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS ABOVE ARE
NOT CORRECT. HOWEVER, WE ASK THAT YOU NOTIFY NAI IMMEDIATELY IF FOR ANY REASON
YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC and all Participants]
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ATTACHMENT 4
TO PLEDGE AGREEMENT
NOTICE OF SECURITY INTEREST
[---------, -----]
[Name of Deposit Taker]
[Address of Deposit Taker]
1. Reference is made to the Pledge Agreement (Phase V - Improvements)
(the "PLEDGE AGREEMENT") dated March 1, 2000 among Network Appliance, Inc.
("NAI"), BNP Leasing Corporation ("BNPLC"), Banque Nationale de Paris and any
other financial institutions which are from time to time Participants under such
Pledge Agreement (collectively, the "PARTICIPANTS") and Banque Nationale de
Paris, acting in its capacity as agent for BNPLC and the Participants (in such
capacity, "AGENT"). Unless otherwise defined herein, all capitalized terms used
in this Notice have the respective meanings given to those terms in the Pledge
Agreement.
2. NAI has informed Agent that NAI has established with the addressee of
this Notice (the "DEPOSIT TAKER") the following non-interest bearing Account(s)
to be maintained at the following Account Office(s):
Account Type Account Office Account Number
------------ -------------- --------------
Time Deposit ________ ________
Time Deposit ________ ________
Time Deposit ________ ________
NAI has further informed Agent that NAI intends to maintain Cash Collateral in
such Account(s), and that to evidence such Account(s) and the amount of Cash
Collateral held therein from time to time, NAI has authorized the Deposit Taker
to issue Certificates of Deposit payable to the order of Agent as provided in
the Pledge Agreement.
3. NAI and Agent hereby notify Deposit Taker that, pursuant to the
Pledge Agreement, NAI has granted to Agent, for the ratable benefit of BNPLC and
the Participants as security for the Secured Obligations, a pledge of and
security interest in all Accounts and other Collateral maintained by NAI with
Deposit Taker, including the Account(s) described in Section 2 above.
-1-
38
4. In furtherance of such grant, NAI and Agent hereby authorize and
direct Deposit Taker to:
(a) hold all Collateral for Agent and as Agent's bailee, separate
and apart from all other property and funds of NAI and all other Persons
and to permit no other funds to be deposited or credited to the
Account(s);
(b) make a notation in its books and records of the interest of
Agent in the Collateral and that the Account(s) and all deposits therein
or sums credited thereto are subject to a pledge and security interest
in favor of Agent;
(c) issue and redeem Certificates of Deposit evidencing the
Account(s), as directed by Agent pursuant to the Pledge Agreement;
(d) take such other steps as Agent may reasonably request to
record, maintain, validate and perfect its pledge of and security
interest in the Collateral; and
(e) upon receipt of notice from Agent that an Event of Default
has occurred, transfer and deliver to Agent or its nominee, together
with all necessary endorsements, all or such portion of the Collateral
held by Deposit Taker as Agent shall direct; provided, however, that in
connection therewith the Deposit Taker may require compliance by Agent
with the provisions in Section 5.4 of the Pledge Agreement for
redemption of any outstanding Certificates of Deposit which evidence the
Account(s).
5. NAI and Agent agree that (a) the possession by Deposit Taker of all
money, instruments, chattel paper and other property constituting Collateral
shall be deemed to be possession by Agent or a person designated by Agent, for
purposes of perfecting the security interest granted to Agent hereunder pursuant
to Section 9305, 8313 or 8213 of the UCC (as the case may be), and (b)
notifications by Deposit Taker to other Persons holding any such property, and
Acknowledgments, receipts or confirmations from such Persons delivered to
Deposit Taker, shall be deemed notifications to, or Acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Deposit Taker for the benefit of Agent for the purposes of perfecting
such security interests under applicable law.
6. As contemplated by the Pledge Agreement, please acknowledge Deposit
Taker's receipt of, and consent to, this notice and confirm the representations
and agreements set forth in the Acknowledgment and Agreement attached hereto by
executing the same and returning this letter to Agent. For your files, a copy of
this letter is enclosed which you may retain. The authorizations and directions
set forth herein may not be revoked or modified without the written consent of
Agent.
-2-
39
"AGENT"
BANQUE NATIONALE DE PARIS
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
"NAI"
Network Appliance, Inc.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-3-
40
ACKNOWLEDGMENT AND AGREEMENT
OF DEPOSIT TAKER
Deposit Taker hereby acknowledges receipt of, and consents to, the above
notice, acknowledges that it will hold the Collateral for Agent and as Agent's
bailee, agrees to comply with the authorizations and directions set forth above
and represents to and agrees with NAI and Agent as follows:
(a) Deposit Taker is a commercial bank, organized under the laws
of the United States of America or a state thereof or under the laws of
another country which is doing business in the United States of America.
Deposit Taker is authorized to maintain deposit accounts for others
through the Account Offices specified in the above notice, and Deposit
Taker will not move the accounts described in the above notice to other
offices without the prior written authorization of Agent and NAI.
(b) Deposit Taker has a combined capital, surplus and undivided
profits of at least $500,000,000.
(c) The information set forth above regarding the Account(s) is
accurate. Such Account(s) is (are) currently open and Deposit Taker has
no prior notice of any other pledge, security interest, Lien, adverse
claim or interest in such Account(s).
(d) Deposit Taker shall promptly notify NAI and Agent if the
representations made by Deposit Taker above cease to be true and
correct.
(e) Deposit Taker shall not (i) allow the withdrawal of funds
from any Account by any Person other than Agent, or (ii) WITHOUT IN EACH
CASE FIRST OBTAINING THE PRIOR WRITTEN AUTHORIZATION OF AGENT, setoff or
attempt to setoff any Secured Obligations owed to Deposit Taker against
any Collateral held from time to time by Deposit Taker, or (iii) WITHOUT
IN EACH CASE FIRST OBTAINING THE PRIOR WRITTEN AUTHORIZATION OF BOTH NAI
AND AGENT, setoff or attempt to setoff any obligations owed to Deposit
Taker other than Secured Obligations, against any Collateral held from
time to time by Deposit Taker.
[______________________________________]
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[Date]
41
ATTACHMENT 5
TO PLEDGE AGREEMENT
EXAMPLES OF CALCULATIONS REQUIRED
TO AVOID A COLLATERAL IMBALANCE
The examples below are provided to illustrate the calculations required
for allocations of Cash Collateral in a manner that will avoid a Collateral
Imbalance. The examples are not intended to reflect actual numbers under this
Agreement or actual Percentages of BNPLC or any of the Participants; nor are the
examples intended to provide a formula for the allocations that would be
appropriate in every case. The examples also reflect adjustments that would be
appropriate if the Collateral Percentage were adjusted from time to time from
and after the Base Rent Commencement Date, although this Agreement provides that
such percentage is not to increase above zero until eighteen months after the
Effective Date (expected to be after the Base Rent Commencement Date), except in
a Mandatory Collateral Period, during which such percentage would be 100%.
EXAMPLE NO. 1
Assumptions:
1. Two Participants ("Participant A" and "Participant B") are parties to
the Participation Agreement with BNPLC. Participant A's Percentage is
50% and Participant B's Percentage is 45%, leaving BNPLC with a
Percentage of 5%.
2. On the Base Rent Commencement Date, Funding Advances (including those to
cover Carrying Costs under the Improvements Lease) totaled $12,000,000,
resulting in a Stipulated Loss Value of $12,000,000, allocable as
follows:
A. BNPLC's Parent (providing BNPLC's share) (5%)........ $600,000
B. Participant A (50%).................................. 6,000,000
C. Participant B (45%).................................. 5,400,000
-----------
TOTAL................................................$12,000,000
3. The Minimum Collateral Value on the Base Rent Commencement Date was
$7,200,000 (reflecting a Collateral Percentage of 60% times Stipulated
Loss Value).
4. On the Base Rent Commencement Date, NAI had delivered to Agent Cash
Collateral of $7,200,000, equal to the Minimum Collateral Value, as
required by Section 5.1 of this Agreement.
-1-
42
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the $7,200,000 to the
Deposit Takers for BNPLC and the Participants as follows:
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value).............. $360,000
B. Participant A's Deposit Taker (50% of Minimum Collateral Value)..... 3,600,000
C. Participant B's Deposit Taker (45% of Minimum Collateral Value).... 3,240,000
----------
TOTAL............................................................... $7,200,000
EXAMPLE NO. 2
Assumptions: Assume the same facts as in Example No. 1, and in addition assume
that:
1. Effective as of the first Base Rent Date, NAI increased its Collateral
Percentage from 60% to 80%, raising the Minimum Collateral Value to
$9,600,000. Because of such increase, NAI also delivered an additional
$2,400,000 as Cash Collateral to Agent on the first Base Rent Date,
bringing the total of all Cash Collateral delivered by NAI to $9,600,000
as required by Section 5.1 of this Agreement.
2. Also effective as of the first Base Rent Date, a new Participant
approved by NAI ("Participant C") became a party to this Agreement and
the Participation Agreement, taking a Percentage of 20%. Simultaneously,
Participant A and Participant B entered into supplements to the
Participation Agreement which reduced their Percentages to 40% and 35%,
respectively.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the Cash Collateral as
required to leave the Deposit Takers for BNPLC and the Participants with the
following amounts:
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value).............. $480,000
B. Participant A's Deposit Taker (40% of Minimum Collateral Value)..... 3,840,000
C. Participant B's Deposit Taker (35% of Minimum Collateral Value)..... 3,360,000
D. Participant C's Deposit Taker (20% of Minimum Collateral Value).... 1,920,000
-----------
TOTAL............................................................... $9,600,000
Thus, to prevent a Collateral Imbalance, Agent would have to allocate the
$2,400,000 of additional Cash Collateral it received on the first Base Rent Date
as follows:
A. BNPLC's Deposit Taker ($480,000 less $360,000 already on deposit) .............$120,000
B. Participant A's Deposit Taker ($3,840,000 less $3,600,000 already on deposit)...240,000
C. Participant B's Deposit Taker ($3,360,000 less $3,240,000 already on deposit)...120,000
-2-
43
D. Participant C's Deposit Taker ($1,920,000 less $0 already on deposit)........1,920,000
---------
TOTAL........................................................................$2,400,000
EXAMPLE NO. 3
Assumptions: Assume the same facts as in Example No. 2, except that:
1. Instead of increasing its Collateral Percentage from 60% to 80%, NAI
increased its Collateral Percentage to 70% on the first Base Rent Date,
raising the Minimum Collateral Value to $8,400,000. Because of such
increase, NAI delivered an additional $1,200,000 as additional Cash
Collateral to Agent on the first Base Rent Date, bringing the total of
all Cash Collateral delivered by NAI to $8,400,000 as required by
Section 5.1 of this Agreement.
Allocation of Cash Collateral Required: To avoid a Collateral Imbalance under
these assumptions, Agent would be required to allocate the Cash Collateral as
required to leave the Deposit Takers for BNPLC and the Participants with the
following amounts:
A. BNPLC's Deposit Taker (5% of Minimum Collateral Value).............. $420,000
B. Participant A's Deposit Taker (40% of Minimum Collateral Value)..... 3,360,000
C. Participant B's Deposit Taker (35% of Minimum Collateral Value)..... 2,940,000
D. Participant C's Deposit Taker (20% of Minimum Collateral Value).... 1,680,000
-----------
TOTAL............................................................... $8,400,000
Thus, to prevent a Collateral Imbalance, Agent would have to allocate the
$1,200,000 of additional Cash Collateral it received on the first Base Rent Date
as follows:
A. BNPLC's Deposit Taker ($420,000 less $360,000 already on deposit) ...............$60,000
B. Participant A's Deposit Taker ($3,360,000 less $3,600,000 already on deposit)..(240,000)
C. Participant B's Deposit Taker ($2,940,000 less $3,240,000 already on deposit)..(300,000)
D. Participant C's Deposit Taker ($1,680,000 less $0 already on deposit).........1,680,000
---------
TOTAL.........................................................................$1,200,000
NOTE: THE NEGATIVE AMOUNTS (IN PARENTHESIS) ABOVE REPRESENT REQUIRED WITHDRAWALS
RATHER THAN DEPOSITS. AS EXAMPLE NO. 3 ILLUSTRATES, TO AVOID A COLLATERAL
IMBALANCE AGENT MAY FROM TIME TO TIME HAVE TO WITHDRAW CASH COLLATERAL HELD BY
THE DEPOSIT TAKER FOR ONE PARTICIPANT AND DEPOSIT IT IN AN ACCOUNT MAINTAINED BY
A DEPOSIT TAKER FOR ANOTHER PARTICIPANT.
-3-
44
ATTACHMENT 6
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT TO
WITHDRAW EXCESS CASH COLLATERAL
[---------, -----]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase V - Improvements) dated March 1,
2000 among Network Appliance, Inc., BNP Leasing
Corporation, Banque Nationale de Paris and any other
financial institutions which are from time to time
Participants under such Pledge Agreement (Phase V -
Improvements) and Banque Nationale de Paris, acting in its
capacity as agent for BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent
under the Pledge Agreement, that pursuant to Section 6.1 of the Pledge
Agreement, NAI requires you to withdraw from the Accounts and return to NAI the
following amount:
____________________________ Dollars ($__________)
on the following date:
----------, ----
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that:
1. Your withdrawal and delivery of the amount specified above to
NAI will not cause the Value of the remaining Collateral to be less than
the Minimum Collateral Value. After giving effect to such withdrawal,
the Collateral remaining in the Accounts maintained by the Deposit
Takers will be:
____________________________ Dollars ($__________),
-1-
45
and the Minimum Collateral Value on the date specified above will equal:
____________________________ Dollars ($__________).
Such Minimum Collateral Value equals the Collateral Percentage of:
__________ percent (___%),
times the Stipulated Loss Value of:
____________________________ Dollars ($__________).
2. NAI is giving this notice to you, BNPLC and the Participants
at least ten days prior to the Base Rent Date specified above.
3. No Default or Event of Default has occurred and is continuing
as of the date of this notice, and NAI does not anticipate that any
Default or Event of Default will have occurred and be continuing on the
date upon which the withdrawal is required.
4. NAI agrees that you may determine the Accounts from which to
make any withdrawal required by NAI pursuant to this Section as
necessary to prevent or mitigate any Collateral Imbalance.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS ABOVE ARE
NOT CORRECT OR IF THE DATE FOR WITHDRAWAL SPECIFIED ABOVE IS LESS THAN TEN DAYS
AFTER YOUR RECEIPT OF THIS NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY NAI
IMMEDIATELY IF FOR ANY REASON YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to Deposit
Takers seven days prior to the withdrawal of Cash Collateral required by this
notice. For your convenience, we have attached a letter as Annex 1 to this
notice that you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth the
amounts NAI believes you must withdraw from each Account to avoid a Collateral
Imbalance.
-2-
46
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC and all Participants]
-3-
47
Annex 1
TO NAI'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH EXCESS COLLATERAL
[---------, -----]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement (Phase V - Improvements) dated March 1,
2000 among Network Appliance, Inc., BNP Leasing
Corporation, Banque Nationale de Paris and any other
financial institutions which are from time to time
Participants under such Pledge Agreement (Phase V -
Improvements) and Banque Nationale de Paris, acting in its
capacity as agent for BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice from the
undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.1
of the Pledge Agreement, NAI requires Agent to withdraw from the Accounts and
return to NAI the amounts listed below on the following date:
----------, ----
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in connection with
such withdrawal:
Deposit Taker Account No. Amount
- ------------- ----------- ------
1. ________________ $___________
2. ________________ $___________
3. ________________ $___________
4. ________________ $___________
TOTAL WITHDRAWALS: $___________
-4-
48
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-----------------------------------
Title:
----------------------------------
[cc BNPLC and NAI]
-5-
49
ATTACHMENT 7
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF
DIRECT PAYMENTS TO PARTICIPANTS
[---------, -----]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase V - Improvements) dated March 1,
2000 among Network Appliance, Inc., BNP Leasing
Corporation, Banque Nationale de Paris and any other
financial institutions which are from time to time
Participants under such Pledge Agreement (Phase V -
Improvements) and Banque Nationale de Paris, acting in its
capacity as agent for BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent
under the Pledge Agreement, that pursuant to Section 6.2 of the Pledge
Agreement, NAI requires you to withdraw from the Accounts and pay directly to
the Participants (in proportion to their respective Percentages) the following
amount:
____________________________ Dollars ($__________)
on the following date (which, NAI acknowledges, must be the Designated Sale Date
or a date thereafter prior to an Event of Default):
----------, ----
The amount specified above equals the following percentage (equal to the
aggregate of all Participant's Percentages):
__________ percent (___%),
-1-
50
times the total of all Cash Collateral presently pledged under the Pledge
Agreement:
____________________________ Dollars ($__________).
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that NAI is giving this notice to you, BNPLC and the
Participants at least ten days prior to the date of required withdrawal and
payment specified above.
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to Deposit
Takers seven days prior to the withdrawal of Cash Collateral required by this
notice. For your convenience, we have attached a letter as Annex 1 to this
notice that you might execute and send to Deposit Takers to advise them of your
intent to withdraw and of your presentment of Certificates of Deposit as
required in connection therewith. The attached letter also sets forth the
amounts NAI believes you must withdraw from each Account to comply with
subsection 6.2.2 of the Pledge Agreement.
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC and all Participants]
-2-
51
ANNEX 1
TO NAI'S NOTICE OF REQUIREMENT TO
WITHDRAW CASH COLLATERAL FOR
DIRECT PAYMENTS TO PARTICIPANTS
[---------, -----]
Deposit Takers on the
Attached Distribution List
Re: Pledge Agreement (Phase V - Improvements) dated March 1,
2000 among Network Appliance, Inc., BNP Leasing
Corporation, Banque Nationale de Paris and any other
financial institutions which are from time to time
Participants under such Pledge Agreement (Phase V -
Improvements) and Banque Nationale de Paris, acting in its
capacity as agent for BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice from the
undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.2
of the Pledge Agreement, NAI requires Agent to withdraw from the Accounts and
pay to the Participants (in proportion to their respective Percentages) the
amounts listed below on the following date:
----------, ----
Accordingly, on such date, the undersigned intends to withdraw the
following amounts from the following Accounts, and with this letter the
undersigned is presenting Certificates of Deposit as required in connection with
such withdrawal:
Deposit Taker Account No. Amount
- ------------- ----------- ------
1. ________________ $___________
2. ________________ $___________
3. ________________ $___________
4. ________________ $___________
TOTAL WITHDRAWALS: $___________
-3-
52
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-----------------------------------
Title:
----------------------------------
[cc BNPLC and NAI]
-4-
53
ATTACHMENT 8
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF
DIRECT PAYMENT TO BNPLC
[---------, -----]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase V - Improvements) dated March 1,
2000 among Network Appliance, Inc., BNP Leasing
Corporation, Banque Nationale de Paris and any other
financial institutions which are from time to time
Participants under such Pledge Agreement (Phase V -
Improvements) and Banque Nationale de Paris, acting in its
capacity as agent for BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent
under the Pledge Agreement, that pursuant to Section 6.3 of the Pledge
Agreement, NAI requires you to withdraw from the Account maintained by the
Deposit Taker for BNPLC and pay directly to BNPLC on behalf of NAI as a payment
required by the Purchase Agreement the following amount:
____________________________ Dollars ($__________)
on the following date (which, NAI acknowledges, must be the Designated Sale Date
or a date thereafter prior to an Event of Default):
----------, ----
To assure you that NAI has satisfied the conditions to its right to
require such withdrawal, and to induce you to comply with this notice, NAI
certifies to you that NAI is giving this notice to you and BNPLC at least ten
days prior to the date of required withdrawal and payment specified above.
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present
-1-
54
Certificates of Deposit to the Deposit Taker for BNPLC seven days prior to the
withdrawal of Cash Collateral required by this notice. For your convenience, we
have attached a letter as Annex 1 to this notice that you might execute and send
to the Deposit Taker for BNPLC to advise it of your intent to withdraw and of
your presentment of Certificates of Deposit as required in connection therewith.
The attached letter also sets forth the amount NAI believes you must withdraw to
comply with Section 6.3 of the Pledge Agreement.
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC]
-2-
55
Annex 1
TO NAI'S NOTICE OF REQUIREMENT OF
DIRECT PAYMENT TO BNPLC
[---------, -----]
[Name of the Deposit Taker for BNPLC]
[Address of such Deposit Taker]
Re: Pledge Agreement (Phase V - Improvements) dated March 1,
2000 among Network Appliance, Inc., BNP Leasing
Corporation, Banque Nationale de Paris and any other
financial institutions which are from time to time
Participants under such Pledge Agreement (Phase V -
Improvements) and Banque Nationale de Paris, acting in its
capacity as agent for BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice from the
undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.3
of the Pledge Agreement, NAI requires Agent to withdraw from the Account
maintained by you, as Deposit Taker for BNPLC, the sum of:
____________________________ Dollars ($__________)
and pay the same to BNPLC as a payment required by the Purchase Agreement on the
following date:
----------, ----
-3-
56
Accordingly, on such date, the undersigned intends to withdraw such
amount from the following Account maintained by you as Deposit Taker for BNPLC,
and with this letter the undersigned is presenting Certificate(s) of Deposit as
required in connection with such withdrawal.
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-----------------------------------
Title:
----------------------------------
[cc BNPLC and NAI]
-4-
57
ATTACHMENT 9
TO PLEDGE AGREEMENT
NOTICE OF NAI'S REQUIREMENT OF A WITHDRAWAL
OF CASH COLLATERAL FROM
A DISQUALIFIED DEPOSIT TAKER
[---------, -----]
Banque Nationale de Paris
[address of BNP]
Re: Pledge Agreement (Phase V - Improvements) dated March 1,
2000 among Network Appliance, Inc., BNP Leasing
Corporation, Banque Nationale de Paris and any other
financial institutions which are from time to time
Participants under such Pledge Agreement (Phase V -
Improvements) and Banque Nationale de Paris, acting in its
capacity as agent for BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice to you, as Agent
under the Pledge Agreement, that pursuant to Section 6.4 of the Pledge
Agreement, NAI requires you to withdraw from the following Account maintained by
the following Deposit Taker:
Deposit Taker Account No.
----------------------------------- ---------------------
----------------------------------- ---------------------
Cash Collateral in the following amount:
____________________________ Dollars ($__________)
and to deposit such Cash Collateral with other Deposit Takers who are not
Disqualified Deposit Takers no later than ten days after the date upon which you
receive this notice.
To assure you that NAI has the right to require such withdrawal, and to
induce you to comply with this notice, NAI certifies to you that the Deposit
Taker specified above has become a Disqualified Deposit Taker because it no
longer satisfies the requirements listed in Section 4.1
-1-
58
of the Pledge Agreement. Specifically, such Deposit Taker no longer satisfies
the following requirements:
[NAI MUST INSERT HERE A DESCRIPTION OF WHICH REQUIREMENTS THE DEPOSIT TAKER NO
LONGER SATISFIES AND HOW NAI HAS DETERMINED THAT THE REQUIREMENTS ARE NO LONGER
SATISFIED, ALL IN SUFFICIENT DETAIL TO PERMIT THE PARTICIPANT FOR WHOM SUCH
DEPOSIT TAKER HAS BEEN MAINTAINING AN ACCOUNT TO RESPOND IF IT BELIEVES THAT NAI
IS IN ERROR.]
Please remember that the express terms of Certificates of Deposit issued
pursuant to the Pledge Agreement require presentment of the Certificates of
Deposit seven days before Cash Collateral is to be withdrawn from the Accounts
they evidence. Accordingly, you must present Certificates of Deposit to the
Deposit Taker specified above seven days prior to the withdrawal of Cash
Collateral required by this notice. For your convenience, we have attached a
letter as Annex 1 to this notice that you might execute and send to such Deposit
Taker to advise it of your intent to withdraw and of your presentment of
Certificates of Deposit as required in connection therewith. The attached letter
also sets forth the amount NAI believes you must withdraw to comply with Section
6.4 of the Pledge Agreement.
Network Appliance, Inc.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[cc BNPLC]
-2-
59
Annex 1
TO NAI'S NOTICE OF REQUIREMENT OF A WITHDRAWAL
OF CASH COLLATERAL FROM
A DISQUALIFIED DEPOSIT TAKER
[---------, -----]
[Name of the Deposit Taker for BNPLC]
[Address of such Deposit Taker]
Re: Pledge Agreement (Phase V - Improvements) dated March 1,
2000 among Network Appliance, Inc., BNP Leasing
Corporation, Banque Nationale de Paris and any other
financial institutions which are from time to time
Participants under such Pledge Agreement (Phase V -
Improvements) and Banque Nationale de Paris, acting in its
capacity as agent for BNPLC and the Participants
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Pledge Agreement (Phase V - Improvements) referenced
above (the "PLEDGE AGREEMENT"). This letter constitutes notice from the
undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.4
of the Pledge Agreement, NAI has advised Agent that you are a Disqualified
Deposit Taker, and NAI requires Agent to withdraw from the Account maintained by
you, as a Deposit Taker under the Pledge Agreement, the sum of:
____________________________ Dollars ($__________)
no later than the following date:
----------, ----
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Accordingly, on such date, the undersigned intends to withdraw such
amount from the Account maintained by you as Deposit Taker (Account No.
__________), and with this letter the undersigned is presenting Certificate(s)
of Deposit as required in connection with such withdrawal.
BANQUE NATIONALE DE PARIS, AS AGENT
Name:
-----------------------------------
Title:
----------------------------------
[cc BNPLC and NAI]
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Schedule 1
Financial Covenants and Negative Covenants
This Schedule 1 is attached to and made a part of (a) the Lease
Agreement (Phase V - Improvements) (the "IMPROVEMENTS LEASE") dated to be
effective as of March 1, 2000 (the "EFFECTIVE DATE"), between BNP Leasing
Corporation, a Delaware corporation ("BNPLC") and Network Appliance, Inc., a
California corporation ("NAI"), (b) the Lease Agreement (Phase V - Land) (the
"LAND LEASE" and, together with the Improvements Lease, the "LEASES") dated to
be effective as of the Effective Date, between BNPLC and NAI, (c) the Pledge
Agreement (Phase V - Improvements) (the "PLEDGE AGREEMENT (IMPROVEMENTS)") dated
to be effective as of the Effective Date, among BNPLC, NAI, and Banque Nationale
de Paris, as a Participant and as agent for any financial institutions that
become Participants thereunder from time to time, and (d) the Pledge Agreement
(Phase V - Land) (collectively with the Pledge Agreement (Improvements), the
"PLEDGE AGREEMENTS") dated to be effective as of the Effective Date, among
BNPLC, NAI, and Banque Nationale de Paris, as a Participant and as agent for any
financial institutions that become Participants thereunder from time to time.
PART I - DEFINED TERMS
In this Schedule 1, capitalized terms used but not defined herein shall
have the meaning assigned to them in the Leases or the Common Definitions and
Provisions Agreements referenced in the Leases; and the following capitalized
terms shall have the following meanings:
"ADJUSTED NET INCOME" means, for any fiscal period of NAI, the aggregate
net income earned (or net losses incurred) during such period by NAI and
its Subsidiaries (determined on a consolidated basis), plus any
Permitted Non-Cash Charges deducted in determining such net income (or
net loss).
"ADJUSTED EBIT" means, for any accounting period, net income (or net
loss) of NAI and its Subsidiaries (determined on a consolidated basis),
plus the amounts (if any) which, in the determination of net income (or
net loss) for such period, have been deducted for (a) interest expense,
(b) income tax expense (c) rent expense under leases of property, and
(d) Permitted Non-Cash Charges.
"COLLATERAL TEST DATES" mean the Base Rent Commencement Date and the
earlier of the following dates after each fiscal quarter of NAI that
ends after the Base Rent Commencement Date : (1) the seventh Business
Day after the release by NAI of its financial statements for the fiscal
quarter; or (2) the first Business Day of the third calendar month
following the end of the fiscal quarter.
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of (1) the total
assets, other than Intangible Assets, of NAI and its Subsidiaries
(determined on a consolidated basis) over (2) the total liabilities of
NAI and its Subsidiaries (determined on a consolidated basis).
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"DEBT" as used in this Exhibit shall have the meaning assigned to it in
the Common Definitions and Provisions Agreements, where "Debt" of any
Person is defined to mean (without duplication of any item): (a)
indebtedness of such Person for borrowed money; (b) indebtedness of such
Person for the deferred purchase price of property or services (except
trade payables and accrued expenses constituting current liabilities in
the ordinary course of business); (c) the face amount of any outstanding
letters of credit issued for the account of such Person; (d) obligations
of such Person arising under acceptance facilities; (e) guaranties,
endorsements (other than for collection in the ordinary course of
business) and other contingent obligations of such Person to purchase,
to provide funds for payment, to provide funds to invest in any Person,
or otherwise to assure a creditor against loss; (f) obligations of
others secured by any Lien on property of such Person; (g) obligations
of such Person as lessee under Capital Leases; and (h) the obligations
of such Person, contingent or otherwise, under any lease of property or
related documents (including a separate purchase agreement) which
provide that such Person or any of its Affiliates must purchase or cause
another Person to purchase any interest in the leased property and
thereby guarantee a minimum residual value of the leased property to the
lessor. For purposes of this definition, the amount of the obligations
described in clause (h) of the preceding sentence with respect to any
lease classified according to GAAP as an "operating lease," shall equal
the sum of (1) the present value of rentals and other minimum lease
payments required in connection with such lease [calculated in
accordance with SFAS 13 and other GAAP relevant to the determination of
the whether such lease must be accounted for as an operating lease or
capital lease], plus (2) the fair value of the property covered by the
lease; provided, however, that such amount shall not exceed the price,
as of the date a determination of Debt is required hereunder, for which
the lessee can purchase the leased property pursuant to any valid
ongoing purchase option if, upon such a purchase, the lessee shall be
excused from paying rentals or other minimum lease payments that would
otherwise accrue after the purchase.
"FIXED CHARGES" means, for any accounting period, the sum (without
duplication of any item) of the following charges or costs incurred or
paid by NAI and its Subsidiaries (determined on a consolidated basis):
(a) gross interest expense, plus (b) amortization of principal or debt
discount in respect of all Debt during such period, plus (c) rent
payable under all leases of property during such period, plus (d) taxes
payable during such period.
"INTANGIBLE ASSETS" means assets of NAI and its Subsidiaries (determined
on a consolidated basis) that are properly classified as "INTANGIBLE
ASSETS" in accordance with GAAP and, in any event, shall include
goodwill, patents, trade names, trademarks, copyrights, franchises,
experimental expense, organization expense, unamortized debt discount
and expense, and deferred charges (other than prepaid insurance, prepaid
taxes and current deferred taxes to the extent any such prepaid or
deferred items are classified on the balance sheet of NAI and its
consolidated Subsidiaries as current assets in accordance with GAAP and
with the concurrence of NAI's independent public accountants).
"MANDATORY COLLATERAL PERIOD" means any period during which,
notwithstanding any contrary designation of a Collateral Percentage by
NAI under the Pledge Agreements, the
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Collateral Percentage for purposes of the Pledge Agreements shall be one
hundred percent (100%), determined as set forth in Part III of this
Schedule 1.
"PERMITTED NON-CASH CHARGES" means the amounts (if any) which, in the
determination of net income (or net loss) for any relevant fiscal
period, have been deducted by NAI or its Subsidiaries for non-cash
charges made to write down goodwill or research and development costs in
connection with acquisitions permitted by this Schedule 1.
"QUICK RATIO" means the ratio of:
(A) the sum (without duplication of any item) of
the following assets of NAI and its Subsidiaries (determined on a
consolidated basis): Collateral delivered and pledged under the
Pledge Agreements in accordance with the requirements thereof (if
any); plus unencumbered cash; plus unencumbered short term cash
investments; plus other unencumbered marketable securities which
are classified as short term investments in accordance with GAAP;
plus unencumbered accounts receivable, computed net of reserves
for uncollectible amounts as determined in accordance with GAAP,
to
(B) the sum (without duplication of any item) of
(1) all liabilities of NAI and its Subsidiaries (determined on a
consolidated basis) treated as current liabilities in accordance
with GAAP, plus (2) other obligations included in total Debt of
NAI and its Subsidiaries (determined on a consolidated basis),
the payment of which is due on demand or will become due within
one year after the date on which the applicable determination of
Quick Ratio is required hereunder.
"ROLLING FOUR QUARTER PERIOD" means a period of four consecutive fiscal
quarters of NAI, the last of which quarters ends after December 31,
1999.
PART II - FINANCIAL COVENANTS
NAI covenants that it shall not at any time suffer or permit:
1. Minimum Unencumbered Cash and Cash Equivalents. The sum
(without duplication of any item) of the unrestricted cash, Collateral
delivered and pledged under the Pledge Agreements in accordance with the
requirements thereof (if any), unencumbered short term cash investments
and unencumbered marketable securities classified as short term
investments according to GAAP of NAI and its Subsidiaries (determined on
a consolidated basis) to be less than total Debt of NAI and its
Subsidiaries (determined on a consolidated basis).
2. Minimum Tangible Net Worth. Consolidated Tangible Net Worth to
be less than the sum of: (a) ninety percent of the Consolidated Tangible
Net Worth as of October 30, 1998; plus (b) seventy-five percent of NAI's
net income (computed without deduction for net losses in any fiscal
quarter) earned in each fiscal quarter since October 30, 1998; plus (c)
one-hundred percent of the net proceeds of sales of stock in
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NAI or its Subsidiaries (other than sales to NAI or its Subsidiaries)
after October 30, 1998; less (d) Permitted Non-Cash Charges for any
period after October 30, 1998.
3. Minimum Quick Ratio. The Quick Ratio to be less than 1.50 to
1.00.
4. Minimum Fixed Charge Coverage. The ratio of (a) Adjusted EBIT
for any Rolling Four Quarter Period to (b) Fixed Charges for the same
Rolling Four Quarter Period, to be less than 1.50 to 1.00.
5. Minimum Profitability. Adjusted Net Income to be less than
$1.00 in more than one fiscal quarter of any Rolling Four Quarter
Period.
6. Maximum Leverage Ratio. the ratio of (a) total Debt of NAI and
its Subsidiaries (determined on a consolidated basis) at the end of any
Rolling Four Quarter Period to (b) the Adjusted EBIT for the same Four
Quarter Rolling Period, to exceed 3.00 to 1.00.
PART III - TESTS FOR MANDATORY COLLATERAL PERIODS
If, as of the end of the latest fiscal quarter of NAI ending before any
Collateral Test Date, NAI shall have either:
(A) failed to maintain a ratio of (1) the sum (without
duplication of any item) of Collateral delivered and pledged under the
Pledge Agreements in accordance with the requirements thereof (if any),
unencumbered cash, unencumbered short term cash investments and
unencumbered marketable securities classified as short term investments
according to GAAP of NAI and its Subsidiaries (determined on a
consolidated basis) to (2) all Debt of NAI and its Subsidiaries
(determined on a consolidated basis), of at least 1.5 to 1.00; or
(B) failed to maintain a ratio of (i) all Debt of NAI and its
Subsidiaries (determined on a consolidated basis) to (ii) Consolidated
Tangible Net Worth of NAI, of no more than 0.45 to 1.00;
such Collateral Test Date shall constitute a "FAILED COLLATERAL TEST DATE" for
purposes of the determination of Mandatory Collateral Periods. A Mandatory
Collateral Period shall commence on each Failed Collateral Test, and such
Mandatory Collateral Period shall continue until the second of any two
subsequent CONSECUTIVE Collateral Test Dates, neither of which constitutes a
Failed Collateral Test Date.
For purposes of illustration only, assume that the following dates are
consecutive Collateral Test Dates, some of which are Failed Collateral Test
Dates and some of which are not, as indicated opposite each date:
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Date Failed Collateral Test Date?
- ---- ----------------------------
February 15, 2001 Yes
May 12, 2001 No
August 16, 2001 Yes
November 11, 2001 No
February 18, 2002 No
May 14, 2002 Yes
August 18, 2002 Yes
November 18, 2002 No
February 15, 2003 No
Under these assumptions, the entire period from February 15, 2001 to February
18, 2002 falls within one or more Mandatory Collateral Periods. Also, the entire
period commencing May 14, 2002 and ending February 15, 2003 falls within one or
more Mandatory Collateral Periods. The period from February 18, 2002 to May 14,
2002 does not constitute Mandatory Collateral Period.
PART IV - OTHER COVENANTS
Without limiting NAI's obligations under the other provisions of the Operative
Documents, during the Term, NAI shall not, without the prior written consent of
BNPLC in each case:
A. Liens. Create, incur, assume or suffer to exist, or permit any of its
Consolidated Subsidiaries to create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
provided that the following shall be permitted except to the extent that they
would encumber any interest in the Property in violation of other provisions of
the Operative Documents:
1. Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if they are being contested in good
faith by appropriate proceedings and for which appropriate reserves are
maintained;
2. Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which
are not past due for more than thirty (30) days, or which are being
contested in good faith by appropriate proceedings and for which
appropriate reserves have been established;
3. Liens under workmen's compensation, unemployment insurance,
social security or similar laws (other than ERISA);
4. Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money),
leases, public or statutory obligations, surety, stay, appeal,
indemnity, performance or other similar bonds, or other similar
obligations arising in the ordinary course of business;
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5. Judgment and other similar Liens against assets other than the
Property or any part thereof in an aggregate amount not in excess of
$3,000,000 arising in connection with court proceedings; provided that
the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good
faith by appropriate proceedings;
6. Easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with
the occupation, use and enjoyment by NAI or any such Consolidated
Subsidiary of the property or assets encumbered thereby in the normal
course of its business or materially impair the value of the property
subject thereto;
7. Liens securing obligations of such a Consolidated Subsidiary
to NAI or to another such Consolidated Subsidiary;
8. Liens not otherwise permitted by this subparagraph A (and not
encumbering the Property or any Collateral) incurred in connection with
the incurrence of additional Debt or asserted to secure Unfunded Benefit
Liabilities, provided that (a) the sum of the aggregate principal amount
of all outstanding obligations secured by Liens incurred pursuant to
this clause shall not at any time exceed five percent (5%) of
Consolidated Tangible Net Worth at such time; and (b) such Liens do not
constitute Liens against NAI's interest in any material Subsidiary or
blanket Liens against all or substantially all of the inventory,
receivables, general intangibles or equipment of NAI or of any material
Subsidiary of NAI (for purposes of this clause, a "material Subsidiary"
means any subsidiary whose assets represent a substantial part of the
total assets of NAI and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP); and
9. Liens incurred in connection with any renewals, extensions or
refundings of any Debt secured by Liens described in the preceding
clauses of this subparagraph A, provided that there is no increase in
the aggregate principal amount of Debt secured thereby from that which
was outstanding as of the date of such renewal, extension or refunding
and no additional property is encumbered.
B. Transactions with Affiliates. Enter into or permit any Subsidiary of
NAI to enter into any material transactions (including, without limitation, the
purchase, sale or exchange of property or the rendering of any service) with any
Affiliates of NAI except on terms (1) that would not cause or result in a
Default by NAI under the financial covenants set forth in Part II of this
Schedule, and (2) that are no less favorable to NAI or the relevant Subsidiary
than those that would have been obtained in a comparable transaction on an arm's
length basis from an unrelated Person.
C. Compliance. Fail to preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; or fail to comply with the provisions of all documents
pursuant to which NAI is organized and/or which govern NAI's continued existence
and with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to NAI and/or its business.
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D. Insurance. Fail to maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to that of NAI,
including but not limited to fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to BNPLC, or fail to deliver to BNPLC from
time to time at BNPLC's request schedules setting forth all insurance then in
effect.
E. Facilities. Fail to keep all properties useful or necessary to NAI's
business in good repair and condition, or to from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.
F. Taxes and Other Liabilities. Fail to pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as NAI may in good faith contest
or as to which a bona fide dispute may arise, and (b) for which NAI has made
provisions, to BNPLC's satisfaction, for eventual payment thereof in the event
that NAI is obligated to make such payment.
G. Capital Expenditures. Make any additional investment in fixed assets
in any fiscal year in excess of an aggregate of twenty percent (20%) of NAI's
total assets as of the end of the prior fiscal year.
H. Merger, Consolidation, Transfer of Assets. Merge into or consolidate
with any other entity (unless NAI is the surviving entity and remains in
compliance of all provisions of the Operative Documents); or make any
substantial change in the nature of NAI's business as conducted as of the date
hereof; or sell, lease, transfer or otherwise dispose of all or a substantial or
material portion of NAI's assets except in the ordinary course of its business.
I. Loans, Advances, Investments. Make any loans or advances to or
investments in any person or entity, except (a) any of the foregoing existing as
of, and disclosed to BNPLC prior to, the date hereof, (b) loans to employees for
travel advances, relocation loans and other loans in the ordinary course of
business, (c) investments in accordance with NAI's investment policy, as in
effect from time to time, (d) existing investments in subsidiaries and joint
ventures which have been disclosed to BNPLC in writing prior to the date hereof,
and new investments in subsidiaries and joint ventures in amounts up to an
aggregated of $10,000,000.00, (e) loans to employees, officers, directors to
finance or refinance the purchase of equity securities of NAI.
J. Dividends, Distributions. Declare or pay any dividend or distribution
either in cash, stock or any other property on NAI's stock now or hereafter
outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of
any class of NAI's stock now or hereafter outstanding.
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EXHIBIT 10.64
================================================================================
CONSTRUCTION MANAGEMENT AGREEMENT
(PHASE V - IMPROVEMENTS)
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
NETWORK APPLIANCE, INC.
("NAI")
MARCH 1, 2000
(SUNNYVALE, CALIFORNIA)
================================================================================
2
TABLE OF CONTENTS
Page
----
RECITALS.....................................................................................1
CONSENT AND AUTHORIZATION....................................................................1
GENERAL TERMS AND CONDITIONS.................................................................1
1. Construction by NAI..................................................................1
(A) The Construction Project......................................................1
(1) Construction Approvals by BNPLC........................................1
(a) Preconstruction Approvals by BNPLC..............................1
(b) Definition of Scope Change......................................2
(c) Approval of Scope Changes.......................................2
(2) NAI's Right to Control and Responsibility for Construction.............2
(a) Performance of the Work.........................................3
(b) Third Party Contracts...........................................3
(c) Third Party Estoppels...........................................4
(d) Adequacy of Drawings, Specifications and Budgets................4
(e) Existing Condition of the Land and Improvements.................4
(f) Correction of Defective Work....................................5
(g) Clean Up........................................................5
(h) No Damage for Delays............................................5
(i) No Fee For Construction Management..............................5
(3) Quality of Work........................................................5
(B) Completion Notices............................................................5
2. Construction Advances................................................................5
(A) Costs Subject to Reimbursement Through Construction Advances..................5
(B) Exclusions From Reimbursable Construction-Period Costs........................7
(C) Conditions to NAI's Right to Receive Construction Advances....................8
(1) Construction Advance Requests..........................................8
(2) Amount of the Advances.................................................8
(a) Limit Dependent Upon the Maximum Construction Allowance.........8
(b) Limit Dependent Upon Costs Previously Incurred by NAI...........8
(c) Limit During CMA Suspension Period..............................9
(d) Restrictions Imposed for Administrative Convenience.............9
(3) No Advances After Certain Dates.......................................10
(D) Breakage Costs for Construction Advances Requested But Not Taken.............10
(E) No Third Party Beneficiaries.................................................10
(F) No Waiver....................................................................10
(G) Funding by Participants......................................................10
(i)
3
3. Normal Tenant Improvements..........................................................12
(A) Definition of Normal Tenant Improvements.....................................12
(B) Advances for Normal Tenant Improvements......................................12
(C) Tenant's Obligation to Construct Normal Tenant Improvements..................12
4. Cost overruns.......................................................................12
(A) Definition of Projected Cost Overruns........................................12
(B) Notice of Projected Cost Overruns............................................12
(C) Election to Make a Voluntary NAI Construction Contribution...................13
5. Suspension and Termination..........................................................13
(A) CMA Suspension Events........................................................13
(1) Projection of Cost Overruns...........................................13
(2) Interruption of Construction..........................................13
(3) Failure of NAI to Correct Defective Work..............................14
(4) Failure of NAI to Provide Evidence of Costs and Expenses..............14
(B) FOCB Notices, Preemptive Notices and CMA Termination Events..................14
(C) Rights and Obligations of NAI During a CMA Suspension Period.................15
(D) Election by NAI to Terminate.................................................15
(E) BNPLC's Right to Terminate...................................................15
(F) Rights and Obligations Surviving Termination.................................16
(G) Cooperation by NAI Following any Termination.................................16
EXHIBITS
Exhibit A......................................................Legal Description
Exhibit B......Description of the Construction Project (With Site Plan Attached)
Exhibit C............................................Form of Contractor Estoppel
Exhibit D...................................Form of Design Professional Estoppel
Exhibit E................Notice Requesting Advance to Cover Insurance Deductible
Exhibit F......................................Construction Advance Request Form
Exhibit G.............................Notice of Voluntary NAI Funding Commitment
Exhibit H...............................................Preemptive Notice by NAI
Exhibit I...........................................Notice of Termination by NAI
(ii)
4
CONSTRUCTION MANAGEMENT AGREEMENT
(PHASE V - IMPROVEMENTS)
This CONSTRUCTION MANAGEMENT AGREEMENT (PHASE V - IMPROVEMENTS) (this
"AGREEMENT"), by and between BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"), and NETWORK APPLIANCE, INC., a California corporation ("NAI"), is
made and dated as of March 1, 2000, the Effective Date. ("EFFECTIVE DATE" and
other capitalized terms used and not otherwise defined in this Agreement are
intended to have the meanings assigned to them in the Common Definitions and
Provisions Agreement (Phase V - Improvements) executed by BNPLC and NAI
contemporaneously with this Agreement. By this reference, the Common Definitions
and Provisions Agreement (Phase V - Improvements) is incorporated into and made
a part of this Agreement for all purposes.)
RECITALS
Pursuant to the Lease Agreement (Phase V - Improvements) executed by
BNPLC and NAI contemporaneously the this Agreement (the "IMPROVEMENTS LEASE"),
which covers the Improvements on the Land described in Exhibit A, BNPLC is
leasing the Improvements and any appurtenances thereto to NAI.
In anticipation of the construction of new or additional Improvements
for NAI's use pursuant to the Improvements Lease, BNPLC and NAI have agreed upon
the terms and conditions upon which BNPLC is willing to authorize NAI to arrange
and manage such construction and upon which BNPLC is willing to provide funds
for such construction, and by this Agreement BNPLC and NAI desire to evidence
such agreement.
CONSENT AND AUTHORIZATION
Subject to the terms and conditions set forth in this Agreement and in
the Improvements Lease, BNPLC does hereby grant its consent and authorization to
NAI for the construction by NAI of the Construction Project on the Land and for
the management by NAI of such construction; provided, however, all rights of NAI
against BNPLC hereunder are expressly made subject and subordinate to the
Permitted Encumbrances and to any other claims or encumbrances affecting the
Land or the Property that may be asserted by third parties and that do not
constitute Liens Removable by BNPLC.
GENERAL TERMS AND CONDITIONS
1. Construction by NAI.
(A) The Construction Project.
(1) Construction Approvals by BNPLC.
(a) Preconstruction Approvals by BNPLC. NAI submitted and
obtained BNPLC's approval of the site plan and descriptions of
the Construction Project referenced in Exhibit B. Also set forth
in Exhibit B is a general
5
description of the Construction Project. The Construction
Project, as constructed by NAI pursuant to this Agreement, and
all construction contracts and other agreements executed or
adopted by NAI in connection therewith, shall be not materially
inconsistent with the plans or other items referenced in Exhibit
B, except to the extent otherwise provided by any Scope Change
(as defined below) approved by BNPLC and except as otherwise
provided in subparagraph 6(d) of the Improvements Lease if BNPLC
should make a Landlord's Election to Continue Construction after
any termination of this Agreement.
(b) Definition of Scope Change. As used herein, "SCOPE
CHANGE" means a change to the Construction Project that, if
implemented, will make the quality, function or capacity of the
Improvements "materially different" (as defined below in this
subparagraph) than as described or inferred by site plan, plans
and renderings referenced in Exhibit B. The term "SCOPE CHANGE"
is not intended to include the mere refinement, correction or
detailing of the site plan, plans or renderings submitted to
BNPLC by NAI. As used in this subparagraph, a "material
difference" means a difference that could reasonably be expected
to (a) after completion of the Construction Project and the
funding of all Construction Advances required in connection
therewith, significantly reduce any excess of the market value of
the Property over Stipulated Loss Value or significantly increase
any excess of Stipulated Loss Value over the market value of the
Property, (b) change the general character of the Improvements
from that needed to accommodate the uses permitted by
subparagraph 2(a) of the Improvements Lease, or (c) result in
Projected Cost Overruns (as defined below).
(c) Approval of Scope Changes. Before making a Scope
Change, NAI shall provide to BNPLC a reasonably detailed written
description of the Scope Change, a revised construction budget
for the Construction Project and a copy of any changes to the
drawings, plans and specifications for the Improvements required
in connection therewith, all of which must be approved in writing
by BNPLC (or by any inspecting architect appointed by BNPLC from
time to time) before the Scope Change is implemented. BNPLC's
approval shall not in any event constitute a waiver of
subparagraph 1(A)(3) or of any other provision of this Agreement
or the Improvements Lease.
(2) NAI's Right to Control and Responsibility for Construction.
Subject to the terms and conditions set forth in this Agreement and in
the Improvements Lease, and prior to any termination of this Agreement
as provided in subparagraphs 5(D) and 5(E), NAI shall have the sole
right to control and the sole responsibility for the design and
construction of the Construction Project, including the means, methods,
sequences and procedures implemented to accomplish such design and
construction. Although title to all Improvements will pass directly to
BNPLC (as more particularly provided in Paragraph 7 of the Improvements
Lease), BNPLC's obligation with respect to the Construction Project
shall be limited to the making of advances under and subject to the
conditions set forth in this Agreement and in Paragraph 6 of the
Improvements Lease. Without limiting the foregoing, NAI acknowledges and
agrees that:
2
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(a) Performance of the Work. Except as provided in
subparagraphs 5(C) and 5(F), NAI must, using its best skill and
judgment and in an expeditious and economical manner not
inconsistent with the interests of BNPLC, perform or cause to be
performed all work required, and will provide or cause to be
provided all supplies and materials required, to design and
complete construction of the Construction Project (collectively
"WORK"). The Work will include obtaining all necessary building
permits and other governmental approvals required in connection
with the design and construction of the Construction Project,
including the design and construction of Normal Tenant
Improvements (as defined below), or required in connection with
the use and occupancy thereof (e.g., final certificates of
occupancy). The Work will also include any repairs or restoration
required because of damage to Improvements by fire or other
casualty prior to the Base Rent Commencement Date (a
"PRE-COMMENCEMENT CASUALTY"); however, the cost of any such
repairs or restoration will be subject to reimbursement not only
through Construction Advances made on and subject to the terms
and conditions of this Agreement, but also through the
application of Escrowed Proceeds as provided in the Improvements
Lease. NAI will carefully schedule and supervise all Work, will
check all materials and services used in connection with all Work
and will keep full and detailed accounts as may be necessary to
document expenditures made or expenses incurred for the Work.
Subject to delays beyond the reasonable control of NAI, NAI shall
cause all Work to be completed on or before the first Business
Day of September, 2001.
(b) Third Party Contracts.
1) NAI shall not enter into any construction
contract or other agreement with a third party concerning
the Work or the Construction Project (a "THIRD PARTY
CONTRACT") in the name of BNPLC or otherwise purport to
bind BNPLC to any obligation to any third party.
2) In any Third Party Contract between NAI and any
of its Affiliates (an "AFFILIATE'S CONTRACT") NAI shall
reserve the right to terminate the contract at any time,
without cause, and without subjecting NAI to liability for
any Termination Fee (as defined below). Further, NAI shall
not enter into any Affiliate's Contract that obligates NAI
to pay more than would be required under an arms-length
contract or that would require NAI to pay its Affiliate
any amount in excess of the sum of actual, out-of-pocket
direct costs and internal labor costs incurred by the
Affiliate to perform such contract.
3) As necessary to limit the total Reimbursable
Third Party Contract Termination Fees (as defined below)
for which BNPLC may be required to provide Construction
Advances to no more than $8,000,000 (the "MAXIMUM
PERMITTED TERMINATION FEES"), NAI shall reserve in every
significant Third Party Contract an absolute express right
to terminate such contract at any time, without cause.
Although any Third Party Contract (other than an
Affiliate's Contract) may require NAI to pay
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a specified Termination Fee in the event of such a
termination, the specified Termination Fee must not exceed
the difference computed by subtracting (I) the aggregate
of all Termination Fees that have been paid or would
become payable by NAI if NAI terminated all other Third
Party Contracts, from (II) the Maximum Permitted
Termination Fees. Without limiting the foregoing, NAI will
manage and administer all Third Party Contracts as
necessary to ensure that, at any point in time, NAI can
terminate all such contracts without becoming liable for
Termination Fees in excess of the Maximum Permitted
Termination Fees.
4) As used in this Agreement, "TERMINATION FEE"
means any amount, however denominated, for which NAI will
be obligated under a Third Party Contract as a result of
any election or decision by NAI to terminate such Third
Party Contract, including demobilization costs; provided,
however, amounts payable for Prior Work [as defined below]
as of the date any such termination are not intended to be
characterized as Termination Fees for purposes of this
Agreement. If, as described in the preceding paragraph,
NAI reserves an absolute express right in a Third Party
Contract to terminate such contract at any time, without
cause, for a specified dollar amount, such dollar amount
will constitute a Termination Fee. If no such right is
reserved in a Third Party Contract, the Termination Fee
applicable to such contract for purposes of this Agreement
will be the amount of damages that NAI could be required
to pay (in addition to payments required for Prior Work)
upon an anticipatory repudiation of the Third Party
Contract by NAI.
(c) Third Party Estoppels. If requested by BNPLC with
respect to any material general construction contract between NAI
and a third party contractor for any part of the Work, NAI shall
cause the contractor to execute and deliver to BNPLC an estoppel
letter substantially in the form of Exhibit C. Similarly, if
requested by BNPLC with respect to any material architectural or
engineering contract between NAI and a third party professional
or firm for any part of the Work, NAI shall cause the
professional or firm thereunder to execute and deliver to BNPLC
an estoppel letter substantially in the form of Exhibit D.
(d) Adequacy of Drawings, Specifications and Budgets.
BNPLC has made and will make no representations as to the
adequacy of any budgets, site plans, renderings, plans, drawings
or specifications for the Construction Project, and no
modification of any such budgets, site plans, renderings, plans,
drawings or specifications that may be required from time to time
will entitle NAI to any adjustment in the Construction Allowance.
(e) Existing Condition of the Land and Improvements. NAI
is familiar with the conditions of the Land and any existing
Improvements on the Land. NAI shall have no claim for damages
against BNPLC or for an increase in the Construction Allowance by
reason of any condition (concealed or otherwise) of or affecting
the Land or Improvements.
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(f) Correction of Defective Work. NAI will promptly
correct all Work performed prior to any termination of this
Agreement that does not comply with the requirements of this
Agreement or that is otherwise defective (in either case,
"DEFECTIVE WORK") at NAI's sole expense. If NAI fails to correct
any Defective Work or fails to carry out Work in accordance with
this Agreement, BNPLC may (but will not be required to) order NAI
to stop all Work until the cause for such failure has been
eliminated.
(g) Clean Up. Upon the completion of all Work, NAI will
remove all waste material and rubbish from and about the Land, as
well as all tools, construction equipment, machinery and surplus
materials. NAI will keep the Land and the Improvements thereon in
a reasonably safe and sightly condition as Work progresses.
(h) No Damage for Delays. NAI shall have no claim for
damages against BNPLC or for an increase in the Construction
Allowance by reason of any delay in the performance of any Work.
(i) No Fee For Construction Management. NAI shall have no
claim for any fee or other compensation or for any reimbursement
of internal administrative or overhead expenses of NAI under this
Agreement, it being understood that NAI is executing this
Agreement in consideration of the rights expressly granted to it
herein and in the Improvements Lease.
(3) Quality of Work. NAI shall cause the Work undertaken and
administered by it pursuant to this Agreement to be performed (a) in a
safe and good and workmanlike manner, (b) in accordance with Applicable
Laws, (c) in compliance with (i) the provisions of this Agreement and
the Improvements Lease, (ii) the material provisions of the Permitted
Encumbrances and (iii) the material provisions of the Development
Documents, and (d) in a manner that, taken as a whole, enhances the
value of the Property commensurate with any Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance in
connection therewith.
(B) Completion Notices. NAI shall provide a notice (a "COMPLETION NOTICE
(BUILDING 4)") to BNPLC promptly after renovation of the portion of the
Improvements designated by NAI as "Building 4" are substantially complete and
ready for occupancy by NAI. Such notice will include a determination by NAI of
the amount of Stipulated Loss Value (Building 4), as defined in the Common
Definitions and Provisions Agreement, and of Stipulated Loss Value (Building
4/Land), as defined in the other Common Definitions and Provisions Agreement. In
addition, NAI shall provide a notice (a "COMPLETION NOTICE (BUILDING 4)") to
BNPLC promptly after construction of the Construction Project is substantially
complete, advising BNPLC of the substantial completion.
2. Construction Advances.
(A) Costs Subject to Reimbursement Through Construction Advances.
Subject to the terms and conditions set forth herein, NAI shall be entitled to a
Construction Allowance, from
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which BNPLC will make Construction Advances on Advance Dates from time to time
to pay or reimburse NAI for the following costs ("REIMBURSABLE
CONSTRUCTION-PERIOD COSTS") to the extent the following costs are not already
included in Transaction Expenses paid by BNPLC from the Initial Funding Advance:
(1) the actual costs and expenses incurred or paid by NAI for the
preparation, negotiation and execution of this Agreement and the other
Operative Documents;
(2) the cost of title insurance or other out of pocket expenses
described in subparagraph 5(c)(iii) of the Improvements Lease or of the
Other Lease Agreement to the extent paid by NAI prior to the Base Rent
Commencement Date;
(3) Commitment Fees;
(4) costs of the Work, including not only hard costs incurred for
the new Improvements described in Exhibit B, but also the following
costs to the extent reasonably incurred in connection with the
Construction Project:
- soft costs, such as architectural fees,
engineering fees and fees and costs paid in
connection with obtaining project permits and
approvals required by governmental authorities
or the Development Documents,
- site preparation costs, and
- costs of offsite and other public improvements
required as conditions of governmental approvals
for the Construction Project;
(5) the cost of maintaining insurance required by (and consistent
with the requirements of) the Improvements Lease and the Other Lease
Agreement prior to the Base Rent Commencement Date, and costs of
repairing any damage to the Improvements caused by a Pre-commencement
Casualty to the extent such costs are not covered by Escrowed Proceeds
made available to NAI as provided in the Improvements Lease and the
Other Lease Agreement prior to the Base Rent Commencement Date
("REIMBURSABLE RESTORATION COSTS");
(6) Impositions that accrue or become due under the Improvements
Lease or the Other Lease Agreement prior to the Base Rent Commencement
Date; and
(7) except as otherwise provided in subparagraph 2(B) below,
Termination Fees payable by NAI in connection with any Third Party
Contract between NAI and a Person not an Affiliate of NAI because of any
election by NAI to cancel or terminate such contract during a CMA
Suspension Period (as defined below).
In addition to other Construction Advances required by this subparagraph 2(A),
but subject to the other terms and conditions hereof, a Construction Advance
will be provided by BNPLC on the Base Rent Commencement Date in the form of
additional Escrowed Proceeds (to be held and applied like other Escrowed
Proceeds pursuant to the Improvements Lease) equal to any
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reduction in property insurance proceeds paid or payable with respect to the
Property because of a property insurance deductible permitted by Exhibit B
attached to the Improvements Lease, if:
(I) damage to the Improvements has been caused by a
Pre-commencement Casualty and, despite the exercise of reasonable
diligence by NAI, NAI has been unable to complete the repair of
such damage sufficiently in advance of the Base Rent Commencement
Date to allow the reimbursement to NAI hereunder of all
Reimbursable Restoration Costs attributable to such property
insurance deductible; and
(II) at least five Business Days before the Base Rent
Commencement Date, NAI has requested such additional Construction
Advance by a notice in the form attached hereto as Exhibit E.
(B) Exclusions From Reimbursable Construction-Period Costs.
Notwithstanding anything herein to the contrary, BNPLC shall not be required to
make any Construction Advance to pay or to reimburse or compensate NAI for any
of the following or any Absolute NAI Construction Obligations required because
of or in connection with or arising out of any of the following:
(1) Environmental Losses;
(2) Losses that would not have been incurred but for any act or
omission of NAI or of any NAI's contractors or subcontractors, which act
or omission is contrary in any material respect to the other terms and
conditions of this Agreement or to the terms and conditions of the other
Operative Documents, during the period that this Agreement remains in
force or during any other period that NAI remains in possession or
control of the Construction Project pursuant to the Improvements Lease
or otherwise;
(3) Losses that would not have been incurred but for any fraud,
misapplication of Construction Advances or other funds, illegal acts, or
willful misconduct on the part of the NAI or its employees or agents or
any other party for whom NAI is responsible;
(4) Losses that would not have been incurred but for any
bankruptcy proceeding involving NAI; and
(5) costs of Normal Tenant Improvements (as defined below),
except to the extent that BNPLC agrees to allow the reimbursement of
such costs from the Construction Allowance as provided in subparagraph
3(B).
For purposes of this subparagraph, "acts and omissions" described in clause (2)
preceding shall include (i) any decision by NAI to make any Scope Change without
the prior approval of BNPLC, (ii) any failure of NAI to maintain insurance
required by the Improvements Lease, the Other Lease Agreement or this Agreement,
(iii) any decision of NAI not to continue or complete Work because of a change
in NAI's facility needs or in NAI's plans to meet its facility needs (such as,
for example, a decision by NAI to lease or acquire another less expensive
facility as an alternative to the Improvements), (iv) any failure by NAI to
reserve termination rights in Third Party Contracts as required by subparagraph
1(A)(2)(b), and (v) any other material breach by NAI of this Agreement.
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(C) Conditions to NAI's Right to Receive Construction Advances. BNPLC's
obligation to provide Construction Advances to NAI from time to time under this
Agreement shall be subject to the following terms and conditions, all of which
terms and conditions are intended for the sole benefit of BNPLC, and none of
which terms and conditions shall limit in any way the right of BNPLC to treat
costs or expenditures incurred or paid by or on behalf of it as Construction
Advances pursuant to subparagraph 6(d) of the Improvements Lease:
(1) Construction Advance Requests. NAI must make a written
request (a "CONSTRUCTION ADVANCE REQUEST") for any Construction Advance,
specifying the amount of such advance, at least five Business Days prior
to the Advance Date upon which the advance is to be paid. To be
effective for purposes of this Agreement, a Construction Advance Request
must be in substantially the form attached as Exhibit F. NAI shall not
submit more than one Construction Advance Request in any calendar month.
(2) Amount of the Advances.
(a) Limit Dependent Upon the Maximum Construction
Allowance. NAI shall not be entitled to require any Construction
Advance that would cause the Funded Construction Allowance to
exceed the Maximum Construction Allowance.
(b) Limit Dependent Upon Costs Previously Incurred by NAI.
NAI shall not be entitled to require any Construction Advance -
other than a final additional Construction Advance required on
the Base Rent Commencement Date because of a permitted property
insurance deductible related to a Pre-commencement Casualty as
described in subparagraph 2(A) above - that would cause the
aggregate of all Construction Advances to exceed the sum of:
(i) Reimbursable Construction-Period Costs that NAI has,
to the reasonable satisfaction of BNPLC, substantiated as having
been paid or incurred by NAI other than for Work (e.g.,
Impositions), plus
(ii) the Reimbursable Construction-Period Costs that NAI
has, to the reasonable satisfaction of BNPLC, substantiated as
having been paid or incurred for Prior Work as of the date of the
Construction Advance Request requesting the advance.
As used in this Agreement, "PRIOR WORK" means all labor and
services actually performed, and all materials actually delivered
to the construction site, in accordance with this Agreement prior
to the date in question as part of the Work, and "FUTURE WORK"
means labor and services performed or to be performed, and
materials delivered or to be delivered, after the date in
question as part of the Work. For purposes of this Agreement, NAI
and BNPLC intend to allocate Reimbursable Construction-Period
Costs between Prior Work and Future Work in a manner that is
generally consistent with the allocations expressed or implied in
construction-related contracts negotiated in good faith between
NAI and third
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parties not affiliated with NAI (e.g., a general contractor);
however, in order to verify the amount of Reimbursable
Construction-Period Costs actually paid or incurred by NAI and
the proper allocation thereof between Prior Work and Future Work,
BNPLC shall be entitled (but not required) to: (x) request,
receive and review copies of such agreements between NAI and
third parties and of draw requests, budgets or other supporting
documents provided to NAI in connection with or pursuant to such
agreements as evidence of the allocations expressed or implied
therein, (y) from time to time engage one or more independent
inspecting architects, certified public accountants or other
appropriate professional consultants and, absent manifest error,
rely without further investigation upon their reports and
recommendations, and (z) without waiving BNPLC's right to
challenge or verify allocations required with respect to future
Construction Advances, rely without investigation upon the
accuracy of NAI's own Construction Advance Requests.
(c) Limit During CMA Suspension Period. Without limiting
the other terms and conditions imposed by this Agreement for the
benefit of BNPLC with respect all Construction Advances, BNPLC
shall have no obligation to make any Construction Advance during
any CMA Suspension Period (as defined below) that would cause the
aggregate of all Construction Advances to exceed the sum of:
(i) Reimbursable Construction-Period Costs that NAI has,
to the reasonable satisfaction of BNPLC, substantiated as having
been paid or incurred by NAI other than for Work (e.g.,
Impositions), plus
(ii) the Reimbursable Construction-Period Costs that NAI
has, to the reasonable satisfaction of BNPLC, substantiated as
having been paid or incurred for Prior Work (as defined below) as
of the date the CMA Suspension Period commenced.
For purposes of computing the limits described in this
subparagraph 2(C)(2)(c), Reimbursable Construction-Period Costs
"other than for Work" shall include Termination Fees that qualify
as Reimbursable Construction-Period Costs pursuant to
subparagraph 2(A)(7) ("REIMBURSABLE THIRD PARTY CONTRACT
TERMINATION FEES"). NAI acknowledges, however, that Termination
Fees will not exceed the Maximum Permitted Termination Fees, so
long as NAI complies with the requirements of subparagraph
1(A)(2)(b). That is, but for an "act or omission of NAI" as such
phrase is used in subparagraph 2(B)(2), the aggregate of all
Termination Fees shall not exceed the Maximum Permitted
Termination Fees. Accordingly, if the aggregate of any
Termination Fees do exceed the Maximum Permitted Termination
Fees, the excess shall not qualify as Reimbursable Third Party
Contract Termination Fees.
(d) Restrictions Imposed for Administrative Convenience.
NAI shall not request any Construction Advance (other than the
final Construction Advance NAI intends to request) for an amount
less than $500,000.
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(3) No Advances After Certain Dates. BNPLC shall have no
obligation to make any Construction Advance (x) after the Base Rent
Commencement Date, (y) on or after the Designated Sale Date, or (z) on
or after the date of any termination of this Agreement pursuant to
subparagraph 5(D) or subparagraph 5(E).
(D) Breakage Costs for Construction Advances Requested But Not Taken. If
NAI requests but thereafter declines to accept any Construction Advance, or if
NAI requests a Construction Advance that it is not permitted to take because of
its failure to satisfy any of the conditions specified in subparagraph 2(C), NAI
shall pay upon demand any resulting Breakage Costs.
(E) No Third Party Beneficiaries. No contractor or other third party
shall be entitled to require BNPLC to make advances as a third party beneficiary
of this Agreement or of the Improvements Lease or otherwise.
(F) No Waiver. No funding of Construction Advances and no failure of
BNPLC to object to any Work proposed or performed by or for NAI shall constitute
a waiver by BNPLC of the requirements contained in this Agreement.
(G) Funding by Participants. NAI acknowledges that, as provided in the
Participation Agreement, each Participant has agreed to pay to BNPLC a
Percentage (under and as defined in the Participation Agreement) of the
Construction Advances required by this Agreement. NAI also acknowledges that
BNPLC will not be responsible to NAI for any failure of any Participant to
provide advances required by the Participation Agreement. So long as any
Participant fails to provide its Percentage of any requested Construction
Advance, then the amount of the Construction Advance for which BNPLC shall be
obligated hereunder shall be reduced by the amount that the Participant should
have provided, but failed to provide, in accordance with the Participation
Agreement. No such reduction, however, of BNPLC's obligation hereunder shall
release or impair the obligation of the Participant directly to NAI, created by
NAI's status as a third party beneficiary of the Participant's commitment under
the Participation Agreement to provide the Participant's Percentage of
Construction Advances. Further, any such failure shall excuse BNPLC's obligation
to provide the requested Construction Advance only to the extent of the funds
that the applicable Participant or Participants should have advanced (but did
not advance) to BNPLC, and in the event of any such failure:
(1) BNPLC will immediately notify NAI, but BNPLC will not in any
event be liable to NAI for BNPLC's failure to do so.
(2) BNPLC will to the extent possible postpone reductions of
Construction Advances because of the failure by any one or more
Participants ("DEFAULTING PARTICIPANTS") to make required advances under
the Participation Agreement (a "PARTICIPANT DEFAULT") by adjusting (and
readjusting from time to time, as required) the funding "Percentages" of
other Participants, and by requesting the other Participants to make
advances to BNPLC on the basis of such adjusted Percentages, in each
case as provided in the Participation Agreement; however, so long as a
Participant Default continues, no Construction Advance shall be required
that would cause the Outstanding Construction Allowance to exceed (1)
the Maximum Construction Allowance available
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under this Agreement, less (2) all amounts that should have been, but
because of a continuing Participant Default have not been, advanced by
any one or more of the Participants to BNPLC under the Participation
Agreement with respect to Construction Advances.
(3) Further, after a Participant Default, and so long as no CMA
Termination Event (as defined below) has occurred and no Event of
Default has occurred and is continuing, BNPLC shall do the following as
reasonably requested by NAI, provided that nothing in this provision
shall require BNPLC to take any action that would violate Applicable
Laws, that would constitute a breach of BNPLC's obligations under the
Participation Agreement, or that would require BNPLC to waive any rights
or remedies it has under this Agreement or other Operative Documents:
(a) BNPLC shall promptly make a written demand upon the
Defaulting Participants for the cure of the Participant Default
and
(b) BNPLC shall not unreasonably withhold its approval for
the substitution of any new participant proposed by NAI for
Defaulting Participants, if (A) the proposed substitution does
not require BNPLC to waive rights against the Defaulting
Participants, (B) the new participant will agree (by executing
supplement to the Participation Agreement as provided in the
Participation Agreement) to provide funds to replace the payments
that would otherwise be required of the Defaulting Participants
with respect to future Construction Advances, (C) the new
participant (or NAI) provides the funds (if any) needed to
terminate the Defaulting Participants' rights to receive payments
of "Net Cash Flow" (as defined in the Participation Agreement)
that BNPLC will be required to pay the new participant under the
terms of the substitution reasonably proposed by NAI, (D) the new
participant (or NAI) provides and agrees in writing to provide
funds needed to reimburse BNPLC for any and all Losses incurred
by BNPLC in connection with or because of the substitution of the
new participant for the Defaulting Participants, including any
cost of defending and paying any claim asserted by Defaulting
Participants because of the substitution (but not including any
liability of BNPLC to the Defaulting Participants for damages
caused by BNPLC's bad faith or gross negligence in the
performance of BNPLC's obligations to the Defaulting
Participants), (E) the obligations of BNPLC to the new
participant per dollar of the new participant's "investment" (it
being understood that such investment will be computed in a
manner consistent with the examples set forth in Exhibit A to the
Participation Agreement, but net of reimbursements to BNPLC under
clause (D) preceding) shall not exceed the obligations per dollar
of investment by the Defaulting Participants that BNPLC would
have had to the Defaulting Participants if there had been no
Participant Default, and (F) the new participant shall be a
reputable financial institution having a net worth of no less
than seven and one half percent (7.5%) of total assets and total
assets of no less than $10,000,000,000.00 (all according to then
recent audited financial statements).
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3. NORMAL TENANT IMPROVEMENTS.
(A) Definition of Normal Tenant Improvements. As used herein, "NORMAL
TENANT IMPROVEMENTS" shall mean any "below-ceiling" interior finishes and
special fixtures or equipment to be constructed for NAI within the Improvements
as part of the Construction Project, BUT WILL NOT INCLUDE (1) costs of
structural elements of the Construction Project, or (2) equipment that would be
necessary for the use of the Improvements by any lessee (e.g., HVAC equipment,
elevators, standard electrical wiring).
(B) Advances for Normal Tenant Improvements. Nothing herein shall be
construed as a commitment or an agreement by BNPLC to pay for Normal Tenant
Improvements, other than Normal Tenant Improvements contemplated in the
description of the Construction Project set forth in Exhibit B and the
attachments thereto. BNPLC does, however, acknowledge that incorporated into the
total Construction Allowance is an amount for contingencies (e.g., cost overruns
related to structural components of Improvements, HVAC equipment, elevators,
etc.), for which BNPLC shall be obligated to provide Construction Advances on
and subject to the terms and conditions set forth in Paragraph . To the extent,
if any, that NAI does not exhaust the Construction Allowance by using
Construction Advances for other costs (e.g., the actual costs incurred for
structural components of Improvements, HVAC equipment, elevators, etc.), BNPLC
will allow NAI to reimburse itself through Construction Advances funded on and
subject to the terms and conditions of Paragraph for the costs of any Normal
Tenant Improvements in addition to those contemplated in the description of the
Construction Project set forth in Exhibit B and the attachments thereto.
Otherwise, any such additional Normal Tenant Improvements will be paid for by
NAI.
(C) Tenant's Obligation to Construct Normal Tenant Improvements. NAI
shall construct all Normal Tenant Improvements in a good and workmanlike manner
and in accordance with the same standards and requirements imposed by this
Agreement for other Work.
4. COST OVERRUNS.
(A) Definition of Projected Cost Overruns. As used in this Agreement,
"PROJECTED COST OVERRUNS" shall mean the excess (if any), calculated as of the
date of each Construction Advance Request, of (1) the total of projected
Reimbursable Construction-Period Costs yet to be incurred or for which NAI has
yet to be reimbursed hereunder (including projected Reimbursable
Construction-Period Costs for Future Work), over (2) the sum of a) any Voluntary
Construction Contribution NAI has committed to pay as provided in subparagraph
4(C), but has yet to pay, plus b) the balance of the remaining Construction
Allowance then projected to be available to cover such costs. The balance of the
remaining Construction Allowance then projected to be available will equal (i)
the amount (if any) by which the Maximum Construction Allowance exceeds the
Funded Construction Allowance, less (ii) the sum of (a) projected future
Carrying Costs, plus (b) any funds that should have been but were not advanced
to BNPLC by any Defaulting Participants under (and as defined in) the
Participation Agreement.
(B) Notice of Projected Cost Overruns. If for any reason (including any
damage to the Property by fire or other casualty or any taking of any part of
the Property by condemnation)
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NAI believes (after taking into account any Voluntary NAI Construction
Contributions NAI has made or committed to make as provided in subparagraph
4(C)) that Projected Cost Overruns are more likely than not at the time NAI
submits any Construction Advance Request, NAI shall state such belief in the
Construction Advance Request and, if NAI can reasonably do so, NAI will estimate
the approximate amount of such Projected Cost Overruns.
(C) Election to Make a Voluntary NAI Construction Contribution. As used
in this Agreement, "VOLUNTARY NAI CONSTRUCTION CONTRIBUTION" shall mean a
voluntary, nonrefundable payment made to BNPLC by NAI prior to the Base Rent
Commencement Date and delivered with or pursuant to a notice in the form of
Exhibit G, confirming that a Voluntary NAI Construction Contribution is being
paid or will be paid pursuant to this subparagraph. To prevent the occurrence of
or to cure any CMA Suspension Event described in subparagraph 5(A)(1), NAI shall
be entitled (but not obligated) to make or commit to make a Voluntary NAI
Construction Contribution in addition to (and, except as provided in the
definition of Issue 97-10 Prepayment in the Common Definitions and Provisions
Agreement (Phase V - Improvements), without reducing or excusing) any other
amounts then due from NAI to BNPLC pursuant to the Operative Documents. Like
other Qualified Prepayments, any Voluntary NAI Construction Contribution will
reduce the Outstanding Construction Allowance as described in the definition
thereof in the Common Definitions and Provisions Agreement (Phase V -
Improvements). In contrast, however, to other Qualified Prepayments, Voluntary
NAI Construction Contributions will be subtracted for purposes of calculating
the Funded Construction Allowance and, thus, will effectively increase the
subsequent Construction Advances available under the limit established by
subparagraph 2(C)(2)(a).
5. SUSPENSION AND TERMINATION.
(A) CMA Suspension Events. Each of the following events shall be a "CMA
SUSPENSION EVENT" under this Agreement:
(1) Projection of Cost Overruns. Either (a) BNPLC shall receive
any Construction Advance Request stating that NAI believes Projected
Cost Overruns are more likely than not, as provided in subparagraph
4(B), or (b) (i) BNPLC shall otherwise determine in good faith that
significant Projected Cost Overruns are likely (taking into account any
failure of a Defaulting Participant to provide funds to BNPLC as
required by the Participation Agreement and any prior Voluntary NAI
Construction Contributions NAI has made or committed to make as provided
in subparagraph 4(C)), (ii) BNPLC shall notify NAI of such determination
and the basis therefor, and (iii) NAI shall fail to give any notice
pursuant to subparagraph 4(C) that, by committing NAI to make or
increase Voluntary NAI Construction Contributions, effectively
eliminates the likelihood of the Projected Cost Overruns on or before
five Business Days after BNPLC's notice to NAI of such determination.
(2) Interruption of Construction. The Construction Project shall,
for any reason after Work commences (including any damage to the
Property by fire or other casualty or any taking of any part of the
Property by condemnation), no longer be substantially progressing (and
shall not have progressed in any substantial way during the preceding
forty-five days), in a good and workmanlike manner and substantially in
13
17
accordance with Applicable Laws, with Permitted Encumbrances, with
Development Documents and with the requirements of this Agreement.
(3) Failure of NAI to Correct Defective Work. NAI shall fail to
diligently pursue the correction of any Defective Work of which NAI has
received notice.
(4) Failure of NAI to Provide Evidence of Costs and Expenses.
BNPLC shall have requested, and NAI shall have failed to provide within
ten Business Days after receipt of the request, with respect to any
Construction Advance: (1) invoices, requests for payment from
contractors and other evidence reasonably establishing that the costs
and expenses for which NAI has requested or is requesting reimbursement
constitute actual Reimbursable Construction-Period Costs, and (2)
canceled checks, lien waivers and other evidence reasonably establishing
that all prior Construction Advances have been used by NAI to pay, and
only to pay, the Reimbursable Construction-Period Costs for which the
prior advances were requested and made.
(B) FOCB Notices, Preemptive Notices and CMA Termination Events.
(1) As used herein, "FOCB NOTICE" means a notice from BNPLC to
NAI that BNPLC is considering a termination of this Agreement pursuant
to subparagraph 5(E) below, provided that the notice is given prior to
BNPLC's receipt from NAI of a Completion Notice and is given when:
(a) any Event of Default has occurred and is continuing;
or
(b) any CMA Suspension Event shall have occurred, NAI
shall have received notice of such CMA Suspension Event (a "CMA
SUSPENSION NOTICE") and the CMA Suspension Event shall have
continued for thirty days after NAI's receipt of such notice; or
(c) NAI shall have failed to maintain the following
insurance, or to provide insurance certificates to BNPLC as
required by the Improvements Lease with respect to the following
insurance, and such failure shall have continued for a period of
five Business Days after any notice to NAI thereof:
1) property insurance as required by the
Improvements Lease, including builder's completed value
risk insurance as BNPLC may require to protect BNPLC's and
NAI's interests in the Improvements under construction
against risks of physical loss, such insurance to be
maintained by NAI at all times until completion of the
Construction Project; and
2) commercial general liability insurance as
required by the Improvements Lease.
(2) As used herein, "PREEMPTIVE NOTICE" means a notice from NAI
to BNPLC in the form attached hereto as Exhibit H, given after BNPLC has
given any FOCB Notice, but before NAI has made any Issue 97-10 Election,
that is sufficient and effective under clause (2) of the definition of
Designated Sale Date in the Common
14
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Definitions and Provisions Agreement (Phase V - Improvements) to
accelerate the Designated Sale Date to a date that is less than ninety
days after the date of BNPLC's FOCB Notice.
(3) For purposes of this Agreement and the other Operative
Documents, "CMA TERMINATION EVENT" shall mean:
(a) BNPLC's receipt of a Notice of NAI's Intent to
Terminate (as defined below); or
(b) A failure of NAI for any reason whatsoever to deliver
a duly executed, effective Preemptive Notice within thirty days
after NAI's receipt of an FOCB Notice.
(C) Rights and Obligations of NAI During a CMA Suspension Period. As
used herein, "CMA SUSPENSION PERIOD" shall mean any period (1) beginning with
the date of any CMA Suspension Notice, FOCB Notice or Notice of NAI's Intent to
Terminate, and (2) ending on the earlier of (a) the first date upon which (i) no
CMA Suspension Events shall be continuing, and (ii) no CMA Termination Events
shall have occurred, or (b) the effective date of any termination of this
Agreement as described in subparagraph 5(D) or subparagraph 5(E). During any CMA
Suspension Period, NAI shall have the right to suspend the Work; provided,
however, the obligations of NAI which are to survive any termination of this
Agreement shall also continue and survive during any such suspension of the
Work.
(D) Election by NAI to Terminate. NAI may elect to terminate this
Agreement at any time prior to the Base Rent Commencement Date when NAI has
determined that (1) the Construction Advances to be provided to it hereunder
will not be sufficient to cover all Reimbursable Construction-Period Costs,
whether because the cost of the Work exceeds budgeted expectations (resulting in
Projected Cost Overruns), because of damage to the Property by fire or other
casualty (other than damage that would not have occurred, or been uninsured or
under-insured, but for an act or omission of NAI), because of a taking of any
part of the Property by condemnation, or because NAI can no longer satisfy
conditions to BNPLC's obligation to provide Construction Advances herein, or (2)
the Construction Project cannot be substantially completed before the Base Rent
Commencement Date for reasons other than a breach by NAI of this Agreement. To
be effective, however, any such election to terminate this Agreement must be
made by giving BNPLC and the Participants a notice thereof prior to the Base
Rent Commencement Date in the form of Exhibit I (a "NOTICE OF NAI'S INTENT TO
TERMINATE"), stating that NAI intends to terminate this Agreement pursuant to
this subparagraph on a date specified therein, which date is not less than
thirty days after the date of such notice. Unless terminated sooner pursuant to
subparagraph 5(E), this Agreement will automatically terminate on the effective
date so specified in any Notice of NAI's Intent to Terminate.
(E) BNPLC's Right to Terminate. BNPLC shall be entitled to terminate
this Agreement at any time (x) more than ninety days after BNPLC has given an
FOCB Notice as described in subparagraph 5(B)(1) (regardless of whether at the
time of such termination by BNPLC an Event of Default or other event or
circumstance described in subparagraph 5(B)(1) is continuing), provided that
BNPLC shall not have received an effective Preemptive Notice within
15
19
thirty days after its delivery of the FOCB Notice to NAI, (y) after the
Designated Sale Date, or (z) after BNPLC's receipt of a Notice of NAI's Intent
to Terminate.
(F) Rights and Obligations Surviving Termination. Following any
termination of this Agreement as provided in subparagraph 5(D) or in 5(E), NAI
shall have no obligation to continue or complete any Work; provided, however, no
termination of this Agreement shall reduce or excuse the following rights and
obligations of the parties, it being intended that all such rights and
obligations shall survive and continue after any such termination:
(1) the rights and obligations of NAI and BNPLC under the other
Operative Documents, including Absolute NAI Construction Obligations
imposed upon NAI by the Improvements Lease; and
(2) NAI's obligations described in the next subparagraph 5(G).
(G) Cooperation by NAI Following any Termination. After any termination
of this Agreement as provided in subparagraph 5(D) or subparagraph 5(E), NAI
shall comply with the following terms and conditions, all of which shall survive
any such termination:
(1) NAI shall promptly deliver copies to BNPLC of all Third Party
Contracts and purchase orders made by NAI in the performance of or in
connection with the Work, together with all plans, drawings,
specifications, bonds and other materials relating to the Work in NAI's
possession, including all papers and documents relating to governmental
permits, orders placed, bills and invoices, lien releases and financial
management under this Agreement. All such deliveries shall be made free
and clear of any liens, security interests, or encumbrances, except such
as may be created by the Operative Documents.
(2) Promptly after any request from BNPLC made with respect to
any Third Party Contract, NAI shall deliver a letter confirming: (i)
that NAI has not performed any act or executed any other instrument
which invalidates or modifies such contract in whole or in part (or, if
so, the nature of such modification); (ii) the extent to which such
contract is valid and subsisting and in full force and effect; (iii)
that there are no defaults or events of default then existing under such
contract and, to NAI's knowledge, no event has occurred which with the
passage of time or the giving of notice, or both, would constitute such
a default or event of default (or, if there is a default, the nature of
such default in detail); (iv) that the services and construction
contemplated by such contract is proceeding in a satisfactory manner in
all material respects (or if not, a detailed description of all
significant problems with the progress of the services or construction);
(v) in reasonable detail the then critical dates projected by NAI for
work and deliveries required by such contract; (vi) the total amount
received by the other party to such contract for work or services
provided by the other party through the date of the letter; (vii) the
estimated total cost of completing the services and work contemplated
under such contract as of the date of the letter, together with any
current draw or payment schedule for the contract; and (viii) any other
information BNPLC may reasonably request to allow it to decide what
steps it should take concerning the contract within BNPLC's rights under
this Agreement and the other Operative Documents.
16
20
(3) NAI will make every reasonable effort, as and to the extent
requested by BNPLC, to secure the cancellation of any then existing
Third Party Contract upon terms satisfactory to BNPLC. NAI shall bear
any cancellation fees or other Losses resulting from any cancellation of
a Third Party Contract after the effective date of a termination of this
Agreement.
(4) NAI will make every reasonable effort, as and to the extent
requested by BNPLC, to secure any required consents or approvals for an
assignment of any then existing Third Party Contract to BNPLC or its
designee, upon terms satisfactory to BNPLC. To the extent assignable,
any Third Party Contract will be assigned by NAI to BNPLC upon request.
(5) If NAI has canceled any Third Party Contract before and in
anticipation of a termination of this Agreement, NAI shall make every
reasonable effort, as and to the extent requested by BNPLC, to secure a
reinstatement of such Third Party Contract in favor of BNPLC and upon
terms satisfactory to BNPLC.
(6) For a period not to exceed ten days after the termination,
NAI shall take such steps as are reasonably necessary to preserve and
protect Work completed and in progress and to protect materials,
equipment, and supplies at the Property or in transit.
17
21
IN WITNESS WHEREOF, NAI and BNPLC have caused this Construction Management
Agreement to be executed effective as of March 1, 2000.
"NAI"
NETWORK APPLIANCE, INC.
By:
---------------------------------------
Jeffry R. Allen, Chief Financial
Officer
22
[Continuation of signature pages to Construction Management Agreement
(Phase V - Improvements) dated to be effective March 1, 2000]
"BNPLC"
BNP LEASING CORPORATION
By:
---------------------------------------
Lloyd Cox, Vice President
23
Exhibit A
LEGAL DESCRIPTION
The real property located in the City of Sunnyvale, County of Santa Clara, State
of California, described as follows:
All of Parcel 1 as shown upon that certain map entitled, "Parcel Map lying
within the City of Sunnyvale, being a resubdivision of Parcel 5, as shown on Map
recorded in Book 413 of Maps, at Page 53, Santa Clara County Records, City of
Sunnyvale, Santa Clara County, California," which Map was filed for record in
the office of the Recorder of the County of Santa Clara, State of California on
July 18, 1978 in Book 423 of Maps, at Page 13.
Excepting therefrom, the following described property granted to the Santa Clara
County Transit District March 28, 1997 under Series No. 13654560:
All of that certain real property situated in the City of Sunnyvale, County of
Santa Clara, State of California, and being a portion of Parcel 1, as said
Parcel 1 is shown on that certain Parcel Map filed in Book 423 of Maps, Page 13,
Records of Santa Clara County, California, and more particularly described as
follows:
Beginning at the point of intersection of the centerlines of Fair Oaks Avenue
and Crossman Road as said Avenue and Road are shown on said Parcel Map; thence
Northerly along said centerline of Crossman Road, North 18 degrees 37' 09" East
82.70 feet; thence Easterly at a right angle from said centerline of Crossman
Road, 71 degrees 22' 51" East 54.89 feet to a point on a curve on the Easterly
line of said Crossman Road; thence from a tangent bearing of South 9 degrees 32'
30" West along said Easterly line of Crossman Road and along said curve concave
Easterly with a radius of 108.99 feet through a central angle of 11 degrees 34'
1" in an arc length of 22.00 feet the true point of this description; thence
continuing Southerly and Southeasterly along said Easterly line of Crossman Road
the following four (4) described courses: (1) continuing along said curve (from
a tangent bearing of South 2 degrees 01' 41" East) concave Easterly with a
radius of 108.99 feet through a central angle of 23 degrees 25' 59" an arc
length of 44.58 feet; (2) South 25 degrees 27' 40" East 79.86 feet to a curve;
(3) Southeasterly along said curve concave Northeasterly with a radius of 108.99
feet, through a central angle of 9 degrees 00' 00" in an arc length of 17.12
feet; (4) South 34 degrees 27' 40" East 23.31 feet to the Northeasterly line of
said Fair Oaks Avenue; thence Southeasterly along said Northeasterly line of
Fair Oaks Avenue South 50 degrees 50' 59" East 139.04 feet; thence leaving said
Northeasterly line of Fair Oaks Avenue North 34 degrees 36' 17" West 57.40 feet;
thence North 50 degrees 50' 13" West 32.20 feet; thence North 34 degrees 36' 17"
West 205.73 feet to the true point of beginning.
24
Exhibit B
DESCRIPTION OF THE CONSTRUCTION PROJECT
Subject to future Scope Changes, the Construction Project will be
substantially consistent with the general description set out in the excerpts
from an appraisal prepared for BNPLC which are attached to this Exhibit and with
the Site Plan which is attached to this Exhibit.
In addition to the Site Plan, the following summarizes excerpts taken
from an appraisal prepared for BNPLC which summarizes information about the
Improvements:
The improvements will consist of Phase V improvements, consisting of (a)
the renovation of an existing one two-story office/research and
development building, known as Building 4, containing approximately
95,169 square feet, and (b) the construction of one three-story office
building, known as Building 5, located on the northeast corner of
Crossman Avenue and Java Drive, in the City of Sunnyvale, Santa Clara
County, California, containing approximately 120,017 square feet,
together with related parking and other facilities.
25
Exhibit C
ESTOPPEL FROM CONTRACTOR
_________, 200__
BNP Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Assignment of Construction Contract
Ladies and Gentlemen:
The undersigned hereby represents to BNP LEASING CORPORATION, a Delaware
corporation ("BNPLC"), and covenants with BNPLC as follows:
1. The undersigned has entered into that certain [Construction Contract]
(the "CONSTRUCTION CONTRACT") by and between the undersigned and Network
Appliance, Inc. ("NAI") dated , ____ for the construction of the improvements to
be constructed as part of NAI's Sunnyvale campus leased by NAI (the
"IMPROVEMENTS") on the land described in the Improvements Lease Documents
described below (the "LAND" and, together with the Improvements and any other
improvements now on or constructed in the future on the Land, the "PROJECT").
2. The undersigned has been advised that, by a Lease Agreement (Phase II
- - Improvements) and a Construction Management Agreement (Phase II -
Improvements), both dated as of March 1, 2000 (collectively, the "IMPROVEMENTS
LEASE DOCUMENTS"), BNPLC is leasing the Project to NAI and has agreed, subject
to the terms and conditions of the Improvements Lease Documents, to provide a
construction allowance for the design and construction of the Improvements. The
undersigned has also been advised that the Improvements Lease Documents
expressly provide that third parties (including the undersigned) are not
intended as beneficiaries of the Improvements Lease Documents and, thus, will
have no standing to enforce any obligations of NAI or BNPLC under the
Improvements Lease Documents, including any such obligation that BNPLC may have
to provide the construction allowance. The undersigned understands that the
Improvements Lease Documents expressly provide that NAI is not authorized to
enter into any construction contract or other agreement with any third party in
the name of BNPLC or to otherwise bind BNPLC to any contract with a third party.
3. A complete and correct copy of the Construction Contract is attached
to this letter. The Construction Contract is in full force and effect and has
not been modified or amended, except as provided in any written modifications or
amendments which are also attached to this letter.
26
BNP Leasing Corporation
_______________, 200___
Page 2
4. The undersigned has not sent or received any notice of default or any
other notice for the purpose of terminating the Construction Contract, nor does
the undesigned have knowledge of any existing circumstance or event which, but
for the elapse of time or otherwise, would constitute a default by the
undersigned or by NAI under the Construction Contract.
The undersigned acknowledges and agrees that:
a) Title to all Improvements shall, when constructed on the Land, pass
directly to BNPLC, not to NAI. BNPLC shall not, however, be held liable for, and
the undersigned shall not assert, any claims, demands or liabilities against
BNPLC arising under or in any way relating to the Construction Contract;
provided, this paragraph will not (1) be construed as a waiver of any statutory
mechanic's or materialmen's liens against the interests of NAI in and to the
Land or the improvements thereon that may otherwise exist or arise in favor of
the undersigned, or (2) prohibit the undersigned from asserting any claims or
making demands against BNPLC under the Construction Contract if BNPLC elects in
writing, pursuant to paragraph b) below, to assume the Construction Contract in
the event NAI's right to possession of the Land is terminated, it being
understood that in the event of such an assumption BNPLC shall be liable for the
unpaid balance of the contract sum due for the work of the undersigned, payable
pursuant to (and subject to the terms and conditions set forth for the benefit
of the owner in) the Construction Contract, but in no event shall BNPLC
otherwise be personally liable for any acts or omissions on the part of NAI.
b) Upon any termination of NAI's right to possession of the Project
under the Improvements Lease Documents, including any eviction of NAI resulting
from an Event of Default (as defined in the Improvements Lease Documents), BNPLC
shall be entitled (but not obligated), by notice to the undersigned and without
the necessity of the execution of any other document, to assume NAI's rights and
obligations under the Construction Contract, cure any defaults by NAI thereunder
and enforce the Construction Contract and all rights of NAI thereunder. Within
ten days of receiving notice from BNPLC that NAI's right to possession has been
terminated, the undersigned shall send to BNPLC a written estoppel letter
stating: (i) that the undersigned has not performed any act or executed any
other instrument which invalidates or modifies the Construction Contract in
whole or in part (or, if so, the nature of such modification); (ii) that the
Construction Contract is valid and subsisting and in full force and effect;
(iii) that there are no defaults or events of default then existing under the
Construction Contract and no event has occurred which with the passage of time
or the giving of notice, or both, would constitute such a default or event of
default (or, if there is a default, the nature of such default in detail); (iv)
that the construction contemplated by the Construction Contract is proceeding in
a satisfactory manner in all material respects (or if not, a detailed
description of all significant problems with the progress of construction); (v)
a reasonably detailed report of the then critical dates projected by the
undersigned for work and deliveries required to complete the Project; (vi) the
total amount received by the undersigned for construction through the date of
the letter; (vii) the estimated total cost of completing the undersigned's work
as of the date of the letter, together with a current draw schedule; and (viii)
any other information BNPLC may request to allow it to
Exhibit C - Page 2
27
BNP Leasing Corporation
_______________, 200___
Page 3
decide whether to assume the Construction Contract. BNPLC shall have seven days
from receipt of such written certificate containing all such requested
information to decide whether to assume the Construction Contract. If BNPLC
fails to assume the Construction Contract within such time, the undersigned
agrees that BNPLC shall not be liable (and the undersigned shall not assert or
bring any action against BNPLC, except to enforce statutory lien rights, if any,
of the undersigned against the Land or improvements on the Land) for any damages
or other amounts resulting from the breach or termination of the Construction
Contract or under any other theory of liability of any kind or nature, but
rather the undersigned shall look solely to NAI (and statutory lien rights, if
any, of the undersigned against the Land and any improvements thereon) for the
recovery of any such damages or other amounts.
c) If BNPLC notifies the undersigned that BNPLC shall not assume the
Construction Contract pursuant to the preceding paragraph following the
termination of NAI's right to possession of the Project under the Improvements
Lease Documents, the undersigned shall immediately discontinue the work under
the Construction Contract and remove its personnel from the Project, and BNPLC
shall be entitled to take exclusive possession of the Project. The undersigned
shall also, upon request by BNPLC, deliver and assign to BNPLC all plans and
specifications and other contract documents previously delivered to the
undersigned (except that the undersigned may keep an original set of the
Construction Contract and other contract documents executed by NAI), all other
material relating to the work which belongs to BNPLC or NAI, and all papers and
documents relating to governmental permits, orders placed, bills and invoices,
lien releases and financial management under the Construction Contract.
Notwithstanding the undersigned's receipt of any notice from BNPLC that BNPLC
declines to assume the Construction Contract, the undersigned shall for a period
not to exceed fifteen days after receipt of such notice take such steps, at
BNPLC's expense, as are reasonably necessary to preserve and protect work
completed and in progress and to protect materials, equipment and supplies at
the site or in transit.
d) If the Construction Contract is terminated by NAI before BNPLC is
given the opportunity to elect whether or not to assume the Construction
Contract as provided herein, BNPLC shall nonetheless have the right hereunder to
assume the Construction Contract, as if it had not been terminated, upon any
termination of NAI's right to possession of the Project under the Improvements
Lease Documents; provided, however, that if the work of the undersigned under
the Construction Contract has been disrupted because of NAI's termination of the
Construction Contract, the undersigned shall be entitled to an equitable
adjustment to the price of the Construction Contract, following any assumption
thereof by BNPLC, for the additional costs incurred by the undersigned
attributable to the disruption; and, provided further, that if BNPLC does assume
the Construction Contract, BNPLC shall receive a credit against the price of the
Construction Contract for any consideration paid to the undersigned by NAI
because of NAI's prior termination of the Construction Contract (whether such
consideration is designated a termination fee, settlement payment or otherwise).
Exhibit C - Page 3
28
BNP Leasing Corporation
_______________, 200___
Page 4
e) No action taken by BNPLC or the undersigned with respect to the
Construction Contract shall prejudice any other rights or remedies of BNPLC or
the undersigned provided by law, by the Improvements Lease Documents, by the
Construction Contract or otherwise against NAI.
f) The undersigned agrees promptly to notify BNPLC of any material
default or claimed material default by NAI under the Construction Contract of
which the undersigned is aware, describing with particularity the default and
the action the undersigned believes is necessary to cure the same. The
undersigned will send any such notice to BNPLC prominently marked "URGENT -
NOTICE OF NAI'S DEFAULT UNDER CONSTRUCTION AGREEMENT WITH NETWORK APPLIANCE,
INC. - SUNNYVALE, CALIFORNIA" at the address specified for notice below (or at
such other addresses as BNPLC shall designate in notice sent to the
undersigned), by certified or registered mail, return receipt requested.
Following receipt of such notice, the undersigned will permit BNPLC or its
designee to cure any such default within the time period reasonably required for
such cure, but in no event less than thirty days. If it is necessary or helpful
to take possession of all or any portion of the Project to cure a default by NAI
under the Construction Contract, the time permitted by the undersigned for cure
by BNPLC will include the time necessary to terminate NAI's right to possession
of the Project and evict NAI, provided that BNPLC commences the steps required
to exercise such right within sixty days after it is entitled to do so under the
terms of the Improvements Lease Documents and applicable law. If the undersigned
incurs additional costs due to the extension of the aforementioned cure period,
the undersigned shall be entitled to an equitable adjustment to the price of the
Construction Contract for such additional costs.
g) Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery or (b) expedited delivery
service with proof of delivery or (c) United States mail, postage prepaid,
registered or certified mail or (d) telegram, telex or telecopy, addressed as
follows:
To the undersigned:
- ------------------- ------------------------------
------------------------------
------------------------------
Telecopy: (___) ___-_____
To BNPLC: BNP Leasing Corporation
- -------- 12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telecopy: (972) 788-9191
Exhibit C - Page 4
29
BNP Leasing Corporation
_______________, 200___
Page 5
A copy of any such notice or communication will also be sent to NAI by (a)
personal delivery or (b) expedited delivery service with proof of delivery or
(c) United States mail, postage prepaid, registered or certified mail or (d)
telegram, telex or telecopy, addressed as follows:
Network Appliance, Inc.
Attn: Corporate Secretary
2770 San Thomas Expressway
Santa Clara, CA 95051
Telecopy: (___) ___-____
h) The undersigned acknowledges that it has all requisite authority to
execute this letter. The undersigned further acknowledges that BNPLC has
requested this letter, and is relying on the truth and accuracy of the
representations made herein, in connection with BNPLC's decision to advance
funds for construction under the Improvements Lease Documents with NAI.
Very truly yours,
-------------------------------------
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
NAI joins in the execution of this letter solely for the purpose of
evidencing its consent hereto, including its consent to the provisions that
would allow, but not require, BNPLC to assume the Construction Contract in the
event NAI is evicted from the Project.
Network Appliance, Inc.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
Exhibit C - Page 5
30
Exhibit D
ESTOPPEL FROM DESIGN PROFESSIONALS
_________, 200__
BNP Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Assignment of [Architect's Agreement/Engineering Contract]
Ladies and Gentlemen:
The undersigned hereby represents to BNP LEASING CORPORATION, a Delaware
corporation ("BNPLC"), and covenants with BNPLC as follows:
1. The undersigned has entered into that certain [Architect's
Agreement/Engineering Contract] (the "AGREEMENT") by and between the undersigned
and Network Appliance, Inc. ("NAI") dated _______, ____ for the
[design/engineering] of the improvements to be constructed as part of NAI's
Sunnyvale campus leased by NAI (the "IMPROVEMENTS") on the land described in the
Improvements Lease Documents described below (the "LAND" and, together with the
Improvements and any other improvements now on or constructed in the future on
the Land, the "PROJECT").
2. The undersigned has been advised that, by a Lease Agreement
(Phase V - Improvements) and a Construction Management Agreement (Phase V -
Improvements), both dated as of March 1, 2000 (collectively, the "IMPROVEMENTS
LEASE DOCUMENTS"), BNPLC is leasing the Project to NAI and has agreed, subject
to the terms and conditions of the Improvements Lease Documents, to provide a
construction allowance for the design and construction of the Improvements. The
undersigned has also been advised that the Improvements Lease Documents
expressly provide that third parties (including the undersigned) are not
intended as beneficiaries of the Improvements Lease Documents and, thus, will
have no standing to enforce any obligations of NAI or BNPLC under the
Improvements Lease Documents, including any such obligation that BNPLC may have
to provide the construction allowance. The undersigned understands that the
Improvements Lease Documents expressly provide that NAI is not authorized to
enter into any Agreement or other agreement with any third party in the name of
BNPLC or to otherwise bind BNPLC to any contract with a third party.
3. A complete and correct copy of the Agreement is attached to this
letter. The Agreement is in full force and effect and has not been modified or
amended, except as provided in any written modifications or amendments which are
also attached to this letter.
4. The undersigned has not sent or received any notice of default or any
other notice for the purpose of terminating the Agreement, nor does the
undesigned have knowledge of any
31
BNP Leasing Corporation
_______________, 200___
Page 2
existing circumstance or event which, but for the elapse of time or otherwise,
would constitute a default by the undersigned or by NAI under the Agreement.
The undersigned acknowledges and agrees that:
a) BNPLC shall not be liable for, and the undersigned shall not assert,
any claims, demands or liabilities against BNPLC arising under or in any way
relating to the Agreement; provided, this paragraph will not (1) be construed as
a waiver of any statutory mechanic's or materialmen's liens against the
interests of NAI in and to the Land or the improvements thereon that may
otherwise exist or arise in favor of the undersigned, or (2) prohibit the
undersigned from asserting any claims or making demands against BNPLC under the
Agreement if BNPLC elects in writing, pursuant to paragraph b) below, to assume
the Agreement in the event NAI's right to possession of the Land is terminated,
it being understood that in the event of such an assumption BNPLC shall be
liable for the unpaid balance of the fees for services of the undersigned,
payable pursuant to (and subject to the terms and conditions set forth for the
benefit of the owner in) the Agreement, but in no event shall BNPLC otherwise be
personally liable for any acts or omissions on the part of NAI.
b) Upon any termination of NAI's right to possession of the Project
under the Improvements Lease Documents, including any eviction of NAI resulting
from an Event of Default (as defined in the Improvements Lease Documents), BNPLC
shall be entitled (but not obligated), by notice to the undersigned and without
the necessity of the execution of any other document, to assume NAI's rights and
obligations under the Agreement, cure any defaults by NAI thereunder and enforce
the Agreement and all rights of NAI thereunder. Within ten days of receiving
notice from BNPLC that NAI's right to possession has been terminated, the
undersigned shall send to BNPLC a written estoppel letter stating: (i) that the
undersigned has not performed any act or executed any other instrument which
invalidates or modifies the Agreement in whole or in part (or, if so, the nature
of such modification); (ii) that the Agreement is valid and subsisting and in
full force and effect; (iii) that there are no defaults or events of default
then existing under the Agreement and no event has occurred which with the
passage of time or the giving of notice, or both, would constitute such a
default or event of default (or, if there is a default, the nature of such
default in detail); (iv) that the services contemplated by the Agreement are
proceeding in a satisfactory manner in all material respects (or if not, a
detailed description of all significant problems with the progress of services);
(v) a reasonably detailed report of the then critical dates projected by the
undersigned for services required to complete the Project; (vi) the total amount
received by the undersigned for services through the date of the letter; (vii)
the estimated total cost of completing such services as of the date of the
letter, together with a current payment schedule; and (viii) any other
information BNPLC may request to allow it to decide whether to assume the
Agreement. BNPLC shall have seven days from receipt of such written certificate
containing all such requested information to decide whether to assume the
Agreement. If BNPLC fails to assume the Agreement within such time, the
undersigned agrees that BNPLC shall not be liable (and the undersigned shall not
assert or bring any action against BNPLC or, except to enforce statutory lien
rights, if any, of the undersigned
Exhibit D - Page 2
32
BNP Leasing Corporation
_______________, 200___
Page 3
against the Land or improvements on the Land) for any damages or other amounts
resulting from the breach or termination of the Agreement or under any other
theory of liability of any kind or nature, but rather the undersigned shall look
solely to NAI (and statutory lien rights, if any, of the undersigned against the
Land and any improvements thereon) for the recovery of any such damages or other
amounts.
c) If BNPLC notifies the undersigned that BNPLC shall not assume the
Agreement pursuant to the preceding paragraph following the termination of NAI's
right to possession of the Project under the Improvements Lease Documents, the
undersigned shall immediately deliver and assign to BNPLC the following: (1)
copies of all plans and specifications for the Project or any component thereof
previously generated by or delivered to the undersigned, (2) any other contract
documents previously delivered to the undersigned (except that the undersigned
may keep an original set of the Agreement and other contract documents executed
by NAI), (3) any other material relating to the services provided under the
Agreement, and (4) to the extent available to the undersigned all papers and
documents relating to governmental permits, orders placed, bills and invoices,
lien releases and financial management under the Agreement. Notwithstanding the
undersigned's receipt of any notice from BNPLC that BNPLC declines to assume the
Agreement, the undersigned shall for a period not to exceed thirty days after
receipt of such notice take such steps, at BNPLC's expense, as are reasonably
necessary to preserve the utility and value of services completed and in
progress and to protect plans and specifications and other materials described
in the preceding sentence.
d) If the Agreement is terminated by NAI before BNPLC is given the
opportunity to elect whether or not to assume the Agreement as provided herein,
BNPLC shall nonetheless have the right hereunder to assume the Agreement, as if
it had not been terminated, upon any termination of NAI's right to possession of
the Project under the Improvements Lease Documents; provided, however, that if
the services of the undersigned under the Agreement has been disrupted because
of NAI's termination of the Agreement, the undersigned shall be entitled to an
equitable adjustment to the price of the Agreement, following any assumption
thereof by BNPLC, for the additional costs incurred by the undersigned
attributable to the disruption; and, provided further, that if BNPLC does assume
the Agreement, BNPLC shall receive a credit against the price of the Agreement
for any consideration paid to the undersigned by NAI because of NAI's prior
termination of the Agreement (whether such consideration is designated a
termination fee, settlement payment or otherwise).
e) No action taken by BNPLC or the undersigned with respect to the
Agreement shall prejudice any other rights or remedies of BNPLC or the
undersigned provided by law, by the Improvements Lease Documents, by the
Agreement or otherwise against NAI.
f) The undersigned agrees promptly to notify BNPLC of any material
default or claimed material default by NAI under the Agreement of which the
undersigned is aware, describing with particularity the default and the action
the undersigned believes is necessary to cure the same. The undersigned will
send any such notice to BNPLC prominently marked
Exhibit D - Page 3
33
BNP Leasing Corporation
_______________, 200___
Page 4
"URGENT - NOTICE OF NAI'S DEFAULT UNDER DESIGN AGREEMENT WITH NETWORK APPLIANCE,
INC. - SUNNYVALE, CALIFORNIA" at the address specified for notice below (or at
such other addresses as BNPLC shall designate in notice sent to the
undersigned), by certified or registered mail, return receipt requested.
Following receipt of such notice, the undersigned will permit BNPLC or its
designee to cure any such default within the time period reasonably required for
such cure, but in no event less than thirty days.
g) Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery or (b) expedited delivery
service with proof of delivery or (c) United States mail, postage prepaid,
registered or certified mail or (d) telegram, telex or telecopy, addressed as
follows:
To the undersigned:
- ------------------- ------------------------------
------------------------------
------------------------------
Telecopy: (___) ___-_____
To BNPLC: BNP Leasing Corporation
- --------- 12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telecopy: (972) 788-9191
A copy of any such notice or communication will also be sent to NAI by (a)
personal delivery or (b) expedited delivery service with proof of delivery or
(c) United States mail, postage prepaid, registered or certified mail or (d)
telegram, telex or telecopy, addressed as follows:
Network Appliance, Inc.
Attn: Corporate Secretary
2770 San Thomas Expressway
Santa Clara, CA 95051
Telecopy: (___) ___-____
Exhibit D - Page 4
34
BNP Leasing Corporation
_______________, 200___
Page 5
h) The undersigned acknowledges that it has all requisite authority to
execute this letter. The undersigned further acknowledges that BNPLC has
requested this letter, and is relying on the truth and accuracy of the
representations made herein, in connection with BNPLC's decision to advance
funds for design services under the Improvements Lease Documents with NAI.
Very truly yours,
--------------------------------------
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
NAI joins in the execution of this letter solely for the purpose of
evidencing its consent hereto, including its consent to the provisions that
would allow, but not require, BNPLC to assume the Agreement in the event NAI is
evicted from the Project.
Network Appliance, Inc.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
Exhibit D - Page 5
35
Exhibit E
NOTICE REQUESTING ADVANCE TO COVER PROPERTY INSURANCE DEDUCTIBLE
BNP Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Construction Management Agreement (Phase V - Improvements) dated
as of March 1, 2000 (the "CONSTRUCTION MANAGEMENT AGREEMENT"),
between Network Appliance, Inc. ("NAI") and BNP Leasing
Corporation ("BNPLC")
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Management Agreement or in the Common
Definitions and Provisions Agreement (Phase V - Improvements) referenced in the
Construction Management Agreement. This letter shall constitute a request made
pursuant to subparagraph 2(A) of the Construction Management Agreement for a
final additional Construction Advance in the form of an addition to Escrowed
Proceeds equal to:
$______________________,
on the Base Rent Commencement Date, which will occur on:
______________, 200_.
To induce BNPLC to make such Construction Advance, NAI represents and
warrants as follows: (x) the dollar amount specified above equals the property
insurance deductible permitted under the insurance requirements set forth in the
Lease, (y) a Pre-commencement Casualty has resulted in damage to the
Improvements, for which the cost of repairs will because of such deductible -
exceed the Escrowed Proceeds paid or payable in connection with such damage
under the property insurance maintained by NAI in accordance with the insurance
requirements in the Improvements Lease, and (z) NAI has not and will not
otherwise receive a Construction Advance to reimburse such excess costs prior to
the expiration of BNPLC's obligation to make further Construction Advances as
provided in subparagraph 2(C)(3) of the Construction Management Agreement.
NAI ACKNOWLEDGES THAT IF ANY REPRESENTATION ABOVE IS NOT TRUE, THEN NAI'S
OBLIGATION TO INDEMNIFY AGAINST LOSSES SUSTAINED BY BNPLC OR ANY OTHER
INTERESTED PARTY BECAUSE OF ITS RELIANCE ON THIS LETTER SHALL CONSTITUTE
ABSOLUTE NAI CONSTRUCTION OBLIGATIONS UNDER THE CONSTRUCTION MANAGEMENT
AGREEMENT AND THE IMPROVEMENTS LEASE.
36
Executed this _____ day of ______________, 20___.
NETWORK APPLIANCE, INC.
Name:
---------------------------------
Title:
--------------------------------
[cc all Participants]
Exhibit E - Page 2
37
Exhibit F
CONSTRUCTION ADVANCE REQUEST FORM
BNP Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Construction Management Agreement (Phase V - Improvements) dated
as of March 1, 2000 (the "CONSTRUCTION MANAGEMENT AGREEMENT"),
between Network Appliance, Inc. ("NAI") and BNP Leasing
Corporation ("BNPLC")
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Management Agreement or in the Common
Definitions and Provisions Agreement (Phase V - Improvements) referenced in the
Construction Management Agreement. This letter shall constitute a Construction
Advance Request, requesting a Construction Advance of:
$_____________________,
on the Advance Date that will occur on:
___________, 200 .
Such total amount can be properly allocated between what we call "Building 4"
and "Building 5" as follows:
Building 4.................................................... $_____________
Building 5.................................................... $_____________
Total (as set forth above)....... $_____________
To induce BNPLC to make such Construction Advance, NAI represents and
warrants as follows:
I. CALCULATION OF LIMIT IMPOSED BY SUBPARAGRAPH 2(C)(2)(b) OF THE
CONSTRUCTION MANAGEMENT AGREEMENT:
(1) NAI has paid or incurred bona fide Reimbursable Construction-Period Costs
other than for Work (e.g., property taxes) of no less than.............. $____________
38
(2) NAI has paid or incurred bona fide Reimbursable Construction-Period Costs
for Prior Work of no less than.......................................... $____________
(3) NAI has received prior Construction Advances of no more than........ $____________
LIMIT (1 + 2 - 3)...................................... $____________
II. PROJECTED COST OVERRUNS:
NAI [CHECK ONE: _ DOES / _ DOES NOT ] believe that Projected Construction
Overruns are more likely than not. [If NAI does believe that Projected Cost
Overruns are more likely than not, and if NAI believes that the amount of such
Projected Construction Overruns can be reasonably estimated, NAI estimates the
same at $___________.]
NOTE: The Construction Management Agreement defines Projected
Construction Overruns as the excess, if any, of (1) the total of
projected Reimbursable Construction-Period Costs yet to be incurred or
for which NAI has yet to be reimbursed hereunder (including projected
Reimbursable Construction-Period Costs for Future Work), over (2) the
balance of the remaining Construction Allowance projected to be
available to cover such costs.
III. ABSENCE OF CERTAIN CMA SUSPENSION EVENTS:
A. The Construction Project is progressing without significant
interruption in a good and workmanlike manner and substantially in accordance
with Applicable Laws, with Permitted Encumbrances, with Development Documents
and with the requirements of the Construction Management Agreement, except as
follows: (IF THERE ARE NO EXCEPTIONS, INSERT "NO EXCEPTIONS")
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B. If NAI has received notice of any Defective Work, NAI has promptly
corrected or is diligently pursuing the correction of such Defective Work,
except as follows: (IF THERE ARE NO EXCEPTIONS, INSERT "NO EXCEPTIONS")
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NAI ACKNOWLEDGES THAT IF ANY REPRESENTATION ABOVE IS NOT TRUE, THEN NAI'S
OBLIGATION TO INDEMNIFY AGAINST LOSSES SUSTAINED BY BNPLC OR ANY OTHER
INTERESTED PARTY BECAUSE OF ITS RELIANCE ON THIS LETTER SHALL CONSTITUTE
ABSOLUTE NAI CONSTRUCTION
Exhibit F - Page 2
39
OBLIGATIONS UNDER THE CONSTRUCTION MANAGEMENT AGREEMENT AND THE IMPROVEMENTS
LEASE.
Executed this _____ day of ______________, 20___.
NETWORK APPLIANCE, INC.
Name:
--------------------------------
Title:
-------------------------------
[cc all Participants]
Exhibit F - Page 3
40
Exhibit G
NOTICE OF VOLUNTARY NAI CONSTRUCTION CONTRIBUTION
BNP Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Construction Management Agreement (Phase V - Improvements) dated
as of March 1, 2000 (the "CONSTRUCTION MANAGEMENT AGREEMENT"),
between Network Appliance, Inc. ("NAI") and BNP Leasing
Corporation ("BNPLC")
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Management Agreement or in the Common
Definitions and Provisions Agreement (Phase V - Improvements) referenced in the
Construction Management Agreement. This letter shall constitute notice, given as
described in subparagraph 4(C) of the Construction Management Agreement, that
NAI is paying with this letter, or unconditionally and irrevocably committing to
pay as described below, a Voluntary NAI Construction Contribution in the amount
of $_____________________.
Such payment by NAI will be in addition to any Voluntary NAI
Construction Contributions required by other notices given by NAI as described
in subparagraph 4(C) of the Construction Management Agreement.
Further, if the Voluntary NAI Construction Contribution required by this
letter is not being delivered to BNPLC by NAI contemporaneously with this
letter, then at such time as BNPLC's obligation to fund additional Construction
Advances is excused by any of the terms and conditions set forth in the
Construction Management Agreement, NAI shall be obligated to deliver such
Voluntary NAI Construction Contribution as required to eliminate (or reduce to
the maximum extent possible) Projected Cost Overruns, including any Projected
Cost Overruns caused by the accrual of Carrying Costs under and as described in
the Improvements Lease referenced in the Construction Management Agreement.
Executed this _____ day of ______________, 20___.
NETWORK APPLIANCE, INC.
Name:
--------------------------------
Title:
-------------------------------
[cc all Participants]
41
Exhibit H
PREEMPTIVE NOTICE BY NAI
BNP Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Construction Management Agreement (Phase V - Improvements) dated
as of March 1, 2000 (the "CONSTRUCTION MANAGEMENT AGREEMENT"),
between Network Appliance, Inc. ("NAI") and BNP Leasing
Corporation ("BNPLC")
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Management Agreement or in the Common
Definitions and Provisions Agreement (Phase V - Improvements) referenced in the
Construction Management Agreement. This letter is intended to constitute a
Preemptive Notice, given as described in subparagraph 5(B) of the Construction
Management Agreement. As provided in clause (2) of the definition of Designated
Sale Date in the Common Definitions and Provisions Agreement (Phase V -
Improvements), this letter shall constitute notice, given in accordance with
clause (2) of the definition of Common Definitions and Provisions Agreement
(Phase V - Improvements), that NAI designates the following date as the
Designated Sale Date:
----------------, ----.
NAI acknowledges, however, that this notice will not be effective as a
Preemptive Notice if (1) such date is sooner than thirty days after the date of
this notice or later than ninety days after the date of any FOCB Notice
previously given by BNPLC under the Construction Management Agreement, or (2)
NAI has previously made any Issue 97-10 Election.
NAI hereby unconditionally, unequivocally and irrevocably: (1) waives
any right to make any Issue 97-10 Election under any of the Operative Documents,
and (2) acknowledges and agrees that for purposes of calculating the
Supplemental Payment required by the Purchase Agreement, the Maximum Remarketing
Obligation will equal the Break Even Price under the Purchase Agreement.
Executed this _____ day of ______________, 20___.
NETWORK APPLIANCE, INC.
Name:
--------------------------------
Title:
-------------------------------
[cc all Participants]
42
Exhibit I
NOTICE OF TERMINATION BY NAI
BNP Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Re: Construction Management Agreement (Phase V - Improvements) dated
as of March 1, 2000 (the "CONSTRUCTION MANAGEMENT AGREEMENT"),
between Network Appliance, Inc. ("NAI") and BNP Leasing
Corporation ("BNPLC")
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Management Agreement referenced above or in
the Common Definitions and Provisions Agreement (Phase V - Improvements)
referenced in the Construction Management Agreement.
NAI has determined that (1) the Construction Advances to be provided to
it under the Construction Management Agreement will not be sufficient to cover
all Construction-Period Reimbursable Costs, whether because the cost of the Work
exceeds budgeted expectations (resulting in Projected Cost Overruns) or because
NAI can no longer satisfy conditions to BNPLC's obligation to provide
Construction Advances in the Construction Management Agreement, or (2) the
Construction Project cannot be substantially completed before the Base Rent
Commencement Date for reasons other than a breach by NAI of the Construction
Management Agreement. Accordingly, this letter shall constitute a Notice of
NAI's Election to Terminate the Construction Management Agreement, given as
provided in subparagraph 5(D) of the Construction Management Agreement.
NAI irrevocably and unconditionally elects to terminate the Construction
Management Agreement effective as of the following date (which, as required by
subparagraph 5(D) thereof is a date not less than thirty days after the date
this notice is given):
_________, 200__
NAI ACKNOWLEDGES THAT THE ELECTION MADE BY NAI DESCRIBED ABOVE
CONSTITUTES AN ISSUE 97-10 ELECTION UNDER AND AS DEFINED IN THE OPERATIVE
DOCUMENTS.
Executed this _____ day of ______________, 20___.
NETWORK APPLIANCE, INC.
Name:
--------------------------------
Title:
-------------------------------
[cc all Participants]
1
EXHIBIT 10.65
================================================================================
$51,000,000
PARTICIPATION AGREEMENT
PHASE V
BETWEEN
BNP LEASING CORPORATION
("BNPLC")
AND
BANQUE NATIONALE DE PARIS
(A "PARTICIPANT")
EFFECTIVE AS OF MARCH 1, 2000
(NETWORK APPLIANCE, INC. - PHASE V)
(SUNNYVALE, SANTA CLARA COUNTY, CALIFORNIA PROPERTY)
================================================================================
2
TABLE of CONTENTS
PAGE
----
1. Definitions..........................................................................1
1.1 "Back to Back Construction-Period Indemnity Claim"............................2
1.2 "Back to Back Construction-Period Indemnity Payment"..........................2
1.3 "Bank Specific Charges".......................................................2
1.4 "Common Definitions and Provisions Agreements"................................2
1.5 "Critical Event"..............................................................2
1.6 "Deferred Construction-Period Indemnity Payments".............................2
1.7 "Deposit Taker"...............................................................3
1.8 "Deposit Taker Losses"........................................................3
1.9 "Direct Payments".............................................................3
1.10 "Defaulting Participant"......................................................3
1.11 "Distributable Payment".......................................................3
1.12 "Excess Participation Amount".................................................3
1.13 "Late Payment Rate"...........................................................3
1.14 "Leases"......................................................................3
1.15 "Majority"....................................................................4
1.16 "Net Cash Flow"...............................................................4
1.17 "Net Sales Proceeds"..........................................................4
1.18 "Operative Documents".........................................................4
1.19 "Participants"................................................................5
1.20 "Participation Agreement Supplement"..........................................5
1.21 "Participation Amount"........................................................5
1.22 "Percentage"..................................................................5
1.23 "Pledge Agreements"...........................................................5
1.24 "Property"....................................................................5
1.25 "Protective Advances".........................................................5
1.26 "Purchase Agreements".........................................................6
1.27 "Uncovered Construction-Period Participant Loss"..............................6
2. Payments From BNPLC to Each Participant..............................................6
2.1 Payments Computed by Reference to Net Cash Flow and Net Sales Proceeds........6
2.2 Payments Computed by Reference to Bank Specific Charges.......................6
2.3 Payments Computed by Reference to Back to Back Construction-Period
Indemnity Payments............................................................6
2.4 Payments Computed by Reference to Deferred Construction-Period
Indemnity Payments............................................................7
2.5 Timing; Manner of Payment.....................................................7
2.6 Meaning of Actually Received..................................................7
(i)
3
3. Payments from the Participants to BNPLC..............................................8
3.1 Initial Funding Advance.......................................................8
3.2 Future Construction Advances..................................................8
3.3 Protective Advances...........................................................9
3.4 Method of Payment.............................................................9
4. Other Adjustments, Deductions and Investments.......................................10
4.1 Other Adjustments to Percentages.............................................10
4.2 Setoff.......................................................................11
4.3 Application of Payments Received from a Defaulting Participant as Cure
for Payment Defaults.........................................................11
4.4 Sharing of Payments..........................................................11
4.5 Withholding Taxes............................................................12
4.6 Order of Application.........................................................12
4.7 Investments Pending Dispute Resolution; Overnight Investments................12
5. Nature of This Agreement............................................................13
5.1 No Conveyance................................................................13
5.2 Not a Partnership, Etc.......................................................13
6. Amendments; Waivers; Exercise of Rights and Remedies Against NAI....................14
6.1 Limitations..................................................................14
6.2 General......................................................................16
6.3 Conflicts and Purchase Agreements Defaults...................................16
6.4 Refusal to Give Consents; Failure to Fund; Failure of a Deposit Taker
to Satisfy Minimum Ratings...................................................17
7. Required Repayments.................................................................17
8. NAI Information; Independent Analysis...............................................17
9. Performance Through Representatives.................................................18
10. Duty of Care........................................................................18
11. Representations by Each Participant.................................................19
11.1 Nature of this Agreement.....................................................19
11.2 No Default or Violation......................................................19
11.3 No Suits.....................................................................19
11.4 Organization.................................................................19
11.5 Enforceability...............................................................19
11.6 No Funding with Plan Assets..................................................19
12. Representations by BNPLC............................................................19
12.1 No Default or Violation......................................................19
12.2 No Suits.....................................................................20
12.3 Organization.................................................................20
12.4 Enforceability...............................................................20
(ii)
4
12.5 Liens Removable by BNPLC.....................................................20
12.6 BNPLC's Status as a Subsidiary of a Bank Holding Company.....................20
13. Assignments.........................................................................20
13.1 By the Participants Generally................................................20
13.2 By BNPLC.....................................................................21
13.3 Execution of Participation Agreement Supplements.............................21
13.4 Regulation A.................................................................21
13.5 Costs........................................................................21
14. GOVERNING LAW; SUBMISSION TO PROCESS; WAIVER of JURY TRIAL..........................21
15. Termination.........................................................................22
16. Miscellaneous.......................................................................22
16.1 Reliance by Others...........................................................22
16.2 Waivers, Etc.................................................................23
16.3 Severability.................................................................23
16.4 Notices......................................................................23
16.5 Construction.................................................................23
16.6 Headings.....................................................................24
16.7 Entire Agreement.............................................................24
16.8 Further Assurances...........................................................24
16.9 Impairment of Operative Documents............................................24
16.10 Books and Records............................................................24
16.11 Definition of Knowledge......................................................24
16.12 Attorneys' Fees..............................................................25
EXHIBITS AND SCHEDULES
Schedule 1...................................Names and Addresses of Participants
Exhibit A.................................Examples of Adjustments to Percentages
Exhibit B................................Participation Agreement Supplement Form
(iii)
5
PARTICIPATION AGREEMENT
This Agreement (this "Agreement") is made as of March 1, 2000, by and
between BNP LEASING CORPORATION ("BNPLC"), a Delaware corporation, and the
Participants (as defined below).
RECITALS:
A. BNPLC and Network Appliance, Inc. ("NAI") have entered into the
following agreements, each dated as of March 1, 2000, relating to the
Improvements: a Lease Agreement (Phase V - Improvements) (the "PHASE V
IMPROVEMENTS LEASE"); a Purchase Agreement (Phase V Improvements) (the "PHASE V
IMPROVEMENTS PURCHASE AGREEMENT"); a Common Definitions and Provisions Agreement
(Phase V - Improvements) (the "PHASE V IMPROVEMENTS CDPA"); a Construction
Management Agreement (the "Construction Management Agreement"); and a Closing
Certificate and Agreement (the "CLOSING CERTIFICATE"). Also, BNPLC, NAI, the
Participants and Banque Nationale de Paris, in its capacity as agent for BNPLC
and the Participants (in such capacity, "AGENT") have entered into a Pledge
Agreement (Phase V - Improvements) dated as of March 1, 2000 (the "PHASE V
IMPROVEMENTS PLEDGE AGREEMENT").
B. NPLC and NAI have also entered into the following agreements,
each dated as of March 1, 2000, relating to the Land: a Lease Agreement (Phase V
- - Land) (the "PHASE V LAND LEASE"); a Purchase Agreement (Phase V - Land) (the
"PHASE V LAND PURCHASE AGREEMENT"); a Common Definitions and Provisions
Agreement (Phase V - Land) (the "PHASE V LAND CDPA"); and the Closing
Certificate. Also, BNPLC, NAI, the Participants and Agent have entered into a
Pledge Agreement (Phase V - Land) dated as of March 1, 2000 (the "PHASE V LAND
PLEDGE AGREEMENT").
C. By this Agreement, the parties desire to evidence the Participants'
agreement to participate with BNPLC in certain of the risks and rewards to BNPLC
of the aforementioned agreements, which participation is to be accomplished
through the exchange of promises to make payments computed by reference to the
sums paid or received by BNPLC from time to time with respect to the
aforementioned agreements, all as more particularly provided below.
AGREEMENTS
NOW, THEREFORE, BNPLC and the Participants hereby agree as follows:
1. DEFINITIONS. As used herein, capitalized terms defined above shall
have the meanings assigned to them above; capitalized terms that are defined in
one, but not both, of the Phase V Improvements CDPA and the Phase V Land CDPA
and that are used but not defined herein shall have the respective meanings
assigned to them in the Phase V Improvements CDPA or Phase V Land CDPA, as
applicable; capitalized terms that are defined in both of the Phase V
Improvements CDPA and the Phase V Land CDPA and that are and used but not
defined herein shall have the respective meanings assigned to them in the Phase
V Improvements CDPA and the Phase V Land CDPA (provided, if the meaning assigned
to any such capitalized term in the Phase V Improvements CDPA is different than
the meaning assigned to it in the Phase V Land CDPA, the term will be construed
broadly for purposes of this Agreement to include anything
1.
6
that would fall within one or both of the definitions of the term in the Phase V
Improvements CDPA and the Phase V Land CDPA); and, the following capitalized
terms shall have the following meanings:
1.1 "BACK TO BACK CONSTRUCTION-PERIOD INDEMNITY CLAIM" means a
claim by BNPLC against NAI for payment of an Absolute NAI Construction
Obligation that is required to cover or reimburse a Loss (1) for which BNPLC is
obligated to another Interested Party (including a Loss that consists of a
Participant's claim made against BNPLC pursuant to Section 2.3 for compensation
for an Uncovered Construction-Period Participant Loss), and (2) which BNPLC
would not have incurred or suffered but for (A) any act or any omission of NAI
or of any of NAI's contractors or subcontractors during the period that the
Construction Management Agreement remains in force or during any other period
that NAI remains in possession or control of the Construction Project, (B) any
fraud, misapplication of funds (including Construction Advances), illegal acts,
or willful misconduct on the part of the NAI or its employees or agents or any
other party for whom NAI is responsible, or (C) any bankruptcy proceeding
involving NAI.
1.2 "BACK TO BACK CONSTRUCTION-PERIOD INDEMNITY PAYMENT" means a
payment made to BNPLC by or on behalf of NAI in satisfaction of a Back to Back
Construction-Period Indemnity Claim.
1.3 "BANK SPECIFIC CHARGES" means payments made to BNPLC by or on
behalf of NAI for the account of a Participant or any other Interested Party
under subparagraph 5(c)(i) or 5(c)(ii) of the Leases or as Upfront Syndication
Fees. Bank Specific Charges include, for example, payments made to compensate a
Participant for an increase in costs related to advances made by the Participant
hereunder and attributable to a Banking Rules Change after the Effective Date.
1.4 "COMMON DEFINITIONS AND PROVISIONS AGREEMENTS" means the
Phase V Improvements CDPA and the Phase V Land CDPA.
1.5 "CRITICAL EVENT" means any of the following:
1.5.1 any failure by NAI to purchase BNPLC's interest in
the Property or to cause an Applicable Purchaser to purchase BNPLC's interest in
the Property when required under the Purchase Agreements;
1.5.2 any failure by NAI to pay Base Rent which continues
for 10 days;
1.5.3 any Issue 97-10 Election; or
1.5.4 any CMA Termination Event.
1.6 "DEFERRED CONSTRUCTION-PERIOD INDEMNITY PAYMENTS" means
payments made to BNPLC pursuant to the Purchase Agreements because of any
"Balance of Unpaid Construction-Period Indemnity Payments" as defined in
subparagraph 1(A)(1) thereof. For purposes of the preceding sentence, payments
to BNPLC under the Purchase Agreements will be considered as made "because of
the Balance of Unpaid Construction-Period Indemnity
2.
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Payments" to the extent, but only to the extent, if any, that the total payments
received and retained by BNPLC on or after the Designated Sale Date pursuant to
the Purchase Agreements exceed the payments to which BNPLC would be entitled if
no Balance of Unpaid Construction-Period Indemnity Payments existed on the
Designated Sale Date.
1.7 "DEPOSIT TAKER" shall have the meaning assigned to it in the
Pledge Agreements.
1.8 "DEPOSIT TAKER LOSSES" shall have the meaning assigned to it
in the Pledge Agreements.
1.9 "DIRECT PAYMENTS", like the phrase "Direct Payments to
Participants" under the Purchase Agreements, means the amounts paid or required
to be paid directly to Participants on the Designated Sale Date as provided in
Section 6.2 of the Pledge Agreements at the direction of and for NAI by Agent
from all or any part of the Collateral described therein.
1.10 "DEFAULTING PARTICIPANT" means any Participant that shall
have failed to make a payment when due to BNPLC equal to the Participant's
Percentage of a Construction Advance as required by Section 3.2 below.
1.11 "DISTRIBUTABLE PAYMENT" means any payment actually received
by BNPLC under the Leases or other Operative Documents as (or in satisfaction of
NAI's obligations for) any of the following or interest on past due amounts
thereof: Base Rent; Commitment Fees; Qualified Prepayments (including Issue
97-10 Prepayments); Bank Specific Charges; Back to Back Construction-Period
Indemnity Payments; a Supplemental Payment; Net Sales Proceeds; or any Deferred
Construction-Period Indemnity Payment.
1.12 "EXCESS PARTICIPATION AMOUNT" of BNPLC or any Participant
means the excess (if any) of the Participation Amount of such Person from time
to time over the amount that would have been such Person's Participation Amount
if, in connection with all Construction Advances actually made under the
Construction Management Agreement or the Leases, all Participants had paid to
BNPLC an amount equal to such Construction Advances times their respective
Percentages, as such excess may be determined by BNPLC in a manner consistent
with the examples set forth in Exhibit A. Absent a failure by any Participant to
make a payment required by Section 3.2 or some other unexpected contingency, it
is expected that BNPLC and the Participants will have no Excess Participation
Amount.
1.13 "LATE PAYMENT RATE" means (a) for each day (other than as
set forth in clause (b) of this sentence) the Fed Funds Rate or (b) for the
purpose of computing interest on past due payments for each day following the
fifth day after such payments first became due, a rate of two percent (2%) per
annum in excess of the Prime Rate then in effect; provided, the Late Payment
Rate shall not, notwithstanding anything to the contrary herein contained,
exceed the maximum rate of interest permitted by applicable law.
1.14 "LEASES" means the Phase V Improvements Lease and the Phase
V Land Lease.
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1.15 "MAJORITY" means, at the time any determination thereof is
required, any of the Participants and BNPLC, the aggregate Percentages of which
equal or exceed sixty-seven percent (67%) of the Percentages of BNPLC and of all
the Participants then entitled to vote under Section 6.1.
1.16 "NET CASH FLOW" means payments made to BNPLC under the
Leases or other Operative Documents as (or in satisfaction of NAI's obligations
for) Base Rent, Commitment Fees, Qualified Prepayments (including Issue 97-10
Prepayments), any Supplemental Payment or any interest on past due Base Rent,
Qualified Prepayments (including Voluntary NAI Construction Contributions and
Issue 97-10 Prepayments) or a Supplemental Payment; provided, however, no
Deferred Construction-Period Indemnity Payments included in any Supplemental
Payment or interest thereon will constitute Net Cash Flow for purposes of this
Agreement.
1.17 "NET SALES PROCEEDS" means payments made to BNPLC under the
Purchase Agreements as (or in satisfaction of NAI's or an Applicable Purchaser's
obligations for) the purchase price for BNPLC's interest in Property or in
Escrowed Proceeds; but less and excluding (x) any such payments applied by BNPLC
to pay, or received by BNPLC as reimbursement for, bona fide costs of a sale
under the Purchase Agreements, (y) any Deferred Construction-Period Indemnity
Payments and (z) any excess sales proceeds received from an Applicable Purchaser
that BNPLC is required by Paragraph 1(A)(2)(b) or 2(D) of the Purchase
Agreements to pay over to NAI. Further, if BNPLC does not sell the Property to
NAI or an Applicable Purchaser pursuant to the Purchase Agreements, then "NET
SALES PROCEEDS" shall also include the excess, if any, of:
1.17.1 all rents and sales, condemnation and insurance
proceeds ACTUALLY RECEIVED by BNPLC (other than sales proceeds paid or to be
paid by BNPLC to NAI pursuant to Paragraph 2(D) of the Purchase Agreements) from
any sale or lease after the Designated Sale Date of any interest in, or because
of any subsequent taking or damage to, the Property; over
1.17.2 the sum of (i) all costs of collecting the rents
and proceeds described in the preceding clause 1.17.1, plus (ii) all ad valorem
taxes, insurance premiums and other Losses of every kind suffered or incurred by
BNPLC with respect to the ownership, operation or maintenance of the Property.
However, for purposes of computing any excess described in the preceding
sentence, costs described in clause 1.17.2 shall not include BNPLC's general
overhead costs or any Protective Advances for which the Participants have
already paid BNPLC their respective Percentages thereof as required by Section
3.3.
1.18 "OPERATIVE DOCUMENTS" means all of Operative Documents under
and as defined in the Phase V Improvements CDPA and Operative Documents under
and as defined in the Phase V Land CDPA. The term Operative Documents includes
the Phase V Improvements Lease, the Phase V Improvements Purchase Agreement, the
Phase V Improvements Pledge Agreement, the Phase V Improvements CDPA, the
Construction Management Agreement, the Closing Certificate, the Phase V Land
Lease, the Phase V Land Purchase Agreement, the Phase V Land Pledge Agreement,
and the Phase V Land CDPA.
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1.19 "PARTICIPANTS" means Banque Nationale de Paris and any other
financial institutions which may hereafter become parties to (i) this Agreement
(by joining with BNPLC in completing and executing a Participation Agreement
Supplement) and (ii) the Pledge Agreements, in each case pursuant to a Permitted
Transfer.
1.20 "PARTICIPATION AGREEMENT SUPPLEMENT" means a Participation
Agreement Supplement in substantially the form attached hereto as Exhibit B,
completed and executed by BNPLC and a Participant, adding the Participant as a
party to this Agreement, changing a Participant's Percentage or removing a
Participant as a party to this Agreement.
1.21 "PARTICIPATION AMOUNT" of BNPLC or any Participant means the
outstanding balance from time to time of the total investment made by BNPLC
under the Operative Documents or by the applicable Participant hereunder, as
determined by BNPLC in a manner consistent with the examples set forth in
Exhibit A. As the examples in Exhibit A illustrate, the Participation Amount of
BNPLC and each Participant will be comparable to its share of the outstanding
principal balance that would be due from NAI from time to time if BNPLC had made
a loan (and the Participants had participated in the loan) to NAI for NAI's
acquisition of the Land and construction of improvements authorized by the
Construction Management Agreement and Leases, instead of BNPLC's having acquired
the Property itself and having leased the same to NAI as provided in the
Operative Documents. Absent a failure by any Participant to make a payment
required by Section 3.2 or some other unexpected contingency, it is expected
that (a) the Participation Amounts of BNPLC and the Participants will always be
in proportion to their respective Percentages set forth in Schedule 1, and (b)
the total Participation Amounts of BNPLC and all Participants during the Term of
the Leases shall equal the Stipulated Loss Value computed from time to time
under the Leases.
1.22 "PERCENTAGE" of each Participant means, subject to change as
provided in Section 4.1 and to change by a Participation Agreement Supplement,
the percentage designated as the Participant's "Percentage" in SCHEDULE 1.
"PERCENTAGE" of BNPLC means a percentage that, at the time a determination of
such Percentage is required hereunder, is equal to 100% less the sum of the
Percentages of all the Participants.
1.23 "PLEDGE AGREEMENTS" means the Phase V Improvements Pledge
Agreement and the Phase V Land Pledge Agreement.
1.24 "PROPERTY" means all real and personal property covered from
time to time by the Phase V Improvements Lease and the Phase V Land Lease.
1.25 "PROTECTIVE ADVANCES" shall mean any payments (including
payments to attorneys, accountants, experts and other advisors) made by or on
behalf of BNPLC at any time or from time to time because of, arising out of or
related to, in whole or in part: (1) the Property or the protection,
preservation, operation or ownership thereof; (2) any of the Operative Documents
or the transactions contemplated therein; or (3) BNPLC's status as a party to
any of the Operative Documents or anything done by BNPLC to enforce the
obligations of NAI under the Operative Documents (whether done upon BNPLC's own
initiative or upon the direction of the Majority). Protective Advances will
include any and all payments made by or on behalf of
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BNPLC for which NAI is obligated to indemnify or reimburse BNPLC by Paragraph
5(c) of the Leases.
1.26 "PURCHASE AGREEMENTS" means the Phase V Improvements
Purchase Agreement and, from and the Phase V Land Purchase Agreement.
1.27 "UNCOVERED CONSTRUCTION-PERIOD PARTICIPANT LOSS" means a
Loss incurred or suffered by a Participant (1) that the Participant would not
have incurred or suffered but for (A) any act or any omission of NAI or of any
NAI's contractors or subcontractors during the period that the Construction
Management Agreement remains in force or during any other period that NAI
remains in possession or control of the Construction Project, (B) any fraud,
misapplication of funds (including Construction Advances), illegal acts, or
willful misconduct on the part of the NAI or its employees or agents or any
other party for whom NAI is responsible, or (C) any bankruptcy proceeding
involving NAI, (2) for which the Leases would obligate NAI to make a
Construction-Period Indemnity Payment directly to the Participant, if not for
NAI's right to decline to pay as described in subparagraph 5(e)(ii)a) of the
Leases, and (3) for which the Participant is not otherwise indemnified directly
by or compensated by NAI or by insurance maintained by NAI.
2. PAYMENTS FROM BNPLC TO EACH PARTICIPANT.
2.1 PAYMENTS COMPUTED BY REFERENCE TO NET CASH FLOW AND NET SALES
PROCEEDS. Upon the ACTUAL RECEIPT of any Net Cash Flow, Net Sales Proceeds or
interest thereon, BNPLC will pay each Participant an amount equal to such
Participant's Percentage times such Net Cash Flow, Net Sales Proceeds or
interest, as the case may be.
2.2 PAYMENTS COMPUTED BY REFERENCE TO BANK SPECIFIC CHARGES. If
BNPLC ACTUALLY RECEIVES any Bank Specific Charges (or interest thereon) for the
account of a particular Participant, then BNPLC promises to promptly make a
payment to such Participant equal to such Bank Specific Charges (or interest
thereon). If requested by any Participant, BNPLC shall make a demand upon NAI
for payment of any Bank Specific Charges due for the account of such
Participant.
2.3 PAYMENTS COMPUTED BY REFERENCE TO BACK TO BACK
CONSTRUCTION-PERIOD INDEMNITY PAYMENTS. If BNPLC actually receives any Back to
Back Construction-Period Indemnity Payment (or interest thereon) in satisfaction
of a Back to Back Construction-Period Indemnity Claim asserted for Losses for
which BNPLC is obligated to a particular Participant, then BNPLC promises to
make a payment to such Participant equal to such Back to Back
Construction-Period Indemnity Payment (or interest thereon). If a Participant
incurs or suffers an Uncovered Construction-Period Participant Loss, BNPLC shall
be obligated to compensate such Participant for the Uncovered
Construction-Period Participant Loss; provided, however, that BNPLC's obligation
to so compensate a Participant shall be satisfied only from any Back to Back
Construction-Period Indemnity Payments received by BNPLC on account of such
obligation, it being understood that BNPLC shall have no personal liability for
any such obligation.
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2.4 PAYMENTS COMPUTED BY REFERENCE TO DEFERRED
CONSTRUCTION-PERIOD INDEMNITY PAYMENTS. If BNPLC actually receives any Deferred
Construction-Period Indemnity Payments, BNPLC promises to make a payment equal
to a fraction thereof to any Participant that (1) has been denied a
Construction-Period Indemnity Payment under the Leases because of NAI's right to
decline to make such payment as provided in subparagraph 5(e)(ii)a) of the
Leases, and (2) has not been compensated for the Construction-Period Indemnity
Payment so denied through payments received from BNPLC pursuant to Section 2.3.
The numerator of the fraction shall equal the total of such Construction-Period
Indemnity Payments denied to the Participant, for which the Participant has not
been compensated pursuant to Section 2.3, and the interest thereon that are
included in the Balance of Unpaid Construction-Period Indemnity Payments. The
denominator of the fraction shall equal the total Balance of Unpaid
Construction-Period Indemnity Payments.
2.5 TIMING; MANNER OF PAYMENT. Each payment required of BNPLC by
this Article 2 shall be made prior to 12:00 noon, San Francisco time, on the
same day that BNPLC actually receives the corresponding Distributable Payment
(in good funds), if BNPLC's receipt of the corresponding Distributable Payment
occurs prior to 12:00 noon, San Francisco time; if, however, BNPLC's receipt of
the Distributable Payment (in good funds) occurs on any day after 12:00 noon,
San Francisco time, the payments required from BNPLC to the Participants shall
not be due until 12:00 noon, San Francisco time, on the next Business Day. All
payments from BNPLC to the Participants shall be by transfer of federal funds
pursuant to the wiring instructions set forth in SCHEDULE 1. Each payment owing
to a Participant by BNPLC shall bear interest from the date it is due until it
is paid by BNPLC at the Late Payment Rate calculated on the basis of a 360-day
year. Any payment by BNPLC to a Participant after the time of day specified
herein for such payment shall be deemed not paid until the next following
Business Day for purposes of this Agreement.
2.6 MEANING OF ACTUALLY RECEIVED. As used herein with respect to
payments, "actually received" and words of like effect shall include not only
payments made directly from NAI or any Applicable Purchaser, but also amounts
paid by others on NAI's behalf, amounts realized by way of setoff, amounts
realized upon the disposition of collateral under the Pledge Agreement and any
other documents that may be given from time to time to secure NAI's obligations
under Leases or Purchase Agreements (net of the costs of disposition and further
net of any amounts that must be returned to NAI or any third party having an
interest in such collateral), and the fair market value of any property or
services accepted in lieu of a cash payment (though it is understood that
nothing herein contained shall require BNPLC to accept property or services in
lieu of a cash payment required by the Operative Documents and that BNPLC will
not agree to accept property or services in lieu of any cash Distributable
Payment without the Participants' prior written consent). Such phrase shall not,
however, include amounts received by BNPLC from any of the Participants or from
any affiliate of BNPLC unless the context otherwise indicates. In the event of
any reduction in Net Sales Proceeds "actually received" by BNPLC (as described
in the preceding sentences) because of a reduction in the Break Even Price
attributable to any Direct Payments or Deposit Taker Losses, BNPLC will be
deemed for purposes of this Agreement to have received additional Net Sales
Proceeds from NAI equal to such reduction. In such event, however, BNPLC will be
entitled to a credit against the payments that would otherwise be required to
any Participant hereunder equal to the aggregate
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amount, if any, of (1) Direct Payments which are actually received by such
Participant, and (2) Deposit Taker Losses with respect to any Deposit Taker for
such Participant.
3. PAYMENTS FROM THE PARTICIPANTS TO BNPLC.
3.1 INITIAL FUNDING ADVANCE. Each of the original Participants
joining in the execution of this Agreement promises to pay to BNPLC an initial
payment as set forth below such Participant's name on SCHEDULE 1, equal to the
Participant's Percentage times the sum of the Initial Funding Advances under and
as defined in the Leases. BNPLC shall have no obligation hereunder to any of the
original Participants that fails to pay such initial payment. Such initial
payment shall be due no later than 12:00 noon, San Francisco time, on the date
hereof.
3.2 FUTURE CONSTRUCTION ADVANCES.
3.2.1 GENERAL. Subject to the limitation set forth in
Section 3.2.3, each Participant promises to make payments to BNPLC equal to such
Participant's Percentage (as such Percentage may be adjusted from time to time
pursuant to Section 4.1) times the total amount of each Construction Advance
required of BNPLC by the Construction Management Agreement after the date
hereof.
3.2.2 TIMING. Before 12:00 noon, San Francisco time, on
the third Business Day prior to any date on which BNPLC expects to make a
payment of a Construction Advance to NAI under the Construction Management
Agreement or of costs or expenditures considered as Construction Advances
pursuant to subparagraph 6(d) of the Leases, BNPLC shall notify the Participants
of the amount of such payment, and each Participant shall pay to BNPLC such
Participant's Percentage times such amount prior to 12:00 noon, San Francisco
time, on such date. If, however, when any failure by a Defaulting Participant to
make a payment required by this Section 3.2 has occurred and is continuing,
BNPLC notifies such Defaulting Participant of the amount of any future payment
required by this Section 3.2 before 12:00 noon, San Francisco time, on or before
the fifth Business Day prior to the date such payment would be due by the terms
of the preceding sentence, and if such notice states that such future payment
from the Defaulting Participant must be made two Business Days before it would
otherwise be due by the terms of the preceding sentence, then such payment will
be due from the Defaulting Participant two Business Days before it would
otherwise be due by the terms of the preceding sentence. The failure of any
Participant to make a payment required by this Section 3.2 shall, for purposes
of this Agreement, be deemed to continue until the Participant actually pays all
past due amounts required by this Section 3.2, together with interest thereon at
the Late Payment Rate.
3.2.3 LIMITATION ON ADVANCES BY PARTICIPANT.
Notwithstanding anything herein to the contrary or any adjustment to any
Participant's Percentage pursuant to Section 4.1, the total of all payments
required of any Participant to BNPLC by this Section 3.2 (excluding interest on
past due payments required by Section 3.2.2) because of any Construction
Advances made to NAI under the Construction Management Agreement (in contrast to
costs or expenditures considered as Construction Advances pursuant to
subparagraph 6(d) of the Leases after a Landlord's Election to Continue
Construction) shall not exceed the amount that would
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cause such Participant's Participation Amount to exceed the Participation Amount
specified for such Participant in Schedule 1.
3.3 PROTECTIVE ADVANCES.
3.3.1 GENERAL. If NAI fails to pay or reimburse any
Protective Advance to BNPLC within ten days after BNPLC makes a demand or
request therefor, BNPLC may notify the Participants of such failure. Promptly
after receipt of any such notice, each Participant shall pay to BNPLC an amount
equal to such Participant's Percentage times the Protective Advance described in
the notice, EVEN IF THE PROTECTIVE ADVANCE WOULD NOT HAVE BEEN PAID BUT FOR ANY
ACTUAL OR ALLEGED NEGLIGENCE OF BNPLC OR ITS AFFILIATES OR REPRESENTATIVES AND
EVEN IF THE PROTECTIVE ADVANCE WOULD NOT HAVE BEEN PAID BUT FOR ANY
ENVIRONMENTAL LOSSES OR OTHER MATTERS OR CIRCUMSTANCES FOR WHICH BNPLC MAY BE
STRICTLY LIABLE. After any Participant has paid its respective Percentage times
the Protective Advance to BNPLC, BNPLC shall be obligated to pay to such
Participant an amount equal to its Adjusted Percentage (as defined below) times
any subsequent Excess Reimbursement (as defined below) or interest thereon
ACTUALLY RECEIVED by BNPLC from NAI for the Protective Advance. As used in this
Agreement the "ADJUSTED PERCENTAGE" of any Participant shall equal (i) such
Participant's Percentage, divided by (ii) the sum of BNPLC's Percentage and the
Percentages of all Participants who have paid BNPLC their respective shares of
the Protective Advance at issue. As used in this Agreement, the term "EXCESS
REIMBURSEMENT" shall mean, for the Protective Advance at issue, amounts
reimbursed or paid by NAI to or on behalf of BNPLC on account of such Protective
Advance in excess of (i) such Protective Advance, times (ii) the Percentages of
any Participants that have not paid BNPLC their respective Percentages of such
Protective Advance.
3.3.2 EXCEPTIONS. Notwithstanding the foregoing, no
Participant shall be required to make any payment pursuant to this Section 3.3
related to a Protective Advance that (1) qualifies as a Construction Advance,
(2) consists of a payment of Excluded Taxes, or (3) is paid only because of a
transfer or assignment by BNPLC of its right to receive Distributable Payments
or its rights and interests in and to the Property, the Operative Documents or
this Agreement to BNPLC's Affiliates. Further, nothing in this Section 3.3 shall
be construed to require a payment by a Participant for that portion or
percentage, if any, of a Protective Advance required only because of (and
attributed by any applicable principles of comparative fault to): (a) conduct of
BNPLC or a Representative of BNPLC that has been determined to constitute gross
negligence or willful misconduct in or as a necessary element of a final
judgment rendered against BNPLC or such Representative by a court with
jurisdiction to make such determination; (b) any representation made by BNPLC in
the Operative Documents that is false in any material respect and that BNPLC
knew was false at the time of BNPLC's execution of the Operative Documents; or
(c) Liens Removable by BNPLC. As used in this Agreement, "gross negligence" of
BNPLC shall not include any negligent failure of BNPLC to act when the duty to
act would not have been imposed but for BNPLC's status as owner of the Property
or as a party to the Operative Documents.
3.4 METHOD OF PAYMENT. All payments made by the Participants to
BNPLC shall be made by transfer of federal funds to BNPLC pursuant to the wiring
instructions for
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BNPLC set forth on SCHEDULE 1. Each payment owing to BNPLC by any Participant
shall be payable to BNPLC on the date specified herein or, if not specified, on
demand and shall bear interest from the date due until the date paid by the
Participant at the Late Payment Rate calculated on the basis of a 360-day year.
Any payment by a Participant to BNPLC after the time of day specified herein for
such payment shall be deemed not paid until the next following Business Day for
purposes of this Agreement.
4. OTHER ADJUSTMENTS, DEDUCTIONS AND INVESTMENTS.
4.1 OTHER ADJUSTMENTS TO PERCENTAGES. As illustrated in part by
the examples set forth in Exhibit A:
4.1.1 ADJUSTMENTS BECAUSE OF DEFAULTING PARTICIPANTS. If a
Construction Advance is reduced as contemplated in subparagraph 2(G) of the
Construction Management Agreement because of a Participant's failure to make
payments required by Section 3.2, the other Participants will nonetheless make
the payments to BNPLC required by Section 3.2 with respect to such Construction
Advance as though there had been no such reduction. The Percentages of the
Participants will then be immediately adjusted by BNPLC as follows:
4.1.1.1 For purposes of computing payments required
by Section 3.2 in connection with all future Construction Advances, the
Percentages of the Participants (other than Defaulting Participants) will be
increased as needed to postpone as long as possible any future or continuing
reductions of Construction Advances under subparagraph 2(G) of the Construction
Management Agreement because of the failure or continuing failure of Defaulting
Participants to make payments required by Section 3.2.
4.1.1.2 For purposes of computing the payments
BNPLC must pay to the Participants pursuant to Section 2.1, the Percentages of
the Participants (other than Defaulting Participants) will be increased as
needed to allow the Participants (other than Defaulting Participants) to
continue to receive a share of Net Cash Flow and Net Sales Proceeds that is in
proportion to their respective Participation Amounts as compared to the total
Participation Amounts of BNPLC and all Participants collectively from time to
time.
4.1.1.3 Without limiting the foregoing, BNPLC may
reduce any Defaulting Participant's Percentage as needed to prevent the
Defaulting Participant from receiving a share of Net Cash Flow or Net Sales
Proceeds that is in excess of the percentage computed by dividing the
Participation Balance of such Defaulting Participant by the total Participation
Balances of BNPLC and all Participants collectively from time to time. Such
reduction in the Defaulting Participant's Percentage shall not cure such
Participant's default hereunder nor constitute BNPLC's sole remedy for such
default, nor limit NAI's rights or remedies (as a third party beneficiary of
this Agreement to the extent provided by Section 16.1) because of such default,
it being understood that other remedies provided herein or available at law or
in equity shall be in addition to any such reduction.
4.1.2 ADJUSTMENTS BECAUSE OF A DEFAULTING PARTICIPANT'S
CURE. If, after a failure to make a payment required by Section 3.2, any
Defaulting Participant cures such
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failure, in whole or in part, by paying BNPLC all or part of such payment and
interest thereon at the Late Payment Rate, then BNPLC shall apply the payments
it receives from the Defaulting Participant as provided in Section 4.3 below,
and in connection therewith the Percentages shall be appropriately adjusted by
BNPLC for purposes of computing payments required by Section 3.2 in connection
with future Construction Advances and for purposes of computing future payments
BNPLC must pay to the Participants pursuant to Section 2.1.
4.2 SETOFF. In the event that one party to this Agreement has
failed to pay to a second party hereto any amount when due hereunder, the second
party may deduct such amount and interest thereon at the Late Payment Rate from
any payments due from it under this Agreement to the first party. Without
limitation, BNPLC may setoff amounts owed to it by any Defaulting Participant
against any termination fee payable to such Defaulting Participant pursuant to
Section 6.4 below if BNPLC shall elect to reduce such Defaulting Participant's
Percentage to zero as provided in Section 6.4.
4.3 APPLICATION OF PAYMENTS RECEIVED FROM A DEFAULTING
PARTICIPANT AS CURE FOR PAYMENT DEFAULTS. If, after failing to make a payment
required by Section 3.2, any Defaulting Participant cures such failure, in whole
or in part, by paying to BNPLC all or part of such payment and interest thereon
at the Late Payment Rate, then BNPLC shall apply the payments so made to BNPLC,
net of the costs of collecting such payments in the following order:
4.3.1 first, to make further Construction Advances under
the Operative Documents to the extent BNPLC is required or deems it appropriate
to do so;
4.3.2 second, to make payments to itself and the
Participants other than Defaulting Participants in proportion to their Excess
Participation Amounts (if any) until BNPLC and the Participants receiving such
payments no longer have any Excess Participation Amount;
4.3.3 third, to pay Defaulting Participants in proportion
to their Excess Participation Amounts (if any) until the Participants receiving
such payments no longer have any Excess Participation Amount; and
4.3.4 finally, to compensate BNPLC for continuing to
provide Construction Advances even when one or more Participants did not make
payments in connection therewith under this Participation Agreement.
4.4 SHARING OF PAYMENTS. Each Participant agrees that if for any
reason it shall obtain a payment made by or for NAI that reduces any
Distributable Payment, and if such payment will cause such Participant to
receive more than it would have received had such payment been made instead to
BNPLC and generated the payments by BNPLC contemplated in this Agreement, then
(1) such Participant shall promptly purchase interests in the rights of other
parties to this Agreement as necessary to cause BNPLC and all Participants to
share payments as they otherwise would have done under this Agreement, and (2)
such other adjustments shall be made from time to time as shall be equitable to
ensure that BNPLC and all Participants share all payments of (or that operate to
reduce) Distributable Payments as they otherwise would have done under this
Agreement. If, however, the payment received by the purchasing Participant or
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any part thereof is later recovered from the purchasing Participant, the
purchase provided for in this Section shall be rescinded, and the price paid by
the purchasing Participant to other parties shall be repaid by them to the
purchasing Participant to the extent of such recovery. Also, if the purchasing
Participant is required by court order to pay interest on the payment so
recovered, then amounts repaid to the purchasing Participant by the other
parties will be repaid with interest, computed in the same manner as the
interest required by the court order. Nothing in this Section shall in any way
affect the right of BNPLC or any Participant to obtain payment (whether by
exercise of rights of banker's lien, set-off or counterclaim or otherwise) of
indebtedness or obligations other than those established by this Agreement or
any of the Operative Documents.
4.5 WITHHOLDING TAXES. BNPLC may deduct any United States
withholding tax required on payments to a Participant hereunder from such
payments, and the Participant shall reimburse BNPLC for any such taxes BNPLC is
required to pay and that BNPLC has not deducted. If BNPLC is uncertain whether
United States withholding tax is required, BNPLC may, after notice to the
applicable Participant, deduct the withholding tax except during any period when
BNPLC is excused from such withholding because of the Participant's delivery to
BNPLC of (i) a statement in duplicate conforming to the requirements of United
States Treasury Regulation Section 1.1441-5(b) or (ii) two duly completed copies
of Internal Revenue Service Form W-8BEN or any successor form thereto ("FORM
W-8BEN") relating to the Participant and claiming complete exemption from
withholding tax on all amounts to be received by the Participant pursuant to
this Agreement or (iii) a valid United States Internal Revenue Service Form
W-8EC1 or any successor form thereto ("FORM W-8EC1") relating to the Participant
and claiming complete exemption from withholding tax on all amounts to be
received by the Participant pursuant to this Agreement. Any Participant shall,
if requested by BNPLC, deliver to BNPLC subsequent statements with respect to
such Treasury Regulation or two additional copies of Form W-8BEN or Form W-8EC1,
or the applicable replacement forms, on or before the date that any prior such
delivered statements or forms expire or become obsolete. If any such statement
or form delivered by a Participant to BNPLC becomes invalid or inapplicable as
to such Participant, such Participant shall promptly inform BNPLC. The
obligations of each Participant pursuant to this Section 4.5 shall survive the
termination of this Agreement.
4.6 ORDER OF APPLICATION. For purposes of this Agreement, BNPLC
shall be entitled, but not required, to apply any payments received from NAI
under the Operative Documents to satisfy (1) NAI's obligation to pay or
reimburse Protective Advances (and interest thereon), if any, and (2) costs
incurred by BNPLC because of any sale under the Purchase Agreements, before
applying such payments to satisfy NAI's other obligations, regardless of how NAI
may have designated such payments.
4.7 INVESTMENTS PENDING DISPUTE RESOLUTION; OVERNIGHT
INVESTMENTS. Whenever BNPLC in good faith determines that it does not have all
information needed to determine how payments to the Participants must be made on
account of any Distributable Payments, or whenever BNPLC in good faith
determines that there is any dispute among the Participants about payments which
must be made on account of Distributable Payments, BNPLC may choose to defer the
payments to Participants which are the subject of such missing information or
dispute. However, to minimize any such deferral, BNPLC shall attempt diligently
to obtain any missing information needed to determine how payments to the
Participants must be made. Also, pending any such deferral, or if BNPLC is
otherwise required to invest funds
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pending distribution to the Participants, BNPLC shall endeavor to invest the
payments at issue. In addition, if BNPLC receives any Distributable Payment
after 12:00 noon, San Francisco time, on any day and will not make payments to
Participants in connection therewith until the next Business Day pursuant to
Section 2.5, then BNPLC shall endeavor to invest such payments overnight;
provided that BNPLC shall have no liability to the Participants if BNPLC is
unable to make such investments. Investments by BNPLC shall be in the overnight
federal funds market pending distribution, and the interest earned on each
dollar of principal so invested shall be paid to the Person entitled to receive
such dollar of principal when the principal is paid to such Person.
5. NATURE OF THIS AGREEMENT.
5.1 NO CONVEYANCE. THIS AGREEMENT IS INTENDED TO CREATE
CONTRACTUAL RIGHTS IN FAVOR OF EACH PARTICIPANT TO RECEIVE PAYMENTS FROM BNPLC,
BUT IT IS NOT INTENDED TO CONVEY OR ASSIGN TO THE PARTICIPANTS ANY INTEREST IN
THE PROPERTY OR IN THE OPERATIVE DOCUMENTS OR IN THE PAYMENTS TO BE MADE TO
BNPLC THEREUNDER. IN NO EVENT SHALL ANY PARTICIPANT EXERCISE OR ATTEMPT TO
EXERCISE ANY RIGHT OR REMEDY OF BNPLC UNDER THE OPERATIVE DOCUMENTS. NOTHING IN
THIS AGREEMENT SHALL BE CONSTRUED TO GRANT TO THE PARTICIPANTS ANY RIGHT TO
ENFORCE NAI'S OBLIGATIONS UNDER THE OPERATIVE DOCUMENTS OR TO COLLECT DIRECTLY
FROM NAI ANY PAYMENTS DUE FROM NAI THEREUNDER. ALTHOUGH BNPLC'S OBLIGATIONS FOR
PAYMENTS TO THE PARTICIPANTS HEREUNDER SHALL BE COMPUTED BY REFERENCE TO FUNDS
ACTUALLY RECEIVED AS DISTRIBUTABLE PAYMENTS, THIS AGREEMENT SHALL NOT BE
CONSTRUED AS AN ASSIGNMENT OF DISTRIBUTABLE PAYMENTS THEMSELVES OR ANY INTEREST
THEREIN, IT BEING UNDERSTOOD THAT (WITHOUT LIMITING OR EXPANDING THE DOLLAR
AMOUNT OF SUCH OBLIGATIONS) BNPLC MAY SATISFY SUCH OBLIGATIONS FROM OTHER FUNDS
AVAILABLE TO IT, THEREBY RESERVING DISTRIBUTABLE PAYMENTS FOR PAYMENT TO OTHER
CREDITORS OR FOR OTHER PURPOSES, AS BNPLC SHALL DETERMINE IN ITS SOLE
DISCRETION.
5.2 NOT A PARTNERSHIP, ETC. NEITHER THE EXECUTION OF THIS
AGREEMENT, NOR THE SHARING OF RISKS AND REWARDS UNDER THE OPERATIVE DOCUMENTS,
NOR ANY AGREEMENT TO SHARE IN PROFITS OR LOSSES ARISING AS A RESULT OF THE
TRANSACTIONS CONTEMPLATED THEREBY, IS INTENDED TO BE OR TO CREATE, AND THE
FOREGOING SHALL BE CONSTRUED NOT TO BE OR TO CREATE ANY PARTNERSHIP, JOINT
VENTURE, OR OTHER JOINT ENTERPRISE BETWEEN BNPLC AND ANY PARTICIPANT. NEITHER
THE EXECUTION OF THIS AGREEMENT NOR THE MANAGEMENT AND ADMINISTRATION OF THE
OPERATIVE DOCUMENTS AND THE RELATED DOCUMENTS BY BNPLC, NOR ANY OTHER RIGHT,
DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO THIS AGREEMENT IS INTENDED TO
BE OR TO CREATE ANY FIDUCIARY RELATIONSHIP BETWEEN BNPLC AND ANY PARTICIPANT.
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6. AMENDMENTS; WAIVERS; EXERCISE OF RIGHTS AND REMEDIES AGAINST NAI.
6.1 LIMITATIONS. Subject to Section 6.3, but notwithstanding
anything else to the contrary in this Agreement:
6.1.1 BNPLC shall not:
6.1.1.1 without the prior written consent of the
Participants, execute any waiver, modification or amendment of the Operative
Documents that would: (1) increase the amounts the Participants may be required
to pay to BNPLC hereunder, including any such increase that could result from an
increase in the Maximum Construction Allowance under the Operative Documents; or
(2) reduce or postpone (or reasonably be expected to reduce or postpone) any
payments that any Participant would, but for such modification or amendment, be
expected to receive from BNPLC hereunder (including any extension of the Term of
the Leases); (3) excuse or diminish NAI's obligations to provide Collateral
under the Pledge Agreements during any "Mandatory Collateral Period" (as
described in Part III of Schedule 1 attached to the Leases); or (4) except as
otherwise expressly permitted by the Operative Documents, release BNPLC's
interest in all or a substantial part of the Property or release any security
interest in Collateral pledged under the Pledge Agreements; or
6.1.1.2 without the prior written consent of a
Majority, execute any other waiver, modification or amendment of the Operative
Documents, except a waiver, modification or amendment that NAI requests pursuant
to express provisions of the Operative Documents and that BNPLC believes in good
faith it must execute to satisfy the requirements of the Operative Documents; or
6.1.1.3 over the written objection of a Majority,
affirmatively elect a Voluntary Retention of the Property pursuant to
subparagraph 1(A)(2)(a) of the Purchase Agreements.
However, this subsection 6.1.1 shall not limit BNPLC's right to forebear from
exercising rights against NAI to the extent BNPLC shall determine in good faith
that such forbearance is appropriate and is permitted by the following
subsections in this Section 6.1. Upon the direction of the Majority, BNPLC shall
execute any waiver, modification or amendment of the Operative Documents
requested by NAI; provided, that: (A) the waiver, modification or amendment is
not prohibited by the forgoing provisions of this Agreement, (B) the waiver,
modification or amendment does not (1) increase the amount BNPLC may be required
to pay to NAI or anyone else, or (2) reduce or postpone (and cannot reasonably
be expected to reduce or postpone) any payments that BNPLC would, but for such
modification or amendment, be expected to receive, or (3) release BNPLC's
interest in all or a substantial part of the Property; and (C) BNPLC is not
excused from executing the waiver, modification or amendment by Section 6.3.
6.1.2 BNPLC will, with reasonable promptness, provide the
Participants with copies of all default notices it sends or receives under the
Operative Documents and notify the Participants of any Event of Default under
the Leases or Critical Event of which BNPLC is actually aware and of any other
matters known to BNPLC which, in BNPLC's reasonable judgment, are likely to
materially affect the payments any Participant will be required to make or
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be entitled to receive under this Agreement, but BNPLC will not in any event be
liable to any Participant for BNPLC's failure to do so unless such failure
constitutes gross negligence or willful misconduct on the part of BNPLC.
6.1.3 Before taking possession of the Property because of
any breach by NAI of the Operative Documents, filing any lawsuit against NAI,
exercising foreclosure or offset rights against the Collateral under the Pledge
Agreements, making a Landlord's Election to Continue Construction, or exercising
termination rights provided in subparagraph 1(c) of the Leases or subparagraph
4(B) of the Purchase Agreements, or if requested in writing by any Participant
at any time when a Critical Event has occurred and is continuing, BNPLC shall
call a meeting with the Participants to discuss what action by BNPLC, if any, is
appropriate under the Operative Documents and what direction, if any, a Majority
may give to BNPLC. Such meeting shall be scheduled during regular business hours
in the offices of Banque Nationale de Paris, San Francisco, or another
appropriate location in San Francisco, California, not earlier than five and not
later than twenty Business Days after BNPLC's receipt of the written request
from any Participant. BNPLC shall attempt in good faith and with reasonable
diligence to comply with the direction of a Majority if, when a Critical Event
or an Event of Default have occurred and be continuing, a Majority shall direct
BNPLC in writing to do any one or more of the following, as applicable under the
circumstances: (a) send any default notices required before a Critical Event can
become an Event of Default, (b) bring a lawsuit against NAI to enforce the
Operative Documents, (c) proceed with a Landlord's Election to Continue
Construction, or (d) exercise termination rights provided in subparagraph 1(c)
of the Leases or subparagraph 4(B) of the Purchase Agreements. However, if BNPLC
is not a member of the Majority voting pursuant to this subsection 6.1.3 in
favor of any such action, then BNPLC may require that it first receive the
written agreement (in form reasonably acceptable to BNPLC) of the members of the
Majority so voting to indemnify BNPLC from and against all costs, liabilities
and claims that may be incurred by or asserted against BNPLC because of the
action the Majority directs BNPLC to take. In no event shall any Participant
instigate any suit or other action directly against NAI with respect to the
Operative Documents or the Property, even if the Participant would, but for this
Agreement, be entitled to do so as a party or third party beneficiary under the
Operative Documents or otherwise.
6.1.4 In the event NAI or an Applicable Purchaser fails to
purchase the Property on the Designated Sale Date when required to do so
pursuant to the Purchase Agreements, BNPLC shall, unless the Participants shall
otherwise agree in writing, bring suit against NAI to enforce the Operative
Documents in such form as shall be recommended by reputable counsel no later
than sixty days after the expiration of any applicable cure or grace period
given NAI by the express terms of the Purchase Agreements, and thereafter BNPLC
shall prosecute the suit with reasonable diligence in accordance with the advice
of reputable counsel. If BNPLC acquires the interests of NAI in any of the
Property as a result of such suit or otherwise, BNPLC shall thereafter proceed
with reasonable diligence to sell the Property in a commercially reasonable
manner to one or more bona fide third party purchasers and shall in any event
have consummated the sale of the entire Property (through a single sale of the
entire property or a series of sales of parts) within five years following the
date BNPLC recovers possession of the Property at the best price or prices BNPLC
believes are reasonably attainable within such time. Further, after the
Designated Sale Date and prior to BNPLC's sale of the entire Property, BNPLC
shall retain a property management company experienced in the area
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where the Property is located to manage the operation of the Property and pursue
the leasing of any completed improvements which are part of the Property. BNPLC
shall not retain an Affiliate of BNPLC to act as the property manager except
under a bona fide, arms-length management contract containing commercially
reasonable terms. Further, after the Designated Sale Date and until BNPLC sells
the Property, BNPLC shall (i) endeavor in good faith to maintain, or shall
obtain the agreement of one or more tenants to maintain, the Property in good
order and repair, (ii) procure and maintain casualty insurance against risks
customarily insured against by owners of comparable properties, in amounts
sufficient to eliminate the effects of coinsurance, (iii) keep and allow the
Participants to review accurate books and records covering the operation of the
Property, and (iv) pay prior to delinquency all taxes and assessments lawfully
levied against the Property.
Notwithstanding the foregoing, any Participants that have failed to fund any
amount due hereunder, including any Percentage of a Construction Advance, and
that have not corrected such failure within five Business Days after being
notified thereof, shall have no voting or consent rights under this Section 6.1
and no rights to require BNPLC to call a meeting pursuant to subsection 6.1.3
until such failure is corrected.
6.2 GENERAL. Subject to the limitations set forth in Section 6.1:
6.2.1 BNPLC shall have the exclusive right to take any
action and to exercise any available powers, rights and remedies to enforce the
obligations of NAI under the Operative Documents, or to refrain from taking any
such action or exercising any such power, right or remedy.
6.2.2 BNPLC shall be entitled to (i) give any consent,
waiver or approval requested by NAI with respect to any construction or other
approval contemplated in the Construction Management Agreement or Leases or (ii)
waive or consent to any adverse title claims affecting the Property, provided
that, in either case, BNPLC believes in good faith that such action will not
have a material adverse effect upon NAI's obligations or ability to make the
payments required under the Operative Documents or upon the rights and remedies,
taken as whole, of BNPLC under the Operative Documents or of the Participants'
hereunder.
6.3 CONFLICTS AND PURCHASE AGREEMENTS DEFAULTS. Notwithstanding
anything to the contrary herein contained, BNPLC shall be entitled, even over
the objection of any Participant or the Majority, (A) to take any action
recommended in writing by reputable counsel and believed in good faith by BNPLC
to be required of BNPLC by the Operative Documents or any law, rule or
regulation to which BNPLC is subject, (B) to refrain from taking any action if
BNPLC believes in good faith that the action is prohibited by the Operative
Documents or any law, rule or regulation to which BNPLC is subject, and if
reputable counsel recommends in writing that BNPLC refrain from taking the
action, and (C) after notice to the Participants, to bring and prosecute a suit
against NAI in the form recommended by and in accordance with advice of
reputable counsel at any time when a breach of the Operative Documents by NAI
shall have put BNPLC (or any of its officers or employees) at risk of criminal
prosecution or significant liability to third parties or at any time after NAI
or an Applicable Purchaser fails to purchase the Property on the Designated Sale
Date pursuant to the Purchase Agreements. (If, however, BNPLC takes any action
or refrains from taking any action
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over the objection of a Majority pursuant to the preceding sentence, BNPLC must
provide the Majority a written explanation (including a copy of a supporting
written recommendation of counsel) of the basis for BNPLC's conclusion that
taking the action, or refraining from taking the action, is permitted by the
preceding sentence.) Further, nothing herein contained shall be construed to
require BNPLC to agree to modify the Operative Documents or to take any action
or refrain from taking any action in any manner that could increase BNPLC's
liability to NAI or others, that could reduce or postpone payments to which
BNPLC is entitled thereunder, or that could reduce the scope and coverage of the
indemnities provided for BNPLC's benefit therein.
6.4 REFUSAL TO GIVE CONSENTS; FAILURE TO FUND; FAILURE OF A
DEPOSIT TAKER TO SATISFY MINIMUM RATINGS. If any Participant declines to consent
to any amendment, modification, waiver, release or consent for which the
Participant's consent is requested or required by reason of this Agreement, or
if any Participant fails to pay any amount owed by it hereunder, or if the
Deposit Taker for any Participant shall cease to be a Qualified Deposit Taker
(as defined in the Pledge Agreement), BNPLC shall have the right, but not the
obligation and without limiting any other remedy of BNPLC, to reduce such
Participant's Percentage to zero and to terminate such Participant's rights to
receive any further payments under Article 2 of this Agreement by paying to such
Participant a termination fee equal to the total amount it would be entitled to
receive from BNPLC hereunder if the date of such payment were the Designated
Sale Date and on such date NAI had itself purchased BNPLC's interest in the
Property pursuant to and in accordance with the Purchase Agreements. No
Participant's rights to receive payments equal to such Participant's Adjusted
Percentage of any Excess Reimbursement of a Protective Advance or interest
thereon as provided in Section 3.3 shall be impaired or affected by any
termination contemplated in this Section 6.4; accordingly, BNPLC shall not, as a
condition to such a termination, be required to reimburse a Participant for any
payments the Participant has made in connection with Protective Advances
pursuant to Section 3.3.
7. REQUIRED REPAYMENTS. Each Participant shall repay to BNPLC, upon
written request or demand by BNPLC (i) any sums paid by BNPLC to such
Participant under this Agreement from, or that were computed by reference to,
any Distributable Payment or other amounts which BNPLC shall be required to
return or pay over to another party, whether pursuant to any bankruptcy or
insolvency law or proceeding or otherwise and (ii) any interest or other amount
that BNPLC is also required to pay to another party with respect to such sums.
Such repayment by a Participant shall not constitute a release of such
Participant's right to receive payments from BNPLC hereunder upon BNPLC's
receipt of any such Distributable Payment or other amount (or any interest
thereon) that BNPLC may later recover.
8. NAI INFORMATION; INDEPENDENT ANALYSIS. Prior to the execution of this
Agreement, BNPLC has provided to the Participants copies of the executed
Operative Documents and of various certificates, legal opinions and other
documents delivered to BNPLC by or on behalf of NAI with the Operative
Documents. In the future, BNPLC shall provide (A) to all Participants copies of
all amendments of the Operative Documents and certificates and legal opinions,
if any, delivered by or on behalf of NAI in connection therewith, and (B) to any
Participant, as reasonably required to comply with a specific, reasonable
written request for information made by the Participant, copies of other
information readily available to BNPLC concerning NAI or Guarantor and the
transactions contemplated in the Operative Documents. However, BNPLC shall not
be liable for its failure to provide the Participants any of the
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foregoing documents unless such failure constitutes gross negligence or willful
misconduct on BNPLC's part. Each Participant has entered into this Agreement
without reliance upon representations made outside this Agreement by BNPLC or by
any Affiliate, agent or attorney of BNPLC and only after independently reviewing
such documents, independently making such inspections, independently consulting
with counsel and independently collecting and verifying such information, as the
Participant determined to be necessary or appropriate. Without limiting the
foregoing, each Participant has independently reviewed the Operative Documents
and independently made such inquiries and investigations of NAI and the Property
as the Participant determined to be necessary or appropriate before executing
this Agreement.
9. PERFORMANCE THROUGH REPRESENTATIVES. BNPLC may perform any of its
duties hereunder by or through officers, directors, employees, attorneys or
agents (collectively, "REPRESENTATIVES"), and BNPLC and its Representatives
shall be entitled to rely, and shall be fully protected in relying, upon any
communication or document believed by it or them to be genuine and correct and
to have been signed or made by the proper Person and, with respect to legal
matters, upon the opinion of counsel selected by BNPLC. The Participants
acknowledge that Banque Nationale de Paris shall be entitled to act as agent for
BNPLC with respect to the administration of this Agreement, and to the extent it
does so, it shall be a Representative of BNPLC hereunder.
10. DUTY OF CARE. NEITHER BNPLC NOR ANY OF ITS REPRESENTATIVES SHALL BE
LIABLE OR RESPONSIBLE TO ANY PARTICIPANT OR ANY OTHER PERSON FOR ANY ACTION
TAKEN OR OMITTED TO BE TAKEN BY BNPLC OR ANY OF ITS REPRESENTATIVES UNDER THIS
AGREEMENT OR THE OPERATIVE DOCUMENTS OR OTHERWISE (EVEN IF NEGLIGENT OR RELATED
TO A MATTER FOR WHICH BNPLC OR ANY OF ITS REPRESENTATIVES MAY OTHERWISE BE
STRICTLY LIABLE); provided, this provision will not excuse BNPLC from liability
for failing to make timely payments required of BNPLC to the Participants by the
express provisions of Article 2 or Section 3.3 or from liability for actions
taken or omitted to be taken by BNPLC which constitute gross negligence or
willful misconduct. Without limiting the generality of the foregoing, BNPLC (1)
may consult with legal counsel (including counsel for NAI), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (2) makes no warranty or
representation to the Participants except as provided in Article 12 and shall
not be responsible to the Participants for any statements, warranties or
representations made in or in connection with the Operative Documents; (3) shall
not have any duty to the Participants to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of the
Operative Documents or to inspect the Property or the books and records of NAI;
(4) shall not be responsible to the Participants for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Operative Documents or any instrument or document furnished in connection
therewith; (5) may rely upon the representations and warranties of NAI and the
Participants in exercising its powers hereunder unless BNPLC shall have actual
knowledge that such representations and warranties are untrue; and (6) shall
incur no liability under or in respect of the Operative Documents by acting upon
any notice, consent, certificate or other instrument or writing (including any
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper Person or Persons.
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11. REPRESENTATIONS BY EACH PARTICIPANT. Each Participant represents
that as of the date it became a party to this Agreement:
11.1 NATURE OF THIS AGREEMENT. It is the type of financial
institution set forth under its name in SCHEDULE 1, or in the Participation
Agreement Schedule which made it a party to this Agreement, and it is entering
into this Agreement for its own account in respect of a commercial transaction
made in ordinary course of its business and not with a view to or in connection
with any subparticipation, sale or distribution to any Person (other than its
Affiliates). Such Participant does not consider the acceptance of the risk
participation hereunder to constitute the "purchase" or "sale" of a "security"
within the meaning of any federal or state securities statute or law, or any
rule or regulations under any of the foregoing.
11.2 NO DEFAULT OR VIOLATION. To such Participant's knowledge,
the execution, delivery and performance of this Agreement do not and will not
contravene, result in a breach of or constitute a default under any material
contract or agreement to which the Participant is a party or by which the
Participant is bound and do not violate or contravene any law, order, decree,
rule or regulation to which the Participant is subject.
11.3 NO SUITS. To such Participant's knowledge, there are no
judicial or administrative actions, suits or proceedings involving the validity,
enforceability or priority of this Agreement and no such suits or proceedings
are threatened.
11.4 ORGANIZATION. Such Participant is duly incorporated and
legally existing under the laws of jurisdiction indicated in SCHEDULE 1 or in
the Participation Agreement Schedule which made it a party to this Agreement.
Such Participant has all requisite power and all material governmental
certificates of authority, licenses, permits, qualifications and other
documentation necessary to perform its obligations under this Agreement.
11.5 ENFORCEABILITY. This Agreement constitutes a legal, valid
and binding obligation of such Participant, enforceable in accordance with its
terms, subject to bankruptcy and other laws affecting creditors' rights
generally and general equitable principles. The execution and delivery of, and
performance under, this Agreement are within such Participant's powers and have
been duly authorized by all requisite action and are not in contravention of the
powers of the charter or other corporate papers of the Participant.
11.6 NO FUNDING WITH PLAN ASSETS. Such Participant has not and
will not provide advances required by this Participant from the assets of any
employee benefit plan (or its related trust).
12. REPRESENTATIONS BY BNPLC. BNPLC represents to each Participant, as
of the date such Participant became a party to this Agreement, that:
12.1 NO DEFAULT OR VIOLATION. To BNPLC's knowledge, its
execution, delivery and performance of this Agreement and the Operative
Documents do not contravene, result in a breach of or constitute a default under
any material contract or agreement to which BNPLC is a party or by which BNPLC
is bound and do not violate or contravene any law, order, decree, rule or
regulation to which BNPLC is subject.
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12.2 NO SUITS. To BNPLC's knowledge, there are no judicial or
administrative actions, suits or proceedings involving the validity,
enforceability or priority of this Agreement and no such suits or proceedings
are threatened.
12.3 ORGANIZATION. BNPLC is duly incorporated and legally
existing under the laws of Delaware and is duly qualified to do business in the
State of California. BNPLC has all requisite power and all material governmental
certificates of authority, licenses, permits, qualifications and other
documentation necessary to perform its obligations under this Agreement. BNPLC
has obtained or will obtain, at NAI's expense pursuant to the provisions of the
Leases, all requisite power and all material governmental certificates of
authority, licenses, permits, qualifications and other documentation necessary
to own and lease the Property and to perform its obligations under the Operative
Documents.
12.4 ENFORCEABILITY. This Agreement and the Operative Documents
constitute legal, valid and binding obligations of BNPLC, enforceable in
accordance with their respective terms, subject to bankruptcy and other laws
affecting creditors' rights generally and general equitable principles. BNPLC's
execution and delivery of, and performance under, this Agreement and the
Operative Documents are within BNPLC's powers and have been duly authorized by
all requisite action and are not in contravention of the powers of the charter,
by-laws or other corporate papers of BNPLC; provided, BNPLC makes no
representation or warranty that conditions imposed by any state or local
Applicable Laws to the purchase, ownership, lease or operation of the Property
have been satisfied.
12.5 LIENS REMOVABLE BY BNPLC. BNPLC shall not create or permit
any Liens Removable by BNPLC not claimed by, through or under any of the
Participants (other than BNPLC's Affiliates), without NAI's consent.
12.6 BNPLC'S STATUS AS A SUBSIDIARY OF A BANK HOLDING COMPANY. As
of the effective date of this Agreement, BNPLC is a "subsidiary" of a "bank
holding company" (as those terms are defined in Chapter 17 of Title 12 of the
United States Code).
13. ASSIGNMENTS.
13.1 BY THE PARTICIPANTS GENERALLY. Except as expressly provided
below, no Participant shall assign or attempt to assign any interest in or
rights under this Agreement without the prior written consent of BNPLC, which
consent shall not be unreasonably withheld so long as the Participant requesting
the approval is not in default hereunder; provided, this provision shall not
prevent a Participant from transferring its rights hereunder to its Affiliates
or to any other Participants who are already parties to this Agreement.
Notwithstanding any permitted assignment by a Participant, if the assignment is
to any Person that does not qualify as a "Participant" for purposes of the
Leases itself (which, as more particularly provided in the definition of
Participant in the Common Definitions and Provisions Agreements, may require the
written approval of such Person by NAI), then such Participant's obligations
under this Agreement shall remain unchanged, such Participant shall remain
primarily responsible for the performance of its obligations hereunder, and
BNPLC may continue to deal solely and directly with such Participant in
connection with all rights and obligations under this Agreement. In the event,
however, of a permitted assignment by a Participant to a Person that does
qualify as a
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"Participant" for purposes of the Leases itself, accomplished by the execution
of appropriate Participation Agreement Supplements as herein provided, the
assigning Participant shall not be liable for any failure by the assignee to
fulfill the obligations assumed hereunder by the assignee by reason of such
assignment.
13.2 BY BNPLC. Except as expressly provided herein, BNPLC shall
not assign or attempt to assign any rights under or interest in the Operative
Documents or this Agreement or any interest in the Property without the
Participants' prior written consent, which consent shall not be unreasonably
withheld. By a Participation Agreement Supplement, BNPLC may, without the prior
written consent of any other Participant, assign participations in the Operative
Documents or the payments required to BNPLC thereunder to any then existing
Participant and to other financial institutions or Affiliates of financial
institutions approved by NAI; provided, that the assignment of participations by
BNPLC shall not reduce the Percentage of BNPLC (or any Affiliate of BNPLC that
may become the owner of BNPLC's interest in the Property) to less than three
percent (3%). In addition, BNPLC may assign its right to receive Distributable
Payments and its rights and interests in and to the Property, the Operative
Documents and this Agreement to Affiliates of BNPLC that do not become
Participants; provided, however, that BNPLC's obligations under this Agreement
shall remain unchanged, BNPLC shall remain primarily responsible for the
performance of its obligations hereunder, and all Distributable Payments
received by any such Affiliates as assignee of BNPLC shall, for purposes of
computing payments required to any Participant hereunder, be considered as
received by BNPLC. In addition, BNPLC shall be permitted to transfer any rights
or interests as BNPLC shall believe in good faith to be necessary to satisfy the
Operative Documents or Applicable Laws.
13.3 EXECUTION OF PARTICIPATION AGREEMENT SUPPLEMENTS. Promptly
after the execution of a Participation Agreement Supplement by BNPLC and any
Participant, BNPLC will provide a copy thereof to all other Participants, but
the other Participants need not join in or approve the Participation Agreement
Supplement for it to be effective.
13.4 REGULATION A. Notwithstanding Sections 13.1 or 13.2, a
Participant may assign and pledge all or any portion of its rights under this
Agreement to any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circulars issued by such Federal Reserve Bank.
13.5 COSTS. Each Participant shall pay all costs incurred by
BNPLC in connection with any permitted assignment by or through such
Participant, including, but not limited to, reasonable fees and disbursements of
its counsel, and any transfer taxes or other taxes assessed because of such
assignment which NAI is not required to pay under the Leases.
14. GOVERNING LAW; SUBMISSION TO PROCESS; WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE DEEMED A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
CALIFORNIA AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF CALIFORNIA AND THE LAWS OF THE UNITED STATES OF
AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. EACH OF BNPLC AND THE
PARTICIPANTS HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE
21.
26
JURISDICTION OF THE STATE AND THE FEDERAL COURTS SITTING IN SAN FRANCISCO,
CALIFORNIA, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT
IN ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT BY ANY MEANS ALLOWED UNDER
CALIFORNIA OR FEDERAL LAW. EACH OF BNPLC AND THE PARTICIPANTS HEREBY WAIVES AND
AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH
PROCEEDING WHICH IS BROUGHT IN A COURT IN SAN FRANCISCO, CALIFORNIA IS BROUGHT
IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER. EACH OF BNPLC
AND THE PARTICIPANTS, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
TO A JURY TRIAL OF ANY DISPUTE RELATING TO THIS AGREEMENT AND AGREES THAT ANY
SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
15. TERMINATION. This Agreement shall terminate on the first date on
which all obligations of NAI under the Operative Documents shall have been
indefeasibly paid or otherwise satisfied or excused, BNPLC shall have ceased to
have any rights in the Property and each party hereto shall have fully performed
its obligations hereunder to the other parties hereto. The agreements of BNPLC
and the Participants in Section 3.3 (which concerns payments by Participants of
their respective Percentages of Protective Advances) shall survive the
termination of this Agreement. Following any sale of the Property by BNPLC
pursuant to the Purchase Agreements and the payment to any Participant of all
amounts payable to such Participant hereunder (including, without limitation,
such Participant's Percentage of all Net Sales Proceeds payable by NAI and any
Applicable Purchaser on the Designated Sale Date), such Participant will execute
and deliver such a quitclaim and release (in recordable form) to NAI or any
Applicable Purchaser.
16. MISCELLANEOUS.
16.1 RELIANCE BY OTHERS. None of the provisions of this Agreement
shall inure to the benefit of any Person other than the Participants and BNPLC
and BNPLC's Representatives; consequently, no Person other than the Participants
and BNPLC shall be entitled to rely upon or raise as a defense, in any manner
whatsoever, the failure of any Participant or BNPLC to comply with the
provisions of this Agreement. None of the Participants nor BNPLC shall incur any
liability to any other Person for any act of omission of another.
Notwithstanding the foregoing, however, NAI shall be a third party
beneficiary of each Participant's obligations to make advances as provided in
Section 3.2 above, of the representations of each Participant in Section 11, of
the limitations upon each Participant's right to assign in Section 13.1, of each
Participant's agreements concerning choice of law and other matters in Section
14, and of each Participant's agreement to provided a release and quitclaim of
the Property pursuant to the last sentence of Section 15. As a third party
beneficiary of the obligations of the Participants specified in the preceding
sentence, NAI shall have standing to bring a claim against any Participant in
NAI's own name if that Participant breaches such obligations. Further, BNPLC may
assign to NAI any claims it may have against a Participant because of the
Participant's breach of any of the provisions referenced in this paragraph or
because of any adverse title claim made against the Property by, through or
under the Participant. Each Participant acknowledges that NAI will be relying on
the commitments of the Participant to
22.
27
make payments required by this Agreement, as needed to satisfy any condition to
Construction Advances concerning funding by Participants set forth in
subparagraph 2(G) of the Construction Management Agreement.
16.2 WAIVERS, ETC. No delay or omission by any party to exercise
any right under this Agreement shall impair any such right, nor shall it be
construed to be a waiver thereof. No waiver of any single breach or default
under this Agreement shall be deemed a waiver of any other breach or default.
Any waiver, consent, or approval under this Agreement must be in writing to be
effective.
16.3 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement shall not in any way affect or impair the legality
or enforceability of the remaining provisions of this Agreement.
16.4 NOTICES. All notices, demands, approvals, consents and other
communications to be made hereunder to or by the parties hereto must, to be
effective for purpose of this Agreement, be in writing. Notices, demands and
other communications required or permitted hereunder are to be sent to the
addresses set forth in Schedule 1 to this Agreement and shall be given by any of
the following means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex, telegram or
telecopying (if confirmed in writing sent by United States first class mail,
return receipt requested); or (C) registered or certified first class mail,
return receipt requested. Such addresses may be changed by notice to the other
parties given in the same manner as provided above. Any notice or other
communication sent pursuant to clause (A) or (C) hereof shall be deemed received
(whether or not actually received) upon first attempted delivery at the proper
notice address on any Business Day between 9:00 A.M. and 5:00 P.M., and any
notice or other communication sent pursuant to clause (B) hereof shall be deemed
received upon dispatch by electronic means.
16.5 CONSTRUCTION. Words of any gender used in this Agreement
shall be held and construed to include any other gender, and words in the
singular number shall be held to include the plural and vice versa, unless the
context otherwise requires. References herein to Articles, Sections, subsections
or other subdivisions shall refer to the corresponding Articles, Sections,
subsections or subdivisions of this Agreement, unless specific reference is made
to another document or instrument. References herein to any Schedule or Exhibit
shall refer to the corresponding Schedule or Exhibit attached hereto, which
shall be made a part hereof by such reference. All capitalized terms used in
this Agreement which refer to other documents shall be deemed to refer to such
other documents as they may be renewed, extended, supplemented, amended or
otherwise modified from time to time, provided such documents are not renewed,
extended or modified in breach of any provision contained herein or therein or,
in the case of any other document to which BNPLC is a party or of which BNPLC is
an intended beneficiary, without the consent of BNPLC. All accounting terms used
but not specifically defined herein shall be construed in accordance with GAAP.
The words "THIS AGREEMENT", "HEREIN", "HEREOF", "HEREBY", "HEREUNDER" and words
of similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular subdivision unless expressly so limited. The phrases
"THIS ARTICLE" and "THIS SECTION" and "THIS SUBSECTION" and similar phrases used
herein refer only to the Articles, Sections or subsections hereof in which the
phrase
23.
28
occurs. As used herein the word "or" is not exclusive. As used herein the words
"INCLUDE", "INCLUDING" and similar terms shall be construed as if followed by
"without limitation to".
16.6 HEADINGS. The Article and Section headings contained in this
Agreement are for convenience only and shall in no way enlarge or limit the
scope or meaning of the various and several provisions hereof.
16.7 ENTIRE AGREEMENT. This Agreement (a) embodies the entire
agreement between the parties, supersedes all prior agreements and
understandings between the parties, if any, relating to the subject matter
hereof, and may be amended only by an instrument in writing executed by an
authorized representative of each party to be bound by such amendment, and (b)
has been executed in a number of identical counterparts, each of which shall be
deemed an original for all purposes and all of which constitute, collectively,
one agreement or certificate; but, in making proof of this Agreement it shall
not be necessary to produce or account for more than one such counterpart signed
by each party thereto.
16.8 FURTHER ASSURANCES. Subject to any restriction in the
Operative Documents, each of BNPLC and the Participants will promptly execute
and deliver all further instruments and documents and take all further action as
any of them may reasonably request in order to evidence the agreements made
hereunder and otherwise to effect the purposes of this Agreement.
16.9 IMPAIRMENT OF OPERATIVE DOCUMENTS. Nothing herein contained
(including the provisions governing the application of payments in Section 4.6
and the provisions authorizing assignments by BNPLC in Section 13.2) shall
impair or modify NAI's rights under the Operative Documents.
16.10 BOOKS AND RECORDS. BNPLC shall keep accurate books and
records in which full, true and correct entries shall be promptly made as to all
payments made and received concerning the Property and will permit all such
books and records (excluding any information that would otherwise be protected
by BNPLC's attorney client privilege) to be inspected and copied by the
Participants and their duly accredited representatives at all times during
reasonable business hours after five Business Days advance notice. This Section
shall not be construed as requiring BNPLC to regularly maintain separate books
and records relating exclusively to the Property; provided, however, that upon
reasonable request, BNPLC shall, at the requesting Participant's expense,
construct or abstract from its regularly maintained books and records
information required by this Section relating to the Property.
16.11 DEFINITION OF KNOWLEDGE. Representations and warranties
made in this Agreement but limited to the "knowledge" of BNPLC or any
Participant, as the case may be, shall be limited to the present actual
knowledge of the officers or other employees of such party primarily responsible
for reviewing and negotiating this Agreement. Also, as used herein with respect
to the existence of any facts or circumstances after the date of this Agreement,
"knowledge" of BNPLC or a Participant, as the case may be, shall be limited to
the present actual knowledge at the time in question of the officers or other
employees of such party primarily responsible for administering this Agreement.
However, none of the officers or
24.
29
employees of any party to this Agreement shall be personally liable for any
representations or warranties made herein or for taking or failing to take any
action required hereby.
16.12 ATTORNEYS' FEES. If any party to this Agreement commences
any legal action or other proceeding against another party hereto to enforce any
of the terms of this Agreement, or because of any breach of the other party or
dispute hereunder, the successful or prevailing party shall be entitled to
recover from the nonprevailing party all Attorneys' Fees incurred in connection
therewith, whether or not such controversy, claim or dispute is prosecuted to a
final judgment. Any such Attorneys' Fees incurred by any party in enforcing a
judgment in its favor under this Agreement shall be recoverable separately from
such judgment, and the obligation for such Attorneys' Fees is intended to be
severable from other provisions of this Agreement and not to be merged into any
such judgment.
[The signature pages follow.]
25.
30
IN WITNESS WHEREOF, BNPLC and the Participants whose signatures appear
below have caused this Participation Agreement to be executed by their
respective, duly authorized representatives, as of the date first above written.
"BNPLC"
BNP LEASING CORPORATION
By:
---------------------------------
Lloyd G. Cox, Vice President
26.
31
[Continuation of signature pages to Participation Agreement effective as of
March 1, 2000]
"PARTICIPANT"
BANQUE NATIONALE DE PARIS
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
27.
32
SCHEDULE 1 - Page 1
A. BNPLC: BNP LEASING CORPORATION,
a Delaware corporation
1. Amount Retained: $1,530,000
2. Initial Percentage: 3%
3. Address for Notices:
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telephone: (972) 788-9191
Facsimile: (972) 788-9140
4. Payment Instructions:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
BNP BNP San Francisco
AC___________________
5. Operations Contact:
BNP Leasing Corporation
12201 Merit Drive
Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox
Telephone: (972) 788-9191
Facsimile: (972) 788-9140
B. Participant: BANQUE NATIONALE DE PARIS,
a banking corporation organized under the laws
of France
1. Amount of Participation: $49,470,000
2. Percentage: 97%
33
SCHEDULE 1 - Page 2
3. Address for Notices:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, CA 94104
Attention: Rafael Lumanlan or Gavin Holles
Telephone: (415) 956-0707
Facsimile: (415) 296-8954
4. Payment Instructions:
Federal Reserve Bank of New York
ABA 026007689 Banque Nationale de Paris
BNP BNP San Francisco
AC___________________
Ref Network Appliance Sunnyvale Synthetic Leases/Phase V
5. Operations Contact:
George Fung
Banque Nationale de Paris
180 Montgomery Street
San Francisco, CA 94104
Telephone: (415) 956-0707
Facsimile: (415) 956-4230
6. "Initial Payment" Due from
Participant to BNPLC: An amount equal to ninety-seven
percent (97%) of initial funding
advanced under the Leases.
34
EXHIBIT A
EXAMPLES OF ADJUSTMENTS TO PERCENTAGES REQUIRED
BECAUSE OF A PARTICIPANT FAILURE TO FUND CONSTRUCTION ADVANCES
The examples below are provided to illustrate the adjustments that might be
required under Section 4.1 to the Participants' Percentages. The examples are
not intended to reflect actual numbers under the Operative Documents or actual
Percentages of BNPLC or any of the Participants; nor are they intended to
provide a formula for adjustments that would be appropriate in every case.
EXAMPLE NO. 1
Assumptions. Assume that:
1. Two Participants ("Participant A" and "Participant B") have entered
into an agreement like this Agreement with BNPLC. Participant A's initial
Percentage was 30% and Participant B's initial Percentage was 20%, leaving BNPLC
with an initial Percentage of 50%.
2. After an exchange of payments like that contemplated by Section 3.1
of this Agreement, the initial Participation Amounts of BNPLC and the
Participants were as follows:
A. BNPLC' Participation Amount (50%) $1,500,000
B. Participant A's Participation Amount (30%) 900,000
C. Participant B's Participation Amount (20%) 600,000
TOTAL $3,000,000
3. On the first Advance Date, a Construction Advance was made in the
amount of $1,000,000, and in connection therewith Participant A and Participant
B paid BNPLC $300,000 and $200,000, respectively. This increased the total
Participation Amounts of BNPLC and the Participants under the Operative
Documents to $4,000,000, which can be broken down as follows:
A. BNPLC's Participation Amount (50%) $2,000,000
B. Participant A's Participation Amount (30%) 1,200,000
C. Participant B's Participation Amount (20%) 800,000
TOTAL $4,000,000
4. On the second Advance Date, three things happened: First, $200,000 in
Carrying Costs were capitalized (i.e., added to the Construction Allowance),
increasing the total Participation Amounts of BNPLC and the Participants by
$200,000 and increasing Participant A's and Participant B's Participation
Amounts by $60,000 and $40,000, respectively. Second,
Exhibit A - Page 1
35
another Construction Advance of $1,900,000 was made, because of which
Participant A and Participant B paid BNPLC $570,000 and $380,000, respectively.
This, together with the $200,000 Carrying Costs, increased the total
Participation Amounts of BNPLC and the Participants to $6,100,000, and increased
Participant A's and Participant B's Participation Amounts to $1,830,000 and
$1,220,000, respectively. Third, BNPLC applied $100,000 that it had received in
connection with the partial condemnation as a Qualified Prepayment, reducing
Participant A's and Participant B's Participation Amounts by $30,000 and
$20,000, respectively, and leaving the total Participation Amounts by BNPLC and
the Participants at $6,000,000, as follows:
A. BNPLC's Participation Amount (50%) $3,000,000
B. Participant A's Participation Amount (30%) 1,800,000
C. Participant B's Participation Amount (20%) 1,200,000
TOTAL $6,000,000
5. On the third Advance Date, two things happened: First, $200,000 in
additional Carrying Costs were capitalized, increasing the total Participation
Amounts by BNPLC and the Participants by $200,000 and increasing Participant A's
and Participant B's Participation Amounts by $60,000 and $40,000, respectively.
Second, although NAI had requested a $2,000,000 Construction Advance, on the
third Advance Date Participant B unexpectedly refused to make any additional
payments to BNPLC, and such refusal resulted in a reduction of the funding BNPLC
was required to make under subparagraph 2(G) of the Construction Management
Agreement. That is, pursuant to and as contemplated in subparagraph 2(G) of the
Construction Management Agreement, BNPLC was only required to advance, and did
advance, $1,600,000 on the third Advance Date. Participant A paid BNPLC $600,000
(30% times the entire $2,000,000 requested advance), increasing Participant A's
Participation Amount by the same amount. At the end of the third Advance Date,
the total Participation Amounts of BNPLC and the Participants had been increased
from $6,000,000 to $7,800,000 by the $200,000 capitalized Carrying Costs and the
actual $1,600,000 advanced by BNPLC to NAI. The total Participation Amounts of
BNPLC and the Participants were then as follows:
A. BNPLC's Participation Amount $4,100,000
B. Participant A's Participation Amount 2,460,000
C. Participant B's Participation Amount 1,240,000
TOTAL $7,800,000
Adjustment Required.
Under the foregoing assumptions, Participant B's refusal to make further
payments to BNPLC would make Participant B a Defaulting Participant.
Nonetheless, Participant A would still have to pay BNPLC 30% of the $2,000,000
third Construction Advance requested by NAI. However, Participant A would also
be entitled to an appropriate increase in its Percentage for purposes of
Exhibit A - Page 2
36
computing the payments from BNPLC to Participant A on account of Net Cash Flow
or Net Sales Proceeds. The adjustment needed at the end of the day on the third
Advance Date would cause Participant A's Percentage to equal 31.5384615% (i.e.,
$2,460,000 divided by $7,800,000), until further adjustments were made, if
necessary, because of the subsequent accrual and capitalization of Carrying
Costs or the making of additional Construction Advances.
EXAMPLE NO. 2
Assumptions. Assume the same facts as in Example No. 1, and in addition assume
that on the fourth Advance Date, no additional Construction Advance was
requested by NAI, but an additional $700,000 in Carrying Costs were capitalized.
This increased the total of BNPLC's and all Participants' Participation Amounts
to $8,500,000, and it increased Participant A's total Participation Amount by
31.5384615% times the $700,000 (or $220,769) to $2,680,769.
Adjustment Required.
Immediately after capitalizing the $700,000 Carrying Costs, Participant A's
Percentage would have to be adjusted to 31.5384588% ($2,680,769 divided by
$8,500,000).
EXAMPLE NO. 3
Assumptions. Assume the same facts as in Example No. 2, and in addition assume
that on the fifth Advance Date, $400,000 in additional Carrying Costs were
capitalized, thereby increasing the total Participation Amounts of BNPLC and the
Participants by $400,000 to $8,900,000 and also increasing Participant A's
Participation Amount by $126,154 (31.5384588% times $400,000). In addition,
assume that NAI requested a $3,000,000 Construction Advance on the fifth Advance
Date, $2,700,000 of which represented new construction costs to be reimbursed
and $300,000 of which represented construction costs that would have been
reimbursed by the prior Construction Advance on the third Advance Date but for
Participant B's refusal to pay its Percentage of such prior Construction
Advance. Again, Participant B refused to make any further payment to BNPLC, even
after BNPLC notified Participant B that a payment would be required two days in
advance of the fifth Advance Date. Thus, after an adjustment (as described
below) to Participant A's Percentage for purposes of calculating payments
required of Participant A in connection with the $3,000,000 Construction
Advance, BNPLC made the entire Construction Advance requested by NAI on the
fifth Advance Date. This resulted in an increase in the total Participation
Amounts of BNPLC and the Participants to $11,900,000.
Adjustment Required.
Under this Example, Participant A's Percentage must be adjusted in two different
ways for two different purposes -one for the purpose of computing the payments
required from Participant A to BNPLC in connection with Construction Advances,
and the second for the purpose of computing payments required to Participant A
from BNPLC in connection with any Net Cash Flow or Net Sales Proceeds received
by BNPLC.
For purposes of computing the payments required from Participant A so long as
Participant B continued to refuse to fund its share of Construction Advances,
Participant A's Percentage must increase to 37.5% (Participant A's Percentage
before any adjustment [30%] divided by the sum
Exhibit A - Page 3
37
of BNPLC's Percentage and Participant A's Percentage before any adjustment
[80%]). Similarly, BNPLC's Percentage of Construction Advances (i.e., the
percentage of Construction Advances for which BNPLC would receive no payment
from Participants) so long as Participant B continued to refuse to fund its
share of Construction Advances must increase to 62.5% (BNPLC's Percentage before
adjustment [50%] divided by the sum of BNPLC's Percentage and Participant A's
Percentage before adjustment [80%]). Thus, for the $3,000,000 Construction
Advance requested by NAI on the fifth Advance Date, Participant A would have
paid BNPLC $1,125,000 (37.5% of $3,000,000) and BNPLC would have had to invest
an additional $1,875,000 (62.5% of $3,000,000).
Immediately after the capitalization of the $400,000 Carrying Costs and after
the funding of the $3,000,000 Construction Advance on the fifth Advance Date,
Participant A's Percentage would be adjusted - for purposes of computing
payments to Participant A from BNPLC upon BNPLC's receipt of any Net Cash Flow
or Net Sales Proceeds - to 33.0473697% (Participant A's new Participation Amount
of $3,931,923 [$2,680,779 plus $126,154 plus $1,125,000] divided by
$11,900,000).
Exhibit A - Page 4
38
EXHIBIT B
SUPPLEMENT TO PARTICIPATION AGREEMENT
[-----------------, -----]
BNP LEASING CORPORATION
- -----------------------
- -----------------------
- -----------------------
Reference is made to the Participation Agreement dated as of March 1,
2000 (as heretofore amended, the "PARTICIPATION AGREEMENT") between BNP Leasing
Corporation ("BNPLC"), Banque Nationale de Paris and other financial
institutions which are from time to time Participants under and as defined in
such Participation Agreement (collectively, the "PARTICIPANTS"). Unless
otherwise defined herein, all capitalized terms used in this Supplement have the
respective meanings given to those terms in the Participation Agreement.
[NOTE: THE NEXT TWO PARAGRAPHS, AND THE ADDENDUM TO SCHEDULE 1 ATTACHED TO THIS
EXHIBIT, WILL BE INCLUDED ONLY AS PART OF A SUPPLEMENT THAT ADDS A NEW
PARTICIPANT UNDER THE PARTICIPATION AGREEMENT:
The undersigned hereby certifies to BNPLC that the undersigned has
become a party to the Pledge Agreements by executing a supplement as provided
therein, and that NAI has approved of the undersigned as a party to the Pledge
Agreements by executing and returning that supplement.
The undersigned, by executing and delivering this Supplement to BNPLC,
hereby agrees to become a party to the Participation Agreement as a Participant
and agrees to be bound by all of the terms thereof applicable to Participants.
The undersigned hereby agrees that its Percentage under the Participation
Agreement shall be ___________ percent (____%), effective as of the date of this
letter. Contemporaneously with the execution of this letter, the undersigned is
paying to BNPLC the sum of $_____________ in consideration of the rights it is
acquiring as a Participant under the Participation Agreement with the foregoing
Percentages.
Schedule 1 attached to the Participation Agreement is amended by the
addition of an Addendum (concerning the undersigned) in the form attached to
this Supplement.]
[NOTE: THE NEXT PARAGRAPH WILL BE INCLUDED ONLY IN A SUPPLEMENT THAT REDUCES AN
EXISTING PARTICIPANT'S PERCENTAGE UNDER THE PARTICIPATION AGREEMENT:
In consideration of the payment of $____________ to the undersigned, the
receipt and sufficiency of which is hereby acknowledged by the undersigned, the
undersigned hereby agrees
Exhibit B - Page 1
39
that its Percentage under the Participation Agreement is reduced to ___________
percent (____%), effective as of the date of this letter.]
[NOTE: THE NEXT PARAGRAPH WILL BE INCLUDED ONLY IN A SUPPLEMENT THAT INCREASES
AN EXISTING PARTICIPANT'S PERCENTAGE UNDER THE PARTICIPATION AGREEMENT:
The undersigned hereby agrees that its Percentage under the
Participation Agreement is increased to ___________ percent (____%), effective
as of the date of this letter. Contemporaneously with the execution of this
letter, the undersigned is paying BNPLC the sum of $_____________ in
consideration of such increase.]
IN WITNESS WHEREOF, the undersigned has executed this Supplement as of
the day and year indicated above.
[NAME]
By:
---------------------------------
Printed Name:
Title:
Accepted and agreed:
BNP LEASING CORPORATION
By:
--------------------------------
Printed Name:
Title:
Exhibit B - Page 2
40
ADDENDUM TO SCHEDULE 1
Participant:
1. Amount of Participation: $
2. Percentage: ___%
3. Address for Notices:
Attention:
Telephone:
Facsimile:
4. Payment Instructions:
Bank:
Account:
Account No.:
ABA No.
Reference:
5. Operations Contact:
Attention:
Telephone:
Facsimile:
Addendum to Schedule 1 - Page 1
1
EXHIBIT 10.66
MODIFICATION AGREEMENT
(FIRST AMENDMENT TO OPERATIVE DOCUMENTS)
This MODIFICATION AGREEMENT (this "AGREEMENT") is made as of April 19,
2000, by BNP LEASING CORPORATION, a Delaware corporation ("BNPLC"), BANQUE
NATIONALE DE PARIS ("AGENT") and NETWORK APPLIANCE, INC., a California
corporation ("NAI")
R E C I T A L S
A. BNPLC and NAI executed a Lease Agreement (Phase V- Improvements) (the
"IMPROVEMENTS LEASE") and a Lease Agreement (Phase V- Land) (the "LAND LEASE"),
each dated March 1, 2000 (collectively, the "LEASES").
B. BNPLC, Agent and NAI desire to modify certain provisions of certain
Operative Documents as provided below.
NOW, THEREFORE, in consideration of the above recitals and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Definitions. Capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings given to them in the Leases.
2. Modifications. The Operative Documents are hereby modified as follows:
a. Modifications to Closing Certificate. Section 1(C) of the Closing
Certificate is amended and restated as follows:
"(C) Title Insurance. Without limiting NAI's obligations under the
preceding subparagraph, contemporaneously with the execution of this
Agreement NAI shall provide to BNPLC a title insurance policy (or
binder committing the applicable title insurer to issue a title
insurance policy, without the payment of further premiums) in the
amount of no less than $55,000,000, in form and substance satisfactory
to BNPLC, written by one or more title insurance companies
satisfactory to BNPLC and insuring BNPLC's fee estate in the Land and
Improvements."
b. Modifications to Common Definitions and Provisions Agreement (Phase V-
Improvements). The definition of "Maximum Construction Allowance" is
amended and restated as follows:
"MAXIMUM CONSTRUCTION ALLOWANCE" means an amount equal to $55,000,000,
less the sum of the Initial Funding Advance under and defined in the
Other Common Definitions and Provisions Agreement and the Initial
Funding Advance under and as defined in this Agreement.
c. Modification to Participation Agreement.
i. The reference to "$51,000,000" on the cover page of the
Participation Agreement is amended and restated to refer to
"$55,000,000".
2
ii. The first sentence of Section 3.2.2 is amended and restated as
follows:
"Before 12:00 noon, San Francisco time, on the third Business Day
prior to any date on which BNPLC expects to make a payment of a
Construction Advance to NAI under the Construction Management
Agreement or of costs or expenditures considered as Construction
Advances pursuant to subparagraph 6(e) of the Phase V
Improvements Lease, BNPLC shall notify the Participants of the
amount of such payment, and each Participant shall pay to BNPLC
such Participant's Percentage times such amount prior to 12:00
noon, San Francisco time, on such date."
iii. Section 3.2.3 is amended and restated as follows:
"LIMITATION ON ADVANCES BY PARTICIPANT. Notwithstanding anything
herein to the contrary or any adjustment to any Participant's
Percentage pursuant to Section 4.1, the total of all payments
required of any Participant to BNPLC by this Section 3.2
(excluding interest on past due payments required by Section
3.2.2) because of any Construction Advances made to NAI under the
Construction Management Agreement (in contrast to costs or
expenditures considered as Construction Advances pursuant to
subparagraph 6(e) of the Phase V Improvements Lease after a
Landlord's Election to Continue Construction, as provided below)
shall not exceed the amount that would cause such Participant's
Participation Amount to exceed the Participation Amount specified
for such Participant in Schedule 1.
In the event of a Landlord's Election to Continue Construction
under subparagraph 6(e) of the Phase V Improvements Lease, no
Participant shall be required to make any payments to BNPLC
relating to costs incurred by BNPLC to continue or complete the
Construction Project in excess of its total Participation Amount
specified for such Participant in Schedule 1, unless such
Participant has approved of the same in writing to BNPLC."
3. Ratification. Each of the Operative Documents, as amended by this
Agreement, are hereby ratified and confirmed in all respects.
4. Entire Agreement. This Agreement and the documents and agreements referred
to herein set forth the entire agreement between the parties concerning the
subject matter hereof and no amendment or modification of this Agreement
shall be binding or valid unless expressed in a writing executed by both
parties hereto.
5. Successors and Assigns. All of the covenants, agreements, terms and
conditions to be observed and performed by the parties hereto shall be
applicable to and binding upon their respective heirs, personal
representatives, successors and, to the extent assignment is permitted
under the Operative Documents, their respective assigns.
2
3
6. Execution in Counterparts. To facilitate execution, this Agreement may be
executed in as many identical counterparts as may be required. It shall not
be necessary that the signature of, or on behalf of, each party, or that
the signature of all persons required to bind any party, appear on each
counterpart. All counterparts, taken together, shall collectively
constitute a single instrument. It shall not be necessary in making proof
of this Agreement to produce or account for more than a single counterpart
containing the respective signatures of, or on behalf of, each of the
parties hereto. Any signature page to any counterpart may be detached from
such counterpart without impairing the legal effect of the signatures
thereon and thereafter attached to another counterpart identical thereto
except having attached to it additional signature pages.
7. Recitals. The recitals contained herein are incorporated by this reference.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BNP LEASING CORPORATION,
a Delaware corporation
By:
-----------------------------------
Lloyd G. Cox, Vice President
BANQUE NATIONALE DE PARIS
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
NETWORK APPLIANCE, INC., a California
corporation
By:
-----------------------------------
3
1
Exhibit 21.1
SUBSIDIARIES OF THE COMPANY
SUBSIDIARIES:
Network Appliance Ltd. (U.K.)
Network Appliance SARL (France)
Network Appliance Srl. (Italy)
Network Appliance GmbH (Germany)
Network Appliance FSC Incorporated
Network Appliance KK (Japan)
Network Appliance Ltd. (Ireland)
Network Appliance GmbH (Switzerland)
Network Appliance BV (Netherlands)
Network Appliance GesmbH (Austria)
Network Appliance SL (Spain)
Network Appliance Global Ltd. (Bermuda)
Network Appliance Denmark ApS
Network Appliance (Australia) Pty Ltd
Network Appliance Mexico S de RL de CV
1
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors and Shareholders of Network Appliance, Inc.:
We consent to the incorporation by reference in Registration Statement Nos.
33-99638, 333-25277, 333-40307 and 333-32318 on Form S-8 of our report dated May
16, 2000 (June 13, 2000 as to Note 11), appearing in this Annual Report on Form
10-K of Network Appliance, Inc. for the year ended April 30, 2000.
DELOITTE & TOUCHE LLP
San Jose, California
July 10, 2000
56
5
1,000
YEAR
APR-28-2000
APR-30-1999
APR-28-2000
279,014
74,477
108,902
3,039
20,434
533,000
66,622
18,673
592,233
113,433
0
0
0
351,519
127,227
592,233
579,300
579,300
235,846
235,846
238,086
0
0
114,406
40,614
73,792
0
0
0
73,792
0.25
0.21
5
1,000
YEAR YEAR
APR-30-1999 APR-24-1998
APR-25-1998 APR-26-1997
APR-30-1999 APR-24-1998
221,284 37,315
5,800 10,800
57,163 34,313
1,886 811
13,581 8,707
315,346 98,939
33,959 21,723
14,688 9,506
346,347 115,736
50,530 29,308
0 0
0 0
0 0
240,093 65,924
55,631 20,341
346,347 115,736
289,420 166,163
289,420 166,163
118,120 67,549
118,120 67,549
116,174 65,956
0 0
0 0
56,990 33,547
21,377 12,582
35,613 20,965
0 0
0 0
0 0
35,613 20,965
0.13 0.08
0.11 0.07
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5
1,000
YEAR YEAR
APR-25-1997 APR-26-1996
APR-27-1996 MAY-01-1995
APR-25-1997 APR-26-1996
21,520 24,637
6,916 2,982
13,911 5,330
330 330
9,920 4,825
56,620 40,402
13,752 6,582
4,514 1,733
68,941 45,449
14,701 6,121
0 0
0 0
0 0
54,653 39,903
(624) 0
68,941 45,449
93,333 46,632
93,333 46,632
38,061 20,557
38,061 20,557
52,189 20,075
0 110
0 68
4,043 6,600
3,793 0
250 6,600
0 0
0 0
0 0
250 6,600
0.00 0.05
0.00 0.03
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5
1,000
3-MOS 6-MOS 9-MOS
APR-28-2000 APR-28-2000 APR-28-2000
MAY-01-1999 MAY-01-1999 MAY-01-1999
JUL-30-1999 OCT-29-1999 JAN-28-2000
230,025 220,828 231,416
15,869 51,673 58,636
68,910 78,747 99,674
2,190 2,609 2,882
15,019 17,542 20,878
348,046 395,214 447,428
42,109 47,122 53,111
17,093 20,042 19,465
382,334 434,304 493,916
58,395 68,538 77,748
0
0
0
254,508 280,393 312,144
69,363 85,221 103,969
382,334 434,304 493,916
103,279 227,991 379,281
103,279 227,991 379,281
42,539 94,055 155,470
42,539 94,055 155,470
41,922 92,419 154,507
0
0
20,881 45,761 76,457
7,413 16,245 27,142
13,468 29,516 49,315
0
0
0
13,468 29,516 49,315
0.05 0.10 0.17
0.04 0.09 0.14
5
1,000
3-MOS 6-MOS 9-MOS
APR-30-1999 APR-30-1999 APR-30-1999
APR-25-1998 APR-25-1998 APR-25-1998
JUL-31-1998 OCT-30-1998 JAN-29-1999
31,476 48,355 59,886
14,930 8,750 8,150
35,960 44,928 50,735
911 1,511 1,686
9,732 10,722 11,751
99,523 121,565 143,720
22,292 25,188 29,939
9,631 11,128 12,735
126,073 150,548 172,648
26,397 39,150 36,792
0 0 0
0 0 0
0 0 0
72,064 75,468 90,655
27,455 35,796 45,085
126,073 150,548 172,648
57,375 123,000 198,616
57,375 123,000 198,616
23,239 50,120 80,938
23,239 50,120 80,938
22,901 49,239 79,540
0 0 0
0 0 0
11,356 24,757 39,796
4,259 9,284 14,929
7,097 15,473 24,867
0 0 0
0 0 0
0 0 0
7,097 15,473 24,867
0.03 0.06 0.09
0.02 0.05 0.08
5
1,000
3-MOS 6-MOS 9-MOS
APR-24-1998 APR-24-1998 APR-24-1998
APR-26-1997 APR-26-1997 APR-26-1997
JUL-25-1997 OCT-24-1997 JAN-23-1998
25,578 28,520 39,302
4,850 5,250 5,250
16,852 23,113 26,684
296 421 546
12,719 11,718 9,045
63,855 73,361 85,394
15,161 17,014 18,638
5,543 6,783 8,074
76,492 86,598 98,908
16,891 20,479 25,122
0 0 0
0 0 0
0 0 0
55,814 57,457 59,579
3,597 8,482 14,037
76,492 86,598 98,908
33,420 71,821 115,805
33,420 71,821 115,805
13,570 29,316 47,196
13,570 29,316 47,196
13,264 28,332 45,791
0 125 125
0 0 0
6,754 14,570 23,458
2,533 5,464 8,797
4,221 9,106 14,661
0 0 0
0 0 0
0 0 0
4,221 9,106 14,661
0.02 0.04 0.06
0.02 0.03 0.05
5
1,000
3-MOS 6-MOS 9-MOS
APR-25-1997 APR-25-1997 APR-25-1997
APR-27-1996 APR-27-1996 APR-27-1996
JUL-26-1996 OCT-25-1996 JAN-24-1997
21,758 15,244 20,938
6,350 8,850 6,850
6,751 10,866 12,336
330 0 0
6,993 8,318 9,585
44,891 46,314 53,007
5,704 5,841 6,148
0 0 0
50,803 52,345 59,357
11,475 10,225 12,833
0 0 0
0 40,448 0
0 0 0
40,416 0 41,495
(1,365) 1,416 4,796
50,803 52,345 59,357
18,460 39,508 64,353
18,460 39,508 64,353
7,593 16,176 26,292
7,593 16,176 26,292
11,913 20,361 30,131
0 0 0
0 0 0
(755) 3,523 8,723
(264) 1,233 3,053
(491) 2,290 5,670
0 0 0
0 0 0
0 0 0
(491) 2,290 5,670
(0.00) 0.01 0.02
(0.00) 0.01 0.02
