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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
Form 10-K
 
     
(Mark One)    
þ
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the fiscal year ended April 25, 2008
or
o
  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
 
NetApp, Inc.
(Exact name of registrant as specified in its charter)
 
     
Delaware
  77-0307520
(State or other jurisdiction of
incorporation or organization) 		  (IRS Employer
Identification No.)
 
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:
 
     
Title of Each Class
 
Name of Exchange on Which Registered
 
Common Stock, $0.001 Par Value
  The NASDAQ Stock Market LLC
 
Securities registered pursuant to Section 12(g) of the Act:
None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ     No o
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ
 
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 þ     No o
 
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.  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
             
Large accelerated filer þ
  Accelerated filer o   Non-accelerated filer o
(Do not check if a smaller reporting company) 		  Smaller reporting company o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ
 
The aggregate market value of voting stock held by non-affiliates of the registrant, as of October 26, 2007, the last day of registrant’s most recently completed second fiscal quarter, was $9,901,640,937 (based on the closing price for shares of the registrant’s common stock as reported by the NASDAQ Global Select Market for the last business 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 June 20, 2008, 329,904,790 shares of the registrant’s common stock, $0.001 par value, were outstanding.
 
 
DOCUMENTS INCORPORATED BY REFERENCE
 
The information called for by Part III of this Form 10-K is hereby incorporated by reference from the definitive Proxy Statement for our annual meeting of stockholders to be held on September 2, 2008, which will be filed with the Securities and Exchange Commission not later than 120 days after April 25, 2008.
 

 

 
TABLE OF CONTENTS
 
                 
      PART I
      Business     2  
      Risk Factors     12  
      Unresolved Staff Comments     28  
      Properties     28  
      Legal Proceedings     28  
      Submission of Matters to a Vote of Security Holders     29  
       
      PART II
      Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities     30  
      Selected Financial Data     32  
      Management’s Discussion and Analysis of Financial Condition and Results of Operations     32  
      Quantitative and Qualitative Disclosures About Market Risk     57  
      Financial Statements and Supplementary Data     60  
      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure     107  
      Controls and Procedures     107  
      Other Information     109  
       
      PART III
      Directors and Executive Officers of the Registrant     109  
      Executive Compensation     109  
      Security Ownership of Certain Beneficial Owners and Management     109  
      Certain Relationships and Related Transactions     109  
      Principal Accounting Fees and Services     109  
       
      PART IV
      Exhibits and Financial Statement Schedules     109  
Signatures     110  
Schedule II     112  
 EXHIBIT 3.1
 EXHIBIT 3.2
 EXHIBIT 10.31
 EXHIBIT 10.32
 EXHIBIT 10.33
 EXHIBIT 10.34
 EXHIBIT 10.35
 EXHIBIT 10.36
 EXHIBIT 10.37
 EXHIBIT 10.39
 EXHIBIT 10.40
 EXHIBIT 10.41
 EXHIBIT 10.42
 EXHIBIT 10.43
 EXHIBIT 10.44
 EXHIBIT 10.45
 EXHIBIT 10.50
 EXHIBIT 10.51
 EXHIBIT 10.52
 EXHIBIT 10.53
 EXHIBIT 10.54
 EXHIBIT 10.55
 EXHIBIT 10.56
 EXHIBIT 10.64
 EXHIBIT 10.69
 EXHIBIT 10.70
 EXHIBIT 10.71
 EXHIBIT 10.72
 EXHIBIT 10.73
 EXHIBIT 10.74
 EXHIBIT 10.75
 EXHIBIT 10.76
 EXHIBIT 10.77
 EXHIBIT 10.78
 EXHIBIT 10.79
 EXHIBIT 10.81
 EXHIBIT 21.1
 EXHIBIT 23.1
 EXHIBIT 31.1
 EXHIBIT 31.2
 EXHIBIT 32.1
 EXHIBIT 32.2


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PART I
 
Item 1.   Business
 
Forward Looking Statements
 
With the exception of historical facts, the statements contained in this Annual Report on Form 10-K are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are subject to the safe harbor provisions set forth in the Exchange Act. Forward-looking statements usually contain the words “estimate,” “intend,” “plan,” “predict,” “seek,” “may,” “will,” “should,” “would,” “anticipate,” “expect,” “believe,” or similar expressions and variations or negatives of these words. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. All forward-looking statements, including but not limited to:
 
(1) the possibility we may acquire technology through business combinations or through licensing from third parties when appropriate;
 
(2) our belief that we are fully compliant with all environmental laws;
 
(3) our intention to continue to commit substantial resources to research and development;
 
(4) our belief 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;
 
(5) our intention to continue to establish and maintain business relationships with technology companies to accelerate the development and marketing of our storage solutions;
 
(6) our belief that building our global brand awareness is key to our long-term success;
 
(7) our belief that industry consolidation may result in stronger competitors;
 
(8) our intention to regularly introduce new products and product enhancements;
 
(9) our belief that the underlying credit quality of the assets backing our auction rate securities investments have not been impacted by the reduced liquidity of these investments;
 
(10) our belief that a number of factors may cause the market price of our common stock to fluctuate;
 
(11) our intention to not pay a dividend, and to retain all available funds to finance internal growth and product development as well as other possible management initiatives;
 
(12) our belief that our products continue to offer the best price-performance value in the industry;
 
(13) our belief that we will be able to continue to gain market share in a more constrained spending environment;
 
(14) our belief that we are well positioned in the fastest growth segments of the storage market to capitalize on an IT spending recovery;
 
(15) our intention to continue to invest in the people, processes, and systems necessary to best optimize our revenue growth, long-term profitability and enhance our worldwide infrastructure;
 
(16) our expectation that our future gross margins will be affected by various factors such as increased software revenues, price reductions and discounts and increased indirect channel sales;
 
(17) our estimates regarding future amortization of existing technology relating to our acquisitions;
 
(18) our expectation that service margins will experience some variability;
 
(19) our estimates regarding future amortization of trademarks, tradenames, customer contracts, and relationships relating to our acquisitions;


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(20) our intention to continue to add sales capacity in an effort to expand our penetration of domestic and international markets;
 
(21) our expectation that we will increase our sales and marketing expenses commensurate with future revenue growth;
 
(22) our estimates regarding future capitalized patents amortization expenses;
 
(23) our belief that our future performance will depend in large part on our ability to maintain and enhance our current product line, develop new products, maintain technological competitiveness, and meet an expanding range of customer requirements;
 
(24) our intention to continuously support current and future product development;
 
(25) our intention to continuously broaden our existing product offerings and introduce new products;
 
(26) our belief that our sales and marketing, research and development, and general and administrative expenses will increase in absolute dollars in fiscal 2009;
 
(27) our belief that our review of restructuring estimates may result in a substantial charge or reduction to restructuring expense if different conditions prevail than were anticipated in previous management estimates;
 
(28) our expectation that the balance of the restructuring reserve relating to closure of facilities and consolidation of resources will be paid by fiscal 2011;
 
(29) our expectation that our interest income will continue to be impacted by the volatility of market interest rates, cash and investment balances, cash generated by operations, timing of our stock repurchases, capital expenditures and payments of our future contractual obligations;
 
(30) our expectation that interest expense will be subject to market interest rate volatility and amounts due under various loan agreements;
 
(31) our belief that period-to-period changes in foreign exchange gains or losses will continue to be impacted by hedging costs associated with our forward and option activities and forecast variance;
 
(32) our belief that we will have sufficient liquidity from cash provided by operations and our financing agreements;
 
(33) the possibility we may receive less cash from stock option exercises if stock option exercise patterns change;
 
(34) the possibility that we may receive less tax benefits and increase our income tax payments if our stock price declines;
 
(35) our expectation regarding interest payments on our outstanding secured credit agreement;
 
(36) our expectations regarding our contractual cash obligations and other commercial commitments at April 25, 2008, for future periods;
 
(37) our expectation regarding the completion of construction of our buildings under the BNP leases;
 
(38) our expectation that capital expenditures will increase commensurate with our business growth;
 
(39) our expectation that our existing facilities and those being developed in Sunnyvale, California; Research Triangle Park, North Carolina; and worldwide are adequate for our requirements over at least the next two years and that additional space will be available as needed;
 
(40) our expectation that we will finance construction projects, including our commitments under facilities and equipment operating leases, and any required capital expenditures over the next few years through cash from operations and existing cash, cash equivalents, and investments;
 
(41) our belief that our diversified customer base should mitigate our exposure to any one industry;


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(42) our expectation that we will incur higher capital expenditures in the near future to expand our operations;
 
(43) our intention to acquire products and businesses that are complementary to our business;
 
(44) the possibility that we will continue to repurchase our common stock, thereby reducing cash, cash equivalents, and/or short-term investments available to fund future operations and meet other liquidity requirements;
 
(45) our belief that our cash and cash equivalents, short-term investments, cash generated from operations, and credit facilities will satisfy our working capital needs, capital expenditures, stock repurchases, contractual obligations, and other liquidity requirements associated with our operations for at least the next twelve months;
 
(46) our intention to hold the auction rate securities until the market recovers;
 
(47) our belief that any lack of liquidity relating to our auction rate securities investments will not have an impact on our ability to fund operations;
 
(48) our belief that cash flow generated from operations reinvested at current market rates will offer a natural hedge against interest rate risk from our lease commitments and debt in the event of a significant change in market interest rate;
 
(49) our belief that the IRS federal tax audits we are currently undergoing will not have a material adverse effect upon our consolidated financial position, results of operations and cash flow;
 
(50) our belief that various legal proceedings and claims which have arisen or may arise in the normal course of business will not have a material adverse effect on our business, cash flow, operating results, or financial condition;
 
(51) our inability to estimate the amount or range of the potential settlement with respect to the various Sun patent litigations; and
 
(52) our inability to determine the likely outcome of the GSA audit, therefore no provision has been recorded,
 
are all inherently uncertain as they are based on management’s current expectations and assumptions concerning future events, and they are subject to numerous known and unknown risks and uncertainties. Therefore, our actual results may differ materially from the forward-looking statements contained herein. Factors that could cause actual results to differ materially from those described herein include, but are not limited to:
 
  •  the amount of orders received in future periods;
 
  •  our ability to ship our products in a timely manner;
 
  •  our ability to achieve anticipated pricing, cost, and gross margins levels;
 
  •  our ability to maintain or increase backlog and revenue;
 
  •  our ability to successfully introduce new products;
 
  •  our ability to achieve and capitalize on changes in market demand;
 
  •  acceptance of, and demand for, our products;
 
  •  demand for our global service and support and professional services;
 
  •  our ability to identify and respond to significant market trends and emerging standards;
 
  •  our ability to realize our financial objectives through increased investment in people, process, and systems;
 
  •  our ability to maintain our supplier and contract manufacturer relationships;
 
  •  the ability of our competitors to introduce new products that compete successfully with our products;


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  •  our ability to expand direct and indirect sales and global service and support;
 
  •  the general economic environment and the continued growth of the storage market;
 
  •  our ability to sustain and/or improve our cash and overall financial position;
 
  •  the results of our ongoing litigation and government audits and inquiries; and
 
  •  those factors discussed under “Risk Factors” elsewhere in this Annual Report on Form 10-K.
 
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based upon information available to us at this time. These statements are not guarantees of future performance. We disclaim any obligation to update information in any forward-looking statement. Actual results could vary from our forward looking statements due to foregoing factors as well as other important factors, including those described in the Risk Factors included on page 11.
 
Overview
 
NetApp, Inc. (“NetApp,” formerly known as Network Appliance, Inc.) is a leading provider of storage and data management solutions. We offer solutions for storing, managing, protecting and archiving business data. Our solutions are designed to lower the cost of managing and protecting our customers’ data while maximizing the return on infrastructure.
 
We believe in offering complete solutions to help customers effectively streamline operations. We strive to provide customers with the best experience in the industry with every interaction they have with our people, products and services. In addition to our broad range of storage and data management solutions, we provide global service and support, offer flexible financing solutions and work to simplify customer environments by utilizing open standards, driving industry collaboration and partnering with other industry leaders. Using a combination of products, technologies and partners, we help solve customer business challenges while helping them maximize return on investment.
 
Our products and services are designed to meet the expansive requirements and demanding service levels of large enterprises and their mission-critical business applications. To better meet these needs, we partner with key industry leaders, such as IBM Corporation, Microsoft Corporation, Oracle Corporation, SAP Corporation, Symantec Corporation and VMware, Inc., to develop integrated solutions that optimize the performance of their applications on our systems. In addition, our products have been designed to satisfy the rigorous demands of high performance computing and technical data center applications, today offering solutions used in the design of semiconductors and automobiles, and graphics rendering and seismic exploration.
 
We were incorporated in 1992 and shipped the world’s first networked storage appliance a year later. Since then, we have brought to market many significant innovations and industry firsts in storage and data management. We have grown to over 7,000 employees with operations in over 130 countries around the world.
 
NetApp Product Families
 
We offer highly available, scalable and cost-effective storage solutions that incorporate our unified storage platform and the feature-rich functionality of our data and storage resource management software. Our solutions help improve enterprise productivity, performance and profitability, while providing investment protection and enhanced asset utilization. Our enterprise-class storage solutions are complemented by our services expertise to ensure interoperability and optimization in the context of the application and IT infrastructure within which they are deployed.
 
Data ONTAP® Software
 
Our Fabric-Attached Storage (“FAS”) and V-Series storage solutions are based on Data ONTAP®, a highly optimized, scalable and flexible operating system that uniquely supports any mix of storage area network (“SAN”), network-attached storage (“NAS”) and Internet protocol SAN (“IP SAN”) environments concurrently. This unified storage software platform integrates seamlessly into UNIX®, Linux®, Windows® and Web environments.


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The Data ONTAP operating system provides the foundation to build a storage infrastructure and an enterprise-wide data fabric for mission-critical business applications, while lowering the total cost of ownership and complexity typically associated with the management of large-scale enterprise data centers.
 
Data ONTAP GX, our high-performance operating system, supports fully integrated, multi-node storage systems within a single global name space. This storage grid architecture provides the ability to dynamically add storage resources and transparently redistribute data without disruption to client systems. We are in the process of integrating the Data ONTAP GX functionality with the core Data ONTAP capabilities and will ultimately converge both into a single operating system.
 
Data Management Software
 
Our products are in use today in some of the largest data centers in the world. These environments require enterprise-class management tools. We provide management software to increase productivity and simplify data management. Such tools include:
 
  •  FlexVol® technology, which enables storage architectures to be more efficient and achieve higher utilization using flexible volumes that do not require repartitioning of physical storage space;
 
  •  FlexClone® technology, which enables true data cloning using logical copies that do not require additional physical storage space, and allows for instant replication of data volumes and data sets;
 
  •  Deduplication technology, which provides the ability to eliminate duplicate data within primary and secondary disk storage environments, resulting in greater efficiency and higher utilization of storage capacity;
 
  •  FlexSharetm technology, which directs how storage system resources are used to deliver an appropriate level of service for each application;
 
  •  FlexCachetm technology, which allows performance acceleration through the creation of read-only cached volumes by creating caching volumes on multiple storage controllers; and
 
  •  MultiStore® software, which allows partitioning of individual physical storage systems into multiple separate logical partitions.
 
Storage Management and Application Integration Software
 
Our management software family of products provides a broad range of storage and data management tools to simplify IT administration and enhance flexibility and productivity. We deliver differentiated products and collaborate with industry open standards and interfaces to deliver this value to customers. We have four suites of products targeted to different IT administrative roles: Storage Suite, Server Suite, Database Suite and Application Suite. The software products within these suites are tightly integrated with database and business applications software from partners such as Microsoft, Oracle, SAP and VMware in order to optimize the performance of those applications on our storage systems. Our product offering extends into data center automation with our recent acquisition of Onaro, Inc., and its SANscreen software, which provides the capability to monitor service levels, manage performance and support change management in complex enterprise SAN environments.
 
FAS Family
 
Our family of modular, scalable, highly available, unified networked storage systems provides seamless access to a full range of enterprise data for users on a variety of platforms. The FAS 6000, FAS 3000, FAS 2000 and FAS 200 series of fabric-attached enterprise storage systems are designed to consolidate UNIX, Windows, NAS, Fibre Channel (“FC”), Internet Small Computer Systems Interface (“iSCSI”), SAN and Web data in central locations running over the standard connection types: Gigabit Ethernet, FC and parallel SCSI (for backup). Our design optimizes and consolidates high-performance data access for individuals in multi-user environments as well as for application servers and server clusters with dedicated access. All of our FAS systems are interoperable and run the highly efficient Data ONTAP operating system.


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V-Series Family
 
Our V-Series is a network-based virtualization solution that consolidates storage arrays from different suppliers behind our data management interface, providing SAN and NAS access to data stored in heterogeneous storage arrays. With the V-Series solution, customers are able to: transform existing heterogeneous, multi-vendor storage systems into a single storage pool; simplify storage provisioning and management with Data ONTAP thin provisioning; and dramatically lower backup time, space and cost with Data ONTAP Snapshottm copies. The V-Series is compatible with the FAS family of storage systems.
 
StoreVaulttm
 
StoreVault is a storage solution that leverages enterprise-proven ONTAP technology and optimizes it to focus on serving small to medium-sized businesses (“SMBs”), as well as larger enterprises in need of small or departmental storage solutions. Sold exclusively through value-added resellers, we believe that StoreVault is the only packaging of advanced enterprise storage technologies that has been simplified and made available for SMB use.
 
NearStore on FAS
 
The NearStore® option for FAS systems is a flexible near-line software package that combines the Data ONTAP operating system with inexpensive SATA disk drives to provide cost-effective, scalable and fast storage for data protection and retention applications. The NearStore software bundle bridges the gap between primary storage and offline storage by providing much faster data access than offline storage at a cost typically much lower than primary storage. NearStore is ideal for disk-to-disk backup, business continuance, archival, compliant retention and content storage.
 
VTL Data Protection Systems
 
Our Virtual Tape Library (“VTL”) solution is a disk-to-disk backup appliance that appears as a tape library to a backup software application, but provides the superior speed and reliability of disk technologies. Our VTL is a high-performance, easily managed system that can be used in any heterogeneous primary storage environment. Developed specifically to address the requirements of backup administrators, our VTL solutions increase the performance and reliability of backups, simplify backup management and reduce storage costs in traditional data center tape backup infrastructures.
 
Data Protection Software Products
 
We offer a broad range of business continuance and disk backup solutions for enterprise customer environments. Our Snapshot technology enables near-instantaneous, space efficient online backups of large data sets without affecting system performance. MetroCluster, SnapMirror®, SyncMirror® and SnapRestore® products provide an appropriate level of data availability and cost of protection matched to the recovery point objectives and recovery time objectives of customer environments. SnapVault®, Open Systems SnapVault and SnapVault for NetBackuptm products provide network- and storage-optimized disk-to-disk backup solutions.
 
Data Retention and Archive Products
 
To meet growing regulatory compliance demands faced by most enterprises, we offer a broad suite of products to help ensure data permanence, accessibility and privacy across a variety of different regulations such as the Sarbanes-Oxley Act, 21 CFR Part 11, SEC Rule 17a-4 and HIPAA. Immutable, cost-effective, resilient and reliable storage architectures can be created utilizing SnapLock® products in conjunction with our NearStore software. Our Information Server 1200 product provides advanced capabilities for both initial classification and subsequent e-discovery requirements.


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Storage Security Products
 
Security has become a critical element of data management, and we have taken a leading role in driving security innovation. Our DataFort storage security appliance provides a unified platform for data security and key management across NAS, IP SAN, FC SAN and tape backup environments. The platform combines wire-speed encryption, access controls, authentication and automated key management to provide strong security for data at rest, while still allowing the capability to search compliant data for legal discovery purposes if the need arises.
 
NetApp Global Services
 
Our customers demand high availability and reliability of their storage infrastructure to ensure the successful, ongoing operation of their businesses. NetApp Global Services (“NGS”) are designed with this in mind. We provide professional services, global support solutions and customer education and training to help customers most effectively manage their data. The professional services and support solutions we offer help our customers to resolve business problems, reduce costs, keep businesses up and running continuously, comply with regulations and policies and improve overall operational results. We utilize a global, integrated model to provide consistent service delivery and global support during every phase of the customer engagement, including assessment and analysis, planning, design, installation, implementation, integration, optimization, ongoing support and remote management and monitoring. Services and support often involve phased rollouts, technology transitions and migrations and other long-term engagements.
 
Principal Markets and Distribution Channels
 
We market and sell our products in numerous countries throughout the world, and in March 2008, we launched a global branding and awareness campaign to increase the visibility of NetApp in the broader IT market. Our diversified customer base represents a number of large segments and vertical markets. We focus primarily on the enterprise data management and storage solutions markets, offering an array of products from our ultra high-end products designed for large enterprise customers to our low-end products designed for SMBs. We have also expanded into the VTL and data encryption markets, bringing us into parts of the data center in which we have not previously competed. With our next-generation operating system, Data ONTAP GX, we offer storage grid architecture to high-performance computing environments.
 
We employ a multi-channel distribution strategy, selling products and services to end users through a direct sales force, value-added resellers, system integrators, original equipment manufacturers (“OEMs”) and distributors. In North America, Europe and Australia, we employ a mix of resellers and direct sales channels to sell to end users. In Asia, Africa and South America, our products are primarily sold through resellers, which are supported by channel sales representatives and technical support personnel. No single customer or distributor accounted for 10% or more of our net sales during fiscal 2008, 2007 or 2006.
 
Seasonality
 
As the size of our business has grown, we have begun to see a seasonal decline in revenues in the first quarter of our fiscal year. In addition, we also see some international seasonality, as sales to European customers are historically weaker during the summer months. Sales to the U.S. government tend to be seasonally stronger during our second fiscal quarter, concurrent with the end of the U.S. federal government’s fiscal year in September.
 
Backlog
 
We manufacture products based on a combination of specific order requirements and 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, “orders” may not constitute a firm backlog and may not be a meaningful indicator of future revenues.


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Manufacturing and Supply Chain
 
We have outsourced manufacturing operations to third parties located in Fremont, California; Livingston, Scotland; Shanghai, China; Singapore; Tao Yuan Shien, Taiwan; and Schiphol Airport, The Netherlands. These operations include materials procurement, commodity management, component engineering, test engineering, manufacturing engineering, product assembly, product assurance, quality control, final test and global logistics. We rely on a limited number of suppliers for materials, as well as several key subcontractors for the production of certain subassemblies and finished systems. We multi-source wherever possible to mitigate supply risk. Our strategy has been to develop close relationships with our suppliers, exchanging critical information and implementing joint quality programs. We also use contract manufacturers for the production of major subassemblies to improve our manufacturing redundancy. This manufacturing strategy minimizes capital investments and overhead expenditures and creates flexibility for rapid expansion. We were awarded ISO 9001 certification on May 29, 1997 and continue to be ISO 9001 certified. We were awarded ISO 14001 certification on December 8, 2004 and continue to be ISO 14001 certified.
 
Research and Development
 
We conduct research and development activities in various locations throughout the world. In fiscal 2008, 2007 and 2006, research and development expenses represented 13.7%, 13.7% and 12.2% of our total revenue, respectively. These costs relate primarily to personnel and related costs incurred to conduct product development activities. Although we develop many of our products internally, we may acquire technology through business combinations or through licensing from third parties when appropriate. We believe that technical leadership is essential to our success and we expect to continue to commit substantial resources to research and development.
 
Competition
 
In the storage market, our primary and near-line storage system products and our associated software portfolio compete primarily with storage system products and data management software from EMC, Hitachi Data Systems (“HDS”), HP, IBM and Sun Microsystems. In addition, Dell, Inc. is a competitor in the storage marketplace through its business arrangement with EMC, which allows Dell to resell EMC storage hardware and software products, as well as through Dell’s recent acquisition of EqualLogic through which Dell offers low-priced storage solutions. In the secondary storage market, which includes the disk-to-disk backup, compliance and business continuity segments, our solutions compete primarily against products from EMC and Sun Microsystems. Our VTL products also compete with traditional tape backup solutions in the broader data backup/recovery space. Additionally, a number of small, newer companies have recently entered the storage systems and data management software markets, the near-line and VTL storage markets and the high-performance clustered storage markets, some of which may become significant competitors in the future.
 
Customer Base
 
Our diversified customer base spans a number of large segments and vertical markets. Examples include: energy, financial services, government, high technology, Internet, life sciences and healthcare services, major manufacturing, media, entertainment, animation and video postproduction and telecommunications.
 
Segment, Geographic Information and Classes of Similar Product and Services
 
See Note 9 to the Consolidated Financials Statements accompanying this Annual Report on Form 10-K. Information about our classes of similar product and services is included in Item 8 — “Financial Statements and Supplementary Data” under the heading “Consolidated Statements of Income” and “Notes to Consolidated Financial Statements” and is incorporated herein by reference.
 
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


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protection. We have registered our NetApp name and logo, Network Appliance name and logo, Data ONTAP, DataFabric, FAServer®, FlexVol, FilerView, NearStore, NetApp, NetCache, SecureShare, SnapDrive, SnapLock, SnapManager, SnapMirror, SnapRestore, SnapVault, WAFL, and others as trademarks in the U.S. Other U.S. trademarks and some of the other U.S. 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 U.S. and international patent applications pending and multiple U.S. patents issued.
 
In addition, through various licensing arrangements, we receive certain rights to intellectual property of others. We expect to maintain current licensing arrangements and to secure licensing arrangements in the future, as needed and to the extent available on reasonable terms and conditions, to support continued development and sales of our products and services. Some of these licensing arrangements require or may require royalty payments and other licensing fees. The amount of these payments and fees may depend on various factors, including but not limited to: the structure of royalty payments, offsetting considerations, if any, and the degree of use of the licensed technology.
 
See Item 1A “Risk Factors — We are exposed to various risks related to legal proceedings or claims and protection of intellectual property rights, which could adversely affect our operating results.”
 
Environmental Disclosure
 
Various federal state and local provisions regulate the use and discharge of certain hazardous materials used in our manufacturing. Failure to comply with environmental regulations in the future could cause us to incur substantial costs or subject us to business interruptions. We believe we are fully compliant with all applicable environmental laws.
 
Working Capital Practices
 
Information about our working capital practices is included in Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operation” under the heading “Financial Condition, Capital Resources and Liquidity” and is incorporated herein by reference.
 
Government Contracts
 
We derive revenues from contracts with the United States government, state and local governments and their respective agencies. Our sales to government clients subject us to risks including early termination, audits, investigations, sanctions and penalties. For more information, refer to Item 1A “Risk Factor — The U.S. government has contributed to our revenue growth and has become an important customer for us.” In addition, please refer to Item 3. “Legal Proceedings” for information related to our GSA audit.
 
Foreign Operations and Export Sales
 
Information about our foreign operations and export sales is included in Note 9 — “Segment, Geographic, and Customer Information” and Item 1A “Risk Factors — Risks inherent in our international operations could have a material adverse effect on our operating results” and is incorporated herein by reference.
 
Employees
 
As of April 25, 2008, we had 7,645 employees. Of the total, 4,279 were in sales and marketing, 2,385 in research and development, 843 in finance and administration, and 138 in manufacturing. Our future performance depends in significant part on our key technical and senior management personnel, none of whom are 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 May 25, 2008, are as follows:
 
             
Name
 
Age
 
Position
 
Daniel J. Warmenhoven
    57     Chief Executive Officer and Chairman of the Board
Thomas F. Mendoza
    57     Vice Chairman
Thomas Georgens
    48     President and Chief Operating Officer, Board Member
Steven J. Gomo
    56     Executive Vice President, Finance and Chief Financial Officer
Robert E. Salmon
    47     Executive Vice President, Field Operations
 
Daniel J. Warmenhoven joined NetApp in October 1994 as president and chief executive officer, and has been a member of the Board of Directors since October 1994. Mr. Warmenhoven currently serves as chief executive officer and as of March 2008 he was appointed chairman of the Board of Directors. Prior to joining the Company, 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 equipment company, from November 1989 to January 1994. Prior to Network Equipment Technologies, Mr. Warmenhoven held executive and managerial positions at Hewlett-Packard from 1985 to 1989 and IBM Corporation from 1972 to 1985. Mr. Warmenhoven is a Director of Aruba Networks, Inc. Mr. Warmenhoven holds a B.S. degree in electrical engineering from Princeton University.
 
Thomas F. Mendoza was appointed vice chairman in March 2008. Mr. Mendoza joined the company in May 1994 and served as president from October 2000 to March 2008. Prior to March 2000, he served in various capacities at NetApp including senior vice president, worldwide sales and marketing, senior vice president, worldwide sales and vice president, North American sales. Mr. Mendoza has more than 30 years of experience as a high-technology executive and has held executive positions at Auspex Systems, Inc. and Stratus Technologies, Inc. He holds a B.A. degree in economics from Notre Dame and is an alumnus of Stanford University’s Executive Business Program. In September 2000, the University of Notre Dame renamed its business school the Mendoza College of Business in honor of an endowment from Tom and his wife, Kathy.
 
Thomas Georgens is the president and chief operating officer of the Company and is responsible for all product operations and field operations worldwide. Mr. Georgens has also been a member of the Board of Directors at NetApp since March 2008. Mr. Georgens joined the Company in 2005 and served as the Company’s executive vice president of product operations from January 2007 until February 2008. Prior to January 2007, Mr. Georgens served as the Company’s executive vice president and general manager of enterprise storage systems. Before joining the Company, Mr. Georgens spent nine years at Engenio, a subsidiary of LSI Logic, the last two years as chief executive officer. He has also served in various other positions, including president of LSI Logic Storage Systems and executive vice president of LSI Logic. Prior to Engenio, Mr. Georgens spent 11 years at EMC in a variety of engineering and marketing positions. Mr. Georgens holds a B.S. degree and an M.E. degree in Computer and Systems Engineering from Rensselaer Polytechnic Institute as well as an M.B.A. degree from Babson College.
 
Steven J. Gomo joined NetApp in August 2002 as senior vice president of finance and chief financial officer. He was appointed executive vice president of finance and chief financial officer in October 2004. Prior to joining the Company, he served as chief financial officer for Gemplus International S.A., headquartered in Luxembourg from November 2000 to April 2002 and as chief financial officer of Silicon Graphics, Inc., from February 1998 to August 2000. Prior to February 1998, he worked at Hewlett-Packard Company for 24 years in various positions, including financial management, corporate finance, general management, and manufacturing. Mr. Gomo currently serves on the board of SanDisk Corporation. Mr. Gomo holds an M.B.A. from Santa Clara University and a B.S. degree in business administration from Oregon State University.
 
Robert E. Salmon joined NetApp in January 1994 and was appointed executive vice president, field operations in December 2005. Mr. Salmon has served as the Company’s executive vice president of worldwide sales since September 2004. From August 2003 to September 2004, Mr. Salmon served as the Company’s senior vice president of worldwide sales and from May 2000 to August 2003, Mr. Salmon served as the Company’s vice president of


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North American sales. Mr. Salmon joined the Company in 1994 after nearly ten years with Sun Microsystems and Data General Corporation. Mr. Salmon graduated from California State University, Chico with a B.S. degree in computer science.
 
Additional Information
 
Our Internet address is www.netapp.com. We make available through our Internet Web site our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
 
The SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The public also may read and copy these filings at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information about this Public Reference Room is available by calling (800) SEC-0330.
 
Item 1A.   Risk Factors
 
The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also impair our business operations. Please see page 2 of this Annual Report on Form 10-K for additional discussion of these forward-looking statements. If any of the following risks actually occurs, our business, operating results, and financial condition could be materially adversely affected.
 
Factors beyond our control could cause our quarterly results to fluctuate, which could adversely impact our common stock price.
 
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, but are not limited to, the following:
 
  •  Changes in general economic conditions and specific economic conditions in the computer, storage, and networking industries;
 
  •  General decrease in global corporate spending on information technology leading to a decline in demand for our products;
 
  •  A shift in federal government spending patterns;
 
  •  The possible effects of terrorist activity and international conflicts, which could lead to business interruptions and difficulty in forecasting;
 
  •  The level of competition in our target product markets;
 
  •  Our reliance on a limited number of suppliers due to industry consolidation, which could subject us to periodic supply-and-demand, price rigidity, and quality issues with our components;
 
  •  The size, timing and cancellation of significant orders;
 
  •  Product configuration and mix;
 
  •  The extent to which our customers renew their service and maintenance contracts with us;
 
  •  Market acceptance of new products and product enhancements;
 
  •  Announcements and introductions of, and transitions to, new products by us or our competitors;
 
  •  Deferrals of customer orders in anticipation of new products or product enhancements introduced by us or our competitors;


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  •  Changes in our pricing in response to competitive pricing actions;
 
  •  Our ability to develop, introduce and market new products and enhancements in a timely manner;
 
  •  Supply constraints;
 
  •  Technological changes in our target product markets;
 
  •  The levels of expenditure on research and development and sales and marketing programs;
 
  •  Our ability to achieve targeted cost reductions;
 
  •  Excess or inadequate facilities;
 
  •  Disruptions resulting from new systems and processes as we continue to enhance and adapt our system infrastructure to accommodate future growth;
 
  •  Future accounting pronouncements and changes in accounting policies and estimates; and
 
  •  Seasonality; for example, as the size of our business has grown, we have begun to see a seasonal decline in revenues in the first quarter of our fiscal year. Sales to the U.S. government also tend to be stronger during our second fiscal quarter, concurrent with the end of the U.S. federal government’s fiscal year end in September.
 
In addition, sales for any future quarter may vary and accordingly be different from what we forecast. We manufacture products based on a combination of specific order requirements and forecasts of our customer demands. 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. Product sales are also difficult to forecast because the storage and data management market is rapidly evolving, and our sales cycle varies substantially from customer to customer.
 
We derive a majority of our revenue in any given quarter from orders booked in the same quarter. Bookings typically follow intraquarter seasonality patterns weighted toward the back end of the quarter. If we do not achieve bookings in the latter part of a quarter consistent with our quarterly financial targets, our financial results will be adversely impacted. If revenues do not meet our expectations, our operating profit may be negatively impacted because portions of our expenses are fixed and difficult to reduce in a short period of time. If our revenues are lower than expected, our fixed expenses could adversely affect our net income and cash flow until revenues increase or until such fixed expenses are reduced to a level commensurate with revenues.
 
Due to all of the foregoing factors, it is possible that in one or more quarters our results may fall below our forecasts and the expectations of public market analysts and investors. In such event, the trading price of our common stock would likely decrease.
 
We cannot assure you that our OEM relationship with IBM will generate significant revenue.
 
In April 2005, we announced a strategic partner relationship with IBM. As part of the relationship, we entered into an OEM agreement that enables IBM to sell IBM branded solutions based on NetApp unified solutions, including NearStore and the V-Series systems, as well as associated software offerings. While this agreement is an element of our strategy to expand our reach into more customers and countries, we do not have an exclusive relationship with IBM, and there is no minimum commitment for any given period of time; therefore, we cannot assure you that this relationship will contribute any revenue in future years. In addition, we have no control over the products that IBM selects to sell, or its release schedule and timing of those products; nor do we control its pricing. In the event that sales through IBM increase, we may experience distribution channel conflicts between our direct sales force and IBM or among our channel partners. If we fail to minimize channel conflicts, our operating results and financial condition could be harmed. We cannot assure you that this OEM relationship will generate significant revenue or that this strategic partnership will continue to be in effect for any specific period of time.


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If we are unable to maintain our existing relationships and develop new relationships with major strategic partners, our revenue may be impacted negatively.
 
An element of our strategy to increase revenue is to strategically partner with major third party software and hardware vendors that integrate our products into their products and also co-market our products with these vendors. We have significant partner relationships with database, business application, backup management and server virtualization companies, including Microsoft, Oracle, SAP, Symantec and VMware. A number of these strategic partners are industry leaders that offer us expanded access to segments of the storage market. There is intense competition for attractive strategic partners, and even if we can establish relationships with these partners, we cannot assure you that these partnerships will generate significant revenue or that the partnerships will continue to be in effect for any specific period of time.
 
We intend to continue to establish and maintain business relationships with technology companies to accelerate the development and marketing of our storage solutions. To the extent that we are unsuccessful in developing new relationships and maintaining our existing relationships, our future revenue and operating results could be impacted negatively. In addition, the loss of a strategic partner could have a material adverse effect on our revenue and earnings.
 
We cannot assure you that we will be able to maintain existing resellers and attract new resellers and that channel conflicts will not materially adversely affect our channel relationships. In addition, we do not have exclusive relationships with our resellers and accordingly there is a risk that those resellers may give higher priority to products of other suppliers, which could materially adversely affect our operating results.
 
We market and sell our storage solutions directly through our worldwide sales force and indirectly through channels such as value-added resellers, systems integrators, distributors, OEMs, and strategic business partners, and we derive a significant portion of our revenue from these indirect channel partners. In fiscal 2008, our indirect channels accounted for 63.0% of our consolidated revenues.
 
In order for us to maintain our current revenue sources and maintain or increase our revenue, we must effectively manage our relationships with these indirect channel partners. To do so, we must attract and retain a sufficient number of qualified channel partners to successfully market our products. However, because we also sell our products directly to customers through our sales force, on occasion we compete with our indirect channels for sales of our products to our end customers, competition that could result in conflicts with these indirect channel partners and make it harder for us to attract and retain these indirect channel partners. At the same time, our indirect channel partners may offer products that are competitive to ours. In addition, because our reseller partners generally offer products from several different companies, including products of our competitors, these resellers may give higher priority to the marketing, sales, and support of our competitors’ products than ours. If we fail to effectively manage our relationships with these indirect channel partners to minimize channel conflict and continue to evaluate and meet our indirect sales partners’ needs with respect to our products, we will not be able to maintain or increase our revenue, which would have a materially adverse affect on our business, financial condition and results of operations. Additionally, if we do not manage distribution of our products and services and support effectively, or if our resellers’ financial condition or operations weaken, our revenues and gross margins could be adversely affected.
 
The U.S. government has contributed to our revenue growth and has become an important customer for us. Future revenue from the U.S. government is subject to shifts in government spending patterns. A decrease in government demand for our products, or an adverse outcome in an ongoing investigation by the GSA and the Department of Justice, could materially affect our growth and result in civil penalties and a loss of revenues.
 
The U.S. government has become an important customer for the storage market and for us; however, government demand is unpredictable, and there can be no assurance that we will maintain or grow our revenue from the U.S. government. Government agencies are subject to budgetary processes and expenditure constraints that could lead to delays or decreased capital expenditures in IT spending. If the government or individual agencies within the government reduce or shift their capital spending pattern, our financial results may be harmed.


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Selling our products to the U.S. government also subjects us to certain regulatory requirements. We received a subpoena from the Office of Inspector General for the General Services Administration (“GSA”) seeking various records relating to GSA contracting activity by us during the period beginning in 1995 and ending in 2005. The subpoena is part of an investigation being conducted by GSA and the Department of Justice regarding potential violations of the False Claims Act in connection with our GSA contracting activity. The subpoena requested a range of documents including documents relating to our discount practices and compliance with the price reduction clause provisions of its GSA contracts. We are cooperating with the investigation and have produced documents and met with the Department of Justice on several occasions. Violations of the False Claims Act could result in the imposition of a damage remedy which includes treble damages plus civil penalties, and could also result in us being suspended or debarred from future government contracting, any or a combination of which could have a material adverse effect on our results of operations or financial condition.
 
The market price for our common stock has fluctuated significantly in the past and will likely continue to do so in the future.
 
The market price for our common stock has experienced substantial volatility in the past, and several factors could cause the price to fluctuate substantially in the future. These factors include but are not limited to:
 
  •  Fluctuations in our operating results;
 
  •  Variations between our operating results and either the guidance we have furnished to the public or the published expectations of securities analysts;
 
  •  Fluctuations in the valuation of companies perceived by investors to be comparable to us;
 
  •  Changes in analysts’ recommendations or projections;
 
  •  Inquiries by the SEC, NASDAQ, law enforcement or other regulatory bodies;
 
  •  Economic developments in the storage and data management market as a whole;
 
  •  International conflicts and acts of terrorism;
 
  •  Announcements of new products, applications or product enhancements by us or our competitors;
 
  •  Changes in our relationships with our suppliers, customers and channel and strategic partners; and
 
  •  General market conditions.
 
In addition, the stock market has experienced volatility that has particularly affected the market prices of equity securities of many technology companies. Additionally, certain macroeconomic factors such as changes in interest rates, the market climate for the technology sector and levels of corporate spending on IT could also have an impact on the trading price of our stock. As a result, the market price of our common stock may fluctuate significantly in the future, and any broad market decline, as well as our own operating results, may materially and adversely affect the market price of our common stock.
 
Macroeconomic conditions and an IT spending slowdown as well as variations in our expected operating performance may continue to cause volatility in our stock price. We are unable to predict changes in general economic conditions and whether or to what extent global IT spending rates will be affected. Furthermore, if there are future reductions in either domestic or international IT spending rates, or if IT spending rates do not increase, our revenues, operating results, and stock price may continue to be adversely affected.
 
Our forecasts of our revenues and earnings outlook may be inaccurate and could materially and adversely impact our business or our planned results of operations.
 
Our revenues are difficult to forecast. We use a “pipeline” system, a common industry practice, to forecast revenues and trends in our business. Sales personnel monitor the status of potential business and estimate when a customer will make a purchase decision, the dollar amount of the sale and the products or services to be sold. These estimates are aggregated periodically to generate a sales pipeline. Our pipeline estimates may prove to be unreliable either in a particular quarter or over a longer period of time, in part because the “conversion rate” of the pipeline into


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contracts varies from customer to customer, can be difficult to estimate, and requires management judgment. Small deviations from our forecasted conversion rate may result in inaccurate plans and budgets and could materially and adversely impact our business or our planned results of operations. In particular, a slowdown in IT spending, weak general economic conditions or evolving technology can reduce the conversion rate in a particular quarter as our customers’ purchasing decisions are delayed, reduced in amount, or cancelled.
 
In addition, we apply the provisions of Statement of Position 97-2 and related interpretations to our product sales, both hardware and software, because our software is essential to the performance of our hardware. If we are unable to establish fair value for undelivered elements of a customer order, revenue relating to the entire order may be deferred until the revenue recognition criteria for all elements of the customer order are met. This could lower our net revenue in one period and increase it in future periods, resulting in greater variability in net revenue and income both on a period-to-period basis and on an actual versus forecast basis.
 
If we are unable to successfully implement our global brand awareness campaign, we may not be able to increase our customer base, market share, or revenue, and our operating results will be adversely affected.
 
We believe that building our global brand awareness is a key factor to the long term success of our business and will be crucial in order for us to grow our customer base, increase our market share, and accelerate our revenue growth. In order to increase this awareness, we launched a new branding campaign in March 2008, which includes a new company name, logo, tagline and new corporate messaging. We are also increasing our sales headcount in order to leverage our brand awareness campaign and build demand for our products with both new and existing customers. We are currently incurring, and will continue to incur, significant expenses as a result of these investments. If we are not successful in achieving our desired growth in revenue, customers, demand and market share, whether on the time line we have forecasted or at all, our operating results will be adversely affected.
 
If we are unable to develop and introduce new products and respond to technological change, if our new products do not achieve market acceptance, if we fail to manage the transition between our new and old products, or if we cannot provide the expected level of service and support for our new products, our operating results could be materially and adversely affected.
 
Our future growth depends upon the successful development and introduction of new hardware and software products. Due to the complexity of storage subsystems and storage security appliances and the difficulty in gauging the engineering effort required to produce new products, such products are subject to significant technical risks. In addition, our new products must respond to technological changes and 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, or if such products do not achieve market acceptance, our operating results could be materially and adversely affected. Furthermore, new or additional product introductions may also adversely affect our sales of existing products, which could also materially and adversely affect our operating results.
 
As new or enhanced products are introduced, we must successfully manage the transition from older products in order to minimize disruption in customers’ ordering patterns, avoid excessive levels of older product inventories, and ensure that enough supplies of new products can be delivered to meet customers’ demands.
 
As we enter new or emerging markets, we will likely increase demands on our service and support operations and may be exposed to additional competition. We may not be able to provide products, service and support to effectively compete for these market opportunities. Furthermore, provision of greater levels of services may result in a delay in the timing of revenue recognition due to the provisions of Statement of Position No. 97-2 and related interpretations.
 
Our gross margins may vary based on the configuration of our product and service solutions, and such variation may make it more difficult to forecast our earnings.
 
We derive a significant portion of our sales from the resale of disk drives as components of our storage systems, and the resale market for disk drives is highly competitive and subject to intense pricing pressures. Our sales of disk


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drives generate lower gross margin than those of our storage systems. As a result, as we sell more highly configured systems with greater disk drive content, overall gross margin may be negatively affected.
 
Our product gross margins have been and may continue to be affected by a variety of other factors, including:
 
  •  Demand for storage and data management products;
 
  •  Pricing actions, rebates, initiatives, discount levels and price competition;
 
  •  Direct versus indirect and OEM sales;
 
  •  Product and add-on software mix;
 
  •  The mix of services as a percentage of revenue;
 
  •  The mix and average selling prices of products;
 
  •  The mix of disk content;
 
  •  New product introductions and enhancements;
 
  •  Excess inventory purchase commitments as a result of changes in demand forecasts and possible product and software defects as we transition our products; and
 
  •  The cost of components, manufacturing labor, quality, warranty and freight.
 
Changes in service gross margins may result from various factors such as:
 
  •  Continued investments in our customer support infrastructure;
 
  •  Changes in the mix between technical support services and professional services; and
 
  •  The timing of technical support service contract initiations and renewals.
 
An increase in competition could materially and adversely affect our operating results.
 
The storage markets are intensely competitive and are characterized by rapidly changing technology. In the storage market, our primary and nearline storage system products and our associated storage software portfolio compete primarily with storage system products and data management software from EMC, HDS, HP, IBM, and Sun/StorageTek. We also see Dell, Inc. as a competitor in the storage marketplace, primarily through its business partnership with EMC, which allows Dell to resell EMC storage hardware and software products. We have also historically encountered less-frequent competition from other companies, including LSI Logic. In the secondary storage market, which includes the disk-to-disk backup, compliance, and business continuity segments, our solutions compete primarily against products from EMC and Sun/StorageTek. Our NearStore VTL appliances also compete with traditional tape backup solutions in the broader data backup/recovery space. Additionally, a number of small, new companies are currently attempting to enter the storage systems and data management software markets and the near-line and NearStore VTL storage markets, some of which may become significant competitors in the future.
 
There has been a trend toward industry consolidation in our markets for several years. We expect this trend to continue as companies attempt to strengthen or hold their market positions in an evolving industry and as companies are acquired or are unable to continue operations. We believe that industry consolidation may result in stronger competitors that are better able to compete as sole-source vendors for customers. 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 and adversely affect our operating results.


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We rely on a limited number of suppliers, and any disruption or termination of our supply arrangements could delay shipment of our products and could materially and adversely affect our operating results.
 
We rely on a limited number of suppliers for components such as disk drives, computer boards and microprocessors utilized in the assembly of our products. In recent years, rapid industry consolidation has led to fewer component suppliers, which could subject us to periodic supply constraints and price rigidity.
 
Our reliance on a limited number of suppliers involves several risks, including:
 
  •  A potential inability to obtain an adequate supply of required components;
 
  •  Supplier capacity constraints;
 
  •  Price increases;
 
  •  Timely delivery; and
 
  •  Component quality.
 
Component quality risk is particularly significant with respect to our suppliers 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 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 termination of the supply of these components could delay shipments of our products and could materially and adversely affect our operating results. Such delays could also damage relationships with current and prospective customers and suppliers.
 
In addition, we license certain technology and software from third parties that are incorporated into our products. If we are unable to obtain or license the technology and software on a timely basis or on acceptable terms, we will not be able to deliver products to our customers in a timely manner.
 
The loss of any contract manufacturers or the failure to accurately forecast demand for our products or successfully manage our relationships with our contract manufacturers could negatively impact our ability to manufacture and sell our products.
 
We currently rely on several contract manufacturers to manufacture our products in multiple locations around the world. Our reliance on our third party contract manufacturers reduces our control over the manufacturing process, exposing us to risks, including reduced control over quality assurance, production costs and product supply. If we should fail to effectively manage our relationships with our contract manufacturers, or if our contract manufacturers experience delays, disruptions, capacity constraints or quality control problems in their manufacturing operations, our ability to ship products to our customers could be impaired, and our competitive position and reputation could be harmed. Qualifying a new contract manufacturer and commencing volume production is expensive and time-consuming. If we are required to change contract manufacturers or bring certain manufacturing in-house, we may lose revenue and damage our customer relationships. If we inaccurately forecast demand for our products, we may have excess or inadequate inventory or incur cancellation charges or penalties, which could adversely impact our operating results. To date, we do not have any significant purchase commitments under our agreements with contract manufacturers.
 
We intend to regularly introduce new products and product enhancements, which will require us to rapidly achieve volume production by coordinating with our contract manufacturers and suppliers. We may need to increase our material purchases, contract manufacturing capacity and quality functions to meet anticipated demand. The inability of our contract manufacturers to provide us with adequate supplies of high-quality products or their inability to obtain raw materials suitable for our needs could cause a delay in our ability to fulfill orders.


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Our future financial performance depends on growth in the storage and data management markets. If these markets do not continue to grow at the rates we expect and upon which we calculate and forecast our growth, our operating results will be materially and adversely impacted.
 
All of our products address the storage and data management markets. Accordingly, our future financial performance will depend in large part on continued growth in the storage and data management markets and on our ability to adapt to emerging standards in these markets. We cannot assure you that the markets for storage and data management will continue to grow or that emerging standards in these markets will not adversely affect the growth of UNIX, Windows and the World Wide Web server markets upon which we depend.
 
For example, we provide our open access data retention solutions to customers within the financial services, healthcare, pharmaceutical and government market segments, industries that are subject to various evolving governmental regulations with respect to data access, reliability and permanence (such as Rule 17(a)(4) of the Securities Exchange Act of 1934, as amended) in the United States and in the other countries in which we operate. If our products do not meet and continue to comply with these evolving governmental regulations in this regard, customers in these market and geographical segments will not purchase our products, and we will not be able to expand our product offerings in these market and geographical segments at the rates for which we have forecast.
 
We are exposed to fluctuations in the market values of our portfolio investments and in interest rates; impairment of our investments could harm our financial results.
 
At April 25, 2008, and April 27, 2007, we had $1,487.3 million and $1,430.7 million, respectively, in cash, cash equivalents, marketable securities and restricted cash and investments. We invest our cash in a variety of financial instruments, consisting principally of investments in corporate bonds, money market funds, corporate securities, municipalities and the United States government and its agencies, and auction rate securities. These investments are subject to general credit, liquidity, market and interest rate risks, which may be exacerbated by unusual events such as the sub-prime mortgage crisis in the United States which has affected various sectors of the financial markets and led to global credit and liquidity issues. If the global credit market continues to deteriorate, our investment portfolio may be impacted and we could determine that some of our investments have experienced an other-than-temporary decline in fair value, requiring an impairment charge which could adversely impact our financial results.
 
We account for our investment instruments in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 115, Accounting for Certain Investments in Debt and Equity Securities. All of the cash equivalents, marketable securities and restricted investments are treated as “available-for-sale” under SFAS No. 115. Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate debt securities may have their market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates. Currently, we do not use derivative financial instruments in our investment portfolio. Because we have the ability and intent to hold our available-for-sale investments until maturity, no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity. However, we may suffer losses in principal if forced to sell securities that have experienced a decline in market value because of changes in interest rates. Currently, we do not use financial derivatives to hedge our interest rate exposure.
 
Funds associated with certain of our auction rate securities may not be accessible for in excess of 12 months and our auction rate securities may experience an other than temporary decline in value, which would adversely affect our earnings.
 
Auction rate securities or, ARS, held by us are securities with long term nominal maturities which, in accordance with investment policy guidelines, had credit ratings of AAA and Aaa at time of purchase. Interest rates for ARS are reset through a “Dutch auction” each month, which historically has provided a liquid market for these securities.
 
Substantially all of our ARS are backed by pools of student loans guaranteed by the U.S. Department of Education, and we believe the credit quality of these securities is high based on this guarantee. However liquidity


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issues in the global credit markets resulted in the failure of auctions for certain of our ARS investments, with a par value of $76.2 million at April 25, 2008. For each failed auction, the interest rate moves to a maximum rate defined for each security, and the ARS continue to pay interest in accordance with their terms, although the principal associated with the ARS will not be accessible until there is a successful auction or such time as other markets for ARS investments develop.
 
We believe that the underlying credit quality of the assets backing our ARS investments have not been impacted by the reduced liquidity of these investments. Based on an analysis of the fair value and marketability of these investments, we recorded a temporary impairment within other accumulated comprehensive income, an element of stockholders’ equity on our balance sheet, of approximately $3.5 million at April 25, 2008. In addition, we have classified all of our auction rate securities that were not liquidated before April 25, 2008 as long-term assets in our consolidated balance sheet as of April 25, 2008 as our ability to liquidate such securities in the next 12 months is uncertain. If liquidity issues in the global credit market continue, or worsen, or if we experience reduced credit quality, extended illiquidity or realize reduced valuations of our ARS investments, we may determine that we have experienced an other-than-temporary decline in fair value in these long-term assets, which could adversely impact our financial results.
 
Our leverage and debt service obligations may adversely affect our financial condition and results of operations.
 
As a result of our sale of $1.265 billion of 1.75% convertible senior notes in June 2008 (the “Notes”), we have a greater amount of long-term debt than we have maintained in the past. We also have two credit facilities and various synthetic lease arrangements. As of April 25, 2008, as adjusted to give effect to the issuance of the Notes as of such date, we would have had approximately $1.438 billion of long-term debt outstanding. In addition, subject to the restrictions in our existing and any future financings agreements, we may incur additional debt.
 
Our maintenance of higher levels of indebtedness could have important consequences because:
 
  •  It could adversely affect our ability to satisfy our obligations;
 
  •  An increased portion of our cash flows from operations may have to be dedicated to interest and principal payments and may not be available for operations, working capital, capital expenditures, expansion, acquisitions or general corporate or other purposes;
 
  •  It may impair our ability to obtain additional financing in the future;
 
  •  It may limit our flexibility in planning for, or reacting to, changes in our business and industry; and
 
  •  It may make us more vulnerable to downturns in our business, our industry or the economy in general.
 
Our ability to meet our expenses and debt obligations will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors. We will not be able to control many of these factors, such as economic conditions and governmental regulations. Our operations may not generate sufficient cash to enable us to service our debt. If we fail to make a payment on our debt, we could be in default on such debt, and this default could cause us to be in default on our other outstanding classes of debt.
 
Future issuances of common stock and hedging activities by holders of the Notes may depress the trading price of our common stock and the Notes.
 
Any issuance of equity securities after the Notes offering, including the issuance of shares upon conversion of the Notes, could dilute the interests of our existing stockholders, including holders who receive shares upon conversion of their Notes, and could substantially decrease the trading price of our common stock and the Notes. We may issue equity securities in the future for a number of reasons, including to finance our operations and business strategy (including in connection with acquisitions, strategic collaborations or other transactions), to increase our capital, to adjust our ratio of debt to equity, to satisfy our obligations upon the exercise of outstanding warrants or options or for other reasons.


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In addition, the price of our common stock could also be affected by possible sales of our common stock by investors who view the Notes as a more attractive means of equity participation in our company and by hedging or arbitrage trading activity that we expect to develop involving our common stock by holders of the Notes. The hedging or arbitrage could, in turn, affect the trading price of the Notes, or any common stock that holders receive upon conversion of the Notes.
 
Conversion of our Notes will dilute the ownership interest of existing stockholders, including holders who had previously converted their Notes.
 
The conversion of some or all of our outstanding Notes will dilute the ownership interest of existing stockholders to the extent we deliver common stock upon conversion of the Notes. Upon conversion, we will satisfy our conversion obligation by delivering cash for the principal amount of a Note and shares of common stock, if any, to the extent the conversion value exceeds the principal amount. There would be no adjustment to the numerator in the net income per common share computation for the cash settled portion of the Notes as that portion of the debt instrument will always be settled in cash. The number of shares delivered upon conversion, if any, will be included in the denominator for the computation of diluted net income per common share. Any sales in the public market of any common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could be used to satisfy short positions, or anticipated conversion of the Notes into shares of our common stock could depress the price of our common stock.
 
The note hedge and warrant transactions that we entered into in connection with the sale of the Notes may affect the trading price of our common stock.
 
In connection with the issuance of the Notes, we entered into privately negotiated convertible note hedge transactions with certain option counterparties (the “Counterparties”), which are expected to reduce the potential dilution to our common stock upon any conversion of the Notes. At the same time, we also entered into warrant transactions with the Counterparties pursuant to which we may issue shares of our common stock above a certain strike price. In connection with hedging these transactions, the Counterparties may have entered into various over-the-counter derivative transactions with respect to our common stock or purchased shares of our common stock in secondary market transactions at or following the pricing of the Notes. Such activities may have had the effect of increasing the price of our common stock. The Counterparties are likely to modify their hedge positions from time to time prior to conversion or maturity of the Notes by purchasing and selling shares of our common stock or entering into other derivative transactions. Additionally, these transactions may expose us to counterparty credit risk for nonperformance. We manage our exposure to counterparty credit risk through specific minimum credit standards and the diversification of counterparties. The effect, if any, of any of these transactions and activities on the market price of our common stock or the Notes will depend, in part, on market conditions and cannot be ascertained at this time, but any of these activities could adversely affect the value of our common stock.
 
In addition, if our stock price exceeds the strike price for the warrants, there could be additional dilution to our shareholders, which could adversely affect the value of our common stock.
 
Our synthetic leases are off-balance sheet arrangements that could negatively affect our financial condition and results. We are investing substantial resources in new facilities and physical infrastructure, which will increase our fixed costs. Our profitability could be reduced if our business does not grow proportionately to our increase in fixed costs.
 
We have various synthetic lease arrangements with BNP Paribas Leasing Corporation (the lessor) for our headquarters office buildings in Sunnyvale, California and a data center in Research Triangle Park, North Carolina. These synthetic leases qualify for operating lease accounting treatment under SFAS No. 13, Accounting for Leases (as amended), and are not considered variable interest entities under FIN No. 46R “Consolidation of Variable Interest Entities (revised).” Therefore, we do not include the properties or the associated debt on our condensed consolidated balance sheet. However, if circumstances were to change regarding our or BNP’s ownership of the properties, or in BNP’s overall portfolio, we could be required to consolidate the entity, the leased facilities and the associated debt.


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If we elect not to purchase the properties at the end of the lease term, we have guaranteed a minimum residual value to BNP. Therefore, if the fair value of the properties declines below that guaranteed minimum residual value, our residual value guarantee would require us to pay the difference to BNP, which could have a material adverse effect on our cash flows, results of operations and financial condition.
 
We have contractual commitments related to capital expenditures on construction or expansion of our facilities and data center. We may encounter cost overruns or project delays in connection with new facilities. These expansions will increase our fixed costs. If we are unable to grow our business and revenues proportionately to our increase in fixed costs, our profitability will be reduced.
 
We are subject to restrictive debt covenants pursuant to our indebtedness. These covenants may restrict our ability to finance our business and, if we do not comply with the covenants or otherwise default under them, we may not have the funds necessary to pay all amounts that could become due.
 
The agreements governing our credit facilities and synthetic lease arrangements contain, and any other future debt agreement we enter into may contain, covenant restrictions that limit our ability to operate our business, including restrictions on our ability to:
 
  •  Incur indebtedness;
 
  •  Incur indebtedness at the subsidiary level;
 
  •  Grant liens;
 
  •  Sell all or substantially all our assets:
 
  •  Enter into certain mergers;
 
  •  Change our business;
 
  •  Enter into swap agreements;
 
  •  Enter into transactions with our affiliates; and
 
  •  Enter into certain restrictive agreements.
 
Our ability to comply with these covenants is dependent on our future performance, which will be subject to many factors, some of which are beyond our control, including prevailing economic conditions.
 
As a result of these covenants, our ability to respond to changes in business and economic conditions and to obtain additional financing, if needed, may be significantly restricted, and we may be prevented from engaging in transactions that might otherwise be beneficial to us. In addition, our failure to comply with these covenants could result in a default under the Notes and our other debt, which could permit the holders to accelerate such debt. If any of our debt is accelerated, we may not have sufficient funds available to repay such debt.
 
Unfavorable economic and market conditions and global disruptions could adversely affect our operating results.
 
Our operating results may be adversely affected by unfavorable global economic and market conditions as well as the uncertain geopolitical environment. Customer demand for our products is intrinsically linked to the strength of the economy. A reduction in demand for storage and data management caused by weakening economic conditions and customer decreases in corporate spending, deferral or delay of IT projects, longer time frames for IT purchasing decisions and generally reduced capital expenditures for IT storage solutions will result in decreased revenues and lower revenue growth rates for us. The network storage market growth declined significantly beginning in the third quarter of fiscal 2001 through fiscal 2003, causing both our revenues and operating results to decline. If the storage and data management markets grow more slowly than anticipated, or if emerging standards other than those adopted by us become increasingly accepted by these markets, our operating results could be materially and adversely affected.


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Turmoil in the geopolitical environment in many parts of the world, including terrorist activities and military actions, may continue to put pressure on global economic conditions. We have no assurance that the consequences from these events will not disrupt our operations in either the U.S. or other regions of the world. Continued increases in energy prices, declining economic conditions and global credit and liquidity issues could also affect our future operating results. If the economic and market conditions in the United States and globally do not improve, or if they deteriorate, we may experience material adverse impacts on our business, operating results, and financial condition.
 
Risks inherent in our international operations could have a material adverse effect on our operating results.
 
We conduct a significant portion of our business outside the United States. A substantial portion of our revenues is derived from sales outside of the U.S. For example, in fiscal 2008, 47.1% of our total revenues were from international customers (including U.S. exports). In addition, we have several research and development centers overseas, and a substantial portion of our products are manufactured outside of the U.S. Accordingly, our business and our future operating results could be materially and adversely affected by a variety of factors affecting our international operations, 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, government spending patterns, and acts of terrorism and international conflicts. In addition, we may not be able to maintain or increase international market demand for our products.
 
We face exposure to adverse movements in foreign currency exchange rates as a result of our international operations. These exposures may change over time as business practices evolve, and they could have a material adverse impact on our financial results and cash flows. 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. Conversely, lowering our price in local currency may result in lower U.S.-based revenue. A decrease in the value of the U.S. dollar relative to foreign currencies could increase the cost of local operating expenses. Additionally, we have exposures to emerging market currencies, which can have extreme currency volatility. We utilize forward and option contracts to hedge our foreign currency exposure associated with certain assets and liabilities as well as anticipated foreign currency cash flows. All balance sheet hedges are marked to market through earnings every quarter. The time-value component of our cash flow hedges is recorded in earnings while all other gains and losses are marked to market through other comprehensive income until forecasted transactions occur, at which time such realized gains and losses are recognized in earnings. These hedges attempt to reduce, but do not always entirely eliminate, the impact of currency exchange movements. Factors that could have an impact on the effectiveness of our hedging program include the accuracy of forecasts and the volatility of foreign currency markets as well as widening interest rate differentials and the volatility of the foreign exchange market. There can be no assurance that such hedging strategies will be successful and that currency exchange rate fluctuations will not have a material adverse effect on our operating results.
 
Additional risks inherent in our international business activities generally include, among others, longer accounts receivable payment cycles and difficulties in managing international operations. Such factors could materially and adversely affect our future international sales and consequently our operating results. Our international operations are subject to other risks, including general import/export restrictions and the potential loss of proprietary information due to piracy, misappropriation or laws that may be less protective of our intellectual property rights than U.S. law.
 
A significant portion of our cash and cash equivalents balances are held overseas. If we are not able to generate sufficient cash domestically in order to fund our U.S. operations and strategic opportunities and service our debt, we may incur a significant tax liability in order to repatriate the overseas cash balances, or we may need to raise additional capital in the future.
 
A portion of our earnings which is generated from our international operations is held and invested by certain of our foreign subsidiaries. These amounts are not freely available for dividend repatriation to the United States without triggering significant adverse tax consequences, which could adversely affect our financial results. As a result, unless the cash generated by our domestic operations is sufficient to fund our domestic operations, our broader corporate initiatives such as stock repurchases, acquisitions, and other strategic opportunities, and to


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service our outstanding indebtedness, we may need to raise additional funds through public or private debt or equity financings, or we may need to expand our existing credit facilities to the extent we choose not to repatriate our overseas cash. Such additional financing may not be available on terms favorable to us, or at all, and any new equity financings or offerings would dilute our current stockholders’ ownership. Furthermore, lenders, in particular in light of the current challenges in the credit markets, may not agree to extend us new, additional or continuing credit. If adequate funds are not available, or are not available on acceptable terms, we may be forced to repatriate our foreign cash and incur a significant tax expense or we may not be able to take advantage of strategic opportunities, develop new products, respond to competitive pressures or repay our outstanding indebtedness. In any such case, our business, operating results or financial condition could be materially adversely affected.
 
Our effective tax rate may increase or fluctuate, which could increase our income tax expense and reduce our net income.
 
Our effective tax rate could be adversely affected by several factors, many of which are outside of our control, including:
 
  •  Earnings being lower than anticipated in countries where we are taxed at lower rates as compared to the U.S. statutory tax rate;
 
  •  Material differences between forecasted and actual tax rates as a result of a shift in the mix of pretax profits and losses by tax jurisdiction, our ability to use tax credits, or effective tax rates by tax jurisdiction different than our estimates;
 
  •  Changing tax laws, accounting standards, such as occurred with the introduction of SFAS No. 123R and FIN No. 48, regulations, and interpretations in multiple tax jurisdictions in which we operate, as well as the requirements of certain tax rulings;
 
  •  An increase in expenses not deductible for tax purposes, including certain stock-based compensation expense, write-offs of acquired in-process research and development, and impairment of goodwill;
 
  •  The tax effects of purchase accounting for acquisitions and restructuring charges that may cause fluctuations between reporting periods;
 
  •  Changes in the valuation of our deferred tax assets and liabilities;
 
  •  Changes in tax laws or the interpretation of such tax laws;
 
  •  Tax assessments or any related tax interest or penalties could significantly affect our income tax expense for the period in which the settlements take place; and
 
  •  A change in our decision to indefinitely reinvest foreign earnings.
 
We receive significant tax benefits from sales to our non-U.S. customers. These benefits are contingent upon existing tax regulations in the United States and in the countries in which our international operations are located. Future changes in domestic or international tax regulations could adversely affect our ability to continue to realize these tax benefits. Our international operations currently benefit from a tax ruling concluded in the Netherlands, which expires in 2010. If we are unable to renegotiate a similar tax ruling upon expiration of the current ruling, our effective tax rate could increase and our operating results could be adversely affected. Our effective tax rate could also be adversely affected by different and evolving interpretations of existing law or regulations, which in turn would negatively impact our operating and financial results as a whole.
 
The price of our common stock could decline to the extent that our financial results are materially affected by an adverse change in our effective tax rate. We are currently undergoing federal income tax audits in the United States and several foreign tax jurisdictions. The rights to some of our intellectual property (“IP”) are owned by certain of our foreign subsidiaries, and payments are made between U.S. and foreign tax jurisdictions relating to the use of this IP in a qualified cost sharing arrangement. Recently, several other U.S. companies have had their foreign IP arrangements challenged as part of IRS examinations, which has resulted in material proposed assessments and/or pending litigation. Our management does not believe, based upon information currently known to us, that the final resolution of any of our audits will have a material adverse effect upon our consolidated financial


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position and our results of operations and cash flows. If the ultimate determination of our taxes owed in any of these tax jurisdictions is for an amount in excess of the tax provision we have recorded or reserved for, our operating results, cash flows and financial condition could be adversely affected.
 
We may face increased risks and uncertainties related to our current or future acquisitions and investments in nonmarketable securities of private companies, and these investments may not achieve our objectives.
 
As part of our strategy, we are continuously evaluating opportunities to buy other businesses or technologies that would complement our current products, expand the breadth of our markets, or enhance our technical capabilities. We may engage in future acquisitions that dilute our stockholders’ investments and cause us to use cash, incur debt, or assume contingent liabilities.
 
Acquisitions of companies entail numerous risks, and we may not be able to successfully integrate acquired operations and products or to realize anticipated synergies, economies of scale, or other value. Integration risks and issues may include, but are not limited to, key personnel retention and assimilation, management distraction, technical development and unexpected costs and liabilities, including goodwill impairment charges. In addition, we may be unable 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 operations.
 
On occasion, we invest in nonmarketable securities of private companies. As of April 25, 2008, the carrying value of our investments in nonmarketable securities totaled $11.2 million. Investments in nonmarketable securities are inherently risky, and some of these companies are likely to fail. Their success (or lack thereof) is dependent on product development, market acceptance, operational efficiency and other key business success factors. In addition, depending on these companies’ future prospects, they may not be able to raise additional funds when needed, or they may receive lower valuations, with less favorable investment terms than in previous financings, and our investments in them would likely become impaired.
 
If we fail to manage our expanding business effectively, our operating results could be materially and adversely affected.
 
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 and enhancing infrastructure, investing in people, facilities and capital equipment and managing our assets. An unexpected decline in the growth rate of revenues without a corresponding and timely reduction in expense growth or a failure to manage other aspects of growth could materially and adversely affect our operating results.
 
In addition, continued expansion could strain our current management, financial, manufacturing and other existing systems and may require us to improve those existing systems or implement new ones. If we experience any problems with the improvement or expansion of these systems, procedures or controls, or if these systems, procedures or controls are not designed, implemented or improved in a cost-effective and timely manner, our operations may be materially and adversely affected. In addition, any failure to implement, improve and expand such systems, procedures and controls in a timely and efficient manner could harm our growth strategy and materially and adversely affect our financial condition and ability to achieve our business objectives.
 
As we continue to grow our business, we are likely to incur costs earlier than some of the anticipated benefits, which could harm our operating results. A significant percentage of our expenses are fixed, which could materially and adversely affect our net income.
 
We are increasing our investment in engineering, sales, service support and other functions to grow our business. We are likely to recognize the costs associated with these increased investments earlier than some of the anticipated benefits, and the return on these investments may be lower, or may develop more slowly, than we expect, which could harm our business.


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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 or previously higher levels, net income will be affected in a material and adverse manner.
 
We depend on the ability of our personnel, raw materials, equipment and products to move reasonably unimpeded around the world. Our business could be materially and adversely affected as a result of a natural disaster, terrorist acts or other catastrophic events.
 
Any political, military, world health or other issue that hinders this movement or restricts the import or export of materials could lead to significant business disruptions. Furthermore, any strike, economic failure or other material disruption caused by fire, floods, hurricanes, power loss, power shortages, telecommunications failures, break-ins and similar events could also adversely affect our ability to conduct business. If such disruptions result in cancellations of customer orders or contribute to a general decrease in economic activity or corporate spending on information technology, or directly impact our marketing, manufacturing, financial and logistics functions, our results of operations and financial condition could be materially adversely affected. In addition, our headquarters are located in Northern California, an area susceptible to earthquakes. If any significant disaster were to occur, our ability to operate our business could be impaired.
 
We depend on attracting and retaining qualified technical and sales personnel. If we are unable to attract and retain such personnel, our operating results could be materially and adversely impacted.
 
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, background and industry experience. Competition for qualified engineers, particularly in Silicon Valley, can be intense. The loss of the services of a significant number of our engineers or salespeople could be disruptive to our development efforts or business relationships and could materially and adversely affect our operating results.
 
Undetected software errors, hardware errors, or failures found in new products may result in loss of or delay in market acceptance of our products, which could increase our costs and reduce our revenues. Product quality problems could lead to reduced revenue, gross margins and net income.
 
Our products may contain undetected software errors, hardware 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 and adversely affect our operating results.
 
If we fail to remedy a product defect, we may experience a failure of a product line, temporary or permanent withdrawal from a product or market, damage to our reputation, inventory costs or product reengineering expenses, any of which could have a material impact on our revenue, margins and net income.
 
In addition, we may be subject to losses that may result or are alleged to result from defects in our products, which could subject us to claims for damages, including consequential damages. Based on our historical experience, we believe that the risk of exposure to product liability claims is currently low. However, should we experience increased exposure to product liability claims, our business could be adversely impacted.
 
We are exposed to various risks related to legal proceedings or claims and protection of intellectual property rights, which could adversely affect our operating results.
 
We are a party to lawsuits in the normal course of our business, including our ongoing litigation with Sun Microsystems. Litigation can be expensive, lengthy and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. An unfavorable resolution of a particular lawsuit could have a material adverse effect on our business, operating results, or financial condition.


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If we are unable to protect our intellectual property, we may be subject to increased competition that could materially and adversely affect our operating results. Our success depends significantly upon our proprietary technology. We 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. Some of our U.S. 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, strategic partners and customers. We currently have multiple U.S. and international patent applications pending and multiple U.S. patents issued. The pending applications may not be approved, and our existing and future 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 and adversely affect our ability to do business. In addition, a failure to obtain and defend our trademark registrations may impede our marketing and branding efforts and competitive position.
 
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. 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 network storage 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 to enter into royalty or licensing agreements, any of which could materially and adversely affect our operating results. Such royalty or licensing agreements, if required, may not be available on terms acceptable to us or at all.
 
Our business is subject to increasingly complex corporate governance, public disclosure, accounting and tax requirements that have increased both our costs and the risk of noncompliance.
 
Because our common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Public Company Accounting Oversight Board, the SEC, and NASDAQ, have implemented requirements and regulations and continue developing additional regulations and requirements in response to corporate scandals and laws enacted by Congress, most notably the Sarbanes-Oxley Act of 2002. Our efforts to comply with these regulations have resulted in, and are likely to continue resulting in, increased general and administrative expenses and diversion of management time and attention from revenue-generating activities to compliance activities.
 
We completed our evaluation of our internal controls over financial reporting for the fiscal year ended April 25, 2008 as required by Section 404 of the Sarbanes-Oxley Act of 2002. Although our assessment, testing and evaluation resulted in our conclusion that as of April 25, 2008, our internal controls over financial reporting were effective, we cannot predict the outcome of our testing in future periods. If our internal controls are ineffective in future periods, our business and reputation could be harmed. We may incur additional expenses and commitment of management’s time in connection with further evaluations, either of which could materially increase our operating expenses and accordingly reduce our net income.
 
Because new and modified laws, regulations, and standards are subject to varying interpretations in many cases due to their lack of specificity, their application in practice may evolve over time as new guidance is provided by


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regulatory and governing bodies. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices.
 
Our ability to forecast earnings is limited by the impact of new and existing accounting requirements such as SFAS No. 123R.
 
The Financial Accounting Standards Board requires companies to recognize the fair value of stock options and other share-based payment compensation to employees as compensation expense in the statement of income. Option pricing models require the input of highly subjective assumptions, including the expected stock price volatility, expected life and forfeiture rate. We have chosen to base our estimate of future volatility using the implied volatility of traded options to purchase our common stock as permitted by SAB No. 107. Management applies judgment when determining estimated forfeiture rates. We base our estimates on historical experience and on various other assumptions management believes to be reasonable under the circumstances, actual results may differ significantly from these estimates under different assumptions or conditions and, as a result, could have a material impact on our financial position and results of operations. Given the unpredictable nature of the “Black Scholes” variables and other management assumptions such as number of options to be granted, underlying strike price and associated income tax impacts, it is very difficult to forecast stock-based compensation expense for any given quarter or year. Any changes in these highly subjective assumptions may significantly impact our ability to make accurate forecasts of future earnings and volatility of our stock price. If another party asserts that the fair value of our employee stock options is misstated, securities class action litigation could be brought against us, or the market price of our common stock could decline, or both could occur. As a result, we could incur significant losses, and our operating results may be adversely affected.
 
Item 1B.   Unresolved Staff Comments
 
None.
 
Item 2.   Properties
 
Our headquarters site for corporate general administration, sales and marketing, research and development, global services, and operations is located in Sunnyvale, California. We own and occupy approximately 740,000 square feet of space in buildings at our Sunnyvale headquarters. In addition, we own a 520,000 square foot facility in the Research Triangle Park, North Carolina, of which approximately 365,000 square feet is occupied by us primarily for research and development and global services.
 
In addition, we have commitments related to various lease arrangements with BNP Paribas LLC (“BNP”) for approximately 1,063,971 square feet of office space and a parking structure for our headquarters in Sunnyvale, California and a data center in Research Triangle Park, North Carolina (as further described below under “Contractual Cash Obligations and Other Commercial Commitments” in Item 7 and Note 4 under Item 8).
 
We lease other sales offices and research and development facilities throughout the U.S. and internationally. We expect that our existing facilities and those being developed in Sunnyvale, California; RTP, North Carolina; and worldwide are adequate for our requirements over at least the next two years and that additional space will be available as needed.
 
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
 
On September 5, 2007, we filed a patent infringement lawsuit in the Eastern District of Texas seeking compensatory damages and a permanent injunction against Sun Microsystems (“Sun”). On October 25, 2007, Sun filed a counter claim against us in the Eastern District of Texas seeking compensatory damages and a permanent injunction. On October 29, 2007, Sun filed another lawsuit against us in the Northern District of California asserting additional patents against us. The Texas court granted a joint motion to transfer the Texas lawsuit to the Northern


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District of California on November 26, 2007. On March 26, 2008, Sun filed a third lawsuit in federal court that extends the patent infringement charges to storage management technology we acquired in January 2008. We are unable at this time to determine the likely outcome of these various patent litigations. In addition, as we are unable to reasonably estimate the amount or range of the potential settlement, no accrual has been recorded as of April 25, 2008.
 
We received a subpoena from the Office of Inspector General for the General Services Administration (“GSA”) seeking various records relating to GSA contracting activity by us during the period beginning in 1995 and ending in 2005. The subpoena is part of an investigation being conducted by GSA and the Department of Justice regarding potential violations of the False Claims Act in connection with our GSA contracting activity. The subpoena requested a range of documents including documents relating to our discount practices and compliance with the price reduction clause provisions of its GSA contracts. We are cooperating with the investigation and have produced documents and met with the Department of Justice on several occasions. Violations of the False Claims Act could result in the imposition of a damage remedy which includes treble damages plus civil penalties, and could also result in us being suspended or debarred from future government contracting, any or a combination of which could have a material adverse effect on our results of operations or financial condition. However, as the investigation is still ongoing and we are unable at this time to determine the likely outcome of this matter, no provision has been recorded as of April 25, 2008.
 
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.


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PART II
 
Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
Our common stock commenced trading on the NASDAQ Global Select Market (and its predecessor, the Nasdaq National Market) on November 21, 1995, and is traded under the symbol “NTAP.” As of June 20, 2008 there were 1,066 holders of record of the common stock. The closing price for our common stock on June 20, 2008 was $23.30. 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 Global Select Market.
 
                                 
    Fiscal 2008     Fiscal 2007  
    High     Low     High     Low  
 
First Quarter
  $ 39.05     $ 28.68     $ 37.58     $ 26.92  
Second Quarter
    32.04       22.97       39.63       28.99  
Third Quarter
    31.49       20.38       41.28       35.54  
Fourth Quarter
    23.78       19.49       40.49       34.93  
 
The following graph shows a five-year comparison of cumulative total return on our common stock, the NASDAQ Composite Index and the S&P 500 Information Technology Index from April 30, 2003 through April 25, 2008. The past performance of our common stock is no indication of future performance.
 
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among NetApp, Inc., The NASDAQ Composite Index
And The S&P Information Technology Index
 
GRAPH
 
* $100 invested on April 30, 2003 in stock or index-including reinvestment of dividends. Fiscal year ending April 30.
 
                                                             
      4/03     4/04     4/05     4/06     4/07     4/08
NetApp, Inc. 
      100.00         140.35         201.13         279.56         280.62         182.50   
NASDAQ Composite
      100.00         134.18         134.93         165.79         181.16         173.24   
S&P Information Technology
      100.00         125.96         123.76         144.60         158.98         150.17   
                                                             


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We believe that a number of factors may cause the market price of our common stock to fluctuate significantly. See “Item 1A. Business — Risk Factors.”
 
Dividend Policy
 
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 as well as other possible management initiatives, including stock repurchases and acquisitions. 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.
 
Securities Authorized for Issuance under Equity Compensation Plans
 
Information regarding securities authorized for issuance under equity compensation plans is incorporated by reference from our Proxy Statement for the 2008 Annual Meeting of Stockholders.
 
Unregistered Securities Sold in Fiscal 2008
 
We did not sell any unregistered securities during fiscal 2008.
 
Issuer Purchases of Equity Securities
 
The table below sets forth activity in the fourth quarter of fiscal 2008:
 
                                 
                      Approximate
 		 
                      Dollar Value of
 		 
                Total Number of
 		    Shares
 		 
                Shares
 		    That May Yet
 		 
                Purchased as
 		    be Purchased
 		 
    Total Number of
 		    Average
 		    Part of the
 		    Under the
 		 
    Shares
 		    Price Paid
 		    Repurchase
 		    Repurchase
 		 
Period
  Purchased     per Share     Program(1)     Program(2)  
 
January 26, 2008 — February 22, 2008
    —     $ —       84,515,286     $ 555,696,939  
February 23, 2008 — March 21, 2008
    2,850,000     $ 20.86       87,365,286     $ 496,244,304  
March 22, 2008 — April 25, 2008
    —     $ —       87,365,286     $ 496,244,304  
                                 
Total
    2,850,000     $ 20.86       87,365,286     $ 496,244,304  
                                 
 
 
(1) This amount represents the total number of shares purchased under our publicly announced repurchase programs since inception.
 
(2) Since May 13, 2003, our Board of Directors has authorized various stock repurchase programs. As of April 25, 2008, total authorizations to date amounted to $3,023,638,730 of our common stock under these stock repurchase programs. During the three-month period ended April 25, 2008, we repurchased 2,850,000 shares of our common stock at a weighted-average price of $20.86 per share for an aggregate purchase price of $59,452,635. As of April 25, 2008, we had repurchased 87,365,286 shares of our common stock at a weighted-average price of $28.93 per share for an aggregate purchase price of $2,527,394,528 since inception of the current stock repurchase program. The remaining authorized amount for stock repurchases under this program was $496,244,304 with no termination date.


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Item 6.   Selected Financial Data
 
The data set forth below are qualified in their entirety by reference to, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and related notes thereto included in this Annual Report on Form 10-K.
 
Five Fiscal Years Ended April 25, 2008
 
                                         
    2008     2007     2006     2005     2004  
    (In thousands, except per share amounts)  
 
Total Revenues
  $ 3,303,167     $ 2,804,282     $ 2,066,456     $ 1,598,131     $ 1,170,310  
Income from Operations
    313,600       301,242       308,291       253,187       158,463  
Net Income(1)
    309,738       297,735       266,452       225,754       152,087  
Net Income per Share, Basic
    0.88       0.80       0.72       0.63       0.44  
Net Income per Share, Diluted
    0.86       0.77       0.69       0.59       0.42  
Cash, Cash Equivalents and Short-Term Investments
    1,164,390       1,308,781       1,322,892       1,169,965       807,965  
Total Assets
    4,070,988       3,658,478       3,260,965       2,372,647       1,877,266  
Short-Term Debt
    —       85,110       166,211       —       —  
Long-Term Deferred Revenue
    637,889       472,423       282,149       187,180       112,337  
Long-Term Debt and Other
    318,658       9,487       138,200       4,474       4,858  
Total Stockholders’ Equity
    1,700,339       1,989,021       1,923,453       1,660,804       1,415,848  
 
 
(1) Net income for fiscal 2006 included an income tax expense of $22.5 million or approximately $0.06 per share related to the American Jobs Creation Act (the “Jobs Act”) and the repatriation of foreign subsidiary earnings back to the U.S. Net income for fiscal 2004 included an income tax benefit of $16.8 million or approximately $0.05 per share associated with a favorable foreign tax ruling.
 
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 set forth under “Item 8. Financial Statements and Supplementary Data”. The following discussion also contains trend information and other forward looking statements that involve a number of risks and uncertainties. The Risk Factors set forth in “Item 1. Business” are hereby incorporated into the discussion by reference.
 
Overview
 
Enterprises are generating large quantities of data. We are experiencing a worldwide proliferation of data, driven by the rapid growth of broadband Internet access, the proliferation of data devices, exponential growth of digital information, and the need to protect critical data through replication. Significant data growth, tough economic conditions, physical data center limitations, including power, heat, space, and new, agile software development methodologies continue to stress enterprise storage infrastructure. Greater global demands on data access, more complex legal requirements, increasing consequences for data outages, and the need for greater data longevity all contribute to the growing burden on IT professionals. As the volume of data grows, so does the complexity of data storage and management. Data ownership and the burdens of managing data continue to challenge our enterprise customers.
 
In response, enterprises are looking for solutions to help simplify data storage and IT administration, improve the capabilities of storage systems and reduce total costs of ownership. Companies are migrating toward modular, unified storage systems and away from large, fixed, expensive, frame-class arrays and inefficient direct-attached storage. To maximize infrastructure efficiency, multiple dedicated servers can now be replaced by virtual servers sharing network-based resources such as common storage. There is a growing trend toward consolidating storage and serving a variety of applications from a unified storage pool.


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During fiscal 2008, we continued to help customers transform their data center architectures through higher efficiencies and asset utilization, greater power and space savings, and innovative data center design and data management techniques. We also continued to make progress across many areas of the organization, including broadening and enhancing our enterprise solutions, supporting our channel and partners, and deepening our professional services coverage. We strengthened our strategic partnerships with server virtualization partners and leveraged our storage grid architecture to enable customers to scale their server and storage infrastructures, reduce costs, maximize asset utilization and keep data highly available. In March 2008, we launched a global branding and awareness campaign to increase the visibility of NetApp in the broader IT market. We believe that building our global brand awareness is a key factor to the long term success of our business in order to grow our customer base, increase our market share, and accelerate our revenue growth. The Onaro acquisition, completed on January 28, 2008, expanded our heterogeneous storage infrastructure and strengthened our storage and data management software portfolio by providing customers with new storage service management and change management capabilities. In addition, with our product introductions, we further extended our ability to help customers do “more with less”.
 
Our fiscal 2008 revenue growth was driven by continued demand across the world for our solutions particularly in international markets, and increased revenue from our U.S. commercial enterprise and U.S. Federal business, partially offset by continued softness in our top enterprise accounts. Revenue growth was attributable to increased product revenue with an expanded portfolio of new products and solutions for enterprise customers, increased software entitlements and maintenance revenue, and increased service revenue and was partially offset by lower-cost-per-megabyte disks and lower average selling prices of our older generation products. We believe our products continue to offer the best price-performance value in the industry.
 
While we reported solid results for fiscal 2008, we were not immune to macroeconomic conditions. We believe that our storage solutions provide customers with value propositions that will enable us to continue to gain market share in a more constrained spending environment. Our strategic investments are targeted at some of the strongest areas of the storage market, such as modular storage, archive and compliance, data protection, data management, data permanence, data security and privacy, iSCSI and grid computing. We believe that we are well positioned in the fastest growth segments of the storage market to capitalize on an IT spending recovery. However, if any storage market trends and emerging standards on which we are basing our assumptions do not materialize as anticipated, and if there is reduced or no demand for our products, our expected rate of revenue growth could be materially impacted. Continued revenue growth depends on the introduction and market acceptance of new products and solutions and continued market demand for our products. We will continue to invest in the people, processes, and systems necessary to best optimize our revenue growth and long-term profitability. However, we cannot assure you that such investments will result in achieving our financial objectives.
 
Critical Accounting Estimates and Policies
 
Our discussion and analysis of financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of such statements requires us to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period and the reported amounts of assets and liabilities as of the date of the financial statements. Our estimates are based on historical experience and other assumptions that we consider to be appropriate in the circumstances. However, actual future results may vary from our estimates.
 
We believe that the following accounting policies are “critical” as defined by the Securities and Exchange Commission, in that they are both highly important to the portrayal of our financial condition and results and require difficult management judgments and assumptions about matters that are inherently uncertain. We also have other important policies, including those related to derivative instruments and concentration of credit risk. However, these policies do not meet the definition of critical accounting policies because they do not generally require us to make estimates or judgments that are difficult or subjective. These policies are discussed in Note 2 to the Consolidated Financial Statements accompanying this Annual Report on Form 10-K.


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We believe the accounting policies described below are the ones that most frequently require us to make estimates and judgments and therefore are critical to the understanding of our results of operations:
 
  •  Revenue recognition and allowances
 
  •  Valuation of goodwill and intangibles
 
  •  Accounting for income taxes
 
  •  Inventory write-downs
 
  •  Restructuring accruals
 
  •  Impairment losses on investments
 
  •  Accounting for stock-based compensation
 
  •  Loss contingencies
 
Revenue Recognition and Allowances
 
We apply the provisions of Statement of Position (“SOP”) No. 97-2, Software Revenue Recognition (SOP No. 97-2), and related interpretations to our product sales, both hardware and software, because our software is essential to the performance of our hardware. We recognize revenue when:
 
  •  Persuasive evidence of an arrangement exists:  It is our customary practice to have a purchase order and/or contract prior to recognizing revenue on an arrangement from our end users, customers, value-added resellers, or distributors.
 
  •  Delivery has occurred:  Our product is physically delivered to our customers, generally with standard transfer terms such as FOB origin. We typically do not allow for restocking rights with any of our value-added resellers or distributors. Products shipped with acceptance criteria or return rights are not recognized as revenue until all criteria are achieved. If undelivered products or services exist that are essential to the functionality of the delivered product in an arrangement, delivery is not considered to have occurred.
 
  •  The fee is fixed or determinable:  Arrangements with payment terms extending beyond our standard terms, conditions and practices are not considered to be fixed or determinable. Revenue from such arrangements is recognized as the fees become due and payable. We typically do not allow for price-protection rights with any of our value-added resellers or distributors.
 
  •  Collection is probable:  Probability of collection is assessed on a customer-by-customer basis. Customers are subjected to a credit review process that evaluates the customers’ financial position and ultimately their ability to pay. If it is determined at the outset of an arrangement that collection is not probable based upon our review process, revenue is recognized upon cash receipt.
 
Our multiple element arrangements include our systems and one or more of the following undelivered software-related elements: software entitlements and maintenance, premium hardware maintenance, and storage review services. Our software entitlements and maintenance entitle our customers to receive unspecified product upgrades and enhancements on a when-and-if-available basis, bug fixes, and patch releases. Premium hardware maintenance services include contracts for technical support and minimum response times. Revenues from software entitlements and maintenance, premium hardware maintenance services and storage review services are recognized ratably over the contractual term, generally from one to three years. Standard hardware warranty costs are considered an obligation under SFAS No. 5, Accounting for Contingencies and expensed as a cost of service when revenue is recognized; such costs were $27.0 million in fiscal 2008, $22.1 million in fiscal 2007, and $18.5 million in fiscal 2006. We also offer extended service contracts (which extend our standard parts warranty and may include premium hardware maintenance) at the end of the warranty term; revenues from these contracts are recognized ratably over the contract term. We typically sell technical consulting services separately from any of our other revenue elements, either on a time and materials basis or for fixed price standard projects; we recognize revenue for these services as they are performed. Revenue from hardware installation services is recognized at the time of


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delivery and any remaining costs are accrued, as the remaining undelivered services are considered to be inconsequential and perfunctory. For arrangements with multiple elements, we recognize as revenue the difference between the total arrangement price and the greater of fair value or stated price for any undelivered elements (“the residual method”).
 
For our undelivered software-related elements, we apply the provisions of SOP No. 97-2 and determine fair value of these undelivered elements based on vendor-specific objective evidence (“VSOE”), which for us consists of the prices charged when these services are sold separately either alone, in the case of software entitlements and maintenance, or as a bundled element which always includes software entitlements and maintenance and premium hardware maintenance, and may also include storage review services. To determine the fair value of these elements, we analyze both the selling prices when elements are sold separately as well as the concentrations of those prices. We believe those concentrations have been sufficient to enable us to establish VSOE of fair value for the undelivered elements. If VSOE cannot be obtained to establish fair value of the undelivered elements, paragraph 12 of SOP No. 97-2 would require that revenue from the entire arrangement be initially deferred and recognized ratably over the period these elements are delivered.
 
For income statement presentation purposes, once fair value has been determined for our undelivered bundled elements, we allocate revenue first to software entitlements and maintenance, based on VSOE of its fair value with the remainder allocated to other service revenues.
 
We record reductions to revenue for estimated sales returns at the time of shipment. Sales returns are estimated based on historical sales returns, current trends, and our expectations regarding future experience. We monitor and analyze the accuracy of sales returns estimates by reviewing actual returns and adjust them for future expectations to determine the adequacy of our current and future reserve needs. Our reserve levels have been sufficient to cover actual returns and have not required material changes in subsequent periods. While we currently have no expectations for significant changes to these reserves, if actual future returns and allowances differ from past experience, additional allowances may be required.
 
We also maintain a separate allowance for doubtful accounts for estimated losses based on our assessment of the collectibility of specific customer accounts and the aging of the accounts receivable. We analyze accounts receivable and historical bad debts, customer concentrations, customer solvency, current economic and geographic trends, and changes in customer payment terms and practices when evaluating the adequacy of our current and future allowance. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us, a specific allowance for bad debt is estimated and recorded, which reduces the recognized receivable to the estimated amount we believe will ultimately be collected. We monitor and analyze the accuracy of allowance for doubtful accounts estimate by reviewing past collectibility and adjust it for future expectations to determine the adequacy of our current and future allowance. Our reserve levels have generally been sufficient to cover credit losses. Our allowance for doubtful accounts as of April 25, 2008 was $2.4 million, compared to $2.6 million as of April 27, 2007. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
 
Valuation of Goodwill and Intangibles
 
Identifiable intangible assets are amortized over time, while in-process research and development is recorded as a charge on the date of acquisition and goodwill is capitalized, subject to periodic review for impairment. Accordingly, the allocation of the acquisition cost to identifiable intangible assets has a significant impact on our future operating results. The allocation process requires extensive use of estimates and assumptions, including estimates of future cash flows expected to be generated by the acquired assets. Should conditions be different than management’s current assessment, material write-downs of the fair value of intangible assets may be required. We periodically review the estimated remaining useful lives of our other intangible assets. In addition, a reduction in the estimate of remaining useful life could result in accelerated amortization expense or a write-down in future periods. As such, any future write-downs of these assets would adversely affect our gross and operating margins. We currently do not foresee changes to useful lives or write-downs to these assets.
 
Under our accounting policy we perform an annual review in the fourth quarter of each fiscal year, or more often if indicators of impairment exist. Triggering events for impairment reviews may be indicators such as adverse


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industry or economic trends, restructuring actions, lower projections of profitability, or a sustained decline in our market capitalization. Evaluations of possible impairment and, if applicable, adjustments to carrying values require us to estimate, among other factors, future cash flows, useful lives, and fair market values of our reporting units and assets. When we conduct our evaluation of goodwill, the fair value of goodwill is assessed using valuation techniques that require significant management judgment. Should conditions be different from management’s last assessment, significant write-downs of goodwill may be required. In fiscal 2008 we performed such evaluation and found no impairment. However, any future write-downs of goodwill would adversely affect our operating margins. As of April 25, 2008, our assets included $680.1 million in goodwill. See Note 14, “Goodwill and Purchased Intangible Assets,” to our Consolidated Financial Statements.
 
During fiscal 2008, we recorded goodwill of $79.2 million in connection with our Onaro acquisition and a decrease of goodwill for $0.2 million in connection with the escrow received from our Topio acquisition in fiscal 2007.
 
Accounting for Income Taxes
 
The determination of our tax provision is subject to judgments and estimates due to the complexity of the tax law that we are subject to in several tax jurisdictions. Earnings derived from our international business are generally taxed at rates that are lower than U.S. rates, resulting in a lower effective tax rate than the U.S. statutory tax rate of 35.0%. The ability to maintain our current effective tax rate is contingent on existing tax laws in both the United States and the respective countries in which our international subsidiaries are located. Future changes in domestic or international tax laws could affect the continued realization of the tax benefits we are currently receiving. In addition, a decrease in the percentage of our total earnings from international business or a change in the mix of international business among particular tax jurisdictions could increase our overall effective tax rate.
 
We account for income taxes in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires that deferred tax assets and liabilities be recognized for the effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. SFAS No. 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized. We have provided a valuation allowance of $28.6 million as of April 25, 2008, compared to $21.0 million as of April 27, 2007 on certain of our deferred tax assets. We adopted SFAS No. 123R effective the beginning of our fiscal year ended April 27, 2007. Under SFAS No. 123R, tax attributes related to the exercise of employee stock options should not be realized until they result in a reduction of taxes payable. Pursuant to Footnote 82 of SFAS No. 123R, on a prospective basis we no longer include unrealized stock option attributes as components of our gross deferred tax assets and corresponding valuation allowance disclosures. The tax effected amounts of gross unrealized net operating loss and business tax credit carryforwards, and their corresponding valuation allowance excluded under Footnote 82 for the years ended April 25, 2008 and April 27, 2007 are $245.1 million and $363.3 million, respectively.
 
We are currently undergoing federal income tax audits in the United States and several foreign tax jurisdictions. The rights to some of our intellectual property (“IP”) are owned by certain of our foreign subsidiaries, and payments are made between foreign and U.S. tax jurisdictions relating to the use of this IP in a qualified cost sharing arrangement. Recently, several other U.S. companies have had their foreign IP arrangements challenged as part of IRS examinations, which have resulted in material proposed assessments and/or pending litigation. Effective September 27, 2007, the IRS’s Large and Mid-Sized Business Division (“LMSB”) released a Coordinated Issues Paper (“CIP”) with respect to qualified cost sharing arrangements (“CSAs”). Specifically, this CIP provides guidance to IRS personnel concerning methods that may be applied to evaluate the arm’s length charge (buy-in payment) for internally developed (pre-existing) as well as acquisition-related intangible property that is made available to a qualified CSA. We have evaluated the IRS’s positions in this CIP and have concluded that it will not have a material adverse impact on our consolidated financial position and the results of operations and cash flows. Furthermore, our management does not believe, based upon information currently known to us that the final resolution of any of our audits will have a material adverse effect on our consolidated financial position and the results of operations and cash flows. However, if upon the conclusion of these audits the ultimate determination of


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our taxes owed in any of these tax jurisdictions is for an amount in excess of the tax provision we have recorded or reserved for, our overall effective tax rate may be adversely impacted in the period of adjustment.
 
Effective March 20, 2008, the IRS’s LMSB also released a CIP with respect to the cost sharing of stock based compensation. Specifically, this CIP provides guidance to IRS personnel concerning stock based compensation related to a CSA by providing that the parties to a CSA will share all costs related to intangible development of the covered intangibles, including but not limited to, salaries, bonuses, and other payroll costs and benefits. Taxpayers should include all forms of compensation in the cost pool, including those costs related to stock-based compensation. We have evaluated the IRS’s positions in this CIP and have concluded that it will not have a material adverse impact upon our consolidated financial position and the results of operations and cash flows.
 
On April 28, 2007, we adopted FIN No. 48. FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result of the implementation of FIN No. 48, we recognize the tax liability for uncertain income tax positions on the income tax return based on the two-step process prescribed in the interpretation. The first step is to determine whether it is more likely than not that each income tax position would be sustained upon audit. The second step is to estimate and measure the tax benefit as the amount that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. Estimating these amounts requires us to determine the probability of various possible outcomes. We evaluate these uncertain tax positions on a quarterly basis. This evaluation is based on the consideration of several factors, including changes in facts or circumstances, changes in applicable tax law, settlement of issues under audit, and new exposures. If we later determine that our exposure is lower or that the liability is not sufficient to cover our revised expectations, we adjust the liability and effect a related change in our tax provision during the period in which we make such determination.
 
Inventory Write-Downs
 
Our inventory balance was $70.2 million as of April 25, 2008, compared to $54.9 million as of April 27, 2007. Inventories are stated at the lower of cost (first-in, first-out basis) or market. We perform an in-depth excess and obsolete analysis of our inventory based upon assumptions about future demand and market conditions. We adjust the inventory value based on estimated excess and obsolete inventories determined primarily by future demand forecasts. Although we strive for accuracy in our forecasts of future product demand, any significant unanticipated changes in demand or technological developments could have a significant impact on the value of our inventory and commitments and on our reported results. If actual market conditions are less favorable than those projected, additional write-downs and other charges against earnings may be required. If actual market conditions are more favorable, we may realize higher gross margins in the period when the written-down inventory is sold. During the past few years, our inventory reserves have generally been sufficient to cover excess and obsolete exposure and have not required material changes in subsequent periods.
 
We engage in extensive, ongoing product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers. We also provide for the estimated cost of known product failures based on known quality issues when they arise. Should actual cost of product failure differ from our estimates, revisions to the estimated liability would be required.
 
We are subject to a variety of federal, state, local, and foreign environmental regulations relating to the use, storage, discharge, and disposal of hazardous chemicals used during our manufacturing process or requiring design changes or recycling of products we manufacture. We will continue to monitor our environmental compliance and could incur higher costs, including additional reserves for excess component inventory.
 
Restructuring Accruals
 
In fiscal 2002, we implemented a restructuring plan related to the closure of an engineering facility and consolidation of resources to our Sunnyvale headquarters. In fiscal 2006, we implemented a restructuring plan related to the move of our global service center operations. In determining restructuring charges, we analyze our


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future business requirements in order to properly align and manage our business commensurate with our future revenue levels.
 
Our restructuring costs, and any resulting accruals, involve significant estimates made by management using the best information available at the time the estimates are made, some of which may be provided by third parties. In recording severance reserves, we accrue a liability when the following conditions have been met: employees’ rights to receive compensation are attributable to employees’ services already rendered, the obligation relates to rights that vest or accumulate, payment of the compensation is probable, and the amount can be reasonably estimated. In recording the facilities lease restructuring reserve, we make various assumptions, including the time period over which the facilities are expected to be vacant, expected sublease terms, expected sublease rates, anticipated future operating expenses, and expected future use of the facilities.
 
Our estimates involve a number of risks and uncertainties, some of which are beyond our control, including future real estate market conditions and our ability to successfully enter into subleases or lease termination agreements with terms as favorable as those assumed when arriving at our estimates. We regularly evaluate a number of factors to determine the appropriateness and reasonableness of our restructuring and lease loss accruals, including the various assumptions noted above. If actual results differ significantly from our estimates, we may be required to adjust our restructuring and lease loss accruals in the future. We estimated our facility restructuring reserve to be $1.9 million as of April 25, 2008. In fiscal 2008, we recorded charges of $0.4 million to the restructuring reserve resulting from a change in estimated operating expenses and rent escalations. In fiscal 2006, our facility restructuring reserve included a $1.3 million reduction related to the execution of a new sublease agreement for our Tewksbury facility, net of related costs.
 
Impairment Losses on Investments
 
All of our available-for-sale investments and nonmarketable securities are subject to a periodic impairment review. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. This determination requires significant judgment. For publicly traded investments, impairment is determined based upon the specific facts and circumstances present at the time, including factors such as current economic and market conditions, the credit rating of the security’s issuer, the length of time an investment’s fair value has been below our carrying value, our ability and intent to hold investments to maturity or for a period of time sufficient to allow for any anticipated recovery in fair value. If an investment’s decline in fair value, caused by factors other than changes in interest rates, is deemed to be other-than-temporary, we would reduce its carrying value to its estimated fair value, as determined based on quoted market prices, liquidation values or other metrics. For investments in publicly held companies, we recognize an impairment charge when the declines in the fair values of our investments in these companies are below their cost basis and are judged to be other-than-temporary. The ultimate value realized on these investments in publicly held companies is subject to market price volatility until they are sold.
 
We actively review, along with our investment advisors, current investment ratings, company specific events, and general economic conditions in managing our investments and determining whether there is a significant decline in fair value that is other-than-temporary. We have not experienced any material losses on our available-for-sale investments. To the extent we determine that a decline in fair value is other-than-temporary, the associated investment is valued at current fair value and an impairment charge is reflected in earnings.
 
As of April 25, 2008 and April 27, 2007, our short-term investments have been classified as “available-for-sale” and are carried at fair value. Currently, all marketable securities held by us are classified as available-for-sale and our entire auction rate securities (ARS) portfolio is classified as long-term investments. The ARS held by us are securities with long term nominal maturities which, in accordance with investment policy guidelines, had credit ratings of AAA and Aaa at time of purchase. Substantially all of our ARS are backed by pools of student loans guaranteed by the U.S. Department of Education. We believe that the underlying credit quality of the assets backing our ARS investments have not been impacted by the reduced liquidity of these investments. Based on an analysis of the fair value and marketability of these investments, we recorded a temporary impairment within other accumulated comprehensive income, an element of stockholders’ equity on our balance sheet, of approximately $3.5 million at April 25, 2008.


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The valuation models used to estimate the auction rate securities fair value included numerous assumptions such as assessments of the underlying structure of each security, expected cash flows, discount rates, credit ratings, workout periods, and overall capital market liquidity. These assumptions, assessments and the interpretations of relevant market data are subject to uncertainties, are difficult to predict and require significant judgment. The use of different assumptions, applying different judgment to inherently subjective matters and changes in future market conditions could result in significantly different estimates of fair value. There is no assurance as to when the market for auction rate securities will stabilize. The fair value of our auction rate securities could change significantly based on market conditions and continued uncertainties in the credit markets. If these uncertainties continue or if these securities experience credit rating downgrades, we may incur additional temporary impairment on our auction rate securities portfolio. We will continue to monitor the fair value of our auction rate securities and relevant market conditions and will record additional temporary or other-than-temporary impairments if future circumstances warrant such charges.
 
For nonmarketable securities, the impairment analysis requires the identification of events or circumstances that would likely have a significant adverse effect on the fair value of the investment, including revenue and earnings trends, overall business prospects, limited capital resources, limited prospects of receiving additional financing, limited prospects for liquidity of the related securities, and general market conditions in the investees’ industries. The carrying value of our investments in privately-held companies were $11.2 million and $8.9 million as of April 25, 2008 and April 27, 2007, respectively. During fiscal 2008, we recorded an impairment of $1.6 million for investments in privately-held companies, which was recorded in net gain (loss) on investments in our Consolidated Statements of Income.
 
Accounting for Stock-Based Compensation
 
We account for stock-based compensation in accordance with SFAS No. 123R, Share-Based Payment, using the Black-Scholes option pricing model to value our employee stock options. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. Option pricing models require the input of highly subjective assumptions, including the expected stock price volatility, expected life, and forfeiture rate. Any changes in these highly subjective assumptions may significantly impact the stock-based compensation expense for the future.
 
Loss Contingencies
 
We are subject to the possibility of various loss contingencies arising in the course of business. We consider the likelihood of the loss or impairment of an asset or the incurrence of a liability as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. In fiscal 2008, 2007 and 2006, we did not identify or accrue for any loss contingencies. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.
 
New Accounting Standards
 
In May 2008, the Financial Accounting Standards Board (“FASB”) issued a new final Staff Position (“FSP”) No. APB 14-1 “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlements).” Under the final FSP, cash settled convertible securities would be separated into their debt and equity components. The value assigned to the debt component would be the estimated fair value, as of the issuance date, of a similar debt instrument without the conversion feature, and the difference between the proceeds for the convertible debt and the amount reflected as a debt liability would be recorded as additional paid-in capital. As a result, the debt would be recorded at a discount reflecting its below-market coupon interest rate. The debt would subsequently be accreted to its par value over its expected life, with the rate of interest that reflects the market rate at issuance being reflected on the income statement. This change in methodology will affect the calculations of net income and earnings per share for many issuers of cash settled convertible securities. The final FSP requires explicit disclosure requirements and will be effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. This final FSP is to be applied


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retrospectively to all periods presented. This standard will have an effect on the company’s convertible debenture sold in June 2008 as described in Note 17, Subsequent Events.
 
In March 2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 161, “Disclosures about Derivative Instruments and Hedging Activities — An Amendment of FASB Statement No. 133” (SFAS No. 161). SFAS No. 161 requires additional disclosures about the objectives of using derivative instruments, the method by which the derivative instruments and related hedged items are accounted for under FASB Statement No. 133 and its related interpretations, and the effect of derivative instruments and related hedged items on financial position, financial performance, and cash flows. SFAS 161 also requires disclosure of the fair value of derivative instruments and their gains and losses in a tabular format. This statement is effective for our fourth quarter of fiscal 2009. We are currently evaluating the effect, if any, that the adoption of SFAS No. 161 will have on our consolidated financial statements.
 
In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (SFAS No. 141(R)). SFAS No. 141(R) establishes principles and requirements for how the acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at the acquisition date fair value. SFAS No. 141(R) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. We are required to adopt SFAS No. 141(R) at the beginning of the first quarter of fiscal 2010, which begins on April 25, 2009. We are currently evaluating the effect that the adoption of SFAS No. 141(R) will have on our consolidated financial statements.
 
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51.” (SFAS No. 160). SFAS No. 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. This new consolidation method will significantly change the accounting for transactions with minority interest holders. We are required to adopt SFAS No. 160 at the beginning of the first quarter of fiscal 2010, which begins on April 25, 2009. We are currently evaluating the effect, if any, that the adoption of SFAS No. 160 will have on our consolidated financial statements.
 
Effective April 28, 2007, we adopted FASB Interpretation (“FIN”) No. 48. FIN No. 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that we have taken or expect to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction). FIN No. 48 is applicable to all uncertain tax positions for taxes accounted for under SFAS No. 109, “Accounting for Income Taxes,” and substantially changes the applicable accounting model. There was no cumulative effect from the adoption of FIN No. 48. As a result of the implementation of FIN No. 48, we recognize the tax liability for uncertain income tax positions on the income tax return based on the two-step process prescribed in the interpretation. The first step is to determine whether it is more likely than not that each income tax position would be sustained upon audit. The second step is to estimate and measure the tax benefit as the amount that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. Estimating these amounts requires us to determine the probability of various possible outcomes. We evaluate these uncertain tax positions on a quarterly basis. See “Note 8, Income Taxes,” for further discussion.
 
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115 “Accounting for Certain Investments in Debt and Equity Securities.” SFAS No. 159 allows measurement at fair value of eligible financial assets and liabilities that are not otherwise measured at fair value. If the fair value option for an eligible item is elected, unrealized gains and losses for that item shall be reported in current earnings at each subsequent reporting date. SFAS No. 159 also establishes presentation and disclosure requirements designed to draw comparison between the different measurement attributes the company elects for similar types of assets and liabilities. We are required to adopt SFAS No. 159 at the beginning of the first quarter of fiscal 2009, which began on April 26, 2008. The adoption of SFAS No. 159 is not expected to have a material impact on our financial position or results of operations.
 
In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and


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expands disclosures about fair value measurements. SFAS No. 157 affects other accounting pronouncements that require or permit fair value measurements where the FASB has previously concluded that fair value is the relevant measurement attribute. SFAS No. 157 does not require any new fair value measurements, but may change current practice in some instances. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. We will adopt SFAS No. 157 in the first quarter of fiscal year 2009. In February 2008, the FASB issued FASB Staff Position No. 157-2 “Effective Date of FASB Statement No. 157” (“FSP 157-2”). FSP 157-2 permits a one-year deferral in applying the measurement provisions of SFAS 157 to non-financial assets and non-financial liabilities that are not recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually). The adoption of SFAS No. 157 and FSP 157-2 is not expected to have a material impact on our financial position or results of operations.
 
Results of Operations
 
The following table sets forth certain consolidated statements of income data as a percentage of total revenues for the periods indicated:
 
                         
    Year Ended  
    April 25,
 		    April 27,
 		    April 28,
 		 
    2008     2007     2006  
 
Revenues:
                       
Product
    67.9 %     74.4 %     76.3  
Software entitlements and maintenance
    14.7       12.2       11.6  
Service
    17.4       13.4       12.1  
                         
      100.0       100.0       100.0  
Cost of Revenues:
                       
Cost of product
    27.6       29.0       29.8  
Cost of software entitlements and maintenance
    0.3       0.4       0.4  
Cost of service
    11.2       9.8       9.0  
                         
Gross Margin
    60.9       60.8       60.8  
                         
Operating Expenses:
                       
Sales and marketing
    32.6       32.0       28.9  
Research and development
    13.7       13.7       12.2  
General and administrative
    5.2       5.3       4.6  
Acquired in process research and development
    —       —       0.2  
Restructuring charges (recoveries)
    —       —       —  
Gain on sale of assets
    —       (0.9 )     —  
                         
Total Operating Expenses
    51.5       50.1       45.9  
                         
Income from Operations
    9.4       10.7       14.9  
Other Income (Expenses), Net:
                       
Interest income
    2.0       2.5       2.1  
Interest expense
    (0.2 )     (0.4 )     (0.1 )
Net gain (loss) on investments
    0.4       (0.1 )     —  
Other income (expenses), net
    —       0.1       0.1  
                         
Total Other Income, Net
    2.2       2.1       2.1  
                         
Income Before Income Taxes
    11.6       12.8       17.0  
Provision for Income Taxes
    2.2       2.2       4.1  
                         
Net Income
    9.4 %     10.6 %     12.9 %
                         


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Fiscal 2008 Compared to Fiscal 2007
 
Total Revenues — Total revenues increased by 17.8% to $3,303.2 million in fiscal 2008, from $2,804.3 million in fiscal 2007. Our fiscal 2008 revenue growth was attributable to increased product revenues, software entitlements and maintenance revenues, and service revenues, and was partially offset by reduced revenues from older generation products. Sales through our indirect channels, including resellers, distributors, and OEM partners, represented 63.0% and 59.6% of total revenues for fiscal 2008 and 2007, respectively.
 
Product Revenues — Product revenues increased by $156.6 million or 7.5% to $2,242.5 million in fiscal 2008, from $2,085.9 million in fiscal 2007. The increase was comprised of a net $151.2 million increase in unit volume and $5.4 million in price and product configuration.
 
Revenues from our expanded portfolio of new products for enterprise customers (products we began shipping in the last twelve months) increased $267.9 million, while revenues from our existing products rose $657.9 million. Increased revenues from new products included our FAS 2000 entry-level systems and recent product introductions in our FAS 6000 series high-end enterprise storage systems. Increased revenues from existing products were primarily from our FAS 3000 mid-range products.
 
These increases were partially offset by a $769.2 million decrease in shipments of our older generation products (older or end-of-life products with declining year over year revenue as well as products we no longer ship), including older generation FAS 3000 systems as well as our FAS 900 series systems and NearStore® R200 systems.
 
Our systems are highly configurable to respond to customer requirements in the open systems storage markets that we serve. This wide variation in customized configuration can significantly impact revenue, cost of revenue, and gross margin performance. Price changes, volumes, and product model mix can also impact revenue, cost of revenue and gross margin performance. Disks are a significant component of our storage systems. Industry disk pricing continues to fall every year, and we pass along those price decreases to our customers while working to maintain relatively constant margins on our disk drives. While price per petabyte continues to decline, system performance and increased capacity have an offsetting impact on product revenue.
 
Software Entitlements and Maintenance Revenues — Software entitlements and maintenance revenues increased by 42.7% to $486.9 million in fiscal 2008, from $341.3 million in fiscal 2007. The year over year increase was due to a larger installed base of customers who have purchased or renewed software entitlements and maintenance. Software entitlements and maintenance revenues represented 14.7% and 12.2% of total revenues for fiscal 2008 and 2007, respectively.
 
Service Revenues — Service revenues, which include hardware support, professional services, and educational services, increased by 52.1% to $573.8 million in fiscal 2008, from $377.1 million in fiscal 2007.
 
Professional service revenue increased by 58.8% in fiscal 2008 compared to fiscal 2007. The increase was due to higher customer demand for our professional services in connection with the integration of our solutions into their IT environments. Service maintenance revenue increased by 51.2% in fiscal 2008 compared to fiscal 2007 due to an installed base which has grown over time as a result of new customer support contracts and renewals from existing customers.
 
While it is an element of our strategy to expand and offer more comprehensive global enterprise support and service solutions, we cannot assure you that service revenue will grow at the current rate in fiscal 2009 or beyond.
 
A large portion of our service revenues are deferred and, in most cases, recognized ratably over the service obligation period, which is typically one to three years. Service revenues represented 17.4% and 13.4% of total revenues for fiscal years 2008 and 2007, respectively.
 
Total International Revenues — Total international revenues (including U.S. exports) increased by 23.9% in fiscal year 2008 compared to fiscal 2007. Total international revenues were $1,554.3 million, or 47.1% of total revenues for fiscal 2008, compared to $1,254.0 million, or 44.7% of total revenues for fiscal 2007. The year over year increase was driven by the product, software entitlement and maintenance, and service revenue factors outlined above. We cannot assure you that we will be able to maintain or increase international revenues in fiscal 2009 or beyond.


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Product Gross Margin — Product gross margin decreased to 59.4% in fiscal 2008 from 60.9% in fiscal 2007.
 
Product gross margin was negatively impacted by rebates and initiatives taken throughout the year and directed primarily to various indirect channels. We expect future product gross margin may continue to be impacted by a variety of factors including selective price reductions and discounts, increased indirect channel sales, increases in software revenues and new higher margin products.
 
Stock-based compensation expense included in cost of product revenues was $3.4 million in fiscal 2008 compared to $3.7 million in fiscal 2007. Amortization of existing technology included in cost of product revenues was $22.6 million and $17.6 million for fiscal 2008 and 2007, respectively. Estimated future amortization of existing technology to cost of product revenues will be $26.3 million for fiscal year 2009, $21.8 million for fiscal year 2010, $12.2 million for fiscal year 2011, $5.9 million for fiscal year 2012, $4.4 million for fiscal year 2013, and none thereafter.
 
Software Entitlements and Maintenance Gross Margin — Software entitlements and maintenance gross margin increased to 98.2% for fiscal 2008 from 97.0% for fiscal 2007. The improved software entitlements and maintenance gross margin year over year was due to larger installed base renewals and upgrades.
 
Service Gross Margin — Service gross margin increased to 35.6% in fiscal 2008 compared to 27.4% in fiscal 2007. Cost of service revenue increased by 35.1% to $369.8 million in fiscal 2008, from $273.6 million in fiscal 2007. Stock-based compensation expense of $10.4 million and $10.1 million was included in the cost of service revenue for fiscal 2008 and 2007, respectively.
 
The improvement in service gross margins year over year was primarily due to an increase in service revenue volume and improved productivity, partially offset by increased service infrastructure spending to support our customers. This spending included additional professional support engineers, increased support center activities and global service partnership programs. Service gross margins will typically be impacted by factors such as timing of technical support service initiations and renewals and additional investments in our customer support infrastructure. For fiscal 2009, we expect service margins to experience some variability as we continue to build out our service capability and capacity to support our growing customer base and new products.
 
Sales and Marketing — Sales and marketing expense consists primarily of salaries, commissions, advertising and promotional expenses, stock-based compensation expense, and certain customer service and support costs. Sales and marketing expense increased 20.1% to $1,075.6 million in fiscal 2008, from $895.8 million in fiscal 2007. This expense as a percentage of revenue increased to 32.6% in fiscal 2008, from 32.0% in fiscal 2007. The increase in sales and marketing expense was due to increased commission expense resulting from higher revenues, higher headcount, higher branding campaign costs, and the continued worldwide investment in our sales and global service organizations.
 
Stock compensation expense included in sales and marketing expense for fiscal 2008 was $65.4 million compared to $71.7 million in fiscal 2007. Amortization of trademarks/trade names and customer contracts/relationships included in sales and marketing expense was $4.2 million and $2.9 million in fiscal 2008 and fiscal 2007, respectively. Based on identified intangibles related to our acquisitions recorded at April 25, 2008, estimated future amortization such as trademarks and customer relationships included in sales and marketing expense will be $4.9 million for fiscal 2009, $4.8 million for fiscal 2010, $3.8 million for fiscal 2011, $2.6 million for fiscal 2012, $1.4 million for fiscal 2013 and $1.3 million thereafter.
 
We expect to continue to add sales capacity in an effort to expand our penetration of domestic and international markets, and establish and expand our distribution channels. We expect to increase sales and marketing expense to support our future revenue growth. We believe that our sales and marketing expense will increase in absolute dollars for fiscal 2009 due to increased headcount, sales and marketing related programs to support future revenue growth, higher branding campaign costs and real estate lease payments, partially offset by reduced discretionary spending.
 
Research and Development — Research and development expense consists primarily of salaries and benefits, stock-based compensation, prototype expenses, engineering charges, consulting fees, and amortization of capitalized patents.


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Research and development expense increased 17.3% to $452.2 million in fiscal 2008 from $385.4 million in fiscal 2007. This expense as a percentage of revenue was 13.7% in both fiscal 2008 and 2007. The increase in research and development expense was primarily a result of increased headcount-related salaries and incentive compensation, and future product development. For both fiscal 2008 and 2007, no software development costs were capitalized.
 
Stock compensation expense included in research and development expense for fiscal 2008 was $46.6 million compared to $51.3 million in fiscal 2007. Also included in research and development expense is capitalized patents amortization of $2.0 million in both fiscal 2008 and 2007. Based on capitalized patents recorded at April 25, 2008, estimated future capitalized patent amortization expenses will be $0.5 million for fiscal year 2009, $0.1 million in fiscal 2010, and none thereafter.
 
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 expect to continuously support current and future product development, broaden our existing product offerings and introduce new products that expand our solutions portfolio.
 
We believe that our research and development expense will increase in absolute dollars for fiscal 2009, primarily due to costs associated with the development of new products and technologies, headcount growth, and real estate lease payments.
 
General and Administrative — General and administrative expense increased 16.3% to $171.5 million for fiscal 2008 from $147.5 million for fiscal 2007. This expense as a percentage of revenue decreased slightly to 5.2% for fiscal 2008 from 5.3% for fiscal 2007. The increase in absolute dollars was primarily due to increased headcount and associated payroll expenses, higher expenses related to prior acquisitions, and increased professional and legal fees for general corporate matters.
 
We believe that our general and administrative expense will increase in absolute dollars for fiscal 2009 due to spending required to support and enhance our existing infrastructure as well as real estate lease payments, partially offset by reduced discretionary spending. Stock compensation expense included in general and administrative expense for fiscal 2008 and 2007 was $22.1 million and $26.2 million, respectively. Amortization of covenants not to compete included in general and administrative expense was $0.2 million and $1.0 million for fiscal 2008 and 2007, respectively.
 
Restructuring Charges — In fiscal 2002, we implemented a restructuring plan related to the closure of an engineering facility and consolidation of resources to our Sunnyvale headquarters. In fiscal 2006, we implemented a restructuring plan related to the move of our global service center operations from Sunnyvale to our new flagship support center at our Research Triangle Park facility in North Carolina.
 
Our restructuring estimates are reviewed and revised periodically and may result in a substantial charge or reduction to restructuring expense should different conditions prevail than were anticipated in previous management estimates. Such estimates included various assumptions such as the time period over which the facilities will be vacant, expected sublease terms, and expected sublease rates. In fiscal 2008, we recorded charges of $0.4 million to the restructuring reserve resulting from a change in the estimated operating expenses and rent escalations related to our 2002 restructuring plan.
 
Of the reserve balance at April 25, 2008, $0.6 million was included in other accrued liabilities, and the remaining $1.3 million was classified as long-term obligations. The balance of the reserve relates to facilities and is expected to be paid by fiscal 2011.


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The following analysis sets forth the significant components of the restructuring reserve at April 25, 2008 (in thousands):
 
                         
          Severance-
 		       
          Related
 		       
    Facility     Amounts     Total  
 
Reserve balance at April 30, 2005
  $ 4,503     $ —     $ 4,503  
Restructuring charges
    281       859       1,140  
Recoveries
    (1,256 )     —       (1,256 )
Cash payments and others
    (862 )     (521 )     (1,383 )
                         
Reserve balance at April 28, 2006
  $ 2,666     $ 338     $ 3,004  
Recoveries
    —       (74 )     (74 )
Cash payments and others
    (582 )     (264 )     (846 )
                         
Reserve balance at April 27, 2007
  $ 2,084     $ —     $ 2,084  
Cash payments
    (607 )     —       (607 )
Restructuring charges
    447       —       447  
                         
Reserve balance at April 25, 2008
  $ 1,924     $ —     $ 1,924  
                         
 
Gain on Sale of Assets — We recorded a gain of $25.3 million in fiscal 2007 as a result of the sale of certain assets to Blue Coat Systems, Inc (“Blue Coat”).
 
Operating Income — Operating income as a percentage of revenue decreased to 9.4% for fiscal 2008 from 10.7% for fiscal 2007. Operating income for fiscal 2007 included a gain on sale of assets of $25.3 million. Our operating expense levels are based in part on our expectations as to future revenue growth, and a significant percentage of our operating expenses are fixed and difficult to reduce within a short period of time. As a result, if revenue levels are below expectations, our fixed expenses could adversely affect our operating income and cash flow until revenues increase or until such fixed expenses are reduced to a level commensurate with revenues. We cannot assure you that we will be able to maintain or increase revenues for fiscal 2009 or beyond.
 
Interest Income — Interest income was $64.6 million and $68.8 million for fiscal 2008 and 2007, respectively. The slight decrease in interest income was primarily driven by lower average interest rates on our investment portfolio and lower cash and investment balances. We expect that period-to-period changes in interest income will continue to be impacted by the volatility of market interest rates, cash and investment balances, cash generated by operations, timing of our stock repurchases, capital expenditures, and payments of our contractual obligations.
 
Interest Expense — Interest expense was $8.0 million and $11.6 million in fiscal 2008 and 2007, respectively. The decrease in interest expense in fiscal 2008 was due to full repayment of the loan agreement entered with JPMorgan (“Loan Agreement”), partially offset by increased interest expense on the $250.0 million outstanding under the revolving secured credit agreement with JPMorgan Securities (see Note 6). We expect period-to-period changes in interest expense to continue to be subject to market interest rate volatility and amounts due under various loan agreements.
 
Net Gain (Loss) on Investments — Net gain on sale of investments was $12.6 million for fiscal 2008. Net gain for fiscal 2008 consisted primarily of a gain of $13.6 million related to the sale of shares of Blue Coat common stock offset by a net write-down of $1.0 million for our investments in privately-held companies. For fiscal 2007, net loss on sale of investments was $1.5 million, including a net write-down of $2.1 million related to the impairment of our investment in privately-held companies.
 
Other Income (Expense), Net — Other expense was $0.1 million for fiscal 2008 and consisted of net exchange losses from foreign currency of $0.7 million, partially offset by other income of $0.6 million. Other income was $2.8 million for fiscal 2007, and consisted of net exchange gains from foreign currency of $2.4 million and other income of $0.4 million. We believe that period-to-period changes in foreign exchange gains or losses will continue to be impacted by hedging costs associated with our forward and option activities and forecast variance.


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Provision for Income Taxes — For fiscal 2008 and 2007, we applied to pretax income an annual effective tax rate before discrete reporting items of 13.3% and 19.0%, respectively. The decrease to the annual effective tax rate year over year is primarily attributable to a relative increase in the benefits attributable to our foreign operations, as well as to a relative decrease in the tax impact of nondeductible stock compensation under SFAS No. 123R, brought about in part by our decision to cease granting incentive stock options. Since we have replaced the granting of incentive stock options with the granting of nonqualified stock options, this gives rise to the recognition of more deferred tax assets as SFAS No. 123R expense occurs. After taking into account the tax effect of discrete items reported, the effective tax rates applied to the pretax income for fiscal 2008 and 2007 were 19.1% and 17.2%, respectively.
 
Fiscal 2007 Compared to Fiscal 2006
 
Total Revenues — Total revenues increased by 35.7% to $2,804.3 million in fiscal 2007, from $2,066.5 million in fiscal 2006. Our fiscal 2007 revenue growth was attributable to increased product revenues, software entitlements and maintenance revenues, and service revenues, and was partially offset by reduced revenues from older generation products. Sales through our indirect channels which include resellers, distributors, and OEM partners represented 59.6% and 55.5% of total revenues for fiscal 2007 and 2006, respectively.
 
Product Revenues — Product revenues increased by 32.2% to $2,085.9 million in fiscal 2007, from $1,577.4 million in fiscal 2006. Product revenue increased $686.9 million in fiscal 2007 as compared to fiscal 2006, due to a $669.7 million increase in unit volume and an increase of $17.2 million due to price and configuration on our existing products as well as increased revenues from existing products. Increased revenues from our new products include certain FAS 3000 mid-range products, V-Series systems, NearStore Virtual Tape Library systems and Datafort storage security appliances. Increased revenue from existing products included certain FAS 6000 series high-end enterprise storage systems and certain FAS 3000 products.
 
These increases were partially offset by a $376.3 million decrease in shipments of our older generation products (i.e. older or end-of-life products with declining year over year revenue as well as products we no longer ship), including FAS 900 series systems, NearStore® R200 systems and NetCache products we no longer ship.
 
Software Entitlements and Maintenance Revenues — Software entitlements and maintenance revenues increased by 42.7% to $341.3 million in fiscal 2007, from $239.1 million in fiscal 2006 due primarily to a larger installed base of customers who have purchased or renewed software entitlements and maintenance contracts. Software entitlements and maintenance revenues represented 12.2% and 11.6% of total revenues for fiscal 2007 and 2006, respectively.
 
Service Revenues — Service revenues, which include hardware support, professional services, and educational services, increased by 50.9% to $377.1 million in fiscal 2007, from $249.9 million in fiscal 2006.
 
Professional service revenue increased by 56.4% in fiscal 2007 compared to fiscal 2006. The increase was due to an increasing number of enterprise customers, which typically have extremely complex IT environments and require professional services to integrate our solution into their environments. Service maintenance contracts increased by 48.3% in fiscal 2007 compared to fiscal 2006, due to an installed base which has grown over time as a result of new customer support contracts, and support contracts and renewals from existing customers.
 
A large portion of our service revenues are deferred and, in most cases, recognized ratably over the service obligation periods, which are typically one to three years. Service revenues represented 13.4% and 12.1% of total revenues for fiscal years 2007 and 2006, respectively.
 
Total International Revenues — Total international revenues (including U.S. exports) increased by 32.9% in fiscal year 2007 compared to fiscal 2006. Total international revenues were $1,254.0 million, or 44.7% of total revenues for fiscal 2007, compared to $943.8 million, or 45.7% of total revenues for fiscal 2006.
 
Product Gross Margin — Product gross margin was 60.9% for both fiscal 2007 and fiscal 2006.
 
Product gross margin for both fiscal 2007 and 2006 were affected by the following factors:
 
  •  Higher average selling price and gross margins in fiscal 2007 related to new products
 
  •  SFAS 123R stock compensation expenses recorded in fiscal 2007 versus none in fiscal 2006


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  •  Sales price reductions due to competitive pricing pressure and selective pricing discounts
 
  •  Increased sales through certain indirect channels, which generates lower gross margin than our direct sales in certain geographic regions
 
  •  Higher disk content with an expanded storage capacity for the higher-end storage systems, as resale of disk drives generates lower gross margins
 
Stock-based compensation expense included in cost of product revenues was $3.7 million for fiscal 2007. Amortization of existing technology included in cost of product revenues was $17.6 million and $11.8 million for fiscal 2007 and 2006, respectively.
 
Software Entitlements and Maintenance Gross Margin — Software entitlements and maintenance gross margin was 97.0% and 96.5% for fiscal 2007 and 2006, respectively, due primarily to improved productivity and a larger installed base, renewals, upgrades, and an increasing mix of enterprise customers.
 
Service Gross Margin — Service gross margin increased to 27.4% in fiscal 2007 compared to 25.9% in fiscal 2006. Cost of service revenue increased by 47.9% to $273.6 million in fiscal 2007, from $185.0 million in fiscal 2006. Stock-based compensation expense of $10.1 million was included in the cost of service revenue for fiscal 2007.
 
The change in service gross margin year over year was primarily impacted by an increase in service revenue, improved productivity, and continued spending in our service infrastructure to support our increasing enterprise customer base. This spending included additional professional support engineers, increased support center activities, and global service partnership programs. Service gross margins will typically be impacted by factors such as timing of technical support service initiations and renewals and additional investments in our customer support infrastructure.
 
Sales and Marketing — Sales and marketing expense consists primarily of salaries, commissions, advertising and promotional expenses, stock-based compensation expense, and certain customer service and support costs. Sales and marketing expense increased 49.5% to $895.8 million in fiscal 2007, from $599.1 million in fiscal 2006. These expenses were 32.0% and 28.9% of total revenues in fiscal 2007 and fiscal 2006, respectively. The increase in absolute dollars was attributed to increased commission expenses resulting from increased revenues, higher payroll expenses due to higher profitability, higher partner program expenses, the continued worldwide investment in our sales and global service organizations associated with selling complete enterprise solutions, and stock-based compensation expenses recognized under adoption of SFAS No. 123R.
 
The stock-based compensation expense included in sales and marketing expense for fiscal 2007 was $71.7 million compared to $4.0 million in fiscal 2006. The increase in stock-based compensation expense was due to adoption of SFAS No. 123R. Amortization of acquisitions-related trademarks/tradenames and customer contracts and relationships included in sales and marketing expenses was $2.9 million and $2.1 million for fiscal 2007 and fiscal 2006, respectively.
 
Research and Development — Research and development expense consists primarily of salaries and benefits, stock-based compensation, prototype expenses, nonrecurring engineering charges, fees paid to outside consultants, and amortization of capitalized patents.
 
Research and development expense increased 53.3% to $385.4 million in fiscal 2007 from $251.3 million in fiscal 2006. This expense represented 13.7% and 12.2% of revenue for fiscal 2007 and 2006, respectively. The increase in research and development expense was primarily a result of increased headcount, ongoing operating impact of acquisitions, ongoing support of current and future product development and enhancement efforts, higher performance-based payroll expenses due to higher profitability, and stock-based compensation expense recognized under adoption of SFAS No. 123R. For both fiscal 2007 and 2006, no software development costs were capitalized.
 
The stock-based compensation expense included in research and development expense for fiscal 2007 was $51.3 million compared to $8.3 million in fiscal 2006. The increase in stock-based compensation expense was due to adoption of SFAS No. 123R. Included in research and development expense are capitalized patents amortization of $2.0 million for both fiscal 2007 and 2006.


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General and Administrative — General and administrative expense increased 58.9% to $147.5 million in fiscal 2007, from $92.8 million in fiscal 2006. This expense represented 5.3% and 4.6% of revenues for fiscal 2007 and 2006, respectively. The increase in absolute dollars was primarily due to higher payroll expenses due to higher profitability and increased headcount, higher stock-based compensation expense recognized under SFAS No. 123R, and higher legal expenses and professional fees for general corporate matters.
 
The stock-based compensation expense included in general and administrative expense for fiscal 2007 was $26.2 million compared to $1.0 million in fiscal 2006. The increase in stock-based compensation expense was due to adoption of SFAS No. 123R. Amortization of covenants not to compete included in general and administrative expenses was $1.0 million and $2.2 million for fiscal 2007 and 2006, respectively.
 
Restructuring Charges — In fiscal 2002, we implemented a restructuring plan related to the closure of an engineering facility and consolidation of resources to the Sunnyvale headquarters. In fiscal 2006, we implemented a restructuring plan related to the move of our global services center operations from Sunnyvale to our new flagship support center at our Research Triangle Park facility in North Carolina.
 
In fiscal 2007, we did not record any reduction in restructuring reserve resulting from a change in estimate for our restructuring plans. In fiscal 2006, we recorded a reduction in restructuring reserve of $1.3 million resulting from the execution of a new sublease agreement for our Tewksbury facility. In fiscal 2006, we also recorded a restructuring charge of $1.1 million, primarily attributed to severance-related amounts and relocation expenses related to our 2006 restructuring plan. Of the reserve balance at April 27, 2007, $0.5 million was included in other accrued liabilities, and the remaining $1.6 million was classified as long-term obligations.
 
Gain on Sale of Assets — We recorded a gain of $25.3 million in fiscal 2007 as a result of the sale of certain assets of our NetCache product line to Blue Coat. We recorded revenues of $57.4 million, $71.1 million and $75.5 million from NetCache products for fiscal 2007, 2006, and 2005 respectively. The contribution to operating income from these products was not significant.
 
Interest Income — Interest income was $68.8 million and $41.5 million for fiscal 2007 and 2006, respectively. The increase in interest income was primarily driven by higher average interest rates on our investment portfolio.
 
Interest Expense — Interest expense was $11.6 million and $1.3 million in fiscal 2007 and 2006, respectively. The increase in fiscal 2007 was primarily due to interest incurred in connection with our debt.
 
Net Gain (Loss) on Investments — Net gain (loss) on investments included a net write-down of $2.1 million related to the impairment of our investment in privately-held companies in fiscal 2007.
 
Other Income (Expense), Net — Other income was $2.8 million for fiscal 2007. Other income for fiscal 2007 included net exchange gains from foreign currency of $2.4 million and other income of $0.4 million. Other income included net exchange gains from foreign currency of $1.7 million for fiscal 2006.
 
Provision for Income Taxes — For fiscal 2007, our annual effective tax rate was 17.2% versus 23.9% for fiscal 2006, which included a 6.4% increase to account for the income tax provision of $22.5 million associated with the cash repatriation of cumulative foreign earnings. The decrease to the effective tax rate for fiscal year 2007 is primarily attributable to the absence of this one-time item and the impact of income taxed at lower tax rates in foreign jurisdictions. The effective tax rate for fiscal 2007 differed from the U.S. statutory rate primarily due to reductions in the rate derived from a beneficial foreign tax ruling for our principal European subsidiary, the availability of tax credits and the generation of foreign earnings in lower tax jurisdictions, offset partially by an increase in the rate due to the tax effect of stock compensation under SFAS No. 123R.
 
The provision for income taxes for fiscal 2006 included an income tax provision of $22.5 million or $0.06 per share associated with the repatriation of cumulative foreign earnings. This tax raised our 2006 effective tax rate by 6.4% under the one-time incentive created pursuant to Section 965 of the Jobs Act. We will invest these earnings pursuant to an approved Domestic Reinvestment Plan that conforms to the Jobs Act guidelines.
 
The 2006 Tax Relief and Health Care Act was signed into law on December 20, 2006. One of the provisions of this law was the retroactive reinstatement of the research and development credit from January 1, 2006 and its


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extension through December 31, 2007. The effective tax rates for the fiscal 2007 reflected the benefits attributable to the extension of the research and development tax credit provisions.
 
Liquidity and Capital Resources
 
The following sections discuss the effects of changes in our balance sheet and cash flows, contractual obligations and other commercial commitments, stock repurchase program, capital commitments, and other sources and uses of cash flow on our liquidity and capital resources.
 
Balance Sheet and Other Cash Flows
 
As of April 25, 2008, as compared to April 27, 2007, our cash, cash equivalents, and short-term investments decreased by $144.4 million to $1,164.4 million. We derive our liquidity and capital resources primarily from our cash flow from operations and from working capital. Working capital (Current Assets minus Current Liabilities) decreased by $399.9 million to $653.3 million as of April 25, 2008, compared to $1,053.3 million as of April 27, 2007 due to higher stock repurchase activities in fiscal 2008. In addition, we have classified all of our auction rate securities that were not liquidated before April 25, 2008 from short-term investments to long-term assets in our consolidated balance sheet as of April 25, 2008 as our ability to liquidate such securities in the next 12 months is uncertain.
 
During fiscal 2008, we generated cash flows from operating activities of $1,008.9 million, as compared with $864.5 million and $554.3 million for fiscal 2007 and fiscal 2006, respectively. We reported net income of $309.7 million for fiscal 2008, as compared to $297.7 million and $266.5 million in fiscal 2007 and fiscal 2006, respectively. A summary of the significant changes and noncash adjustments affecting net income and changes in assets and liabilities impacting operating cash flows are as follows:
 
  •  Stock-based compensation expense was $148.0 million in fiscal 2008, compared to $163.0 million and $13.3 million in fiscal 2007 and 2006, respectively. The decrease in stock-based compensation in fiscal 2008 compared to fiscal 2007 was largely due to our declining stock price year over year.
 
  •  Depreciation expense was $115.3 million, $87.4 million, and $63.7 million in fiscal 2008, 2007 and 2006, respectively. The increase was due to continued capital expansion to meet our business growth.
 
  •  Amortization of intangibles and patents was $28.9 million, $23.4 million, and $18.1 million in fiscal 2008, 2007 and 2006, respectively. The increase was attributed to intangibles related to the newly acquired companies including Onaro and Topio.
 
  •  Net gain on sale of investments was $12.6 million for fiscal 2008, compared to net loss of $1.5 million for fiscal 2007. The gain in fiscal 2008 was related to sale of Blue Coat common shares which amounted to $13.6 million, offset by a net write-down of $1.0 million for our investments in privately-held companies.
 
  •  An increase in deferred revenues of $401.0 million in fiscal 2008 was primarily due to increased service sales and software entitlements and maintenance revenues. An increase in deferred revenue of $421.3 million in fiscal 2007 compared to $233.2 million in fiscal 2006, was due to larger installed base renewals, upgrades and an increased number of new enterprise customers.
 
  •  Increase in other liabilities of $117.5 million in fiscal 2008 compared to decrease of $0.3 million and $1.6 million in fiscal 2007 and 2006, respectively, was primarily due to reclassification of our FIN 48 tax liability (see Note 8 in the Notes to Consolidated Financial Statements).
 
  •  Increase in accounts payable of $20.0 million, $36.6 million and $17.4 million in fiscal 2008, 2007, and 2006, respectively, was primarily attributable to elevated purchasing activity required to support our business growth and facilities expansion projects.
 
  •  Accrued compensation and related benefits increased by $18.8 million, $43.6 million and $28.4 million in fiscal 2008, 2007, and 2006, respectively, reflecting increased headcount and the timing of payroll accruals versus payments.


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  •  Increase in accounts receivable of $27.7 million in fiscal 2008 was due to increased shipment levels weighted towards the end of the fourth quarter, offset by timing of collections. Increase in accounts receivable of $175.2 million and $116.8 million in fiscal 2007 and fiscal 2006, respectively were due to higher revenue volume and shipment levels weighted toward the end of the fourth quarters in both fiscal years.
 
  •  Net inventory increased $15.4 million in fiscal 2008 due to higher inventory to support revenue growth during the fourth quarter of fiscal 2008. Net inventory decreased $9.9 million for fiscal 2007, primarily due to higher inventory at fiscal 2006 year end associated with the new FAS 6000 launch. The increase of $46.2 million in fiscal 2006 was due primarily to ramping up of purchased components in anticipation of revenue growth.
 
  •  An increase in deferred income taxes of $53.0 million in fiscal 2008 was primarily due to an increase in deferred tax balances associated with increases in deferred revenue and tax benefits associated with stock compensation. The increase of $146.0 million in fiscal 2007, as compared to a decrease of $1.5 million in fiscal 2006, was primarily due to an increase in deferred tax balances associated with increases in tax benefits associated with stock compensation and deferred revenue.
 
  •  A decrease in income taxes payable of $47.3 million in fiscal 2008 compared to an increase of $1.6 million in fiscal 2007 was primarily attributable to reclassification of FIN 48 liability (see Note 8 in the Notes to Consolidated Financial Statements). An increase in income taxes payable in fiscal 2007 compared to an increase of $72.7 million in fiscal 2006 was primarily attributable to income taxes payments related to the one-time repatriation incentive under the Jobs Act. During fiscal 2007, we remitted $19.6 million of income taxes relating to the foreign dividend repatriation in connection with the filing of our fiscal 2006 federal income tax return.
 
We expect that cash provided by operating activities may fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results, shipment levels and linearity, accounts receivable collections, inventory management, and the timing of tax and other payments.
 
Cash Flows from Investing Activities
 
Capital expenditures for fiscal 2008 were $188.3 million as compared to $165.8 million and $132.9 million in fiscal 2007 and 2006, respectively. We received net proceeds of $376.4 million and $187.9 million in fiscal 2008 and 2007, respectively, and used net proceeds of $128.5 million in fiscal 2006, for net purchases and redemptions of short-term investments and restricted investments to repay debts with JP Morgan (See Note 6 to the Consolidated Financial Statements). Investing activities in fiscal 2008, 2007, and 2006 also included new investments in privately held companies of $4.2 million, $1.6 million, and $9.3 million, respectively. In fiscal 2008, we acquired Onaro, Inc. and incurred total cash payments including related transaction costs totaling $99.6 million. In fiscal 2007, we acquired Topio, Inc. and incurred total cash payments including related transaction costs totaling $131.2 million. In fiscal 2006, we acquired Alacritus, Inc. (“Alacritus”) and Decru Inc. (“Decru”) and incurred total cash payments including related transaction costs totaling $53.7 million. In fiscal 2008, we received $0.2 million in connection with the escrow from our Topio acquisition. In fiscal 2008, 2007 and 2006, we received $0.9 million, $2.8 million, and $0.1 million, respectively, from the sale of investments in privately held companies. In fiscal 2008, we received $18.3 million from the sale of shares of Blue Coat common stock. In fiscal 2007, we received $23.9 million in cash in connection with the sale of certain assets to Blue Coat.
 
The credit markets have been volatile and have experienced a shortage in overall liquidity. As of April 25, 2008, auction rate securities with an estimated fair value of $72.7 million were recorded in long-term investments. We concluded that no other-than-temporary impairment losses occurred during fiscal 2008 because we believe that the declines in fair value that occurred during fiscal 2008 were due to general market conditions. These investments continue to be of high credit quality, and we have the intent and ability to hold these investments until the anticipated recovery in market value occurs. We believe we have sufficient liquidity through cash provided by operations and our financing agreements. If the global credit market continues to deteriorate, our investment portfolio may be impacted and we could determine some of our investments are impaired which could adversely impact our financial results.


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Cash Flows from Financing Activities
 
In fiscal 2008 and 2007, we used $662.4 million and $747.3 million, respectively, compared to fiscal 2006, when cash from financing activities generated $42.8 million. We made repayments of $231.5 million and $214.9 million for our debt and revolving credit facility in fiscal 2008 and 2007, respectively. We repurchased 32.8 million, 22.6 million and 17.4 million shares of common stock for a total of $903.7 million, $805.7 million, and $488.9 million in fiscal 2008, 2007 and 2006, respectively. Sales of common stock related to employee stock option exercises and employee stock purchases provided $114.7 million, $215.5 million and $232.7 million in fiscal 2008, 2007 and 2006, respectively. Tax benefits, related to tax deductions in excess of the stock-based compensation expense recognized, of $45.4 million and $63.2 million were presented as financing cash flows for fiscal 2008 and 2007, respectively, in accordance with SFAS No. 123R. During fiscal 2008, 2007 and 2006, we withheld shares with an aggregate value of $6.0 million, $5.3 million and $1.1 million, respectively, in connection with the exercise of certain employees’ restricted stock for purposes of satisfying those employees’ federal, state, and local withholding tax obligations. The increase in the amounts withheld year over year was due to the release of restricted stock units assumed in connection with acquisitions and increased grants of restricted stock units. During fiscal 2008, we borrowed $318.8 million through a revolving credit facility for our general corporate purposes, including stock repurchases and working capital needs. During fiscal 2006, we borrowed $300.0 million to fund the repatriation in cash from foreign earnings and investments under the Jobs Act.
 
Net proceeds from the issuance of common stock related to employee participation in employee stock programs have historically been a significant component of our liquidity. The extent to which our employees participate in these programs generally increases or decreases based upon changes in the market price of our common stock. As a result, our cash flow resulting from the issuance of common stock related to employee participation in employee stock programs will vary. Income tax benefits associated with dispositions of employee stock transactions has historically been another significant source of our liquidity. If stock option exercise patterns change, we may receive less cash from stock option exercises and may not receive the same level of tax benefits in the future, which could cause our cash payments for income taxes to increase. In addition, if our stock price declines, we may receive less tax benefits, which could also cause our income tax payments to increase.
 
Other Factors Affecting Liquidity and Capital Resources
 
For fiscal 2008, 2007, and 2006, the income tax benefit associated with dispositions of employee stock transactions was $48.2 million, $175.0 million, and $36.6 million, respectively. If stock option exercise patterns change, we may receive less cash from stock option exercises and may not receive the same level of tax benefits in the future, which could cause our cash payments for income taxes to increase.
 
Stock Repurchase Program
 
At April 25, 2008, $496.2 million remained available for future repurchases under plans approved as of that date. The stock repurchase program may be suspended or discontinued at any time.
 
Credit Facilities and Debt
 
In October 2007, we received proceeds from a secured credit agreement totaling $250.0 million with JP Morgan Securities Inc. (“JP Morgan Securities”) as sole bookrunner and sole lead arranger (“Secured Credit Agreement”). The Secured Credit Agreement is used to finance general corporate purposes, including stock repurchases and working capital needs. See Note 6 of the Consolidated Financial Statements. In fiscal 2008, we repaid $146.4 million and drew $69.0 million against this Secured Credit Agreement. As of April 25, 2008, the outstanding balance on the Secured Credit Agreement was $172.6 million. The obligations under the Secured Credit Agreement are collateralized by certain investments with a value totaling $242.6 million as of April 25, 2008. Interest on the loans under the Secured Credit Agreement accrues at a floating rate based on a base rate in effect from time to time, plus a margin. The interest rate at April 25, 2008 was 2.88%. In accordance with the payment terms of the Secured Credit Agreement, interest payments will be approximately $5.0 million in fiscal 2009 based on amount outstanding at April 25, 2008. As of April 25, 2008, we were in compliance with the liquidity and leverage requirements of the Secured Credit Agreement.


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In March 2006, we received proceeds from a term loan agreement totaling $300.0 million to finance a dividend under the Jobs Act (“Loan Agreement”). (See Note 6 of the Consolidated Financial Statements.) As of April 25, 2008, the loan agreement was fully repaid.
 
In November 2007, we entered into a $250.0 million senior unsecured credit agreement (the “Unsecured Credit Agreement”) with certain lenders and BNP Paribas, as syndication agent, and JP Morgan Chase Bank National Association, as administrative agent (See Note 6 of the Consolidated Financial Statements,) and as of April 25, 2008, no amount was outstanding under this facility. However, the amounts allocated under the Unsecured Credit Agreement to support certain of our outstanding letters of credit amounted to $0.5 million as of April 25, 2008.
 
In June 2008, we issued $1.265 billion of 1.75% Convertible Senior Notes due 2013 (the “Notes”). See Note 17, “Subsequent Event” of the Consolidated Financial Statements.
 
We have prepared the following unaudited pro forma summary consolidated balance sheet information as of April 25, 2008 which gives effect to the above transactions as if they occurred on April 25, 2008.
 
NetApp, Inc.
 
Pro Forma Summary Consolidated Balance Sheet Information
 
                         
          Pro Forma
 		    Pro Forma
 		 
    April 25, 2008     Adjustments     April 25, 2008  
    (In thousands)
 		 
    (Unaudited)  
 
Cash and cash equivalents
  $ 936,479     $ 873,017     $ 1,809,496  
Total current assets
    2,067,433       878,317       2,945,750  
Long-term deferred income taxes and other assets
    208,529       123,898       332,427  
Total assets
    4,070,988       1,002,215       5,073,203  
Total current liabilities
    1,414,102       —       1,414,102  
1.75% convertible senior notes due 2013
    —       1,265,000       1,265,000  
Total liabilities
    2,370,649       1,265,000       3,635,649  
Total stockholders’ equity
    1,700,339       (262,785 )     1,437,554  
 
Contractual Obligations
 
The following summarizes our contractual cash obligations at April 25, 2008, and the effect such obligations are expected to have on our liquidity and cash flows in future periods:
 
                                                         
    2009     2010     2011     2012     2013     Thereafter     Total  
    (In millions)  
 
Contractual Obligations:
                                                       
Office operating lease payments(1)
  $ 27.8     $ 24.5     $ 21.2     $ 15.7     $ 12.8     $ 27.2     $ 129.2  
Real estate lease payments(2)
    6.2       9.2       10.2       10.2       135.5       154.9       326.2  
Equipment operating lease payments(3)
    17.5       12.9       6.4       1.5       1.3       —       39.6  
Venture capital funding
    —       —       —       —       —       —          
commitments(4)
    0.3       0.2       0.2       —       —       —       0.7  
Purchase commitments(5)
    47.2       —       —       —       —       —       47.2  
Capital expenditures(6)
    29.7       —       —       —       —       —       29.7  
Communications and maintenance(7)
    21.6       12.5       4.8       0.9       0.1       —       39.9  
Restructuring charges(8)
    0.6       0.7       0.6       —       —       —       1.9  
Debt(9)
    4.9       5.0       5.0       5.0       174.4       —       194.3  
Uncertain tax positions(10)
    —       —       —       —       —       97.8       97.8  
                                                         
Total Contractual Cash Obligations
  $ 155.8     $ 65.0     $ 48.4     $ 33.3     $ 324.1     $ 279.9     $ 906.5  
                                                         


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For purposes of the above table, contractual obligations for the purchase of goods and services are defined as agreements that are enforceable, are legally binding on us, and subject us to penalties if we cancel the agreement. Some of the figures we include in this table are based on management’s estimates and assumptions about these obligations, including their duration, the possibility of renewal or termination, anticipated actions by management and third parties, and other factors. Because these estimates and assumptions are necessarily subjective, our actual future obligations may vary from those reflected in the table.
 
                                                         
    2009   2010   2011   2012   2013   Thereafter   Total
    (In millions)
 
Other Commercial Commitments:
                                                       
Letters of credit(11)
  $ 2.2     $ 0.0     $ 0.1     $ 0.4     $ 0.1     $ 0.4     $ 3.2  
                                                         
                                                         
 
 
(1) We enter into operating leases in the normal course of business. We lease sales offices, research and development facilities, and other property and equipment under operating leases throughout the United States and internationally, which expire on various dates through fiscal year 2017. Substantially all lease agreements have fixed payment terms based on the passage of time and contain payment escalation clauses. Some lease agreements provide us with the option to renew or terminate the lease. Our future operating lease obligations would change if we were to exercise these options and if we were to enter into additional operating lease agreements. Facilities operating lease payments exclude the leases impacted by the restructurings described in Note 13 of the Consolidated Financial Statements. The amounts for the leases impacted by the restructurings are included in subparagraph (8) below. The net increase in office operating lease payments was primarily due to several domestic lease extensions during fiscal 2008.
 
(2) Included in the above contractual cash obligations pursuant to the five financing arrangements with BNP Paribas LLC (“BNP”) are (a) lease commitments of $6.2 million in fiscal 2009; $9.2 million in fiscal 2010; $10.2 million in each of the fiscal years 2011 and 2012; $8.4 million in fiscal 2013, and $6.2 million thereafter, which are based on either the London Interbank Offered Rate (“LIBOR”) rate at April 25, 2008 plus a spread or a fixed rate for terms of five years, and (b) at the expiration or termination of the lease, a supplemental payment obligation equal to our minimum guarantee of $275.8 million in the event that we elect not to purchase or arrange for sale of the buildings. (See Note 4 to the Consolidated Financial Statements.)
 
(3) Equipment operating leases include servers and IT equipment used in our engineering labs and data centers.
 
(4) Venture capital funding commitments include a quarterly committed management fee based on a percentage of our committed funding to be payable through June 2011.
 
(5) Amounts included in purchase commitments are (a) agreements to purchase components from our suppliers and/or contract manufacturers that are non-cancelable and legally binding; and (b) commitments related to utilities contracts. Purchase commitments and other exclude (a) products and services we expect to consume in the ordinary course of business in the next 12 months; (b) orders that represent an authorization to purchase rather than a binding agreement; (c) orders that are cancelable without penalty and costs that are not reasonably estimable at this time.
 
(6) Capital expenditures include worldwide contractual commitments to purchase equipment and to construct building and leasehold improvements, which will be recorded as property and equipment.
 
(7) Communication and maintenance represent payments we are required to make based on a minimum volume under certain communication contracts with major telecommunication companies as well as maintenance contracts with multiple vendors. Such obligations expire in September 2012.
 
(8) These amounts are included on our Consolidated Balance Sheets under Long-term Obligations and Other Accrued Liabilities, and are comprised of committed lease payments and operating expenses net of committed and estimated sublease income.
 
(9) Included in these amounts is the $172.6 million outstanding under the Secured Credit Agreement (see Note 6 to the Consolidated Financial Statements). Estimated interest payments for the Secured Credit Agreement are $21.7 million for fiscal 2009 through fiscal 2013.
 
(10) As discussed in Note 8 of the Notes to the Consolidated Financial Statements, we have adopted the provisions of FIN No. 48. At April 25, 2008, our liability was $97.8 million.


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(11) The amounts outstanding under these letters of credit relate to workers’ compensation, a customs guarantee, a corporate credit card program, and foreign rent guarantees.
 
As of April 25, 2008, we have commitments relating to two financing, construction, and leasing arrangements with BNP Paribas LLC (“BNP”) for office space and a parking structure to be located on land in Sunnyvale, California that we currently own. These arrangements require us to lease our land to BNP for a period of 99 years to construct approximately 380,000 square feet of office space costing up to $113.5 million. After completion of construction, we will pay minimum lease payments, which vary based on the LIBOR plus a spread or a fixed rate (3.49% and 3.06% for the first and second lease, respectively, at April 25, 2008) on the cost of the facilities. We began to make lease payments on the first building in January 2008 and expect to begin making lease payments on the second building in December 2008, respectively, for terms of five years. We have the option to renew the leases for two consecutive five-year periods upon approval by BNP. Upon expiration (or upon any earlier termination) of the lease terms, we must elect one of the following options: (i) purchase the buildings from BNP for $48.5 million and $65.0 million, respectively; (ii) if certain conditions are met, arrange for the sale of the buildings by BNP to a third party for an amount equal to at least $41.2 million and $55.3 million, respectively, and be liable for any deficiency between the net proceeds received from the third party and such amounts; or (iii) pay BNP supplemental payments of $41.2 million and $55.3 million, respectively, in which event we may recoup some or all of such payment by arranging for a sale of either or both buildings by BNP during the ensuing two-year period.
 
As of April 25, 2008, we have a commitment relating to a third financing, construction, and leasing arrangement with BNP for facility space to be located on land currently owned by us in Research Triangle Park, North Carolina. This arrangement requires us to lease our land to BNP for a period of 99 years to construct approximately 120,000 square feet for a data center costing up to $61.0 million. After completion of construction, we will pay minimum lease payments, which vary based on the LIBOR plus a spread (3.06% at April 25, 2008) on the cost of the facility. We expect to begin making lease payments on the completed buildings in January 2009 for a term of five and a half years. We have the option to renew the lease for two consecutive five-year periods upon approval by BNP. Upon expiration (or upon any earlier termination) of the lease term, we must elect one of the following options: (i) purchase the building from BNP for $61.0 million; (ii) if certain conditions are met, arrange for the sale of the building by BNP to a third party for an amount equal to at least $51.9 million, and be liable for any deficiency between the net proceeds received from the third party and $51.9 million; or (iii) pay BNP a supplemental payment of $51.9 million, in which event we may recoup some or all of such payment by arranging for the sale of the building by BNP during the ensuing two-year period.
 
As of April 25, 2008, we have a commitment relating to a fourth financing and operating leasing arrangement with BNP for approximately 374,274 square feet of buildings located in Sunnyvale, California costing up to $101.1 million. This arrangement requires us to pay minimum lease payments, which may vary based on the LIBOR plus a spread or a fixed rate (3.47% and 3.49% for the first two buildings, and 3.06% for the third building at April 25, 2008). We began to make lease payments on two buildings in December 2007 and the third building in January 2008 for terms of five years. We have the option to renew the leases for two consecutive five-year periods upon approval by BNP. Upon expiration (or upon any earlier termination) of the lease terms, we must elect one of the following options: (i) purchase the buildings from BNP for $101.1 million; (ii) if certain conditions are met, arrange for the sale of the buildings by BNP to a third party for an amount equal to at least $85.9 million, and be liable for any deficiency between the net proceeds received from the third party and $85.9 million; or (iii) pay BNP a supplemental payment of $85.9 million, in which event we may recoup some or all of such payment by arranging for the sale of the buildings by BNP during the ensuing two-year period.
 
During the fourth quarter of fiscal 2008, we entered into a fifth financing, construction, and leasing arrangement with BNP for facility space to be located on land currently owned by us in Sunnyvale, California. This arrangement requires us to lease our land to BNP for a period of 99 years to construct approximately 189,697 square feet for a data center costing up to $49.0 million. After completion of construction, we will pay minimum lease payments, which vary based on the LIBOR plus a spread (3.06% at April 25, 2008) on the cost of the facility. We expect to begin making lease payments on the completed building in January 2010 for a term of five years. We have the option to renew the lease for two consecutive five-year periods upon approval by BNP. Upon expiration (or upon any earlier termination) of the lease term, we must elect one of the following options: (i) purchase the building from BNP for $49.0 million; (ii) if certain conditions are met, arrange for the sale of the


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building by BNP to a third party for an amount equal to at least $41.6 million, and be liable for any deficiency between the net proceeds received from the third party and $41.6 million; or (iii) pay BNP a supplemental payment of $41.6 million, in which event we may recoup some or all of such payment by arranging for the sale of the building by BNP during the ensuing two-year period.
 
All leases require us to maintain specified financial covenants with which we were in compliance as of April 25, 2008. Such specified financial covenants include a maximum ratio of Total Debt to Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and a minimum amount of Unencumbered Cash and Short Term Investments.
 
Legal Contingencies
 
On September 5, 2007, we filed a patent infringement lawsuit in the Eastern District of Texas seeking compensatory damages and a permanent injunction against Sun Microsystems. On October 25, 2007, Sun Microsystems filed a counter claim against us in the Eastern District of Texas seeking compensatory damages and a permanent injunction. On October 29, 2007, Sun filed a second lawsuit against us in the Northern District of California asserting additional patents against us. The Texas court granted a joint motion to transfer the Texas lawsuit to the Northern District of California on November 26, 2007. On March 26, 2008, Sun filed a third lawsuit in federal court that extends the patent infringement charges to storage management technology we acquired in January 2008. We are unable at this time to determine the likely outcome of these various patent litigations. In addition, as we are unable to reasonably estimate the amount or range of the potential settlement, no accrual has been recorded as of April 25, 2008.
 
We received a subpoena from the Office of Inspector General for the General Services Administration (“GSA”) seeking various records relating to GSA contracting activity by us during the period beginning in 1995 and ending in 2005. The subpoena is part of an investigation being conducted by GSA and the Department of Justice regarding potential violations of the False Claims Act in connection with our GSA contracting activity. The subpoena requested a range of documents including documents relating to our discount practices and compliance with the price reduction clause provisions of its GSA contracts. We are cooperating with the investigation and have produced documents and met with the Department of Justice on several occasions. Violations of the False Claims Act could result in the imposition of a damage remedy which includes treble damages plus civil penalties, and could also result in us being suspended or debarred from future government contracting, any or a combination of which could have a material adverse effect on our results of operations or financial condition. However, as the investigation is still ongoing and we are unable at this time to determine the likely outcome of this matter, no provision has been recorded as of April 25, 2008.
 
In addition, we are subject to various legal proceedings and claims which have arisen or may arise in the normal course of business. While the outcome of these legal matters is currently not determinable, we do not believe that any current litigation or claims will have a material adverse effect on our business, cash flow, operating results, or financial condition.
 
Capital Expenditure Requirements
 
We expect capital expenditures to increase in the future consistent with the growth in our business, as we continue to invest in people, land, buildings, capital equipment, and enhancements to our worldwide infrastructure. We expect that our existing facilities and those being developed in Sunnyvale, California; Research Triangle Park, North Carolina; and worldwide are adequate for our requirements over at least the next two years and that additional space will be available as needed. We expect to finance these construction projects, including our commitments under facilities and equipment operating leases, and any required capital expenditures over the next few years through cash from operations and existing cash, cash equivalents and investments.
 
Credit Environment
 
The credit markets have been volatile and have experienced a shortage in overall liquidity. We believe we have sufficient liquidity through cash provided by operations and our financing agreements. If the global credit market continues to deteriorate, our investment portfolio may be impacted and we could determine some of our investments


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have experienced other-than-temporary declines in fair value which could adversely impact our financial results. In addition, some of our sales are derived from customers in the financial services industry, which is experiencing a downturn. We believe that our diversified customer base should mitigate our exposure to any one industry; however, we remain exposed to overall reductions in spending by our customer base.
 
See further discussion under Item 1A — Risk Factors, “We are exposed to fluctuations in the market values of our portfolio investments and in interest rates.”
 
Off-Balance Sheet Arrangements
 
As of April 25, 2008, our financial guarantees of $3.2 million that were not recorded on our balance sheet consisted of standby letters of credit related to workers’ compensation, a customs guarantee, a corporate credit card program, and foreign rent guarantees.
 
As of April 25, 2008, our notional fair value of foreign exchange forward and foreign currency option contracts totaled $419.3 million. We do not believe that these derivatives present significant credit risks, because the counterparties to the derivatives consist of major financial institutions, and we manage the notional amount of contracts entered into with any one counterparty. We do not enter into derivative financial instruments for speculative or trading purposes. Other than the risk associated with the financial condition of the counterparties, our maximum exposure related to foreign currency forward and option contracts is limited to the premiums paid.
 
We have entered into indemnification agreements with third parties in the ordinary course of business. Generally, these indemnification agreements require us to reimburse losses suffered by the third party due to various events, such as lawsuits arising from patent or copyright infringement. These indemnification obligations are considered off-balance sheet arrangements in accordance with FASB Interpretation 45, of FIN No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.”
 
We have commitments related to five lease arrangements with BNP for approximately 1,063,971 square feet of office space and a parking structure for our headquarters in Sunnyvale, California and a data center in Research Triangle Park, North Carolina (as further described above under “Contractual Obligations”).
 
We have evaluated our accounting for these leases under the provisions of FIN No. 46R and have determined the following:
 
  •  BNP is a leasing company for BNP Paribas in the United States. BNP is not a “special purpose entity” organized for the sole purpose of facilitating the leases to us. The obligation to absorb expected losses and receive expected residual returns rests with the parent, BNP Paribas. Therefore, we are not the primary beneficiary of BNP as we do not absorb the majority of BNP’s expected losses or expected residual returns; and
 
  •  BNP has represented in the Closing Agreement (filed as Exhibit 10.40) that the fair value of the property leased to us by BNP is less than half of the total of the fair values of all assets of BNP, excluding any assets of BNP held within a silo. Further, the property leased to NetApp is not held within a silo. The definition of “held within a silo” means that BNP has obtained funds equal to or in excess of 95% of the fair value of the leased asset to acquire or maintain its investment in such asset through nonrecourse financing or other contractual arrangements, the effect of which is to leave such asset (or proceeds thereof) as the only significant asset of BNP at risk for the repayment of such funds.
 
Accordingly, under the current FIN No. 46R standard, we are not required to consolidate either the leasing entity or the specific assets that we lease under the BNP lease. Our future minimum lease payments and residual guarantees under these real estates leases will amount to a total of $326.2 million reported under our Note 4, “Commitments and Contingencies.”
 
Liquidity and Capital Resource Requirements
 
Key factors affecting our cash flows include our ability to effectively manage our working capital, in particular, accounts receivable and inventories and future demand for our products and related pricing. We expect to incur


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higher capital expenditures in the future to expand our operations. We will from time to time acquire products and businesses complementary to our business. In the future, we may continue to repurchase our common stock, which would reduce cash, cash equivalents, and/or short-term investments available to fund future operations and meet other liquidity requirements. Based on past performance and current expectations, we believe that our cash and cash equivalents, short-term investments, cash generated from operations, and credit facilities will satisfy our working capital needs, capital expenditures, stock repurchases, contractual obligations, and other liquidity requirements associated with our operations for at least the next twelve months. However, should we need to investigate other financing alternatives, we cannot be certain that additional financing will be available on satisfactory terms.
 
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk
 
We are exposed to market risk related to fluctuations in interest rates, market prices, and 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 Risk and Market Interest Risk
 
Investment and Interest Income — As of April 25, 2008, we had available-for-sale investments of $543.2 million, which included restricted investments in connection with our credit facility. Our investment portfolio primarily consists of investments with original maturities at the date of purchase of greater than three months, which are classified as available-for-sale. These investments, consisting primarily of corporate bonds, corporate securities, government, municipal debt securities, and auction-rate securities, are subject to interest rate and interest income risk and will decrease in value if market interest rates increase. A hypothetical 10 percent increase in market interest rates from levels at April 25, 2008 would cause the fair value of these available-for-sale investments to decline by approximately $2.1 million. 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. We do not use derivative financial instruments in our investment portfolio.
 
We are also exposed to market risk relating to our long-term investments in auction rate securities due to uncertainties in the credit and capital markets. As of April 25, 2008, our long term investments of $83.9 million include fair value of auction rate securities (ARS) in the amount of $72.7 million. During fiscal 2008, we determined that there was a decline in the fair value of our ARS investments of approximately $3.5 million and recorded a temporary impairment charge. The fair value of our auction rate securities may change significantly due to events and conditions in the credit and capital markets. While these ARS had credit ratings of AAA and Aaa at time of purchase, these securities/issuers could be subject to review for possible downgrade. Any downgrade in these credit ratings may result in additional decline in estimated fair value of our auction rate securities. Changes in the various assumptions used to value these securities and any increase in the markets’ perceived risk associated with such investments may also result in a decline in estimated fair value. If the current market conditions deteriorate further, or the anticipated recovery in market values does not occur, we may be required to record additional unrealized losses in other comprehensive income (loss) or impairment charges to earnings in future quarters. We intend and have the ability to hold these auction rate securities until the market recovers. We do not believe that the lack of liquidity relating to our ARS investments will impact our ability to fund working capital needs, capital expenditures or other operating requirements.
 
Our investment policy is to limit credit exposure through diversification and investment in highly rated securities. We further mitigate concentrations of credit risk in our investments by limiting our investments in the debt securities of a single issuer and by diversifying risk across geographies and type of issuer. We actively review, along with our investment advisors, current investment ratings, company specific events, and general economic conditions in managing our investments and in determining whether there is a significant decline in fair value that is other-than-temporary. We have not experienced any material losses on our available-for-sale investments. To the extent we determine that a decline in fair value is other-than-temporary, the associated investment is valued at current fair value and an impairment charge is reflected in earnings.


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Lease Commitments — As of April 25, 2008, we have three arrangements with BNP to lease our land for a period of 99 years to construct approximately 569,697 square feet of office space and a parking structure costing up to $162.5 million. We also have a fourth arrangement with BNP to lease our land for a period of 99 years to construct approximately 120,000 square feet of data center costing up to $61.0 million for a term of five and a half years. After completion of construction, we will pay minimum lease payments which vary based on the LIBOR plus a spread. In the third quarter of fiscal 2008, we entered into an additional financing and operating leasing arrangements with BNP to lease approximately 374,274 square feet of three buildings located in Sunnyvale, California for $101.1 million for a term of five years. We have the option to renew these leases for two consecutive five-year periods upon approval by BNP. A hypothetical 10 percent increase in market interest rates from levels at April 25, 2008 would increase our total lease payments under the initial five-year term by approximately $3.5 million. We do not currently hedge against market interest rate increases. As additional cash flow generated from operations is invested at current market rates, it will offer a natural hedge against interest rate risk from our lease commitments in the event of a significant change in market interest rate.
 
Debt Obligation — We have an outstanding Secured Credit Agreement totaling $172.6 million as of April 25, 2008. Under the terms of this arrangement, we expect to make interest payments at LIBOR plus a spread. A hypothetical 10 percent increase in market interest rates from levels at April 25, 2008 would increase our total interest payments by approximately $2.5 million. We do not currently use derivatives to manage interest rate risk for this arrangement. As additional cash flow generated from operations is invested at current market rates, it will offer a natural hedge against interest rate risk from our debt in the event of a significant change in market interest rate.
 
Nonmarketable securities — We have from time to time made cash investments in companies with distinctive technologies that are potentially strategically important to us. Our investments in nonmarketable securities would be negatively affected by an adverse change in equity market prices, although the impact cannot be directly quantified. Such a change, or any negative change in the financial performance or prospects of the companies whose nonmarketable securities we own, would harm the ability of these companies to raise additional capital and the likelihood of our being able to realize any gains or return of our investments through liquidity events such as initial public offerings, acquisitions, and private sales. These types of investments involve a high degree of risk, and there can be no assurance that any company we invest in will grow or be successful. We do not currently engage in any hedging activities to reduce or eliminate equity price risk with respect to such nonmarketable investments. Accordingly, we could lose all or part of these investments if there is an adverse change in the market price of a company we invest in. Our investments in nonmarketable securities had a carrying amount of $11.2 million as of April 25, 2008 and $8.9 million as of April 27, 2007. If we determine that an other-than-temporary decline in fair value exists for a nonmarketable equity security, we write down the investments to their fair value and record the related write-down as an investment loss in our Consolidated Statements of Income.
 
Foreign Currency Exchange Rate Risk and Foreign Exchange Forward Contracts
 
We hedge risks associated with foreign currency transactions to minimize the impact of changes in foreign currency exchange rates on earnings. We utilize forward and option contracts to hedge against the short-term impact of foreign currency fluctuations on certain assets and liabilities denominated in foreign currencies. All balance sheet hedges are marked to market through earnings every period. We also use foreign exchange forward contracts to hedge foreign currency forecasted transactions related to certain sales and operating expenses. These derivatives are designated as cash flow hedges under SFAS No. 133. For cash flow hedges outstanding at April 25, 2008, the gains or losses were included in other comprehensive income.
 
We do not enter into foreign exchange contracts for speculative or trading purposes. In entering into forward and option foreign exchange contracts, we have assumed the risk that might arise from the possible inability of counterparties to meet the terms of their contracts. We attempt to limit our exposure to credit risk by executing foreign exchange contracts with creditworthy multinational commercial banks. All contracts have a maturity of less than one year.


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The following table provides information about our foreign exchange forward contracts and currency options contracts outstanding on April 25, 2008 (in thousands):
 
                                 
                Notional
 		    Notional
 		 
          Foreign
 		    Contract Value
 		    Fair Value
 		 
Currency
  Buy/Sell     Currency Amount     in USD     in USD  
 
Forward Contracts:
                               
EUR
    Sell       153,226     $ 238,961     $ 238,740  
GBP
    Sell       46,488     $ 91,772     $ 91,978  
CAD
    Sell       21,480     $ 21,116     $ 21,115  
Other
    Sell       N/A     $ 15,490     $ 15,489  
AUD
    Buy       36,801     $ 34,127     $ 34,122  
Other
    Buy       N/A     $ 17,823     $ 17,820  
 
The following table provides information about our foreign exchange forward contracts and currency options contracts outstanding on April 27, 2007 (in thousands):
 
                                 
                Notional
 		    Notional
 		 
          Foreign
 		    Contract Value
 		    Fair Value
 		 
Currency
  Buy/Sell     Currency Amount     in USD     in USD  
 
Forward Contracts:
                               
EUR
    Sell       156,155     $ 211,846     $ 212,838  
GBP
    Sell       33,418     $ 66,507     $ 66,698  
CAD
    Sell       24,186     $ 21,670     $ 21,672  
Other
    Sell       N/A     $ 20,190     $ 20,194  
AUD
    Buy       23,654     $ 19,582     $ 19,581  
Other
    Buy       N/A     $ 5,981     $ 5,981  
Option Contracts:
                               
EUR
    Sell       13,000     $ 17,711     $ 17,823  
GBP
    Sell       2,000     $ 3,992     $ 4,020  


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Item 8.   Financial Statements and Supplementary Data
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders of
NetApp, Inc.
Sunnyvale, California
 
We have audited the accompanying consolidated balance sheets of NetApp, Inc. (formerly “Network Appliance, Inc.”) and subsidiaries (collectively, the “Company”) as of April 25, 2008 and April 27, 2007, and the related consolidated statements of income, cash flows and stockholders’ equity and comprehensive income (loss) for each of the three years in the period ended April 25, 2008. Our audits also included the consolidated financial statement schedule listed in the Index at Item 15(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 the standards of the Public Company Accounting Oversight Board (United States). 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, such consolidated financial statements present fairly, in all material respects, the financial position of NetApp, Inc. and subsidiaries as of April 25, 2008 and April 27, 2007, and the results of their operations and their cash flows for each of the three years in the period ended April 25, 2008 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, 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.
 
As discussed in Note 2 to the consolidated financial statements, (1) in the year ended April 25, 2008, the Company changed its method of measuring and recognizing tax benefits associated with uncertain tax positions in accordance with Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 and (2) in the year ended April 27, 2007, the Company changed its method of accounting for stock-based compensation in accordance with guidance provided in Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of April 25, 2008, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 24, 2008 expressed an unqualified opinion on the Company’s internal control over financial reporting.
 
/s/  DELOITTE & TOUCHE LLP
 
San Jose, California
June 24, 2008


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NETAPP, INC.
 
CONSOLIDATED BALANCE SHEETS
 
                 
    April 25,
 		    April 27,
 		 
    2008     2007  
    (In thousands, except per
 		 
    share amounts)  
 
ASSETS
Current Assets:
               
Cash and cash equivalents
  $ 936,479     $ 489,079  
Short-term investments
    227,911       819,702  
Accounts receivable, net of allowances of $2,439 at April 25, 2008, and $2,572 at April 27, 2007
    582,110       548,249  
Inventories
    70,222       54,880  
Prepaid expenses and other assets
    120,561       99,840  
Short-term restricted cash and investments
    2,953       118,312  
Short-term deferred income taxes
    127,197       110,741  
                 
Total current assets
    2,067,433       2,240,803  
Property and Equipment, Net
    693,792       603,523  
Goodwill
    680,054       601,056  
Intangible Assets, Net
    90,075       83,009  
Long-Term Investments and Restricted Cash
    331,105       12,572  
Long-Term Deferred Income Taxes and Other Assets
    208,529       117,515  
                 
    $ 4,070,988     $ 3,658,478  
                 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
               
Current portion of long-term debt
  $ —     $ 85,110  
Accounts payable
    178,233       144,112  
Income taxes payable
    6,245       53,371  
Accrued compensation and related benefits
    202,929       177,327  
Other accrued liabilities
    154,331       97,017  
Deferred revenue
    872,364       630,610  
                 
Total current liabilities
    1,414,102       1,187,547  
Long-Term Debt
    172,600       —  
Other Long-Term Obligations
    146,058       9,487  
Long-Term Deferred Revenue
    637,889       472,423  
                 
      2,370,649       1,669,457  
                 
Commitments and Contingencies (Note 4) 
               
Stockholders’ Equity:
               
Preferred stock, $0.001 par value, 5,000 shares authorized; shares outstanding: none in 2008 and 2007
    —       —  
Common stock, $0.001 par value; 885,000 shares authorized; 429,080 shares issued at April 25, 2008, and 421,623 shares issued at April 27, 2007
    429       422  
Additional paid-in capital
    2,690,629       2,380,623  
Treasury stock at cost (87,365 shares at April 25, 2008, and 54,593 shares at April 27, 2007)
    (2,527,395 )     (1,623,691 )
Retained earnings
    1,535,903       1,226,165  
Accumulated other comprehensive income
    773       5,502  
                 
Total stockholders’ equity
    1,700,339       1,989,021  
                 
    $ 4,070,988     $ 3,658,478  
                 
 
See notes to consolidated financial statements.


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NETAPP, INC.
 
CONSOLIDATED STATEMENTS OF INCOME
 
                         
    Year Ended  
    April 25,
 		    April 27,
 		    April 28,
 		 
    2008     2007     2006  
    (In thousands, except per share amounts)  
 
Revenues
                       
Product
  $ 2,242,474     $ 2,085,898     $ 1,577,435  
Software entitlements and maintenance
    486,896       341,258       239,139  
Service
    573,797       377,126       249,882  
                         
Total revenues
    3,303,167       2,804,282       2,066,456  
                         
Cost of Revenues
                       
Cost of product
    911,434       815,928       616,576  
Cost of software entitlements and maintenance
    8,572       10,210       8,370  
Cost of service
    369,785       273,644       185,049  
                         
Total cost of revenues
    1,289,791       1,099,782       809,995  
                         
Gross margin
    2,013,376       1,704,500       1,256,461  
                         
Operating Expenses:
                       
Sales and marketing
    1,075,588       895,813       599,140  
Research and development
    452,205       385,357       251,330  
General and administrative
    171,536       147,501       92,817  
Acquired in-process research and development
    —       —       5,000  
Restructuring charges (recoveries)
    447       (74 )     (117 )
Gain on sale of assets
    —       (25,339 )     —  
                         
Total operating expenses
    1,699,776       1,403,258       948,170  
                         
Income from Operations
    313,600       301,242       308,291  
Other Income (Expenses), Net:
                       
Interest income
    64,610       68,837       41,519  
Interest expense
    (7,990 )     (11,642 )     (1,283 )
Net gain (loss) on investments
    12,614       (1,538 )     101  
Other income (expense), net
    (135 )     2,829       1,644  
                         
Total other income, net
    69,099       58,486       41,981  
                         
Income Before Income Taxes
    382,699       359,728       350,272  
Provision for Income Taxes
    72,961       61,993       83,820  
                         
Net Income
  $ 309,738     $ 297,735     $ 266,452  
                         
Net Income per Share:
                       
Basic
  $ 0.88     $ 0.80     $ 0.72  
                         
Diluted
  $ 0.86     $ 0.77     $ 0.69  
                         
Shares Used in Net Income per Share Calculations:
                       
Basic
    351,676       371,204       371,061  
                         
Diluted
    361,090       388,454       388,381  
                         
 
See notes to consolidated financial statements.


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NETAPP, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                         
    Year Ended  
    April 25,
 		    April 27,
 		    April 30,
 		 
    2008     2007     2006  
          (In thousands)        
 
Cash Flows from Operating Activities:
                       
Net income
  $ 309,738     $ 297,735     $ 266,452  
Adjustments to reconcile net income to net cash provided by operating activities:
                       
Depreciation
    115,250       87,391       63,679  
Acquired in-process research and development
            —       5,000  
Amortization of intangible assets and patents
    28,934       23,442       18,118  
Stock-based compensation
    147,964       163,033       13,293  
Net loss (gain) on investments
    (12,614 )     1,538       (101 )
Gain on sale of assets
    —       (25,339 )     —  
Net loss on disposal of equipment
    1,841       773       1,381  
Allowance for doubtful accounts
    818       928       46  
Deferred income taxes
    (53,031 )     (145,989 )     1,545  
Deferred rent
    3,912       1,033       669  
Income tax benefit from stock-based compensation
    48,195       175,036       —  
Excess tax benefit from stock-based compensation
    (45,391 )     (63,159 )     —  
Changes in assets and liabilities:
                       
Accounts receivable
    (27,741 )     (175,231 )     (116,816 )
Inventories
    (15,382 )     9,908       (46,247 )
Prepaid expenses and other assets
    (7,549 )     (6,366 )     (12,964 )
Accounts payable
    20,031       36,589       17,405  
Income taxes payable
    (47,300 )     1,556       72,669  
Accrued compensation and related benefits
    18,754       43,612       28,353  
Other accrued liabilities
    3,974       16,903       10,200  
Other liabilities
    117,469       (265 )     (1,629 )
Deferred revenue
    401,014       421,328       233,229  
                         
Net cash provided by operating activities
    1,008,886       864,456       554,282  
                         
Cash Flows from Investing Activities:
                       
Purchases of investments
    (1,053,450 )     (2,630,350 )     (1,029,412 )
Redemptions of investments
    1,429,899       2,818,207       900,863  
Change in restricted cash
    (793 )     290       (1,678 )
Proceeds from sale of assets
    —       23,914       —  
Proceeds from sales of marketable securities
    18,256       —       —  
Proceeds from sales of nonmarketable securities
    898       2,813       130  
Purchases of property and equipment
    (188,280 )     (165,828 )     (132,883 )
Purchases of nonmarketable securities
    (4,235 )     (1,583 )     (9,275 )
Purchase of businesses, net of cash acquired/(goodwill adjustment)
    (99,390 )     (131,241 )     (53,747 )
                         
Net cash provided by (used in) investing activities
    102,905       (83,778 )     (326,002 )
                         
Cash Flows from Financing Activities:
                       
Proceeds from sale of common stock related to employee stock transactions
    114,697       215,453       232,745  
Tax withholding payments reimbursed by restricted stock
    (6,020 )     (5,272 )     (1,062 )
Excess tax benefit from stock-based compensation
    45,391       63,159       —  
Proceeds from debt
    —       —       300,000  
Proceeds from revolving credit facility
    318,754       —       —  
Repayment of debt
    (85,110 )     (214,890 )     —  
Repayment of revolving credit facility
    (146,400 )     —       —  
Repurchases of common stock
    (903,704 )     (805,708 )     (488,908 )
                         
Net cash (used in) provided by financing activities
    (662,392 )     (747,258 )     42,775  
                         
Effect of Exchange Rate Changes on Cash and Cash Equivalents
    (1,999 )     (5,597 )     (3,341 )
Net Increase in Cash and Cash Equivalents
    447,400       27,823       267,714  
Cash and Cash Equivalents:
                       
Beginning of period
    489,079       461,256       193,542  
                         
End of period
  $ 936,479     $ 489,079     $ 461,256  
                         
 
See notes to consolidated financial statements.


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NETAPP, INC.
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME (LOSS)
 
                                                                         
    Common Stock     Treasury Stock                 Accumulated
 		       
                Additional
 		                Deferred
 		          Other
 		       
                Paid-in
 		          Treasury
 		    Stock
 		    Retained
 		    Comprehensive
 		       
    Shares     Amount     Capital     Shares     Amount     Compensation     Earnings     Income (Loss)     Total  
    (In thousands)  
 
Balances, April 30, 2005
    381,509     $ 381     $ 1,347,352       (14,566 )   $ (329,075 )   $ (15,782 )   $ 661,978     $ (4,050 )   $ 1,660,804  
Components of comprehensive income:
                                                                       
Net income
    —       —       —       —       —       —       266,452       —       266,452  
Currency translation adjustment
    —       —       —       —       —       —       —       (914 )     (914 )
Unrealized gain on derivatives
    —       —       —       —       —       —       —       (4,271 )     (4,271 )
Unrealized loss on investments, net
    —       —       —       —       —       —       —       (1,863 )     (1,863 )
                                                                         
Total comprehensive income
                                                                    259,404  
Issuance of common stock related to employee transactions
    18,081       18       232,726       —       —       —       —       —       232,744  
Spinnaker restricted stock units exercises
    98       —       —       —       —       —       —       —       —  
Restricted stock withheld for taxes
    (34 )     —       (1,062 )     —       —       —       —       —       (1,062 )
Repurchase of common stock
    —       —       —       (17,430 )     (488,908 )     —       —       —       (488,908 )
Repurchase of restricted stock
    (15 )     —       —       —       —       —       —       —       —  
Issuance of common stock to acquire Decru, Inc. 
    8,270       9       191,865       —       —       —       —       —       191,874  
Assumption of options in connection with Decru
    —       —       36,142       —       —       (18,549 )     —       —       17,593  
Assumption of options in connection with Alacritus
    —       —       2,314       —       —       (1,199 )     —       —       1,115  
Deferred stock compensation
    85       —       29,855       —       —       (29,855 )     —       —       —  
Amortization of deferred stock compensation
    —       —       —       —       —       13,233       —       —       13,233  
Reversal of deferred stock compensation due to employee terminations
    —       —       (2,886 )     —       —       2,886       —       —       —  
Stock compensation expense — nonemployee
    —       —       60       —       —       —       —       —       60  
Income tax benefit from employee stock transactions
    —       —       36,596       —       —       —       —       —       36,596  
                                                                         
Balances, April 30, 2006
    407,994     $ 408     $ 1,872,962       (31,996 )   $ (817,983 )   $ (49,266 )   $ 928,430     $ (11,098 )   $ 1,923,453  
Components of comprehensive income:
                                                                       
Net income
    —       —       —       —       —       —       297,735       —       297,735  
Currency translation adjustment
    —       —       —       —       —       —       —       2,954       2,954  
Unrealized gain on investments, net
    —       —       —       —       —       —       —       15,183       15,183  
Unrealized gain on derivatives
    —       —       —       —       —       —       —       (1,537 )     (1,537 )
                                                                         
Total comprehensive income
                                                                    314,335  
Issuance of common stock related to employee transactions
    13,308       14       215,439       —       —       —       —       —       215,453  
Restricted stock awards issued
    125       —       —       —       —       —       —       —       —  
Restricted stock awards cancelled
    (5 )     —       —       —       —       —       —       —       —  
Restricted stock units vested
    43       —       —       —       —       —       —       —       —  
Decru NQ auto exercises
    233       —       —       —       —       —       —       —       —  
Restricted stock units exercises
    75       —       —       —       —       —       —       —       —  
Restricted stock withheld for taxes
    (150 )     —       (5,272 )     —       —       —       —       —       (5,272 )
Repurchase of common stock
    —       —       —       (22,597 )     (805,708 )     —       —       —       (805,708 )
Repurchase of restricted stock — Decru
    —       —       (1 )     —       —       —       —       —       (1 )
Assumption of options in connection with Topio
    —       —       8,369       —       —       —       —       —       8,369  
Deferred stock compensation
    —       —       (49,266 )     —       —       49,266       —       —       —  
Stock compensation expense — employee
    —       —       163,356       —       —       —       —       —       163,356  
Income tax benefit from employee stock transactions
    —       —       175,036       —       —       —       —       —       175,036  
                                                                         
Balances, April 27, 2007
    421,623     $ 422     $ 2,380,623       (54,593 )   $ (1,623,691 )   $ —     $ 1,226,165     $ 5,502     $ 1,989,021  
Components of comprehensive income:
                                                                       
Net income
    —       —       —       —       —       —       309,738               309,738  
Currency translation adjustment
    —       —       —       —       —       —       —       1,111       1,111  
Unrealized gain on investments, net
    —       —       —       —       —       —       —       (7,786 )     (7,786 )
Unrealized gain on derivatives
    —       —       —       —       —       —       —       1,946       1,946  
                                                                         
Total comprehensive income
    —       —       —       —       —       —       —       —       305,009  
Issuance of common stock related to employee transactions
    7,711       7       114,695       —       —       —       —       —       114,702  
Restricted stock withheld for taxes
    (196 )     —       (6,020 )     —       —       —       —       —       (6,020 )
Repurchase of common stock
    —       —       —       (32,772 )     (903,704 )     —       —       —       (903,704 )
Repurchase of restricted stock & RSA
    (58 )     —       (5 )     —       —       —       —       —       (5 )
Stock compensation expense — employee
    —       —       147,924       —       —       —       —       —       147,924  
Assumption of options in connection with Onaro
    —       —       5,217       —       —       —       —       —       5,217  
Income tax benefit from employee stock transactions
    —       —       48,195       —       —       —       —       —       48,195  
                                                                         
Balances, April 25, 2008
    429,080     $ 429     $ 2,690,629       (87,365 )   $ (2,527,395 )   $ —     $ 1,535,903     $ 773     $ 1,700,339  
                                                                         
 
See notes to consolidated financial statements.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar and share amounts in thousands, except per-share data)
 
1.   The Company
 
Based in Sunnyvale, California, NetApp, Inc. (“we” or “the Company”) was incorporated in California in April 1992 and reincorporated in Delaware in November 2001; in March 2008, the company changed its name from Network Appliance, Inc. The Company is a supplier of enterprise storage and data management software and hardware products and services. Our solutions help global enterprises meet major information technology challenges such as managing storage growth, assuring secure and timely information access, protecting data and controlling costs by providing innovative solutions that simplify the complexity associated with managing corporate data.
 
2.   Significant Accounting Policies
 
Fiscal Year — We operate on a 52-week or 53-week year ending on the last Friday in April. Fiscal 2008, 2007, and 2006 were all 52-week fiscal years.
 
Basis of Presentation — The consolidated financial statements include the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions are eliminated in consolidation.
 
Reclassification — In the first quarter of fiscal 2008, we began to classify sales-related tax receivable balances from our customers within prepaid expenses and other current assets. These balances were included in accounts receivable, net, in previous periods ($43,075 at April 27, 2007), and such amounts have been reclassified in the accompanying financial statements to conform to the current period classification. This reclassification had no effect on the reported amounts of net income or cash flow from operations for any period presented. In addition, we have chosen to use the term “software entitlements and maintenance” in our statements of income to describe the arrangements under which we provide our customers the right to receive unspecified software product upgrades and enhancements on a when-and-if-available basis, bug fixes, and patch releases; these were previously described as “software upgrade and maintenance.”
 
Risk and Uncertainties — There are no concentrations of business transacted with a particular customer nor concentrations of sales from a particular market or geographic area that would severely impact our business in the near term. However, we currently rely on a limited number of suppliers for certain key components and a few key contract manufacturers to manufacture most of our products; any disruption or termination of these arrangements could materially adversely affect our operating results.
 
Comprehensive Income — Comprehensive income is defined as the change in equity during a period from nonowner sources. Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes foreign currency translation adjustments, unrealized gain and losses on derivatives and unrealized gains and losses on our available-for-sale securities, which includes a temporary impairment charge of $3,500 in fiscal 2008 associated with our auction rate securities. Refer to Note 3 for further discussion regarding this unrealized loss.
 
Other comprehensive income for the fiscal years 2008, 2007, and 2006 has been disclosed within the consolidated statement of stockholders’ equity and comprehensive income (loss).


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The components of accumulated other comprehensive income (loss) at the end of each fiscal year, were as follows (net of related tax effects):
 
                         
    2008     2007     2006  
 
Accumulated translation adjustments
  $ 4,432     $ 3,321     $ 367  
Accumulated unrealized gain (loss) on available-for-sale investments
    (2,317 )     5,469       (9,714 )
Accumulated unrealized loss on derivatives
    (1,342 )     (3,288 )     (1,751 )
                         
Total accumulated other comprehensive income (loss)
  $ 773     $ 5,502     $ (11,098 )
                         
 
Cash and Cash Equivalents — We consider all highly liquid debt investments with original maturities of three months or less to be cash equivalents at time of purchase.
 
Available-for-Sale Investments — Available-for-sale investments with original maturities of greater than three months are classified as short-term investments as these investments generally consist of highly marketable securities that are intended to be available to meet current cash requirements. As of April 25, 2008, all marketable securities held by us are classified as available-for-sale and our entire auction rate securities portfolio is classified as long-term investments. Available-for-sale investments are carried at fair market value, and unrealized gains or losses are recorded, net of taxes in accumulated other comprehensive income (loss), which is a separate component of stockholders’ equity. 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 material. Management determines the appropriate classification of debt and equity securities at the time of purchase and reevaluates the classification at each reporting date. The fair value of our available-for-sale investments, including those included in restricted investments, was $543,226 and $935,762 as of April 25, 2008, and April 27, 2007, respectively.
 
Restricted Investments — We have available-for-sale investments that are pledged as collateral pursuant to the secured credit agreement (the “Secured Credit Agreement”) entered into with JPMorgan Securities Inc. (“JPMorgan Securities”) as sole bookrunner and sole lead arranger. As of April 25, 2008, investments of $242,613 were classified as long-term restricted investments within the Consolidated Balance Sheets in accordance with the investment maturity and loan repayment schedule. As of April 27, 2007, investments of $116,060 were classified as short-term restricted investments in connection with the loan agreement entered with JPMorgan, as administrative agent (the “Loan Agreement”), within the Consolidated Balance Sheets in accordance with the investment maturity and loan repayment schedule. There was no short-term restricted investment as of April 25, 2008 and no long-term restricted investment as of April 27, 2007.
 
Investments in Nonpublic Companies — We have certain investments in nonpublicly- traded companies in which we have less than 20% of the voting rights and in which we do not exercise significant influence and accordingly, we account for these investments under the cost method. As of April 25, 2008, and April 27, 2007, $11,169 and $8,932 of these investments are included in long-term investments and restricted cash on the balance sheet. We perform periodic reviews of our investments for impairment.
 
Other-than-temporary Impairment — All of our available-for-sale investments and nonmarketable equity securities are subject to a periodic impairment review. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. This determination requires significant judgment. For publicly traded investments, impairment is determined based upon the specific facts and circumstances present at the time, including factors such as current economic and market conditions, the credit rating of the security’s issuer, the length of time an investment’s fair value has been below our carrying value, and our ability to hold investments to maturity or until recovery. If an investment’s decline in fair value, caused by factors other than changes in interest rates, is deemed to be other-than-temporary, we would reduce its carrying value to its estimated fair value, as determined based on quoted market prices or liquidation values. Declines in value judged to be other-than-temporary, if any, are recorded in operations as incurred. For long term investments such as auction rate securities,


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
impairment is determined based on fair value and marketability of these investments. The valuation models we used to estimate fair value included numerous assumptions such as assessments of the underlying structure of each security, expected cash flows, discount rates, credit ratings, workout periods, and overall capital market liquidity. For nonmarketable equity securities, the impairment analysis requires the identification of events or circumstances that would likely have a significant adverse effect on the fair value of the investment, including revenue and earnings trends, overall business prospects, limited capital resources, limited prospects of receiving additional financing, limited prospects for liquidity of the related securities and general market conditions in the investees’ industry.
 
Inventories — Inventories are stated at the lower of cost (first-in, first-out basis) or market. Cost components include materials, labor, and manufacturing overhead costs. We write down inventory and record purchase commitment liabilities for excess and obsolete inventory equal to the difference between the cost of inventory and the estimated fair value based upon assumptions about future demand and market conditions.
 
Property and Equipment — Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from three to five years. The land at our Sunnyvale headquarters site and at Research Triangle Park (“RTP”), North Carolina, is not depreciated but is reviewed for impairment similar to our review of goodwill and intangible assets discussed below. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the remaining term of the lease. Building improvements are amortized over the estimated lives of the assets, which range from 10 to 40 years. Construction in progress will be amortized over the estimated useful lives of the respective assets when they are ready for their intended use.
 
We review the carrying values of long-lived assets whenever events and circumstances indicate that the net book value of an asset may not be recovered through expected future cash flows from its use and eventual disposition. The amount of impairment loss, if any, is measured as the difference between the net book value and the estimated fair value of the asset.
 
Goodwill and Purchased Intangible Assets — Goodwill and identifiable intangibles are accounted for in accordance with SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” We record goodwill and identifiable intangibles related to acquisitions and evaluate these items for impairment on an annual basis, or sooner if events or changes in circumstances indicate that carrying values may not be recoverable. If an evaluation is required, the estimated future undiscounted cash flows associated with these assets is compared to their carrying amount to determine if a write-down to fair market value or discounted cash flow value is required. We performed an annual impairment test of goodwill as of February 22, 2008, and February 23, 2007, respectively, and found no impairment.
 
Purchased intangible assets include patents, existing technologies, trademarks, tradenames, customer contracts/relationships and covenants not to compete, which are carried at cost less accumulated amortization. Amortization of purchased intangible assets is computed using the straight-line method over estimated useful lives of the assets, which range from 18 months to eight years. See Note 14, “Goodwill and Purchased Intangible Assets.”
 
Revenue Recognition — We apply the provisions of Statement of Position (“SOP”) No. 97-2, “Software Revenue Recognition,” and related interpretations to our product sales, both hardware and software, because our software is essential to the performance of our hardware. We recognize revenue when:
 
  •  Persuasive evidence of an arrangement exists:  It is our customary practice to have a purchase order and/or contract prior to recognizing revenue on an arrangement from our end users, customers, value-added resellers, or distributors.
 
  •  Delivery has occurred:  Our product is physically delivered to our customers, generally with standard transfer terms such as FOB origin. We typically do not allow for restocking rights with any of our value-


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
  added resellers or distributors. Products shipped with acceptance criteria or return rights are not recognized as revenue until all criteria are achieved. If undelivered products or services exist that are essential to the functionality of the delivered product in an arrangement, delivery is not considered to have occurred.
 
  •  The fee is fixed or determinable:  Arrangements with payment terms extending beyond our standard terms, conditions, and practices are not considered to be fixed or determinable. Revenue from such arrangements is recognized as the fees become due and payable. We typically do not allow for price-protection rights with any of our value-added resellers or distributors.
 
  •  Collection is probable:  Probability of collection is assessed on a customer-by-customer basis. Customers are subjected to a credit review process that evaluates the customers’ financial position and ultimately their ability to pay. If it is determined at the outset of an arrangement that collection is not probable based upon our review process, revenue is recognized upon cash receipt.
 
Our multiple element arrangements include our systems and one or more of the following undelivered software-related elements: software entitlements and maintenance, premium hardware maintenance, and storage review services. Our software entitlements and maintenance entitle our customers to receive unspecified product upgrades and enhancements on a when-and-if-available basis, bug fixes, and patch releases. Premium hardware maintenance services include contracts for technical support and minimum response times. Revenues from software entitlements and maintenance, premium hardware maintenance services and storage review services are recognized ratably over the contractual term, generally from one to three years. Standard hardware warranty costs are considered an obligation under SFAS No. 5, Accounting for Contingencies and expensed as a cost of service when revenue is recognized; such costs were $26,997 in fiscal 2008, $22,082 in fiscal 2007, and $18,532 in fiscal 2006. We also offer extended service contracts (which extend our standard parts warranty and may include premium hardware maintenance) at the end of the warranty term; revenues from these contracts are recognized ratably over the contract term. We typically sell technical consulting services separately from any of our other revenue elements, either on a time and materials basis or for fixed price standard projects; we recognize revenue for these services as they are performed. Revenue from hardware installation services is recognized at the time of delivery and any remaining costs are accrued, as the remaining undelivered services are considered to be inconsequential and perfunctory. For arrangements with multiple elements, we recognize as revenue the difference between the total arrangement price and the greater of fair value or stated price for any undelivered elements (“the residual method”).
 
For our undelivered software-related elements, we apply the provisions of SOP No. 97-2 and determine fair value of these undelivered elements based on vendor-specific objective evidence (“VSOE”), which for us consists of the prices charged when these services are sold separately either alone, in the case of software entitlements and maintenance, or as a bundled element which always includes software entitlements and maintenance and premium hardware maintenance, and may also include storage review services. To determine the fair value of these elements, we analyze both the selling prices when elements are sold separately as well as the concentrations of those prices. We believe those concentrations have been sufficient to enable us to establish VSOE of fair value for the undelivered elements. If VSOE cannot be obtained to establish fair value of the undelivered elements, paragraph 12 of SOP No. 97-2 would require that revenue from the entire arrangement be initially deferred and recognized ratably over the period these elements are delivered.
 
For income statement presentation purposes, once fair value has been determined for our undelivered bundled elements, we allocate revenue first to software entitlements and maintenance, based on VSOE of its fair value with the remainder allocated other service revenues.
 
We record reductions to revenue for estimated sales returns at the time of shipment. Sales returns are estimated based on historical sales returns, current trends, and our expectations regarding future experience. We monitor and analyze the accuracy of sales returns estimates by reviewing actual returns and adjust them for future expectations to determine the adequacy of our current and future reserve needs. If actual future returns and allowances differ from past experience, additional allowances may be required.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
We also maintain a separate allowance for doubtful accounts for estimated losses based on our assessment of the collectibility of specific customer accounts and the aging of our accounts receivable. We analyze accounts receivable and historical bad debts, customer concentrations, customer solvency, current economic and geographic trends, and changes in customer payment terms and practices when evaluating the adequacy of the allowance for doubtful accounts. Our allowance for doubtful accounts as of April 25, 2008, was $2,439, compared to $2,572 as of April 27, 2007. If the financial condition of our customers deteriorates, resulting in an impairment of their ability to make payments, additional allowances may be required.
 
Deferred Revenues — Deferred revenues consist primarily of amounts related to software entitlements and maintenance, service contracts and other service described in revenue recognition above.
 
Software Development Costs — The costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized in accordance with SFAS No. 86, “Accounting for the Costs of Software to Be Sold, Leased, or Otherwise Marketed.” Because we believe our current process for developing software is essentially completed concurrently with the establishment of technological feasibility, which occurs upon the completion of a working model, no costs have been capitalized for any of the periods presented. In accordance with SOP No. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,” the cost of internally developed software is capitalized and included in property and equipment at the point at which the conceptual formulation, design, and testing of possible software project alternatives have been completed and management authorizes and commits to funding the project. Pilot projects and projects where expected future economic benefits are less than probable are not capitalized. Internally developed software costs include the cost of software tools and licenses used in the development of our systems, as well as consulting costs. Completed projects are transferred to property and equipment at cost and are amortized on a straight-line basis over their estimated useful lives, generally three years. We did not capitalize any software development costs in fiscal 2008, 2007 or 2006.
 
Income Taxes — Deferred income tax assets and liabilities are provided for temporary differences that will result in future tax deductions or income in future periods, as well as the future benefit of tax credit carryforwards. A valuation allowance reduces tax assets to their estimated realizable value. In years prior to fiscal 2006, U.S. income taxes were not provided on that portion of unremitted earnings of foreign subsidiaries that were expected to be reinvested indefinitely. The American Jobs Creation Act created a one-time incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85% dividend-received deduction for certain dividends from certain non-U.S. subsidiaries. During the fourth quarter of fiscal 2006, we repatriated $405,500 of accumulated foreign earnings and recorded a $22,500 federal and state income tax liability upon the remittance of those foreign earnings. As of our fiscal years ended April 25, 2008 and April 27, 2007, the amount of accumulated unremitted earnings from our foreign subsidiaries considered to be reinvested indefinitely under Accounting Principles Board (“APB”) Opinion No. 23, “Accounting for Income Taxes — Special Areas” was approximately $677,200 and $330,000, respectively.
 
Determining the liability for uncertain tax positions requires us to make significant estimates and judgments as to whether, and the extent to which, additional taxes may be due based on potential tax audit issues in the U.S. and other tax jurisdictions throughout the world. Our estimates are based on the outcomes of previous audits, as well as the precedents set in cases in which others have taken similar tax positions to those taken by us. If we later determine that our exposure is lower or that the liability is not sufficient to cover our revised expectations, we adjust the liability and effect a related change in our tax provision during the period in which we make such a determination.
 
Effective April 28, 2007, we adopted FASB Interpretation (“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109.” FIN No. 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that we have taken or expect to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction). FIN No. 48 is applicable to all uncertain tax positions for taxes accounted for under


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
SFAS No. 109, “Accounting for Income Taxes,” and substantially changes the applicable accounting model. There was no cumulative effect from the adoption of FIN No. 48. As a result of the implementation of FIN No. 48, we recognize the tax liability for uncertain income tax positions on the income tax return based on the two-step process prescribed in the interpretation. The first step is to determine whether it is more likely than not that each income tax position would be sustained upon audit. The second step is to estimate and measure the tax benefit as the amount that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. Estimating these amounts requires us to determine the probability of various possible outcomes. We evaluate these uncertain tax positions on a quarterly basis. See “Note 8, Income Taxes,” for further discussion.
 
Foreign Currency Translation — For subsidiaries whose functional currency is the local currency, gains and losses resulting from translation of these foreign currency financial statements into U.S. dollars are recorded within stockholders’ equity as part of accumulated other comprehensive income (loss). For subsidiaries where the functional currency is the U.S. dollar, gains and losses resulting from the process of remeasuring foreign currency financial statements into U.S. dollars are included in other income (expenses), net.
 
Derivative Instruments — We follow SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” as amended. Derivatives that are not designated as hedges are adjusted to fair value through earnings. If the derivative is designated as a hedge, depending on the nature of the exposure being hedged, changes in fair value will either be offset against the change in fair value of the hedged items through earnings or recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. The ineffective portion of the hedge is recognized in earnings immediately. For all periods presented, realized gains and losses on the ineffective portion of our hedges were not material.
 
As a result of our significant international operations, we are subject to risks associated with fluctuating exchange rates. We use derivative financial instruments, principally currency forward contracts and currency options, to attempt to minimize the impact of exchange rate movements on our balance sheet and operating results. Factors that could have an impact on the effectiveness of our hedging program include the accuracy of forecasts and the volatility of foreign currency markets. These programs reduce, but do not always entirely eliminate, the impact of currency exchange movements. The maturities of these instruments are generally less than one year.
 
Currently, we do not enter into any foreign exchange forward contracts to hedge exposures related to firm commitments or nonmarketable investments. Our major foreign currency exchange exposures and related hedging programs are described below:
 
Balance Sheet.  We utilize foreign currency forward and options contracts to hedge exchange rate fluctuations related to certain foreign assets and liabilities. Gains and losses on these derivatives offset gains and losses on the assets and liabilities being hedged and the net amount is included in earnings. In fiscal 2008, net gains generated by hedged assets and liabilities totaled $12,752, which were offset by losses on the related derivative instruments of $13,487. In fiscal 2007, net gains generated by hedged assets and liabilities totaled $5,180, which were offset by losses on the related derivative instruments of $2,829. In fiscal 2006, net gains generated by hedged assets and liabilities totaled $3,505, which were offset by losses on the related derivative instruments of $1,681.
 
The premiums paid on the foreign currency option contracts are recognized as a reduction to other income when the contract is entered into. Other than the risk associated with the financial condition of the counterparties, our maximum exposure related to foreign currency options is limited to the premiums paid.
 
Forecasted Transactions.  We use currency forward contracts to hedge exposures related to forecasted sales and operating expenses denominated in certain foreign currencies. These contracts are designated as cash flow hedges and in general closely match the underlying forecasted transactions in duration. The contracts are carried on the balance sheet at fair value, and the effective portion of the contracts’ gains and losses is recorded as other comprehensive income (loss) until the forecasted transaction occurs.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
If the underlying forecasted transactions do not occur, or it becomes probable that they will not occur, the gain or loss on the related cash flow hedge is recognized immediately in earnings. For fiscal years 2008, 2007, and 2006, we did not record any gains or losses related to forecasted transactions that did not occur or became improbable.
 
We measure the effectiveness of hedges of forecasted transactions on at least a quarterly basis by comparing the fair values of the designated currency forward contracts with the fair values of the forecasted transactions. No ineffectiveness was recognized in earnings during fiscal 2008, 2007, and 2006.
 
As of April 25, 2008, the notional fair value of foreign exchange forward and foreign currency option contracts totaled $419,264.
 
We do not believe that these derivatives present significant credit risks, because the counterparties to the derivatives consist of major financial institutions, and we manage the notional amount of contracts entered into with any one counterparty. We do not enter into derivative financial instruments for speculative or trading purposes.
 
Use of Estimates — The preparation of the consolidated financial statements is in conformity with generally accepted accounting principles and 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, revenue recognition and allowances; allowance for doubtful accounts; valuation of goodwill and intangibles; fair value of derivative instruments and related hedged items; accounting for income taxes; inventory valuation and contractual commitments; restructuring accruals; impairment losses on investments; fair value of options granted under our stock-based compensation plans; and loss contingencies. Actual results could differ from those estimates.
 
Concentration of Credit Risk and Allowance for Doubtful Accounts  — Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents, short-term investments, foreign exchange contracts and accounts receivable. Cash equivalents and short-term investments consist primarily of corporate bonds, U.S. government agencies, and money market funds, all of which are considered high investment grade. Our policy is to limit the amount of credit exposure through diversification and investment in highly rated securities. We further mitigate concentrations of credit risk in our investments by limiting our investments in the debt securities of a single issuer and by diversifying risk across geographies and type of issuer. 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. We sell our products primarily to large organizations in different industries and geographies. Credit risk is 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 potential credit losses.
 
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, common shares issuable upon exercise of stock options, and restricted stock awards.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following is a reconciliation of the numerators and denominators of the basic and diluted net income per share computations for the periods presented:
 
                         
    Year Ended  
    April 25,
 		    April 27,
 		    April 28,
 		 
    2008     2007     2006  
 
Net Income (Numerator):
                       
Net income, basic and diluted
  $ 309,738     $ 297,735     $ 266,452  
                         
Shares (Denominator):
                       
Weighted average common shares outstanding
    351,876       371,628       371,544  
Weighted average common shares outstanding subject to repurchase
    (200 )     (424 )     (483 )
                         
Shares used in basic computation
    351,676       371,204       371,061  
Weighted average common shares outstanding subject to repurchase
    200       424       483  
Common shares issuable upon exercise of stock options
    9,214       16,826       16,837  
                         
Shares used in diluted computation
    361,090       388,454       388,381  
                         
Net Income per Share:
                       
Basic
  $ 0.88     $ 0.80     $ 0.72  
                         
Diluted
  $ 0.86     $ 0.77     $ 0.69  
                         
 
At April 25, 2008, April 27, 2007 and April 28, 2006, 39,302, 22,827, and 8,831, shares of common stock options with a weighted average exercise price of $38.92, $45.00, and $65.34 respectively, were excluded from the diluted net income per share computation, as their exercise prices were greater than the average market price of the common shares for the periods presented and would therefore be antidilutive.
 
Stock-Based Compensation — On April 29, 2006, we adopted SFAS No. 123R, “Share-Based Payment” (“SFAS No. 123R”), which required us to measure and recognize compensation expense for all stock-based payments awards, including employee stock options, restricted stock units and rights to purchase shares under employee stock purchase plans, based on their estimated fair value and to recognize the costs in our financial statements over the employees’ requisite service period. Total stock-based compensation expense recognized in fiscal 2008 and 2007 was $147,964 and $163,033, respectively.
 
The fair value of employee restricted stock units is equal to the market value of our common stock on the date the award is granted. Calculating the fair value of employee stock options and the rights to purchase shares under the employee stock purchase plans requires estimates and significant judgment. We use the Black-Scholes option pricing model to estimate the fair value of these awards, consistent with the provisions of SFAS No. 123R. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model, and is not remeasured as a result of subsequent stock price fluctuations. Option-pricing models require the input of highly subjective assumptions, including the expected term of options, the expected price volatility of the stock underlying such options and forfeiture rate. Our expected term assumption is based primarily on historical exercise and post-vesting forfeiture experience. Our stock price volatility assumption is based on an implied volatility of call options and dealer quotes on call options, generally having a term of greater than twelve months. Changes in the subjective assumptions required in the valuation models may significantly affect the estimated value of our stock-based awards, the related stock-based compensation expense and, consequently, our results of operations. Likewise, the shortening of the contractual life of our options could change the estimated exercise behavior in a manner other than currently expected.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
In addition, SFAS 123R requires that we estimate the number of stock-based awards that will be forfeited due to employee turnover. Our forfeiture assumption is based primarily on historical experience. Changes in the estimated forfeiture rate can have a significant effect on reported stock-based compensation expense, as the effect of adjusting the rate for all expense amortization after April 28, 2006 is recognized in the period the forfeiture estimate is changed. If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment will be made to increase the estimated forfeiture rate, which will result in a decrease to the expense recognized in the financial statements. If the actual forfeiture rate is lower than the estimated forfeiture rate, then an adjustment will be made to lower the estimated forfeiture rate, which will result in an increase to the expense recognized in our financial statements. The expense we recognize in future periods will be affected by changes in the estimated forfeiture rate and may differ significantly from amounts recognized in the current period and/or our forecasts.
 
Had compensation expense been determined based on the fair value at the grant date for awards, consistent with the provisions of SFAS No. 123, our pro forma net income and pro forma net income per share for fiscal 2006, would be as follows:
 
         
    Year Ended  
    April 28,
 		 
    2006  
 
Net income as reported
  $ 266,452  
Add: stock based employee compensation expense included in reported net income under APB No. 25, net of related tax effects
    7,976  
Deduct: total stock based compensation determined under fair value based method for all awards, net of related tax effects
    (98,762 )
         
Pro forma net income
  $ 175,666  
         
Basic net income per share, as reported
  $ 0.72  
         
Diluted net income per share, as reported
  $ 0.69  
         
Basic net income per share, pro forma
  $ 0.47  
         
Diluted net income per share, pro forma
  $ 0.45  
         


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Statements of Cash Flows — Supplemental cash flows and noncash investing and financing activities are as follows:
 
                         
    Year Ended  
    April 25,
 		    April 27,
 		    April 28,
 		 
    2008     2007     2006  
 
Supplemental Cash Flow Information:
                       
Income taxes paid
  $ 29,307     $ 38,941     $ 13,730  
Income tax refunds
    2,202       4,237       4,262  
Interest paid
    8,082       10,584       1,239  
Noncash Investing and Financing Activities:
                       
Conversion of evaluation inventory to equipment
    —       —       21,918  
Deferred stock compensation, net of reversals
    —       —       26,968  
Income tax benefit from employee stock transactions
    48,195       175,036       36,596  
Acquisition of property and equipment on account
    27,280       11,226       4,618  
Reclassification of restricted investments
    375,981       —       241,152  
Stock issued for acquisition
    —       —       191,874  
Options assumed for acquired businesses
    5,217       8,369       38,456  
Interest accrued for debt
    —       373       44  
Common stocks received from sale of assets
    —       4,637       —  
 
Recently Issued Accounting Standards — In May 2008, the Financial Accounting Standards Board (“FASB”) issued a new final Staff Position (“FSP”) No. APB 14-1 “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlements).” Under the final FSP, cash settled convertible securities would be separated into their debt and equity components. The value assigned to the debt component would be the estimated fair value, as of the issuance date, of a similar debt instrument without the conversion feature, and the difference between the proceeds for the convertible debt and the amount reflected as a debt liability would be recorded as additional paid-in capital. As a result, the debt would be recorded at a discount reflecting its below-market coupon interest rate. The debt would subsequently be accreted to its par value over its expected life, with the rate of interest that reflects the market rate at issuance being reflected on the income statement. This change in methodology will affect the calculations of net income and earnings per share for many issuers of cash settled convertible securities. The final FSP requires explicit disclosure requirements and will be effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. This final FSP is to be applied retrospectively to all periods presented. This standard will have an effect on the Company’s convertible debenture sold in June 2008 as described in Note 17, Subsequent Events.
 
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — An Amendment of FASB Statement No. 133” (SFAS No. 161). SFAS No. 161 requires additional disclosures about the objectives of using derivative instruments, the method by which the derivative instruments and related hedged items are accounted for under FASB Statement No. 133 and its related interpretations, and the effect of derivative instruments and related hedged items on financial position, financial performance, and cash flows. SFAS 161 also requires disclosure of the fair value of derivative instruments and their gains and losses in a tabular format. This statement is effective for our fourth quarter of fiscal 2009. We are currently evaluating the effect, if any, that the adoption of SFAS No. 161 will have on our consolidated financial statements.
 
In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (SFAS No. 141(R)). SFAS No. 141(R) establishes principles and requirements for how the acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at the acquisition date fair value. SFAS No. 141(R) determines what information


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. We are required to adopt SFAS No. 141(R) at the beginning of the first quarter of fiscal 2010, which begins on April 25, 2009. We are currently evaluating the effect that the adoption of SFAS No. 141(R) will have on our consolidated financial statements.
 
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51.” (SFAS No. 160). SFAS No. 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. This new consolidation method will significantly change the accounting for transactions with minority interest holders. We are required to adopt SFAS No. 160 at the beginning of the first quarter of fiscal 2010, which begins on April 25, 2009. We are currently evaluating the effect, if any, that the adoption of SFAS No. 160 will have on our consolidated financial statements.
 
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115 “Accounting for Certain Investments in Debt and Equity Securities.” SFAS No. 159 allows measurement at fair value of eligible financial assets and liabilities that are not otherwise measured at fair value. If the fair value option for an eligible item is elected, unrealized gains and losses for that item shall be reported in current earnings at each subsequent reporting date. SFAS No. 159 also establishes presentation and disclosure requirements designed to draw comparison between the different measurement attributes the company elects for similar types of assets and liabilities. We are required to adopt SFAS No. 159 at the beginning of the first quarter of fiscal 2009, which began on April 26, 2008. The adoption of SFAS No. 159 is not expected to have a material impact on our financial position or results of operations.
 
In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 affects other accounting pronouncements that require or permit fair value measurements where the FASB has previously concluded that fair value is the relevant measurement attribute. SFAS No. 157 does not require any new fair value measurements, but may change current practice in some instances. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. We will adopt SFAS No. 157 in the first quarter of fiscal year 2009. In February 2008, the FASB issued FASB Staff Position No. 157-2 “Effective Date of FASB Statement No. 157” (“FSP 157-2”). FSP 157-2 permits a one-year deferral in applying the measurement provisions of SFAS 157 to non-financial assets and non-financial liabilities that are not recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually). The adoption of SFAS No. 157 and FSP 157-2 is not expected to have a material impact on our financial position or results of operations.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
3.   Balance Sheet Components
 
Short-Term and Long-Term Investments
 
The following is a summary of investments at April 25, 2008:
 
                                 
    Amortized
 		    Gross Unrealized     Estimated
 		 
    Cost     Gains     Losses     Fair Value  
 
Corporate bonds
  $ 382,528     $ 2,066     $ 903     $ 383,691  
Auction rate securities
    76,202       —       3,500       72,702  
U.S. government agencies
    61,578       352       150       61,780  
U.S. Treasuries
    15,375       107       —       15,482  
Municipal bonds
    1,591       9       —       1,600  
Certificate of deposits
    2       —       —       2  
Money market funds
    839,841       —       —       839,841  
                                 
Total debt and equity securities
    1,377,117       2,534       4,553       1,375,098  
Less cash equivalents
    831,872       —       —       831,872  
Less long-term restricted investments
    241,867       1,033       287       242,613 (1)
                                 
Total unrestricted investments
  $ 303,378     $ 1,501     $ 4,266     $ 300,613  
                                 
Short-term unrestricted investments
  $ 227,176     $ 1,501     $ 766     $ 227,911  
Long-term unrestricted investments
    76,202       —       3,500       72,702 (1)
                                 
Total unrestricted investments
  $ 303,378     $ 1,501     $ 4,266     $ 300,613  
                                 
 
The following is a summary of investments at April 27, 2007:
 
                                 
    Amortized
 		    Gross Unrealized     Estimated
 		 
    Cost     Gains     Losses     Fair Value  
 
Corporate bonds
  $ 544,334     $ 398     $ 1,484     $ 543,248  
Auction rate securities
    114,415       —       —       114,415  
Corporate securities
    113,084       24       7       113,101  
U.S. government agencies
    218,492       12       753       217,751  
U.S. Treasuries
    10,097       —       112       9,985  
Municipal bonds
    3,769       —       11       3,758  
Marketable equity securities
    4,637       8,276       —       12,913  
Money market funds
    84,961       —       —       84,961  
                                 
Total debt and equity securities
    1,093,789       8,710       2,367       1,100,132  
Less cash equivalents
    164,347       23       —       164,370  
Less short-term restricted investments
    116,950       —       890       116,060 (2)
                                 
Total unrestricted investments
  $ 812,492     $ 8,687     $ 1,477     $ 819,702  
                                 
Short-term unrestricted investments
  $ 812,492     $ 8,687     $ 1,477     $ 819,702  
Long-term unrestricted investments
    —       —       —       —  
                                 
Total unrestricted investments
  $ 812,492     $ 8,687     $ 1,477     $ 819,702  
                                 


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
(1) As of April 25, 2008, we have pledged $242,613 of long-term restricted investments for the revolving credit facility (see Note 6). In addition, we have long-term restricted cash of $4,621 relating to our foreign rent, custom, and service performance guarantees. As of April 25, 2008, we also have long-term available-for-sale investment of $72,702 and investments in nonpublic companies of $11,169. These combined amounts are presented as long-term investments and restricted cash in the accompanying Consolidated Balance Sheets as of April 25, 2008.
 
(2) As of April 27, 2007, we have pledged $116,060 of short-term restricted investments for the Tranche A term loan as defined in the Loan Agreement (see Note 6) and have short-term restricted cash of $2,252, relating to our foreign rent, custom, and service performance guarantees, which is presented as short-term restricted cash and investments in the accompanying Consolidated Balance Sheets as of April 27, 2007. In addition, we have long-term restricted cash of $3,639, and investments in nonpublic companies of $8,932. These combined amounts are presented as long-term investments and restricted cash in the accompanying Consolidated Balance Sheets as of April 27, 2007.
 
On August 13, 2007, we sold 360 shares of common stock of Blue Coat and received net proceeds of $18,256 and recorded a $13,619 realized gain. These shares of common stock in Blue Coat Systems, Inc. (“Blue Coat”) were received in connection with the sale of certain assets of NetCache® to Blue Coat on September 11, 2006, as described in Note 16.
 
We record net unrealized gains or losses on available-for-sale securities in other comprehensive income (loss), which is a component of stockholders’ equity. Realized gains or losses are reflected in income and have not been material for all years presented. The following table shows the gross unrealized losses and fair values of our investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at April 25, 2008:
 
                                                 
    Less Than 12 Months     12 Months or Greater     Total  
          Unrealized
 		          Unrealized
 		          Unrealized
 		 
    Fair Value     Loss     Fair Value     Loss     Fair Value     Loss  
 
Corporate bonds
  $ 31,716     $ (175 )   $ 99,011     $ (728 )   $ 130,727     $ (903 )
Auction rate securities
    72,702       (3,500 )     —       —     $ 72,702     $ (3,500 )
U.S. government agencies
    4,024       (22 )     8,163       (128 )     12,187       (150 )
                                                 
Total
  $ 108,442     $ (3,697 )   $ 107,174     $ (856 )   $ 215,616     $ (4,553 )
                                                 
 
The following table shows the gross unrealized losses and fair values of our investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at April 27, 2007:
 
                                                 
    Less Than 12 Months     12 Months or Greater     Total  
          Unrealized
 		          Unrealized
 		          Unrealized
 		 
    Fair Value     Loss     Fair Value     Loss     Fair Value     Loss  
 
Corporate bonds
  $ 160,031     $ (694 )   $ 207,685     $ (790 )   $ 367,716     $ (1,484 )
Corporate securities
    16,643       (7 )     —       —       16,643       (7 )
U.S. government agencies
    103,964       (489 )     85,242       (264 )     189,206       (753 )
U.S.treasury
    9,984       (112 )     —       —       9,984       (112 )
Municipal bonds
    2,172       (8 )     1,586       (3 )     3,758       (11 )
                                                 
Total
  $ 292,794     $ (1,310 )   $ 294,513     $ (1,057 )   $ 587,307     $ (2,367 )
                                                 


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The unrealized losses on our investments in corporate bonds and U.S. government agencies were caused by interest rate increases. We believe that we will be able to collect all principal and interest amounts due to us at maturity given the high credit quality of these investments. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because we have the ability and intent to hold those investments until a recovery of fair value, which may be maturity, we do not consider these investments to be other-than temporarily impaired at April 25, 2008.
 
Since the third quarter of calendar 2007, the credit markets have been volatile and have experienced a shortage in overall liquidity due to the instability in the sub-prime lending industry. We believe we have sufficient liquidity under cash provided by operations and our financing agreements. If the global credit market continues to deteriorate, our investment portfolio may be impacted and we may determine that we may have experienced an other-than-temporary decline in fair value of some of our investments, which could adversely impact our financial results. See further discussion under Item 1A — Risk Factors, “Funds associated with certain of our auction rate securities may not be accessible for in excess of 12 months and our auction rate securities may experience an other-than-temporary decline in value, which could adversely affect our earnings.”
 
Our long term investments include auction rate securities (ARS) with a fair value of $72,702 at April 25, 2008. These ARS are securities with long term nominal maturities which, in accordance with investment policy guidelines, had credit ratings of AAA and Aaa at the time of purchase. Interest rates for ARS are reset through a “Dutch auction” each month, which historically has provided a liquid market for these securities.
 
All of our ARS are backed by pools of student loans guaranteed by the U.S. Department of Education, and we believe the credit quality of these securities is high based on this guarantee. Beginning in the fourth quarter of fiscal 2008, liquidity issues in the global credit markets resulted in the failure of auctions for certain ARS investments, with a par value of $76,202 at April 25, 2008. For each failed auction, the interest rate moves to a maximum rate defined for each security, and the ARS continue to pay interest in accordance with their terms. However, the principal associated with the ARS will not be accessible until there is a successful auction or such time as other markets for ARS investments develop.
 
We believe that the underlying credit quality of the assets backing our ARS investments have not been impacted by the reduced liquidity of these investments. Based on an analysis of the fair value and marketability of these investments, we recorded a temporary impairment within other comprehensive income, an element of stockholders’ equity on our balance sheet, of approximately $3,500 at April 25, 2008. In addition, we have classified all of our auction rate securities, with an estimated fair value of $72,702, as long-term assets in our consolidated balance sheet as of April 25, 2008 as our ability to liquidate such securities in the next 12 months is uncertain. We will continue to monitor these securities; if we determine that the decline in market value is other-than-temporary, an impairment loss would be recognized at that time. We do not believe that the lack of liquidity relating to our ARS investments will impact our ability to fund working capital needs, capital expenditures or other operating requirements.
 
Inventories
 
                 
    April 25,
 		    April 27,
 		 
    2008     2007  
 
Purchased components
  $ 7,665     $ 19,429  
Work-in-process
    271       5  
Finished goods
    62,286       35,446  
                 
    $ 70,222     $ 54,880  
                 


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Property and Equipment
 
                 
    April 25,
 		    April 27,
 		 
    2008     2007  
 
Land
  $ 176,129     $ 163,837  
Buildings and building improvements
    229,067       223,720  
Leasehold improvements
    67,860       45,476  
Computers, related equipment and purchased software
    480,770       385,355  
Furniture
    52,540       42,650  
Construction-in-progress
    90,469       43,708  
                 
      1,096,835       904,746  
Accumulated depreciation and amortization
    (403,043 )     (301,223 )
                 
    $ 693,792     $ 603,523  
                 
 
4.   Commitments and Contingencies
 
The following summarizes our commitments and contingencies at April 25, 2008, and the effect such obligations may have on our future periods:
 
                                                         
    2009     2010     2011     2012     2013     Thereafter     Total  
 
Contractual Obligations:
                                                       
Office operating lease payments(1)
  $ 27,813     $ 24,530     $ 21,220     $ 15,707     $ 12,818     $ 27,154     $ 129,242  
Real estate lease payments(2)
    6,157       9,225       10,223       10,223       135,483       154,872       326,183  
Equipment operating lease payments(3)
    17,539       12,925       6,388       1,535       1,262       —       39,649  
Venture capital funding commitments(4)
    246       233       221       18       —       —       718  
Purchase commitments(5)
    47,173       —       —       —       —       —       47,173  
Capital expenditures(6)
    29,688       —       —       —       —       —       29,688  
Communications and maintenance(7)
    21,597       12,459       4,812       907       85       —       39,860  
                                                         
Total Contractual Cash Obligations
  $ 150,213     $ 59,372     $ 42,864     $ 28,390     $ 149,648     $ 182,026     $ 612,513  
                                                         
Other Commercial Commitments:
                                                       
Letters of credit(8)
  $ 2,229     $ 53     $ 70     $ 373     $ 71     $ 367     $ 3,163  
                                                         
 
 
(1) We enter into operating leases in the normal course of business. We lease sales offices, research and development facilities, and other property and equipment under operating leases throughout the United States and internationally, which expire on various dates through fiscal year 2017. Substantially all lease agreements have fixed payment terms based on the passage of time and contain payment escalation clauses. Some lease agreements provide us with the option to renew or terminate the lease. Our future operating lease obligations would change if we were to exercise these options and if we were to enter into additional operating lease agreements. Facilities operating lease payments exclude the leases impacted by the restructurings described in Note 13. Total rent expense for all facilities was $29,586 for year ended April 25, 2008, and $23,986 and $18,787 for years ended April 27, 2007 and April 28, 2006, respectively.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
(2) Included in the above contractual cash obligations pursuant to five financing arrangements with BNP are (a) lease commitments of $6,157 in fiscal 2009; $9,225 in fiscal 2010; $10,223 in each of the fiscal years 2011, and 2012; $8,365 in fiscal 2014; and $6,165 thereafter, which are based on the LIBOR rate at April 25, 2008 plus a spread or a fixed rate, for terms of five years, and (b) at the expiration or termination of the lease, a supplemental payment obligation equal to our minimum guarantee of $275,825 in the event that we elect not to purchase or arrange for sale of the buildings.
 
(3) Equipment operating leases include servers and IT equipment used in our engineering labs and data centers.
 
(4) Venture capital funding commitments include a quarterly committed management fee based on a percentage of our committed funding to be payable through June 2011.
 
(5) Amounts included in purchase commitments are (a) agreements to purchase components from our suppliers and/or contract manufacturers that are non-cancelable and legally binding; and (b) commitments related to utilities contracts. Purchase commitments and other exclude (a) products and services we expect to consume in the ordinary course of business in the next 12 months; (b) orders that represent an authorization to purchase rather than a binding agreement; (c) orders that are cancelable without penalty and costs that are not reasonably estimable at this time.
 
(6) Capital expenditures include worldwide contractual commitments to purchase equipment and to construct building and leasehold improvements, which will be recorded as property and equipment.
 
(7) Communication and maintenance represent payments we are required to make based on a minimum volume under certain communication contracts with major telecommunication companies as well as maintenance contracts with multiple vendors. Such obligations expire in September 2012.
 
(8) The amounts outstanding under these letters of credit relate to workers’ compensation, a customs guarantee, a corporate credit card program, and foreign rent guarantees
 
As of April 25, 2008, we have commitments relating to two financing, construction, and leasing arrangements with BNP for office space and a parking structure to be located on land in Sunnyvale, California that we currently own. These arrangements require us to lease our land to BNP for a period of 99 years to construct approximately 380,000 square feet of office space costing up to $113,500. After completion of construction, we will pay minimum lease payments, which vary based on the LIBOR plus a spread or a fixed rate (3.49% and 3.06% for the first and second lease, respectively, at April 25, 2008) on the cost of the facilities. We began to make lease payments on the first building in January 2008 and expect to begin making lease payments on the second building in December 2008, respectively, for terms of five years. We have the option to renew the leases for two consecutive five-year periods upon approval by BNP. Upon expiration (or upon any earlier termination) of the lease terms, we must elect one of the following options: (i) purchase the buildings from BNP for $48,500 and $65,000, respectively; (ii) if certain conditions are met, arrange for the sale of the buildings by BNP to a third party for an amount equal to at least $41,225 and $55,250, respectively, and be liable for any deficiency between the net proceeds received from the third party and such amounts; or (iii) pay BNP supplemental payments of $41,225 and $55,250, respectively, in which event we may recoup some or all of such payments by arranging for a sale of either or both buildings by BNP during the ensuing two-year period.
 
As of April 25, 2008, we have a commitment relating to a third financing, construction, and leasing arrangement with BNP for facility space to be located on land currently owned by us in Research Triangle Park, North Carolina. This arrangement requires us to lease our land to BNP for a period of 99 years to construct approximately 120,000 square feet for a data center costing up to $61,000. After completion of construction, we will pay minimum lease payments, which vary based on the LIBOR plus a spread (3.06% at April 25, 2008) on the cost of the facility. We expect to begin making lease payments on the completed building in January 2009 for a term of five and a half years. We have the option to renew the lease for two consecutive five-year periods upon approval by BNP. Upon expiration (or upon any earlier termination) of the lease term, we must elect one of the following options: (i) purchase the building from BNP for $61,000; (ii) if certain conditions are met, arrange for the sale of the building by BNP to a third party for an amount equal to at least $51,850, and be liable for any deficiency between the


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
net proceeds received from the third party and $51,850; or (iii) pay BNP a supplemental payment of $51,850, in which event we may recoup some or all of such payment by arranging for the sale of the building by BNP during the ensuing two-year period.
 
As of April 25, 2008, we have a commitment relating to a fourth financing and operating leasing arrangement with BNP for approximately 374,274 square feet of buildings located in Sunnyvale, California costing up to $101,050. This arrangement requires us to pay minimum lease payments, which may vary based on the LIBOR plus a spread or a fixed rate (3.47% and 3.49% for the first two buildings, and 3.06% for the third building at April 25, 2008). We began to make lease payments on two buildings in December 2007 and the third building in January 2008 for terms of five years. We have the option to renew the leases for two consecutive five-year periods upon approval by BNP. Upon expiration (or upon any earlier termination) of the lease terms, we must elect one of the following options: (i) purchase the buildings from BNP for $101,050; (ii) if certain conditions are met, arrange for the sale of the buildings by BNP to a third party for an amount equal to at least $85,893, and be liable for any deficiency between the net proceeds received from the third party and $85,893; or (iii) pay BNP a supplemental payment of $85,893, in which event we may recoup some or all of such payment by arranging for the sale of the buildings by BNP during the ensuing two-year period.
 
During the fourth quarter of fiscal 2008, we entered into a fifth financing, construction, and leasing arrangement with BNP for facility space to be located on land currently owned by us in Sunnyvale, California. This arrangement requires us to lease our land to BNP for a period of 99 years to construct approximately 189,697 square feet for a data center costing up to $48,950. After completion of construction, we will pay minimum lease payments, which vary based on the LIBOR plus a spread (3.06% at April 25, 2008) on the cost of the facility. We expect to begin making lease payments on the completed building in January 2010 for a term of five years. We have the option to renew the lease for two consecutive five-year periods upon approval by BNP. Upon expiration (or upon any earlier termination) of the lease term, we must elect one of the following options: (i) purchase the building from BNP for $48,950; (ii) if certain conditions are met, arrange for the sale of the building by BNP to a third party for an amount equal to at least $41,608, and be liable for any deficiency between the net proceeds received from the third party and $41,608; or (iii) pay BNP a supplemental payment of $41,608, in which event we may recoup some or all of such payment by arranging for the sale of the building by BNP during the ensuing two-year period.
 
All leases require us to maintain specified financial covenants with which we were in compliance as of April 25, 2008. Such specified financial covenants include a maximum ratio of Total Debt to Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and a minimum amount of Unencumbered Cash and Short Term Investments.
 
As of April 25, 2008, the notional fair value of our foreign exchange forward and foreign currency option contracts totaled $419,264. We do not believe that these derivatives present significant credit risks, because the counterparties to the derivatives consist of major financial institutions, and we manage the notional amount of contracts entered into with any one counterparty. We do not enter into derivative financial instruments for speculative or trading purposes. Other than the risk associated with the financial condition of the counterparties, our maximum exposure related to foreign currency forward and option contracts is limited to the premiums paid on purchased options.
 
We have both recourse and nonrecourse lease financing arrangements with third party leasing companies through preexisting relationships with customers. Under the terms of recourse leases, which are generally three years or less, we remain liable for the aggregate unpaid remaining lease payments to the third party leasing company in the event that any customers default. For these recourse arrangements, revenues on the sale of our product to the leasing company are deferred and recognized into income as payments to the leasing company come due. As of April 25, 2008, and April 27, 2007, the maximum recourse exposure under such leases totaled approximately $24,842 and $10,262, respectively. Under the terms of the nonrecourse leases, we do not have any continuing obligations or liabilities. To date, we have not experienced material losses under this lease financing program.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
From time to time, we have committed to purchase various key components used in the manufacture of our products. We establish accruals for estimated losses on purchased components for which we believe it is probable that they will not be utilized in future operations. To the extent that such forecasts are not achieved, our commitments and associated accruals may change.
 
We are subject to various legal proceedings and claims which may arise in the normal course of business. While the outcome of these legal matters is currently not determinable, we do not believe that any current litigation or claims will have a material adverse effect on our business, cash flow, operating results, or financial condition.
 
We are currently undergoing federal income tax audits in the United States and several foreign tax jurisdictions. The rights to some of our intellectual property (“IP”) are owned by certain of our foreign subsidiaries, and payments are made between foreign and U.S. tax jurisdictions relating to the use of this IP in a qualified cost sharing arrangement. Recently, several other U.S. companies have had their foreign IP arrangements challenged as part of IRS examinations, which have resulted in material proposed assessments and/or pending litigation. Effective September 27, 2007, the Internal Revenue Service’s Large and Mid-Sized Business Division released a Coordinated Issues Paper (“CIP”) with respect to qualified cost sharing arrangements (“CSAs”). Specifically, this CIP provides guidance to IRS personnel concerning methods that may be applied to evaluate the arm’s length charge for internally developed as well as acquisition-related intangible property that is made available to a qualified CSA. We have evaluated the IRS’s positions in this CIP and believe that it will not have a material adverse impact upon our consolidated financial position and the results of operations and cash flows. Furthermore, we do not believe, based upon information currently known to us, that the final resolution of any of our audits will have a material adverse effect upon our consolidated financial position and the results of operations and cash flows. However, if upon the conclusion of these audits the ultimate determination of our taxes owed in any of these tax jurisdictions is for an amount in excess of the tax provision we have recorded or reserved for, our overall effective tax rate may be adversely impacted in the period of adjustment.
 
Effective March 20, 2008, the IRS also released a CIP with respect to the cost sharing of stock based compensation. Specifically, this CIP provides guidance to IRS personnel concerning stock based compensation related to a CSA by providing that the parties to a CSA will share all costs related to intangible development of the covered intangibles, including but not limited to, salaries, bonuses, and other payroll costs and benefits, and that taxpayers should include all forms of compensation in the cost pool, including those costs related to stock-based compensation. We have evaluated the IRS’s positions in this CIP and have concluded that it will not have a material adverse impact upon our consolidated financial position and the results of operations and cash flows.
 
We received a subpoena from the Office of Inspector General for the General Services Administration (“GSA”) seeking various records relating to GSA contracting activity by us during the period beginning in 1995 and ending in 2005. The subpoena is part of an investigation being conducted by the GSA and the Department of Justice regarding potential violations of the False Claims Act in connection with our GSA contracting activity. The subpoena requested a range of documents including documents relating to our discount practices and compliance with the price reduction clause provisions of its GSA contracts. We are cooperating with the investigation and have produced documents and met with the Department of Justice on several occasions. Violations of the False Claims Act could result in the imposition of a damage remedy which includes treble damages plus civil penalties, and could also result in us being suspended or debarred from future government contracting, any or a combination of which could have a material adverse effect on our results of operations or financial condition. However, as the investigation is still ongoing and we are unable at this time to determine the likely outcome of this matter, no provision has been recorded as of April 25, 2008.
 
On September 5, 2007, we filed a patent infringement lawsuit in the Eastern District of Texas seeking compensatory damages and a permanent injunction against Sun Microsystems. On October 25, 2007, Sun Microsystems filed a counter claim against us in the Eastern District of Texas seeking compensatory damages and a permanent injunction. On October 29, 2007, Sun filed a second lawsuit against us in the Northern District of California asserting additional patents against us. The Texas court granted a joint motion to transfer the Texas


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
lawsuit to the Northern District of California on November 26, 2007. On March 26, 2008, Sun filed a third lawsuit in federal court that extends the patent infringement charges to storage management technology we acquired in January 2008. We are unable at this time to determine the likely outcome of these various patent litigations. In addition, as we are unable to reasonably estimate the amount or range of any potential settlement, no accrual has been recorded as of April 25, 2008.
 
5.   Line of Credit
 
In July 1998, we negotiated a $5,000 unsecured revolving credit facility with a domestic commercial bank. The credit facility expired in December 2007, except to the extent of our outstanding letters of credit amounting to $1,755 as of April 25, 2008. Under terms of the credit facility, we must maintain various financial covenants, with which we are in compliance. 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. In addition, the amounts allocated under our unsecured revolving credit facility to support certain of our outstanding letters of credit amounted to $450 (see Note 6) as of April 25, 2008.
 
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 $600,000, of which $284,619 was available at April 25, 2008.
 
6.   Credit Facility and Debt
 
On November 2, 2007, we entered into a senior unsecured credit agreement (the “Unsecured Credit Agreement”) with certain lenders and BNP Paribas (“BNP”), as syndication agent, and JPMorgan Chase Bank National Association (“JPMorgan”), as administrative agent. The Unsecured Credit Agreement provides for a revolving unsecured credit facility that is comprised of commitments from various lenders who agree to make revolving loans and swingline loans and issue letters of credit of up to an aggregate amount of $250,000 with a term of five years. Revolving loans may be, at our option, Alternative Base Rate borrowings or Eurodollar borrowings. Interest on Eurodollar borrowings accrues at a floating rate based on LIBOR for the interest period specified by us plus a spread based on our leverage ratio. Interest on Alternative Base Rate borrowings, swingline loans and letter of credit disbursements accrues at a rate based on the Prime Rate in effect on such day. The proceeds of the loans may be used for our general corporate purposes, including stock repurchases and working capital needs. As of April 25, 2008, no amount was outstanding under this facility.
 
On October 5, 2007, the Company entered into a Secured Credit Agreement with JPMorgan Securities. The Secured Credit Agreement provides for a revolving secured credit facility of up to $250,000 with a term of five years. On October 10, 2007, $250,000 was advanced to the Company and was recorded in the Long-Term Debt in the accompanying Consolidated Balance Sheets as of April 25, 2008. During fiscal 2008, we made repayments of $146,400 and drew $69,000 on the revolving credit facility. As of April 25, 2008, the outstanding balance on the Secured Credit Agreement was $172,600. The full amount is due on the maturity date of October 5, 2012. As of April 25, 2008, we have pledged $242,613 of long-term restricted investments in connection with the Secured Credit Agreement. Interest for the Secured Credit Agreement accrues at a floating rate based on the base rate in effect from time to time, plus a margin, which totaled 2.88% at April 25, 2008.
 
On March 31, 2006, NetApp Global LTD., a subsidiary of the Company, entered into a loan agreement (the “Loan Agreement”) with JPMorgan, as administrative agent. The Loan Agreement provides for a term loan available in two tranches, a tranche of $220,000 (“Tranche A”) and a tranche of $80,000 (“Tranche B”), for an aggregate borrowing of $300,000. The proceeds of the term loan were used to finance a dividend from Global to the Company under the American Jobs Creation Act. The Tranche A term loan, together with accrued and unpaid interest, was due in full on the maturity date of March 31, 2008. During fiscal 2008, we made repayments of $85,110 on the term loan. The Tranche A and Tranche B term loan were fully repaid as of April 25, 2008, and January 26, 2007, respectively.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
As of April 25, 2008, we were in compliance with all debt covenants as required by the Unsecured Credit Agreement, and Secured Credit Agreement, respectively.
 
7.   Stock-Based Compensation, Equity Incentive Programs and Stockholders’ Equity
 
Stock-Based Compensation
 
Effective April 29, 2006, we adopted SFAS No. 123R, “Share-Based Payments,” which provides guidance on accounting for stock-based awards for employee services. We elected to adopt the modified prospective method, and accordingly we were not required to restate our prior period financial statements.
 
Prior to the Adoption of SFAS No. 123R
 
Prior to the adoption of SFAS No. 123R, stock-based compensation expense had not been recognized in our consolidated statement of operations, other than those related to acquisitions and restricted stock awards. As a result of adopting SFAS No. 123R, pretax stock-based compensation expense recorded for fiscal 2008 and 2007 of $147,964 and $163,033, respectively, was related to employee stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”), and employee stock purchases under our Employee Stock Purchase Plan. Pretax stock-based compensation expense of $13,293 for fiscal 2006, which we recorded under APB No. 25, was related to RSUs, RSAs, and options assumed from acquisitions.
 
As required by SFAS No. 123R, we eliminated the unamortized deferred stock compensation of $49,266 on April 29, 2006. Our common stock and additional paid-in capital were also reduced by the same amount and had been included in the Stockholders’ Equity of our Consolidated Balance Sheets as of April 28, 2006.
 
SFAS No. 123R Stock-Based Compensation Expense
 
The stock-based compensation expenses included in the Consolidated Statement of Income for fiscal 2008 and 2007 are as follows:
 
                 
    Year Ended  
    April 25,
 		    April 27,
 		 
    2008     2007  
 
Cost of product revenue
  $ 3,384     $ 3,720  
Cost of service revenue
    10,442       10,088  
Sales and marketing
    65,399       71,701  
Research and development
    46,632       51,323  
General and administrative
    22,107       26,201  
                 
Total stock-based compensation expense before income taxes
    147,964       163,033  
Income taxes
    (29,270 )     (29,525 )
                 
Total stock-based compensation expense after income taxes
  $ 118,694     $ 133,508  
                 


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table summarizes stock-based compensation associated with each type of award:
 
                 
    Year Ended  
    April 25,
 		    April 27,
 		 
    2008     2007  
 
Employee stock options and awards
  $ 131,410     $ 150,257  
Employee stock purchase plan (“ESPP”)
    16,513       13,099  
Change in amounts capitalized in inventory
    41       (323 )
                 
Total stock-based compensation expense before income taxes
    147,964       163,033  
Income taxes
    (29,270 )     (29,525 )
                 
Total stock-based compensation expense after income taxes
  $ 118,694     $ 133,508  
                 
 
In conjunction with the adoption of SFAS No. 123R, we changed our accounting policy of attributing the fair value of stock-based compensation to expense from the accelerated multiple-option approach provided by APB No. 25, as allowed under SFAS No. 123, to the straight-line single-option approach. Compensation expense for all stock-based payment awards expected to vest that were granted on or prior to April 28, 2006 will continue to be recognized using the accelerated multiple-option method. Compensation expense for all stock-based payment awards expected to vest that were granted subsequent to April 28, 2006 is recognized on a straight-line basis under the single-option approach.
 
Valuation Assumptions
 
In compliance with SFAS No. 123R, we estimated the fair value of stock options using the Black-Scholes model on the date of the grant. Assumptions used in the Black-Scholes valuation model were as follows:
 
                         
    Stock Options
 		  ESPP
    Year Ended   Year Ended
    April 25,
 		  April 27,
 		  April 28,
 		  April 25,
 		  April 27,
 		  April 28,
    2008   2007   2006   2008   2007   2006
 
Expected life in years(1)
  4.0   4.0   3.9   0.5   0.5   0.5
Risk-free interest rate(2)
  2.04% - 5.02%   4.42% - 5.05%   3.77% - 4.76%   2.36% -4.95%   4.42% - 5.06%   3.17% - 4.58%
Volatility(3)
  33% - 55%   32% - 38%   66% - 69%   35% - 49%   32% - 38%   66% - 69%
Expected dividend(4)
  0%   0%   0%   0%   0%   0%
 
 
(1) The expected life of 4.0 years represented the period that our stock-based award was expected to be outstanding and was determined based on historical experience on similar awards. The expected life of 0.5 years for the purchase plan was based on the term of the purchase period.
 
(2) The risk-free interest rate for the options was based upon U.S. Treasury bills with equivalent expected terms of our employee stock-based award. The risk-free interest rate for the employee stock purchase plan was based upon U.S. Treasury bills yield curve in effect at the time of grant for the expected term of the purchase period.
 
(3) We used the implied volatility of traded options to estimate our stock price volatility. Prior to adoption of SFAS No. 123R, we estimated volatility based upon historical volatility rates as required by SFAS No. 123.
 
(4) The expected dividend was determined based on our history and expected dividend payouts.
 
We estimate our forfeiture rates based on historical voluntary termination behavior and recognized compensation expense only for those equity awards expected to vest.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Equity Incentive Programs
 
Stock Option Plans — In September 1995, we adopted the 1995 Stock Incentive Plan (“the 1995 Plan”). All outstanding options issued under a previous option 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 1995 Plan comprises three separate equity incentive programs: (i) the Discretionary Option Program under which options may be granted to eligible individuals at a fixed price per share; (ii) the Salary Investment Option Grant Program under which the company’s officers and other highly compensated employees may elect to have a portion of their base salary reduced in return for stock options, and (iii) the Stock Issuance Program under which eligible persons may be issued shares of Common Stock directly. 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 10 years after the date of grant. The 1999 Plan supplements the existing 1995 Plan which will expire on August 31, 2008 and all available share may or may not be issued prior to expiration. However, an Automatic Option Grant Program previously in effect under the 1995 Plan terminated as of October 26, 1999, and all automatic option grants made to nonemployee board members on or after that date will be made under the 1999 Plan.
 
In April 1997, the Board of Directors adopted the Special Nonofficer Stock Option Plan (“the Nonofficer 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 Nonofficer Plan allows only for the issuance of nonqualified options to nonofficer employees. The Nonofficer Plan expired on December 31, 2007, and no further grants may be made from the plan.
 
In August 1999, the Board of Directors adopted the 1999 Stock Option Plan (“the 1999 Plan”), which comprises five 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; (ii) the Stock Appreciation Rights Program under which eligible persons may be granted stock appreciation rights that allow individuals to receive the appreciation in Fair Market Value of the shares; (iii) the Stock Issuance Program under which eligible individuals may be issued shares of Common Stock directly; (iv) the Performance Share and Performance Unit Program under which eligible persons may be granted performance shares and performance units which result in payment to the participant only if performance goals or other vesting criteria are achieved; and (v) the Automatic Option Grant Program under which nonemployee board members automatically receive option grants at designated intervals over their period of board service.
 
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 nonstatutory 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 over a four-year period. Options granted prior to April 29, 2006, have a term of no more than 10 years after the date of grant and those granted after April 29, 2006 have a term of no more than seven years, subject to earlier termination upon the occurrence of certain events. In fiscal 2004, the 1999 Plan was amended to create the Stock Issuance Program, whereby eligible individuals may be issued shares of common stock directly, either through the issuance or immediate purchase of these shares or as a bonus for services rendered. In fiscal 2005, the 1999 Plan was amended to increase the share reserve by an additional 10,200 shares of common stock; to create the Stock Appreciation Right Program under which eligible persons may be granted stock appreciation rights that allow individuals to receive the appreciation in Fair Market Value of the shares; to create the Performance Share and Performance Unit Program under which eligible persons may be granted performance shares and performance units that result in payment to the participant only if performance goals or other vesting criteria are achieved; and to prohibit the repricing of any outstanding stock option or stock appreciation right after it has been granted or to cancel any outstanding stock option or stock appreciation right and immediately replace it with a new stock option or stock


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
appreciation right with a lower exercise price unless approved by stockholders. In fiscal 2006, the 1999 Plan was amended to increase the share reserve by an additional 10,600 shares of common stock and limit the number of shares that may be issued pursuant to full value awards that may be granted under the Stock Issuance Program or the Performance Share and Performance Unit Program. In fiscal 2007, the 1999 Plan was amended to increase the share reserve by an additional 10,900 shares of common stock and to increase Director compensation under the Automatic Option Grant Program from an option to purchase 15,000 shares to an option to purchase 20,000 shares. In fiscal 2008, the 1999 Plan was amended to increase the share reserve by an additional 7,200 shares of common stock; to extend the term of the Plan for a period of ten years; to increase the limitation of the percentage of Stock Issuance and Performance Shares or Performance Units that may be granted under the Plan from 10% to 30% of the shares reserved; to increase the limit on the value of performance units a participant may receive during any calendar year to $2,000; and to decrease the maximum term of options and stock appreciation rights to seven years. There have been no repricing to date under any of the plans, and no stock appreciation rights have been issued.
 
In fiscal 2008, we assumed a stock option plan in connection with our acquisition of Onaro (see Note 12). Under the terms of the merger agreement, options and restricted stock units to purchase 1,000 shares were exchanged at certain exchange ratios. The options granted under this 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. The restricted stock units generally vest at a rate of 50% on the first and second annual anniversaries of the vesting commencement date.
 
In fiscal 2007, we assumed two stock option plans in connection with our acquisition of Topio (see Note 12.) Under the terms of the merger agreement, options and restricted stock units to purchase 858 shares were exchanged at certain exchange ratios. The options granted under these plans generally vest at a rate of 25% on the first anniversary of the vesting commencement date and then ratably over the following 36 months. The restricted stock units generally vest at a rate of 50% on the first and second annual anniversaries of the vesting commencement date.
 
In fiscal 2006, we assumed various stock option plans in connection with our Alacritus and Decru acquisitions. Pursuant to the provisions of the merger agreements, outstanding shares were exchanged under certain exchange ratios in effect at the time of each merger. Options granted under these plans 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 not more than 10 years after the date of grant.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
A summary of the combined activity under our stock option plans and agreements is as follows:
 
                                         
          Outstanding Options     Weighted
 		       
    Shares
 		          Weighted
 		    Average
 		       
    Available
 		          Average
 		    Remaining
 		    Aggregate
 		 
    for
 		    Numbers
 		    Exercise
 		    Contractual Term
 		    Intrinsic
 		 
    Grant     of Shares     Price     (Years)     Value  
 
Balances, April 29, 2005 (49,019 options exercisable at a weighted average exercise price of $24.38)
    21,914       70,305       23.24                  
Additional shares reserved for plan
    10,600       —       —                  
Options granted (weighted average fair value of $15.58)
    (13,420 )     13,420       30.31                  
Assumed Decru and Alacritus plans
    2,029       —       —                  
Assumed Decru options issued (weighted average fair value of $17.40)
    (1,907 )     1,907       11.86                  
Assumed Alacritus options issued (weighted average fair value of $14.76)
    (79 )     79       26.30                  
Assumed Alacritus restricted stock units issued (weighted average fair value of $14.76)
    (43 )     43       —                  
Restricted stock units granted (weighted average fair value of $37.00)
    (638 )     638       —                  
Options exercised
    —       (16,399 )     12.44                  
Restricted stock units exercised
    —       (98 )     —                  
Options expired
    (96 )     —       —                  
Options canceled
    4,165       (4,165 )     35.38                  
Restricted stock units canceled
    21       (21 )     —                  
                                         
Balances, April 28, 2006 (41,116 options exercisable at a weighted average exercise price of $26.57)
    22,546       65,709       26.08                  
Additional shares reserved for plan
    10,900       —       —                  
Options granted (weighted average fair value of $11.06)
    (12,820 )     12,820       36.53                  
Assumed Topio options registered
    858       —       —                  
Assumed Topio options issued (weighted average fair value of $39.33)
    (858 )     858       20.32                  
Restricted stock units granted (weighted average fair value of $37.58)
    (753 )     753       —                  
Options exercised
    —       (11,908 )     14.97                  
Restricted stock units exercised
    —       (120 )     —                  
Options forfeitures and canceled
    3,039       (3,039 )     38.36                  
Restricted stock units forfeitures and canceled
    30       (30 )     —                  
Options expired
    (80 )     —       —                  
                                         
Outstanding at April 27, 2007 (39,095 options exercisable at a
    22,862       65,043     $ 29.28                  
weighted average exercise price of $28.57)
                                       
Assumed Onaro plan
    1,000       —       —                  
Additional shares reserved for plan
    7,200       —       —                  
Options granted (weighted average fair value of $26.41)
    (11,196 )     11,196       26.41                  
Restricted stock units granted (weighted average fair value of $23.11)
    (3,373 )     3,373       —                  
Assumed Onaro options issued (weighted average fair value of $22.22)
    (808 )     808       13.82                  
Assumed Onaro restricted stock units issued (weighted average fair value of $22.83)
    (192 )     192       —                  
Options exercised
    —       (5,343 )     12.47                  
Restricted stock units exercised
    —       (309 )     —                  
Options forfeitures and cancellation
    4,639       (4,639 )     37.54                  
Restricted stock units forfeitures and cancellation
    153       (153 )     —                  
Options expired
    (643 )     —       —                  
                                         
Outstanding at April 25, 2008
    19,642       70,168     $ 28.08                  
                             
                             
Options vested and expected to vest as of April 25, 2008
            63,112     $ 30.03       5.05     $ 150,626  
Exercisable at April 25, 2008
            42,857     $ 29.96       4.41     $ 141,341  
RSUs vested and expected to vest as of April 25, 2008
            3,950     $ —       2.08     $ 92,587  
Exercisable at April 25, 2008
            —     $ —       —     $ —  


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The intrinsic value of stock options represents the difference between the exercise price of stock options and the market price of our stock on that day for all in-the-money options. The weighted-average fair value for the fiscal 2008 and 2007 grants as of the grant date was $25.43 and $12.83, respectively. The total intrinsic value of options exercised was $83,129, $267,165 and $302,954 for fiscal 2008, 2007, and 2006, respectively. We received $66,614, $178,241, and $203,977 from the exercise of stock options for fiscal 2008, 2007, and 2006, respectively. There was $312,965 of total unrecognized compensation as of April 25, 2008 related to options and restricted stock units. The unrecognized compensation will be amortized on a straight-line basis over a weighted-average remaining period of 2.6 years.
 
Stock Issuance Program — Under the 1995 Stock Issuance Program, certain eligible persons may be issued shares of common stock directly. No restricted stock award was issued to employees during fiscal 2008. During fiscal 2007, and 2006, 125 and 210 shares, respectively, of restricted stock awards were issued to certain employees. Prior to the adoption of SFAS No. 123R, the exercise price discount from fair market value of these shares has been recorded as deferred stock compensation expense in fiscal 2006, which is being amortized ratably over its respective vesting periods, between three to four years. After the adoption of SFAS No. 123R in fiscal 2008 and 2007, the fair value of these grants are recorded as part of the stock-based compensation. At April 25, 2008, 3,635 shares were available for future issuances under this program.
 
The following table summarizes our nonvested shares (restricted stock awards) as of April 25, 2008:
 
                 
          Weighted-
 		 
          Average
 		 
    Number of
 		    Grant-Date
 		 
    Shares     Fair Value  
 
Nonvested at April 27, 2007
    265     $ 34.45  
Awards granted
    —       —  
Awards vested
    (70 )     32.62  
Awards canceled/expired/forfeited
    (50 )     34.26  
                 
Nonvested at April 25, 2008
    145     $ 35.40  
                 
 
Although nonvested shares are legally issued, they are considered contingently returnable shares subject to repurchase by the Company when employees terminate their employment. The total fair value of shares vested during fiscal 2008 and 2007 was $1,632 and $3,135, respectively. There was $4,781 of total unrecognized compensation as of April 25, 2008 related to restricted stock awards. The unrecognized compensation will be amortized on a straight-line basis over a weighted-average remaining period of 2.2 years.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table summarizes information about stock options outstanding under all option plans as of April 25, 2008:
 
                                                 
          Options Outstanding              
            Weighted
 		          Options Exercisable  
            Average
 		    Weighted
 		          Weighted
 		 
      Number
 		    Remaining
 		    Average
 		          Average
 		 
Range of
 		    Outstanding at
 		    Contractual Life
 		    Exercise
 		    Number
 		    Exercise
 		 
Exercise Prices     April 25, 2008     (In Years)     Price     Exercisable     Price  
 
$  —
  $ 0.010       4,554       2.09     $ —       —     $ —  
  0.09
    5.00       846       3.52       3.04       727       3.17  
  5.11
    10.00       2,642       4.09       9.46       2,614       9.49  
 10.24
    15.00       2,846       1.97       11.77       2,845       11.77  
 15.21
    20.00       6,483       4.23       17.23       6,392       17.20  
 20.16
    25.00       16,053       5.51       22.09       9,775       21.89  
 25.31
    30.00       7,237       6.80       28.13       3,244       28.58  
 30.74
    35.00       13,419       6.00       32.10       7,196       32.23  
 35.83
    45.00       9,774       5.83       38.98       3,750       39.26  
 46.56
    55.00       3,833       2.05       53.52       3,833       53.52  
 58.00
    122.19       2,481       2.12       89.62       2,481       89.62  
                                                 
$  —
  $ 122.19       70,168       4.91     $ 28.08       42,857     $ 29.96  
                                                 
 
Employee Stock Purchase Plan — Under the Employee Stock Purchase Plan (“ESPP”), employees are entitled to purchase shares of our common stock at 85% of the fair market value at certain specified dates over a two-year period. In fiscal 2008, the plan was amended to increase the share reserve by an additional 1,600 shares. In fiscal 2007 and 2006, the plan was amended to increase the share reserve by an additional 1,600 and 1,500 shares of common stock, respectively. Of the 20,600 shares authorized to be issued under this plan, 3,809 shares were available for issuance at April 25, 2008; 2,057, 1,632, and 1,575 shares were issued in fiscal 2008, 2007, and 2006, respectively, at a weighted average price of $23.38, $22.78, and $18.28 respectively.
 
                                 
          Weighted
 		    Weighted
 		       
          Average
 		    Average
 		    Aggregate
 		 
    Number of
 		    Exercise
 		    Remaining
 		    Intrinsic
 		 
    Shares     Price     Contractual Term     Value  
 
Outstanding at April 25, 2008
    1,264     $ 20.97       0.1     $ 3,123  
Vested and expected to vest at April 25, 2008
    1,228     $ 20.97       0.1     $ 3,033  
 
The total intrinsic value of employee stock purchases was $9,365 and $20,462 for fiscal 2008 and 2007, respectively. The compensation cost for shares purchased under the ESPP plan was $16,513 and $13,099 for fiscal 2008 and 2007, respectively. There was $1,798 of total unrecognized compensation as of April 25, 2008 related to ESPP. The unrecognized compensation will be amortized on a straight-line basis over a weighted-average remaining period of 0.1 years.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table shows the shares issued and their purchase price per share for the employee stock purchase plan during fiscal 2008:
 
         
Purchase date
    May 31, 2007  
Shares issued
    891  
Average purchase price per share
  $ 26.50  
Purchase date
    November 30, 2007  
Shares issued
    1,166  
Average purchase price per share
  $ 21.00  
 
Stockholders’ Equity
 
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 stockholders.
 
Deferred Stock Compensation — Prior to adoption of SFAS No. 123R in fiscal 2007, deferred stock compensation was recorded for the grant of stock awards or shares of restricted stock to employees at exercise prices deemed to be less than the fair value of our common stock on the grant date. Deferred stock compensation was also recorded for retention escrow shares withheld in accordance with the merger agreement. Deferred stock compensation was adjusted to reflect cancellations and forfeitures due to employee terminations as they occur. We recorded $29,855 of deferred stock compensation in fiscal 2006, primarily related to unvested options assumed and retention escrow shares withheld in the Spinnaker acquisition, restricted stock awards to certain employees, and the grant of stock options below fair value to certain highly compensated employees. We reversed $2,886 of deferred compensation in fiscal 2006 due to employee terminations. The reversals were primarily related to the forfeiture of unvested options assumed in acquisitions as a result of employee terminations.
 
We recorded $60 in compensation expense in fiscal 2006 for the fair value of options granted to a member of the Board of Directors in recognition for services performed outside of the normal capacity of a board member. During fiscal 2002, 100 common shares under the 1995 Plan were granted at an exercise price of $15.32 per share, the fair market value per share on the grant date. The option has a term of 10 years measured from the grant date, subject to earlier termination following his cessation of board service, and will vest in a series of 48 successive equal monthly installments upon his completion of each month of board service over the 48-month period measured from the grant date.
 
We recorded $13,233 in compensation expense for fiscal 2006 primarily related to the amortization of deferred stock compensation from unvested options assumed in the Decru, Alacritus, WebManage and Spinnaker acquisitions; the retention escrow shares relative to Spinnaker, the grant of stock options to certain highly compensated employees below fair value at the date of grant and the award of restricted stock to certain employees.
 
As required by SFAS No. 123R, we eliminated the unamortized deferred stock compensation of $49,266 on April 29, 2006 and reduced our common stock and additional paid-in capital by the same amount .
 
Stock Repurchase Program — Since the inception of the stock repurchase program through April 25, 2008, we have purchased a total of 87,365 shares of our common stock at an average price of $28.93 per share for an aggregate purchase price of $2,527,395. At April 25, 2008, $496,244 remained available for repurchases under the plan. The stock repurchase program may be suspended or discontinued at any time.
 
During fiscal 2008, we repurchased 32,772 shares of our common stock at an aggregate cost of $903,704, or a weighted average price of $27.58 per share. During fiscal 2007, we repurchased 22,597 shares of our common stock at an aggregate cost of $805,708, or a weighted average price of $35.66 per share. The repurchases were recorded as treasury stock and resulted in a reduction of stockholders’ equity.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
8.   Income Taxes
 
Income before income taxes is as follows:
 
                         
    Year Ended  
    April 25,
 		    April 27,
 		    April 30,
 		 
    2008     2007     2006  
 
Domestic
  $ 45,769     $ 38,875     $ 105,274  
Foreign
    336,930       320,853       244,998  
                         
Total
  $ 382,699     $ 359,728     $ 350,272  
                         
 
The provision for income taxes consists of the following:
 
                         
    Year Ended  
    April 25,
 		    April 27,
 		    April 30,
 		 
    2008     2007     2006  
 
Current:
                       
Federal
  $ 48,791     $ 154,590     $ 56,715  
State
    23,849       23,153       6,533  
Foreign
    17,708       11,553       9,659  
                         
Total current
    90,348       189,296       72,907  
                         
Deferred:
                       
Federal
    7,134       (107,166 )     3,546  
State
    (20,458 )     (20,137 )     7,352  
Foreign
    (4,063 )     —       15  
                         
Total deferred
    (17,387 )     (127,303 )     10,913  
                         
Provision (benefit) for income taxes
  $ 72,961     $ 61,993     $ 83,820  
                         
 
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate as follows:
 
                         
    Year Ended  
    April 25,
 		    April 27,
 		    April 30,
 		 
    2008     2007     2006  
 
Tax computed at federal statutory rate
  $ 133,945     $ 125,904     $ 122,595  
State income taxes, net of federal benefit
    2,204       1,961       5,250  
Federal credits
    (4,659 )     (7,757 )     (7,824 )
Non-deductible in process research and development
    —       —       1,750  
Stock-based compensation pursuant to SFAS No. 123R
    11,001       25,008       —  
Foreign earnings in lower tax jurisdiction
    (67,596 )     (82,071 )     (61,137 )
Remittance of accumulated foreign earnings (includes state taxes of $3,775, net of federal benefit)
    —       —       22,482  
Other
    (1,934 )     (1,052 )     704  
                         
Provision for income taxes
  $ 72,961     $ 61,993     $ 83,820  
                         
 
The income tax benefits associated with dispositions from employee stock transactions of $48,195, $175,036, and $36,596, respectively, for fiscal 2008, 2007 and 2006, were recognized as additional paid-in capital.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The components of our deferred tax assets and liabilities are as follows:
 
                 
    Year Ended  
    April 25,
 		    April 27,
 		 
    2008     2007  
 
Deferred Tax Assets:
               
Inventory reserves and capitalization
  $ 22,801     $ 20,583  
Reserves and accruals not currently deductible
    20,169       21,354  
Net operating loss and credit carryforwards
    71,656       53,356  
Stock-based compensation
    61,062       41,109  
Deferred revenue
    116,621       120,390  
Capitalized research and development expenditures
    2,394       3,778  
Investment losses
    2,088       1,669  
Conditional royalty
    15,969       13,173  
Other
    96       50  
                 
Gross deferred tax assets
    312,856       275,462  
Valuation allowance
    (28,576 )     (21,008 )
                 
Total deferred tax assets
    284,280       254,454  
Deferred Tax Liabilities:
               
Depreciation
    (624 )     1,068  
Tax effect of unrealized comprehensive income
    —       (2,899 )
Acquisition intangibles
    (23,178 )     (31,057 )
Other
    (453 )     (2,456 )
                 
Total deferred tax liabilities
    (24,255 )     (35,344 )
                 
Net deferred tax assets
  $ 260,025     $ 219,110  
                 
 
Current deferred tax assets are $127,197 and $110,741 as of fiscal 2008 and 2007, respectively. Noncurrent net deferred tax assets for fiscal 2008 and 2007 are $132,828 and $108,369, respectively, and are included in Long Term Deferred Taxes and Other Assets within the accompanying Consolidated Balance Sheets.
 
As discussed in Note 2, effective April 28, 2007, we adopted FIN No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109,”, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes”. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN No. 48 also provides guidance on derecognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure, and transition.
 
The total amount of unrecognized tax benefits upon the adoption of FIN No. 48, on April 28, 2007, was $58,326. There was no cumulative effect from the adoption of FIN No. 48; however, certain amounts were reclassified among our consolidated balance sheet accounts as follows:
 
         
Retained earnings cumulative effect
  $ —  
Additional deferred tax assets
    4,889  
Reclass from current liability to long-term liability
    53,437  
         
Total increase in liability
  $ 58,326  
         


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The entire portion of the $58,326 balance of unrecognized tax benefits at April 28, 2007, if recognized, would affect our effective tax rate.
 
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
 
         
Balance at April 28, 2007
  $ 58,326  
Additions based on tax positions related to the current year
    21,184  
Additions for tax positions of prior years
    18,255  
         
Balance at April 25, 2008 (included in Other Long-term Obligations)
  $ 97,765  
         
 
The entire balance of unrecognized tax benefits at April 25, 2008, if recognized, would affect our provision for income taxes.
 
We recognize accrued interest and penalties related to unrecognized tax benefits in the income tax provision. During the fiscal years ended 2005 through 2007, we recognized total accrued interest and penalties of approximately $170 and have included this accrual in our FIN No. 48 disclosure balances.
 
We are subject to taxation in the United States, various states, and several foreign jurisdictions. Our federal income tax returns are currently being examined for the fiscal years 2003-2004. We are effectively subject to federal tax examination adjustments for tax years ended on or after fiscal year 2000, in that we have net operating loss carryforwards from these years that could be subject to adjustment, if and when utilized.
 
As we are in the early stages of the federal income tax return and foreign jurisdiction income tax audit process, at this time we can not make a determination as to whether or not recognition of any unrecognized tax benefits will occur within the next 12 months.
 
The tax years that remain subject to examination for our major tax jurisdictions are shown below:
 
Tax Years Subject to Examination for Major Tax Jurisdictions at April 25, 2008
 
     
2003 — 2007
  United States — federal income tax
2002 — 2007
  United States — state and local income tax
2003 — 2007
  Australia
2004 — 2007
  Germany
2005 — 2007
  India
2006 — 2007
  Japan
2000 — 2007
  The Netherlands
2004 — 2007
  United Kingdom
 
The above table excludes the net operating loss carryover risk identified above with respect to federal and state tax returns.
 
We adopted SFAS No. 123R effective the beginning our fiscal 2007. Pursuant to the requirements of Footnote 82 of SFAS No. 123R, we no longer include unrealized stock option attributes as components of our gross deferred tax assets and corresponding valuation allowance disclosures. Footnote 82 is applied on a prospective basis. The tax effected amounts of gross unrealized net operating loss and business tax credit carryforwards, and their corresponding valuation allowance excluded under Footnote 82 for the years ended April 25, 2008 and April 27, 2007 are $245,130 and $363,303, which will result in additional paid in capital if and when realized as a reduction in taxes otherwise paid.
 
The Jobs Act created a one-time incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85% dividend-received deduction for certain dividends from certain non-U.S. subsidiaries. During the fourth quarter of 2006, we incurred a charge of approximately $22,482 for federal and state income taxes


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
related to the repatriation of approximately $400,000 of accumulated income earned by its foreign subsidiaries. As a result of this dividend, there were no significant unremitted earnings held by our foreign subsidiaries at April 28, 2006. As of our fiscal years ended April 25, 2008 and April 27, 2007, the amount of accumulated unremitted earnings from our foreign subsidiaries under APB No. 23 are approximately $677,200 and $330,000.
 
During fiscal 2006, our Netherlands subsidiary received a favorable tax ruling from the Netherlands tax authorities effective May 1, 2005. This ruling replaced a previous Netherlands tax ruling that was scheduled to expire on December 31, 2005. This ruling results in both a lower level of earnings subject to tax in the Netherlands and an extension of the expiration date to April 30, 2010.
 
Network Appliance Systems India Pvt. Ltd. received a tax holiday from the Indian tax authorities attributed to its call center and research and development activities effective June 6, 2003. These activities qualify under the Software Technology Park of India (“STPI”) scheme for the development and manufacture of computer software and information technology enabled services. Under this tax holiday, net income derived from call center and research and development activities is exempt from Indian taxation. This tax holiday will expire on December 31, 2009.
 
As of April 25, 2008, our Netherlands subsidiary had a conditional royalty expense carryforward of $62,624 that may become available for offset against future Netherlands income. The carryforward may not, however, be used to offset income under the new Netherlands tax ruling expiring April 30, 2010. The carryforward does not have an expiration date. We have established a valuation allowance against the deferred tax asset for the carryforward based upon our belief that we will not be able to utilize this attribute. In the event we are able to utilize this attribute, the tax benefit of the carryforward will be accounted for as a credit to stockholders’ equity of $9,219 and as a reduction to the income tax provision of $6,750.
 
We have been notified of examinations in the U.S. and several foreign tax jurisdictions. The rights to some of our intellectual property (“IP”) is owned by certain of our foreign subsidiaries, and payments are made between U.S. and foreign tax jurisdictions relating to the use of this IP. Recently, some other companies have had their foreign IP arrangements challenged as part of an examination. Our management does not believe, based upon information currently known to us that the final resolution of any of our audits will have a material adverse effect upon our consolidated financial position and the results of operations and cash flows. See Note 4 Commitments and Contingencies.
 
As of April 25, 2008, the federal and state net operating loss carryforwards for income tax purposes were approximately $499,930 and $163,302, respectively. The federal net operating loss carryforwards will begin to expire in fiscal 2021. State net operating losses of $8,582 will expire in fiscal years 2009 through 2011, $5,422 will expire in fiscal year 2012 while the remaining $149,298 will expire in fiscal years 2013 through 2028.
 
As of April 25, 2008, we had federal and state tax credit carryforwards of approximately $73,466 and $61,356, respectively, available to offset future income tax liabilities. Federal tax credit carryforwards of $46,245 will begin to expire in fiscal years 2009 through 2020, while the remaining $27,221 will expire in fiscal years beginning 2021. State tax credits of $1,513 will expire in fiscal years 2009 through 2012, while the remaining $59,843 is available indefinitely to reduce cash taxes otherwise payable. As discussed above, most of the net operating loss and tax credit carryovers, if realized, will be recognized as additional paid in capital in that they are employee stock option tax attributes.
 
During fiscal 2005, we established a valuation allowance against certain capital loss carryforwards of approximately $3,468 based upon our belief at that time that we would not be able to utilize this attribute before expiration starting in fiscal 2008. However, during fiscal 2007, the sale of NetCache generated capital gain income against which the entire capital loss carryforward was utilized. As a result, we realized a tax benefit for the entire capital loss carryforward through the reversal of the valuation allowance originally established during fiscal 2005.
 
During fiscal 2004, as part of our acquisition of Spinnaker, we acquired approximately $52,000 and $12,000 of federal and state net operating losses, respectively, and $2,700 of federal tax credits that were realized as deferred


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
tax assets upon acquisition. We also established a valuation allowance of $2,400 against a portion of the state net operating loss carryforwards of Spinnaker which if utilized will be treated as a reduction of acquired goodwill.
 
During fiscal 2006, as part of our acquisition of Alacritus, we acquired approximately $6,100 of federal net operating losses and $50 of federal tax credits that were realized as deferred tax assets upon acquisitions.
 
During fiscal 2006, as part of our acquisition of Decru, we acquired approximately $32,100 of federal net operating losses and $1,100 of federal tax credits that were realized as deferred tax assets upon acquisition. We also established valuation reserves of $1,200 and $1,200 against all of Decru’s state net operating loss carryforwards and state tax credit carryforwards, respectively, that existed as of the acquisition date. If utilized, these attributes will be treated as a reduction of acquired goodwill.
 
During fiscal 2007, as part of our acquisition of Topio, we acquired approximately $17,900 and $15,400 of federal and state net operating losses, respectively, that were realized as deferred tax assets upon acquisition.
 
During fiscal 2008, as part of our acquisition of Onaro, we acquired approximately $5,900 and $7,100 of federal and state net operating losses, respectively, that were realized as deferred tax assets upon acquisition.
 
9.   Segment, Geographic, and Customer Information
 
Under SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” we operate in one reportable industry segment: the design, manufacturing, marketing, and technical support of high-performance networked storage solutions. We market our products in the U.S. and in foreign countries through our sales personnel and our subsidiaries. The Company’s Chief Executive Officer and Chief Operating Officer are considered our Chief Operating Decision Makers (“CODMs”), as defined by SFAS No. 131. The CODMs evaluates resource allocation decisions and operational performance based upon revenue by geographic regions. Under SFAS No. 131, we have one reportable segment, as our three geographic operating segments can be aggregated into one reportable segment as they have similar operating characteristics. For fiscal years 2008, 2007, and 2006, we recorded revenue from customers throughout the U.S. and Canada, Europe, Latin America, Australia, and Asia Pacific.
 
The following table presents total revenues for the years ended April 25, 2008, April 27, 2007, and April 28, 2006, by geographic area and long-lived assets as of April 25, 2008, and April 27, 2007, by geographic area.
 
                         
    Years Ended  
    April 25,
 		    April 27,
 		    April 28,
 		 
    2008     2007     2006  
 
Total Revenues:
                       
United States
  $ 1,748,916     $ 1,550,268     $ 1,122,692  
International
    1,554,251       1,254,014       943,764  
                         
Total revenues
  $ 3,303,167     $ 2,804,282     $ 2,066,456  
                         
Long-lived Assets:
                       
United States
  $ 1,837,586     $ 1,346,127          
International
    165,969       71,548          
                         
Total Long-lived Assets
  $ 2,003,555     $ 1,417,675          
                         
 
Total revenues above are attributed to regions based on customers’ shipment locations.
 
International sales include export sales primarily to the United Kingdom, Germany, Japan, France, the Netherlands, Switzerland, Canada, and Australia. No single foreign country accounted for 10% or more of total revenues in fiscal 2008, 2007, or 2006.
 
No customer accounted for 10% or more of total revenues in fiscal 2008, 2007, or 2006.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
10.   Fair Value of Financial Instruments
 
The carrying values of cash and cash equivalents, and restricted cash and investments reported in the Consolidated Balance Sheets approximate their fair value. Our short-term investments and foreign exchange contracts are carried at fair value based on quoted market prices. Other investments in nonmarketable securities are included in long-term investments and restricted cash at April 25, 2008, and April 27, 2007, with total carrying value of $11,169 and $8,932, which approximate their fair values. The fair value of our debt also approximates its carrying value as of April 25, 2008, and April 27, 2007.
 
We do not use derivative financial instruments for speculative or trading purposes. We enter into forward foreign exchange and currency option contracts to hedge trade and intercompany receivables and payables as well as future sales and operating expenses against future movement in foreign exchange rates.
 
Foreign currency forward contracts obligate us to buy or sell foreign currencies at a specified future date. Option contracts give us the right to buy or sell foreign currencies and are exercised only when economically beneficial. As of April 25, 2008, we had $419,289 of outstanding foreign exchange contracts that all had remaining maturities of five months or less. As of April 27, 2007, we had $367,479 of outstanding foreign exchange contracts (including $21,703 of option contracts). For the balance sheet hedges, these contracts are adjusted to fair value at the end of each month and are included in earnings. The premiums paid on the foreign currency option contracts are recognized as a reduction to other income when the contract is entered into. For cash flow hedges, the related gains or losses are included in other comprehensive income. Gains and losses on these foreign exchange contracts are offset by losses and gains on the underlying assets and liabilities. At April 25, 2008, and April 27, 2007, the estimated notional fair value of forward foreign exchange contracts were $419,264 and $368,807, respectively. The fair value of foreign exchange contracts is based on prevailing financial market information.
 
The following table provides information about our foreign exchange forward contracts and currency options contracts outstanding on April 25, 2008:
 
                                 
          Foreign
 		    Notional
 		    Notional
 		 
          Currency
 		    Contract Value in
 		    Fair Value in
 		 
Currency
  Buy/Sell     Amount     USD     USD  
 
Forward Contracts:
                               
EUR
    Sell       153,226     $ 238,961     $ 238,740  
GBP
    Sell       46,488     $ 91,772     $ 91,978  
CAD
    Sell       21,480     $ 21,116     $ 21,115  
Other
    Sell       N/A     $ 15,490     $ 15,489  
AUD
    Buy       36,801     $ 34,127     $ 34,122  
Other
    Buy       N/A     $ 17,823     $ 17,820  


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table provides information about our foreign exchange forward contracts and currency options contracts outstanding on April 27, 2007:
 
                                 
          Foreign
 		    Notional
 		    Notional
 		 
          Currency
 		    Contract Value in
 		    Fair Value in
 		 
Currency
  Buy/Sell     Amount     USD     USD  
 
Forward Contracts:
                               
EUR
    Sell       156,155     $ 211,846     $ 212,838  
GBP
    Sell       33,418     $ 66,507     $ 66,698  
CAD
    Sell       24,186     $ 21,670     $ 21,672  
Other
    Sell       N/A     $ 20,190     $ 20,194  
AUD
    Buy       23,654     $ 19,582     $ 19,581  
Other
    Buy       N/A     $ 5,981     $ 5,981  
Option Contracts:
                               
EUR
    Sell       13,000     $ 17,711     $ 17,823  
GBP
    Sell       2,000     $ 3,992     $ 4,020  
 
11.   Employee Benefit and Incentive Compensation Plans
 
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 $12,241, $10,920, and $2,220 for fiscal 2008, 2007, and 2006, respectively to the Savings Plan.
 
All employees of the Company are eligible to participate in the Incentive Compensation Plan (“Incentive Plan”) provided that they meet certain requirements pursuant to the Incentive Plan. Incentive Plan contributions totaled $56,632, $56,722, and $40,361in fiscal 2008, 2007, and 2006.
 
12.   Business Combinations
 
We have acquired several companies over the last three fiscal years. The total purchase price paid for each of these companies is summarized below:
 
                                 
    Year Ended  
    April 25,
 		    April 27,
 		    April 28,
 		 
    2008     2007     2006  
    Onaro     Topio     Decru     Alacritus  
 
Cash consideration
  $ 104,524     $ 136,852     $ 54,482     $ 11,000  
Common stock issued
    —       —       191,874       —  
Fair value of vested stock options assumed
    5,217       8,369       36,142       2,314  
Acquisition-related transaction costs
    989       882       711       337  
                                 
    $ 110,730     $ 146,103     $ 283,209     $ 13,651  
                                 
Number of shares issued
    —       —       8,270       —  
Number of stock options assumed
    335       858       1,907       79  
 
In accordance with SFAS No. 141, we allocate the purchase price to the estimated tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values; in the case of Onaro, this allocation is


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
preliminary and is subject to the finalization of certain valuation estimates. The purchase price allocations are as follows:
 
                                 
    Year Ended  
    April 25,
 		    April 27,
 		    April 28,
 		 
    2008     2007     2006  
    Onaro     Topio     Decru     Alacritus  
 
Fair value of tangible assets acquired
  $ 10,410     $ 7,905     $ 16,590     $ 67  
Intangible assets:
                               
Existing Technology (4 - 5 year life)
    23,900       18,800       40,700       5,000  
Patents and Core Technology (4 - 5 year life)
    5,500       3,800       11,800       —  
Customer Relationships (4 - 8 year life)
    5,000       8,300       7,520       —  
Non compete agreements (2 year life)
    —       300       1,200       700  
Trademarks and tradenames (2 - 7 year life)
    1,600       200       4,800       —  
In-process research and development
    —       —       5,000       —  
Goodwill
    79,211       114,700       192,894       6,323  
Fair value of liabilities assumed
    (3,182 )     (2,752 )     (3,129 )     (810 )
Deferred stock compensation
    —       —       18,549       1,199  
Deferred income taxes
    (11,709 )     (5,150 )     (12,715 )     1,172  
                                 
    $ 110,730     $ 146,103     $ 283,209     $ 13,651  
                                 
 
The historical operations of each of those entities was not significant and accordingly no pro forma information has been provided.
 
Acquisition of Onaro
 
On January 28, 2008, we acquired Onaro, Inc. (“Onaro”), a privately-held company based in Boston, Massachusetts, that provides software solutions for enterprises to increase service quality, return on storage, and compliance by managing storage as a service. The acquisition will give our customers access to new storage service management and change management capabilities. It will allow us to help enterprise organizations increase data center and storage network efficiencies by proactively managing and optimizing storage service levels for availability and performance in dynamic data center environments, using our cost-effective and highly scalable modular storage systems.
 
Goodwill of $79,211 was recorded in connection with our acquisition of Onaro. The acquisition of Onaro helps extend our vision and strategy for integrated data management and storage efficiency in the data center. We plan to further develop and extend Onaro’s service management software technologies and build upon the foundation that the Onaro’s software provides. In addition, Onaro has an experienced and knowledgeable workforce and an existing infrastructure. These opportunities, along with the ability to leverage the Onaro workforce, were primary contributing factors to the establishment of the purchase price, resulting in the recognition of a significant amount of goodwill. The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on management estimates and assumptions, and other information compiled by management that utilized established valuation techniques appropriate for the high-technology industry. Goodwill recorded as a result of this acquisition is not expected to be deductible for tax purposes.
 
The net deferred income tax liability of $11,709 recorded in connection with this acquisition is comprised of deferred tax assets of $2,893, primarily related to net operating losses incurred from inception through the acquisition date and a deferred tax liability of $14,602 related to acquired intangible assets.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
As of the acquisition date, no amounts were allocated to in-process research and development. In-process research and development is dependent on the status of new projects on the date the acquisition is consummated. Prior to the acquisition date, Onaro had released new versions of its software products. Accordingly, there were no substantive research and development projects in process on the date the acquisition was consummated.
 
Acquisition of Topio
 
On December 7, 2006, we acquired Topio, Inc. (“Topio”), a privately-held company based in Santa Clara, California, that developed and sold enterprise-class software for data replication and rapid recovery across the spectrum of locations, platforms and storage that support an enterprise. The acquisition will continue to expand our data protection portfolio and simplify the replication of data from other storage arrays to our storage systems.
 
Goodwill of $114,700 was recorded in connection with our acquisition of Topio. The current and future potential of the Topio technology will enable us to expand our data protection portfolio and simplify the replication of data from other storage arrays to our storage systems. In addition, Topio has an experienced and knowledgeable workforce and an existing infrastructure. These opportunities, along with the ability to leverage the Topio workforce, were significant contributing factors to the establishment of the purchase price, resulting in the recognition of a significant amount of goodwill. The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on management estimates and assumptions, and other information compiled by management that utilized established valuation techniques appropriate for the high-technology industry. Goodwill recorded as a result of this acquisition is not expected to be deductible for tax purposes.
 
The net deferred income tax liability of $5,150 recorded in connection with this acquisition is comprised of deferred tax assets of $7,644 primarily related to net operating losses incurred from inception through the acquisition date and a deferred tax liability of $12,794 related to acquired intangible assets.
 
Because Topio had recently introduced its products, no amount was allocated to in-process research and development.
 
Acquisition of Decru
 
On August 26, 2005, we completed our acquisition of Decru, Inc. (“Decru”), a Delaware corporation that developed and sold encryption software and appliances which encrypt network data.
 
Goodwill of $192,894 was generated in connection with our acquisition of Decru. The current and future potential for Decru’s technology will enable us to help our customers manage their risk of data theft and corruption with data encryption and authentication products. In addition, Decru has an experienced and knowledgeable workforce and an existing infrastructure. These opportunities, along with the ability to leverage the Decru workforce, were significant contributing factors to the establishment of the purchase price, resulting in the recognition of a significant amount of goodwill. The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on management estimates and assumptions, and other information compiled by management that utilized established valuation techniques appropriate for the high-technology industry. Goodwill recorded as a result of this acquisition is not expected to be deductible for tax purposes.
 
Of the total purchase price, $5,000 was allocated to in-process research and development (“IPR&D”) and was expensed in fiscal 2006. Projects that qualify as IPR&D represent those that have not yet reached technological feasibility and which have no alternative future use. Technological feasibility is established when an enterprise has completed all planning, designing, coding, and testing activities that are necessary to establish that a product can be produced to meet its design specifications including functions, features, and technical performance requirement. The value of IPR&D was determined by estimating the stage of completion and risk associated with IPR&D to determine the level of discount rate to be applied, estimating costs to develop the purchased IPR&D into commercially viable products, estimating the resulting net cash flows from the projects when completed and discounting the net cash flows to their present value based on the percentage of completion of the IPR&D projects.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Prior to the adoption of SFAS No. 123R in fiscal 2007, we recorded the intrinsic value, measured as the difference between the grant price and fair market value on the acquisition consummation date, of unvested options and restricted stock units assumed in the Decru acquisition as deferred stock compensation in accordance with FASB Interpretation No. 44, “Accounting for Certain Transactions involving Stock Compensation.” Such deferred stock compensation which aggregated $18,549 for Decru, was recorded as a separate component of stockholders’ equity in the accompanying Consolidated Balance Sheets. As required by SFAS No. 123R, we eliminated all unamortized deferred stock compensation related to the Decru acquisition on April 29, 2006.
 
Acquisition of Alacritus
 
On May 2, 2005, we acquired Alacritus, Inc., a privately-held company based in Pleasanton, California, that developed and sold disk-based virtual tape library software for data protection solutions.
 
Prior to the adoption of SFAS No. 123R in fiscal 2007, we recorded the intrinsic value of unvested options and restricted stock units assumed in the Alacritus acquisition as deferred stock compensation in accordance with FASB Interpretation No. 44, “Accounting for Certain Transactions involving Stock Compensation,” Such deferred stock compensation, which aggregated $1,199 for Alacritus, is recorded as a separate component of stockholders’ equity in the accompanying Consolidated Balance Sheets. As required by SFAS No. 123R, we eliminated all unamortized deferred stock compensation related to the Alacritus acquisition on April 29, 2006.
 
Goodwill Adjustment
 
During fiscal 2008, we decreased goodwill by $213 relating to escrow funds received from the Topio purchase transaction. During fiscal 2006, we decreased goodwill by $3,498 and $2,061 relating to the tax benefits associated with the subsequent exercise of previously vested assumed Spinnaker and Decru options, respectively.
 
13.   Restructuring Charges
 
In fiscal 2002, we implemented a restructuring plan related to the closure of an engineering facility and consolidation of resources to our Sunnyvale headquarters. In fiscal 2006, we implemented a restructuring plan related to the move of our global services center operations from Sunnyvale to our new flagship support center at our Research Triangle Park facility in North Carolina.
 
Our restructuring estimates are reviewed and revised periodically and may result in a substantial charge or reduction to restructuring expense should different conditions prevail than were anticipated in previous management estimates. Such estimates included various assumptions such as the time period over which the facilities will be vacant, expected sublease terms, and expected sublease rates. In fiscal 2008, we recorded charges of $447 to the restructuring reserve resulting from a change in the estimated operating expenses and rent escalations related to our 2002 restructuring plan.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following analysis sets forth the significant components of the restructuring reserve at April 25, 2008, April 27, 2007, and April 28, 2006:
 
                         
          Severance-
 		       
          Related
 		       
    Facility     Amounts     Total  
 
Reserve balance at April 30, 2005
  $ 4,503     $ —     $ 4,503  
Restructuring charges
    281       859       1,140  
Recoveries
    (1,256 )     —       (1,256 )
Cash payments and others
    (862 )     (521 )     (1,383 )
                         
Reserve balance at April 28, 2006
  $ 2,666     $ 338     $ 3,004  
Recoveries
    —       (74 )     (74 )
Cash payments and others
    (582 )     (264 )     (846 )
                         
Reserve balance at April 27, 2007
  $ 2,084     $ —     $ 2,084  
Cash payments
    (607 )     —       (607 )
Restructuring charges
    447       —       447  
                         
Reserve balance at April 25, 2008
  $ 1,924     $ —     $ 1,924  
                         
 
Of the reserve balance at April 25, 2008 and April 27, 2007, $660 and $542, respectively, were included in other accrued liabilities, and the remaining $1,264 and $1,542, respectively, were classified as long-term obligations.
 
14.   Goodwill and Purchased Intangible Assets
 
Under Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” goodwill attributable to each of our reporting units is required to be tested for impairment by comparing the fair value of each reporting unit with its carrying value. Our reporting units are the same as our operating units. On an ongoing basis, goodwill is reviewed annually for impairment (or more frequently if indicators of impairment arise). As of April 25, 2008, and April 27, 2007, respectively, there had been no impairment of goodwill and intangible assets. Goodwill balance is summarized as follows:
 
         
    Goodwill  
 
April 28, 2006
  $ 487,535  
Additions
    114,700  
Divestiture
    (1,179 )
         
April 27, 2007
  $ 601,056  
Adjustments
    (213 )
Additions
    79,211  
         
April 25, 2008
  $ 680,054  
         
 
During fiscal 2006, we acquired Alacritus and Decru and recorded goodwill of $6,323, and $192,894, respectively, resulting from the allocation of the purchase price. During fiscal 2006, we decreased goodwill by $3,498 relating to the tax benefits associated with the subsequent exercise of previously vested assumed Spinnaker options. During fiscal 2007 we acquired Topio and recorded goodwill of $114,700 resulting from the allocation of the purchase price. In fiscal 2007, we also recorded a reduction of goodwill of $1,179 in connection with the NetCache divestiture in fiscal 2007. See Note 16, “Divestiture.” In fiscal 2008, we acquired Onaro and recorded goodwill of $79,211 resulting from the allocation of the purchase price and decreased goodwill by $213 in connection with Topio.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Intangible assets balances are summarized as follows:
 
                                                         
    Amortization
 		    April 25, 2008     April 27, 2007  
    Period
 		    Gross
 		    Accumulated
 		    Net
 		    Gross
 		    Accumulated
 		    Net
 		 
    (Years)     Assets     Amortization     Assets     Assets     Amortization     Assets  
 
Identified Intangible Assets:
                                                       
Patents
    5     $ 10,040     $ (9,411 )   $ 629     $ 10,040     $ (7,429 )   $ 2,611  
Existing technology
    4-5       126,660       (56,095 )     70,565       113,625       (49,878 )     63,747  
Trademarks/tradenames
    2-7       6,600       (2,328 )     4,272       5,280       (1,651 )     3,629  
Customer Contracts/relationships
    1.5-8       20,800       (6,191 )     14,609       17,220       (4,398 )     12,822  
Covenants Not to Compete
    1.5-2       —       —       —       9,510       (9,310 )     200  
                                                         
Total Identified Intangible Assets, Net
          $ 164,100     $ (74,025 )   $ 90,075     $ 155,675     $ (72,666 )   $ 83,009  
                                                         
 
Amortization expense for identified intangibles is summarized below:
 
                         
    Fiscal 2008     Fiscal 2007     Fiscal 2006  
 
Patents
  $ 1,982     $ 1,982     $ 1,982  
Existing technology
    22,582       17,581       11,785  
Other identified intangibles
    4,370       3,879       4,350  
                         
    $ 28,934     $ 23,442     $ 18,117  
                         
 
Our acquired patents are intended to enhance our technology base to build next-generation network-attached storage, storage area network, and fabric-attached storage systems for the benefit of our enterprise customers. The costs of such patents for use in research and development activities that have alternative future uses have been capitalized and amortized over an estimated useful life of five years as research and development expenses.
 
Existing technology is amortized as cost of product revenue. Trademarks, tradenames, customer contracts and relationships are amortized as sales and marketing expenses. Covenants not to compete are amortized over as general and administrative expenses.
 
Based on the identified intangible assets (including patents) recorded at April 25, 2008, the future amortization expense of identified intangibles for the next five fiscal years is as follows:
 
         
Year Ending April,
  Amount  
 
2009
  $ 31,698  
2010
    26,728  
2011
    16,020  
2012
    8,517  
2013
    5,818  
Thereafter
    1,294  
         
Total
  $ 90,075  
         
 
15.   Guarantees
 
As of April 25, 2008, our financial guarantees consisted of standby letters of credit outstanding, bank guarantees, and restricted cash and investments which were related to loan collateral, facility lease requirements, service performance guarantees, customs and duties guarantees, VAT requirements, and workers’ compensation plans. The maximum amount of potential future payments under these arrangements was $253,350 as of April 25, 2008, of which $2,953 and $247,234 were collateralized as short-term and long-term restricted cash and


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
investments, respectively, on our Consolidated Balance Sheets, and $3,163 were amounts outstanding under our commercial commitments (see Note 4). The maximum amount of potential future payments under these arrangements was $125,315 as of April 27, 2007, of which $121,951 was collateralized as restricted cash and investment on our Consolidated Balance Sheets, and $3,364 were amounts outstanding under our commercial commitments.
 
As of April 25, 2008, our notional fair value of foreign exchange forward and foreign currency option contracts totaled $419,264. We do not believe that these derivatives present significant credit risks, because the counterparties to the derivatives consist of major financial institutions, and we manage the notional amount of contracts entered into with any one counterparty. We do not enter into derivative financial instruments for speculative or trading purposes. Other than the risk associated with the financial condition of the counterparties, our maximum exposure related to foreign currency forward and option contracts is limited to the premiums paid.
 
We have both recourse and nonrecourse lease financing arrangements with third party leasing companies through preexisting relationships with the customers. We sell our products directly to the leasing company, and the lease arrangement is made between our customer and the leasing company. Under the terms of recourse leases, which are generally three years or less, we remain liable for the aggregate unpaid remaining lease payments to the third party leasing company in the event that any customers default. For these recourse arrangements, revenue on the sale of our product to the leasing company is deferred and recognized into income as payments to the leasing company come due. As of April 25, 2008, and April 27, 2007, the maximum recourse exposure under such leases totaled approximately $24,842 and $10,262, respectively. Under the terms of the nonrecourse leases we do not have any continuing obligations or liabilities. To date, we have not experienced significant losses under this lease financing program.
 
We enter into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, we agree to defend and indemnify the other party — primarily our customers or business partners or subcontractors — for damages and reasonable costs incurred in any suit or claim brought against them alleging that our products sold to them infringe any U.S. patent, copyright, trade secret, or similar right. If a product becomes the subject of an infringement claim, we may, at our option: (i) replace the product with another noninfringing product that provides substantially similar performance; (ii) modify the infringing product so that it no longer infringes but remains functionally equivalent; (iii) obtain the right for the customer to continue using the product at our expense and for the reseller to continue selling the product; (iv) take back the infringing product and refund to customer the purchase price paid less depreciation amortized on a straight-line basis. We have not been required to make material payments pursuant to these provisions historically.
 
We have not recorded any liability at April 25, 2008, and April 27, 2007, respectively, related to these guarantees since the maximum amount of potential future payments under such guarantees, indemnities and warranties is not determinable, other than as described above.
 
16.   Divestiture
 
On September 11, 2006, we completed the sale of certain assets of our NetCache product line to Blue Coat and agreed not to compete in the market served by NetCache for a period of no less than three years from and after September 11, 2006. We received $23,914 in cash and 360 shares of Blue Coat’s common stock with a fair value of $4,637 as of September 11, 2006. In addition, we accrued $2,032 for costs expected to be incurred to fulfill our engineering and service contractual obligations. Because of these continuing obligations, the NetCache sale does not qualify for presentation as a discontinued operation. As a result of this divestiture, we recorded a pre-tax gain of $25,339 in our income from operations and a reduction of goodwill of $1,179. We recorded revenues of $57,421 and $71,106 from NetCache products for fiscal 2007 and 2006, respectively. The contribution to operating income from these products was not significant.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
17.   Subsequent Event
 
On June 10, 2008, we issued $1,265,000 aggregate principal amount of 1.75% Convertible Senior Notes due 2013 (the “Notes”) to initial purchasers who resold the Notes to qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933, as amended. The net proceeds from the offering, after deducting the initial purchasers’ discount and offering expenses of $26,500, were $1,238,500. We used (i) $273,644 of the net proceeds to purchase 11,600 shares of our common stock in negotiated transactions with institutional investors and (ii) $254,898 of the net proceeds to enter into the note hedge transaction described below.
 
The Notes are convertible into the right to receive cash in an amount up to the principal amount and shares of our common stock for the conversion value in excess of the principal amount, if any, at an initial conversion rate of 31.4006 shares of common stock per $1,000 principal amount of Notes, subject to adjustment as described in the indenture governing the Notes, which represents an initial conversion price of $31.85 per share. The Notes are unsecured, unsubordinated obligations of NetApp, and interest will be payable in arrears on June 1 and December 1 of each year, beginning on December 1, 2008, in cash at a rate of 1.75% per annum, and will be convertible upon satisfaction of certain conditions. The Notes will mature on June 1, 2013 unless earlier repurchased or converted.
 
Concurrent with the issuance of the Notes, we entered into note hedge transactions (the “Note Hedges”) with certain financial institutions, which are designed to mitigate potential dilution from the conversion of the Notes in the event that the market value per share of our common stock at the time of exercise is greater than $31.85 per share, subject to adjustments. The Note Hedges cover, subject to anti-dilution adjustments, the net shares of our common stock that would be deliverable to converting Noteholders in the event of a conversion of the Notes. The Note Hedges expire at the earlier of (i) the last day on which any Notes remain outstanding and (ii) the scheduled trading day immediately preceding the maturity date of the Notes. We also entered into separate warrant transactions whereby we sold to the same financial institutions warrants (the “Warrants”) to acquire, subject to anti-dilution adjustments, 39,700 shares of our common stock at an exercise price of $41.28 per share, subject to adjustment, on a series of days commencing on September 3, 2013. Upon exercise of the Warrants, we have the option to deliver cash or shares of our common stock equal to the difference between the then market price and the strike price of the Warrants.
 
If the market value per share of our common stock at the time of conversion of the Convertible Notes is above the strike price of the Note Hedges, the Note Hedges will generally entitle us to receive net shares of our common stock (and cash for any fractional share amount) based on the excess of the then current market price of our common stock over the strike price of the Note Hedges, which is designed to offset any shares that we may have to deliver to the Note Holders. Additionally, at the time of exercise of the Warrants, if the market price of our common stock exceeds the strike price of the Warrants, we will owe the option counterparties net shares of our common stock (and cash for any fractional share amount) or cash in an amount based on the excess of the then current market price of our common stock over the strike price of the Warrants.
 
The separate Note Hedge and Warrant transactions, taken together, were structured to reduce the potential future share dilution associated with the conversion of Notes. The cost of the Note Hedge transactions to us was $254,898, and $152,200 net of deferred tax benefits, and has been accounted for as an equity transaction in accordance with EITF No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” (EITF No. 00- 19). We received proceeds of $163,059 related to the sale of the Warrants, which has also been classified as equity because the instruments meet all of the equity classification criteria within EITF No. 00-19.
 
In accordance with SFAS 128, the Notes will have no impact on diluted earnings per share until the price of our common stock exceeds the conversion price (initially $31.85 per share) because the principal amount of the Notes will be settled in cash upon conversion. Prior to conversion, we will include the effect of the additional shares that may be issued if our common stock price exceeds the conversion price, using the treasury stock method.
 
Also, in accordance with SFAS 128, the warrants will have no impact on earnings per share until our common stock share price exceeds $41.28. Prior to exercise, we will include the effect of additional shares that may be issued using the treasury stock method. The Note Hedge transactions are anti-dilutive and therefore will have no impact on earnings per share.


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NETAPP, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The FASB recently issued a new FSP No. APB 14-1 “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlements)”. Under the final FSP, cash settled convertible securities will be separated into their debt and equity components. This change in methodology will adversely affect the calculations of our net income and earnings per share for cash settled convertible securities. We will be required to adopt this FSP in our first quarter of fiscal 2010. This final FSP will be applied retrospectively to all periods presented. See Note 2 for further discussion.
 
We will incur interest expense of 1.75%, per annum on the outstanding principal amount of the Notes, which is estimated to be $22,138 per year. We incurred debt issuance costs of $26,500 which will be capitalized and amortized to interest expense over the term of the Notes. The amortization of these fees will result in a charge to interest expense of $5,300 per year.
 
We have prepared the following unaudited pro forma summary consolidated balance sheet information as of April 25, 2008 which gives effect to the above transactions as if they occurred on April 25, 2008.
 
NetApp, Inc.
 
Pro Forma Summary Consolidated Balance Sheet Information
 
                         
                Pro Forma
 		 
    April 25,
 		    Pro Forma
 		    April 25,
 		 
    2008     Adjustments     2008  
    (Unaudited)
 		 
    (In thousands)  
 
Cash and cash equivalents
  $ 936,479     $ 873,017     $ 1,809,496  
Total current assets
    2,067,433       878,317       2,945,750  
Long-term deferred income taxes and other assets
    208,529       123,898       332,427  
Total assets
    4,070,988       1,002,215       5,073,203  
Total current liabilities
    1,414,102       —       1,414,102  
1.75% convertible senior notes due 2013
    —       1,265,000       1,265,000  
Total liabilities
    2,370,649       1,265,000       3,635,649  
Total stockholders’ equity
    1,700,339       (262,785 )     1,437,554  
 
18.   Selected Quarterly Financial Data (Unaudited)
 
                                 
    Year Ended April 25, 2008  
    Q1     Q2     Q3     Q4  
 
Total revenues
  $ 689,235     $ 792,198     $ 884,003     $ 937,731  
Gross margin
    417,197       484,005       539,302       572,872  
Net income
    34,337       83,758       101,823       89,820  
Net income per share, basic
    0.09       0.24       0.30       0.26  
Net income per share, diluted
    0.09       0.23       0.29       0.26  
 
                                 
    Year Ended April 27, 2007  
    Q1     Q2     Q3     Q4  
 
Total revenues
  $ 621,288     $ 652,523     $ 729,278     $ 801,193  
Gross margin
    373,070       401,307       444,109       486,014  
Net income
    54,670       86,931       66,514       89,620  
Net income per share, basic
    0.15       0.23       0.18       0.24  
Net income per share, diluted
    0.14       0.22       0.17       0.23  


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Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
None.
 
Item 9A.   Controls and Procedures
 
(a)   Evaluation of Disclosure Controls and Procedures
 
Disclosure Controls are procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure Controls are also designed to ensure that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
 
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to NetApp, including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to NetApp’s management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
 
(b)   Management’s Report on Internal Control Over Financial Reporting
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, our management concluded that, as of April 25, 2008, our internal control over financial reporting was effective based on those criteria.
 
The effectiveness of our internal control over financial reporting as of April 25, 2008 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein.
 
(c)   Changes in Internal Control Over Financial Reporting
 
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with management’s evaluation during our last fiscal quarter that have materially effected, or are reasonably likely to materially effect, our internal control over financial reporting.


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(d)   Report of Independent Registered Public Accounting Firm
 
To the Board of Directors and Stockholders of
NetApp, Inc.
Sunnyvale, California
 
We have audited the internal control over financial reporting of NetApp, Inc. (formerly “Network Appliance, Inc.”) and subsidiaries (collectively, the “Company”) as of April 25, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risks, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, the Company maintained in all material respects, effective internal control over financial reporting as of April 25, 2008, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and consolidated financial statement schedule as of and for the year ended April 25, 2008 of the Company and our report dated June 24, 2008 expressed an unqualified opinion on those financial statements and financial statement schedule and included an explanatory paragraph regarding the adoption of Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109.
 
/s/  DELOITTE & TOUCHE LLP
 
San Jose, California
June 24, 2008


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Item 9B.   Other Information
 
None.
 
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 Annual Report on Form 10-K 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” in the Proxy Statement for the 2008 Annual Meeting of Stockholders which will be filed with the Securities and Exchange 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” in the Proxy Statement for the 2008 Annual Meeting of Stockholders.
 
We have adopted a written code of ethics that applies to our Board of Directors and all of our employees, including our principal executive officer, principal financial officer and principal accounting officer. A copy of the code is available on our website at http://www.netapp.com.
 
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 for the 2008 Annual Meeting of Stockholders.
 
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 for the 2008 Annual Meeting of Stockholders.
 
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 for the 2008 Annual Meeting of Stockholders.
 
Item 14.   Principal Accountant Fees and Services
 
The information required by this item is incorporated by reference from the information under the caption “Audit Fees” in our Proxy Statement for the 2008 Annual Meeting of Stockholders.
 
With the exception of the information incorporated in Items 10, 11, 12, 13, and 14 of this Annual Report of Form 10-K, NetApp’s Proxy Statement is not deemed “filed” as part of this Annual Report on Form 10-K.
 
PART IV
 
Item 15.   Exhibits and Financial Statement Schedules
 
See the Exhibit Index immediately following the signature page of this Annual Report on Form 10-K.


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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 June 24, 2008.
 
NETAPP, INC.
 
  By: 
/s/  DANIEL J. WARMENHOVEN
Daniel J. Warmenhoven
Chief Executive Officer, Chairman of the Board
 
POWER OF ATTORNEY
 
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Daniel J. Warmenhoven and Steven J. Gomo, 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:
 
             
Signature
 
Title
 
Date
 
         
/s/  DANIEL J. WARMENHOVEN

Daniel J. Warmenhoven 		  Chief Executive Officer,
Chairman of the Board, Director
(Principal Executive Officer) 		  June 24, 2008
         
/s/  DONALD T. VALENTINE

Donald T. Valentine 		  Lead Independent Director   June 24, 2008
         
/s/  STEVEN J. GOMO

Steven J. Gomo 		  Executive Vice President of Finance and Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer) 		  June 24, 2008
         
/s/  TOM GEORGENS

Tom Georgens 		  President, Chief Operating Officer, Director   June 24, 2008
         
/s/  ALAN EARHART

Alan Earhart 		  Director   June 24, 2008
         
/s/  CAROL A. BARTZ

Carol A. Bartz 		  Director   June 24, 2008


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Signature
 
Title
 
Date
 
         
/s/  NICHOLAS G. MOORE

Nicholas G. Moore 		  Director   June 24, 2008
         
/s/  MARK LESLIE

Mark Leslie 		  Director   June 24, 2008
         
/s/  ROBERT T. WALL

Robert T. Wall 		  Director   June 24, 2008
         
/s/  GEORGE T. SHAHEEN

George T. Shaheen 		  Director   June 24, 2008
         
/s/  JEFFRY R. ALLEN

Jeffry R. Allen 		  Director   June 24, 2008
         
/s/  EDWARD KOZEL

Edward Kozel 		  Director   June 24, 2008


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SCHEDULE II.
 
NETAPP, INC.
 
VALUATION AND QUALIFYING ACCOUNTS
Years Ended April 25, 2008, April 27, 2007, and April 28, 2006
 
                                 
          Additions
 		             
          Charged
 		             
    Balance at
 		    (Credited) to
 		          Balance
 		 
    Beginning
 		    Costs and
 		    Reductions
 		    at End of
 		 
Description
  of Period     Expenses     and Write-Offs     Period  
 
Allowance for doubtful accounts:
                               
2008
  $ 2,572     $ 818     $ 951     $ 2,439  
2007
  $ 2,380     $ 928     $ 736     $ 2,572  
2006
  $ 5,445     $ 46     $ 3,111     $ 2,380  


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EXHIBIT INDEX
 
         
Exhibit No
 
Description
 
  2 .1(6)   Agreement and Plan of Merger, dated as of November 3, 2003, by and among NetApp, Inc., Nagano Sub, Inc., and Spinnaker Networks, Inc.
  2 .2(11)   Agreement and Plan of Merger and Reorganization, dated as of June 15, 2005, by and among NetApp Inc., Dolphin Acquisition Corp., and Decru, Inc.
  3 .1   Certificate of Incorporation of the Company, as amended.
  3 .2   Bylaws of the Company, as amended.
  4 .1   Reference is made to Exhibits 3.1 and 3.2.
  10 .1(19)*   The Company’s Amended and Restated Employee Stock Purchase Plan.
  10 .2(2)*   The Company’s Amended and Restated 1995 Stock Incentive Plan.
  10 .4(19)*   The Company’s Amended and Restated 1999 Stock Incentive Plan.
  10 .5†(3)   OEM Distribution and License Agreement, dated October 27, 1998, by and between Dell Products L.P. and the Company.
  10 .6(4)   OEM Product Agreement, dated November 6, 1998, by and between Fujitsu Limited and the Company.
  10 .7†(5)   Patent Cross License Agreement, dated as of October 1, 2000, by and between Intel Corporation and the Company.
  10 .8(1)*   Form of Indemnification Agreement entered into between the Company and its directors and officers.
  10 .9(7)*   Spinnaker Networks, Inc. 2000 Stock Plan.
  10 .10(9)*   Alacritus, Inc. 2005 Stock Plan.
  10 .11(8)*   The Company’s Fiscal Year 2005 Incentive Compensation Plan.
  10 .12(10)*   The Company’s Deferred Compensation Plan.
  10 .13(15)   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1995 Stock Option Plan.
  10 .14(15)   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1995 Stock Option Plan (Chairman of the Board or any Board Committee Chairperson).
  10 .15(15)   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1995 Stock Option Plan (Restricted Stock Agreement).
  10 .16(15)   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1999 Stock Option Plan (Restricted Stock Unit Agreement).
  10 .17(15)   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1999 Stock Option Plan.
  10 .18(15)   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1999 Stock Option Plan (Change of Control).
  10 .19(15)   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1999 Stock Option Plan (China).
  10 .20(15)   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1999 Stock Option Plan (Non-Employee Director Automatic Stock Option — Annual).
  10 .21(15)   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1999 Stock Option Plan (Non-Employee Director Automatic Stock Option — Initial).
  10 .22(15)   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1999 Stock Option Plan (France).
  10 .23(15)   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1999 Stock Option Plan (India).
  10 .24(15)   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1999 Stock Option Plan (United Kingdom).
  10 .25(12)   Form of Stock Option Grant Notice and Option Agreement under the Decru, Inc. Amended and Restated 2001 Equity Incentive Plan and the 2001 Equity Incentive Plan filed under Attachment II.
  10 .26(12)   Form of Stock Option Grant Notice and Option Agreement under the Decru, Inc. 2001 Equity Incentive Plan and the 2001 Equity Incentive Plan filed under Attachment II.

Table of Contents

         
Exhibit No
 
Description
 
  10 .27(12)   Form of Early Exercise Stock Purchase Agreement under the Decru, Inc. 2001 Equity Incentive Plan.
  10 .28(12)   Form of Restricted Stock Bonus Grant Notice and Agreement under the Decru, Inc. 2001 Equity Incentive Plan.
  10 .29(13)   Asset Purchase Agreement, dated June 20, 2003, by and between Auspex Systems, Inc. and the Company.
  10 .30(14)   Purchase and Sale Agreement, dated July 27, 2004 by and between Cisco Systems, Inc. and the Company.
  10 .31   Amended and Restated Closing Certificate and Agreement (Building 7), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .32   Amended and Restated Construction Agreement (Building 7), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .33   Amended and Restated Lease Agreement (Building 7), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .34   Amended and Restated Common Definitions and Provisions Agreement (Building 7), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .35   Amended and Restated Purchase Agreement (Building 7), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .36   Amended and Restated Ground Lease (Building 7), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .37   First Modification Agreement (Building 7), dated as of April 9, 2008, by and between BNP Paribas Leasing Corporation and the Company.
  10 .38(16)   Loan Agreement, dated March 31, 2006, by and among the Lenders party thereto, JP Morgan Chase Bank, National Association, as administrative agent, and Network Appliance Global Ltd.
  10 .39   Amended and Restated Closing Certificate and Agreement (Building 8), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .40   Amended and Restated Construction Agreement (Building 8), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .41   Amended and Restated Lease Agreement (Building 8), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .42   Amended and Restated Common Definitions and Provisions Agreement (Building 8), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .43   Amended and Restated Purchase Agreement (Building 8), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .44   Amended and Restated Ground Lease (Building 8), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .45   First Modification Agreement (Building 8), dated as of April 9, 2008, by and between BNP Paribas Leasing Corporation and the Company.
  10 .46(17)*   SANPro Systems, Inc. 2001 U.S. Stock Option Plan.
  10 .47(17)*   Topio, Inc. 2004 Israeli Share Option Plan.
  10 .49(18)   Master Confirmation, dated March 19, 2007, by and between JP Morgan Securities Inc. and the Company.
  10 .50   Amended and Restated Closing Certificate and Agreement (RTP Data Center), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .51   Amended and Restated Construction Agreement (RTP Data Center), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .52   Amended and Restated Lease Agreement (RTP Data Center), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .53   Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .54   Amended and Restated Purchase Agreement (RTP Data Center), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.

Table of Contents

         
Exhibit No
 
Description
 
  10 .55   Amended and Restated Ground Lease (RTP Data Center), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .56   First Modification Agreement (RTP Data Center), dated as of April 9, 2008, by and between BNP Paribas Leasing Corporation and the Company.
  10 .57(20)   Master Confirmation, dated August 13, 2007, by and between Bank of America, N.A. and the Company.
  10 .58(20)   Secured Credit Agreement, dated October 5, 2007, by and between the Lenders party thereto, JP Morgan Chase Bank, N.A., as administrative agent, and the Company.
  10 .59(21)   Credit Agreement, dated November 2, 2007, by and among the Lenders party thereto, Bank of America, N.A., Citicorp USA, Inc. and Standard Chartered Bank as co-documentation agents, BNP Paribas, as syndication agent, JP Morgan Chase Bank, National Association, as administration agent, and the Company.
  10 .60(21)   Closing Certificate and Agreement (Moffett Business Center), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .61(21)   Lease Agreement (Moffett Business Center), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .62(21)   Common Definitions and Provisions Agreement (Moffett Business Center), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .63(21)   Purchase Agreement (Moffett Business Center), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .64   First Modification Agreement (Moffett Business Center), dated as of April 9, 2008, by and between BNP Paribas Leasing Corporation and the Company.
  10 .65(21)   Closing Certificate and Agreement (1299 Orleans), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .66(21)   Lease Agreement (1299 Orleans), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .67(21)   Common Definitions and Provisions Agreement (1299 Orleans), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .68(21)   Purchase Agreement (1299 Orleans), dated November 29, 2007, by and between BNP Paribas Leasing Corporation and the Company.
  10 .69   First Modification Agreement (1299 Orleans), dated as of April 9, 2008, by and between BNP Paribas Leasing Corporation and the Company.
  10 .70   Closing Certificate and Agreement (Building 9), dated as of February 1, 2008, by and between BNP Paribas Leasing Corporation and the Company.
  10 .71   Lease Agreement (Building 9), dated as of February 1, 2008, by and between BNP Paribas Leasing Corporation and the Company.
  10 .72   Common Definitions and Provisions Agreement (Building 9), dated February 1, 2008, by and between BNP Paribas Leasing Corporation and the Company.
  10 .73   Purchase Agreement (Building 9), dated as of February 1, 2008, by and between BNP Paribas Leasing Corporation and the Company.
  10 .74   Ground Lease (Building 9), dated as of February 1, 2008, by and between BNP Paribas Leasing Corporation and the Company.
  10 .75   Construction Agreement (Building 9), dated as of February 1, 2008, by and between BNP Paribas Leasing Corporation and the Company.
  10 .76   First Modification Agreement (Building 9), dated as of April 9, 2008, by and between BNP Paribas Leasing Corporation and the Company.
  10 .77   Amendment No. 1 to Secured Credit Agreement dated November 2, 2007 by and between JPMorgan Chase Bank and the Company.
  10 .78   Amendment No. 1 to Unsecured Credit Agreement dated April 10, 2008 by and between JPMorgan Chase Bank and the Company.
  10 .79   Amendment No. 2 to Secured Credit Agreement dated April 10, 2008 by and between JPMorgan Chase Bank and the Company.

Table of Contents

         
Exhibit No
 
Description
 
  10 .80 (22)*   Onaro, Inc. Amended and Restated 2002 Stock Option and Incentive Plan (including Appendix — Israeli Taxpayers).
  10 .81   Form of Stock Option Agreement approved for use under the Company’s amended and restated 1999 Stock Option Plan (Israel).
  10 .82 (19)*   The Company’s Executive Compensation Plan.
  21 .1   Subsidiaries of the Company.
  23 .1   Consent of Independent Registered Public Accounting Firm.
  24 .1   Power of Attorney (see signature page).
  31 .1   Certification of the Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
  31 .2   Certification of the Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
  32 .1   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
  32 .2   Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
 
 
(1) Previously filed as an exhibit to the Company’s Registration Statement on Form S-1 (No. 33-97864).
 
(2) Previously filed as an exhibit to the Company’s Proxy Statement dated August 21, 1998.
 
(3) Previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q dated December 11, 1998.
 
(4) Previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q dated March 11, 1999.
 
(5) Previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q dated March 12, 2001.
 
(6) Previously filed as an exhibit to the Company’s Current Report on Form 8-K dated February 27, 2004.
 
(7) Previously filed as an exhibit to the Company’s Form S-8 registration statement dated March 1, 2004.
 
(8) Previously filed as an exhibit to the Company’s Current Report on Form 8-K dated May 18, 2005.
 
(9) Previously filed as an exhibit to the Company’s Form S-8 registration statement dated June 2, 2005.
 
(10) Previously filed as an exhibit to the Company’s Current Report on Form 8-K dated July 7, 2005.
 
(11) Previously filed as an exhibit to the Company’s Proxy Statement dated July 8, 2005.
 
(12) Previously filed as an exhibit to the Company’s Current Report on Form 8-K dated May 19, 2006.
 
(13) Previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q dated September 3, 2003.
 
(14) Previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q dated August 31, 2004.
 
(15) Previously filed as an exhibit to the Company’s Annual Report on Form 10-K dated July 8, 2005.
 
(16) Previously filed as an exhibit to the Company’s Annual Report on Form 10-K dated July 11, 2006.
 
(17) Previously filed as an exhibit to the Company’s Form S-8 registration statement dated January 5, 2007.
 
(18) Previously filed as an exhibit to the Company’s Annual Report on Form 10-K dated June 26, 2007.
 
(19) Previously filed as an exhibit to the Company’s Proxy Statement dated July 25, 2007.
 
(20) Previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q dated December 4, 2007.
 
(21) Previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q dated March 5, 2008.
 
(22) Previously filed as an exhibit to the Company’s Form S-8 registration statement dated February 25, 2008.
 
†  Specified portions of this agreement have been omitted and have been filed separately with the Commission pursuant to a request for confidential treatment.
 
*  Identifies management plan or compensatory plan or arrangement.

Table of Contents

TRADEMARKS
 
©2007 NetApp. All rights reserved. Specifications are subject to change without notice. NetApp, the NetApp logo, the Network Appliance logo, Go further, faster, DataFabric, Data ONTAP, Decru, FAServer, FilerView, FlexCache, FlexClone, FlexShare, FlexVol, MultiStore, NearStore, NetCache, SANscreen, SecureShare, SnapDrive, SnapLock, SnapManager, SnapMirror, SnapRestore, Snapshot, SnapVault, StoreVault, SyncMirror, Topio, and WAFL are trademarks or registered trademarks of NetApp, Inc. in the United States and/or other countries. Symantec and Netbackup are trademarks of Symantec Corporation or its affiliates in the U.S. and other countries. Windows is a registered trademark of Microsoft Corporation. Linux is a registered trademark of Linus Torvalds. UNIX is a registered trademark of The Open Group. All other brands or products are trademarks or registered trademarks of their respective holders and should be treated as such.

exv3w1
Exhibit 3.1
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
NETAPP NC CORPORATION,
a Delaware corporation
WITH AND INTO
NETWORK APPLIANCE, INC.,
a Delaware corporation
(Pursuant to Section 253 of the General Corporation Law of Delaware)
     Network Appliance, Inc. (the “Corporation”), a corporation incorporated on the 1st day of November, 2001, pursuant to the provisions of the General Corporation Law of the State of Delaware, does hereby certify as follows:
     1. That the Corporation is organized and existing under the General Corporation Law of the State of Delaware.
     2. That the Corporation owns 100% of the capital stock of NetApp NC Corporation, a Delaware corporation (“ Sub ”) incorporated on the 6th day of March, 2008, pursuant to the provisions of the General Corporation Law of the State of Delaware.
     3. That the Corporation determined to merge Sub into itself (the “Merger”) by the resolutions of its board of directors attached hereto as Exhibit A , duly adopted on March 3, 2008.
     4. Pursuant to Section 253(b) of the General Corporation Law of Delaware the name of the corporation surviving the merger shall be NetApp, Inc.
     5. The Merger shall become effective upon filing with the Delaware Secretary of State.
     IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by its duly authorized officer on this 10 day of
March, 2008.
     NETWORK APPLIANCE, INC.
         
By:
Name:
  /s/ Andrew Kryder
 
Andrew Kryder 		   
Title:
  Secretary    

 

 

EXHIBIT A
Resolutions of the Board of Directors of Network Appliance, Inc., a Delaware Corporation
Merger with NetApp NC Corporation.
     WHEREAS: The Company owns 100% of the outstanding capital stock of NetApp NC Corporation, a corporation organized and existing under the laws of the State of Delaware (“Merger Sub”).
     WHEREAS: The Board desires that Merger Sub merge with and into the Company and that the Company possess itself of all the estate, property, rights, privileges and franchises of Merger Sub.
NOW, THEREFORE, BE IT RESOLVED: That the Board hereby authorizes the merger of Merger Sub with and into the Company, with the Company continuing as the surviving corporation (the “Merger”).
RESOLVED FURTHER: That upon the effective date of the Merger, the name of the Company shall be changed from “Network Appliance, Inc.” to “NetApp, Inc.” pursuant to Section 253(b) of the Delaware General Corporation Law.
RESOLVED FURTHER: That upon the effective date of the Merger, the Company shall assume any and all assets, obligations and liabilities of Merger Sub pursuant to Section 253 of the Delaware General Corporation Law.
RESOLVED FURTHER: That each outstanding share of capital stock of Merger Sub will be canceled and extinguished upon the effectiveness of the Merger, and no consideration shall be issued in exchange therefor.
RESOLVED FURTHER: That the officers of the Company be and hereby are directed to make and execute a Certificate of Ownership and Merger setting forth a copy of the resolution to merge Merger Sub with and into the Company and assume Merger Sub’s liabilities and obligations, and the date of adoption thereof, and to file the same in the office of the Secretary of State of the State of Delaware.
RESOLVED FURTHER: That the Merger of Merger Sub with and into the Company shall become effective upon the filing of the Certificate of Ownership and Merger with the Secretary of State of the State of Delaware as provided for therein.
RESOLVED FURTHER: That the Certificate of Ownership and Merger in the form attached hereto as Exhibit A be and hereby is approved and adopted in all respects.
RESOLVED FURTHER: That upon the effective time of the Merger, the Amended and Restated Certificate of Incorporation of the Company (“Certificate of Incorporation”) in effect immediately prior to the effectiveness of the Merger shall continue to be the Certificate of Incorporation of the Company; provided, however, that the amendment to Article 1 of said Certificate of Incorporation as is effected by the merger is as follows: “The name of this corporation is NetApp, Inc.”.
RESOLVED FURTHER: That upon the effective time of the Merger, the directors and officers of the Company, as constituted immediately prior to the effectiveness of the Merger, shall continue to be the directors and officers of the Company.
RESOLVED FURTHER: That each stock certificate evidencing the ownership of each share of Common Stock of the Company issued and outstanding immediately prior to the effective time of the merger shall continue to evidence ownership of the shares of the Company.
RESOLVED FURTHER: That each stock certificate evidencing the ownership of Common Stock of Company issued anytime after the effective time of the merger shall be in the form of the stock certificate to be approved by the appropriate officers of the Company.
RESOLVED FURTHER: That the Board hereby authorizes, directs and empowers the appropriate officers of the Company, and each of them, for and on behalf of the Company, to take any and all such actions, and prepare, execute and deliver any and all such documents, including filing of the Certificate of Ownership and Merger, as may be necessary or advisable to carry out the foregoing resolutions, and hereby ratifies and confirms any and all actions taken heretofore to accomplish such purposes.

 

 

CERTIFICATE OF INCORPORATION
OF
NETWORK APPLIANCE, INC.
ARTICLE I
     The name of this corporation is Network Appliance, Inc. (the “Corporation”).
ARTICLE II
     The address of the Corporation’s registered office in the State of Delaware is 1013 Centre Road, City of Wilmington, County of New Castle, Delaware 19801. The name of the Corporation’s registered agent at such address is the Corporation Service Company.
ARTICLE III
     The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “GCL”), as the same exists or may hereafter be amended.
ARTICLE IV
     The name and mailing address of the incorporator is John W. Larson, Esq., Brobeck, Phleger & Harrison LLP, One Market, Spear Street Tower, San Francisco, CA 94105.
ARTICLE V
     The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares that the Corporation is authorized to issue is Eight Hundred Ninety Million (890,000,000). Eight Hundred Eighty-Five Million (885,000,000) shares shall be Common Stock, par value $0.001 per share, and Five Million (5,000,000) shares shall be Preferred Stock, par value $0.001 per share.
     The Preferred Stock may be issued from time to time in one or more series, without further stockholder approval. The Board of Directors of the Corporation is hereby authorized to fix or alter the rights, preferences, privileges and restrictions granted to or imposed upon each series of Preferred Stock, and the number of shares constituting any such series and the designation thereof, or of any of them. The rights, privileges, preferences and restrictions of any such additional series may be subordinated to, pari passu with (including, without limitation, inclusion in provisions with respect to liquidation and acquisition preferences, redemption and/or approval of matters by vote), or senior to any of those of any present or future class or series of Preferred Stock or Common Stock. The Board of Directors is also authorized to increase or decrease the number of shares of any series prior or subsequent to the issue of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.
ARTICLE VI
     In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws of the Corporation. In addition,

 

 

the Bylaws may be amended by the affirmative vote of holders of at least sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of voting stock of the Corporation entitled to vote at an election of directors.
ARTICLE VII
     The number of directors of the Corporation shall be determined by resolution of the Board of Directors.
     Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide. Advance notice of stockholder nominations for the election of directors and of any other business to be brought before any meeting of the stockholders shall be given in the manner provided in the Bylaws of this Corporation.
     At each annual meeting of stockholders, directors of the Corporation shall be elected to hold office until the expiration of the term for which they are elected, or until their successors have been duly elected and qualified; except that if any such election shall not be so held, such election shall take place at a stockholders’ meeting called and held in accordance with the GCL.
     Vacancies occurring on the Board of Directors for any reason may be filled by vote of a majority of the remaining members of the Board of Directors, even if less than a quorum, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been duly elected and qualified.
ARTICLE VIII
     Stockholders of the Corporation shall take action by meetings held pursuant to this Certificate of Incorporation and the Bylaws and shall have no right to take any action by written consent without a meeting. Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. Special meetings of the stockholders, for any purpose or purposes, may only be called by the Chief Executive Officer, President, Chairman of the Board or a majority of the members of the Board of Directors. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.
ARTICLE IX
     To the fullest extent permitted by applicable law, this Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers, employees and agents (and any other persons to which Delaware law permits this Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the GCL, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to action for breach of duty to the Corporation, its stockholders, and others.
     No director of the Corporation shall be personally liable to the Corporation or any stockholder for monetary damages for breach of fiduciary duty as a director, except for any matter in respect of which such director shall be liable under Section 174 of the GCL or any amendment thereto or shall be liable by reason that, in addition to any and all other requirements for such liability, such director (1) shall have breached the director’s duty or loyalty to the Corporation or its stockholders, (2) shall have acted in a manner involving intentional misconduct or a knowing violation of law or, in failing to act, shall have acted in a manner involving intentional misconduct or a knowing violation of law, or (3) shall have derived an improper personal benefit. If the GCL is hereafter amended to authorize the further elimination or limitation of the liability of a director, the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended.

 

 

     Each person who was or is made a party or is threatened to be made a party to or is in any way involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), including any appeal therefrom, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or a direct or indirect subsidiary of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another entity or enterprise, or was a director or officer of a foreign or domestic corporation which was predecessor corporation of the Corporation or of another entity or enterprise at the request of such predecessor corporation, shall be indemnified and held harmless by the Corporation, and the Corporation shall advance all expenses incurred by any such person in defense of any such proceeding prior to its final determination, to the fullest extent authorized by the GCL. In any proceeding against the Corporation to enforce these rights, such person shall be presumed to be entitled to indemnification and the Corporation shall have the burden of proving that such person has not met the standards of conduct for permissible indemnification set forth in the GCL. The rights to indemnification and advancement of expenses conferred by this Article IX shall be presumed to have been relied upon by the directors and officers of the Corporation in serving or continuing to serve the Corporation and shall be enforceable as contract rights. Said rights shall not be exclusive of any other rights to which those seeking indemnification may otherwise be entitled. The Corporation may, upon written demand presented by a director or officer of the Corporation or of a direct or indirect subsidiary of the Corporation, or by a person serving at the request of the Corporation as a director or officer of another entity or enterprise, enter into contracts to provide such persons with specified rights to indemnification, which contracts may confer rights and protections to the maximum extent permitted by the GCL, as amended and in effect from time to time.
     If a claim under this Article IX is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expenses of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce the right to be advanced expenses incurred in defending any proceeding prior to its final disposition where the required undertaking, if any, has been tendered to the Corporation ) that the claimant has not met the standards of conduct which make it permissible under the GCL for the Corporation to indemnify the claimant for the amount claimed, but the claimant shall be presumed to be entitled to indemnification and the Corporation shall have the burden of proving that the claimant has not met the standards of conduct for permissible indemnification set forth in the GCL.
     If the GCL is hereafter amended to permit the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment, the indemnification rights conferred by this Article IX shall be broadened to the fullest extent permitted by the GCL, as so amended. No amendment to or repeal of this Article IX shall affect or diminish in any way the rights of any indemnitee to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of any such amendment or repeal.
ARTICLE X
     The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. Notwithstanding the foregoing, the provisions set forth in Articles VI, VII, VIII, IX and X of this Certificate of Incorporation may not be repealed or amended in any respect without the affirmative vote of holders at least sixty-six and two-thirds percent (66 2/3%) of the outstanding voting stock of the Corporation entitled to vote at an election of directors.
     IN WITNESS WHEREOF, the undersigned incorporator has executed this certificate on November 1, 2001.
         
     
  /s/ John W. Larson    
  John W. Larson   
  Incorporator   

 

exv3w2
         
Exhibit 3.2
CERTIFICATE OF AMENDMENT
TO THE BYLAWS OF
NETAPP, INC.
     The undersigned, Andrew Kryder, hereby certifies that he is the duly appointed, qualified, and acting Senior Vice President of Tax and Legal and Secretary of NetApp, Inc., a Delaware corporation (the “Company”), and that on March 7, 2008 pursuant to Article III, Section 1 of the Bylaws of the Company the Board of Directors of the Company amended such Bylaws as set forth below:
“I. Increase in the Number of Directors
WHEREAS: The Board deems it advisable and in the best interests of the Company and its stockholders to increase the number of authorized directors on the Board from ten (10) to eleven (11); and
WHEREAS: Article III, Section 1 of the Bylaws of the Company states, in relevant part:
“The number of directors of this corporation that shall constitute the whole Board shall be determined by resolution of the Board of Directors; provided, however, that no decrease in the number of directors shall have the effect of shortening the term of an incumbent director.”
NOW, THEREFORE, BE IT RESOLVED: That the number of authorized directors on the Board be, and hereby is, increased from
ten (10) to eleven (11).”
     IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 7th day of March, 2008.
/s/ Andrew Kryder
Signed
Andrew Kryder
Senior Vice President of Tax and Legal and Secretary of NetApp, Inc.

 

 

BYLAWS
OF
NETWORK APPLIANCE, INC.
ARTICLE I
OFFICES
     Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware.
     Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
     Section 1. All meetings of the stockholders for the election of directors shall be held at such place as may be fixed from time to time by the Board of Directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.
     Section 2. Annual meetings of stockholders shall be held at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. At each annual meeting, the stockholders shall elect directors to succeed those directors whose terms expire in that year and shall transact such other business as may properly be brought before the meeting.
     Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting.
     Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make available, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.
     Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may only be called by the Board.
     Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not fewer than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting.
     Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

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     Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, either the Chairman of the Board, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted that might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
     Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question.
     Section 10. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three (3) years from its date, unless the proxy provides for a longer period.
     Section 11. Nominations for election to the Board of Directors must be made by the Board of Directors or by a committee appointed by the Board of Directors for such purpose or by any stockholder of any outstanding class of capital stock of the corporation entitled to vote for the election of directors. Nominations by stockholders must be preceded by notification in writing received by the secretary of the corporation not less than one-hundred twenty (120) days prior to any meeting of stockholders called for the election of directors. Such notification shall contain the written consent of each proposed nominee to serve as a director if so elected and the following information as to each proposed nominee and as to each person, acting alone or in conjunction with one or more other persons as a partnership, limited partnership, syndicate or other group, who participates or is expected to participate in making such nomination or in organizing, directing or financing such nomination or solicitation of proxies to vote for the nominee:
     (a) the name, age, residence, address, and business address of each proposed nominee and of each such person;
     (b) the principal occupation or employment, the name, type of business and address of the corporation or other organization in which such employment is carried on of each proposed nominee and of each such person;
     (c) the amount of stock of the corporation owned beneficially, either directly or indirectly, by each proposed nominee and each such person; and
     (d) a description of any arrangement or understanding of each proposed nominee and of each such person with each other or any other person regarding future employment or any future transaction to which the corporation will or may be a party.
     The presiding officer of the meeting shall have the authority to determine and declare to the meeting that a nomination not preceded by notification made in accordance with the foregoing procedure shall be disregarded.
     Section 12. At any meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (a) pursuant to the corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any stockholder of the corporation who is a stockholder of record at the time of giving of the notice provided for in this Bylaw, who shall be entitled to vote at such meeting and who complies with the notice procedures set forth in this Bylaw.

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     For business to be properly brought before any meeting by a stockholder pursuant to clause (c) above of this Section 12, the stockholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than one hundred twenty (120) days prior to the date of the meeting. A stockholder’s notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (a) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (b) the name and address, as they appear on the corporation’s books, of the stockholder proposing such business, and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (c) the class and number of shares of the corporation which are owned beneficially and of record by such stockholder of record and by the beneficial owner, if any, on whose behalf of the proposal is made and (d) any material interest of such stockholder of record and the beneficial owner, if any, on whose behalf the proposal is made in such business.
     Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at a meeting except in accordance with the procedures set forth in this Section 12. The presiding officer of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the procedures prescribed by this Section 12, and if such person should so determine, such person shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this Section 12, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this Section 12.
     Section 13. The stockholders of the Corporation may not take action by written consent without a meeting but must take any such actions at a duly called annual or special meeting in accordance with these Bylaws and the Certificate of Incorporation.
ARTICLE III
DIRECTORS
     Section 1. The number of directors of this corporation that shall constitute the whole Board shall be determined by resolution of the Board of Directors; provided, however, that no decrease in the number of directors shall have the effect of shortening the term of an incumbent director. With the exception of the first Board of Directors, which shall be elected by the incorporator and except as provided in the corporation’s Certificate of Incorporation, the Board of Directors shall be elected at the annual meeting of stockholders, with each director to hold office for a term expiring at the annual meeting of stockholders following the annual meeting where each director was elected to hold office until his successor is elected and qualified.
     Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next election of the class for which such directors were chosen and until their successors are duly elected and qualified or until earlier resignation or removal. If there are no directors in office, then an election of directors may be held in the manner provided by statute.
     Section 3. The business of the corporation shall be managed by or under the direction of its Board of Directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
     Section 4. The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.

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     Section 5. The first meeting of each newly elected Board of Directors shall be held immediately following the annual meeting of stockholders and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event the meeting is not held immediately following the annual meeting of stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors.
     Section 6. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board.
     Section 7. Special meetings of the Board may be called by the Chairman of the Board or the Chief Executive Officer on twelve (12) hours’ notice to each director either personally or by telephone, telegram, facsimile or electronic mail; special meetings shall be called by the Chief Executive Officer or secretary in like manner and on like notice on the written request of a majority of the Board unless the Board consists of only one director, in which case special meetings shall be called by the Chairman of the Board, the Chief Executive Officer or secretary in like manner and on like notice on the written request of the sole director. A written waiver of notice, signed by the person entitled thereto, whether before or after the time of the meeting stated therein, shall be deemed equivalent to notice.
     Section 8. At all meetings of the Board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
     Section 9. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee.
     Section 10. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
     Section 11. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the corporation. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.
     In the absence of disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
     Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the Bylaws of the

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corporation; and, unless the resolution or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.
     Section 12. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
     Section 13. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.
REMOVAL OF DIRECTORS
     Section 14. Unless otherwise restricted by the Certificate of Incorporation or Bylaws, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors.
ARTICLE IV
NOTICES
     Section 1. Whenever, under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice (except as provided in Section 7 of Article III of these Bylaws), but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telephone, telegram or facsimile.
     Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
     Section 1. The officers of the corporation shall be chosen by the Board of Directors and shall be a chief executive officer, a president, a chief financial officer and a secretary. The Board of Directors may elect from among its members a Chairman of the Board. The Board of Directors may also choose one or more vice presidents, assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these Bylaws otherwise provide.
     Section 2. The Board of Directors at its first meeting after each annual meeting of stockholders shall choose a chief executive officer, a president, a chief financial officer, and a secretary and may choose vice presidents.

5

 

     Section 3. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.
     Section 4. The salaries of all officers of the corporation shall be fixed by the Board of Directors or any committee established by the Board of Directors for such purpose. The salaries of agents of the corporation shall, unless fixed by the Board of Directors, be fixed by the president or any vice president of the corporation.
     Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
     Section 6. The Chairman of the Board, if such an officer is elected, shall exercise and perform such powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by the Bylaws.
CHIEF EXECUTIVE OFFICER
     Section 7. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the chief executive officer shall be the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business and the officers of the corporation. He shall preside at all meetings of the shareholders and, at all meetings of the Board of Directors. He shall have the general powers and duties of management usually vested in the office of the chief executive officer of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or the Bylaws.
PRESIDENT
     Section 8. In the absence or disability of the chief executive officer, the president shall perform all the duties of the chief executive officer (except presiding at meetings of the Board of Directors), and when so acting shall have all of the powers of, and be subject to all the restrictions upon, the chief executive officer. The president shall have such other powers and perform such other duties as from time to time may be prescribed by the Board of Directors or the Bylaws or the chief executive officer or the Chairman of the Board.
CHIEF FINANCIAL OFFICER
     Section 9. The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transaction of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any Director.
     The chief financial officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the president and Directors, whenever they request it, an account of all of his transactions as chief financial officer and of the financial condition of the corporation, and shall have other power and perform such other duties as may be prescribed by the Board of Directors of the Bylaws.

6

 

SECRETARY
     Section 10. The secretary shall keep or cause to be kept, at the principal executive office or such other place as the Board of Directors may direct, a book of minutes of all meetings and actions of Directors, committees or Directors, and shareholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice given, the names of those present at the Directors’ meetings or committee meetings, the number of shares present or represented at shareholders’ meetings, and the proceedings.
     The secretary shall keep, or cause to be kept, at the principal executive office or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the Board of Directors a share register, or a duplicate share register, showing the names of all shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation.
     The secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors required by the Bylaws or Bylaw to be given, and he shall keep the seal of the corporation if one be adopted, in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the Bylaws.
ARTICLE VI
CERTIFICATE OF STOCK
     Section 1. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the Chairman of the Board of Directors, the chief executive officer, the president, a vice president, the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation, certifying the number of shares owned by him/her in the corporation.
     Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor, and the amount paid thereon shall be specified.
     If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
     Any of or all the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he/she were such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
     Section 2. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or

7

 

destroyed certificate or certificates, or his/her legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
     Section 3. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
     Section 4. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
     Section 5. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
     Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.
     Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.
CHECKS
     Section 3. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

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FISCAL YEAR
     Section 4. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.
SEAL
     Section 5. The Board of Directors may adopt a corporate seal having inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
     Section 6. The corporation shall, to the fullest extent authorized under the laws of the State of Delaware, as those laws may be amended and supplemented from time to time, indemnify any director made, or threatened to be made, a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of being a director of the corporation or a predecessor corporation or, at the corporation’s request, a director or officer of another corporation, provided, however, that the corporation shall indemnify any such agent in connection with a proceeding initiated by such agent only if such proceeding was authorized by the Board of Directors of the corporation. The indemnification provided for in this Section 6 shall: (i) not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, agreement or vote of stockholders or disinterested directors or otherwise, both as to action in their official capacities and as to action in another capacity while holding such office, (ii) continue as to a person who has ceased to be a director, and (iii) inure to the benefit of the heirs, executors and administrators of such a person. The corporation’s obligation to provide indemnification under this Section 6 shall be offset to the extent of any other source of indemnification or any otherwise applicable insurance coverage under a policy maintained by the corporation or any other person.
     Expenses incurred by a director of the corporation in defending a civil or criminal action, suit or proceeding by reason of the fact that he is or was a director of the corporation (or was serving at the corporation’s request as a director or officer of another corporation) shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized by relevant sections of the General Corporation Law of Delaware. Notwithstanding the foregoing, the corporation shall not be required to advance such expenses to an agent who is a party to an action, suit or proceeding brought by the corporation and approved by a majority of the Board of Directors of the corporation which alleges willful misappropriation of corporate assets by such agent, disclosure of confidential information in violation of such agent’s fiduciary or contractual obligations to the corporation or any other willful and deliberate breach in bad faith of such agent’s duty to the corporation or its stockholders.
     The foregoing provisions of this Section 6 shall be deemed to be a contract between the corporation and each director who serves in such capacity at any time while this Bylaw is in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts.
     The Board of Directors in its discretion shall have power on behalf of the corporation to indemnify any person, other than a director, made a party to any action, suit or proceeding by reason of the fact that he, his testator or intestate, is or was an officer or employee of the corporation.
     To assure indemnification under this Section 6 of all directors, officers and employees who are determined by the corporation or otherwise to be or to have been “fiduciaries” of any employee benefit plan of the corporation which may exist from time to time, Section 145 of the General Corporation Law of Delaware shall, for the purposes of this Section 6, be interpreted as follows: an “other enterprise” shall be deemed to include such an employee benefit plan, including without limitation, any plan of the corporation which is

9

 

governed by the Act of Congress entitled “Employee Retirement Income Security Act of 1974,” as amended from time to time; the corporation shall be deemed to have requested a person to serve an employee benefit plan where the performance by such person of his duties to the corporation also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan; excise taxes assessed on a person with respect to an employee benefit plan pursuant to such Act of Congress shall be deemed “fines.”
ARTICLE VIII
AMENDMENTS
     Section 1. These Bylaws may be altered, amended or repealed or new Bylaws may be adopted by the affirmative vote of holders of at least 66 2/3% vote of the outstanding voting stock of the corporation. These Bylaws may also be altered, amended or repealed or new Bylaws may be adopted by the Board of Directors, when such power is conferred upon the Board of Directors by the Certificate of Incorporation. The foregoing may occur at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new Bylaws be contained in the notice of such special meeting. If the power to adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the Certificate of Incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal Bylaws.
CERTIFICATE OF ADOPTION BY THE
SECRETARY OF
NETWORK APPLIANCE, INC.
     The undersigned, Andrew Kryder, hereby certifies that he is the duly elected and acting Secretary of Network Appliance, Inc., a Delaware corporation (the “Corporation”), and that the Bylaws attached hereto constitute the Bylaws of said Corporation as duly adopted by the Board of Directors and the Stockholders of the Corporation and as in effect on the date hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name this 1st day of November, 2001.
         
     
  /s/ Andrew Kryder    
  Andrew Kryder   
  Secretary   
 

10

exv10w31
Exhibit 10.31
AMENDED AND RESTATED
CLOSING CERTIFICATE
AND AGREEMENT
(BUILDING 7)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
         
    Page  
1 Representations, Covenants and Acknowledgments of NAI Concerning the Property
     2  
(A) Prior Inspections and Investigations Concerning the Property
     2  
(B) Title
     2  
(C) Compliance with Covenants and Laws
     2  
 
        
2 Representations and Covenants by NAI
     2  
(A) Concerning NAI and the Operative Documents
     2  
(1) Entity Status
     2  
(2) Authority
     3  
(3) Solvency
     3  
(4) Financial Reports
     3  
(5) Pending Legal Proceedings
     3  
(6) No Default or Violation
     4  
(7) Use of Proceeds
     4  
(8) Enforceability
     4  
(9) Pari Passu
     4  
(10) Conduct of Business and Maintenance of Existence
     4  
(11) Investment Company Act, etc
     4  
(12) Not a Foreign Person
     5  
(13) ERISA
     5  
(14) Compliance With Laws
     5  
(15) Payment of Taxes Generally
     5  
(16) Maintenance of Insurance Generally
     6  
(17) Franchises, Licenses, etc
     6  
(18) Patents, Trademarks, etc
     6  
(19) Labor
     6  
(20) Title to Properties Generally
     7  
(21) Books and Records
     7  
(B) Further Assurances
     7  
(C) Syndication
     7  
(D) Financial Statements; Required Notices; Certificates
     7  
(F) OFAC
     10  
 
        
3 Financial Covenants and Negative Covenants of NAI
     10  
(B) Negative Covenants
     19  
(1) Subsidiary Indebtedness
     20  
(2) Liens
     21  
(3) Fundamental Changes and Asset Sales
     23  
(4) Speculative Swap Agreements
     24  
(5) Transactions with Affiliates
     24  
(6) Restrictive Agreements
     24  

 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
(C) Financial Covenants
     25  
(1) Maximum Leverage Ratio
     25  
(2) Minimum Liquidity
     25  
 
        
4 Limited Representations and Covenants of BNPPLC
     25  
(A) Concerning Accounting Matters
     25  
(B) Other Limited Representations
     27  
(1) Entity Status
     27  
(2) Authority
     27  
(3) Solvency
    28  
(4) Pending Legal Proceedings
     28  
(5) No Default or Violation
     28  
(6) Enforceability
     28  
(7) Conduct of Business and Maintenance of Existence
     29  
(8) Not a Foreign Person
     29  
(C) Further Assurances
     29  
(D) Actions Permitted by NAI Without BNPPLC’s Consent
     33  
(E) Waiver of Landlord’s Liens
     33  
(F) Estoppel Letters
     34  
(G) No Implied Representations or Promises by BNPPLC
     34  
 
        
5 Usury Savings Provision
     34  
 
        
6 Obligations of NAI Under Other Operative Documents Not Limited by this Certificate
     35  
 
        
7 Obligations of NAI Hereunder Not Limited by Other Operative Documents
     35  
 
        
8 Waiver of Jury Trial
     35  
 
        
9 Amendment and Restatement of Prior Certificate
     36  

(ii)

 

TABLE OF CONTENTS
(Continued)
     
Exhibits and Schedules
Exhibit A
  Legal Description
 
    
Exhibit B
  Quarterly Certificate
 
    
Exhibit C
  Form of Disclosure Letter
 
    
Exhibit D
  Certificate to be Provided by BNPPLC Re: Accounting

(iii)

 

AMENDED AND RESTATED
CLOSING CERTIFICATE AND AGREEMENT
(BUILDING 7)
     This AMENDED AND RESTATED CLOSING CERTIFICATE AND AGREEMENT (BUILDING 7) (this “Certificate”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Certificate, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (Building 7) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Certificate for all purposes. As used in this Certificate, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Certificate are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     Also contemporaneously with this Certificate, BNPPLC is executing and accepting an Amended and Restated Ground Lease (Building 7) from NAI (the “Ground Lease”), pursuant to which BNPPLC is acquiring a leasehold estate in the Land described in Exhibit A and any existing Improvements on the Land.
     Also contemporaneously with this Certificate, BNPPLC and NAI are executing an Amended and Restated Construction Agreement (Building 7) (the“Construction Agreement”) and an Amended and Restated Lease Agreement (Building 7) (the “Lease”). Pursuant to the Construction Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements. When the term of the Lease commences, the Lease will cover all Improvements on the Land described in Exhibit A.
     Also contemporaneously with this Certificate, BNPPLC and NAI are executing an Amended and Restated Purchase Agreement (Building 7) (the “Purchase Agreement”), pursuant to which NAI may purchase or arrange for the purchase of the Property and BNPPLC may collect a Supplemental Payment from NAI sufficient to cover all or a substantial portion of the Lease Balance not otherwise repaid to BNPPLC from the proceeds of any sale of the Property.
     As a condition to BNPPLC’s execution of the other Operative Documents, BNPPLC requires the representations and covenants of NAI set out below.
AGREEMENTS

 

 

     In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1      Representations, Covenants and Acknowledgments of NAI Concerning the Property. To induce BNPPLC to enter into the Ground Lease, and to enter into this Certificate and the other Operative Documents, NAI represents, covenants and acknowledges as follows:
     (A) Prior Inspections and Investigations Concerning the Property. NAI has thoroughly inspected, investigated and evaluated the condition of and title to the Property and Applicable Laws which will govern the construction, use and operation of the Property required or permitted by the Operative Documents, as necessary to make the representations concerning the Property set forth in this Certificate and other Operative Documents.
     (B) Title. Good and indefeasible title to the Land and any existing Improvements thereon is currently vested in NAI, subject only to the rights of BNPPLC under the Ground Lease, the Permitted Encumbrances and any Liens Removable by BNPPLC. Neither the construction contemplated by the Construction Agreement, nor the lease of property contemplated by the Ground Lease or by the Lease, nor any assignment or transfer contemplated by the Purchase Agreement, will violate any Permitted Encumbrance or invoke any purchase option, right of first refusal or other preferential purchase right contained in any Permitted Encumbrance. So long as NAI has any rights under the Construction Agreement, the Lease or the Purchase Agreement, NAI will not permit any Person to acquire rights of the landlord under the Ground Lease other than NAI itself or a corporation that controls, is controlled by or under common control with NAI.
     (C) Compliance with Covenants and Laws. The construction contemplated by the Construction Agreement and use of the Property permitted by the Lease comply, or will comply after NAI obtains readily available permits (either as the construction manager under the Construction Agreement or as the tenant under the Lease), in all material respects with all Applicable Laws. NAI has obtained or can and will promptly obtain all utility, building, health and operating permits required by any governmental authority or municipality having jurisdiction over the Property for the construction contemplated in the Construction Agreement and the use of the Property permitted by the Lease.
2      Representations and Covenants by NAI. NAI also represents and covenants to BNPPLC as follows:
        (A) Concerning NAI and the Operative Documents.
     (1) Entity Status. NAI is a corporation duly incorporated and validly existing
Amended and Restated Closing Certificate and Agreement (Building 7) – Page 2

 

 

in the State of Delaware and is authorized to do business in and is in good standing under the laws of California.
     (2) Authority. The Constituent Documents of NAI permit the execution, delivery and performance of the Operative Documents by NAI, and all actions and approvals necessary to bind NAI under the Operative Documents have been taken and obtained. Without limiting the foregoing, the Operative Documents will be binding upon NAI when signed on behalf of NAI by Ingemar Lanevi, Vice President and Corporate Treasurer of NAI. NAI has all requisite power and all governmental certificates of authority, licenses, permits and qualifications to carry on its business as now conducted and contemplated to be conducted and to perform the Operative Documents.
     (3) Solvency. NAI is not “insolvent” on the Effective Date (that is, the sum of NAI’s absolute and contingent liabilities — including the obligations of NAI under the Operative Documents — does not exceed the fair market value of NAI’s assets), and NAI 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 by the Operative Documents 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. No petition or answer has been filed by or, to NAI’s knowledge, against NAI in bankruptcy or other legal proceedings that seeks 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, a reorganization, arrangement, rearrangement, composition, extension, liquidation or dissolution of NAI or similar relief under the federal Bankruptcy Code or any state law.
     (4) Financial Reports. All reports, financial statements and other data furnished by NAI to BNPPLC in connection with the agreements set forth in the Operative Documents are true and correct in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading. No material adverse change has occurred since the dates of such reports, statements and other data in the financial condition of NAI.
     (5) Pending Legal Proceedings. No judicial or administrative investigations, actions, suits or proceedings are pending or, to the knowledge of NAI, threatened against or affecting NAI by or before any court or other Governmental Authority that have or could reasonably be expected to have a Material Adverse Effect. NAI is not in default with respect to any order, writ, injunction, decree or demand of any court or other Governmental Authority in a manner that has or could reasonably be expected to have a Material Adverse Effect.
Amended and Restated Closing Certificate and Agreement (Building 7) – Page 3

 

 

     (6) No Default or Violation. The execution and performance by NAI of the Operative Documents do not and will not contravene or result in a breach of or default under any other agreement to which NAI is a party or by which NAI is bound or which affects any assets of NAI. Such execution and performance by NAI do not contravene any law, order, decree, rule or regulation to which NAI is subject. Further, such execution 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, any property of NAI pursuant to the provisions of any such other agreement.
     (7) Use of Proceeds. In no event will the funds from any Funding Advance 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 in Regulation U 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 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.
     (8) Enforceability. The Operative Documents constitute the legal, valid and binding obligations of NAI enforceable in accordance with their terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
     (9) Pari Passu. The claims of BNPPLC against NAI under the Operative Documents rank at least pari passu with the claims of all its other unsecured creditors, except those whose claims are preferred solely by any laws of general application having effect in relation to bankruptcy, insolvency, liquidation or other similar events.
     (10) Conduct of Business and Maintenance of Existence. So long as any obligations of NAI under the Operative Documents remain outstanding, NAI will continue to engage in business of the same general type as now conducted by it and will preserve, renew and keep in full force and effect its corporate existence and its rights, privileges and franchises necessary or desirable in the normal conduct of business.
     (11) Investment Company Act, etc. NAI is not and will not become, by reason of the Operative Documents or any business or transactions in which it participates voluntarily, (a) an “investment company” or a company “controlled” by an “investment company” (as each of the quoted terms is defined or used in the Investment Company Act of 1940, as amended), or (b) subject to regulation under the Federal Power Act, or any foreign, federal or local statute or regulation limiting NAI’s ability to incur or guarantee
Amended and Restated Closing Certificate and Agreement (Building 7) – Page 4

 

 

indebtedness or obligations, or to pledge its assets to secure indebtedness or obligations, as contemplated by any of the Operative Documents.
     (12) 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).
     (13) 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. No ERISA Termination Event has occurred with respect to any Plan, and NAI and its Subsidiaries are in compliance with ERISA. Neither NAI nor its Subsidiaries are required to contribute to, or has any other absolute or contingent liability in respect of, any Multiemployer Plan. As of the Effective Date no “accumulated funding deficiency” (as defined in Section 412(a) of the Code) exists with respect to any Plan, whether or not waived by the Secretary of the Treasury or his delegate, and there are no Unfunded Benefit Liabilities with respect to any Plan.
     (14) Compliance With Laws. NAI and its Subsidiaries comply and will comply with all Applicable Laws (including environmental laws and ERISA and the rules and regulations thereunder), except when the necessity of compliance is contested in good faith by appropriate proceedings which do not have and could not reasonably be expected to have a Material Adverse Effect. Neither NAI nor its Subsidiaries have received any notice asserting or describing a material failure on the part of NAI or any Subsidiary to comply with Applicable Laws, other than failures that have been fully rectified by NAI or the Subsidiary, as the case may be, in a manner approved or accepted by Governmental Authorities responsible for the enforcement of the Applicable Laws.
     (15) Payment of Taxes Generally. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect (taking into account any appropriate contest of taxes), NAI and its Subsidiaries have filed and will file all tax declarations, reports and returns which are required by (and in the form required by) Applicable Laws and have paid and will pay all taxes or other charges shown to be due and payable on such declarations, reports and returns and all assessments made against it or its assets by any Governmental Authority; and no liens have been filed or established by any Governmental Authority against NAI or its assets or against any Subsidiary or its assets to secure the payment of taxes or assessments that are past due or
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claimed to be past due.
     (16) Maintenance of Insurance Generally. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have maintained and will maintain insurance with respect to its properties and businesses, with financially sound and reputable insurers, having coverages against losses or damages of the kinds customarily insured against by reputable companies in the same or similar businesses, such insurance being the types, and in amounts no less than the amounts, which are customary for such companies under similar circumstances.
     (17) Franchises, Licenses, etc. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and comply with, and will have and will comply with, all franchises, certificates, licenses, permits and other authorizations from Governmental Authorities that are necessary for the ownership, maintenance and operation of its properties and assets.
     (18) Patents, Trademarks, etc. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and will have and maintain in full force and effect all patents, trademarks, service marks, trade names, copyrights, licenses and other such rights, free from burdensome restrictions, which are necessary for the operation of its businesses. Without limiting the foregoing, to the knowledge of NAI, no product, process, method, service or other item presently sold by or employed by NAI or any Subsidiary in connection with its business as presently conducted infringes any patents, trademark, service mark, trade name, copyright, license or other right owned by any other Person. No claim or litigation is presently pending, or to the knowledge of NAI, threatened against or affecting NAI or any Subsidiary that contests its right to sell or use any such product, process, method, substance or other item and that has or could reasonably be expected to have a Material Adverse Effect.
     (19) Labor. Neither NAI nor any of its Subsidiaries has experienced strikes, labor disputes, slow downs or work stoppages due to labor disagreements that currently have or could reasonably be expected to have a Material Adverse Effect, and to the knowledge of NAI there are no such strikes, disputes, slow downs or work stoppages threatened against it or against any Subsidiary. The hours worked and payment made to employees of NAI and its Subsidiaries have not been in violation in any material respect of the Fair Labor Standards Act or any other Applicable Laws dealing with such matters. All material payments due on account of wages or employee health and welfare insurance and other benefits from NAI or from any Subsidiary have been paid or accrued as
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liabilities on its books.
     (20) Title to Properties Generally. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and will have and maintain good and indefeasible fee simple title to or valid leasehold interests in all of its real property and good title to or a valid leasehold interest in all of its other material assets, as such properties and assets are reflected in the most recent financial statements delivered to BNPPLC, other than properties or assets disposed of in the ordinary course of business since such date; subject, however, in the case of the Property, to Permitted Encumbrances and Liens created by the Operative Documents. NAI enjoys peaceful and undisturbed possession under all of its leases.
     (21) Books and Records. NAI will keep proper books of record and account, containing complete and accurate entries of all its financial and business transactions.
     (B) Further Assurances. NAI will, upon the reasonable request of BNPPLC, (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 the Operative Documents and to subject to any of the Operative Documents any property intended by the terms thereof to be covered 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 BNPPLC 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 BNPPLC to enable BNPPLC to comply with the requirements or requests of any agency or authority having jurisdiction over it.
     (C) Syndication. Without limiting the foregoing, NAI will cooperate with BNPPLC as reasonably required to allow BNPPLC to induce banks not affiliated with BNPPLC to become Participants. Such cooperation will include the execution of any modification proposed by BNPPLC to any of the Operative Documents at the request of a prospective Participant; subject, however, to the conditions that (i) in no event will NAI be required to approve or accept an increase in the Spread or other modifications that change the economics of the transactions contemplated by the Operative Documents to NAI, and (ii) in other respects the form and substance of any such modification agreement must not be reasonably objectionable to NAI.
     (D) Financial Statements; Required Notices; Certificates. Prior to the Completion Date and throughout the Term of the Lease, NAI will deliver to BNPPLC and to each Participant of which NAI has been notified:
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     (1) as soon as available and in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of NAI, the unaudited consolidated balance sheet of NAI and its Subsidiaries as of the end of such quarter and consolidated unaudited statements of income, stockholders’ equity and cash flow of NAI and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in comparative form figures for the corresponding period in the preceding fiscal year, in the case of such statements of income, stockholders’ equity and cash flow, and figures for the preceding fiscal year in the case of such balance sheet, all in reasonable detail, in accordance with GAAP, and certified in a manner acceptable to BNPPLC by a Responsible Financial Officer of NAI (subject to normal year-end adjustments); provided, that so long as NAI is a company subject to the periodic reporting requirements of Section 12 of the Securities Exchange Act of 1934, as amended, NAI will be deemed to have satisfied its obligations under this clause (1) if NAI delivers to BNPPLC the same quarterly reports, certified by a Responsible Financial Officer of NAI (subject to year-end adjustments), that NAI delivers to its shareholders;
     (2) as soon as available and in any event within ninety days after the end of each fiscal year of NAI, the consolidated balance sheet of NAI and its Subsidiaries as of the end of such fiscal year and consolidated statements of income, stockholders’ equity and cash flow of NAI and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such fiscal year, setting forth in comparative form figures for the preceding fiscal year, all in reasonable detail, in accordance with GAAP, and certified in a manner acceptable to BNPPLC by independent public accountants of recognized national standing reasonably acceptable to BNPPLC; provided, that so long as NAI is a company subject to the periodic reporting requirements of Section 12 of the Securities Exchange Act of 1934, as amended, NAI will be deemed to have satisfied its obligations under this clause (ii) if NAI delivers to BNPPLC the same annual report and report and opinion of accountants that NAI delivers to its shareholders;
     (3) in each case if requested in writing by BNPPLC, together with the financial statements furnished in accordance with subparagraph 2(D)(1) and 2(D)(2), a certificate of a Responsible Financial Officer of NAI in the form of certificate attached hereto as Exhibit B (a) representing that no Event of Default or material Default by NAI has occurred (or, if an Event of Default or material Default by NAI has occurred, stating the nature thereof and the action which NAI has taken or proposes to take to rectify it), (b) stating that the representations and warranties by NAI contained herein are true and complete in all material respects on and as of the date of such certificate as though made on and as of such date, and (c) setting forth calculations which show whether NAI is complying with financial covenants set forth in subparagraph 3(C);
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     (4) as soon as possible and in any event within five days after the occurrence of each Event of Default or material Default known to a Responsible Financial Officer of NAI, a statement of NAI setting forth details of such Event of Default or material Default and the action which NAI has taken and proposes to take with respect thereto;
     (5) promptly after the sending or filing thereof, copies of all such financial statements, proxy statements, notices and reports which NAI or any Subsidiary sends to its public stockholders, and copies of all reports and registration statements (without exhibits) which NAI or any Subsidiary files with the Securities and Exchange Commission (or any governmental body or agency succeeding to the functions of the Securities and Exchange Commission) or any national securities exchange;
     (6) as soon as practicable and in any event within thirty days after a Responsible Financial Officer of NAI knows or has reason to know that any ERISA Termination Event with respect to any Plan has occurred, a statement of a Responsible Financial Officer of NAI describing such ERISA Termination Event and the action, if any, which NAI proposes to take with respect thereto;
     (7) upon request by BNPPLC, 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 either stating that no Default exists under the Operative Documents or specifying each such Default; it being intended that any such statement by NAI may be relied upon by any prospective purchaser or mortgagee of the Property or any prospective Participant; and
     (8) such other information respecting the condition or operations, financial or otherwise, of NAI, of its Subsidiaries or of the Property as BNPPLC or BNPPLC’s Parent or any Participant through BNPPLC may from time to time reasonably request.
Reports and financial statements required to be delivered pursuant to paragraphs (1), (2) and (5) of this subparagraph 2(D) shall be deemed to have been delivered on the date on which such reports, or reports containing such financial statements, are posted for downloading (in a “PDF” or other readily available format) on one of NAI’s internet websites at www.netapp.com or www.investors.netapp.com or on the SEC’s internet website at www.sec.gov; provided, however, that after being posted they remain available for downloading at the applicable website for at least 90 days.
BNPPLC is hereby authorized to deliver a copy of any information or certificate delivered to it pursuant to this subparagraph 2(D) to any Participant and to any regulatory body having
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jurisdiction over BNPPLC, BNPPLC’s Parent or any Participant that requires or requests it.
     (E) Omissions. None of NAI’s representations in the Operative Documents or in any other document, certificate or written statement furnished to BNPPLC 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.
     (F) OFAC. None of NAI or any subsidiary or affiliate of NAI: (i) is a person named on the list of Specially Designated Nationals or Blocked Persons maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise published from time to time; or (ii) is (A) an agency of the government of a country, (B) an organization controlled by a country, or (C) a person resident in a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise published from time to time, as such program may be applicable to such agency, organization or person; or (iii) derives more than 15% of its assets or operating income from investments in or transactions with any such country, agency, organization or person. Further, none of the proceeds from the Initial Advance or any Construction Advance will be used to finance any operations, investments or activities in, or make any payments to, any such country, agency, organization, or person.
     (G) U.S. Patriot Act. NAI acknowledges that BNPPLC, BNPPLC’s Parent and Participants may be required, pursuant to the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), to obtain, verify, record and disclose to law enforcement authorities information that identifies the NAI, including the name and address of NAI. NAI will provide to BNPPLC and Participants any such information they may request pursuant to the Patriot Act, and NAI agrees that any of BNPPLC, BNPPLC’s Parent and Participants may disclose such information to law enforcement authorities if the authorities make a request or demand for disclosure pursuant to the Patriot Act. NAI also acknowledges that, in such event, none of BNPPLC, BNPPLC’s Parent or Participants may be required or even permitted by the Patriot Act to notify NAI of the request or demand for disclosure.
3      Financial Covenants and Negative Covenants of NAI. NAI represents and covenants as follows:
     (A) Definitions Applicable in this Paragraph. As used in (and only for purposes of) this Paragraph 3:
     “Accepted Contest Requirements” means, with respect to any Tax or other payment due or claimed to be due from NAI or any Subsidiary or any demand for payment made upon NAI or any Subsidiary, that (a) NAI or such Subsidiary must contest
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the validity or amount thereof in good faith by appropriate proceedings, (b) NAI or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment thereof pending such contest could not reasonably be expected to result in a Material Adverse Effect.
     “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
     “Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of Equity Interests representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of NAI; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of NAI by Persons who were neither (i) nominated by the board of directors of NAI nor (ii) appointed by directors so nominated; or (c) NAI ceasing to own, directly or indirectly, 100% of the issued and outstanding Equity Interests of each Material Domestic Subsidiary except in accordance with subparagraph 3(B)(3) below.
     “Consolidated Debt for Borrowed Money” means at any time (1) the sum, without duplication, of (a) items that, in accordance with GAAP, would be classified as indebtedness on the consolidated balance sheet of NAI and its Subsidiaries and (b) the capitalized portion of any synthetic leases, minus (2) the then aggregate outstanding principal amount of Indebtedness under NAI’s Secured Revolver and under that certain Loan Agreement dated as of March 31, 2006 by and among Network Appliance Global Ltd. and JPMorgan Chase Bank, National Association as initial lender and as administrative agent. (In clause (b) of this definition, “capitalized portion” means, with respect to any synthetic lease, the price for which the lessee can purchase the leased property or could purchase it if the synthetic lease expired on the date of the applicable calculation of the Consolidated Debt for Borrowed Money. Thus, for example, the “capitalized portion” of the transactions governed by the Operative Documents will equal the Lease Balance.)
     “Consolidated EBITDA” means, with reference to any period, the sum of the following: (a) Consolidated Net Income for such period, plus (b) without duplication and to the extent deducted from revenues in determining such Consolidated Net Income, the
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sum of (i) Consolidated Interest Expense for such period, (ii) expense for taxes paid or accrued during such period, (iii) all amounts attributable to depreciation, (iv) amortization during such period, (v) extraordinary non-cash charges incurred other than in the ordinary course of business during such period, (vi) nonrecurring extraordinary non-cash restructuring charges, and (vii) share-based non-cash compensation expense minus without duplication and to the extent included in determining such Consolidated Net Income, (c) interest income, (d) extraordinary non-cash gains realized other than in the ordinary course of business and (e) any cash payments made during such period in respect of the item described in clause (vii) above subsequent to the fiscal quarter in which the relevant share-based non-cash compensation expense was incurred, all calculated for NAI and its Subsidiaries in accordance with GAAP on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period NAI or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period NAI or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by NAI and its Subsidiaries in excess of $50,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to NAI or any of its Subsidiaries in excess of $50,000,000.
     “Consolidated Interest Expense” means, with reference to any period, the interest expense (including without limitation interest expense under Capital Lease Obligations that is treated as interest in accordance with GAAP) of NAI and its Subsidiaries calculated on a consolidated basis for such period with respect to (a) all outstanding Indebtedness of NAI and its Subsidiaries allocable to such period in accordance with GAAP and (b) Swap Agreements (including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers acceptance financing and net costs under interest rate Swap Agreements to the extent such net costs are allocable to such period in accordance with GAAP). In addition, for purposes of calculating the Leverage Ratio only, rents payable for any period pursuant to NAI’s synthetic leases shall be included in Consolidated Interest Expense for
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such period; excluding, however, any amounts (whether on not designated as rents) paid or to be paid as compensation for or reimbursement of any Losses, and also excluding any payments which reduce or will reduce the outstanding lease balance of any synthetic lease. For example, Base Rents payable under the Lease will be included in Consolidated Interest Expense, but not Additional Rents.
     “Consolidated Net Income” means, with reference to any period, the net income (or loss) of NAI and its Subsidiaries calculated in accordance with GAAP on a consolidated basis (without duplication) for such period.
     “Consolidated Total Assets” means, as of the date of any determination thereof, total assets of NAI and its Subsidiaries calculated in accordance with GAAP on a consolidated basis as of such date.
     “Disclosure Letter” means the disclosure letter (the form of which is attached to this Certificate as Exhibit C) given by NAI to Chase Bank, National Association, as Administrative Agent, in connection with NAI’s recently executed Credit Agreement dated as of November 2, 2007, as amended or supplemented from time to time by NAI with the written consent of BNPPLC.
     “Domestic Subsidiary” means any Subsidiary that is incorporated or organized under the laws of the United States of America, any state thereof or in the District of Columbia.
     “Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.
     “Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
     “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to
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advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.
     “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are paid or payable, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (k) the Net Mark-to Market Exposure of all Swap Obligations of such Person, and (l) any other Off-Balance Sheet Liability. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
     “Leverage Ratio” means the ratio, determined as of the end of each fiscal quarter of NAI, of Consolidated Debt for Borrowed Money as of the end of such fiscal quarter to Consolidated EBITDA for the period of 4 consecutive fiscal quarters ending with the end of such fiscal quarter.
     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or other security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
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     “Liquidity” means, with respect to NAI and its Subsidiaries as of any date of determination, the sum of all unrestricted cash and unrestricted Permitted Investments which are not subject to any Lien (other than Liens permitted under subparagraph 3(B)(2)(e)) and which would be included on the consolidated balance sheet of NAI and such Subsidiaries in accordance with GAAP as of such date of determination.
     “Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations or condition, financial or otherwise, of NAI and its Subsidiaries taken as a whole, or (b) the ability of NAI or any Material Domestic Subsidiary to perform any of its obligations under any of the Operative Documents or (c) the rights of or benefits available to BNPPLC under any of the Operative Documents.
     “Material Domestic Subsidiary” means each Material Subsidiary that is a Domestic Subsidiary. The Material Domestic Subsidiaries on the Effective Date are identified as such in Schedule 3.01 to the Disclosure Letter.
     “Material Subsidiary” means each Subsidiary (a) which, as of the most recent fiscal quarter of NAI, for the period covering the then most recently ended fiscal year and the portion of the then current fiscal year ending at the end of such fiscal quarter, for which financial statements have been delivered pursuant to subparagraph 2(D), contributed greater than five percent (5%) of NAI’s Consolidated EBITDA for such period or (b) which contributed greater than five percent (5%) of NAI’s Consolidated Total Assets as of such date.
     “Moody’s” means Moody’s Investors Service, Inc.
     “NAI’s Secured Revolver” means the Secured Credit Agreement dated as of October 5, 2007 by and among NAI, certain lenders and JPMorgan Chase Bank, National Association, as administrative agent, as it exists and is in force on the Effective Date.
     “Net Mark-to-Market Exposure” of a Person means, as of any date of determination, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from each Swap Agreement transaction. “Unrealized losses” means the fair market value of the cost to such Person of replacing such transaction as of the date of determination (assuming such transaction were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such transaction as of the date of determination (assuming such transaction was to be terminated as of that date).
     “Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person
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that is related to retained credit risk, or (b) any indebtedness, liability or obligation under any so-called “synthetic lease” transaction entered into by such Person.
     “Permitted Liens or Encumbrances” means:
     (a) Liens imposed by law for Taxes or other governmental charges that are not yet due or are being contested in accordance with Accepted Contest Requirements;
     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than sixty (60) days or are being contested in accordance with Accepted Contest Requirements;
     (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;
     (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;
     (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (J) of the definition thereof in the Common Definitions and Provisions Agreement;
     (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere in any material respect with the ordinary conduct of business of NAI or any Subsidiary;
     (g) leases or subleases granted to other Persons and not interfering in any material respect with the business of the lessor or sublessor;
     (h) Liens arising from precautionary Uniform Commercial Code filings or similar filings relating to operating leases;
     (i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection within the importation of goods;
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     (j) Liens on insurance proceeds securing the premium of financed insurance proceeds;
     (k) Liens incurred in the ordinary course of business on cash collateral to secure letters of credit, bank guarantees and banker’s acceptances and Swap Agreements;
     (l) licenses of intellectual property in the ordinary course of business;
     (m) any interest or title of a lessor or sublessor under any lease of real property or personal property; and
     (n) other Liens on assets securing Indebtedness or other obligations not prohibited under provisions of the Operative Documents other than this Paragraph 3 in an aggregate amount not to exceed $50,000,000 at any time outstanding;
provided that the term “Permitted Liens or Encumbrances” shall not include any Lien securing Indebtedness.
     “Permitted Investments” means:
     (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;
     (b) investments in commercial paper maturing within 365 days from the date of acquisition thereof and having, at such date of acquisition, a rating of “A-2” (or better) from S&P or “P-2” (or better) from Moody’s;
     (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof or any other country which has a combined capital and surplus and undivided profits of not less than $500,000,000;
     (d) fully collateralized repurchase agreements with a term of not more
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\

than thirty (30) days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above;
     (e) money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, as amended, to the extent such money market fund is governed thereby, (ii) are rated AA by S&P and Aa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000;
     (f) investments made pursuant to a cash management investment policy approved by the board of directors of the Person making such investment and as in effect on the Effective Date, as such policy may be amended or otherwise modified from time to time with the written consent of BNPPLC; and
     (g) investments described in the following table:
     
Type of Security   Remaining Maturity/ S&P/ Moody’s Rating
JPMorgan Certificates of Deposit
    
 
    
US Treasury Treasuries
    
 
    
US Agency Securities
  Less than 30 years
 
    
USD Commercial Paper
  A1/P1 Less than or equal to 270 days
 
    
 
    
 
  US Gov’t
 
  Treasury Plus
Money Market Funds (Must be 
  Cash Management 
through JPMorgan) 
  100% US Treasury
 
  Federal Money Market
 
    
Medium Term Notes, Corporate
    
Bonds, Corporate Debentures,
    
Floating Rate Notes, and Auction
    
Rate Securities
  A or better
     “S&P” means Standard & Poor’s, a division of the McGraw-Hill Companies.
     “Sale and Leaseback Transaction” means any sale or other transfer of assets or property by any Person with the intent to lease any such asset or property as lessee.
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     “Subordinated Indebtedness” means any Indebtedness of NAI or any Subsidiary the payment of which is subordinated to payment of the obligations under the Operative Documents to the written satisfaction of BNPPLC.
     “subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.
     “Subsidiary” means any subsidiary of NAI.
     “Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of NAI or the Subsidiaries shall be a Swap Agreement.
     “Swap Obligations” of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any such Swap Agreement transaction.
     “Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.
     (B) Negative Covenants. Prior to the Designated Sale Date and so long thereafter as any amount shall continue to be due and payable by NAI to BNPPLC pursuant to any of the Operative Documents, NAI covenants and agrees as follows:
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     (1) Subsidiary Indebtedness. NAI will not permit any Subsidiary to create, incur, assume or permit to exist any Indebtedness, except:
     (a) by Guarantee or assumption of any obligations evidenced or created by (x) any of the Operative Documents, (y) or other comparable agreements between BNPPLC and NAI covering other properties, or (z) the Credit Agreement referenced on the first page of the Disclosure Letter;
     (b) Indebtedness existing on the date hereof and set forth in Schedule 6.01 to the Disclosure Letter and extensions, renewals and replacements of any such Indebtedness that do not increase the then outstanding principal amount thereof;
     (c) Indebtedness of (i) any Subsidiary to any Material Domestic Subsidiary and (ii) any Subsidiary that is not a Material Domestic Subsidiary to any other Subsidiary that is not a Material Domestic Subsidiary;
     (d) Guarantees by any Subsidiary of Indebtedness of NAI or any other Subsidiary;
     (e) Indebtedness of any Subsidiary incurred to finance the acquisition, construction or improvements of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets (and additions, accessions, parts, improvement and attachments thereto and the proceeds thereof) prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the then outstanding principal amount thereof; provided that such Indebtedness is incurred prior to or within 120 days after such acquisition or the completion of such construction or improvement; and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof;
     (f) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof;
     (g) Indebtedness of any Subsidiary as an account party in respect of letters of credit, bank guarantees and bankers’ acceptances;
     (h) Indebtedness in respect of Swap Agreements permitted under
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subparagraph 3(B)(4);
     (i) Indebtedness of Subsidiaries which are not Material Domestic Subsidiaries in an aggregate principal amount not exceeding 5% of Consolidated Total Assets at any time outstanding; and
     (j) other Indebtedness of any Subsidiary which is a Material Domestic Subsidiary so long as, at the time of the incurrence thereof and after giving effect thereto (on a pro forma basis), NAI is in pro forma compliance with the maximum Leverage Ratio permitted under subparagraph 3(C)(1).
     (2) Liens. NAI will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it (and for purposes hereof, any capital stock issued by NAI which is held by NAI as treasury stock shall not be deemed to be property or an asset of NAI and shall not be subject to this subparagraph 3(B)(2)), or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except that the following shall be permitted so long as they do not encumber any interest in the Property in violation of other provisions of the Operative Documents:
     (a) Permitted Liens or Encumbrances;
     (b) any Lien on any property or asset of NAI or any Subsidiary existing on the date hereof and set forth in Schedule 6.02 to the Disclosure Letter; provided that (i) such Lien shall not apply to any other property or asset of NAI or any Subsidiary and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;
     (c) any Lien existing on any property or asset prior to the acquisition thereof by NAI or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of NAI or any Subsidiary and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be, and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;
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     (d) Liens on fixed or capital assets (and additions, accessions, parts, improvements and attachments thereto and the proceeds thereof) acquired, constructed or improved by NAI or any Subsidiary; provided that:
     (i) such security interests secure Indebtedness not otherwise prohibited under the Operative Documents;
     (ii) such security interests and the Indebtedness secured thereby are either (A) incurred prior to or within one hundred twenty (120) days after such acquisition or the completion of such construction or improvement, or (B) granted and incurred to extend, renew or replace any security interest and Indebtedness secured thereby that are permitted by this clause (d) and do not increase the outstanding principal amount thereof by more than 5%;
     (iii) the Indebtedness secured thereby does not exceed 105% of the cost of acquiring, constructing or improving such fixed or capital assets; and
     (iv) such security interests shall not apply to any other property or assets of NAI or any Subsidiary;
     (e) customary bankers’ Liens and rights of setoff arising by operation of law or contract and incurred on deposits made in the ordinary course of business;
     (f) assignments of the right to receive income effected (i) as a part of the sale of a Subsidiary or a business unit or (ii) for factoring in the ordinary course of business;
     (g) Liens on any cash earnest money deposit made by NAI or any Subsidiary in connection with any letter of intent or acquisition agreement that is not prohibited by the Operative Documents;
     (h) customary Liens granted in favor a trustee to secure fees and other amounts owing to such trustee under an indenture or other agreement pursuant to Indebtedness not otherwise prohibited under the Operative Documents; and
     (i) Liens granted as provided in and securing Indebtedness under NAI’s Secured Revolver, provided such Liens do not at any time secure an outstanding principal balance of more than $500,000,000.
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     (3) Fundamental Changes and Asset Sales.
     (a) NAI will not, and will not permit any Subsidiary to, merge into, consolidate with, or otherwise be acquired by, any other Person, or sell, transfer, lease or otherwise dispose (including pursuant to a Sale and Leaseback Transaction) of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or here-after acquired, and for purposes hereof, any capital stock issued by NAI which is held by NAI as treasury stock shall not be deemed to be property or an asset of NAI and shall not be subject to this subparagraph 3(B)(3), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Subsidiary may merge into a Material Domestic Subsidiary in a transaction in which the surviving entity is such Material Domestic Subsidiary, (ii) any wholly owned Subsidiary may merge into or consolidate with any wholly owned Subsidiary in a transaction in which the surviving entity is a wholly owned Subsidiary and no Person other than NAI or a wholly owned Subsidiary receives any consideration, provided that if any such merger described in this clause (ii) shall involve a Material Domestic Subsidiary, the surviving entity of such merger shall be a Material Domestic Subsidiary, (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to a Material Domestic Subsidiary or any wholly owned Subsidiary pursuant to a transaction not otherwise prohibited under the Operative Documents, (iv) any Subsidiary may liquidate or dissolve if NAI determines in good faith that such liquidation or dissolution is in the best interests of NAI, (v) NAI may merge with any other Person so long as NAI is the surviving entity, (vi) any Subsidiary may merge with any other Person so long as the surviving entity is, in the case of a Subsidiary Guarantor, the Subsidiary Guarantor, and in all other cases, a wholly owned Subsidiary and (vii) any Subsidiary other than a Subsidiary Guarantor may merge into, and NAI or any Subsidiary may dispose of assets to, any other Person so long as NAI delivers a certificate to BNPPLC demonstrating pro forma compliance with subparagraph 3(C) after giving effect to such transaction.
     (b) NAI will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by NAI and its Subsidiaries on the date of execution of the Operative Documents and businesses reasonably related thereto.
     (c) NAI will not, and will not permit any of its Subsidiaries to, change its fiscal year to end on a day other than as such fiscal year end is currently
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determined or change NAI’s method of determining fiscal quarters.
     (4) Speculative Swap Agreements. NAI will not, and will not permit any of its Subsidiaries to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which NAI or any Subsidiary has actual exposure (other than those in respect of Equity Interests or Subordinated Indebtedness of NAI or any of its Subsidiaries), and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of NAI or any Subsidiary.
     (5) Transactions with Affiliates. NAI will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to NAI or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among NAI and its wholly owned Subsidiaries not involving any other Affiliate, (c) to enter into indemnification arrangements with or to pay customary fees and reimburse out-of-pocket expenses of directors or (d) as set forth on the Disclosure Letter.
     (6) Restrictive Agreements. NAI will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of NAI or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to NAI or any other Subsidiary or to Guarantee Indebtedness of NAI or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law, by any Operative Document, by any document relating to NAI’s unsecured syndicated revolving credit facility from certain lenders and JPMorgan Chase Bank, National Association as administrative agent, by NAI’s Secured Revolver, or by any document relating to NAI’s synthetic lease facilities, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.06 to the Disclosure Letter (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of assets or of a Subsidiary pending such sale, provided such restrictions and conditions apply only to such assets or such Subsidiary that are to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by the
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Operative Documents if such restrictions or conditions apply only to the property or assets securing such Indebtedness, and (v) clause (a) of the foregoing shall not apply to customary provisions in leases, licenses, joint venture agreements and other agreements entered into in the ordinary course of business restricting the assignment thereof.
     (C) Financial Covenants. Prior to the Designated Sale Date and so long thereafter as any amount shall continue to be due and payable by NAI to BNPPLC pursuant to any of the Operative Documents:
     (1) Maximum Leverage Ratio. NAI will not permit the Leverage Ratio to be greater than 3.0 to 1.0.
     (2) Minimum Liquidity. NAI and its Subsidiaries on a consolidated basis shall maintain, at all times, Liquidity of not less than $300,000,000.
4   Limited Representations and Covenants of BNPPLC
  (A)   Concerning Accounting Matters.
           (1) To permit NAI to determine the appropriate accounting for NAI’s relationship with BNPPLC under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN 46”), BNPPLC represents that to the knowledge of BNPPLC the fair value of the Property and of other properties, if any, leased to NAI by BNPPLC (collectively, whether one or more, the “Properties Leased to NAI”) are, as of the Effective Date, less than half of the total of the fair values of all assets of BNPPLC, excluding any assets of BNPPLC held within a silo. Further, none of the Properties Leased to NAI are, as of the Effective Date, held within a silo. Consistent with the directions of NAI (based upon the current interpretation of FIN 46 by NAI and its auditors), and for purposes of this representation only:
  •   “held within a silo” means, with respect to any asset or group of assets leased by BNPPLC to a single lessee or group of affiliated lessees, that BNPPLC has obtained funds equal to or in excess of 95% of the fair value of the leased asset or group of assets to acquire or maintain its investment in such asset or group of assets through non-recourse financing or other contractual arrangements (such as targeted equity or bank participations), the effect of which is to leave such asset or group of assets (or proceeds thereof) as the only significant asset or assets of BNPPLC at risk for the repayment of such funds;
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  •   “fair value” means, with respect to any asset, the amount for which the asset could be bought or sold in a current transaction negotiated at arms length between willing parties (that is, other than in a forced or liquidation sale);
 
  •   with respect to the Properties Leased to NAI (regardless of how BNPPLC accounts for the leases of the Properties Leased to NAI), and with respect to other assets that are subject to leases accounted for by BNPPLC as operating leases pursuant to Financial Accounting Standards Board Statement 13 (“FAS 13”), fair value is determined without regard to residual value guarantees, remarketing agreements, non-recourse financings, purchase options or other contractual arrangements, whether made by BNPPLC with NAI or with other parties, that might otherwise impact the fair value of such assets;
 
  •   with respect to assets, other than Properties Leased to NAI, that are subject to leases accounted for by BNPPLC as leveraged leases pursuant to FAS 13, fair value is determined on a gross basis prior to the application of leveraged lease accounting, recognizing that equity investments made by BNPPLC in its assets subject to leveraged lease accounting should be grossed up in applying this test (however, equity investments made by BNPPLC through another legal entity should not be so grossed up in applying this test);
 
  •   with respect to assets, other than Properties Leased to NAI, that are subject to leases accounted for by BNPPLC as direct financing leases pursuant to FAS 13, fair value is determined as the sum of the fair values (considering current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities) of the corresponding finance lease receivables and related unguaranteed residual values.
     (2) BNPPLC also represents that BNPPLC’s Parent is, as of the Effective Date, including BNPPLC as a consolidated subsidiary in the audited financial statements issued by BNPPLC’s Parent.
     (3) BNPPLC covenants that, as reasonably requested by NAI from time to time with respect to any accounting period during which the Lease is or was in effect, BNPPLC will provide to NAI confirmation of facts concerning BNPPLC and its assets as
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necessary to permit NAI to determine the proper accounting for the Lease (including updates of the facts set forth in clauses (1) and (2) above); except that BNPPLC will not be required by this provision to (w) provide any information that is not in the possession or control of BNPPLC or its Affiliates, (x) disclose the specific terms and conditions of its leases or other transactions with other parties or the names of such parties, (y) make disclosures prohibited by any law applicable to BNPPLC or BNPPLC’s Parent, or (z) disclose any other information that is protected from disclosure by confidentiality provisions in favor of such other parties or would be protected if their agreements with BNPPLC contained confidentiality provisions similar in scope and substance to any confidentiality provisions set forth in the Operative Documents for the benefit of NAI or its Affiliates. BNPPLC will represent that information provided by it pursuant to this clause is true and complete in all material respects, but only to the knowledge of BNPPLC as of the date it is provided, utilizing the form of the certificate attached hereto as Exhibit D (signed by an officer of BNPPLC), which certificate will be provided periodically by BNPPLC within five business days of reasonable written request therefor by NAI as provided above, or such longer period of time as may be reasonably necessary under the circumstances in order for BNPPLC to confirm such information.
     (4) Although the representations required of BNPPLC by this subparagraph are intended to cover facts, it is understood and agreed (consistent with subparagraph 4(C) of the Lease) that BNPPLC has not made and will not make any representation or warranty as to the proper accounting by NAI or its Affiliates of the Lease or as to other accounting conclusions.
     (B) Other Limited Representations. BNPPLC represents that:
     (1) Entity Status. BNPPLC is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware.
     (2) Authority. The Constituent Documents of BNPPLC permit the execution, delivery and performance of the Operative Documents by BNPPLC, and all actions and approvals necessary to bind BNPPLC under the Operative Documents have been taken and obtained. Without limiting the foregoing, the Operative Documents will be binding upon BNPPLC when signed on behalf of BNPPLC by Lloyd G. Cox, Managing Director of BNPPLC. BNPPLC has all requisite power and all governmental certificates of authority, licenses, permits and qualifications to carry on its business as now conducted and contemplated to be conducted and to perform the Operative Documents, except that BNPPLC makes no representation as to whether it has obtained governmental certificates of authority, licenses, permits, qualifications or other documentation required by state or local Applicable Laws. With regard to any such state or local requirements, NAI may require that BNPPLC obtain a specific governmental certificates of authority, licenses,
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permits, qualifications or other documentation pursuant to subparagraph 4(C), subject to the conditions set forth in that subparagraph.
     (3) Solvency. BNPPLC is not “insolvent” on the Effective Date (that is, the sum of BNPPLC’s absolute and contingent liabilities — including the obligations of BNPPLC under the Operative Documents — does not exceed the fair market value of BNPPLC’s assets), and BNPPLC has no outstanding liens, suits, garnishments or court actions which could render BNPPLC insolvent or bankrupt. BNPPLC’s capital is adequate for the businesses in which BNPPLC is engaged and intends to be engaged. BNPPLC has not incurred (whether by the Operative Documents or otherwise), nor does BNPPLC intend to incur or believe that it will incur, debts which will be beyond its ability to pay as such debts mature. No petition or answer has been filed by or, to BNPPLC’s knowledge, against BNPPLC in bankruptcy or other legal proceedings that seeks an assignment for the benefit of creditors, the appointment of a receiver, trustee, custodian or liquidator with respect to BNPPLC or any significant portion of BNPPLC’s property, a reorganization, arrangement, rearrangement, composition, extension, liquidation or dissolution of BNPPLC or similar relief under the federal Bankruptcy Code or any state law. (As used in the Operative Documents, “BNPPLC’s knowledge” and words of like effect mean the present actual knowledge of Lloyd G. Cox and Barry Mendelsohn, the current officers of BNPPLC having primary responsibility for the negotiation of the Operative Documents.)
     (4) Pending Legal Proceedings. No judicial or administrative investigations, actions, suits or proceedings are pending or, to the knowledge of BNPPLC, threatened against or affecting BNPPLC by or before any court or other Governmental Authority. BNPPLC is not in default with respect to any order, writ, injunction, decree or demand of any court or other Governmental Authority in a manner that has or could reasonably be expected to have a a material adverse effect on BNPPLC or its ability to perform its obligations under the Operative Documents.
     (5) No Default or Violation. The execution and performance by BNPPLC of the Operative Documents do not and will not contravene or result in a breach of or default under any other agreement to which BNPPLC is a party or by which BNPPLC is bound or which affects any assets of BNPPLC. Such execution and performance by BNPPLC do not contravene any law, order, decree, rule or regulation to which BNPPLC is subject. Further, such execution and performance by BNPPLC 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, any property of BNPPLC pursuant to the provisions of any such other agreement.
     (6) Enforceability. The Operative Documents constitute the legal, valid and
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binding obligations of BNPPLC enforceable in accordance with their terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
     (7) Conduct of Business and Maintenance of Existence. So long as any of the Operative Documents remains in force, BNPPLC will continue to engage in business of the same general type as now conducted by it and will preserve, renew and keep in full force and effect its corporate existence and its rights, privileges and franchises necessary or desirable in the normal conduct of business.
     (8) Not a Foreign Person. BNPPLC is not a “foreign person” within the meaning of Sections 1445 and 7701 of the Code (i.e. BNPPLC 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).
Notwithstanding the foregoing, however or any other provision herein or in other Operative Documents to the contrary, it is understood that NAI is not relying upon BNPPLC for any evaluation of California or local Applicable Laws upon the transactions contemplated in the Operative Documents, and BNPPLC makes no representation and will not make any representation 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.
     (C) Further Assurances. Prior to the Completion Date and during the Term of the Lease BNPPLC will take any action reasonably requested by NAI to facilitate the construction contemplated by the Construction Agreement or the use of the Property permitted by the Lease or the establishment of a commercial condominium regime that includes the Property (a “Condominium Regime”) or replatting of the Land and other adjacent land owned by NAI (a “Replatting”); subject, however, to the following terms and conditions:
     (1) This subparagraph 4(C) will not impose upon BNPPLC the obligation to take any action that can be taken by NAI, NAI’s Affiliates or anyone else other than BNPPLC as the lessee under the Ground Lease or the owner of the Property.
     (2) BNPPLC will not be required by this subparagraph 4(C) to incur any expense or make any payment to another Person unless (a) BNPPLC has received funds from NAI, in excess of any other amounts due from NAI under any of the Operative Documents, sufficient to cover the expense or make the payment or (b) the request by NAI which will result in such expense or payment is made before the Completion Date and BNPPLC can include such expense or payment in the Outstanding Construction Allowance for purposes of the Construction Agreement.
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     (3) BNPPLC will have no obligations whatsoever under this subparagraph 4(C) at any time after a 97-10/Meltdown Event or when a Default has occurred and is continuing.
     (4) NAI must request any action to be taken by BNPPLC pursuant to this subparagraph 4(C), and such request must be specific and in writing, if required by BNPPLC at the time the request is made.
     (5) No action may be required of BNPPLC pursuant to this subparagraph 4(C) that could constitute a violation of any Applicable Laws or compromise or constitute a waiver of BNPPLC’s rights under other provisions of this Certificate or any of the other Operative Documents or that for any other reason is reasonably objectionable to BNPPLC.
     The actions BNPPLC will take pursuant to this subparagraph 4(C) 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, relocation 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 (which will, in the case of agreements made with NAI or its Affiliates, remain subject to subparagraphs (J), (K) and (L) of Paragraph 11 of the Ground Lease or comparable provisions included in amendments to the Operative Documents) 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”, (VII) modifications of Permitted Encumbrances, (VIII) permit applications or other documents required to accommodate the Construction Project or any Replatting, (IX) confirmations of NAI’s rights under any particular provisions of the Operative Documents which NAI may wish to provide to a third party, (X) tract or parcel map subdividing the Land and adjacent land into lots or parcels as part of a final Replatting consistent with the tentative map attached to and made a part of Exhibit A, or (XI) condominium documents (e.g., a condominium declaration or map) meeting the requirements of Applicable Laws to establish a Condominium Regime. However, the determination of whether any such action is reasonably requested or reasonably objectionable to BNPPLC may depend in whole or in part upon the extent to which the requested action may result in a lien to secure payment or performance obligations against BNPPLC’s interest in the Property, may cause the
Amended and Restated Closing Certificate and Agreement (Building 7) – Page 30

 

 

value of the Property to be less than the Lease Balance after any Qualified Prepayments that may result from such action are taken into account, or may impose upon BNPPLC any present or future obligations greater than the obligations BNPPLC is willing to accept, taking into consideration the indemnifications provided by NAI under the Construction Agreement or the Lease, as applicable.
     In addition, with respect to any request made by NAI to facilitate a relocation of any easements or a substitution of new easements for those described in Exhibit A, the following will be relevant to the determination of whether the request is reasonable:
     (i) whether material encroachments will result from the relocation or replacement, and whether title to the land over or under which any such easement is to be relocated or replaced is encumbered by Liens other than those which are Fully Subordinated or Removable or which otherwise constitute Permitted Encumbrances;
     (ii) whether the relocation or replacement will result in any interruption of access or services provided to the Property which is likely to extend beyond the Designated Sale Date (it being understood, however, that any such interruption which is not likely to extend beyond the Designated Sale Date will not be a reason for BNPPLC to decline the request); and
     (iii) whether the relocation or replacement is to be accomplished in a manner that will not, when the relocation or replacement is complete, result in a material adverse change in the access to or services provided to the Improvements or the Land.
     With respect to any request made by NAI to facilitate the establishment of a Condominium Regime, the following will be relevant to the determination of whether the request is reasonable:
     (1) whether the Condominium Regime will create one or more distinct condominium units or parcels of land that include all significant Improvements constructed or to be constructed by NAI for BNPPLC pursuant to the Construction Agreement’ and only such Improvements (whether one or more, the “Applicable Units”);
     (2) whether NAI is willing to amend the Operative Documents by amendments in form and substance acceptable to BNPPLC (the “Anticipated Amendments”) as necessary to ensure that:
     (A) the Property will include all of the Applicable Units, together with appurtenant access, parking and other rights and easements (whether exclusive or nonexclusive) at least comparable to those existing or created as of the Effective
Amended and Restated Closing Certificate and Agreement (Building 7) – Page 31

 

 

Date by the Ground Lease (as described in Exhibit A thereto) (“Appurtenant Condo Rights”);
     (B) the land leased to BNPPLC pursuant to the Ground Lease will include the land over which exclusive possession and control must reasonably be vested in the owner of the Applicable Units to preserve the value and utility of the Applicable Units to such owner, taking into account Appurtenant Condo Rights; and
     (C) in the event discretionary approvals or consents are required from any “declarant” or “operator” or “owners’ association” by the Condominium Regime over the design, construction or alteration of Improvements or over the sale, use, leasing or financing of the Property, then (i) the “declarant” or “operator” or “owners’ association” will be NAI or controlled by it or another party acceptable to BNPPLC and will be bound by and remain bound by subparagraphs (J), (K) and (L) of Paragraph 11 of the Ground Lease or comparable provisions in the Anticipated Amendments with respect to such discretionary approvals or consents;
     (3) whether the request itself (if granted) or the proposed Condominium Regime is likely to have any material adverse impact on the value or utility of the Property, taken as a whole, after giving effect to the Anticipated Amendments and taking into account Appurtenant Condo Rights; and
     (4) whether the request itself (if granted) or the Condominium Regime will materially limit, or give NAI or its Affiliates discretionary control over, the rights of BNPPLC and its successors and assigns to use or lease, sell or otherwise transfer the Applicable Units in the event NAI declines for any reason to purchase the Property on the Designated Sale Date pursuant to the Purchase Agreement, but taking into account any superior rights BNPPLC has or may reserve under or by reference to subparagraphs (J), (K) and (L) of Paragraph 11 of the Ground Lease or comparable provisions in the Anticipated Amendments.
     Any and all Losses incurred by BNPPLC because of any action taken after the Completion Date pursuant to this subparagraph 4(C) will be covered by the indemnifications of BNPPLC set forth in Construction Agreement or in the Lease. Further, for purposes of such indemnification, any such action taken by BNPPLC 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 Lease or the other Operative Documents.
Amended and Restated Closing Certificate and Agreement (Building 7) – Page 32

 

 

     (D) Actions Permitted by NAI Without BNPPLC’s Consent. No refusal by BNPPLC to execute or join in the execution of any agreement, application or other document requested by NAI pursuant to the preceding subparagraph 4(C) will prevent NAI from itself executing such agreement, application or other document, so long as NAI is not purporting to act for BNPPLC and does not thereby create or expand any obligations or restrictions that encumber BNPPLC’s title to the Property. Further, subject to the other terms and conditions of the Lease and other Operative Documents, NAI may do any of the following in NAI’s own name and to the exclusion of BNPPLC before and during the Term of the Lease, so long as no 97-10/Meltdown Event has occurred and no Default has occurred and is continuing, and provided NAI is not purporting to act for BNPPLC and does not thereby create or expand any obligations or restrictions that encumber BNPPLC’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 Permitted Encumbrances;
     (2) perform obligations arising under and exercise and enforce the rights of NAI or the owner of the Property with respect to any other contracts or documents (such as building permits) included within the Personal Property; and
     (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 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 BNPPLC and NAI under the other Operative Documents with respect to the collection and application of such monetary damages will be the same as for condemnation proceeds payable because of a taking of all or any part of the Property.
     (E) Waiver of Landlord’s Liens. BNPPLC waives any security interest, statutory landlord’s lien or other interest BNPPLC 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; however, BNPPLC 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 Lease. Although computer equipment or other tangible personal property may be “bolted down” or otherwise firmly affixed to Improvements, it will 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 Lease.
     Without limiting the foregoing, BNPPLC acknowledges that NAI may obtain financing from other parties for inventory, furnishings, equipment, machinery and other personal property
Amended and Restated Closing Certificate and Agreement (Building 7) – Page 33

 

 

that is located in or about the Improvements, but that is not included in or integral to the Property, and to secure such financing NAI may grant a security interest under the California Uniform Commercial Code in such inventory, furnishings, equipment, machinery and other personal property. Further, BNPPLC acknowledges that the lenders providing such financing may require confirmation from BNPPLC of its agreements concerning landlord’s liens and other matters set forth in this subparagraph 4(E), and NAI may obtain such confirmation in any statement required of BNPPLC by the next subparagraph.
     (F) Estoppel Letters. Upon thirty days written request by NAI at any time and from time to time prior to the Designated Sale Date, BNPPLC must 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 Base Rent payable by NAI under the Lease has been paid, stating whether BNPPLC is aware of any Default by NAI that may exist under the Operative Documents and confirming BNPPLC’s agreements concerning landlord’s liens and other matters set forth in subparagraph 4(E). Any such statement by BNPPLC 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.
     (G) No Implied Representations or Promises by BNPPLC. NAI acknowledges and agrees that neither BNPPLC nor its representatives or agents have made any representations or promises with respect to the Property or the transactions contemplated in the Operative Documents except as expressly set forth in the Operative Documents, and no rights, easements or licenses are being acquired by NAI from BNPPLC by implication or otherwise, except as expressly set forth in the other Operative Documents.
5 Usury Savings Provision. Notwithstanding anything to the contrary in any of the Operative Documents, BNPPLC does not intend to contract for, charge or collect any amount of money from NAI that constitutes interest in excess of the maximum nonusurious rate of interest, if any, allowed by applicable usury laws (the “Maximum Rate”). BNPPLC and NAI agree that it is their intent in the execution of the Lease, the Purchase Agreement and other Operative Documents to contract in strict compliance with applicable usury laws, if any. In furtherance thereof, BNPPLC and NAI stipulate and agree that none of the provisions of the Lease, the Purchase Agreement or the other Operative Documents shall ever be construed to create a contract requiring compensation for the use, forbearance or detention of money at a rate in excess of the Maximum Rate, and the provisions of this paragraph shall control over all other provisions of this Certificate or other Operative Documents which may be in apparent conflict herewith. All interest paid or agreed to be paid by NAI to BNPPLC shall, to the extent permitted by applicable usury laws, be amortized, prorated, allocated, and spread throughout the period that any principal upon which such interest accrues is expected to be outstanding (including without limitation any
Amended and Restated Closing Certificate and Agreement (Building 7) – Page 34

 

 

renewal or extension of the term of the Lease) so that the amount of interest included in such payments does not exceed the maximum nonusurious amount permitted by applicable usury laws. If the Designated Sale Date is accelerated and as a result thereof amounts paid by NAI to BNPPLC as interest are determined to exceed the interest that would have accrued at the Maximum Rate for the period prior to the Designated Sale Date, then BNPPLC shall, at its option, either refund to NAI the amount of such excess or credit such excess as a Qualified Prepayment (and thus reduce the Lease Balance and other amounts, the determination of which depend upon Qualified Prepayments credited to NAI) and thereby shall render inapplicable any and all penalties of any kind provided by applicable usury laws as a result of such excess interest. If BNPPLC receives money (or anything else) that is determined to constitute interest and that would, but for this provision, increase the effective interest rate received by BNPPLC under or in connection with the Operative Documents to a rate in excess of the Maximum Rate, then the amount determined to constitute interest in excess of the maximum nonusurious interest shall, immediately following such determination, be returned to NAI or be credited as a Qualified Prepayment, in which event any and all penalties of any kind under applicable usury law shall be inapplicable. If BNPPLC does not actually receive, but shall contract for, request or demand, a payment of money (or anything else) which is determined to constitute interest and to increase the effective interest rate contracted for or charged to a rate in excess of the Maximum Rate, BNPPLC shall be entitled, following such determination, to waive or rescind the contractual claim, request or demand for the amount determined to exceed the Maximum Rate, in which event any and all penalties of any kind under applicable usury law shall be inapplicable. If at any time NAI should have reason to believe that the transactions evidenced by the Operative Documents are in fact usurious, NAI shall promptly give BNPPLC notice of such condition, after which BNPPLC shall have ninety days in which to make appropriate refund or other adjustment in order to correct such condition if it in fact exists.
6 Obligations of NAI Under Other Operative Documents Not Limited by this Certificate. Except as provided above in Paragraph 5, nothing contained in this Certificate will limit, modify or otherwise affect any of NAI’s obligations under the other Operative Documents. Subject to Paragraph 5, those obligations are intended to be separate, independent and in addition to, and not in lieu of, those established by this Certificate.
7 Obligations of NAI Hereunder Not Limited by Other Operative Documents. Recognizing that but for this Certificate (including the representations of NAI set forth in Paragraph 1) BNPPLC would not acquire the Property or enter into the other Operative Documents, NAI agrees that BNPPLC’s rights for any breach of this Certificate (including a breach of such representations) will not be limited by any provision of the other Operative Documents that would limit NAI’s liability thereunder.
8 Waiver of Jury Trial. Each of the parties hereto hereby waives its right to a jury trial of any claim or cause of action based upon or arising out of this Agreement, the other Operative
Amended and Restated Closing Certificate and Agreement (Building 7) – Page 35

 

 

Documents or any of the transactions contemplated hereby or thereby, including contract claims, tort claims, breach of duty claims, and all other common law or statutory claims (collectively, the “Claims”). If and to the extent that the foregoing waiver of the right to a jury trial is unenforceable for any reason in such forum, each of the parties hereto hereby consents to the adjudication of all Claims pursuant to judicial reference as provided in California Code of Civil Procedure Section 638, and the judicial referee shall be empowered to hear and determine all issues in such reference, whether fact or law. Each of the parties hereto represents that each has reviewed this waiver and consent and each knowingly and voluntarily waives its jury trial rights and consents to judicial reference following consultation with legal counsel on such matters. In the event of litigation, a copy of this Agreement may be filed as a written consent to a trial by the court or to judicial reference under California Code of Civil Procedure Section 638 as provided herein.
9 Amendment and Restatement of Prior Certificate. This Certificate amends, restates and replaces entirely the Prior Closing Certificate and Agreement. Without limiting the rights and obligations of NAI under this Certificate, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Closing Certificate and Agreement are now made subject to the terms and conditions of this Certificate; and all rights and interests of BNPPLC in and to the Land or other Property under the Prior Closing Certificate and Agreement are renewed and extended (rather than terminated) by this Certificate.
[The signature pages follow.]
Amended and Restated Closing Certificate and Agreement (Building 7) – Page 36

 

 

     IN WITNESS WHEREOF, this Amended and Restated Closing Certificate and Agreement (Building 7) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
Amended and Restated Closing Certificate and Agreement (Building 7) – Signature Page

 

 

         
[Continuation of signature pages for Amended and Restated Closing Certificate and Agreement (Building 7) dated as of November 29, 2007.]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
Amended and Restated Closing Certificate and Agreement (Building 7) – Signature Page

 

 

         
Exhibit A
Legal Description
Parcel 7 and the Additional Leased Premises, as defined below, (collectively, the “Building 7 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the northern boundary of Parcel 7 and the southern boundary of Parcel 8, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 7 and Parcel 8, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 7 and Parcel 11, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 7 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
Exhibit A to Amended and Restated
Closing Certificate and Agreement (Building 7) – Page 2

 

 

Exhibit B
Quarterly Certificate
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Gentlemen:
     This Certificate is furnished pursuant to subparagraph 2(D)(3) of the Amended and Restated Closing Certificate and Agreement (Building 7) dated as of November 29, 2007 between Network Appliance, Inc. and BNP Paribas Leasing Corporation(as amended, the “Closing Certificate”). Terms defined in the Closing Certificate and used but not otherwise defined in this Certificate are intended to have the respective meanings ascribed to them in the Closing Certificate.
     The undersigned, being a Responsible Financial Officer of Network Appliance, Inc., represents and certifies the following to BNP Paribas Leasing Corporation:
     (a) No Event of Default or material Default by NAI has occurred except as follows:
[If an Event of Default or material Default by NAI has occurred, insert a description of the nature thereof and the action which NAI has taken or proposes to take to rectify it; otherwise, insert the word “none”.]
     (b) The representations and warranties by NAI in the Closing Certificate are true and complete in all material respects on and as of the date of this Certificate as though made on and as of such date.
     (c) the calculations set forth in the attachment to this Certificate, which show whether NAI is complying with financial covenants set forth in subparagraph 3(C) of the Closing Certificate based upon the most recent information available, are true and complete.

 

 

     Executed this                      day of                                          , 20___.
[INSERT SIGNATURE BLOCK FOR A
RESPONSIBLE FINANCIAL OFFICER]
Exhibit B to Amended and Restated
Closing Certificate and Agreement (Building 7) – Page 2

 

 

Exhibit C
Form of Disclosure Letter
 
 
 
NETWORK APPLIANCE, INC.
DISCLOSURE LETTER
To: JPMorgan Chase Bank, National Association, as Administrative Agent (“Agent”), under that certain Credit Agreement dated as of November ___, 2007 (as such agreement may be amended, restated or otherwise modified in writing from time to time, the “Credit Agreement”) among Network Appliance, Inc. (the “Borrower”), the lenders from time to time party thereto, BNP Paribas, as syndication agent, and Agent.
This Disclosure Letter is delivered to you pursuant to the Credit Agreement. The items set forth in the attached Schedules represent exceptions, qualifications, permitted items and disclosures that are listed herein pursuant to the terms of the Credit Agreement. Capitalized terms used herein (or in the attached schedules) and defined in the Credit Agreement shall have the meanings ascribed in the Credit Agreement, unless the context otherwise requires.
IN WITNESS WHEREOF, the undersigned has executed this Disclosure Letter as of November ___, 2007.
         
  NETWORK APPLIANCE, INC.
 		  
  By:      
    Name:   Ingemar Lanevi   
    Title:   Treasurer   

 

 

         
Schedule 3.01
Subsidiaries
                     
    Material
Domestic		            
Subsidiary   Subsidiary
(Y/N)		   Jurisdiction   Shareholder   Percentage
Interest
Network Appliance Global Ltd.
  N   Bermuda   Network Appliance Inc.     100 %
Network Appliance Holdings Ltd.
  N   Cyprus   Network Appliance Global Ltd.     100 %
Network Appliance Holding & Manufacturing BV
  N   Netherlands   Network Appliance Holdings Ltd.     100 %
Network Appliance BV
  N   Netherlands   Network Appliance Holding & Mfg BV     100 %
Network Appliance ApS
  N   Denmark   Network Appliance Holdings Ltd.     100 %
Network Appliance Ltd
  N   UK   Network Appliance BV     100 %
Network Appliance SAS
  N   France   Network Appliance BV     100 %
Network Appliance GmbH
  N   Germany   Network Appliance BV     100 %
Network Appliance Srl.
  N   Italy   Network Appliance BV     100 %
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 7) – Page 2

 

 

                     
    Material
Domestic		            
Subsidiary   Subsidiary
(Y/N)		   Jurisdiction   Shareholder   Percentage
Interest
Network Appliance GmbH
  N   Switzerland   Network Appliance BV     100 %
Network Appliance (Sales) Limited
  N   Ireland   Network Appliance BV     100 %
Network Appliance GesmbH
  N   Austria   Network Appliance BV     100 %
Network Appliance SL
  N   Spain   Network Appliance BV     100 %
Network Appliance BVBA
  N   Belgium   Network Appliance BV     100 %
Network Appliance Israel Ltd.
  N   Israel   Network Appliance BV     100 %
Network Appliance Israel R&D, Ltd.
  N   Israel   Network Appliance Inc.     100 %
Network Appliance Poland Sp. z.o.o.
  N   Poland   Network Appliance BV     100 %
Network Appliance Sweden AB
  N   Sweden   Network Appliance BV     100 %
Network Appliance South Africa (Pty) Ltd.
  N   South Africa   Network Appliance BV     100 %
Network Appliance Finland Oy
  N   Finland   Network Appliance BV     100 %
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 7) – Page 3

 

 

                     
    Material
Domestic		            
Subsidiary   Subsidiary
(Y/N)		   Jurisdiction   Shareholder   Percentage
Interest
Network Appliance Norway AS
  N   Norway   Network Appliance BV     100 %
Network Appliance BV (Representative Office)
  N   UAE   Network Appliance BV     100 %
Network Appliance BV (Representative Office)
  N   Turkey   Network Appliance BV     100 %
Network Appliance BV (Representative Office)
  N   Russia   Network Appliance BV     100 %
Network Appliance Luxembourg S.a.r.l.
  N   Luxembourg   Network Appliance BV     100 %
Network Appliance BV (Representative Office)
  N   Indonesia   Network Appliance BV     100 %
Network Appliance BV (Representative Office)
  N   Philippines   Network Appliance BV     100 %
Network Appliance KK
  N   Japan   Network Appliance Inc.     100 %
Network Appliance Pty. Ltd.
  N   Australia   Network Appliance Global Ltd.     100 %
Network Appliance Mexico S. de R.L. de C.V.
  N   Mexico   Network Appliance Inc.     100 %
Network Appliance Singapore Private Ltd.
  N   Singapore   Network Appliance Inc.     100 %
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 7) – Page 4

 

 

                     
    Material
Domestic		            
Subsidiary   Subsidiary
(Y/N)		   Jurisdiction   Shareholder   Percentage
Interest
Network Appliance Sdn Bhd
  N   Malaysia   Network Appliance Inc.     100 %
Network Appliance Systems Private Ltd.
  N   India   Network Appliance Inc.     100 %
Network Appliance Argentina Srl
  N   Argentina   Network Appliance Inc.     100 %
Network Appliance Ltd.
  N   Brazil   Network Appliance Inc.     100 %
Network Appliance Canada Ltd.
  N   Canada   Network Appliance Inc.     100 %
Network Appliance (Shanghai) Commercial Co., Ltd.
  N   China   Network Appliance BV     100 %
Network Appliance (Hong Kong) Limited
  N   Hong Kong   Network Appliance BV     100 %
Network Appliance, Inc. (Representative Office)
  N   China, Beijing   Network Appliance Inc.     100 %
Network Appliance, Inc. (Representative Office)
  N   China, Shanghai   Network Appliance Inc.     100 %
Network Appliance, Inc. (Representative Office)
  N   China, Guangzhou   Network Appliance Inc.     100 %
Network Appliance, Inc. (Representative Office)
  N   Korea   Network Appliance Inc.     100 %
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 7) – Page 5

 

 

                     
    Material
Domestic		            
Subsidiary   Subsidiary
(Y/N)		   Jurisdiction   Shareholder   Percentage
Interest
Network Appliance, Inc. (Representative Office)
  N   Taiwan   Network Appliance Inc.     100 %
Network Appliance, Inc. (Representative Office)
  N   Hong Kong   Network Appliance Inc.     100 %
Network Appliance Federal Systems, Inc.
  N   California   Network Appliance Inc.     100 %
Network Appliance Financial Solutions, Inc.
  N   Delaware   Network Appliance Inc.     100 %
Spinnaker Networks, Inc.
  N   Delaware   Network Appliance Inc.     100 %
Spinnaker Networks, LLC
  N   Delaware   Network Appliance Inc.     100 %
Alacritus, Inc.
  N   Delaware   Network Appliance Inc.     100 %
Decru, Inc.
  N   Delaware   Network Appliance Inc.     100 %
Decru BV
  N   Netherlands   Network Appliance Holding & Mfg BV     100 %
Network Appliance Limited
  N   Thailand   Network Appliance Inc.     100 %
Network Appliance Saudi Arabia LLFC
  N   Saudi Arabia   Network Appliance BV     100 %
Decru Ltd.
  N   U.K.   Decru Inc.     100 %
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 7) – Page 6

 

 

                     
    Material
Domestic		            
Subsidiary   Subsidiary
(Y/N)		   Jurisdiction   Shareholder   Percentage
Interest
Topio, Inc.
  N   Delaware   Network Appliance Inc.     100 %
Commitments or Obligations of Borrower or any Subsidiary to issue capital or other equity interests:
     None.
Options, warrants or other rights to acquire capital or other equity interests of Borrower or any Subsidiary:
     None.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 7) – Page 7

 

 

Schedule 3.06
Disclosed Matters
     None.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 7) – Page 8

 

 

Schedule 6.01
Existing Indebtedness
Secured Credit Agreement, dated as of October 5, 2007, by and among Network Appliance, Inc., the lenders party thereto and JPMorgan Chase Bank, National Association, as administrative agent.
Loan Agreement, dated as of March 31, 2006, by and among Network Appliance Global, Ltd., as the borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.
See attached schedule of existing letters of credit and bank guarantees.
Lease Agreements, dated as of December 15, 2005, December 16, 2006, and July 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc., and those certain Closing Certificates executed in connection with such Lease Agreements, dated as of December 15, 2005, December 16, 2006, and July 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 7) – Page 9

 

 

Schedule 6.02
Existing Liens
Liens in connection with items disclosed on Schedule 6.01.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 7) – Page 10

 

 

Schedule 6.05
Existing Affiliate Transactions
Transaction arising in connection with commissionaire agreements between Network Appliance B. V. and each of its subsidiaries and related arrangements with respect to payment of value added taxes.
Transactions arising in connection that certain Technology License Agreement, effective as of May 1, 2000, by and between Network Appliance Global Ltd. and Network Appliance B.V.
Transactions arising in connection that certain Technology License Agreement, effective as of May 1, 2000, by and between Network Appliance Global Ltd. and Network Appliance Inc.
Transactions arising in connection with that certain Technology License Agreement, entered into as of April 27, 2002, by and between Network Appliance, Inc. and Network Appliance Global Ltd.
Transactions arising in connection with that certain Technology License Agreement, entered into as of May 1, 2004, by and between Network Appliance Global Ltd. and Spinnaker Networks Inc.
Transactions arising in connection with that certain Technology License Agreement, entered into as of May 3, 2005, by and between Network Appliance Inc. and Alacritus Inc.
Transactions arising in connection with that certain Technology License Agreement, entered into as of April 29, 2006, by and between Network Appliance Global Ltd. and Decru Inc.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 7) – Page 11

 

 

Schedule 6.06
Existing Restrictive Agreements
Secured Credit Agreement, dated as of October 5, 2007, by and among Network Appliance, Inc., the lenders party thereto and JPMorgan Chase Bank, National Association, as administrative agent.
Loan Agreement dated as of March 31, 2006, by and among Network Appliance Global, Ltd., as the borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
Lease Agreements, dated as of December 15, 2005, December 16, 2006, and June 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc., and those certain
Closing Certificates executed in connection with such Lease Agreements, dated as of December 15, 2005, December 16, 2006, and June 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc.
Letter Agreement between Wells Fargo Bank, National Association, and Borrower, dated as of December 1, 2006, providing Borrower with a revolving line of credit for the issuance of letters of credit in an aggregate principal amount not to exceed $5,000,000.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 7) – Page 12

 

 

Exhibit D
Certificate of BNPPLC Re: Accounting
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Gentlemen:
     This certificate is furnished pursuant to subparagraph 4(A) of the Amended and Restated Closing Certificate and Agreement (Building 7) dated as of November 29, 2007 between BNP Paribas Leasing Corporation and Network Appliance, Inc. (as amended, the “Closing Certificate”). Terms defined in the Closing Certificate and used but not otherwise defined in this certificate are intended to have the respective meanings ascribed to them in the Closing Certificate.
     BNP Paribas Leasing Corporation (“ BNPPLC”) certifies that the following are true and complete in all material respects, but only to the knowledge of BNPPLC as of the date hereof:
     (A) The facts disclosed in any financial statements or other documents listed in the Annex attached to this certificate were (as of their respective dates) true and complete in all material respects. Copies of such statements or other documents were provided by or behalf of BNPPLC to NAI prior to the date hereof to permit NAI to determine the appropriate accounting for NAI’s relationship with BNPPLC under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN 46”).
     (B The fair value of the Property and of other properties, if any, leased to NAI by BNPPLC (collectively, whether one or more, the “Properties Leased to NAI”) are, as of the date hereof, less than half of the total of the fair values of all assets of BNPPLC, excluding any assets of BNPPLC which are held within a silo. Further, none of the Properties Leased to NAI are, as of the date hereof, held within a silo.
     Although the representations required of BNPPLC by this certificate are intended to cover facts, it is understood and agreed (consistent with subparagraph 4(C) of the Lease) that BNPPLC has not made and will not make any representation or warranty as to the proper accounting by NAI or its Affiliates of the Lease or other Operative Documents or as to other accounting conclusions.

 

 

     Executed this                      day of                                          , 20___.
                 
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation		    
 
 
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
Exhibit D to Closing Amended and Restated
Certificate and Agreement (Building 7) – Page 2

 

exv10w32
Exhibit 10.32
AMENDED AND RESTATED
CONSTRUCTION AGREEMENT
(BUILDING 7)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
             
        Page  
ENGAGEMENT AND AUTHORIZATION     1  
 
            
GENERAL TERMS AND CONDITIONS     2  
 
            
1
   Additional definitions     2  
 
   “97-10/Maximum Permitted Prepayment”     2  
 
   “97-10/Meltdown Event”     2  
 
   “97-10/Prepayment”     3  
 
   “97-10/Project Costs”     3  
 
   “97-10/Pronouncement”     4  
 
   “NAI’s Estimate of Force Majeure Delays”     4  
 
   “NAI’s Estimate of Force Majeure Excess Costs”     4  
 
   “Accrued Construction Period Interest Expense”     4  
 
   “Administrative Fee”     5  
 
   “Affiliate’s Contract”     5  
 
   “Arrangement Fee”     5  
 
   “Capital Adequacy Charges”     5  
 
   “Carrying Costs”     5  
 
   “Commitment Fee Rate”     5  
 
   “Commitment Fees”     6  
 
   “Complete Taking”     7  
 
   “Completion Date”     7  
 
   “Completion Notice”     7  
 
   “Construction Advances”     7  
 
   “Construction Advance Request”     7  
 
   “Construction Allowance”     7  
 
   “Construction Budget”     7  
 
   “Construction Project”     7  
 
   “Covered Construction Period Losses”     8  
 
   “Defective Work”     8  
 
   “FOCB Notice”     8  
 
   “Force Majeure Event”     8  
 
   “Funded Construction Allowance”     8  
 
   “Future Work”     9  
 
   “Ground Lease Rents”     9  
 
   “Increased Cost Charges”     9  
 
   “Increased Commitment”     9  
 
   “Increased Funding Commitment”     9  
 
   “Increased Time Commitment”     9  
 
   “Initial Advance”     9  

 

 

TABLE OF CONTENTS
(Continued)
             
        Page  
 
   “Maximum Construction Allowance”     9  
 
   “Notice of NAI’s Intent to Terminate”     9  
 
   “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event”     9  
 
   “Notice of Termination by NAI”     9  
 
   “Outstanding Construction Allowance”     9  
 
   “Owner’s Election to Continue Construction”     9  
 
   “Pre-lease Casualty”     9  
 
   “Pre-lease Force Majeure Delays”     10  
 
   “Pre-lease Force Majeure Event”     10  
 
   “Pre-lease Force Majeure Event Notice”     10  
 
   “Pre-lease Force Majeure Excess Costs”     10  
 
   “Pre-lease Force Majeure Losses”     10  
 
   “Prior Work”     11  
 
   “Projected Cost Overruns”     11  
 
   “Reimbursable Construction Period Costs”     11  
 
   “Remaining Proceeds”     12  
 
   “Scope Change”     12  
 
   “Target Completion Date”     12  
 
   “Termination of NAI’s Work”     12  
 
   “Third Party Contract”     12  
 
   “Third Party Contract/Termination Fees”     12  
 
   “Timing or Budget Shortfall”     12  
 
   “Upfront Fees”     13  
 
   “Work”     13  
 
   “Work/Suspension Event”     13  
 
   “Work/Suspension Notice”     14  
 
   “Work/Suspension Period”     14  
                             
2   Construction and Management of the Property by NAI     14  
    (A)   The Construction Project     14  
          (1 )   Construction Approvals by BNPPLC     14  
 
              (a)   Preconstruction Approvals by BNPPLC     14  
 
              (b)   Approval of Scope Changes     14  
          (2 )   NAI’s Right to Possession and to Control Construction     15  
 
              (a)   Performance of the Work     15  
 
              (b)   Third Party Contracts     16  
 
              (c)   Adequacy of Drawings, Specifications and Budgets     16  
 
              (d)   Existing Condition of the Land and Improvements     16  

(ii)

 

TABLE OF CONTENTS
(Continued)
                             
 
                       Page  
 
              (e)   Correction of Defective Work     16  
 
              (f)   Clean Up     17  
 
              (g)   No Damage for Delays     17  
 
              (h)   No Fee For Construction Management     17  
        (3)     Quality of Work     17  
    (B)   Completion Notice     17  
    (C)   Status of Property Acquired With BNPPLC’s Funds     18  
    (D)   Insurance     18  
        (1)     Liability Insurance     18  
        (2)     Property Insurance     19  
        (3)     Failure of NAI to Obtain Insurance     19  
        (4)     Waiver of Subrogation     19  
    (E)   Condemnation     20  
    (F)   Additional Representations, Warranties and Covenants of NAI Concerning the Property     20  
        (1)     Payment of Local Impositions     20  
        (2)     Operation and Maintenance     21  
        (3)     Debts for Construction, Maintenance, Operation or Development     22  
        (4)     Permitted Encumbrances and the Ground Lease     22  
        (5)     Books and Records Concerning the Property     22  
    (G)   BNPPLC’s Right of Access     23  
        (1)     Access Generally     23  
        (2)     Failure of NAI to Perform     23  
 
                            
3   Amounts to be Added to the Lease Balance (in Addition to Construction Advances)     24  
    (A)   Initial Advance     24  
    (B)   Carrying Costs     25  
    (C)   Commitment Fees     25  
    (D)   Future Administrative Fees and Out-of-Pocket Costs     26  
    (E)   Increased Cost Charges and Capital Adequacy Charges     26  
    (F)   Ground Lease Payments     27  
 
                            
4   Construction Advances     27  
    (A)   Costs Subject to Reimbursement Through Construction Advances     27  
    (B)   Exclusions From Reimbursable Construction Period Costs     29  
    (C)   Conditions to NAI’s Right to Receive Construction Advances     29  
        (1)     Construction Advance Requests     29  
        (2)     Amount of the Advances     30  
 
              (a)   The Maximum Construction Allowance     30  

(iii)

 

TABLE OF CONTENTS
(Continued)
                             
 
                       Page  
 
              (b)   Costs Previously Incurred by NAI     30  
 
              (c)   Limits During any Work/Suspension Period     31  
 
              (d)   Restrictions Imposed for Administrative Convenience     31  
        (3)     No Advances After Certain Dates     31  
    (D)   Breakage Costs for Construction Advances Requested But Not Taken     31  
    (E)   No Third Party Beneficiaries     32  
    (F)   No Waiver     32  
                             
5   Application of Insurance and Condemnation Proceeds     32  
    (A)   Collection and Application Generally     32  
    (B)   Advances of Escrowed Proceeds to NAI     33  
    (C)   Status of Escrowed Proceeds After Commencement of the Term of the Lease     33  
    (D)   Special Provisions Applicable After a 97-10/Meltdown Event or Event of Default     33  
    (E)   NAI’s Obligation to Restore     33  
    (F)   Special Provisions Concerning a Complete Taking     34  
 
                            
6   Notice of Cost Overruns and Pre-lease Force Majeure Events     34  
    (A)   Notice of Projected Cost Overruns     34  
    (B)   Pre-lease Force Majeure Event Events and Notices     34  
 
                            
7   Suspension and Termination of NAI’s Work     34  
    (A)   Rights and Obligations During a Work/Suspension Period     34  
    (B)   NAI’s Election to Terminate NAI’s Work     34  
    (C)   BNPPLC’s Election to Terminate NAI’s Work     38  
    (D)   Surviving Rights and Obligations     38  
    (E)   Cooperation After a Termination of NAI’s Work     38  
 
8   Continuation of Construction by BNPPLC     40  
    (A)   Owner’s Election to Continue Construction     40  
        (1)     Take Control of the Property     40  
        (2)     Continuation of Construction     40  
        (3)     Arrange for Turnkey Construction     41  
        (4)     Suspension or Termination of Construction by BNPPLC     41  
    (B)   Powers Coupled With an Interest     42  
 
                            
9   NAI’s Obligation for 97-10/Prepayments     42  
 
                            
10   Indemnity for Covered Construction Period Losses     43  

(iv)

 

TABLE OF CONTENTS
(Continued)
                             
 
                       Page  
    (A)   Covenant to Indemnify Against Covered Construction Period Losses     43  
    (B)   Certain Losses Included or Excluded     44  
        (1)     Back to Back Claims by Participants Against BNPPLC     44  
        (2)     Environmental     45  
        (3)     Failure to Maintain a Safe Work Site     45  
        (4)     Failure to Complete Construction     46  
        (5)     Fraud     46  
        (6)     Excluded Taxes and Established Misconduct     46  
    (C)   Express Negligence Protection     46  
    (D)   Survival of Indemnity     47  
    (E)   Due Date for Indemnity Payments     47  
    (F)   Order of Application of Payments     47  
    (G)   Defense of BNPPLC     47  
        (1)     Assumption of Defense     47  
        (2)     Indemnity Not Contingent     47  
    (H)   Notice of Claims     48  
    (I)   Withholding of Consent to Settlements Proposed by NAI     48  
    (J)   Settlements Without the Prior Consent of NAI     48  
        (1)     Election to Pay Reasonable Settlement Costs in Lieu of Actual     48  
        (2)     Conditions to Election     49  
        (3)     Indemnity Survives Settlement     49  
    (K)   No Authority to Admit Wrongdoing on the Part of NAI     49  
    (L)   Refunds of Covered Construction Period Losses Paid by NAI     50  
        (1)     Payment by BNPPLC After Refund     50  
        (2)     Meaning of Refund     50  
        (3)     Conditions to Payment     51  
 
                            
11   Characterization of Operative Documents; Remedies     51  
    (A)   Characterization of Operative Documents     51  
        (1)     Confirmation of Lien and Security Interest Granted in the Lease     51  
        (2)     Foreclosure Remedies     51  
    (B)   Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement     52  
    (C)   Remedies Cumulative     52  
    (D)   Third Party Estoppels     53  
 
                            
12   Amendment and Restatement of Prior Construction Agreement     53  

(v)

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
     
Exhibit A
  Legal Description
 
    
Exhibit B
  Description of the Construction Project and Budget
 
    
Exhibit C
  Construction Advance Request Form
 
    
Exhibit D
  Pre-lease Force Majeure Event Notice
 
    
Exhibit E
  Notice of Termination by NAI’s Work
 
    
Exhibit F
  Notice of NAI’s Intent to Terminate
 
    
Exhibit G
  Notice of Increased Funding Commitment by BNPPLC
 
    
Exhibit H
  Notice of Increased Time Commitment by BNPPLC
 
    
Exhibit I
  Notice of Rescission of NAI’s Intent to Terminate
 
    
Exhibit J
  Form of Contractor Estoppel
 
    
Exhibit K
  Form of Design Professional Estoppel

(vi)

 

AMENDED AND RESTATED
CONSTRUCTION AGREEMENT
(BUILDING 7)
     This AMENDED AND RESTATED CONSTRUCTION AGREEMENT (BUILDING 7) (this “Agreement”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Agreement, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (Building 7) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Agreement for all purposes. As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     At the request of NAI and to facilitate the transaction contemplated in the other Operative Documents, contemporaneously with this Agreement BNPPLC is executing and accepting an Amended and Restated Ground Lease (Building 7) from NAI (the “Ground Lease”), pursuant to which BNPPLC is acquiring a leasehold estate in the Land described in Exhibit A and any existing Improvements on such Land.
     Also contemporaneously with this Agreement, BNPPLC and NAI are executing an Amended and Restated Lease Agreement (Building 7) (the “Lease”), pursuant to which the parties expect that NAI will lease the Improvements on the Land described in Exhibit A from BNPPLC for a lease term that will commence on the Completion Date (as defined below).
     In anticipation of the construction of new or additional Improvements for NAI’s use pursuant to the Lease, BNPPLC and NAI have agreed upon the terms and conditions upon which BNPPLC is willing to authorize NAI to arrange and manage such construction and upon which BNPPLC is willing to provide funds for such construction, and by this Agreement BNPPLC and NAI desire to evidence such agreement.
ENGAGEMENT AND AUTHORIZATION
     Subject to the terms and conditions set forth in this Agreement, BNPPLC does hereby engage and authorize NAI — and NAI does hereby accept such engagement and authorization, as an independent contractor for BNPPLC — to construct the Construction Project on the Land and to

 

 

manage such construction for BNPPLC. As more particularly provided in subparagraph 2(A)(2) below, NAI will take possession and control of the Land and all Improvements on the Land to accomplish such construction. However, the rights and authority granted to NAI by this Agreement are expressly made subject and subordinate to the terms and condition hereinafter set forth and to the Ground Lease, to the Permitted Encumbrances and to any other claims or encumbrances affecting the Land or the Property that may be asserted by third parties other than Liens Removable by BNPPLC.
GENERAL TERMS AND CONDITIONS
1 Additional definitions. As used in this Agreement, capitalized terms defined above will have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and that are used but not defined herein will have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms will have the following respective meanings:
“97-10/Maximum Permitted Prepayment” as of any date means the amount equal to eighty-nine and nine-tenths of one percent (89.9%) of the aggregate of all 97-10/Project Costs paid or incurred on or prior to such date.
“97-10/Meltdown Event” means any of the following:
     (a) NAI gives a Notice of NAI’s Intent to Terminate and thereafter (i) fails to rescind the same as described in subparagraph 7(B)(7) within ten days after BNPPLC responds with any Increased Commitment, or (ii) gives a Notice of Termination by NAI as provided in subparagraph 7(B)(1); or
     (b) NAI gives a notice to terminate its Supplemental Payment Obligation under the Purchase Agreement as described in subparagraph 6(B) of the Purchase Agreement; or
     (c) BNPPLC gives notice to NAI as described in subparagraph 7(C) to cause a Termination of NAI’s Work; or
     (d) NAI fails for any reason whatsoever to substantially complete the Construction Project and give a Completion Notice to BNPPLC prior to the Target Completion Date; or
Amended and Restated Construction Agreement (Building 7) – Page 2

 

 

     (e) for any reason whatsoever (including the accrual of Carrying Costs), the Funded Construction Allowance exceeds the Maximum Construction Allowance.
“97-10/Prepayment” means any payment to BNPPLC required by Paragraph 9, which in each case will equal (A) the 97-10/Maximum Permitted Prepayment, computed as of the date on which the payment becomes due, less (B) the sum of (1) the accreted value of any prior payments actually received by BNPPLC from NAI constituting 97-10/Prepayments, and (2) amounts (if any) then owed by BNPPLC to NAI pursuant to this Agreement as reimbursements for Reimbursable Construction Period Costs paid by NAI and not theretofore reimbursed. For purposes of the preceding sentence, “accreted value” of a payment means 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 plus the Spread.
“97-10/Project Costs” means the following:
     (a) costs incurred for 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 any Permitted Encumbrance,
 
  •   site preparation costs, and
 
  •   costs of offsite and other public improvements required as conditions of governmental approvals for the Construction Project or required by any Permitted Encumbrances;
     (b) costs incurred to maintain insurance required by (and consistent with the requirements of) this Agreement prior to the Completion Date;
     (c) Local Impositions that have accrued or become due prior to the Completion Date;
     (d) Accrued Construction Period Interest Expense; and
     (e) any costs in addition to those described in clauses (a) through (d) preceding that GAAP (as it exists on the Effective Date) would allow BNPPLC to
Amended and Restated Construction Agreement (Building 7) – Page 3

 

 

capitalize as part of the cost of the Property or that the 97-10/Pronouncement would allow BNPPLC to characterize as project costs, including: (1) cancellation or termination fees or other compensation payable by NAI or BNPPLC pursuant to any contract concerning the Construction Project made by NAI or BNPPLC with any general contractor, architect, engineer or other third party because of any election by NAI or BNPPLC to cancel or terminate such contract, and (2) any costs that BNPPLC incurs and is allowed to capitalize to continue or complete the Construction Project after any Owner’s Election to Continue Construction as provided in subparagraph 8(A).
However, notwithstanding the foregoing, 97-10/Project Costs will not include Pre-lease Force Majeure Losses, Administrative Fees, the Arrangement Fee or any legal fees which are included in Transaction Expenses.
It is understood that 97-10/Project Costs will include all amounts paid, reimbursed or accrued prior to the Effective Date and included in the Initial Lease Balance that would qualify as 97-10/Project Costs under and as defined in the Prior Construction Agreement. However, it is also understood that 97-10/Project Costs will not include any costs that were paid, reimbursed or accrued prior to the Effective Date, but excluded from 97-10/Project Costs according to the definition thereof in the Prior Construction Agreement. For example, 97-10/Project Costs will not include the fee described and defined as an Arrangement Fee in the Prior Construction Agreement.
“97-10/Pronouncement” means the pronouncement issued by the Emerging Issues Task Force of the Financial Accounting Standards Board in 1998 titled “EITF 97-10: The Effect of Lessee Involvement in Asset Construction”, which provides that certain kinds of involvement by a lessee in pre-lease commencement construction will cause the lessee to be considered as the owner of the leased property during the construction period and then will require application of the appropriate sale and leaseback accounting rules.
“NAI’s Estimate of Force Majeure Delays” has the meaning indicated in subparagraph 7(B)(4).
“NAI’s Estimate of Force Majeure Excess Costs” has the meaning indicated in subparagraph 7(B)(3).
“Accrued Construction Period Interest Expense” means interest that has accrued and that BNPPLC has paid or is obligated to pay on Funding Advances for any period prior to the Completion Date. Such interest will include a percentage, equal to the aggregate Percentages of all Participants (under and as defined in the Participation Agreement), of Carrying Costs and Commitment Fees that accrue after the execution of any Participation Agreement and that are added to the Outstanding Construction Allowance as provided in
Amended and Restated Construction Agreement (Building 7) – Page 4

 

 

this Agreement, it being understood that the additional amounts BNPPLC must pay to the Participants under the Participation Agreement because of the accrual of Carrying Costs and Commitment Fees effectively constitute construction period interest on advances the Participants make to BNPPLC under the Participation Agreement. Accrued Construction Period Interest Expense will also include any interest and other finance charges that accrue prior to the Completion Date because of Funding Advances provided to BNPPLC by BNPPLC’s Parent in the form of loans, regardless of whether BNPPLC’s obligation in respect of such loans is limited to BNPPLC’s interest in the Property. However, any such interest and other finance charges accruing on Funding Advances provided by BNPPLC’s Parent and included in Accrued Construction Period Interest Expense will not exceed the Carrying Costs attributable to the portion of the Lease Balance funded or maintained by such Funding Advances. Further, Accrued Construction Period Interest will not include any portion of Carrying Costs included in Pre-lease Force Majeure Losses (as set forth in the definition thereof below) or interest or finance charges that BNPPLC must pay to the Participants under the Participation Agreement because of the accrual of such portion of Carrying Costs.
“Administrative Fee” has the meanings indicated in subparagraph 3(A) and subparagraph 3(D).
“Affiliate’s Contract” has the meaning indicated in subparagraph 2(A)(2)(b)2).
“Arrangement Fee” has the meaning indicated in subparagraph 3(A).
“Capital Adequacy Charges” has the meaning indicated in subparagraph 3(E)(1).
“Carrying Costs” has the meaning indicated in subparagraph 3(B).
“Commitment Fee Rate” means, for each Construction Period, the amount established as of the date (in this definition, the “CFR Test Date”) that is two Business Days prior to such period by reference to the pricing grid below, based upon the ratio calculated by dividing (1) Consolidated EBITDA for the then latest Rolling Four Quarters Period that ended prior to (and for which NAI has reported earnings as necessary to compute Consolidated EBITDA) into (2) the Consolidated Debt for Borrowed Money as of the end of such Rolling Four Quarters Period. In each case, the Commitment Fee Rate will be established at the Level in the pricing grid below which corresponds to such ratio; provided, that:
     (a) promptly after earnings are reported by NAI for the latest quarter in any Rolling Four Quarters Period, NAI must notify BNPPLC of any resulting change in the
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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 this Agreement unless, prior to the CFR Test Date for the next period, NAI shall have provided BNPPLC with a written notice setting forth and certifying the calculation under this definition that justifies the reduction; and
     (b) if Commitment Fees are understated during any Construction Period because of any misstatement, subsequently discovered, of Consolidated EBITDA or Consolidated Debt for Borrowed Money, BNPPLC will be entitled to add to the Outstanding Construction Allowance or (after the Completion Date) collect from NAI all additional amounts that would have been added to the Outstanding Construction Allowance hereunder or expected to be paid under the other Operative Documents but for the misstatement, together with interest on each such additional amount computed at the Default Rate from the date it would have been included in the Outstanding Construction Allowance or expected to be paid to the date it is actually added or paid.
         
    Ratio of Consolidated Debt for    
    Borrowed Money to    
Levels   Consolidated EBITDA   Spread
Level I
  less than 0.5   6.0 basis points
 
        
Level II
  greater than or equal to 0.5, but
less than 1.0 		  7.0 basis points
 
        
Level III
  greater than or equal to 1.0, but
less than 1.5 		  8.0 basis points
 
        
Level IV
  greater than or equal to 1.5, but
less than 2.0 		  10.0 basis point
 
        
Level V
  greater than or equal to 2.0   15.0 basis points
All determinations of the Commitment Fee Rate by BNPPLC will, in the absence of clear and demonstrable error, be binding and conclusive for purposes of this Agreement. Further BNPPLC may, but will 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 (a) of this definition.
“Commitment Fees” has the meaning indicated in subparagraph 3(C).
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“Complete Taking” means a taking by eminent domain prior to the Completion Date over NAI’s objection of all of the Land or the Property, or so much thereof as to make it impossible to complete the Construction Project for its intended uses on the Land regardless of any Scope Changes BNPPLC may be willing to approve or any Increased Commitment that BNPPLC may be willing to provide.
“Completion Date” means the date upon which NAI gives the notice to BNPPLC which is required by subparagraph 2(B), after having substantially completed the Construction Project and having obtained any certificate of occupancy or other permit (temporary or permanent) required for the commencement of NAI’s use of the Improvements.
“Completion Notice” means the notice required by subparagraph 2(B) from NAI to BNPPLC, advising BNPPLC that NAI has substantially completed construction of the Construction Project and has obtained any certificate of occupancy or other permit (temporary or permanent) required for the commencement of NAI’s use of the Improvements.
“Construction Advances” means (1) actual advances of funds made by or on behalf of BNPPLC to or on behalf of NAI as provided in Paragraph 4, which sets forth NAI’s rights to receive advances for Reimbursable Construction Period Costs, and (2) other amounts paid or incurred by BNPPLC that subparagraph 8(A) or other provisions of this Agreement allow BNPPLC to characterize as Construction Advances. The term “Construction Advances” will not, however, include advances of insurance proceeds, condemnation proceeds or other Escrowed Proceeds to pay or reimburse costs of repairs or restoration.
“Construction Advance Request” has the meaning indicated in subparagraph 4(C)(1).
“Construction Allowance” means the allowance to be provided by BNPPLC for the design and construction of the Construction Project, against which and from which Carrying Costs, Construction Advances and other amounts will be or may be charged and paid as provided in various provisions of this Agreement (including Paragraphs 3, 4 and 8).
“Construction Budget” means the budget for the Construction Project set forth in Exhibit B.
“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.
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“Covered Construction Period Losses” has the meaning indicated in subparagraph 10(A).
“Defective Work” has the meaning indicated in subparagraph 2(A)(2)(e).
“FOCB Notice” means a notice from BNPPLC to NAI advising NAI of any of the following events or circumstances, and also advising NAI that because of any of the following events or circumstances BNPPLC will be entitled to make the election described in subparagraph 7(C), which will constitute a Termination of NAI’s Work and a 97-10/Meltdown Event:
     (1) NAI has taken action to cancel or terminate or reduce the coverage available to BNPPLC under the builder’s risk insurance obtained for the Construction Project as required by this Agreement, or NAI has otherwise failed to maintain any insurance or to provide insurance certificates to BNPPLC as required by this Agreement and not cured such failure within ten days after receiving notice thereof, or
     (2) NAI has given any Pre-lease Force Majeure Event Notice to BNPPLC, or
     (3) an Event of Default has occurred and is continuing; or
     (4) a Work/Suspension Event has occurred and continued for more than thirty consecutive days after NAI’s receipt of a Work/Suspension Notice advising NAI of such Work/Suspension Event, and subsequent to such thirty day period the Work/Suspension Event has not been rectified by NAI.
“Force Majeure Event” means (A) any taking of any part of the Property by eminent domain prior to the Completion Date, and (B) any damage to the Improvements or disruption of the Work that occurs prior to the Completion Date and that is caused by fire or acts of God (such as flood, lightning, earthquake or hurricane), war, strikes and other labor disputes, or riot or similar civil disturbance, but only to the extent such damage or disruption (i) is beyond the control of and not caused in whole or in part by negligence, illegal acts or willful misconduct on the part of NAI or of its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI, and (ii) could not have been avoided or overcome by the exercise of due diligence or reasonable foresight on the part of NAI or of any other such party.
“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
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Outstanding Construction Allowance.
“Future Work” has the meaning indicated in subparagraph 4(C)(2)(b).
“Ground Lease Rents” has the meaning indicated in subparagraph 3(F).
“Increased Cost Charges” has the meaning indicated in subparagraph 3(E)(1).
“Increased Commitment” has the meaning indicated in subparagraph 7(B)(6).
“Increased Funding Commitment” has the meaning indicated in subparagraph 7(B)(6)(a).
“Increased Time Commitment” has the meaning indicated in subparagraph 7(B)(6)(b).
“Initial Advance” has the meaning indicated in subparagraph 3(A).
“Maximum Construction Allowance” means an amount equal to the difference computed by subtracting both the Initial Lease Balance and the Initial Advance from $48,500,000, as such amount may be increased from time to time by any Increased Funding Commitment made by BNPPLC as provided in subparagraph 7(B)(6).
“Notice of NAI’s Intent to Terminate” has the meaning indicated in subparagraph 7(B)(2).
“Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” has the meaning indicated in subparagraph 7(B)(5).
“Notice of Termination by NAI” has the meaning indicated in subparagraph 7(B)(1).
“Outstanding Construction Allowance” means, as of any date, the difference (but not less than zero) of (A) the total Construction Advances made by or on behalf of BNPPLC on or prior to such date in question, plus (B) all Carrying Costs, Commitment Fees, Administrative Fees, Increased Cost Charges and Capital Adequacy Charges added on or prior to the date as provided in Paragraph 3, less (C) any funds received and applied as Qualified Prepayments on or prior to such date.
“Owner’s Election to Continue Construction” has the meaning indicated in subparagraph 8(A).
“Pre-lease Casualty” has the meaning indicated in subparagraph 2(A)(2)(a).
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“Pre-lease Force Majeure Delays” means delays in the completion of the Work to the extent (but only to the extent) caused solely by a Pre-lease Force Majeure Event.
“Pre-lease Force Majeure Event” means a Force Majeure Event that occurs prior to the Completion Date; provided, however, that if NAI does not notify BNPPLC of any such Force Majeure Event by the delivery of a Pre-lease Force Majeure Event Notice within thirty days after the Force Majeure Event first occurs or commences, then such Force Majeure Event will not qualify as a “Pre-lease Force Majeure Event” for purposes of this Agreement or the other Operative Documents.
“Pre-lease Force Majeure Event Notice” has the meaning indicated in subparagraph 6(B).
“Pre-lease Force Majeure Excess Costs” means the amount (if any) by which the increases in the costs of the Work resulting directly and solely from a Pre-lease Force Majeure Event (such as, for example, the costs of repairing damage to the Improvements caused by a Pre-lease Force Majeure Event) exceed the amounts available to pay or reimburse NAI for such increased costs. Amounts available to pay or reimburse such increased costs will include (a) insurance proceeds or any recovery from a third party (including any Escrowed Proceeds held by BNPPLC), and (b) any part of the Construction Allowance (including any unused contingency amount in the Construction Budget) not used or needed to cover other Reimbursable Construction Period Costs.
“Pre-lease Force Majeure Losses” means any of the following Losses that BNPPLC suffers by reason of any taking or damage to the Improvements which constitutes a Pre-lease Force Majeure Event:
     (a) the costs of repairing any such damage to the extent that such costs have, as of the date of any required determination of Pre-lease Force Majeure Losses, been paid or reimbursed from a Construction Advance (and thus are included in the Lease Balance as of that date), to be distinguished from costs of repairs paid or reimbursed from insurance proceeds or from any recovery from a third party;
     (b) any diminution in the value of the Improvements resulting from any such taking or resulting from any such damage that has not, as of the date of the required determination of Pre-lease Force Majeure Losses, been repaired;
     (c) any increase in the total amount of Carrying Costs, Commitment Fees, Administrative Fees, Increased Cost Charges, Capital Adequacy Charges and Ground Lease Rents (and any other amounts) added to the Lease Balance as
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provided in Paragraph 3 solely by reason of Pre-lease Force Majeure Delays; and
     (d) to the extent not already included in the increase described in the preceding clause, all increases in Carrying Costs that are attributable to the amounts included in Pre-lease Force Majeure Losses pursuant to the preceding clause (a);
but in each case such amounts will constitute Pre-lease Force Majeure Losses only to the extent, if any, that they are not offset by condemnation or insurance proceeds which are (1) paid by reason of such Pre-lease Force Majeure Event (including insurance proceeds paid to compensate BNPPLC or NAI for increased financing costs, the lost time value of BNPPLC’s investment in the Project or business interruption) and (2) applied as a Qualified Prepayment to reduce the Lease Balance.
Also, for purposes of this definition, the diminution in the value of the Improvements, as described in the preceding clause (b), because of any damage that constitutes a Pre-lease Force Majeure Event will not exceed the amount thereof estimated in good faith by any independent appraiser or insurance adjuster engaged by BNPPLC to determine such amount after BNPPLC has received a Pre-lease Force Majeure Event Notice as provided in subparagraph 6(B), nor will it exceed the cost of repairing the damage as estimated in good faith by any such independent insurance adjuster or as indicated by any bona fide written bid to make the repairs that BNPPLC obtains from a reputable contractor capable of making the repairs.
“Prior Work” has the meaning indicated in subparagraph 4(C)(2)(b).
“Projected Cost Overruns” means 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 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, plus (ii) any Escrowed Proceeds then available or expected to be available to cover costs of repairs and restoration that NAI will perform as part of the Work after a casualty or condemnation, less (iii) all projected future Carrying Costs, Commitment Fees, Administrative Fees and other amounts to be added to the Outstanding Construction Allowance as provided in Paragraph 3.
“Reimbursable Construction Period Costs” has the meaning indicated in subparagraph 4(A).
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“Remaining Proceeds” has the meaning indicated in subparagraph 5(A).
“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 the site plan or 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 BNPPLC by NAI. As used in this definition, a “material difference” means a difference that could reasonably be expected to (a) cause the Lease Balance to exceed the fair market value of the Property when the Construction Project is completed and all Construction Advances required in connection therewith have been funded, or significantly increase any such excess, (b) change the general character of the Improvements from that needed to accommodate the uses to be permitted by subparagraph 2(A) of the Lease, or (c) cause or exacerbate Projected Cost Overruns.
“Target Completion Date” means January 2, 2008, as such date may be extended from time to time by any Increased Time Commitment made by BNPPLC as provided in subparagraph 7(B)(6)(b).
“Termination of NAI’s Work” means a termination of NAI’s rights and obligations to continue the Work because of an election to terminate made by NAI pursuant to subparagraph 7(B) or because of an election by BNPPLC made pursuant to subparagraph 7(C).
“Third Party Contract” has the meaning indicated in subparagraph 2(A)(2)(b)1).
“Third Party Contract/Termination Fees” means any amounts, 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 only by reason of Prior Work as of the date of any such termination will not be characterized as Third Party Contract/Termination Fees. If NAI reserves an absolute express right in a Third Party Contract to terminate such contract at any time, without cause, for a specified U.S. dollar amount, such amount will constitute a Third Party Contract/Termination Fee. If no such right is reserved in a Third Party Contract, the amount of damages that NAI is required to pay (in addition to payments required for Prior Work) upon a repudiation of the Third Party Contract by NAI will qualify as a “Third Party Contract/Termination Fee” applicable to such contract for purposes of this Agreement.
“Timing or Budget Shortfall” means that, as of any time prior to the Completion Date, (i) the remaining available Construction Allowance will not be sufficient to cover
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Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances (x) because the cost of the Work exceeds budgeted expectations (resulting in Projected Cost Overruns) through no fault of NAI or its employees or any other party acting under NAI’s control or with the approval or authorization of NAI, (y) because of any Pre-lease Force Majeure Event or (z) because NAI can no longer satisfy conditions to BNPPLC’s obligation to provide further Construction Advances, or (ii) the Work will not be substantially completed prior to the Target Completion Date through no fault of NAI or its employees or any other party acting under NAI’s control or with the approval or authorization of NAI. As used in this definition with respect to any party, the term “fault” will not include inadequate estimation of time or dollars unless shown to be caused by the negligence or wilful misconduct of that party.
“Upfront Fees” has the meaning indicated in subparagraph 3(A).
“Work” has the meaning indicated in subparagraph 2(A)(2)(a), and it includes all work and services, labor and materials provided by or on behalf of the Prior Construction Agreement.
“Work/Suspension Event” means any of the following:
     (1) Projected Cost Overruns have become more likely than not, in BNPPLC’s good faith judgment (taking into account any notices or Construction Draw Requests from NAI indicating that a Pre-lease Force Majeure Event may result in Projected Cost Overruns), and BNPPLC has notified NAI of such judgement and the reasons therefor.
     (2) Delays in the Work (including any delays resulting from damage to the Property by fire or other casualty or from any taking of any part of the Property by condemnation) have made it substantially unlikely, in BNPPLC’s good faith judgment, that NAI will be able to complete the Construction Project in accordance with the requirements of this Agreement prior to the Target Completion Date using only the funds available to NAI under this Agreement, and BNPPLC has notified NAI of such judgement and the reasons therefor.
     (3) BNPPLC has requested with respect to any Construction Advance, but NAI has failed to provide within thirty days after receipt of the request: (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 or other evidence reasonably establishing that all prior Construction Advances paid to NAI have been used by NAI to pay the Reimbursable Construction Period Costs for which the prior advances were requested and made.
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“Work/Suspension Notice” means a notice from BNPPLC to NAI advising NAI of any event or circumstances that constitute a Work/Suspension Event and advising NAI that (1) before the Work/Suspension Event is rectified BNPPLC may limit Construction Advances to NAI as permitted by this Agreement, and (2) unless NAI does rectify the Work/Suspension Event within thirty days after NAI’s receipt of such notice, BNPPLC may elect to send an FOCB Notice in anticipation of a Termination of NAI’s Work.
“Work/Suspension Period” means any period (1) beginning with the date of any Work/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 Work/Suspension Events are continuing, (ii) all previous FOCB Notices and Notices of NAI’s Intent to Terminate (if any) have been rescinded, and (iii) no 97-10/Meltdown Events have occurred, or (b) the effective date of any Termination of NAI’s Work as described in subparagraph 7(B) or subparagraph 7(C).
2   Construction and Management of the Property by NAI.
     (A) The Construction Project.
     (1) Construction Approvals by BNPPLC.
     (a) Preconstruction Approvals by BNPPLC. NAI has submitted and obtained BNPPLC’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 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, must not be inconsistent in any material respect with the plans or other items referenced in Exhibit B, except to the extent otherwise provided by any Scope Change approved by BNPPLC and except as otherwise provided in subparagraph 8(A) if BNPPLC should make an Owner’s Election to Continue Construction after any Termination of NAI’s Work.
     (b) Approval of Scope Changes. Before making a Scope Change, NAI must provide to BNPPLC a reasonably detailed written description of the Scope Change, a revised Construction Budget 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 BNPPLC before the Scope Change is implemented. After receiving such items, BNPPLC will endeavor in good faith to respond promptly (and in any event no later than thirty days after such receipt) to any request by NAI for approval of the Scope Change. BNPPLC
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will not, however, be liable for any failure to provide a prompt response. Further, BNPPLC’s approval will not in any event constitute a waiver of subparagraph 2(A)(3) or of any other provision of this Agreement or other Operative Documents.
     (2) NAI’s Right to Possession and to Control Construction. Subject to the terms and conditions set forth in this Agreement, and prior to any Termination of NAI’s Work as provided in subparagraphs 7(B) and 7(C), NAI will have possession of the Land and all Improvements on the Land to the exclusion of BNPPLC and will 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 vest in BNPPLC (as more particularly provided in subparagraph 2(C)), BNPPLC’s obligation with respect to the Construction Project will be limited to the making of advances under and subject to the conditions set forth in this Agreement. Without limiting the foregoing, NAI acknowledges and agrees that:
     (a) Performance of the Work. Except as provided in subparagraphs 7(A) and 7(D), NAI must, using its best skill and judgment and in an expeditious and economical manner not inconsistent with the interests of BNPPLC, perform or cause to be performed all work required, and must provide or cause to be provided all supplies and materials required, to design and complete construction of the Construction Project (collectively, the “Work”) no later than the Target Completion Date. 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, or required in connection with the use and occupancy thereof (e.g., 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 Completion Date (a “Pre-lease Casualty”); provided, however, the cost of any such repairs or restoration will be subject to reimbursement not only through Construction Advances made to NAI on and subject to the terms and conditions of this Agreement, but also through the application of Escrowed Proceeds as provided in Paragraph 5; and, provided further, like other Work, any such repairs and restoration to be provided by NAI will be subject to subparagraphs 7(A) and 7(B), which establish certain rights of NAI to suspend or discontinue any Work. 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.
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     (b) Third Party Contracts.
     1) NAI will 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 BNPPLC or otherwise purport to bind BNPPLC 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 must reserve the right to terminate such contract at any time, without cause, and without subjecting NAI to liability for any Third Party Contract/Termination Fee. Further, NAI must 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.
     (c) Adequacy of Drawings, Specifications and Budgets. BNPPLC has not made and will not make any representations as to the adequacy of the Construction Budget or any other budget or any 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.
     (d) Existing Condition of the Land and Improvements. NAI is familiar with the conditions of the Land and any existing Improvements on the Land. NAI will have no claim for damages against BNPPLC or for an increase in the Construction Allowance or for an extension of the deadline specified in subparagraph 2(A)(2)(a) for completing the Work by reason of any condition (concealed or otherwise) of or affecting the Land or Improvements.
     (e) Correction of Defective Work. NAI will promptly correct all Work performed prior to any Termination of NAI’s Work that does not comply with the requirements of this Agreement for any reason other than a Pre-lease Casualty (“Defective Work”). If NAI fails to correct any Defective Work or fails to carry out Work in accordance with this Agreement, BNPPLC may (but will not be required to) order NAI to stop all Work until the cause for such failure has been eliminated.
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     (f) 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.
     (g) No Damage for Delays. NAI will have no claim for damages against BNPPLC or for an increase in the Construction Allowance by reason of any delay in the performance of any Work. Nor will NAI have any claim for an extension of the deadline specified in subparagraph 2(A)(2)(a) for completing the Work because of any such period of delay, except that (i) in the case of any Pre-lease Force Majeure Delays, NAI will have certain rights as set forth in subparagraph 7(B) and other provisions of this Agreement, and (ii) in the event of intentional interference with the Work by BNPPLC itself for which NAI provides written notice to cease, NAI will be entitled to an extension of the deadline specified in subparagraph 2(A)(2)(a) as needed because of any delays resulting from such intentional interference. It is also understood that any such intentional interference by BNPPLC will constitute a Force Majeure Event. In no event, however, will BNPPLC’s exercise of its rights and remedies permitted under this Agreement or the other Operative Documents be construed as intentional interference with NAI’s performance of any Work; and thus neither BNPPLC’s exercise of its right to withhold Construction Advances at any time when NAI has failed to satisfy all conditions herein to such advances, nor BNPPLC’s exercise of its right to terminate Work by NAI as provided in subparagraph 7(C), be considered as intentional interference with the Work or a Pre-lease Force Majeure Event.
     (h) No Fee For Construction Management. NAI will have no claim under this Agreement for any fee or other compensation or for any reimbursement of internal administrative or overhead expenses (other than the out-of-pocket overhead expenses properly included in the Construction Budget, if any), it being understood that NAI is executing this Agreement in consideration of the rights expressly granted to it herein and in the other Operative Documents.
     (3) Quality of Work. NAI will 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, and (c) in compliance with the provisions of this Agreement and the material provisions of the Permitted Encumbrances.
     (B) Completion Notice. Within fifteen Business Days after NAI substantially completes construction of the Construction Project and obtains any certificate of occupancy or
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other permit (temporary or permanent) required by Applicable Laws for the commencement of NAI’s use and occupancy of the Improvements, NAI must provide a notice (a “Completion Notice”) to BNPPLC, advising BNPPLC thereof, and thereby establish the Completion Date. For purposes of this Agreement and the other Operative Documents, BNPPLC will be entitled to rely without investigation upon any such notice given by NAI as evidence that NAI has, in fact, substantially completed the Construction Project and has obtained any certificate of occupancy or other permit (temporary or permanent) required for the commencement of NAI’s use of the Improvements, and after giving any such notice NAI will be estopped from later claiming that the Completion Date has not occurred.
     (C) Status of Property Acquired With BNPPLC’s Funds. All Improvements constructed on the Land as provided in this Agreement or the Prior Construction Agreement will constitute “Property” for purposes of the Lease and other Operative Documents. Further, to the extent heretofore or hereafter acquired (in whole or in part) with funds previously advanced by BNPPLC under the Prior Construction Agreement or with any portion of the Initial Advance or with any Construction Advances or with other funds for which NAI receives reimbursement from such funds previously advanced, the Initial Advance or Construction Advances, all furnishings, furniture, chattels, permits, licenses, franchises, certificates and other personal property of whatever nature will be considered as having been acquired on behalf of BNPPLC by NAI and will constitute “Property” for purposes of the Lease and other Operative Documents, as will all renewals or replacements of or substitutions for any such Property. The parties intend that title to the Improvements and to any other such Property will vest in BNPPLC without passing through NAI or NAI’s Affiliates before it is transferred to BNPPLC from contractors, suppliers, vendors or other third Persons, but with the understanding that all such Property will be accepted by BNPPLC subject to the terms and conditions of the other Operative Documents, including subparagraph 4(C)(1) of the Lease (concerning the characterization of the Lease and other Operative Documents for tax and certain other purposes). Although nothing herein constitutes authorization of NAI by BNPPLC to bind BNPPLC to any construction contract or other agreement with a third Person, any construction contract or other agreement executed by NAI for the acquisition or construction of Improvements or other components of the Property may, as NAI deems appropriate, provide for the direct transfer of title to BNPPLC as described in the preceding sentence.
     (D) Insurance.
     (1) Liability Insurance. Throughout the period prior to any Termination of NAI’s Work, NAI must 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 Minimum Insurance Requirements, which are set forth in an exhibit to the Common Definitions and Provisions Agreement. NAI must deliver and maintain with
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BNPPLC for each liability insurance policy required by this Agreement 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 Minimum Insurance Requirements.
     (2) Property Insurance. Throughout the period prior to any Termination of NAI’s Work, NAI must also 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 Minimum Insurance Requirements. NAI must deliver and maintain with BNPPLC for each property insurance policy required by this Agreement 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 Minimum Insurance Requirements. If any of the Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance has been required hereunder, (i) BNPPLC may, but will not be obligated to, make proof of loss if not made promptly by NAI after notice from BNPPLC, (ii) each insurance company concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC for application as required by Paragraph 5, and (iii) BNPPLC may settle, adjust or compromise any and all claims for loss, damage or destruction under any policy or policies of insurance (provided, that so long as no 97-10/Meltdown Event has occurred and no Event of Default has occurred and is continuing, BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s intention to settle any such claim before settling it unless NAI has already approved of the settlement by BNPPLC). BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any insurance proceeds. If any casualty results in damage to or loss or destruction of the Property, NAI must give prompt notice thereof to BNPPLC and Paragraph 5 will apply.
     (3) Failure of NAI to Obtain Insurance. If NAI fails to obtain any insurance or to provide confirmation of any insurance as required by this Agreement, BNPPLC will 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 BNPPLC’s other remedies under the circumstances, BNPPLC may charge the cost of such insurance against the Construction Allowance as if it were a Construction Advance paid to NAI as hereinafter provided.
     (4) 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 BNPPLC or any other Interested Party for any and all Losses, to the extent that NAI is compensated by
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insurance or would be compensated by the insurance policies contemplated in this Agreement, 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 Agreement. 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.
     (E) 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 must promptly notify the other (provided, however, BNPPLC will have no liability for its failure to provide such notice) of the pendency of such proceedings. Prior to any Termination of NAI’s Work, NAI must, if requested by BNPPLC, diligently prosecute any such proceedings and consult with BNPPLC, its attorneys and experts and cooperate with them as reasonably 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 will be paid to BNPPLC as Escrowed Proceeds, and all such proceeds will be applied as provided in Paragraph 5. BNPPLC is hereby authorized, in its own name or in the name of NAI or in the name of both, to settle and deliver valid acquittances for, or to challenge and to appeal from, any such judgment, decree or award concerning condemnation of any of the Property (provided, that so long as no 97-10/Meltdown Event has occurred and no Event of Default has occurred and is continuing, BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s intention to settle any such claim before settling it unless NAI has already approved of the settlement by BNPPLC). BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any such proceeds, judgments, decrees or awards.
     (F) Additional Representations, Warranties and Covenants of NAI Concerning the Property. Without limiting the rights granted to NAI by other provisions of this Agreement to be reimbursed from Construction Advances for the cost of complying with the following, NAI represents, warrants and covenants as follows:
     (1) Payment of Local Impositions. Throughout the period prior to any Termination of NAI’s Work, NAI must pay or cause to be paid prior to delinquency all ad valorem taxes assessed against the Property and other Local Impositions. If requested by BNPPLC from time to time, NAI will furnish BNPPLC with receipts or other appropriate evidence showing payment of all Local Impositions prior to the applicable delinquency date therefor.
Notwithstanding the foregoing, NAI may in good faith, by appropriate proceedings,
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contest the validity, applicability or amount of any asserted Local Imposition, and pending such contest NAI will not be deemed in default under any of the provisions of this Agreement because of the Local Imposition if (1) NAI diligently prosecutes such contest to completion in a manner reasonably satisfactory to BNPPLC, 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 must be concluded and the contested Local Impositions must be paid by NAI prior to the earlier of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC 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 BNPPLC (including the Property) may be seized or sold or any other action is taken or overtly threatened against BNPPLC or against any property owned or leased by BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     (2) Operation and Maintenance. Throughout the period prior to any Termination of NAI’s Work, NAI must operate and maintain the Property in a good and workmanlike manner and in compliance with Applicable Laws in all material respects and 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 complaint or demand for corrective action given by any Governmental Authority to NAI, or to BNPPLC and forwarded by it to NAI, then for purposes of the preceding sentence, NAI will be considered not to have maintained the Property “in compliance with all Applicable Laws in all material respects” whether or not the noncompliance would be material in the absence of the complaint or demand.) NAI must 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. Without limiting the generality of the foregoing, NAI must not conduct or permit others to conduct Hazardous Substance Activities on the Property, except Permitted Hazardous Substance Use and Remedial Work; and NAI must not discharge or permit the discharge of anything (including Permitted Hazardous Substances) on or from the Property that would require any permit under applicable Environmental Laws, other than (1) storm water runoff, (2) fume hood emissions, (3) waste water discharges through a publicly owned treatment works, (4) discharges that are a necessary part of any Remedial Work, and (5) other similar discharges consistent with the definition of Permitted
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Hazardous Substance Use which do not significantly increase the risk of Environmental Losses to BNPPLC, in each case in strict compliance with Environmental Laws. To the extent that any of the following would, individually or in the aggregate, increase the likelihood of a 97-10/Meltdown Event or materially and adversely affect the value of the Property or the use of the Property for purposes permitted by this Agreement, NAI must not, without BNPPLC’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. NAI will 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 must not do anything that could reasonably be expected to significantly reduce the market value of the Property. If NAI receives a notice or claim from any federal, state or other governmental authority that the Property is not in compliance with any Applicable Law, or that any action may be taken against BNPPLC because the Property does not comply with any Applicable Law, NAI must promptly furnish a copy of such notice or claim to BNPPLC.
     (3) Debts for Construction, Maintenance, Operation or Development. NAI must promptly pay or cause to be paid all debts and liabilities incurred by it or its contractors or subcontractors in the construction, maintenance, operation or development of the Property. Such debts and liabilities will include those incurred for labor, material and equipment and all debts and charges for utilities servicing the Property.
     (4) Permitted Encumbrances and the Ground Lease. NAI must 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 or the Ground Lease throughout the period prior to any Termination of NAI’s Work. NAI must not, without the prior consent of BNPPLC, create any new Permitted Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted Encumbrance that would create or expand or purport to create or expand obligations or restrictions encumbering BNPPLC’s interest in the Property. (Whether BNPPLC must give any such consent requested by NAI prior to the Completion Date will be governed by subparagraph 4(C) of the Closing Certificate.)
     (5) Books and Records Concerning the Property. NAI must keep books and records that are accurate and complete in all material respects for NAI’s construction and management of the Property as contemplated in this Agreement and must 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)
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to be inspected and copied by BNPPLC.
     (G) BNPPLC’s Right of Access.
     (1) Access Generally. BNPPLC and BNPPLC’s representatives may enter the Property at any time for the purpose of making inspections or performing any work BNPPLC is authorized to undertake by the next subparagraph or for the purpose confirming whether NAI has complied with the requirements of this Agreement or the other Operative Documents. However, prior to any Termination of NAI’s Work, BNPPLC or BNPPLC’s representative will, before making any entry upon the Property or performing any work on the Property authorized by this Agreement, do the following
     (a) BNPPLC will give NAI at least 24 hours notice, unless BNPPLC believes in good faith that an emergency may exist or a Default has occurred and is continuing, because of which significant damage to the Property or other significant Losses may be sustained if BNPPLC delays entry to the Property; and
     (b) if then requested to do so by NAI in order to maintain NAI’s security, BNPPLC or its representative will: (i) sign in at NAI’s security or information desk if NAI has such a desk on the premises, (ii) wear a visitor’s badge or other reasonable identification, (iii) permit an employee of NAI to observe such inspection or work, and (iv) comply with other similar reasonable nondiscriminatory security requirements of NAI that do not, individually or in the aggregate, significantly interfere with inspections or work of BNPPLC authorized by this Agreement.
     (2) Failure of NAI to Perform. If NAI fails to perform any act or to take any action required of it by this Agreement or other Operative Documents, or to pay any money which NAI is required by this Agreement or other Operative Documents to pay, and if such failure or action constitutes an Event of Default or renders BNPPLC or any director, officer, employee or Affiliate of BNPPLC at risk of criminal prosecution or renders BNPPLC’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, BNPPLC may, perform or cause to be performed such act or take such action or pay such money. (To the extent that expenses so incurred by BNPPLC, or money so paid by BNPPLC, qualify as a Covered Construction Period Losses, NAI must pay the same to BNPPLC upon demand. If any such expenses incurred or money paid do not qualify as Covered Construction Period Losses, but do constitute 97-10/Project Costs, BNPPLC may treat them as Construction Advances hereunder. To the extent that any such expenses incurred or money paid do not qualify as Covered Construction Period Losses and do constitute 97-10/Project Costs, they will be included — with interest — in the
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Balance of Unpaid Covered Construction Period Losses under and as defined in the Purchase Agreement.) Further, BNPPLC, upon making such payment, will be subrogated to all of the rights of the person, corporation or body politic receiving such payment. But nothing herein will imply any duty upon the part of BNPPLC to do any work which, under any provision of this Agreement or otherwise, NAI may be required to perform, and the performance thereof by BNPPLC will not constitute a waiver of NAI’s default. BNPPLC may during the progress of any such work permitted by BNPPLC hereunder on or in the Property keep and store upon the Property all necessary materials, tools, and equipment. BNPPLC will 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 BNPPLC’s performance of any such work, or on account of bringing materials, supplies and equipment into or through the Property during the course of such work, and the obligations of NAI under this Agreement and the other Operative Documents will not thereby be excused in any manner.
3   Amounts to be Added to the Lease Balance (in Addition to Construction Advances).
     (A) Initial Advance. Upon execution and delivery of this Agreement by BNPPLC, an advance (the “Initial Advance”) will be made by BNPPLC to cover the cost of certain Transaction Expenses and other amounts described in this subparagraph. The amount of the Initial Advance, which will be included in the Lease Balance, may be confirmed by a separate closing certificate executed by NAI as of the Effective Date. An arrangement fee (the “Arrangement Fee”), an initial administrative agency fee (an “Administrative Fee”) and upfront fees (the “Upfront Fees”) will all be paid from the Initial Advance (and thus be included in the Lease Balance) in the amounts provided in the Closing Letter. To the extent that BNPPLC does not itself use the entire the Initial Advance to pay such fees and Transaction Expenses incurred by BNPPLC, the remainder thereof will be advanced to NAI, with the understanding that NAI will use any such amount advanced for one or more of the following purposes: (1) the payment or reimbursement of Transaction Expenses incurred by NAI and all “soft costs” incurred by NAI in connection with the planning, design, engineering, construction and permitting of the Construction Project; (2) the maintenance of the Property; or (3) the payment of other amounts due pursuant to the Operative Documents. (Before executing the separate closing certificate to confirm the Initial Advance, NAI will make a reasonable effort to determine all prior expenses incurred by it as described in clause (1) of the preceding sentence and to request an Initial Advance sufficient in amount to cover all such expenses in addition to the Arrangement Fee, the initial Administrative Fee, the Upfront Fees and all Transaction Expenses incurred by BNPPLC. However, no failure by NAI to identify and include all such expenses in the amount of the requested Initial Advance will preclude NAI from requesting reimbursement for the same through a subsequent Construction Advance as provided in Paragraph 4. Reimbursable
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Construction Period Costs to be paid or reimbursed pursuant to Paragraph 4 will not be limited to those incurred after the Effective Date.)
     (B) Carrying Costs. For each Construction Period certain charges (“Carrying Costs”) will accrue and be added to 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). If, however, for any reason the Lease Balance (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 will 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. Carrying Costs accruing for any Construction Period will be equal to:
  •   the amount equal on the first day of such Construction Period to the Lease Balance, times
 
  •   the sum of the Effective Rate and the Spread for such Construction Period, times
 
  •   a fraction, the numerator of which is the number of days in such Construction Period and the denominator of which is three hundred sixty.
     (C) Commitment Fees. For each Construction Period additional charges (“Commitment Fees”) will accrue and be added to 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). If, however, for any reason the Lease Balance (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 will include not only Commitment Fees added on or before the immediately preceding Advance Date computed as described below, but also Commitment Fees accruing on and after such preceding Advance Date to but not including the date in question. Commitment Fees for each Construction Period will be computed as follows:
  •   the Commitment Fee Rate for such Construction Period, times an amount equal to:
     (1) the Maximum Construction Allowance, less
     (2) the Funded Construction Allowance on the first day of such Construction Period; times
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  •   the number of days in such Construction Period; divided by
 
  •   three hundred sixty.
     (D) Future Administrative Fees and Out-of-Pocket Costs. If the Completion Date does not occur prior to the first anniversary of the Effective Date, then on each anniversary of the Effective Date prior to the Completion Date, an administrative agency fee (also, an “Administrative Fee”) will be added to the Outstanding Construction Allowance by BNPPLC in the amount provided in the Closing Letter. Also, to the extent that BNPPLC incurs any out-of-pocket costs prior to the Completion Date with respect to the administration of or performance of its obligations under this Agreement or other Operative Documents (e.g., any rents required by the Ground Lease and any Attorneys’ Fees or other costs incurred to evaluate lien releases and other information submitted by NAI with requests for Construction Advances), BNPPLC may add such costs to the Outstanding Construction Allowance from time to time.
     (E) Increased Cost Charges and Capital Adequacy Charges.
     (1) If after the Effective Date there is any increase in the cost to BNPPLC’s Parent or any Participant agreeing to make or making, funding or maintaining advances to BNPPLC in connection with the Property because of any Banking Rules Change, then BNPPLC may agree or become obligated to pay to BNPPLC’s Parent or such Participant, as the case may be, additional amounts (“Increased Cost Charges”) sufficient to compensate BNPPLC’s Parent or the Participant for such increased costs. Any Increased Cost Charges paid by BNPPLC or for which BNPPLC becomes obligated to pay, prior to the Completion Date, will be added to the Outstanding Construction Allowance by BNPPLC.
     (2) BNPPLC’s Parent or any Participant may demand additional payments (“Capital Adequacy Charges”) if BNPPLC’s Parent or the 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 BNPPLC to permit BNPPLC to maintain BNPPLC’s investment in the Property or to make Construction Advances. To the extent that BNPPLC’s Parent or a Participant demands Capital Adequacy Charges as compensation for the additional capital requirements reasonably allocable to such investment or advances, and BNPPLC pays or becomes obligated to pay to BNPPLC’s Parent or the Participant the amount so demanded prior to the Completion Date, such amount will also be added to the Outstanding Construction Allowance by BNPPLC.
     (3) Notwithstanding the foregoing provisions of this subparagraph 3(E), the Outstanding Construction Allowance will not be increased by Increased Cost Charges or
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Capital Adequacy Charges that arise or accrue (a) as a result of any change in the rating assigned to BNPPLC by rating agencies or bank regulators in regard to BNPPLC’s creditworthiness, record keeping or failure to comply with Applicable Laws (including U.S. banking regulations applicable to subsidiaries of a bank holding company), or (b) more than nine months prior to the date NAI is notified of the intent of BNPPLC’s Parent or a Participant to make a claim for such charges; provided, that if the Banking Rules Change which results in a claim for compensation is retroactive, then the nine month period will be extended to include the period of the retroactive effect of such Banking Rules Change. Further, BNPPLC will cause BNPPLC’s Parent and any Participant that is an Affiliate of BNPPLC to use commercially reasonable efforts to reduce or eliminate any claim for compensation pursuant to this subparagraph 3(E), including a change in the office of BNPPLC’s Parent or such Participant through which it provides and maintains Funding Advances if such change will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of BNPPLC’s Parent or such Participant, be otherwise disadvantageous to it. It is understood that NAI may also request similar commercial reasonable efforts on the part of any Participant that is not an Affiliate of BNPPLC, but if a claim for additional compensation by any such Participant is not eliminated or waived, then NAI may request that BNPPLC replace such Participant under the Participation Agreement.
     (F) Ground Lease Payments. All rentals payable by BNPPLC under the Ground Lease prior to the Completion Date (“Ground Lease Rents”) will be added to the Outstanding Construction Allowance by BNPPLC on the date paid.
4 Construction Advances.
     (A) Costs Subject to Reimbursement Through Construction Advances. Subject to the terms and conditions set forth herein, NAI will be entitled to a Construction Allowance, from which BNPPLC 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 have not yet been paid or reimbursed from advances by BNPPLC under the Prior Construction Agreement and are not already included in Transaction Expenses paid by BNPPLC from the Initial 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) 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:
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  •   soft costs payable to third parties (whether or not incurred prior to the Effective Date), such as legal fees, architectural fees, engineering fees, construction management fees, transaction management fees and fees and costs paid in connection with obtaining project permits and approvals required by governmental authorities or any of the Permitted Encumbrances,
 
  •   site preparation costs,
 
  •   costs of offsite and other public improvements required as conditions of governmental approvals for the Construction Project, and
 
  •   to the extent that funds from the Construction Allowance can be used for such costs without causing Projected Cost Overruns, the costs of constructing parking lots, driveways and other improvements on the land subject to the Appurtenant Easements;
     (3) the cost of title insurance in favor of BNPPLC and of maintaining other insurance required by (and consistent with the requirements of) this Agreement prior to the Completion Date, and costs of repairing any damage to the Improvements caused by a Pre-lease Casualty to the extent such costs are not covered by Escrowed Proceeds made available to NAI as provided herein prior to the Completion Date;
     (4) Local Impositions that accrue or become due prior to the Completion Date;
     (5) reasonable and ordinary out-of-pocket costs of operating and maintaining the Property prior to the Completion Date in accordance with the requirements of this Agreement;
     (6) Third Party Contract/Termination Fees, not to exceed in the aggregate ten percent (10%) of the Maximum Construction Allowance, 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 Work/Suspension Period; and
     (7) furniture, trade fixtures and equipment and other tenant improvements to support NAI’s use and occupancy of the Property for the permitted uses described in subparagraph 2(A) of the Lease, but that are not integral to or affixed in such a manner as to become part of the Improvements, the aggregate cost of which does not exceed ten percent (10%) of the Maximum Construction Allowance; provided, that no Construction Advance for furniture and other items described in this clause will be required of
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BNPPLC or requested by NAI before the Construction Project is substantially complete and substantially all other Reimbursable Construction Period Costs have been paid or reimbursed from Construction Advances.
     (B) Exclusions From Reimbursable Construction Period Costs. Notwithstanding anything herein to the contrary, BNPPLC will not be required to make any Construction Advance to pay or to reimburse or compensate NAI for Covered Construction Period Losses paid by NAI as provided in subparagraph 10(A) or for any of the following Losses which may be incurred by NAI or any other party:
     (1) Environmental Losses;
     (2) Losses that would not have been incurred but for any affirmative act taken by NAI or by any of NAI’s contractors or subcontractors, which act is contrary to the other terms and conditions of this Agreement or to the terms and conditions of the other Operative Documents (e.g., undertaking a Scope Change without prior authorization of BNPPLC);
     (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 NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI; and
     (4) Losses that would not have been incurred but for any bankruptcy proceeding involving NAI as the debtor.
     (C) Conditions to NAI’s Right to Receive Construction Advances. BNPPLC’s obligation to provide Construction Advances to NAI from time to time under this Agreement will be subject to the following terms and conditions, all of which terms and conditions are intended for the sole benefit of BNPPLC, and none of which will limit in any way the right of BNPPLC to treat costs or expenditures incurred or paid by or on behalf of BNPPLC as Construction Advances pursuant to subparagraph 8(A):
     (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 C. NAI will not submit more than one Construction Advance Request in any calendar month.
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     (2) Amount of the Advances.
     (a) The Maximum Construction Allowance. NAI will not be entitled to require any Construction Advance that would cause the Funded Construction Allowance to exceed the Maximum Construction Allowance or that would increase the amount of any such excess.
     (b) Costs Previously Incurred by NAI. NAI will not be entitled to require any Construction Advance 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 BNPPLC, substantiated as having been paid or incurred by NAI other than for Work (e.g., Local Impositions), plus
     (ii) the Reimbursable Construction Period Costs that NAI has, to the reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred for Prior Work as of the date of the Construction Advance Request in which NAI requests 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, as part of the Work in accordance with this Agreement prior to the date in question, and “Future Work” means labor and services performed or to be performed, and materials delivered or to be delivered, as part of the Work on or after the date in question. For purposes of this Agreement, NAI and BNPPLC 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 parties not affiliated with NAI (e.g., a construction contractor engaged by NAI); 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, BNPPLC will 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 BNPPLC’s right to challenge or verify allocations required with respect to future
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Construction Advances, rely without investigation upon the accuracy of NAI’s own Construction Advance Requests.
     (c) Limits During any Work/Suspension Period. Without limiting the other terms and conditions imposed by this Agreement for the benefit of BNPPLC with respect all Construction Advances, BNPPLC will have no obligation to make any Construction Advance during any Work/Suspension Period 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 BNPPLC, substantiated as having been paid or incurred by NAI other than for Work (e.g., Local Impositions), plus
     (ii) the Reimbursable Construction Period Costs that NAI has, to the reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred for Prior Work as of the date the Work/Suspension Period commenced.
For purposes of computing the limits described in this subparagraph 4(C)(2)(c), Reimbursable Construction Period Costs “other than for Work” will include Third Party Contract/Termination Fees that qualify as Reimbursable Construction Period Costs pursuant to subparagraph 4(A)(6). However, as provided in subparagraph 4(A)(6), the amount of such Third Party Contract/Termination Fees subject to reimbursement will not in any event exceed ten percent (10%) of the Maximum Construction Allowance. If NAI fails to manage and administer Third Party Contracts as necessary to ensure that NAI can (at any point in time) terminate all such contracts without becoming liable for Third Party Contract/Termination Fees in excess of ten percent (10%) of the Maximum Construction Allowance, then the excess will be the responsibility of NAI.
     (d) Restrictions Imposed for Administrative Convenience. NAI will not request any Construction Advance (other than the final Construction Advance NAI intends to request) for an amount less than $1,000,000.
     (3) No Advances After Certain Dates. BNPPLC will have no obligation to make any Construction Advance (x) after the last Advance Date, (y) on or after the Designated Sale Date, or (z) on or after the effective date of any Termination of NAI’s Work pursuant to subparagraph 7(B) or subparagraph 7(C).
     (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
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Construction Advance that it is not permitted to take because of its failure to satisfy any of the conditions specified in subparagraph 4(C), BNPPLC will be entitled to add any resulting Breakage Costs to the Outstanding Construction Allowance and the Lease Balance.
     (E) No Third Party Beneficiaries. No contractor or other third party will be entitled to require BNPPLC to make advances as a third party beneficiary of this Agreement, and nothing contained herein or in any of the other Operative Documents will be construed as an agreement obligating BNPPLC to make advances to anyone other than NAI itself.
     (F) No Waiver. No funding of Construction Advances and no failure of BNPPLC to object to any Work proposed or performed by or for NAI will constitute a waiver by BNPPLC of the requirements contained in this Agreement.
5   Application of Insurance and Condemnation Proceeds.
     (A) Collection and Application Generally. This Paragraph 5 will govern the application of proceeds received by BNPPLC or NAI from any third party prior to the commencement of the Term of the Lease (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 (e.g., damage resulting from a third party’s release of Hazardous Materials onto the Property); excluding, however, any funds paid to BNPPLC by BNPPLC’s Parent, by an Affiliate of BNPPLC or by any Participant that is made to compensate BNPPLC for any Losses BNPPLC may suffer or incur in connection with this Agreement or the Property. NAI will promptly pay over to BNPPLC any insurance, condemnation or other proceeds covered by this Paragraph 5 which NAI may receive from any insurer, condemning authority or other third party. All proceeds covered by this Paragraph 5, including those received by BNPPLC from NAI or third parties, will be applied as follows:
     (1) First, proceeds covered by this Paragraph 5 will be used to reimburse BNPPLC for any reasonable costs and expenses, including Attorneys’ Fees, that BNPPLC incurred to collect the proceeds.
     (2) Second, the proceeds remaining after such reimbursement to BNPPLC (the “Remaining Proceeds”) will be applied, as hereinafter more particularly provided, either as a Qualified Prepayment or to pay or reimburse NAI or BNPPLC for the actual out-of-pocket costs of repairing or restoring the Property. Until any Remaining Proceeds received by BNPPLC are applied by
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BNPPLC as a Qualified Prepayment or applied by BNPPLC to reimburse costs of repairs to or restoration of the Property pursuant to this Paragraph 5, BNPPLC will hold and maintain such Remaining Proceeds as Escrowed Proceeds in an interest bearing account, and all interest earned on such account will 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 5, BNPPLC will hold all such Escrowed Proceeds until they are advanced 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 Agreement. BNPPLC will so advance the Escrowed Proceeds as the applicable repair or restoration progresses and upon compliance by NAI with such conditions and requirements as may be reasonably imposed by BNPPLC, including conditions and requirements similar to those that set forth herein for the payment of Construction Advances. In no event, however, will BNPPLC be required to pay Escrowed Proceeds to NAI in excess of the actual out-of-pocket cost to NAI of the applicable repair, restoration or replacement, as evidenced by invoices or other documentation reasonably satisfactory to BNPPLC.
     (C) Status of Escrowed Proceeds After Commencement of the Term of the Lease. Any Remaining Proceeds governed by this Paragraph 5 which BNPPLC is continuing to hold as Escrowed Proceeds when the Term of the Lease commences will be applied in accordance with the terms and conditions of the Lease as if received by BNPPLC immediately after the Term commenced.
     (D) Special Provisions Applicable After a 97-10/Meltdown Event or Event of Default. Notwithstanding the foregoing, after any 97-10/Meltdown Event and when any Event of Default has occurred and is continuing, BNPPLC will be entitled to receive and collect all insurance, condemnation or other proceeds governed by this Paragraph 5 and to apply all Remaining Proceeds, when and in such order and to such extent deemed appropriate by BNPPLC in its sole discretion, either (A) to the reimbursement of NAI or BNPPLC 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, if the Property is damaged by fire or other casualty or any part of the Property is taken by condemnation, NAI must to the maximum extent possible, as part of the Work, 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 this Agreement; provided, however, like other Work, any such restoration and continuation of construction by NAI will be subject to subparagraphs 7(A) and 7(B), which establish certain rights of NAI to suspend or discontinue any Work; and, provided further, any additional costs required to complete the Construction Project resulting from such a casualty or taking prior to the Completion Date will, to the extent not covered by Remaining Proceeds paid to NAI as provided
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herein, be subject to reimbursement by BNPPLC as Reimbursable Construction Period Costs on the same terms and conditions that apply to reimbursements of other costs of the Work hereunder.
     (F) Special Provisions Concerning a Complete Taking. NAI may react to any threat of a Complete Taking from a governmental authority by exercising NAI’s right to accelerate the Designated Sale Date (as provided in the definition thereof) and by exercising the Purchase Option under the Purchase Agreement. By so doing, NAI will put itself in a position to control condemnation proceedings and to receive all proceeds of the Complete Taking. If, however, NAI does not buy the Property pursuant to the Purchase Agreement prior to any Complete Taking, then BNPPLC will be entitled to receive and retain all amounts paid for the Property in connection with the Complete Taking, notwithstanding any contrary provision herein or in the other Operative Documents and notwithstanding that such proceeds may exceed the Lease Balance.
6   Notice of Cost Overruns and Pre-lease Force Majeure Events.
     (A) Notice of Projected Cost Overruns. If, at the time NAI submits any Construction Advance Request, NAI believes 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) that Projected Cost Overruns are more likely than not, NAI must 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.
     (B) Pre-lease Force Majeure Event Events and Notices. NAI may from time to time provide a notice to BNPPLC in the form attached as Exhibit D (a “Pre-lease Force Majeure Event Notice”), describing any Pre-lease Force Majeure Event that has occurred or commenced within the 30 days prior to such notice and setting forth NAI’s preliminary good faith estimate of any Pre-lease Force Majeure Delays, Pre-lease Force Majeure Losses and Pre-lease Force Majeure Excess Costs that are likely to result from such event. BNPPLC will have the option to respond to any Pre-lease Force Majeure Event Notice with an FOCB Notice or, alternatively and if applicable, with an Increased Commitment as provided in subparagraph 7(B)(6).
7   Suspension and Termination of NAI’s Work.
     (A) Rights and Obligations During a Work/Suspension Period. During any Work/Suspension Period, NAI will have the right to suspend the Work; however, the obligations of NAI which are to survive any Termination of NAI’s Work as provided in subparagraph 7(D) will continue and survive during any Work/Suspension Period.
     (B) NAI’s Election to Terminate NAI’s Work. NAI may elect to terminate its rights
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and obligations to continue Work at any time prior to the Completion Date if at such time NAI believes in good faith that a Timing or Budget Shortfall exists. To be effective, however, any such election by NAI must be made in accordance with the following provisions:
     (1) Any such election by NAI to terminate its rights and obligations to continue the Work must be made by notice to BNPPLC in the form of Exhibit E (a “Notice of Termination by NAI”).
     (2) At least forty-five days before giving any such Notice of Termination by NAI, NAI must give a notice of NAI’s intent to terminate to BNPPLC in the form of Exhibit F (a “Notice of NAI’s Intent to Terminate”), and the Notice of NAI’s Intent to Terminate must state the reasons, in NAI’s good faith determination, for the Timing or Budget Shortfall.
     (3) Without limiting the forgoing, prior to giving any Notice of Termination by NAI predicated upon NAI’s belief that the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of a Pre-lease Force Majeure Event, NAI must — after having notified BNPPLC of the such event by the delivery of a Pre-lease Force Majeure Event Notice in accordance with subparagraph 6(B) — expressly set forth such belief in the Notice of NAI’s Intent to Terminate as indicated in Exhibit F. In any such Notice of NAI’s Intent to Terminate, NAI must also specify its good faith estimate of the Pre-lease Force Majeure Excess Costs likely to be incurred (“NAI’s Estimate of Force Majeure Excess Costs”).
     (4) Similarly, prior to giving any Notice of Termination by NAI predicated upon NAI’s belief that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays resulting from a Pre-lease Force Majeure Event, NAI must — after having notified BNPPLC of such event by the delivery of a Pre-lease Force Majeure Event Notice in accordance with subparagraph 6(B) — expressly set forth such belief in the Notice of NAI’s Intent to Terminate as indicated in Exhibit F. In any such Notice of NAI’s Intent to Terminate, NAI must also specify its good faith estimate of the Pre-lease Force Majeure Delays likely to occur (“NAI’s Estimate of Force Majeure Delays”).
     (5) As used herein, a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” means any Notice of NAI’s Intent to Terminate that sets forth NAI’s belief, by the optional provisions contemplated in Exhibit F, that either or both: (a) the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of a Pre-lease Force Majeure Event, or (b) the Work will not be substantially complete before the Target
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Completion Date only because of Pre-lease Force Majeure Delays resulting from a Pre-lease Force Majeure Event. Should any Termination of NAI’s Work occur before NAI sends a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event (in accordance with this subparagraph and in the form attached as Exhibit F), such Termination of NAI’s Work will, for purposes of determining whether any 97-10/Prepayment may be required pursuant to Paragraph 9, be conclusively presumed to have occurred for reasons other than a Pre-lease Force Majeure Event.
     (6) After receipt of any Notice of NAI’s Intent to Terminate and before receipt of a Notice of Termination by NAI, BNPPLC may, but will not be obligated to, respond to NAI with certain commitments as follows (such a response being hereinafter called an “Increased Commitment”):
     (a) In the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses NAI’s belief that the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs, BNPPLC may respond with a written commitment to increase the Construction Allowance (an “Increased Funding Commitment”) by an amount at least equal to NAI’s Estimate of Force Majeure Excess Costs as set forth in such Notice of NAI’s Intent to Terminate. Any such Increased Funding Commitment may be in the form of Exhibit G.
     (b) In the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses NAI’s belief that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays, BNPPLC may respond with a written commitment to extend the Target Completion Date (an “Increased Time Commitment”) by at least the number of days included in NAI’s Estimate of Force Majeure Delays as set forth in such Notice of NAI’s Intent to Terminate. Any such Increased Time Commitment may be in the form of Exhibit H.
     (c) In the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses NAI’s belief that both (i) the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs and (ii) the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays, BNPPLC may respond with both an Increased Funding Commitment and an Increased Time Commitment as provided in the preceding subparagraphs (a) and (b).
     (d) In the case of a Notice of Intent to Terminate which is not a Notice
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of Intent to Terminate Because of a Force Majeure Event (and thus not covered by any of the preceding subparagraphs (a) through (c)), BNPPLC may require NAI to promptly provide a good faith estimate of the minimum Increased Funding Commitment or Increased Time Commitment (or both) reasonably required to eliminate the reasons for NAI’s delivery of the Notice of Intent to Terminate. After receipt of NAI’s good faith estimate, BNPPLC may respond with an Increased Funding Commitment or Increased Time Commitment (or both) consistent with such estimate.
     (7) If BNPPLC does respond to a Notice of NAI’s Intent to Terminate with an Increased Commitment, NAI will be entitled to, and will not unreasonably refuse to, rescind such Notice of NAI’s Intent to Terminate within ten days after receipt of such Increased Commitment. To be effective, any such rescission must be by notice to BNPPLC in the form of Exhibit I. In any event, except as provided in the next subparagraph, the failure of NAI to so rescind any Notice of NAI’s Intent to Terminate within ten days after receipt of the Increased Commitment will, for purposes of determining whether any 97-10/Prepayment may be required pursuant to Paragraph 9, create a conclusive presumption that any Termination of NAI’s Work after the date of such response was made for reasons other than a Pre-lease Force Majeure Event.
     (8) For the avoidance of doubt, BNPPLC acknowledges that NAI’s rescission of any Notice of NAI’s Intent to Terminate (including any Notice of NAI’s Intent to Terminate Because of a Force Majeure Event) after receipt of an Increased Commitment as described in the preceding subsection will not preclude NAI from subsequently exercising its rights under this subparagraph 7(B) in the event NAI subsequently believes in good faith that a Timing or Budget Shortfall exists.
Thus, for example, if NAI rescinds a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event after receiving an Increased Commitment from BNPPLC, but subsequently determines that such Increased Commitment is insufficient (through no fault of NAI or its employees or any other party acting under NAI’s control or with the approval or authorization of NAI) to rectify the Timing or Budget Shortfall which caused NAI to send such notice, then NAI may deliver a second Notice of NAI’s Intent to Terminate Because of a Force Majeure Event, and in response thereto BNPPLC may elect to provide yet another Increased Commitment. Moreover, such process may be repeated any number of times, in each case without causing NAI to lose its right to subsequently invoke this subparagraph 7(B) and send yet another Notice of NAI’s Intent to Terminate (including another Notice of NAI’s Intent to Terminate Because of a Force Majeure Event).
     (9) Notwithstanding the foregoing, in the event of a Complete Taking, NAI
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may deliver a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event that explains the futility of continuing with the Construction Project on the Land regardless of any willingness of BNPPLC to approve or consider Scope Changes or an Increased Commitment, and no offer by BNPPLC of an Increased Commitment after a Complete Taking will preclude a “Termination of NAI’s Work Because of a Pre-lease Force Majeure Event” for the purposes of determining whether NAI must pay a 97-10/Prepayment pursuant to Paragraph 9.
     (C) BNPPLC’s Election to Terminate NAI’s Work. By notice to NAI BNPPLC may elect to terminate NAI’s rights and obligations to continue the Work at any time (i) more than thirty days after BNPPLC has given an FOCB Notice to NAI, or (ii) after BNPPLC’s receipt of a Notice of NAI’s Intent to Terminate and before an election by NAI to rescind the same as described in subparagraph 7(B)(7).
     (D) Surviving Rights and Obligations. Following any Termination of NAI’s Work as provided in subparagraph 7(B) or in 7(C), NAI will have no obligation to continue or complete any Work; however, no such Termination of NAI’s Work will reduce or excuse the following rights and obligations of the parties, it being intended that all such rights and obligations will survive and continue after any Termination of NAI’s Work:
     (1) NAI’s obligations described in the next subparagraph 7(E);
     (2) the rights and obligations of NAI and BNPPLC under the Ground Lease;
     (3) the rights and obligations of NAI and BNPPLC under the Purchase Agreement, other than NAI’s Supplemental Payment Obligation if it has been terminated as provided in subparagraph 6(B) of the Purchase Agreement;
     (4) any obligations of NAI under the other Operative Documents by reason of any misrepresentation or other act or omission of NAI that occurred prior to the Termination of NAI’s Work or during any subsequent period in which NAI remains in possession or control of the Construction Project; and
     (5) NAI’s obligations to indemnify BNPPLC as set forth in subparagraph 10(A).
     (E) Cooperation After a Termination of NAI’s Work. After any Termination of NAI’s Work as provided in subparagraph 7(B) or subparagraph 7(C), NAI must comply with the following terms and conditions, all of which will survive notwithstanding any such termination:
     (1) NAI must promptly deliver copies to BNPPLC of all Third Party Contracts
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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 must 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 BNPPLC made with respect to any Third Party Contract, NAI must deliver a letter confirming: (i) whether NAI has performed any act or executed any other instrument which invalidates or modifies such contract in whole or in part (and, if so, the nature thereof); (ii) the extent to which such contract is valid and subsisting and in full force and effect; (iii) that, to NAI’s knowledge, 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 or potential default, the nature of such default in detail); (iv) whether the services and construction contemplated by such contract are proceeding in a satisfactory manner in all material respects (and 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) NAI’s good faith estimate of the 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 BNPPLC may reasonably request to allow it to decide what steps it should take concerning the contract within BNPPLC’s rights under this Agreement and the other Operative Documents.
     (3) As and to the extent requested by BNPPLC, NAI will make every reasonable effort (but without any obligation to incur any expense or liability to do so, unless BNPPLC agrees to reimburse the same with reasonable promptness) to secure any required consents or approvals for an assignment of any then existing Third Party Contract to BNPPLC or its designee, upon terms satisfactory to BNPPLC. To the extent assignable, any then existing Third Party Contract will be assigned by NAI to BNPPLC upon request, without charge by NAI.
     (4) If NAI has canceled any Third Party Contract before and in anticipation of a Termination of NAI’s Work, then as and to the extent requested by BNPPLC, NAI must make every reasonable effort (but without any obligation to incur any expense or liability to do so, unless BNPPLC agrees to reimburse the same with reasonable promptness) to secure a reinstatement of such Third Party Contract in favor of BNPPLC and upon terms
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satisfactory to BNPPLC.
     (5) For a period not to exceed thirty days after the Termination of NAI’s Work, NAI must 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. Without regard to the conditions applicable to other payments required of BNPPLC by this Agreement, BNPPLC must with reasonable promptness reimburse any reasonable out-of-pocket expenses incurred by NAI to comply with this subparagraph (5); however, BNPPLC may at any time or from time to time by notice to NAI limit or terminate such reimbursements as to expenses incurred after NAI’s receipt of such notice, and thereafter NAI will be excused from any obligation to incur expenses that BNPPLC may decline to reimburse.
8   Continuation of Construction by BNPPLC.
     (A) Owner’s Election to Continue Construction. Without limiting BNPPLC’s other rights and remedies under this Agreement or the other Operative Documents, and without terminating NAI’s surviving obligations under this Agreement or NAI’s obligations under the other Operative Documents, after any Termination of NAI’s Work as provided in subparagraph 7(B) or subparagraph 7(C), BNPPLC will 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 not substantially inconsistent (to the extent practicable under Applicable Laws) with the general description of the Construction Project set forth in Exhibit B. (As used herein, “Owner’s Election to Continue Construction” means any election by BNPPLC to continue or complete the Construction Project pursuant to the preceding sentence.) After any Owner’s Election to Continue Construction, BNPPLC may do any one or more of the following pursuant to this subparagraph without further notice and regardless of whether any breach of this Agreement by NAI is then continuing:
     (1) Take Control of the Property. BNPPLC may cause NAI and any contractors or other parties on the Property to vacate the Property until the Construction Project is complete or BNPPLC elects not to continue work on the Construction Project.
     (2) Continuation of Construction. BNPPLC 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 BNPPLC is not substantially inconsistent (to the extent practicable under Applicable Laws) with the general description of the Construction Project set forth in Exhibit B and the permitted use of the Property set forth in the Lease, BNPPLC will have complete discretion to:
     (a) proceed with construction according to such plans and
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specifications as BNPPLC may from time to time approve;
     (b) establish and extend construction deadlines as BNPPLC from time to time deems appropriate, without obligation to adhere to any deadlines for construction by NAI set forth in this Agreement;
     (c) hire, fire and replace architects, engineers, contractors, construction managers and other consultants as BNPPLC 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 BNPPLC 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 BNPPLC from time to time reasonably deems appropriate;
     (e) pay, settle or compromise existing or future bills and claims which are or may be liens against the Property or as BNPPLC reasonably 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 BNPPLC from time to time deems appropriate; and
     (h) generally do anything that NAI itself might have done if NAI had satisfied or obtained BNPPLC’s waiver of the conditions specified therein.
     (3) Arrange for Turnkey Construction. Without limiting the generality of the foregoing, BNPPLC may engage any contractor or real estate developer BNPPLC believes to be reputable to take over and complete construction of the Construction Project on a “turnkey” basis.
     (4) Suspension or Termination of Construction by BNPPLC. Notwithstanding
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any Owner’s Election to Continue Construction, BNPPLC may subsequently elect at any time to suspend or terminate further construction without obligation to NAI.
For purposes of the Operative Documents (including the determination of the Outstanding Construction Allowance, the Lease Balance and the Break Even Price), after any Owner’s Election to Continue Construction, all costs and expenditures incurred or paid by or on behalf of BNPPLC to complete or continue construction as provided in this subparagraph 8(A) will be considered Construction Advances, 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 BNPPLC will include costs that BNPPLC has become obligated to pay to any third party that is not an Affiliate of BNPPLC (including any construction contractor), even if the payments for which BNPPLC has become so obligated constitute prepayments for work or services to be rendered after payment and notwithstanding that BNPPLC’s obligations for the payments may be conditioned upon matters beyond BNPPLC’s control. For example, even if a construction contract between BNPPLC and a contractor excuses BNPPLC from making further progress payments to the contractor upon NAI’s failure to make any required 97-10/Prepayment under this Agreement, the obligation to make a progress payment would nonetheless be “incurred” by BNPPLC, for purposes of determining whether BNPPLC has incurred costs considered to be 97-10/Project Costs and Construction Advances, when BNPPLC’s obligation to pay it became subject only to NAI’s payment of a 97-10/Prepayment or other conditions beyond BNPPLC’s control.
     (B) Powers Coupled With an Interest. BNPPLC’s rights under subparagraph 8(A) are intended to constitute powers coupled with an interest which cannot be revoked.
9 NAI’s Obligation for 97-10/Prepayments. After any 97-10/Meltdown Event NAI must make a 97-10/Prepayment to BNPPLC within three Business Days after receipt from BNPPLC of any demand for such a payment. BNPPLC may demand 97-10/Prepayments pursuant to this Paragraph at any time and from time to time (as 97-10/Project Costs increase) after a 97-10/Meltdown Event. NAI acknowledges that it is undertaking the obligation to make 97-10/Prepayments as provided in this Paragraph in consideration of the rights afforded to it by this Agreement, but that such obligation is not contingent upon any exercise by NAI of such rights or upon its rights under any other Operative Documents. If a 97-10/Meltdown Event does occur, NAI’s obligation to make 97-10/Prepayments as provided in this Paragraph will survive any Termination of NAI’s Work.
Notwithstanding the foregoing provisions of this Paragraph 9, if (as provided in subparagraph 7(B)) NAI effectively makes the election for a Termination of NAI’s Work because of a Pre-lease Force Majeure Event that resulted in Pre-lease Force Majeure Excess Costs or Pre-lease Force Majeure Delays, then NAI will be excused from the obligation to make 97-10/Prepayments until such time (if ever) that BNPPLC itself completes the Construction
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Project or causes it to be completed as BNPPLC is authorized to do by subparagraph 8(A).
10   Indemnity for Covered Construction Period Losses.
     (A) Covenant to Indemnify Against Covered Construction Period Losses. Subject to the qualifications in subparagraph 10(B), as directed by BNPPLC, NAI must indemnify and defend BNPPLC from and against all of the following Losses (“Covered Construction Period Losses”):
     (1) Losses suffered or incurred by BNPPLC, directly or indirectly, relating to or arising out of, based on or as a result of any of the following which occurs or is alleged to have occurred prior to any Termination of NAI’s Work: (i) any Hazardous Substance Activity; (ii) any violation of any applicable Environmental Laws relating to the Land or 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; or (iv) any claim, demand, cause of action or investigation, or any action or other proceeding, whether meritorious or not, brought or asserted against BNPPLC 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 provision or any allegation of any such matters;
     (2) Losses incurred or suffered by BNPPLC that BNPPLC 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 prior to any Termination of NAI’s Work (as provided in subparagraphs 7(B) and 7(C)) or during any other period that NAI remains in possession or control of the Construction Project (including any failure by NAI to obtain or maintain insurance as required by this Agreement during such periods; but excluding, however, as described below, certain Losses consisting of claims related to any failure of NAI to complete the Construction Project);
     (3) Losses incurred or suffered by BNPPLC 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 NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI; and
     (4) Losses incurred or suffered by BNPPLC that would not have been incurred but for any bankruptcy proceeding involving NAI as the debtor.
NAI’s obligations under this indemnity will apply whether or not BNPPLC is also indemnified as to the applicable Covered Construction Period Loss by any third party (including another
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Interested Party) and whether or not the Covered Construction Period Loss arises or accrues prior to the Effective Date. Further, in the event, for income tax purposes, BNPPLC must include in its taxable income any payment or reimbursement from NAI which is required by this indemnity (in this provision, the “Original Indemnity Payment”), and yet BNPPLC is not entitled during the same taxable year to a corresponding and equal deduction from its taxable income for the Covered Construction Period Loss paid or reimbursed by such Original Indemnity Payment (in this provision, the “Corresponding Loss”), then NAI must also pay to BNPPLC on demand the additional amount (in this provision, the “Additional Indemnity Payment”) needed to gross up the Original Indemnity Payment for any and all resulting additional income taxes. That is, NAI must pay an Additional Indemnity Payment as is needed so that the Corresponding Loss (computed net of the reduction, if any, of BNPPLC’s income taxes because of credits or deductions that are attributable to the BNPPLC’s payment or deemed payment of the Corresponding Loss and that are recognized for tax purposes in the same taxable year during which BNPPLC must recognize the Original Indemnity Payment as income) will not exceed the difference computed by subtracting (i) all income taxes (determined for this purpose based on the highest marginal income tax rates charged to corporations by federal, state and local tax authorities, as applicable, for the relevant period or periods) imposed because of the receipt or constructive receipt of the Original Indemnity Payment and the Additional Indemnity Payment, from (ii) the sum of the Original Indemnity Payment and the Additional Indemnity Payment. (With regard to any payment or reimbursement of an Original Indemnity Payment, “After Tax Basis” means that such payment or reimbursement is or will be made together with the additional amount needed to gross up such Original Indemnity Payment as described in this provision.)
     (B) Certain Losses Included or Excluded.
     (1) Back to Back Claims by Participants Against BNPPLC. Losses for which BNPPLC is entitled to be indemnified as described in subparagraph 10(A) will include claims made against BNPPLC by any Participant, and amounts (if any) reimbursed by BNPPLC to any Participant, because of the following:
     (a) Losses suffered or incurred by such Participant, directly or indirectly, relating to or arising out of any of the following which occurs or is alleged to have occurred prior to any Termination of NAI’s Work: (i) any Hazardous Substance Activity; (ii) any violation of any applicable Environmental Laws relating to the Land or 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; or (iv) any claim, demand, cause of action or investigation, or any action or other proceeding, whether meritorious or not, brought or asserted against such Participant which directly or indirectly relates to, arises from, is based on, or results from any of the
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matters described in clauses (i), (ii), or (iii) of this provision or any allegation of any such matters;
     (b) Losses incurred or suffered by such Participant that such Participant 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 prior to any Termination of NAI’s Work (as provided in subparagraphs 7(B) and 7(C)) or during any other period that NAI remains in possession or control of the Construction Project (including any failure by NAI to obtain or maintain insurance as required by this Agreement during such periods; but excluding, however, as described below, certain Losses consisting of claims related to any failure of NAI to complete the Construction Project);
     (c) Losses incurred or suffered by such Participant 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 NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI; and
     (d) Losses incurred or suffered by such Participant that would not have been incurred but for any bankruptcy proceeding involving NAI as the debtor.
     (2) Environmental. As used in clause (1) of the preceding subparagraph 10(A) and clause (a) of the preceding subparagraph 10(B)(1), “Losses” will not include costs properly incurred in connection with the Work to prevent the occurrence of a violation of Environmental Laws that did not previously exist. (For example, Environmental Losses will not include the increase in costs resulting from NAI’s installation of fire proofing materials other than asbestos because of Environmental Laws that prohibit the use of asbestos.) However, any costs to correct or answer for any violation of Environmental Laws that occurred on or prior to the Effective Date or that NAI causes or permits to occur after the Effective Date in connection with the Work or the Property will constitute Environmental Losses. (Thus, for instance, if NAI releases Hazardous Materials from the Property in a manner that contaminates ground water in violation of Environmental Laws, the costs of correcting the contamination and any applicable fines or penalties will constitute Environmental Losses for which NAI must indemnify and defend BNPPLC pursuant to subparagraph 10(A).)
     (3) Failure to Maintain a Safe Work Site. If a third party asserts a claim for damages against BNPPLC because of injuries the third party sustained while on the Land as a result of NAI’s breach of its obligations under this Agreement to keep the Land and the Improvements thereon in a reasonably safe condition as Work progresses under NAI’s
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direction and control, then any such claim and other Losses resulting from such claim will constitute Covered Construction Period Losses under clause (2) of subparagraph 10(A). Also, if the third party asserts a claim for damages against any Participant because of such injuries, and if the Participant requires BNPPLC to reimburse the Participant’s Losses attributable to such claim, then such reimbursement will constitute Covered Construction Period Losses under clause (2) of subparagraph 10(A), consistent with understanding confirmed by clause (b) of subparagraph 10(B)(1).
     (4) Failure to Complete Construction. Additional costs of construction may result from NAI’s failure to complete the Construction Project if a Termination of NAI’s Work occurs pursuant to subparagraphs 7(B) and 7(C). Nevertheless, it is understood that a failure of NAI to complete the Construction Project following any such Termination of NAI’s Work will not necessarily constitute a breach of this Agreement, and clause (2) of subparagraph 10(A) will not include any such additional costs of performing the Work or the cost to BNPPLC of completing the Construction Project after the Termination of NAI’s Work. (To the extent, however, that such costs qualify as 97-10/Project Costs, they may increase the 97-10/Maximum Permitted Prepayment.)
     (5) Fraud. As used in clause (3) of subparagraph 10(A) and clause (c) of subparagraph 10(B)(1), “fraud” or “willful misconduct” will include (i) any deliberate decision by NAI to make a Scope Change without BNPPLC’s prior written approval, (ii) any fraud or intentional misrepresentation by NAI, or its vendors, contractors or subcontractors regarding NAI’s ongoing compliance with the requirements of this Agreement, and (iii) the performance by NAI or its vendors, contractors or subcontractors of Defective Work, with NAI’s knowledge that it constitutes Defective Work, prior to any Termination of NAI’s Work as provided in subparagraphs 7(B) and 7(C).
     (6) Excluded Taxes and Established Misconduct. Nothing in this Paragraph 10 or other provisions of this Agreement will be construed to require NAI to reimburse or pay Excluded Taxes or Losses incurred or suffered by BNPPLC that are proximately caused by (and attributed by any applicable principles of comparative fault to) the Established Misconduct of BNPPLC.
     (C) Express Negligence Protection. Every release provided in this Agreement for BNPPLC or any other Interested Party, and the indemnity provided for the benefit of BNPPLC in the preceding subparagraph 10(A), will apply even if and when the subject matters thereof are alleged to be caused by or to arise out of the negligence or strict liability of BNPPLC or another Interested Party. Further, all such releases and the indemnity will apply even if insurance obtained by NAI or required of NAI by this Agreement is not adequate to cover Losses against or for which the releases and the indemnity are provided (although NAI’s liability for any failure to
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obtain insurance required by this Agreement will not be limited to Losses against which indemnity is provided, it being understood that the parties have agreed upon insurance requirements for reasons that extend beyond providing a source of payment for Losses against which BNPPLC may be indemnified by NAI).
     (D) Survival of Indemnity. NAI’s obligations under this Paragraph 10 will survive the termination or expiration of this Agreement and any Termination of NAI’s Work with respect to Losses suffered by BNPPLC resulting or arising from events or circumstances which existed or occurred or are alleged to have existed or occurred prior to the Termination of NAI’s Work or during any subsequent period in which NAI remains in possession or control of the Construction Project, whether such Losses are asserted, suffered or paid before or after the Termination of NAI’s Work.
     (E) Due Date for Indemnity Payments. Any amount to be paid by NAI under this Paragraph 10 will be due fifteen days after a notice requesting such payment is received by NAI. Any such amount not paid by NAI when first due will bear interest at the Default Rate in effect from time to time from the date it first became 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.
     (F) Order of Application of Payments. BNPPLC will be entitled to apply any payments by or on behalf of NAI against NAI’s obligations under this Paragraph 10 or against other amounts owing by NAI and then past due under any of the other Operative Documents in the order the same became due or in such other order as BNPPLC may elect.
     (G) Defense of BNPPLC.
     (1) Assumption of Defense. By notice to NAI BNPPLC may direct NAI to assume on behalf of BNPPLC and to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation included in or concerning any Covered Construction Period Loss. NAI must promptly comply with any such direction using counsel selected by NAI and reasonably satisfactory to BNPPLC to represent BNPPLC. In the event NAI fails to promptly comply with any such direction from BNPPLC, BNPPLC may contest or settle the claim, proceeding or investigation using counsel of its own selection at NAI’s expense, subject only to subparagraph 10(I) if that subparagraph is applicable.
     (2) Indemnity Not Contingent. Also, although subparagraphs 10(I) and 10(J) will apply to tort claims asserted against BNPPLC related to the Property, the right of BNPPLC to be indemnified pursuant to subparagraph 10(A) for payments made to satisfy governmental requirements (“Government Mandated Payments”) (e.g., fines payable
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because of any release of Hazardous Materials from the Property) will not be conditioned in any way upon NAI having consented to or approved of, or having been provided with an opportunity to defend against or contest, such Government Mandated Payments. In all cases, however, including those which may involve Government Mandated Payments, the rights of BNPPLC to be indemnified will be subject to subparagraph 10(K).
     (H) Notice of Claims. If BNPPLC receives a written notice of a claim for taxes or a claim alleging a tort or other unlawful conduct that BNPPLC believes is covered by the indemnity in subparagraph 10(A), then BNPPLC will be expected to promptly furnish a copy of such notice to NAI. The failure to so provide a copy of the notice will not excuse NAI from its obligations under subparagraph 10(A); except that if such failure continues for more than fifteen days after the notice is received by BNPPLC and NAI is unaware of the matters described in the notice, with the result that NAI is unable to assert defenses or to take other actions which could minimize its obligations, then NAI will be excused from its obligation to indemnify BNPPLC against the Covered Construction Period Losses, if any, which would not have been incurred or suffered but for such failure. For example, if BNPPLC fails to provide NAI with a copy of a notice of an overdue tax obligation covered by the indemnity set out in subparagraph 10(A) and NAI is not otherwise already aware of such obligation, and if as a result of such failure BNPPLC 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 BNPPLC (or any Affiliate of BNPPLC) to pay the excess.
     (I) Withholding of Consent to Settlements Proposed by NAI. With regard to any tort claim against BNPPLC for which NAI undertakes to defend BNPPLC as provided in subparagraph 10(G)(1), if BNPPLC unreasonably refuses to consent to a settlement of the claim which is proposed by NAI and which will meet the conditions listed in the next sentence, NAI’s liability for the cost of continuing the defense and for any other amounts payable in respect of the claim will be limited to the total cost for which the settlement proposed by NAI would have been accomplished but for the unreasonable refusal to consent. Any such settlement proposed by NAI must meet the following conditions: (A) at the time of the settlement by NAI, NAI must pay all amounts required to release BNPPLC and other affected Interested Parties (if any) and their property interests from any further obligation for or liens securing the applicable claim and from any interest, penalties and other related liabilities, and (B) the settlement or compromise must not involve an admission of fraud or criminal wrongdoing or result in some other material adverse consequence to BNPPLC or any other Interested Party.
     (J) Settlements Without the Prior Consent of NAI.
     (1) Election to Pay Reasonable Settlement Costs in Lieu of Actual. Except as otherwise provided in subparagraph 10(J)(2), if BNPPLC settles any tort claim for which
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it is entitled to be indemnified by NAI without NAI’s consent, then NAI may, by notice given to BNPPLC no later than ten days after NAI is notified of the settlement, elect to pay Reasonable Settlement Costs to BNPPLC in lieu of a payment or reimbursement of actual settlement costs. (With respect to any tort claim asserted against BNPPLC, “Reasonable Settlement Costs” means the maximum amount that a prudent Person in the position of BNPPLC, but able to pay any amount, might reasonably agree to pay to settle the tort claim, taking into account the nature and amount of the claim, the relevant facts and circumstances known to BNPPLC at the time of settlement and the additional Attorneys Fees’ and other costs of defending the claim which could be anticipated but for the settlement.) After making an election to pay Reasonable Settlement Costs with regard to a particular tort claim, NAI will have no right to rescind or revoke the election, despite any subsequent determination that Reasonable Settlement Costs exceed actual settlement costs. It is understood that Reasonable Settlement Costs may be more or less than actual settlement costs and that a final determination of Reasonable Settlement Costs may not be possible until after NAI must decide between paying Reasonable Settlement Costs or paying actual settlement costs.
     (2) Conditions to Election. Notwithstanding the foregoing, NAI will have no right to elect to pay Reasonable Settlement Costs in lieu of actual settlement costs if BNPPLC settles claims without NAI’s consent at any time when an Event of Default has occurred and is continuing or after a failure by NAI to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation as provided in subparagraph 10(G)(1).
     (3) Indemnity Survives Settlement. Except as provided in this subparagraph 10(J), no settlement by BNPPLC of any claim made against it will excuse NAI from any obligation to indemnify BNPPLC against the settlement costs or other Covered Construction Period Losses suffered by reason of, in connection with, arising out of, or in any way related to such claim.
     (K) No Authority to Admit Wrongdoing on the Part of NAI. BNPPLC will not under any circumstances have any authority to bind NAI to an admission of wrongdoing or responsibility to any third party claimant with regard to matters for which BNPPLC claims a right to indemnification from NAI under this Agreement.
Further, nothing herein contained, including the foregoing provisions concerning settlements by BNPPLC of indemnified Losses, will be construed as authorizing BNPPLC to bind NAI to do or refrain from doing anything to satisfy a third party claimant. If, for example, a claim is made by a Governmental Authority that NAI must refrain from some particular conduct on or about the Land in order to comply with Applicable Laws, BNPPLC cannot bind NAI (and will not purport to bind NAI) to any agreement to refrain from such conduct or otherwise prevent NAI from
Amended and Restated Construction Agreement (Building 7) – Page 49

 

 

continuing to contest the claim by reason of any provision set forth herein.
Moreover, so long as this Agreement or the Lease continues, BNPPLC’s right to settle any claim involving the Property will not include the right to bind NAI to any agreement (including any consent decree proposed by any Governmental Authority) which purports to prohibit, limit or impose conditions upon any use of the Property by NAI without the prior written consent of NAI. In the case of any proposed settlement of a claim asserted by a Governmental Authority against BNPPLC, NAI will not unreasonably withhold such consent. However, for purposes of determining whether it is reasonable for NAI to withhold such consent, any diligent ongoing undertaking by NAI to contest such the claim on behalf of BNPPLC will be relevant.
Subject to the foregoing provisions in this subparagraph 10(K), BNPPLC may agree for itself (and only for itself) to act or refrain from doing anything as demanded or requested by a third party claimant; provided, however, in no event will such an agreement impede NAI from continuing to exercise its rights to operate its business on the Property or elsewhere in any lawful manner deemed appropriate by NAI, nor will any such agreement limit or impede NAI’s right to contest claims raised by any third party claimants (including Governmental Authorities) that NAI is not complying or has not complied with Applicable Laws.
     (L) Refunds of Covered Construction Period Losses Paid by NAI.
     (1) Payment by BNPPLC After Refund. If BNPPLC receives a refund of any Covered Construction Period Losses paid, reimbursed or advanced by NAI pursuant to subparagraph 10(A), BNPPLC will promptly pay to NAI the amount of such refund, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of such refund and such payment to NAI; provided, that the amount payable to NAI will not exceed the amount of the indemnity payment in respect of such refunded Covered Construction Period Losses that was made by NAI. If it is subsequently determined that BNPPLC was not entitled to such refund, the portion of such refund that is repaid or recaptured will be treated as a Covered Construction Period Loss for which NAI must indemnify BNPPLC pursuant to subparagraph 10(A) without regard to subparagraph 10(B)(6). If, in connection any such refund, BNPPLC also receives an amount representing interest on such refund, BNPPLC will promptly pay to NAI the amount of such interest, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of the receipt or accrual of such interest and as a result of the such payment to NAI; provided, that BNPPLC will not be required to make any such payment in respect of the interest (if any) that is fairly attributable to a period before NAI paid, reimbursed or advanced the Covered Construction Period Losses refunded to BNPPLC.
     (2) Meaning of Refund. With respect to Covered Construction Period Losses incurred or suffered by BNPPLC and paid or reimbursed by NAI on an After Tax Basis, if
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taxes of BNPPLC which are not subject to indemnification by NAI are reduced because of such Losses (whether by reason of a deduction, credit or otherwise) and such reduction was not taken into account in the calculation of the required reimbursement or payment by NAI, then for purposes of this subparagraph 10(L) such reduction will be considered a “refund”.
     (3) Conditions to Payment. Notwithstanding the foregoing, in no event will BNPPLC be required to make any payment to NAI pursuant to this subparagraph 10(L) after any 97-10/Meltdown Event or when any Event of Default has occurred and is continuing.
11 Characterization of Operative Documents; Remedies.
     (A) Characterization of Operative Documents.
     (1) Confirmation of Lien and Security Interest Granted in the Lease. Reference is made to subparagraph 4(C) of the Lease, in which NAI and BNPPLC have confirmed their intent that (A) for the purposes of determining the proper accounting for the Lease by NAI, BNPPLC will be treated as the owner and landlord of the Property and NAI will be treated as the tenant of the Property, and (B) for income tax purposes and commercial law (including real estate and bankruptcy law) and regulatory purposes, (1) the Lease and the other Operative Documents (including this Agreement) will be treated as a financing arrangement, (2) BNPPLC will be deemed a lender making loans to NAI in the principal amount equal to the Lease Balance, which loans are secured by the Property, and (3) NAI will be treated as the owner of the Property and will be entitled to all tax benefits available to the owner of the Property. Consistent with such intent, by the provisions set forth in Exhibit B to the Lease, NAI is granting to BNPPLC a lien upon and mortgaging and warranting title to the leasehold estate in the Land created by the Ground Lease and the Improvements and all rights, titles and interests of NAI in and to other Property, WITH POWER OF SALE, to secure all obligations (monetary or otherwise) of NAI arising under or in connection with any of the Operative Documents (including this Agreement). NAI further confirms and agrees that (i) its grant of a lien and security interest as set forth in Exhibit B of the Lease is made as of the Effective Date, even though the Term of the Lease will not commence before the Completion Date, and (ii) the security interest granted in Exhibit B of the Lease will extend to and cover all Third Party Contracts, now existing or made in the future.
     (2) Foreclosure Remedies. Even before the Completion Date, at any time when an Event of Default has occurred and is continuing, BNPPLC may notify NAI of BNPPLC’s intent to pursue remedies described in Exhibit B to the Lease, and at any time thereafter, regardless of whether the Event of Default is continuing, if NAI has not
Amended and Restated Construction Agreement (Building 7) – Page 51

 

 

already purchased the Property or caused an Applicable Purchaser to purchase the Property pursuant to the Purchase Agreement, (i) BNPPLC will have the power and authority, to the extent provided by law, after proper notice and lapse of such time as may be required by law, to sell or arrange for a sale to foreclose its lien and security interest granted in Exhibit B to the Lease, and (ii) BNPPLC, in lieu of or in addition to exercising any power of sale granted in Exhibit B to the Lease, may proceed by a suit or suits in equity or at law for a foreclosure or sale of the Property or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure or sale of the Property, or for the enforcement of any other legal or equitable remedy permitted by law.
     (B) Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement. Prior to the Designated Sale Date, so long as NAI remains in possession of the Property and there has been no termination of the Purchase Option as provided in Paragraph 6(B) of the Purchase Agreement, BNPPLC’s right to complete any foreclosure sale as provided in subparagraph 11(A)(2) will be subject to the condition precedent that BNPPLC has notified NAI, at a time when an Event of Default has occurred and is continuing and no less than thirty days prior to completing such a sale, of BNPPLC’s intent to do so. The condition precedent is intended to provide NAI with an opportunity to exercise the Purchase Option before losing possession of the Property because of a sale authorized by subparagraph 11(A)(2). 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, BNPPLC may proceed immediately to complete a sale authorized by subparagraph 11(A)(2) at any time after the earliest of (i) thirty days after BNPPLC 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.
     (C) Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy, and each and every such right and remedy will be cumulative and in addition to any other right or remedy given to BNPPLC under other Operative Documents (including the right to accelerate the Designated Sale Date, as provided in the definition thereof in the Common Definitions and Provisions Agreement, and the right, when applicable, to exercise the Put Option as provided in subparagraph 3(B) of the Purchase Agreement) or now or hereafter existing in favor of BNPPLC under Applicable Laws. In addition to other remedies provided in this Agreement, BNPPLC will 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 Agreement. Nothing contained in this Agreement will limit or prejudice the right of BNPPLC to prove for and obtain in proceedings for bankruptcy or insolvency of NAI by reason of the termination of this Agreement, 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
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to be proved, whether or not the amount be greater, equal to, or less than the amount BNPPLC might recover under this Agreement. Without limiting the generality of the foregoing, nothing contained herein will modify, limit or impair any of the rights and remedies of BNPPLC under the Purchase Agreement, including its right to exercise the Put Option provided in subparagraph 3(B) of the Purchase Agreement if the conditions listed in subparagraph 3(B) of the Purchase Agreement are satisfied; and BNPPLC will not be required to give the thirty day notice described in subparagraph 11(B) as a condition precedent to any acceleration of the Designated Sale Date or to taking any action to enforce the Purchase Agreement
     (D) Third Party Estoppels. If requested by BNPPLC with respect to any material 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 BNPPLC an estoppel letter substantially in the form of Exhibit J. Similarly, if requested by BNPPLC 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 BNPPLC an estoppel letter substantially in the form of Exhibit K.
12 Amendment and Restatement of Prior Construction Agreement. This Agreement amends, restates and replaces entirely the Prior Construction Agreement. Without limiting the rights and obligations of NAI under this Agreement, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Construction Agreement are now made subject to the terms and conditions of this Agreement; and all rights and interests of BNPPLC in and to the Land or other Property under the Prior Construction Agreement are renewed and extended (rather than terminated) by this Agreement.
[The signature pages follow.]
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     IN WITNESS WHEREOF, this Amended and Restated Construction Agreement (Building 7) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
Amended and Restated Construction Agreement (Building 7) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Construction Agreement (Building 7) dated as of November 29, 2007.]
         
  NETWORK APPLIANCE, INC., a Delaware
corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Construction Agreement (Building 7) – Signature Page

 

 

Exhibit A
Legal Description
Parcel 7 and the Additional Leased Premises, as defined below, (collectively, the “Building 7 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the northern boundary of Parcel 7 and the southern boundary of Parcel 8, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 7 and Parcel 8, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 7 and Parcel 11, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 7 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
Exhibit A to Amended and Restated Construction Agreement (Building 7) – Page 2

 

 

Exhibit B
Description of the Construction Project and Construction Budget
     Subject to future Scope Changes, the Construction Project will be substantially consistent with the following general description and with any site plan, elevations or renderings, and construction budget approved by BNPPLC in connection with the Prior Construction Agreement:
A new office building, five stories tall, containing approximately 190,000 square feet, designed and finished out for general office use.
     All of the buildings will be suitable for uses contemplated in the Lease and of a quality, when complete to be considered first class facilities for such uses. Also included in the Construction Project will be the construction of appurtenant parking areas, driveways and other facilities on the Land (or pursuant to appurtenant easements described in Exhibit A to the Ground Lease) of suitable quality for such buildings.

 

 

Exhibit C
Construction Advance Request Form
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 7) dated as of November 29, 2007 (the “Construction Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”)
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement. This letter constitutes a Construction Advance Request, requesting a Construction Advance of:
$                    ,
on the Advance Date that will occur on:
                    , 20     .
     To induce BNPPLC to make such Construction Advance, NAI represents and warrants as follows:
I. Calculation of limit imposed by Subparagraph 4(C)(2)(b) of the Construction 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 $                    
 
(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 $                    

 

 

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 $                                         .]
III. Construction Advances Covering Pre-lease Force Majeure Losses:
Neither the Construction Advance requested by this letter nor prior Construction Advances (if any) have been used or will be used to cover any costs of repairs that constitute Pre-lease Force Majeure Losses, except as follows: (if there are no exceptions, insert “No Exceptions”)
         
 
 
 
    
 
 
 
    
 
 
 
    
 
 
 
    
IV. Absence of Certain Work/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 and with the requirements of the Construction 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”)
         
 
 
 
    
 
 
 
    
 
 
 
    
 
 
 
    
Exhibit C to Amended and Restated Construction Agreement (Building 7) – Page 2

 

 

                 
    NETWORK APPLIANCE, INC., a Delaware    
    corporation    
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
Exhibit C to Amended and Restated Construction Agreement (Building 7) – Page 3

 

 

Exhibit D
Pre-lease Force Majeure Event Notice
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 7) dated as of November 29, 2007 (the “Construction Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Agreement and other Operative Documents.
     This letter constitutes a Pre-lease Force Majeure Event Notice, given as provided in subparagraph 6(B) of the Construction Agreement to preserve the right of NAI to assert the occurrence of a Pre-lease Force Majeure Event.
     NAI certifies to BNPPLC that the following Pre-lease Force Majeure Event occurred or commenced on                     , 20___:
[INSERT DESCRIPTION OF EVENT HERE]
     NAI’s preliminary good faith estimate of the Pre-lease Force Majeure Delays, of the Pre-lease Force Majeure Losses and of the Pre-lease Force Majeure Excess Costs likely to result from such event are                      days, $                     and $                    , respectively. Such amounts, however, are only estimates.
     NAI acknowledges that after NAI gives this notice, BNPPLC may at any time deliver an FOCB Notice to NAI as described in the Construction Agreement.

 

 

                 
    NETWORK APPLIANCE, INC., a Delaware    
    corporation    
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
Exhibit D to Amended and Restated Construction Agreement (Building 7) – Page 2

 

 

Exhibit E
Notice of Termination of NAI’s Work
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 7) dated as of November 29, 2007 (the “Construction Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Agreement and other Operative Documents.
     NAI has determined that the Construction Allowance to be provided to it under the Construction Agreement will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances for the reason or reasons set forth in the Notice of NAI’s Intent to Terminate dated                     , 200___, previously delivered to you as provided in subparagraph 7(B) of the Construction Agreement. That Notice of NAI’s Intent to Terminate has not been rescinded by NAI.
     NAI hereby irrevocably and unconditionally elects to terminate its rights and obligations to continue the Work under Construction Agreement effective as of the date of this letter (which, as required by subparagraph 7(B) of the Construction Agreement, is a date not less than forty-five days after the date the aforementioned Notice of NAI’s Intent to Terminate). This notice constitutes a “Notice of Termination by NAI” as described in subparagraph 7(B) of the Construction Agreement.
     NAI also acknowledges that a 97-10/Meltdown Event has occurred under and as defined in the Construction Agreement, and that BNPPLC is thus entitled to demand and receive 97-10/Prepayments under and as provided in Paragraph 9 of the Construction Agreement, unless the last sentence of Paragraph 9 excuses NAI from paying the same.

 

 

                 
    NETWORK APPLIANCE, INC., a Delaware    
    corporation    
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
Exhibit E to Amended and Restated Construction Agreement (Building 7) – Page 2

 

 

Exhibit F
Notice of NAI’s Intent to Terminate
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 7) dated as of November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Agreement and other Operative Documents.
 
[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth below as being required after a Complete Taking in any “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event,” this letter must contain the following paragraph and inserts following such paragraph as indicated:
     NAI has determined that the Construction Allowance to be provided to it under the Construction Agreement will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances, because:
[INSERT ANY ONE OR MORE OF THE FOLLOWING REASONS THAT APPLY: (1) THE COST OF THE WORK EXCEEDS BUDGETED EXPECTATIONS (RESULTING IN PROJECTED COST OVERRUNS), (2) A PRE-LEASE FORCE MAJEURE EVENT HAS OCCURRED, OR (3) NAI CAN NO LONGER SATISFY CONDITIONS TO BNPPLC’S OBLIGATION TO PROVIDE CONSTRUCTION

 

 

ADVANCES IN THE CONSTRUCTION AGREEMENT.]
 
     The purpose of this letter is to give notice to BNPPLC and Participants of NAI’s intent to terminate NAI’s rights and obligations to perform Work under the Construction Agreement. This letter constitutes a “Notice of NAI’s Intent to Terminate” given pursuant to subparagraph 7(B) of the Construction Agreement. As provided in that subparagraph, as a condition to any effective Termination of NAI’s Work, NAI must deliver a subsequent notice of termination to BNPPLC and Participants, no less than forty-five days after the date BNPPLC receives this letter.
 
[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth below as being required for any “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event,” this letter must contain the following paragraph:
     The period running from the date of BNPPLC’s receipt of this letter to the effective date of any actual Termination of NAI’s Work by NAI or BNPPLC will constitute a Work/Suspension Period under the Construction Agreement. During such period BNPPLC’s funding obligations will be limited and NAI may suspend the Work to the extent so provided in the Construction Agreement. Moreover, NAI acknowledges that the delivery of this Notice of Intent to Terminate is a 97-10/Meltdown Event. Therefore, after receipt of this notice BNPPLC will have the rights to demand and receive 97-10/Prepayments from NAI as provided in Paragraph 9 of the Construction Agreement.]
[DRAFTING NOTE: This letter will qualify as a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” only if NAI includes one of the following alternative sets of provisions, as applicable.]
[ALTERNATIVE #1 (Applies only if there has been a Complete Taking):
     This letter constitutes a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement. A Complete Taking has occurred. Thus, regardless of any Scope Changes BNPPLC may be willing to approve or consider, and regardless of any Increased Commitment BNPPLC may be willing to provide, it would be futile to continue the Construction Project on the Land.
     NAI acknowledges and agrees that BNPPLC is entitled to all proceeds of the taking of the Property and all such proceeds must be paid to BNPPLC. NAI has no right and will not assert
Exhibit F to Amended and Restated Construction Agreement (Building 7) – Page 2

 

 

any right to share in such proceeds. NAI agrees to cooperate with BNPPLC as BNPPLC may from time to time request in order to maximize BNPPLC’s recovery of such proceeds.]
[ALTERNATIVE #2 (applies in the event of a Pre-lease Force Majeure Event other than a Complete Taking): Include the next (single sentence) paragraph, together with one or both (as applicable) of the two paragraphs following the next (single sentence) paragraph, and together with the remaining paragraphs after those two paragraphs, all with blanks filled in appropriately:
     This letter constitutes a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement.
     NAI now believes that the remaining available Construction Allowance will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of one or more Pre-lease Force Majeure Events. BNPPLC has previously been notified of such Pre-lease Force Majeure Event(s) by notice(s) dated                     , which NAI delivered to BNPPLC in accordance with subparagraph 6(B) of the Construction Agreement. NAI’s current good faith estimate of the Pre-lease Force Majeure Excess Costs that are most likely to be incurred because of such Pre-lease Force Majeure Event(s) is $                                        .
     NAI now believes that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays resulting from one or more Pre-lease Force Majeure Events. BNPPLC has previously been notified of such Pre-lease Force Majeure Event(s) by notice(s) dated                     , which NAI delivered to BNPPLC in accordance with subparagraph 6(B) of the Construction Agreement. NAI’s current good faith estimate of the Pre-lease Force Majeure Delays that are most likely to occur because of such Pre-lease Force Majeure Event(s) is                                          days.
     Also be advised that, as provided in subparagraph 7(B) of the Construction Agreement, BNPPLC is entitled to (but not obligated to) respond to this notice with an Increased Commitment. Responding with an Increased Commitment will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of NAI under the Purchase Agreement) that any Termination of NAI’s Work is for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified.
     In the event BNPPLC fails to respond with an Increased Commitment, the failure may excuse NAI from the obligation to make a 97-10/Prepayment under Paragraph 9 of the Construction Agreement notwithstanding any Termination of NAI’s Work, which would constitute a very material adverse consequence to BNPPLC. Moreover, the Construction Agreement grants to NAI a right to cause a Termination of NAI’s Work at any time more than
Exhibit F to Amended and Restated Construction Agreement (Building 7) – Page 3

 

 

forty-five days after giving this notice, provided that NAI continues to believe that a Timing or Budget Shortfall exists at that time. Thus, if BNPPLC intends to respond with an Increased Commitment, BNPPLC would be well advised to do so before the expiration of such forty-five day period.]
                 
    NETWORK APPLIANCE, INC., a Delaware    
    corporation        
 
                
 
  By:            
             
 
      Name:        
 
         
 
    
 
      Title:        
 
         
 
    
Exhibit F to Amended and Restated Construction Agreement (Building 7) – Page 4

 

 

Exhibit G
Notice of Increased Funding Commitment by BNPPLC
[Date]
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
     Re: Amended and Restated Construction Agreement (Building 7) dated as of November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     NAI has delivered a notice to BNPPLC dated                     , 20___, which by its terms expressed NAI’s intent that it constitute a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement. In such notice, NAI advised BNPPLC of NAI’s intent to terminate the Construction Agreement because of NAI’s belief that the Construction Allowance to be provided to it under the Construction Agreement will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances. Such notice also suggested NAI’s belief that, but for the cost of repairing damage to the Improvements caused by a Pre-lease Force Majeure Event, the remaining available Construction Allowance would be sufficient. In addition, such notice set forth the amount of $                                         as NAI’s estimate of the Pre-lease Force Majeure Excess Costs most likely to be incurred because of such Pre-lease Force Majeure Event.
     This response to such notice constitutes an Increased Funding Commitment. BNPPLC hereby commits to increase the amount of the Construction Allowance by $                                         (the estimate given by NAI as described above). Such commitment is made on and subject to all of the same terms and conditions set forth in the Construction Agreement and other Operative Documents as being applicable to the original Construction Allowance and to Construction Advances required thereunder.
     Please note that, according to the Construction Agreement, NAI will have ten days after the date of any Increased Commitment (which may be comprised of this Increased Funding Commitment and any separate Increased Time Commitment given contemporaneously herewith)

 

 

within which NAI may rescind the aforementioned Notice of NAI’s Intent to Terminate Because of a Force Majeure Event by a notice given in the form prescribed by the Construction Agreement. Any failure of NAI to so rescind the notice will constitute a 97-10/Meltdown Event under and as defined in the Construction Agreement and will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of NAI) that any Termination of NAI’s Work occurred for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified.
                 
    BNP PARIBAS LEASING CORPORATION, a    
    Delaware corporation    
 
                
 
  By:            
             
 
      Name:        
 
         
 
    
 
      Title:        
 
         
 
    
Exhibit G to Amended and Restated Construction Agreement (Building 7) – Page 2

 

 

Exhibit H
Notice of Increased Time Commitment by BNPPLC
[Date]
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
     Re: Amended and Restated Construction Agreement (Building 7) dated as of November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     NAI has delivered a notice to BNPPLC dated                     , 20___, which by its terms expressed NAI’s intent that it constitute a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement. In such notice, NAI advised BNPPLC of NAI’s intent to elect a Termination of NAI’s Work because of NAI’s belief that the Work will not be substantially complete prior to the Target Completion Date only because of Pre-lease Force Majeure Delays. Such notice also expressed NAI’s belief that Pre-lease Force Majeure Delays are likely to be                                          days in the aggregate.
     This response to such notice constitutes an Increased Time Commitment. BNPPLC hereby commits to extend the Target Completion Date by                                          days (the estimate given by NAI as described above).
     Please note that, according to the Construction Agreement, NAI will have ten days after the date of any Increased Commitment (which may be comprised of this Increased Time Commitment and any separate Increased Funding Commitment given contemporaneously herewith) within which NAI may rescind the aforementioned Notice of NAI’s Intent to Terminate Because of a Force Majeure Event by a notice given in the form prescribed by the Construction Agreement. Any failure of NAI to so rescind the notice will constitute a 97-10/Meltdown Event under and as defined in the Construction Agreement and will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of NAI) that any Termination of NAI’s Work occurred for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified.

 

 

                 
    BNP PARIBAS LEASING CORPORATION, a    
    Delaware corporation    
 
                
 
  By:            
             
 
      Name:        
 
         
 
    
 
      Title:        
 
         
 
    
Exhibit H to Amended and Restated Construction Agreement (Building 7) – Page 2

 

 

Exhibit I
Rescission of Notice of NAI’s Intent to Terminate
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 7) dated as of November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     NAI has delivered to BNPPLC a Notice of NAI’s Intent to Terminate dated ___, 200___, and BNPPLC has responded with an Increased Commitment as of ___, 200___. NAI hereby accepts the Increased Commitment and, as provided in subparagraph 7(B) of the Construction Agreement, rescinds such Notice of NAI’s Intent to Terminate.
     NAI acknowledges that, because of such rescission, NAI must, as a condition precedent to any exercise of its remaining rights to terminate the Construction Agreement pursuant to subparagraph 7(B) thereof, deliver another Notice of NAI’s Intent to Terminate at least forty five days prior to the effective date of the Termination of NAI’s Work.
                 
    NETWORK APPLIANCE, INC., a Delaware    
    corporation        
 
                
 
  By:            
             
 
      Name:        
 
         
 
    
 
      Title:        
 
         
 
    

 

 

Exhibit J
Estoppel From Contractor
________, 200__
BNP Paribas 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 Paribas Leasing Corporation, a Delaware corporation (“BNPPLC”), and covenants with BNPPLC 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 Building 7 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 an Amended and Restated Lease Agreement (Building 7) and an Amended and Restated Construction Agreement (Building 7), both dated as of November 29, 2007 (collectively, the “Building 7 Documents”), BNPPLC is leasing the Project to NAI and has agreed, subject to the terms and conditions of the Building 7 Documents, to provide a construction allowance for the design and construction of the Improvements. The undersigned has also been advised that the Building 7 Documents expressly provide that third parties (including the undersigned) are not intended as beneficiaries of the Building 7 Documents and, thus, will have no standing to enforce any obligations of NAI or BNPPLC under the Building 7 Documents, including any such obligation that BNPPLC may have to provide the construction allowance. The undersigned understands that the Building 7 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 BNPPLC or to otherwise bind BNPPLC 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.

 

 

BNP Paribas 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 BNPPLC, not to NAI. BNPPLC shall not, however, be liable for, and the undersigned shall not assert, any claims, demands or liabilities against BNPPLC 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 BNPPLC under the Construction Contract if BNPPLC 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 BNPPLC 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 BNPPLC 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 Building 7 Documents, including any eviction of NAI resulting from an Event of Default (as defined in the Building 7 Documents), BNPPLC 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 BNPPLC that NAI’s right to possession has been terminated, the undersigned shall send to BNPPLC 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
Exhibit J to Amended and Restated Construction Agreement (Building 7) – Page 2

 

 

BNP Paribas Leasing Corporation
                                         , 200___
Page 3
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 BNPPLC may request to allow it to decide whether to assume the Construction Contract. BNPPLC shall have seven days from receipt of such written certificate containing all such requested information to decide whether to assume the Construction Contract. If BNPPLC fails to assume the Construction Contract within such time, the undersigned agrees that BNPPLC shall not be liable (and the undersigned shall not assert or bring any action against BNPPLC, 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 BNPPLC notifies the undersigned that BNPPLC 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 Building 7 Documents, the undersigned shall immediately discontinue the work under the Construction Contract and remove its personnel from the Project, and BNPPLC shall be entitled to take exclusive possession of the Project. The undersigned shall also, upon request by BNPPLC, deliver and assign to BNPPLC 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 BNPPLC 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 BNPPLC that BNPPLC 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 BNPPLC’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 BNPPLC is given the opportunity to elect whether or not to assume the Construction Contract as provided herein, BNPPLC shall nonetheless have the right hereunder to assume the Construction Contract, as if it
Exhibit J to Amended and Restated Construction Agreement (Building 7) – Page 3

 

 

BNP Paribas Leasing Corporation
                                         , 200___
Page 4
had not been terminated, upon any termination of NAI’s right to possession of the Project under the Building 7 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 BNPPLC, for the additional costs incurred by the undersigned attributable to the disruption; and, provided further, that if BNPPLC does assume the Construction Contract, BNPPLC 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).
     e) No action taken by BNPPLC or the undersigned with respect to the Construction Contract shall prejudice any other rights or remedies of BNPPLC or the undersigned provided by law, by the Building 7 Documents, by the Construction Contract or otherwise against NAI.
     f) The undersigned agrees promptly to notify BNPPLC 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 BNPPLC 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 BNPPLC 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 BNPPLC 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 BNPPLC will include the time necessary to terminate NAI’s right to possession of the Project and evict NAI, provided that BNPPLC commences the steps required to exercise such right within sixty days after it is entitled to do so under the terms of the Building 7 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
Exhibit J to Amended and Restated Construction Agreement (Building 7) – Page 4

 

 

BNP Paribas Leasing Corporation
                                         , 200___
Page 5
telecopy, addressed as follows:
     
To the undersigned:
                                                               
 
                                                               
 
                                                               
 
  Telecopy: (___) ___-___
 
    
To BNPPLC:
  BNP Paribas 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:
     
Address of NAI:
  Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
 
    
With a copy to:
  Network Appliance, Inc.
495 East Java Drive
Sunnyvale, California 94089
Attention: Mr. Thom Bryant
Telecopy: (408)-822-4463
     h) The undersigned acknowledges that it has all requisite authority to execute this letter. The undersigned further acknowledges that BNPPLC has requested this letter, and is relying on the truth and accuracy of the representations made herein, in connection with BNPPLC’s decision to advance funds for construction under the Building 7 Documents with NAI.
Exhibit J to Amended and Restated Construction Agreement (Building 7) – Page 5

 

 

BNP Paribas Leasing Corporation
                                         , 200___
Page 6
                 
    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, BNPPLC to assume the Construction Contract in the event NAI is evicted from the Project.
                 
    Network Appliance, Inc.    
 
                
 
  By:            
             
 
      Name:        
 
         
 
    
 
      Title:        
 
         
 
    
Exhibit J to Amended and Restated Construction Agreement (Building 7) – Page 6

 

 

Exhibit K
Estoppel From Design Professionals
_________, 200__
BNP Paribas 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 Paribas Leasing Corporation, a Delaware corporation (“BNPPLC”), and covenants with BNPPLC 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 Building 7 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 an Amended and Restated Lease Agreement (Building 7) and an Amended and Restated Construction Agreement (Building 7), both dated as of November 29, 2007 (collectively, the “Building 7 Documents”), BNPPLC is leasing the Project to NAI and has agreed, subject to the terms and conditions of the Building 7 Documents, to provide a construction allowance for the design and construction of the Improvements. The undersigned has also been advised that the Building 7 Documents expressly provide that third parties (including the undersigned) are not intended as beneficiaries of the Building 7 Documents and, thus, will have no standing to enforce any obligations of NAI or BNPPLC under the Building 7 Documents, including any such obligation that BNPPLC may have to provide the construction allowance. The undersigned understands that the Building 7 Documents expressly provide that NAI is not authorized to enter into any Agreement or other agreement with any third party in the name of BNPPLC or to otherwise bind BNPPLC 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.

 

 

BNP Paribas 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 Agreement, 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 Agreement.
     The undersigned acknowledges and agrees that:
     a) BNPPLC shall not be liable for, and the undersigned shall not assert, any claims, demands or liabilities against BNPPLC 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 BNPPLC under the Agreement if BNPPLC 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 BNPPLC 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 BNPPLC 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 Building 7 Documents, including any eviction of NAI resulting from an Event of Default (as defined in the Building 7 Documents), BNPPLC 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 BNPPLC that NAI’s right to possession has been terminated, the undersigned shall send to BNPPLC 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
Exhibit K to Amended and Restated Construction Agreement (Building 7) – Page 2

 

 

BNP Paribas Leasing Corporation
                                         , 200___
Page 3
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 BNPPLC may request to allow it to decide whether to assume the Agreement. BNPPLC shall have seven days from receipt of such written certificate containing all such requested information to decide whether to assume the Agreement. If BNPPLC fails to assume the Agreement within such time, the undersigned agrees that BNPPLC shall not be liable (and the undersigned shall not assert or bring any action against BNPPLC or, 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 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 BNPPLC notifies the undersigned that BNPPLC shall not assume the Agreement pursuant to the preceding paragraph following the termination of NAI’s right to possession of the Project under the Building 7 Documents, the undersigned shall immediately deliver and assign to BNPPLC 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 BNPPLC that BNPPLC 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 BNPPLC’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 BNPPLC is given the opportunity to elect whether or not to assume the Agreement as provided herein, BNPPLC 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 Building 7 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
Exhibit K to Amended and Restated Construction Agreement (Building 7) – Page 3

 

 

BNP Paribas Leasing Corporation
                                         , 200___
Page 4
equitable adjustment to the price of the Agreement, following any assumption thereof by BNPPLC, for the additional costs incurred by the undersigned attributable to the disruption; and, provided further, that if BNPPLC does assume the Agreement, BNPPLC 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 BNPPLC or the undersigned with respect to the Agreement shall prejudice any other rights or remedies of BNPPLC or the undersigned provided by law, by the Building 7 Documents, by the Agreement or otherwise against NAI.
     f) The undersigned agrees promptly to notify BNPPLC 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 BNPPLC prominently marked “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 BNPPLC 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 BNPPLC 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: (___) ___-___
Exhibit K to Amended and Restated Construction Agreement (Building 7) – Page 4

 

 

BNP Paribas Leasing Corporation
                                         , 200___
Page 5
     
To BNPPLC:
  BNP Paribas 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:
     
Address of NAI:
  Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
 
    
With a copy to:
  Network Appliance, Inc.
495 East Java Drive
Sunnyvale, California 94089
Attention: Mr. Thom Bryant
Telecopy: (408)-822-4463
     h) The undersigned acknowledges that it has all requisite authority to execute this letter. The undersigned further acknowledges that BNPPLC has requested this letter, and is relying on the truth and accuracy of the representations made herein, in connection with BNPPLC’s decision to advance funds for design services under the Building 7 Documents with NAI.
                 
    Very truly yours,    
 
                
         
 
                
 
  By:            
             
 
      Name:        
 
         
 
    
 
      Title:        
 
         
 
    
Exhibit K to Amended and Restated Construction Agreement (Building 7) – Page 5

 

 

BNP Paribas Leasing Corporation
                                         , 200___
Page 6
     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, BNPPLC to assume the Agreement in the event NAI is evicted from the Project.
                 
    Network Appliance, Inc.    
 
                
 
  By:            
             
 
      Name:        
 
         
 
    
 
      Title:        
 
         
 
    
Exhibit K to Amended and Restated Construction Agreement (Building 7) – Page 6

 

exv10w33
Exhibit 10.33
AMENDED AND RESTATED
LEASE AGREEMENT
(BUILDING 7)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
                 
            Page  
1   Term; Lease Obligations Deferred Until Completion of Initial Improvements; Termination Prior to Lease     3  
Commencement
 
   (A)   Scheduled Term; Deferral of Obligations     3  
 
   (B)   Option of BNPPLC to Terminate     3  
 
   (C)   Automatic Termination     3  
 
   (D)   Extension of the Term     3  
 
                
2   Use and Condition of the Property     4  
 
   (A)   Use     4  
 
   (B)   Condition of the Property     5  
 
   (C)   Consideration for and Scope of Waiver     5  
 
                
3   Rent     6  
 
   (A)   Base Rent Generally     6  
 
   (B)   Calculation of and Due Dates for Base Rent     6  
 
       (1) Determination of Payment Due Dates Generally     6  
 
       (2) Special Adjustments to Base Rent Payment Dates and Periods     6  
 
       (3) Base Rent Formula     7  
 
       (4) Fixed Rate Lock     7  
 
   (C)   Early Termination of Fixed Rate Lock     8  
 
   (D)   Additional Rent     9  
 
   (E)   Administrative Fees.     9  
 
   (F)   No Demand or Setoff     9  
 
   (G)   Default Interest and Order of Application     9  
 
   (H)   Calculations by BNPPLC Are Conclusive     9  
 
                
4   Nature of this Agreement     9  
 
   (A)   “Net” Lease Generally     9  
 
   (B)   No Termination     10  
 
   (C)   Characterization of this Lease     11  
 
                
5   Payment of Executory Costs and Losses Related to the Property     13  
 
   (A)   Local Impositions     13  
 
   (B)   Increased Costs; Capital Adequacy Charges     13  
 
   (C)   NAI’s Payment of Other Losses; General Indemnification     15  
 
   (D)   Exceptions and Qualifications to Indemnities     19  
 
   (E)   Refunds and Credits Related to Losses Paid by NAI     23  
 
   (F)   Reimbursement of Excluded Taxes Paid by NAI     25  
 
   (G)   Collection on Behalf of Participants     25  
 
                
6   Replacement of Participants     25  

 

 

TABLE OF CONTENTS
(Continued)
                 
            Page  
 
   (A)   NAI’s Right to Substitute Participants     25  
 
   (B)   Conditions to Replacement of Participants     25  
 
                
7   Items Included in the Property     26  
 
   (A)   Status of Property     26  
 
   (B)   Changes in the Land Covered by the Ground Lease     27  
 
                
8   Environmental     27  
 
   (A)   Environmental Covenants by NAI     27  
 
   (B)   Right of BNPPLC to do Remedial Work Not Performed by NAI     28  
 
   (C)   Environmental Inspections and Reviews     28  
 
   (D)   Communications Regarding Environmental Matters     29  
 
                
9   Insurance Required and Condemnation     30  
 
   (A)   Liability Insurance     30  
 
   (B)   Property Insurance     30  
 
   (C)   Failure to Obtain Insurance     31  
 
   (D)   Condemnation     31  
 
   (E)   Waiver of Subrogation     32  
 
                
10   Application of Insurance and Condemnation Proceeds     32  
 
   (A)   Collection and Application of Insurance and Condemnation Proceeds Generally     32  
 
   (B)   Advances of Escrowed Proceeds to NAI     33  
 
   (C)   Application of Escrowed Proceeds as a Qualified Prepayment     33  
 
   (D)   Right of NAI to Receive and Apply Remaining Proceeds Below a Certain Level     33  
 
   (E)   Special Provisions Applicable After a 97-10/Meltdown Event or an Event of Default     33  
 
   (F)   NAI’s Obligation to Restore     34  
 
   (G)   Takings of All or Substantially All of the Property on or after the Completion Date     34  
 
   (H)   If Remaining Proceeds Exceed the Lease Balance     34  
 
11   Additional Representations, Warranties and Covenants of NAI Concerning the Property     35  
 
   (A)   Operation and Maintenance     35  
 
   (B)   Debts for Construction, Maintenance, Operation or Development     36  

(ii) 

 

TABLE OF CONTENTS
(Continued)
                 
            Page  
 
   (C)   Repair, Maintenance, Alterations and Additions     36  
 
   (D)   Permitted Encumbrances     37  
 
   (E)   Books and Records Concerning the Property     37  
 
                
12   Assignment and Subletting by NAI     38  
 
   (A)   BNPPLC’s Consent Required     38  
 
   (B)   Standard for BNPPLC’s Consent to Assignments and Certain Other Matters     38  
 
   (C)   Consent Not a Waiver     39  
 
                
13   Assignment by BNPPLC     39  
 
   (A)   Restrictions on Transfers     39  
 
   (B)   Effect of Permitted Transfer or other Assignment by BNPPLC     39  
 
                
14   BNPPLC’s Right to Enter and to Perform for NAI     40  
 
   (A)   Right to Enter     40  
 
   (B)   Performance for NAI     40  
 
   (C)   Building Security     40  
 
                
15   Remedies     41  
 
   (A)   Traditional Lease Remedies     41  
 
   (B)   Foreclosure Remedies     43  
 
   (C)   Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement     43  
 
   (D)   Enforceability     44  
 
   (E)   Remedies Cumulative     44  
 
                
16   Default by BNPPLC     44  
 
                
17   Quiet Enjoyment     45  
 
                
18   Surrender Upon Termination     45  
 
                
19   Holding Over by NAI     45  
 
                
20   Recording Memorandum     46  
 
                
21   Independent Obligations Evidenced by Other Operative Documents     46  

(iii)

 

TABLE OF CONTENTS
(Continued)
                 
            Page  
22
   Proprietary Information and Confidentiality     46  
 
   (A)   Proprietary Information     46  
 
   (B)   Confidentiality     46  
 
                
23   Amendment and Restatement of the Prior Lease     47  
Exhibits and Schedules
     
Exhibit A
  Legal Description
Exhibit B
  California Lien and Foreclosure Provisions

(iv)

 

AMENDED AND RESTATED
LEASE AGREEMENT
(BUILDING 7)
     This AMENDED AND RESTATED LEASE AGREEMENT (BUILDING 7) (this “Lease”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Lease, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (Building 7) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Lease for all purposes. As used in this Lease, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Lease are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     At the request of NAI and to facilitate the transactions contemplated in the other Operative Documents, BNPPLC is entering into the Ground Lease, pursuant to which BNPPLC will have a leasehold estate in the Land described in Exhibit A and any existing improvements on the Land from NAI contemporaneously with the execution of this Lease.
     NAI is already in possession and control of the Land pursuant to the Prior Lease or the Prior Construction Agreement.
     In anticipation of BNPPLC’s acquisition of the leasehold estate under the Ground Lease and other property described below, BNPPLC and NAI have reached agreement as to the terms and conditions upon which BNPPLC is willing to sublease the Land to NAI and to lease to NAI any existing Improvements and the Improvements to be constructed on the Land as hereinafter provided, and by this Lease BNPPLC and NAI desire to evidence such agreement and to amend and restate the Prior Lease.
GRANTING CLAUSES
     BNPPLC does hereby LEASE, DEMISE and LET unto NAI for the Term (as hereinafter defined) all right, title and interest of BNPPLC, now owned or hereafter acquired, in and to:
     (1) the Land, including the leasehold estate in the Land acquired by BNPPLC under the Ground Lease;
     (2) any and all Improvements;

 

 

     (3) all easements and other rights appurtenant to the leasehold estate created by the Ground Lease or to the Improvements; and
     (4) (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 abutting land.
BNPPLC’s interest in all property described in clauses (1) through (4) above is 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 BNPPLC under the Ground Lease or as described in subparagraph 7(A) below, BNPPLC also hereby grants and assigns to NAI for the term of this Lease the right to use and enjoy (and, in the case of contract rights, to enforce) such rights or interests of BNPPLC:
     (a) any goods, equipment, furnishings, furniture and other tangible personal property of whatever nature that are located on the Real Property and all renewals or replacements of or substitutions for any of the foregoing (collectively, the “Tangible Personal Property”);
     (b) the benefits, if any, conferred upon the owner of the Real Property by the Permitted Encumbrances; and
     (c) any permits, licenses, franchises, certificates, and other rights and privileges against third parties related to the Real Property or Tangible Personal Property, including warranties, if any, given by vendors from whom any Tangible Personal Property was or may be acquired.
Such rights and interests of BNPPLC, 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 by this Lease and NAI’s rights hereunder are expressly made subject and subordinate to the terms and conditions of this Lease and the Ground Lease, to the matters listed in Exhibit B to the Closing Certificate and all other Permitted Encumbrances, and to any other claims or encumbrances not constituting Liens Removable by BNPPLC.
GENERAL TERMS AND CONDITIONS
Amended and Restated Lease Agreement (Building 7) – Page 2

 

 

     The Property is leased by BNPPLC 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; Lease Obligations Deferred Until Completion of Initial Improvements; Termination Prior to Lease Commencement.
     (A) Scheduled Term; Deferral of Obligations. The term of this Lease (the “Term”) will not commence until a Completion Date occurs because of a Completion Notice given by NAI to BNPPLC, as required by subparagraph 2(B) of the Construction Agreement after NAI substantially completes the Construction Project. The Term will begin on and include any such Completion Date and will end on the first Business Day of January, 2013, unless the Term is extended as provided in subparagraph 1(D) or sooner terminated as expressly provided in other provisions of this Lease.
     BNPPLC and NAI intend to be legally bound by this Lease when it is executed by them. They also intend, however, that this Lease will not impose any payment obligations upon either of them prior to the Completion Date. Accordingly, neither NAI nor BNPPLC will have any obligation to make any payments under this Lease until the Completion Date, and if this Lease terminates before the Completion Date pursuant to subparagraph 1(B) or subparagraph 1(C), the Term will never commence and neither party will have any obligation for payments by reason of this Lease following the termination.
     Nothing in this subparagraph 1(A) nor any other provision of this Lease will defer or terminate the rights and obligations of the parties under the other Operative Documents. Unlike this Lease, the other Operative Documents will, when executed, immediately impose payment obligations upon BNPPLC and NAI.
     (B) Option of BNPPLC to Terminate. BNPPLC will have the option to terminate this Lease, which BNPPLC may exercise by notice to NAI, at any time after any 97-10/Meltdown Event or after BNPPLC’s receipt of a Pre-lease Force Majeure Notice. Such option may be exercised by BNPPLC as it deems appropriate in its sole and absolute discretion.
     (C) Automatic Termination. If NAI elects to accelerate the Designated Sale Date (as provided in the definition thereof in the Common Definitions and Provisions Agreement) prior to the Completion Date, or if a Termination of NAI’s Work occurs under and as provided in the Construction Agreement before the Completion Date, then this Lease will terminate automatically before the Term begins.
     (D) Extension of the Term. The Term may be extended at the option of NAI for up to two successive periods of five years each; provided, however, that prior to each such extension the following conditions must have been satisfied: (A) NAI must have delivered a notice of its
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election to exercise the option at least one hundred eighty days prior to the end of the Term, and prior to the commencement of any such extension BNPPLC and NAI must have agreed in writing upon, and received the written consent and approval of BNPPLC’s Parent and all Participants (other than Participants being replaced at the request of NAI as provided in Paragraph 6) to, (1) a corresponding extension of the date specified in clause (1) of the definition of Designated Sale Date in the Common Definitions and Provisions Agreement and of the term of the Ground Lease, and (2) an adjustment to the Rent that NAI will be required to pay during the extension, it being expected that the Rent for the extension may be different than the Rent required for the original Term or any prior extension, and it being understood that the Rent for any extension must in all events be satisfactory to both BNPPLC and NAI, each in its sole and absolute discretion; (B) at the time of NAI’s exercise of its option to extend, no Event of Default has occurred and is continuing, and no Event of Default will result from the extension; (C) immediately prior to any such extension, this Lease must then remain in effect; and (D) if this Lease has been assigned by NAI, then NAI must have executed a guaranty (or confirmed an existing guaranty, if applicable), guaranteeing NAI’s assignee’s obligations under the Operative Documents throughout such extended Term. With respect to the condition that BNPPLC and NAI must have agreed upon the Rent required for any extension of the Term, neither NAI nor BNPPLC is willing to submit itself to a risk of liability or loss of rights hereunder for being judged unreasonable. Similarly, neither BNPPLC’s Parent nor any Participant is expected to submit itself to a risk of liability or loss of rights for being judged to have unreasonably withheld consent or approval to any extension of the Term. Accordingly, NAI, BNPPLC, BNPPLC’s Parent and Participants will each have sole and absolute discretion in making its determination, and both NAI and BNPPLC 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 and satisfaction of the other conditions listed in this subparagraph, if NAI exercises its option to extend the Term as provided in this subparagraph, this Lease will continue in full force and effect, and the leasehold estate hereby granted to NAI will 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 Effective Date and before the extension.
2 Use and Condition of the Property.
     (A) Use. Subject to the Permitted Encumbrances, NAI may use and occupy the Property during the Term, but only for the following purposes and other lawful purposes incidental thereto:
     (1) construction and development of the Construction Project;
     (2) administrative and office space;
     (3) activities related to NAI’s research and development or production of products
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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;
     (4) cafeteria and other support facilities that NAI may provide to its employees; and
     (5) 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 BNPPLC, which approval will not be unreasonably withheld after completion of the Construction Project (but NAI acknowledges that BNPPLC’s withholding of such approval shall be reasonable if BNPPLC determines in good faith that (1) giving the approval may materially increase BNPPLC’s risk of liability for any existing or future environmental problem, or (2) giving the approval is likely to substantially increase BNPPLC’s administrative burden of complying with or monitoring NAI’s compliance with the requirements of this Lease or other Operative Documents).
     (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 BNPPLC or other Interested Parties regarding the title thereto or the rights of any parties in possession of any part thereof, except as expressly set forth in Paragraph 17. BNPPLC will not be responsible for any latent or other defect or change of condition in the Land, Improvements or other Property or for any violations with respect thereto of Applicable Laws. Further, BNPPLC will not be required to furnish to NAI any facilities or services of any kind, including water, phone, sewer, steam, heat, gas, air conditioning, electricity, light or power.
     (C) Consideration for and Scope of Waiver. The provisions of subparagraph 2(B) have been negotiated by BNPPLC and NAI as being consistent with the Rent payable under this Lease, and such provisions are intended to be a complete exclusion and negation of any representations or warranties of BNPPLC or other Interested Parties, 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.
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     However, such exclusion of representations and warranties by BNPPLC is not intended to impair any representations or warranties made by other parties, including any architects, engineers or contractors engaged to work on the Construction Project, 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 must pay BNPPLC rent (“Base Rent”), calculated as provided below. Each payment of Base Rent must be received by BNPPLC no later than 1:00 p.m. (Eastern time) on the date it becomes due; if received after 1:00 p.m. (Eastern time) it will be considered for purposes of this 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 becomes due, BNPPLC will notify NAI in writing of the amount of each installment, calculated as provided below. Any failure by BNPPLC to so notify NAI, however, will not constitute a waiver of BNPPLC’s right to payment, but absent such notice NAI will 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 BNPPLC of the underpayment.
     (B) Calculation of and Due Dates for Base Rent. Payments of Base Rent will be calculated and become due as follows:
     (1) Determination of Payment Due Dates Generally. For Base Rent Periods subject to a LIBOR Period Election of six months, Base Rent will 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. For all other Base Rent Periods, Base Rent will be due in one installment on the Base Rent Date upon which the Base Rent Period ends.
     (2) Special Adjustments to Base Rent Payment Dates and Periods. Notwithstanding the foregoing, if NAI or any Applicable Purchaser purchases BNPPLC’s interest in the Property pursuant to the Purchase Agreement, any accrued unpaid Base Rent and all outstanding Additional Rent will be due on the date of purchase in addition to the purchase price and other sums due to BNPPLC under the Purchase Agreement.
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     (3) Base Rent Formula. Each installment of Base Rent payable for any Base Rent Period will equal:
  •   the Lease Balance on the first day of such Base Rent Period, less Losses (if any) that BNPPLC suffered or incurred prior to the Term and that qualify as Pre-lease Force Majeure Losses (as defined in the Construction Agreement), times
 
  •   the sum of the Effective Rate and the Spread, 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.
     Only for the purpose of illustration, assume the following for a hypothetical Base Rent Period: that prior to the first day of such Base Rent Period the Construction Allowance has been fully funded, and no Pre-lease Force Majeure Losses have occurred, but Qualified Prepayments have been received by BNPPLC, leaving a Lease Balance of $30,000,000; that the Effective Rate for the Base Rent Period is 6%; that the Spread is one hundred fifty basis points (150/100 of 1%); and that such Base Rent Period contains exactly thirty days. Under such assumptions, Base Rent for the hypothetical Base Rent Period will equal:
$30,000,000 x [6% + 1.50%] x 30/360 = $187,500.
     (4) Fixed Rate Lock. At any time during the Term, NAI may deliver a notice in the form attached to the Common Definitions and Provisions Agreement as Annex 2 (a “Fixed Rate Lock Notice”), requesting that BNPPLC establish a fixed rate for use in the calculation of the Effective Rate hereunder (a “Fixed Rate Lock”) for all Base Rent Periods commencing on or after a date specified in such notice, which date must be the first Business Day of a calendar month (the “Fixed Rate Lock Date”). Promptly after receiving a Fixed Rate Lock Notice, BNPPLC will enter into an Interest Rate Swap with BNP Paribas (the “Fixed Rate Swap”); except that BNPPLC may decline to enter into the Fixed Rate Swap and to establish a Fixed Rate Lock if:
     (a) NAI does not deliver the Fixed Rate Lock Notice to BNPPLC at least ten Business days prior to the Fixed Rate Lock Date specified therein;
     (b) NAI specifies a Fixed Rate Lock Date in the Fixed Rate Lock Notice that is prior to the end of any Base Rent Period which commenced before
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BNPPLC receives the Fixed Rate Lock Notice;
     (c) any notice has been given to accelerate the Designated Sale Date as provided in the definition thereof in the Common Definitions and Provisions Agreement;
     (d) the estimate of the Fixed Rate (hereinafter defined) specified by NAI in the Fixed Rate Lock Notice is for any reason less than the fixed rate available to BNPPLC under any Interest Rate Swap proposed by BNP Paribas;
     (e) at the time the Fixed Rate Lock Notice is given, the Interest Rate Swap requested thereby is contrary to any Applicable Laws or any interpretation thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency (including, without limitation, any such requirement imposed by the Board of Governors of the United States Federal Reserve System); or
     (f) any event has occurred or circumstance exists that constitutes a Default or a 97-10/Meltdown Event.
The notional principal amount of the Fixed Rate Swap will equal the Lease Balance on the date such notice is given. The fixed rate used to calculate payments required of BNPPLC under the Fixed Rate Swap, as the counterparty designated the fixed rate payor, will constitute the “Fixed Rate” for purposes of this Lease.
     (C) Early Termination of Fixed Rate Lock. After a Fixed Rate Lock is established, BNPPLC may cause or suffer a termination in whole or in part of the Fixed Rate Swap in the event that (i) NAI fails to make any payment of Base Rent required hereunder on the Base Rent Date when it first becomes due, (ii) the Designated Sale Date occurs before the date specified in clause (1) of the definition thereof in the Common Definitions and Provisions Agreement, (iii) for any reason a Qualified Prepayment is applied to reduce the Lease Balance, (iv) the Lease Balance on the Fixed Rate Lock Date is less than the notional amount of the Fixed Rate Swap for any reason. NAI must reimburse to BNPPLC any Fixed Rate Settlement Amount charged to BNPPLC in connection with such a termination, and if the termination is a complete, rather than a partial, termination of the Fixed Rate Swap then in effect, it will for purposes of this Lease constitute a termination of the Fixed Rate Lock itself. Further, if BNPPLC is charged penalties or interest because of its failure to make a timely payment required under the Fixed Rate Swap, and if BNPPLC’s failure to make the timely payment was caused by NAI’s failure to make a timely payment of Base Rent or other amounts due hereunder or under other Operative
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Documents, then such penalties or interest will constitute Losses against which BNPPLC is entitled to be indemnified pursuant to subparagraph 5(C). If a Fixed Rate Lock is terminated as provided in this subparagraph, NAI shall have no right to require BNPPLC to enter into another Interest Rate Swap in order to establish a new fixed rate.
     (D) Additional Rent. All amounts which NAI is required to pay to or on behalf of BNPPLC pursuant to this Lease, together with every charge, premium, interest and cost set forth herein which may be added for nonpayment or late payment thereof, will constitute rent (all such amounts, other than Base Rent, are herein called “Additional Rent”; and, collectively, Base Rent and Additional Rent are herein sometimes called “Rent”).
     (E) Administrative Fees. In addition to other amounts payable by NAI hereunder, on or before each anniversary of the Effective Date after the Completion Date and prior to the Designated Sale Date, NAI must pay BNPPLC an annual administrative agency fee (an “Administrative Fee”) as provided in the Closing Letter. Each payment of an Administrative Fee will represent Additional Rent for the first Base Rent Period during which it first becomes due.
     (F) No Demand or Setoff. Except as expressly provided herein, NAI must pay all Rent without notice or demand and without counterclaim, deduction, setoff or defense.
     (G) Default Interest and Order of Application. All Rent will 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. BNPPLC may 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 BNPPLC elects.
     (H) Calculations by BNPPLC Are Conclusive. All calculations by BNPPLC of Base Rent, Additional Rent or any amount needed to calculate Base Rent (including the Effective Rate for any Base Rent Period and the Lease Balance) or Additional Rent will, in the absence of clear and demonstrable error, be conclusive and binding upon NAI.
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 BNPPLC and NAI that Base Rent and other payments herein specified will be absolutely net to BNPPLC and that NAI must pay all costs, expenses and obligations of every kind relating to the Property or this Lease which may arise or become due. Further, it is understood that all amounts payable by NAI to BNPPLC under this Lease and the other Operative Documents are expressed as minimum payments to be made net of any deduction
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or withholding required under any Applicable Laws.
     (B) No Termination. Except as expressly provided in this Lease itself, this Lease will not terminate, nor will NAI have any right to terminate this Lease, nor will NAI be entitled to any abatement of or setoff against the Rent, nor will the obligations of NAI under this 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 BNPPLC under this Lease or any of the other Operative Documents or any other agreement to which BNPPLC 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 BNPPLC 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) NAI’s ownership of any interest in the Property, or (ix) 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 hereunder be separate and independent of the covenants and agreements of BNPPLC, that Base Rent and all other sums payable by NAI hereunder continue to be payable in all events and that the obligations of NAI hereunder continue unaffected, unless the requirement to pay or perform the same have been terminated or limited pursuant to an express provision of this 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 “warranty of suitability” or other warranties implied as a matter of law) (i) to quit, terminate or surrender this 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) will 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 BNPPLC’s failure to remove a Lien Removable by BNPPLC or because of any other default by BNPPLC under this Lease: (i) the recovery of monetary damages in the case of any default that continues beyond the period for cure provided in Paragraph 16, (ii) injunctive relief in case of the violation, or attempted or threatened violation, by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Lease which are binding upon BNPPLC (including the confidentiality provisions set forth in subparagraph 22(B) below), or (iii) a decree compelling performance by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Lease which are binding upon BNPPLC.
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     (C) Characterization of this Lease.
     (1) Both NAI and BNPPLC intend that (A) for the purposes of determining the proper accounting for this Lease by NAI, BNPPLC will be treated as the owner and landlord of the Property and NAI will be treated as the tenant of the Property, and (B) for income tax purposes and commercial law (including real estate and bankruptcy law) and regulatory purposes, (1) this Lease and the other Operative Documents will be treated as a financing arrangement, (2) BNPPLC will be deemed a lender making loans to NAI in the principal amount equal to the Lease Balance, which loans are secured by the Property, and (3) NAI will be treated as the owner of the Property and will be entitled to all tax benefits available to the owner of the Property. Consistent with such intent, by the provisions set forth in Exhibit B, NAI is granting to BNPPLC a lien upon and mortgaging and warranting title to a leasehold estate in the Land (the terms and conditions of which leasehold estate are as set forth in the Ground Lease) and the Improvements and all rights, titles and interests of NAI in and to other Property, WITH POWER OF SALE, to secure all obligations (monetary or otherwise) of NAI arising under or in connection with any of the Operative Documents. Without limiting the generality of the foregoing, NAI and BNPPLC desire that their intent as set forth in this subparagraph be given effect both in the context of any bankruptcy, insolvency or receivership proceedings concerning NAI or BNPPLC and in other contexts. Accordingly, NAI and BNPPLC expect that in the event of any bankruptcy, insolvency or receivership proceedings affecting NAI or BNPPLC or any enforcement or collection actions arising out of such proceedings, the transactions evidenced by this Lease and the other Operative Documents will be characterized and treated as loans made to NAI by BNPPLC, as an unrelated third party lender to NAI, secured by the Property.
     (2) Notwithstanding the foregoing, NAI acknowledges and agrees that none of BNPPLC or the other Interested Parties has made, or will be deemed to have made, in the Operative Documents or otherwise, any representations or warranties concerning how this Lease and the other Operative Documents will be characterized or treated under applicable accounting rules, income tax, regulatory, commercial or real estate law, bankruptcy, insolvency or receivership law or any other rules or requirements concerning the tax, accounting or legal characteristics of the Operative Documents. NAI further acknowledges and agrees that it is sophisticated and knowledgeable regarding all such matters and that it has, as it deemed appropriate, obtained from and relied upon its own professional accountants, counsel and other advisors for such tax, accounting and legal advice concerning the Operative Documents.
     (3) In any event, NAI will be required by subparagraph 5(C) below to indemnify and hold harmless BNPPLC from and against all additional taxes that may arise or become due because of any refusal of taxing authorities to recognize and give
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effect to the intention of the parties as set forth in subparagraph 4(C)(1) (“Unexpected Recharacterization Taxes”), including any additional income or capital gain tax that may become due because of payments to BNPPLC of the purchase price upon any sale under the Purchase Agreement resulting from any insistence of such taxing authorities that BNPPLC be treated as the “true owner” of the Property for tax purposes (a “Forced Recharacterization”); provided, however, NAI will not be required to pay or reimburse Unexpected Recharacterization Taxes to the extent that they are, in any given tax year, eliminated or offset by actual savings to BNPPLC because of additional depreciation deductions or other tax benefits available to BNPPLC in the same year only by reason of the Forced Recharacterization (“Unexpected Tax Savings”). To the extent Unexpected Recharacterization Taxes are eliminated or offset by Unexpected Tax Savings in a given tax year, including the tax year in which any sale under the Purchase Agreement occurs (the “Year of Sale”), such Unexpected Recharacterization Taxes will constitute Excluded Taxes as provided in clause (D) of the definition thereof in the Common Definitions and Provisions Agreement. Also, for purposes of this provision, it is understood that any depreciation deductions first available to BNPPLC in tax years prior to the Year of Sale and resulting from a Forced Recharacterization (“Prior Year Depreciation Deductions”) will be considered “available to BNPPLC” in the Year of Sale (and thus will eliminate or offset any Unexpected Recharacterization Taxes resulting from the recapture of such Prior Year Depreciation Deductions upon a sale under the Purchase Agreement) to the extent that (A) such Prior Year Depreciation Deductions are not otherwise used to generate Unexpected Tax Savings or Unexpected Net Tax Benefits (as defined below), and (B) the tax laws and regulations applicable in the Year of Sale effectively permit BNPPLC to carry over the Prior Year Depreciation Deductions to the Year of Sale by allowing BNPPLC to carry over net operating losses from the years in which the Prior Year Depreciation Deductions were first available to BNPPLC to the Year of Sale.
     (4) After any Forced Recharacterization, BNPPLC will make a reasonable effort to determine whether Unexpected Tax Savings exceed Unexpected Recharacterization Taxes in any given tax year (any such excess being hereinafter called an “Unexpected Net Tax Benefit”); and if BNPPLC does determine that an Unexpected Net Tax Benefit has been realized and the amount thereof, BNPPLC will notify NAI of the same and either credit the amount thereof against payments otherwise then due or to become due from NAI under this Lease or the other Operative Documents or pay the amount of such Unexpected Net Tax Benefit to NAI. It is understood, however, that the tax position of BNPPLC (and the consolidated tax group of which it is a part) may, in any given tax year, be such that no Unexpected Net Tax Benefit exists or can be determined with a reasonable effort on the part of BNPPLC. Therefore, BNPPLC makes no representation that NAI will receive any credits or payments pursuant to this provision after any Forced Recharacterization. Also, the determination by BNPPLC of the amount of any Unexpected Net Tax Benefit will be conclusive absent clear and manifest error, as
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will any determination by BNPPLC that the amount of any Unexpected Net Tax Benefit in a given tax year cannot be calculated with a reasonable effort. If NAI is dissatisfied with any such determination by BNPPLC prior to the Designated Sale Date, NAI will be entitled to accelerate the Designated Sale Date (as provided in clause (2) of the definition thereof), after which NAI may purchase or cause an Applicable Purchaser to purchase the Property on the accelerated Designated Sale Date pursuant to the Purchase Agreement.
5   Payment of Executory Costs and Losses Related to the Property.
     (A) Local Impositions. Subject only to the exceptions listed in subparagraph 5(D) below, NAI must pay or cause to be paid prior to delinquency all Local Impositions. If requested by BNPPLC from time to time, NAI must furnish BNPPLC with receipts or other appropriate evidence showing payment of all Local Impositions at least ten days 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 Local Imposition, and pending such contest NAI will not be deemed in default under any of the provisions of this Lease because of the Local Imposition if (1) NAI diligently prosecutes such contest to completion in a manner reasonably satisfactory to BNPPLC, 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 must be concluded and the contested Local Impositions must be paid by NAI prior to the earliest of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC 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 BNPPLC (including the Property) may be seized or sold or any other action is taken or overtly threatened against BNPPLC or against any property owned or leased by BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price (when taken together with any Supplemental Payment paid by NAI pursuant to 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:
     (1) If there is any increase in the cost to BNPPLC’s Parent or any Participant of agreeing to make or making, funding or maintaining advances to BNPPLC in connection with the Property because of any Banking Rules Change, then NAI must from time to time (after receipt of a request from BNPPLC’s Parent or such Participant as
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provided below) pay to BNPPLC for the account of BNPPLC’s Parent or such Participant, as the case may be, additional amounts sufficient to compensate BNPPLC’s Parent or the Participant for such increased cost. A certificate as to the amount of such increased cost, submitted to BNPPLC and NAI by BNPPLC’s Parent or the Participant, will be conclusive and binding upon NAI, absent clear and demonstrable error.
     (2) BNPPLC’s Parent or any Participant may demand additional payments (“Capital Adequacy Charges”) if BNPPLC’s Parent or the 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 or for BNPPLC to permit BNPPLC to maintain BNPPLC’s investment in the Property. To the extent that BNPPLC’s Parent or any Participant demands Capital Adequacy Charges as compensation for the additional capital requirements reasonably allocable to such investment or advances, NAI must pay to BNPPLC for the account of BNPPLC’s Parent or the Participant, as the case may be, the amount so demanded.
     (3) Notwithstanding the foregoing provisions of this subparagraph 5(B), NAI will not be obligated to pay any claim for compensation pursuant to this subparagraph 5(B) that arises or accrues (a) in the case of BNPPLC’s Parent, as a result of any change in the rating assigned to BNPPLC by rating agencies or bank regulators in regard to BNPPLC’s creditworthiness, record keeping or failure to comply with Applicable Laws (including U.S. banking regulations applicable to subsidiaries of a bank holding company), or (b) in the case of BNPPLC’s Parent or any Participant, more than nine months prior to the date NAI is notified of the intent of BNPPLC’s Parent or such Participant to make a claim for such charges; provided, that if the Banking Rules Change which results in a claim for compensation is retroactive, then the nine month period will be extended to include the period of the retroactive effect of such Banking Rules Change. Further, BNPPLC will cause BNPPLC’s Parent and any Participant that is an Affiliate of BNPPLC to use commercially reasonable efforts to reduce or eliminate any claim for compensation pursuant to this subparagraph 5(B), including a change in the office of BNPPLC’s Parent or such Participant through which it provides and maintains Funding Advances if such change will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of BNPPLC’s Parent or such Participant, be otherwise disadvantageous to it. It is understood that NAI may also request similar commercial reasonable efforts on the part of any Participant that is not an Affiliate of BNPPLC, but if a claim for additional compensation by any such Participant is not eliminated or waived, then NAI may request that BNPPLC replace such Participant as provided in Paragraph 6. Nothing in this subparagraph will be construed to require BNPPLC’s Parent or any Participant to create any new office through which to make or maintain Funding Advances.
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     (4) Any amount required to be paid by NAI under this subparagraph 5(B) will be due ten days after a notice requesting such payment is received by NAI from BNPPLC’s Parent or the applicable Participant.
     (C) NAI’s Payment of Other Losses; General Indemnification. Subject only to the exceptions listed in subparagraph 5(D) below:
     (1) Agreement to Indemnify. As directed by BNPPLC, NAI must pay, reimburse, indemnify, defend, protect and hold harmless BNPPLC and all other Interested Parties from and against all Losses (including Environmental Losses) asserted against or incurred or suffered by any of them at any time and from time to time by reason of, in connection with, arising out of, or in any way related to the following:
  ·   the ownership or alleged ownership of any interest in the Property or the Rents;
 
  ·   the purchase, design, construction, preparation, installation, inspection, delivery, non-delivery, acceptance, rejection, possession, use, operation, maintenance, management, rental, lease, sublease, repossession, condition (including defects, whether or not discoverable), destruction, repair, alteration, modification, restoration, addition or substitution, storage, transfer of title, redelivery, return, sale or other disposition of all or any part of or interest in the Property;
 
  ·   the imposition of any Lien (or incurring of any liability to refund or pay over any amount as a result of any Lien) against all or any part of or interest in the Property;
 
  ·   any failure of the Property or NAI itself to comply with Applicable Laws;
 
  ·   Permitted Encumbrances or any violation thereof;
 
  ·   Hazardous Substance Activities, including those occurring prior to the Term;
 
  ·   the negotiation, administration or enforcement of the Operative Documents or the Participation Agreement;
 
  ·   the making or maintenance of Funding Advances;
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  ·   any Interest Rate Swap that BNPPLC enters into as described in subparagraph 3(B)(4) of this Lease;
 
  ·   the breach by NAI of this Lease, any other Operative Document or any other document executed by NAI pursuant to or in connection with any Operative Document;
 
  ·   any obligations of BNPPLC under the Closing Certificate or the Ground Lease; or
 
  ·   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.
NAI’s obligations under this indemnity will apply whether or not any Interested Party is also indemnified as to the applicable Loss by another Interested Party and whether or not the Loss arises or accrues because of any condition of the Property or other circumstance concerning the Property prior to the Effective Date.
Further, in the event, for income tax purposes, an Interested Party must include in its taxable income any payment or reimbursement from NAI which is required by this indemnity (in this provision, the “Original Indemnity Payment”), and yet the Interested Party is not entitled during the same taxable year to a corresponding and equal deduction from its taxable income for the Loss paid or reimbursed by such Original Indemnity Payment (in this provision, the “Corresponding Loss”), then NAI must also pay to such Interested Party on demand the additional amount (in this provision, the “Additional Indemnity Payment”) needed to gross up the Original Indemnity Payment for any and all resulting additional income taxes. That is, NAI must pay an Additional Indemnity Payment as is needed so that the Corresponding Loss (computed net of the reduction, if any, of the Interested Party’s income taxes because of credits or deductions that are attributable to the Interested Party’s payment or deemed payment of the Corresponding Loss and that are recognized for tax purposes in the same taxable year during which the Interested Party must recognize the Original Indemnity Payment as income) will not exceed the difference computed by subtracting (i) all income taxes (determined for this purpose based on the highest marginal income tax rates charged to corporations by federal, state and local tax authorities, as applicable, for the relevant period or periods) imposed because of the receipt or constructive receipt of the Original Indemnity Payment and the Additional Indemnity Payment, from (ii) the sum of the Original Indemnity Payment and the Additional Indemnity Payment. (With regard to any payment or reimbursement of an Original Indemnity Payment, “After Tax Basis” means that such payment or reimbursement is or will be made together with the additional amount needed
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to gross up such Original Indemnity Payment as described in this provision.)
     (2) Scope of Indemnities and Releases. Every indemnity and release provided in this Lease and the other Operative Documents for the benefit of BNPPLC or other Interested Parties, including the indemnity set forth in subparagraph 5(C)(1), will apply even if and when the subject matter of the indemnity or release arises out of or results from the negligence or strict liability of BNPPLC or any other Interested Party. Further, all such indemnities and releases will apply even if insurance obtained by NAI or required of NAI by this Lease or the other Operative Documents is not adequate to cover Losses against or for which the indemnities and releases are provided. (However, NAI’s liability for any failure to obtain insurance required by this Lease or the other Operative Documents will not be limited to Losses against which indemnities are provided, it being understood that the parties have agreed upon insurance requirements for reasons that extend beyond providing a source of payment for Losses against which BNPPLC and other Interested Parties may be indemnified by NAI.)
     (3) Nonexclusive List of Costs Covered by Indemnity. Costs and expenses for which NAI is responsible on an After Tax Basis pursuant to this subparagraph 5(C) will include all of the following, except to the extent that the following are included in the Initial Advance or in the calculation of any Break Even Price or Make Whole Amount paid to BNPPLC pursuant to the Purchase Agreement:
  ·   appraisal fees;
 
  ·   Uniform Commercial Code search fees;
 
  ·   filing and recording fees;
 
  ·   inspection fees and expenses;
 
  ·   brokerage fees and commissions;
 
  ·   survey fees;
 
  ·   title policy premiums and escrow fees;
 
  ·   any Breakage Costs or Fixed Rate Settlement Amount;
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    ·   Attorneys’ Fees incurred by BNPPLC with respect to the drafting, negotiation, administration or enforcement of this Lease or the other Operative Documents; and
 
    ·   all taxes (except Excluded Taxes) related to the Property or to the transactions contemplated in the Operative Documents.
Such costs and expenses will also include all rent or other payments required of BNPPLC under the Ground Lease, so long as this Lease remains in force or NAI remains in possession of the Property or is entitled to possession by this Lease. (It is understood, however, that with respect to payments which are required by the Ground Lease from BNPPLC to NAI and for which NAI is required to reimburse BNPPLC, such payments and the corresponding reimbursements will be offset and deemed paid by offsetting book entries rather than by an actual transfer of funds back and forth between the parties.)
     (4) Defense and Settlement of Indemnified Claims.
     (a) By notice to NAI BNPPLC may direct NAI to assume on behalf of BNPPLC or any other Interested Party and to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation included in or concerning any Loss for which NAI is responsible pursuant to subparagraph 5(C)(1). NAI must promptly comply with any such direction using counsel selected by NAI and reasonably satisfactory to BNPPLC or the other Interested Party, as applicable, to represent BNPPLC or the other Interested Party, as applicable. In the event NAI fails to promptly comply with any such direction from BNPPLC, BNPPLC or any other affected Interested Party may contest or settle the claim, proceeding or investigation using counsel of its own selection at NAI’s expense, subject to subparagraph 5(D)(3) if that subparagraph is applicable.
     (b) Also, although subparagraphs 5(D)(3) and 5(D)(4) will apply to tort claims asserted against any Interested Party related to the Property, the right of an Interested Party to be indemnified pursuant to this subparagraph 5(C) for taxes or other payments made to satisfy governmental requirements (“Government Mandated Payments”) will not be conditioned in any way upon NAI having consented to or approved of, or having been provided with an opportunity to defend against or contest, such Government Mandated Payments. In all cases, however, including those which may involve Government Mandated Payments, the rights of each Interested Party to be indemnified will be subject to subparagraph 5(D)(5).
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     (5) Payments Due. Any amount to be paid by NAI under this subparagraph 5(C) will be due ten days after a notice requesting such payment is given to NAI, subject to any applicable contest rights expressly granted to NAI by other provisions of this Lease.
     (6) Survival. NAI’s obligations under this subparagraph 5(C) will survive the termination or expiration of this Lease with respect to Losses suffered by any Interested Party on or prior to, or by reason of any actual or alleged occurrence or circumstances on or prior to, the later of the dates upon which (a) this Lease terminates or expires, or (b) NAI surrenders possession and control of the Property.
     (D) Exceptions and Qualifications to Indemnities.
     (1) Exceptions. BNPPLC acknowledges and agrees that nothing in Paragraph 4 or the preceding subparagraphs of this Paragraph 5 will be construed to require NAI to pay or reimburse:
     · Excluded Taxes; or
     · Losses incurred or suffered by any Interested Party to the extent proximately caused by (and attributed by any applicable principles of comparative fault to) the Established Misconduct of that Interested Party; or
     · Losses that result from any Liens Removable by BNPPLC; or
     · transaction expenses (including Attorneys’ Fees) incurred by any of the Participants in connection with the drafting, negotiation or execution of the Participation Agreement (or supplements making them parties thereto) or in connection with any due diligence Participants may undertake before entering into the Participation Agreement; or
     · Local Impositions or other Losses contested, if and so long as they are contested, by NAI in accordance with any of the provisions of this Lease or other Operative Documents which expressly authorize such contests; or
     · transaction expenses or other Losses caused by or necessary to accomplish any conveyance by BNPPLC to BNPPLC’s Parent or a Qualified Affiliate which constitutes a Permitted Transfer only by reason of clause (3) of the definition of Permitted Transfer in the Common Definitions and Provisions Agreement; or
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     · any amount which may from time to time be payable by BNPPLC to any Participant representing the excess of “Base Rent” as defined in the Participation Agreement over Base Rent as defined in and calculated pursuant to this Lease and the Common Definitions and Provisions Agreement; or
     · any decline in the value of the Property solely by reason of decline in general market conditions and not because of any breach of this Lease or other Operative Documents by NAI.
Further, without limiting BNPPLC’s rights (as provided in other provisions of this Lease and other Operative Documents) to include the following in the calculation of the Lease Balance, the Break Even Price and the Make Whole Amount (as applicable) or to collect Base Rent, a Supplemental Payment and other amounts, the calculation of which depends upon the Lease Balance, BNPPLC acknowledges and agrees that nothing in Paragraph 4 or the preceding subparagraphs of this Paragraph 5 will be construed to require NAI to pay or reimburse an Interested Party for costs paid by BNPPLC with the proceeds of the Initial Advance as part of the Transaction Expenses or with Construction Advances.
     (2) Notice of Claims. If an Interested Party receives a written notice of a claim for taxes or a claim alleging a tort or other unlawful conduct that the Interested Party believes is covered by the indemnity in subparagraph 5(C)(1), 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 will not excuse NAI from its obligations under subparagraph 5(C)(1); except that if such failure continues for more than fifteen days after the notice is received by such Interested Party and NAI is unaware of the matters described in the notice, with the result that NAI is unable to assert defenses or to take other actions which could minimize its obligations, then NAI will be excused from its obligation to indemnify such Interested Party (and any Affiliate of such Interested Party) against Losses, if any, which would not have been incurred or suffered but for such failure. For example, if BNPPLC fails to provide NAI with a copy of a notice of an overdue tax obligation covered by the indemnity set out in subparagraph 5(C)(1) and NAI is not otherwise already aware of such obligation, and if as a result of such failure BNPPLC 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 BNPPLC (or any Affiliate of BNPPLC) to pay the excess.
     (3) Withholding of Consent to Settlements Proposed by NAI. With regard to any tort claim against an Interested Party for which NAI undertakes to defend the Interested Party as provided in subparagraph 5(C)(4)(a), if the Interested Party unreasonably refuses to consent to a settlement of the claim which is proposed by NAI
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and which will meet the conditions listed in the next sentence, NAI’s liability for the cost of continuing the defense and for any other amounts payable in respect of the claim will be limited to the total cost for which the settlement proposed by NAI would have been accomplished but for the unreasonable refusal to consent. Any such settlement proposed by NAI must meet the following conditions: (A) at the time of the settlement by NAI, NAI must pay all amounts required to release the Interested Party and its property interests from any further obligation for or liens securing the applicable claim and from any interest, penalties and other related liabilities, and (B) the settlement or compromise must not involve an admission of fraud or criminal wrongdoing or result in some other material adverse consequence to the Interested Party.
     (4) Settlements Without the Prior Consent of NAI.
     (a) Except as otherwise provided in subparagraph 5(D)(4)(b), if any Interested Party settles any tort claim for which it is entitled to be indemnified by NAI without NAI’s consent, then NAI may, by notice given to the Interested Party no later than ten days after NAI is notified of the settlement, elect to pay Reasonable Settlement Costs to the Interested Party in lieu of a payment or reimbursement of actual settlement costs. (With respect to any tort claim asserted against an Interested Party, “Reasonable Settlement Costs” means the maximum amount that a prudent Person in the position of the Interested Party, but able to pay any amount, might reasonably agree to pay to settle the tort claim, taking into account the nature and amount of the claim, the relevant facts and circumstances known to such Interested Party at the time of settlement and the additional Attorneys Fees’ and other costs of defending the claim which could be anticipated but for the settlement.) After making an election to pay Reasonable Settlement Costs with regard to a particular tort claim and a particular Interested Party, NAI will have no right to rescind or revoke the election, despite any subsequent determination that Reasonable Settlement Costs exceed actual settlement costs. It is understood that Reasonable Settlement Costs may be more or less than actual settlement costs and that a final determination of Reasonable Settlement Costs may not be possible until after NAI must decide between paying Reasonable Settlement Costs or paying actual settlement costs.
     (b) Notwithstanding the foregoing, NAI will have no right to elect to pay Reasonable Settlement Costs in lieu of actual settlement costs if an Interested Party settles claims without NAI’s consent at any time when an Event of Default has occurred and is continuing or after a failure by NAI to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation as provided in subparagraph 5(C)(4)(a).
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     (c) Except as provided in this subparagraph 5(D)(4), no settlement by any Interested Party of any claim made against it will excuse NAI from any obligation to indemnify the Interested Party against the settlement costs or other Losses suffered by reason of, in connection with, arising out of, or in any way related to such claim.
     (5) No Authority to Admit Wrongdoing by NAI or to Bind NAI to any Settlement. No Interested Party will under any circumstances have any authority to bind NAI to an admission of wrongdoing or responsibility to any third party claimant with regard to matters for which such Interested Party claims a right to indemnification from NAI under this Lease.
Further, nothing herein contained, including the foregoing provisions concerning settlements by Interested Parties of indemnified Losses, will be construed as authorizing any Interested Party to bind NAI to do or refrain from doing anything to satisfy a third party claimant. If, for example, a claim is made by a Governmental Authority that NAI must refrain from some particular conduct on or about the Land in order to comply with Applicable Laws, BNPPLC cannot bind NAI (and will not purport to bind NAI) to any agreement to refrain from such conduct or otherwise prevent NAI from continuing to contest the claim by reason of any provision set forth herein.
Moreover, so long as this Lease continues, no Interested Party may settle any claim involving the Property by executing any agreement (including any consent decree proposed by any Governmental Authority) which purports to prohibit, limit or impose conditions upon any use of the Property by NAI without the prior written consent of NAI. In the case of any proposed settlement of a claim asserted by a Governmental Authority against BNPPLC, NAI will not unreasonably withhold such consent. However, for purposes of determining whether it is reasonable for NAI to withhold such consent, any diligent ongoing undertaking by NAI to contest such the claim on behalf of BNPPLC will be relevant.
Subject to the foregoing provisions in this subparagraph 5(D)(5), any Interested Party may agree for itself (and only for itself) to act or refrain from doing anything as demanded or requested by a third party claimant; provided, however, in no event will such an agreement impede NAI from continuing to exercise its rights to operate its business on the Property or elsewhere in any lawful manner deemed appropriate by NAI, nor will any such agreement limit or impede NAI’s right to contest claims raised by any third party claimants (including Governmental Authorities) that NAI is not complying or has not complied with Applicable Laws.
     (6) Defense of Tax Claims. This Lease does not grant to NAI any right to
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control the defense of or contest any tax claim for which an Interested Party may have a right to indemnity under subparagraph 5(C), other than the right to contest Local Impositions as provided in subparagraph 5(A), nor does this Lease grant to NAI the right to inspect the income tax returns, books or records of any Interested Party. Nevertheless, if a tax claim is asserted against BNPPLC for which it is entitled to be indemnified pursuant to subparagraph 5(C), BNPPLC will consider in good faith any defenses and strategies proposed by NAI with regard to such claim. Further, if any such tax claim is asserted against BNPPLC which involves assertions that apply not only to the transactions contemplated by this Lease, but also to other similar transactions in which BNPPLC has participated, then BNPPLC will not settle the claim on a basis that results in a disproportionately greater tax burden with respect to the transactions contemplated herein than with respect to such other similar transactions. For example, if taxing authorities assert that both this Lease and other comparable lease agreements made by BNPPLC are not financing arrangements as intended by the parties thereto, and on the basis of such assertions the taxing authorities claim that BNPPLC owes income taxes which are not Excluded Taxes, then BNPPLC will not settle the claim in a manner that would cause NAI’s liability under subparagraph 5(C) to be disproportionately greater than the indemnity obligation of another similarly situated tenant of BNPPLC under another lease agreement with an indemnity provision comparable to subparagraph 5(C). Also, BNPPLC will not grant to another tenant the right to dictate to BNPPLC the tax position BNPPLC must take in regard to the Property or the Operative Documents, except that BNPPLC may include provisions comparable to the foregoing in other leases to assure other tenants against a disproportionately greater burden than NAI will bear in regard to any settlement of a tax claim by BNPPLC.
     (7) Indemnified Parties Other than Landlord. As a condition to making any indemnity payment for Losses directly to any Interested Party other than BNPPLC itself, NAI may require the Interested Party to confirm and agree in writing that it will be obligated to make the payments to NAI as provided in subparagraph 5(E)(2) in the event the Interested Party subsequently receives a refund of the Losses covered by such indemnity payment.
     (E) Refunds and Credits Related to Losses Paid by NAI.
     (1) If BNPPLC receives a refund of any Losses paid, reimbursed or advanced by NAI pursuant to this Paragraph 5 that has not already been accounted for in the After Tax Basis calculation described in subparagraph 5(C)(1), BNPPLC will promptly pay to NAI the amount of such refund, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of the refund and such payment to NAI; provided, that the amount payable to NAI will not exceed the amount of the indemnity payment in respect of such refunded Losses that was made by NAI. If it is subsequently determined that BNPPLC
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was not entitled to the refund, the portion of the refund that is repaid or recaptured will be treated as a Loss for which NAI must indemnify BNPPLC pursuant to this Paragraph 5 without regard to subparagraph 5(D). If, in connection with any such refund, BNPPLC also receives an amount representing interest on such refund, BNPPLC will promptly pay to NAI the amount of such interest, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of the receipt or accrual of the interest and as a result of such payment to NAI; provided, that BNPPLC will not be required to make any such payment in respect of the interest (if any) that is fairly attributable to a period for which NAI had not yet paid, reimbursed or advanced the Losses refunded to BNPPLC.
     (2) If any Interested Party (other than BNPPLC itself) receives a refund of any Loss paid, reimbursed or advanced by NAI pursuant to this Paragraph 5 that has not already been accounted for in the After Tax Basis calculation described in subparagraph 5(C)(1), NAI may demand (and enforce the demand pursuant to any agreement previously delivered by the Interested Party as provided in subparagraph 5(D)(7)) that such Interested Party promptly pay to NAI the amount of such refund, plus or minus any net tax benefits or detriments realized by such Interested Party as a result of the refund and such payment to NAI; provided, that the amount payable to NAI will not exceed the amount of the indemnity payment in respect of such refunded Losses that was made by NAI. If it is subsequently determined that such Interested Party was not entitled to the refund, the portion of the refund that is repaid or recaptured will be treated as a Loss for which NAI must indemnify such Interested Party pursuant to this Paragraph 5 without regard to subparagraph 5(D). If, in connection with any such refund, such Interested Party also receives an amount representing interest on such refund, NAI may demand that such Interested Party promptly pay to NAI the amount of such interest, plus or minus any net tax benefits or detriments realized by such Interested Party as a result of the receipt or accrual of the interest and as a result of such payment to NAI; provided, that such Interested Party will not be required to make any such payment in respect of the interest (if any) which is fairly attributable to a period before NAI paid, reimbursed or advanced the Losses refunded to such Interested Party.
     (3) With respect to Losses incurred or suffered by an Interested Party and paid or reimbursed by NAI on an After Tax Basis, if taxes of such Interested Party which are not subject to indemnification by NAI are reduced because of such Losses (whether by reason of a deduction, credit or otherwise) and such reduction was not taken into account in the calculation of the required reimbursement or payment by NAI, then for purposes of this subparagraph 5(E) such reduction will be considered a “refund”.
     (4) Notwithstanding the foregoing, in no event will BNPPLC or any other Interested Party be required to make any payment to NAI pursuant to this subparagraph 5(E) when an Event of Default has occurred and is continuing.
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     (F) Reimbursement of Excluded Taxes Paid by NAI. If NAI is ever required (by laws imposing withholding tax obligations or otherwise) to pay Excluded Taxes that any Interested Party should have paid, but failed to pay when due, in connection with this Lease, such Interested Party must reimburse NAI for such Excluded Taxes (together with any additional amount required to preserve for NAI the full amount of such reimbursement after related taxes are considered, calculated in the same manner that an Additional Indemnity Payment would be calculated under subparagraph 5(C)(1) in the case of a reimbursement owed by NAI to an Interested Party) within 30 days after such Interested Party’s receipt of a written demand for such reimbursement by NAI.
     (G) Collection on Behalf of Participants. BNPPLC may, on behalf of any Participant or its Affiliates, collect any amount that becomes due from NAI to such Participant or its Affiliates pursuant to subparagraph 5(B) or 5(C), in which case BNPPLC will be obligated to such Participant in respect of the collected amount as provided in the Participation Agreement. Alternatively, as provided in the Participation Agreement, BNPPLC may assign the right to collect any such amount to such Participant, in which case the Participant will be entitled to collect the same directly from NAI.
6 Replacement of Participants.
     (A) NAI’s Right to Substitute Participants. During the Term, so long as no Event of Default exists and subject to the terms and conditions set forth in subparagraph 6(B), if any Participant which is not an Affiliate of BNPPLC (in this Paragraph, the “Unrelated Participant”) (1) declines to approve the Rent for an extension of this Lease under subparagraph 1(D), or (2) makes a demand for compensation under subparagraph 5(B), NAI may request that BNPPLC execute Participation Agreement Supplements (as defined in the Participation Agreement) as needed to transfer the rights of the Unrelated Participant thereunder to one or more new Participants (in this subparagraph, whether one or more, the “New Participants”) designated by NAI who are willing and able to accept such interests and to make Funding Advances as necessary to terminate the Unrelated Participant’s right to payments in respect of Base Rent and the Lease Balance under the Operative Documents. BNPPLC will execute such Participation Agreement Supplements within ten Business Days of the later to occur of such request by NAI and satisfaction of all conditions set forth in subparagraph 6(B).
     (B) Conditions to Replacement of Participants. NAI and BNPPLC, working together, will endeavor in good faith to identify New Participants that are willing to replace any Unrelated Participant described in the preceding subparagraph and that are acceptable to both NAI and BNPPLC. (The term New Participants may include new parties to the Participation Agreement and it may include existing Participants that increase their Funding Advances as needed to replace the Unrelated Participant.) However, nothing contained herein will be construed to require BNPPLC itself to increase its Percentage (as defined in the Participation Agreement) to
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replace an Unrelated Participant, and nothing herein contained will be construed to require BNPPLC itself to provide or to obtain from its Affiliates Funding Advances to replace the Funding Advances that an Unrelated Participant has provided or agreed to provide. Also, New Participants will be subject to the approval of BNPPLC; provided, that BNPPLC must not unreasonably withhold its approval for the substitution of any New Participant proposed by NAI for any Unrelated Participant so long as (i) no Event of Default has occurred and is continuing, (ii) BNPPLC determines it can give such approval without violating Applicable Laws, without breaching its obligations under the Participation Agreement, and without waiving rights or remedies it has under this Lease or the other Operative Documents, (iii) BNPPLC or BNPPLC’s Parent is not involved in any material litigation adverse to the New Participant in any pending lawsuit or other legal proceeding, and (iv) all of the conditions listed in the next sentence are satisfied. Any substitution of New Participants for an Unrelated Participant as provided in this Paragraph will be subject to the following conditions:
     (1) the proposed substitution does not include a waiver of rights by BNPPLC against any Unrelated Participant or require BNPPLC to pay any amounts out-of-pocket that are not reimbursed concurrently by NAI or the New Participants;
     (2) the New Participants must become parties to the Participation Agreement (by executing supplements to that agreement as provided therein) and must provide all funds due to the Unrelated Participant being replaced because of the termination of the Unrelated Participant’s rights to receive payments in respect of Net Cash Flow and Net Sales Proceeds (both as defined in the Participation Agreement); and
     (3) the obligations of BNPPLC to the New Participants must not exceed the obligations that BNPPLC would have had to the Unrelated Participant if there had been no substitution, other than those for which NAI is liable.
Upon consummation of any such substitution NAI must pay to the replaced Participant Breakage Costs, if any, incurred by the replaced Participant because of the substitution.
7 Items Included in the Property
   (A) Status of Property. All Improvements on the Land from time to time will constitute “Property” covered by this Lease. Further, as provided in the Construction Agreement, to the extent heretofore or hereafter acquired by NAI (in whole or in part) with funds previously advanced by BNPPLC under the Prior Construction Agreement or with any portion of the Initial Advance or with any Construction Advances or with other funds for which NAI has received or receives reimbursement from such funds previously advanced, the Initial Advance or Construction Advances, all furnishings, furniture, chattels, permits, licenses, franchises, certificates and other personal property of whatever nature will be deemed to have been acquired
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on behalf of BNPPLC by NAI and will constitute “Property” covered by this Lease, as will all renewals or replacements of or substitutions for any such Property. Upon request of BNPPLC, but not more often than once in any period of twelve consecutive months, NAI will deliver to BNPPLC an inventory describing all significant items of Personal Property (and, in the case of Tangible Personal Property, showing the make, model, serial number and location thereof) with a certification by NAI that such inventory is true and complete and that all items specified in the inventory are covered by this Lease free and clear of any Lien other than the Permitted Encumbrances or Liens Removable by BNPPLC.
     (B) Changes in the Land Covered by the Ground Lease. Upon any amendment of the definition of the “Land” covered by the Ground Lease, the “Land” as defined in and covered by this Lease and the other Operative Documents will also be so amended.
8 Environmental.
     (A) Environmental Covenants by NAI.
          (1) NAI will not conduct or permit others to conduct Hazardous Substance Activities on the Property, except Permitted Hazardous Substance Use and Remedial Work.
          (2) NAI will not discharge or permit the discharge of anything (including Permitted Hazardous Substances) on or from the Property that would require any permit under applicable Environmental Laws, other than (i) storm water runoff, (ii) waste water discharges through a publicly owned treatment works, (iii) discharges that are a necessary part of any Remedial Work, and (iv) other similar discharges consistent with the definition herein of Permitted Hazardous Substance Use which do not significantly increase the risk of Environmental Losses to BNPPLC, in each case in strict compliance with Environmental Laws.
          (3) Following any discovery that Remedial Work is required by Environmental Laws or is otherwise reasonably believed by BNPPLC to be required, and to the extent not inconsistent with the other provisions of this Lease, NAI must promptly perform and diligently and continuously pursue such Remedial Work.
          (4) If requested by BNPPLC in connection with any Remedial Work required by this subparagraph, NAI must retain environmental consultants reasonably acceptable to BNPPLC 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
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subcontractors and their employees) or to protect the environment. NAI must implement any such additional measures to the extent required with respect to the Property by Environmental Laws or otherwise reasonably believed by BNPPLC to be required.
     (B) Right of BNPPLC to do Remedial Work Not Performed by NAI. If NAI’s failure to perform any Remedial Work required as provided in subparagraph 8(A) continues beyond the Environmental Cure Period (as defined below), BNPPLC 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 BNPPLC pursuant to the preceding sentence (including any removal of Hazardous Substances), the cost thereof will be a demand obligation owing by NAI to BNPPLC. As used in this subparagraph, “Environmental Cure Period” means the period ending on the earliest of: (1) ninety days after NAI is notified of the breach which must be cured within such period or, if during such ninety days NAI initiates the Remedial Work and diligently and continuously pursues it in accordance with a timetable accepted and approved by applicable Governmental Authorities (which may include delays waiting for permits or other authorizations), the date by which such Remedial Work is to be completed according to such timetable, (2) the date that any writ or order is issued for the levy or sale of any property owned by BNPPLC (including the Property) because of such breach, (3) the date that any criminal action is instituted or overtly threatened against BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a net price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     (C) Environmental Inspections and Reviews. BNPPLC reserves the right to retain environmental consultants to review any report prepared by NAI or to conduct BNPPLC’s own investigation to confirm whether NAI is complying with the requirements of this Paragraph 8. NAI grants to BNPPLC and to BNPPLC’s agents, employees, consultants and contractors the right to enter upon the Property during reasonable hours and after reasonable notice to inspect the Property and to perform such tests as BNPPLC deems reasonably necessary or appropriate to review or investigate Hazardous Substances in, on, under or about the Property or any discharge or reasonably suspected discharge of Hazardous Substances into groundwater or surface water from the Property. NAI must promptly reimburse BNPPLC for the fees of its environmental consultants and the costs of any such inspections and tests; provided, however, BNPPLC’s right to reimbursement for the fees of any consultant engaged as provided in this subparagraph or for the costs of any inspections or test undertaken as provided in this subparagraph will be limited to the following circumstances: (1) an Event of Default has occurred and is continuing at the time of such engagement, tests or inspections; (2) NAI has not exercised the Purchase Option and BNPPLC has retained the consultant to establish the condition of the Property prior to any conveyance thereof pursuant to the Purchase Agreement or to the expiration of this Lease; (3)
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BNPPLC has retained the consultant to satisfy any regulatory requirements applicable to BNPPLC or its Affiliates; (4) BNPPLC has retained the consultant because it has reason to believe, and does in good faith believe, that a significant violation of Environmental Laws concerning the Property has occurred; or (5) BNPPLC has retained the consultant because BNPPLC has been notified of a possible violation of Environmental Laws concerning the Property by any Governmental Authority having jurisdiction.
     (D) Communications Regarding Environmental Matters.
     (1) NAI must promptly advise BNPPLC and Participants of (i) any discovery known to NAI of any event or circumstance which would render any of the representations of NAI herein or in any of the other Operative Documents 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, (ii) 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, (iii) any discovery known to NAI of any occurrence or condition on any real property adjoining or in the vicinity of the Property which would or could reasonably be expected to cause the Property or any part thereof to be subject to any ownership, occupancy, transferability or use restrictions under Environmental Laws, or (iv) any investigation or inquiry known to NAI 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 will deliver to BNPPLC within thirty days after BNPPLC’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 BNPPLC may reasonably request.
     (2) NAI will provide BNPPLC and Participants with copies of all material written communications with Governmental Authorities relating to the matters listed in the preceding clause (1). NAI will also provide BNPPLC and Participants 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.
     (3) Prior to NAI’s submission of a communication to any regulatory agency or third party which causes, or potentially could cause (whether by implementation of or
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response to said communication), a material change in the scope, duration, or nature of any Remedial Work, NAI must, to the extent practicable, deliver to BNPPLC and Participants a draft of the proposed submission (together with the proposed date of submission), and in good faith assess and consider any comments of BNPPLC regarding the same. Promptly after BNPPLC’s request, NAI will meet with BNPPLC to discuss the submission, will provide any additional information reasonably requested by BNPPLC and will provide a written explanation to BNPPLC addressing the issues raised by comments (if any) of BNPPLC regarding the submission.
9   Insurance Required and Condemnation.
     (A) Liability Insurance. Throughout the Term NAI must 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 Minimum Insurance Requirements. NAI must deliver and maintain with BNPPLC for each liability insurance policy required by this 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 Minimum Insurance Requirements.
     (B) Property Insurance.
     (1) Throughout the Term NAI must 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 Minimum Insurance Requirements. NAI must deliver and maintain with BNPPLC for each property insurance policy required by this 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 Minimum Insurance Requirements.
     (2) If any of the Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance is required hereunder, (a) BNPPLC may, but will not be obligated to, make proof of loss if not made promptly by NAI after notice from BNPPLC, (b) each insurance company concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC (or, if so instructed by BNPPLC, to NAI) for application as required by Paragraph 10, and (c) BNPPLC will be entitled, in its own name or in the name of NAI or in the name of both, to settle, adjust or compromise any and all claims for loss, damage or destruction under any policy or policies of insurance; except that, if any such claim is for less than $1,000,000, if no 97-10/Meltdown Event has occurred and if no Event of Default has occurred and is continuing, NAI alone will have the right to settle, adjust or compromise
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the claim as NAI deems appropriate; and, except that, during the Term, so long as no Event of Default has occurred and is continuing, BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s intention to settle any such claim before settling it unless NAI has already approved of the settlement by BNPPLC.
     (3) BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any insurance proceeds.
     (4) If any casualty results in damage to or loss or destruction of the Property, NAI must give prompt notice thereof to BNPPLC and Paragraph 10 will 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 Lease, BNPPLC will 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 BNPPLC’s other remedies under the circumstances, BNPPLC may require NAI to reimburse BNPPLC for the cost of such insurance and to pay interest thereon computed at the Default Rate from the date such cost was paid by BNPPLC until the date of reimbursement 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 will promptly notify the other (provided, however, BNPPLC will have no liability for its failure to provide such notice) of the pendency of such proceedings. (As used herein, “condemnation of the Property” or words of like effect will include any indirect condemnation by means of a taking of the Land or the Existing Appurtenant Easements or any part thereof.) NAI must, at its expense, diligently prosecute any such proceedings and must consult with BNPPLC, its attorneys and experts and cooperate with them as reasonably requested in the carrying on or defense of any such proceedings. BNPPLC is hereby authorized, in its own name or in the name of NAI or in the name of both, at any time after a 97-10/Meltdown Event or when an Event of Default has occurred and is continuing, but not otherwise without 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. BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any such proceeds, judgments, decrees or awards.
     Notwithstanding the foregoing provisions of this subparagraph, if condemnation proceeds totaling not more than $1,000,000 are to be recovered as a result of a taking of less than all or substantially all of the Property, NAI may directly receive and hold such proceeds during the Term, so long as no Event of Default has occurred and is continuing and NAI applies such proceeds as required herein.
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     (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 BNPPLC or any other Interested Party to recover Losses for which NAI is compensated by insurance or would be compensated by the insurance contemplated in this 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 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 will govern the application of proceeds received by BNPPLC 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 (e.g.,damage resulting from a third party’s release of Hazardous Materials onto the Property); excluding, however, any funds paid to BNPPLC by BNPPLC’s Parent, by an Affiliate of BNPPLC or by any Participant that is made to compensate BNPPLC for any Losses BNPPLC may suffer or incur in connection with this Lease or the Property. Except as provided in subparagraph 10(D), NAI must promptly pay over to BNPPLC 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 BNPPLC from NAI or third parties, will be applied as follows:
     (1) First, proceeds covered by this Paragraph 10 will be used to reimburse BNPPLC for any reasonable costs and expenses, including Attorneys’ Fees, that BNPPLC incurred to collect the proceeds.
     (2) Second, the proceeds remaining after such reimbursement to BNPPLC (hereinafter, the “Remaining Proceeds”) will be applied, as hereinafter more particularly provided, either as a Qualified Prepayment or to reimburse NAI or BNPPLC for the actual out-of-pocket costs of repairing or restoring the Property. Until, however, any Remaining Proceeds received by BNPPLC are applied by BNPPLC as a Qualified Prepayment or applied by BNPPLC to reimburse costs of repairs to or restoration of the Property pursuant to this Paragraph 10, BNPPLC will hold and maintain such Remaining Proceeds as Escrowed Proceeds in an interest bearing account, and all interest earned on such account will be added to and made a part of such Escrowed Proceeds.
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     (B) Advances of Escrowed Proceeds to NAI. Except as otherwise provided below in this Paragraph 10, BNPPLC will 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 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 BNPPLC to assure the completion of such repair or restoration with available funds. So long as any Lease Balance remains outstanding, however, BNPPLC will not 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 reasonably satisfactory to BNPPLC, it being understood that BNPPLC may retain and, after NAI has completed the applicable repair or restoration and been reimbursed for the out-of-pocket cost thereof, apply any such excess (or so much thereof as is needed to reduce the Lease Balance to zero) as a Qualified Prepayment.
     (C) Application of Escrowed Proceeds as a Qualified Prepayment. During the Term, so long as no Event of Default has occurred and is continuing, BNPPLC will 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 BNPPLC 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 BNPPLC’s actual receipt of the notice, BNPPLC may postpone the date of the Qualified Prepayment to any date not later than five Business Days after BNPPLC’s receipt of the notice. In any event, BNPPLC may deduct Breakage Costs or any Fixed Rate Settlement Amount incurred in connection with any Qualified Prepayment from the Remaining Proceeds or other amounts available for application as the Qualified Prepayment, and NAI must reimburse BNPPLC upon request for any such Breakage Costs or Fixed Rate Settlement Amount that BNPPLC incurs but does not deduct.
     (D) Right of NAI to Receive and Apply Remaining Proceeds Below a Certain Level. If, after the Completion Date, any condemnation of any portion of the Property or any casualty resulting in the diminution, destruction, demolition or damage to any portion of the Property will (in the good faith judgment of BNPPLC) reduce the then current “AS IS” market value by less than $1,000,000 and (in the good faith estimation of BNPPLC) be unlikely to result in Remaining Proceeds of more than $1,000,000, and if no 97-10/Meltdown Event has occurred and no Event of Default has occurred and is continuing, then BNPPLC will, upon NAI’s request, instruct the condemning authority or insurer, as applicable, to pay the Remaining Proceeds resulting therefrom directly to NAI. NAI must apply any such Remaining Proceeds to the repair or restoration of the Property to a safe and secure condition and to a value of no less than the value before taking or casualty.
     (E) Special Provisions Applicable After a 97-10/Meltdown Event or an Event of Default. Notwithstanding the foregoing, after any 97-10/Meltdown Event, and when any Event of
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Default has occurred and is continuing, BNPPLC will 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 BNPPLC in its sole discretion, either (A) to the reimbursement of NAI or BNPPLC for the out-of-pocket cost of repairing or restoring the Property, or (B) as Qualified Prepayments. Further, when any Event of Default has occurred and is continuing, if the Remaining Proceeds paid to BNPPLC with respect to any damage or destruction of the Property are reduced by reason of any insurance deductible or self-insured retention, NAI must pay to BNPPLC upon demand an additional amount equal to the full amount of such deductible or self insured retention, whereupon the additional amount paid will be added to the Remaining Proceeds and applied as such by BNPPLC in accordance with the provisions of this Lease.
     (F) NAI’s Obligation to Restore. Regardless of the adequacy of any Remaining Proceeds available to NAI hereunder, if on or after the Completion 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 either (1) promptly restore or improve the Property or the remainder thereof to a value no less than the Lease Balance and to a reasonably safe and sightly condition, or (2) promptly restore the Property or remainder thereof to a reasonably safe and sightly condition and pay to BNPPLC for application as a Qualified Prepayment the amount (if any), as determined by BNPPLC, needed to reduce the Lease Balance to no more than the then current “AS IS” market value of the Property or remainder thereof.
     (G) Takings of All or Substantially All of the Property on or after the Completion Date. In the event of any taking of all or substantially all of the Property on or after the Completion Date, BNPPLC will be entitled to apply all Remaining Proceeds (or so much thereof as is required to reduce the Lease Balance to zero) as a Qualified Prepayment. Any taking of so much of the Property as, in BNPPLC’s good faith judgment, makes it impracticable to restore or improve the remainder thereof as required by part (1) of the preceding subparagraph will be considered a taking of substantially all the Property for purposes of this Paragraph 10.
     (H) If Remaining Proceeds Exceed the Lease Balance. Notwithstanding the various provisions of this Paragraph 10 authorizing BNPPLC to apply Remaining Proceeds received by it during the Term as a Qualified Prepayment, in the event any such Remaining Proceeds exceed the sum of (i) all payments thereof made to NAI to reimburse it for the costs of repairs and restoration to the Property, (ii) any application thereof to cover costs incurred by BNPPLC for the repair or restoration the Property and (iii) the Lease Balance, such excess will not be applied as a Qualified Prepayment, but rather will constitute Escrowed Proceeds which must, if NAI exercises the Purchase Option pursuant to the Purchase Agreement, be delivered to the purchaser of the Property (be it NAI or an Applicable Purchaser) as provided therein.
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11 Additional Representations, Warranties and Covenants of NAI Concerning the Property. NAI represents, warrants and covenants as follows:
     (A) Operation and Maintenance. NAI must operate and maintain the Property in a good and workmanlike manner and in compliance with Applicable Laws in all material respects and pay or cause to be paid all fees or charges of any kind due 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 complaint or demand for corrective action given by any Governmental Authority to NAI, or to BNPPLC and forwarded by it to NAI, then for purposes of the preceding sentence, NAI will be considered not to have maintained the Property “in compliance with all Applicable Laws in all material respects” whether or not the noncompliance would be material in the absence of the complaint or demand.) NAI will not use or occupy, or allow the use or occupancy of, the Property in any manner which violates any Applicable Laws or which constitutes a public or private nuisance or which makes void, voidable or cancelable any insurance then in force with respect to the Property. To the extent that any of the following would, individually or in the aggregate, materially and adversely affect the value of the Property or the use of the Property for purposes permitted by this Lease, NAI will not, without BNPPLC’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. NAI will 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 will not do anything that could reasonably be expected to significantly reduce the market value of the Property. If NAI receives a notice or claim from any Governmental Authority that the Property is not in compliance with any Applicable Law, or that any action may be taken against BNPPLC because the Property does not comply with any Applicable Law, NAI must promptly furnish a copy of such notice or claim to BNPPLC.
     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 will 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 BNPPLC, 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 must be concluded and the violation of such Applicable Law must be corrected by NAI and any claims asserted against BNPPLC or the Property because of such violation must be paid by NAI, all prior to the earliest of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC or any of its directors, officers or employees because of such violation, (ii) the
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date that any action is taken or overtly threatened by any Governmental Authority against BNPPLC or any property owned by BNPPLC (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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     (B) Debts for Construction, Maintenance, Operation or Development. NAI must cause all debts and liabilities incurred in the construction, maintenance, operation or development of the Property, including invoices for labor, material and equipment and all debts and charges for utilities servicing the Property, to be promptly paid.
     Notwithstanding the foregoing, NAI may in good faith, by appropriate proceedings, contest the validity, applicability or amount of any asserted statutory liens in the nature of contractors’, mechanics’ or materialmens’ liens, and pending such contest NAI will not be deemed in default under this subparagraph because of the contested lien if (1) within thirty days after being asked to do so by BNPPLC, NAI bonds over to BNPPLC’s reasonable satisfaction all such contested liens against the Property alleged to secure an amount in excess of $1,000,000 (individually or in the aggregate), (2) NAI diligently prosecutes such contest to completion in a manner reasonably satisfactory to BNPPLC, 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 must be concluded and the lien, interest and costs must be paid by NAI prior to the earliest of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC 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 BNPPLC has an interest may be seized or sold or any other action is taken or overtly threatened against BNPPLC or any property in which BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     (C) Repair, Maintenance, Alterations and Additions. NAI must keep the Property in good order, operating condition and appearance and must 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 will promptly replace any worn-out fixtures and Tangible Personal Property with fixtures and personal property comparable to the replaced items when new. NAI will not, without the prior consent of BNPPLC, (i) remove from the Property any
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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 following completion of the Work contemplated in the Construction Agreement.
     However, during the Term, so long as no Event of Default has occurred and is continuing, BNPPLC will not unreasonably withhold a consent requested by NAI pursuant to the preceding sentence for the construction or alteration of Improvements. NAI acknowledges, however, that BNPPLC’s refusal or failure to give such consent will be deemed reasonable if BNPPLC believes in good faith that the construction or alteration for which NAI is requesting consent could have a material adverse impact upon the value of the Property (taken as whole), or if NAI has not provided BNPPLC with adequate information to allow BNPPLC to properly evaluate such impact on value.
     Without limiting the foregoing, NAI must notify BNPPLC before making any significant alterations to the Improvements during the Term, regardless of the impact on the value of the Property expected to result from such alterations.
     (D) Permitted Encumbrances. NAI must 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. Without limiting the foregoing, NAI must 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 BNPPLC, NAI will not create any new Permitted Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted Encumbrance that would create or expand or purport to create or expand obligations or restrictions which would encumber BNPPLC’s interest in the Property or be binding upon BNPPLC itself. (Whether BNPPLC must give any such consent requested by NAI during the Term of this Lease will be governed by subparagraph 4(C) of the Closing Certificate.)
     (E) Books and Records Concerning the Property. NAI must keep books and records that are accurate and complete in all material respects for the Property and, subject to Paragraph 22, must 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 BNPPLC during normal business hours. (BNPPLC will not over the objection of NAI inspect or copy such materials more than once in any twelve month period unless BNPPLC believes in good faith that more frequent
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inspection and copying is required to determine whether a Default or an Event of Default has occurred and is continuing or to assess the effect thereof or to properly exercise remedies with respect thereto.) This subparagraph will not be construed as requiring NAI to regularly maintain separate books and records relating exclusively to the Property, but NAI will as reasonably requested from time to time by BNPPLC construct or abstract from its regularly maintained books and records information required by this subparagraph relating to the Property.
12 Assignment and Subletting by NAI.
     (A) BNPPLC’s Consent Required. Without the prior consent of BNPPLC, NAI will not assign, transfer, mortgage, pledge or hypothecate this Lease or any interest of NAI hereunder and will not sublet all or any part of the Property, by operation of law or otherwise, except as follows:
     (1) During the Term, so long as no Event of Default has occurred and is continuing, NAI may sublet (a) to Affiliates of NAI, or (b) no more than thirty-three percent (33%) (computed on the basis of square footage) of the useable space in then existing and completed building Improvements to Persons who are not NAI’s Affiliates, subject to the conditions that (i) any such sublease by NAI must be made expressly subject and subordinate to the terms hereof, (ii) the sublease must have a term equal to or less than the remainder of the then effective Term of this Lease, and (iii) the use permitted by the sublease must be expressly limited to uses consistent with subparagraph 2(A) or other uses approved in advance by BNPPLC as uses that will not present any extraordinary risk of uninsured environmental or other liability.
     (2) During the Term, so long as no Event of Default has occurred and is continuing, NAI may assign all of its rights under this Lease and the other Operative Documents to an Affiliate of NAI, subject to the conditions that (a) the assignment must be in writing and must unconditionally provide that the Affiliate assumes all of NAI’s obligations hereunder and thereunder, and (b) NAI must execute an unconditional guaranty of the obligations assumed by the Affiliate in form satisfactory to BNPPLC, confirming (x) that notwithstanding the assignment NAI will remain primarily liable for all of the obligations undertaken by NAI under the Operative Documents, (y) that such guaranty is a guaranty of payment and performance and not merely of collection, and (z) that NAI waives to the extent permitted by Applicable Law all defenses otherwise available to guarantors or sureties.
     (B) Standard for BNPPLC’s Consent to Assignments and Certain Other Matters. Consents and approvals of BNPPLC which are required by this Paragraph 12 will not be unreasonably withheld, but NAI acknowledges that BNPPLC’s withholding of such consent or approval will be reasonable if BNPPLC determines in good faith that (1) giving the approval may
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increase BNPPLC’s risk of liability for any existing or future environmental problem, (2) giving the approval is likely to substantially increase BNPPLC’s administrative burden of complying with or monitoring NAI’s compliance with the requirements of this Lease, or (3) any transaction for which NAI has requested the consent or approval would negate NAI’s representations in the Operative Documents regarding ERISA or cause any of the Operative Documents (or any exercise of BNPPLC’s rights thereunder) to constitute a violation of any provision of ERISA. Further, NAI acknowledges that BNPPLC may reasonably require, as a condition to giving its consent to any assignment by NAI, that NAI execute an unconditional guaranty providing that NAI will remain primarily liable for all of the tenant’s obligations hereunder and under other Operative Documents. Any such guaranty must be a guaranty of payment and not merely of collection, must provide that NAI waives to the extent permitted by Applicable Law all defenses otherwise available to guarantors or sureties, and must otherwise be in a form satisfactory to BNPPLC.
     (C) Consent Not a Waiver. No consent by BNPPLC to a sale, assignment, transfer, mortgage, pledge or hypothecation of this Lease or NAI’s interest hereunder, and no assignment or subletting of the Property or any part thereof in accordance with this Lease or otherwise with BNPPLC’s consent, will release NAI from liability hereunder; and any such consent will apply only to the specific transaction thereby authorized and will not relieve NAI from any requirement of obtaining the prior consent of BNPPLC to any further sale, assignment, transfer, mortgage, pledge or hypothecation of this Lease or any interest of NAI hereunder.
13 Assignment by BNPPLC.
     (A) Restrictions on Transfers. Except by a Permitted Transfer, BNPPLC will not assign, transfer, mortgage, pledge, encumber or hypothecate this Lease or the other Operative Documents or any interest of BNPPLC 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 payable to BNPPLC hereunder because of BNPPLC’s assignment of this Lease to any citizen of, or any corporation or other entity formed under the laws of, a country other than the United States, NAI will not be required to compensate BNPPLC or any such assignee for the withholding tax.
     (B) Effect of Permitted Transfer or other Assignment by BNPPLC. If by a Permitted Transfer BNPPLC sells or otherwise transfers the Property and assigns to the transferee all of BNPPLC’s rights under this Lease and under the other Operative Documents, and if the transferee expressly assumes all of BNPPLC’s obligations under this Lease and under the other Operative Documents, then BNPPLC will thereby be released from any obligations arising after such assumption under this Lease or under the other Operative Documents (other than any liability for a breach of any continuing obligation to provide Construction Advances under the
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Construction Agreement), and NAI must look solely to each successor in interest of BNPPLC for performance of such obligations.
14 BNPPLC’s Right to Enter and to Perform for NAI .
     (A) Right to Enter. BNPPLC and BNPPLC’s representatives may, subject to subparagraph 14(C), enter the Property for the purpose of making inspections or performing any work BNPPLC is authorized to undertake by the next subparagraph or for the purpose of confirming whether NAI has complied with the requirements of this Lease or the other Operative Documents. During the Term, so long as no Event of Default has occurred and is continuing and no apparent emergency exists which would justify immediate entry, BNPPLC will give NAI at least two Business Days notice before making any such entry over the objection of NAI and will limit any such entry to normal business hours.
     (B) Performance for NAI. If NAI fails to perform any act or to take any action required of it by this Lease or the Closing Certificate, or to pay any money which NAI is required by this Lease or the Closing Certificate to pay, and if such failure or action constitutes an Event of Default or renders BNPPLC or any director, officer, employee or Affiliate of BNPPLC at risk of criminal prosecution or renders BNPPLC’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, BNPPLC may, perform or cause to be performed such act or take such action or pay such money. Any expenses so incurred by BNPPLC, and any money so paid by BNPPLC, will be a demand obligation owing by NAI to BNPPLC. Further, upon making such payment, BNPPLC will be subrogated to all of the rights of the person, corporation or body politic receiving such payment. But nothing herein will imply any duty upon the part of BNPPLC to do any work which under any provision of this Lease NAI may be required to perform, and the performance thereof by BNPPLC will not constitute a waiver of NAI’s default. BNPPLC may during the progress of any such work by BNPPLC keep and store upon the Property all necessary materials, tools, and equipment. BNPPLC will 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 the performance of any such work, or on account of bringing materials, supplies and equipment into or through the Property during the course of such work, and the obligations of NAI under this Lease will not thereby be excused in any manner.
     (C) Building Security. So long as NAI remains in possession of the Property, BNPPLC or BNPPLC’s representative will, before making any inspection or performing any work on the Property authorized by this Lease, do the following
     (1) BNPPLC will give NAI at least 24 hours notice, unless BNPPLC believes in good faith that an emergency may exist or a Default has occurred and is continuing, because of which significant damage to the Property or other significant Losses may be
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sustained if BNPPLC delays entry to the Property; and
     (2) if then requested to do so by NAI in order to maintain NAI’s security, BNPPLC or its representative will: (i) sign in at NAI’s security or information desk if NAI has such a desk on the premises, (ii) wear a visitor’s badge or other reasonable identification, (iii) permit an employee of NAI to observe such inspection or work, and (iv) comply with other similar reasonable nondiscriminatory security requirements of NAI that do not, individually or in the aggregate, significantly interfere with inspections or work of BNPPLC authorized by this Lease.
15 Remedies.
     (A) Traditional Lease Remedies. At any time after an Event of Default and after BNPPLC has given any notice required by subparagraph 15(C), BNPPLC will be entitled at BNPPLC’s option (and without limiting BNPPLC in the exercise of any other right or remedy BNPPLC may have, and without any further demand or notice except as expressly described in this subparagraph 15(A)), to exercise any one or more of the following remedies:
     (1) By notice to NAI, BNPPLC may terminate NAI’s right to possession of the Property. However, only a notice clearly and unequivocally confirming that BNPPLC has elected to terminate NAI’s right of possession will be effective for purposes of this provision.
     (2) Upon termination of NAI’s right to possession as provided in the immediately preceding subsection (1) and without further demand or notice, BNPPLC may re-enter the Property in any manner not prohibited by Applicable Laws and take possession of all improvements, additions, alterations, equipment and fixtures thereon and remove any persons in possession thereof. Any personal property on the Land may be removed and stored in a warehouse or elsewhere, and in such event the cost of any such removal and storage will be at the expense and risk of and for the account of NAI.
     (3) Upon termination of NAI’s right to possession as provided in the immediately preceding subsection (1), this Lease will terminate and BNPPLC may recover from NAI damages which include the following:
     (a) the worth at the time of award of the unpaid Rent which had been earned at the time of termination;
     (b) costs and expenses actually incurred by BNPPLC to repair damage to the Property that NAI was obligated to (but failed to) repair prior to the termination;
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     (c) the sum of the following (“Lease Termination Damages”):
     1) 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;
     2) 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;
     3) any other amount necessary to compensate BNPPLC for all the detriment proximately caused by NAI’s failure to perform NAI’s obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including the costs and expenses of preparing and altering the Property for reletting and all other costs and expenses of reletting (including Attorneys’ Fees, advertising costs and brokers’ commissions), and
     (d) such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California law.
The “worth at the time of award” of the amounts referred to in subparagraph 15(A)(3)(a) and subparagraph 15(A)(3)(c)1) will be computed by allowing interest at the Default Rate. The “worth at the time of award” of the amount referred to in subparagraph 15(A)(3)(c)2) will 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%).
Notwithstanding the foregoing, the total Lease Termination Damages which BNPPLC may recover from NAI will be limited in amount to the extent required, if any, to prevent the sum of recoverable Lease Termination Damages, plus any Supplemental Payment that BNPPLC has received or remains entitled to recover pursuant to the Purchase Agreement, from being more than the Maximum Remarketing Obligation; provided, however, if a Supplemental Payment is owed to BNPPLC according to the Purchase Agreement, but NAI fails to pay it, this limitation upon BNPPLC’s right to recover Lease Termination Damages will be of no effect. For purposes of this provision, “Maximum Remarketing Obligation” is intended to have the meaning assigned to it in the Purchase Agreement and is intended to be computed as of the date any award of Lease Termination Damages to BNPPLC as if such date was the Designated Sale Date.
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     (4) Even after a breach of this Lease or abandonment of the Property by NAI, BNPPLC may continue this Lease in force and recover Rent as it becomes due. Accordingly, despite any breach or abandonment by NAI, this Lease will continue in effect for so long as BNPPLC does not terminate NAI’s right to possession, and BNPPLC may enforce all of BNPPLC’s rights and remedies under this Lease, including the right to recover the Rent as it becomes due under this Lease. NAI’s right to possession will not be deemed to have been terminated by BNPPLC except pursuant to subparagraph 15(A)(1) hereof. The following, in and of themselves, will 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 BNPPLC to protect BNPPLC’s interest under this Lease; or
     (c) Reasonable withholding of consent to an assignment or subletting, or terminating a subletting or assignment by NAI.
     (B) Foreclosure Remedies. At any time when an Event of Default has occurred and is continuing, BNPPLC may notify NAI of BNPPLC’s intent to pursue remedies described in Exhibit B, and at any time thereafter, regardless of whether the Event of Default is continuing, if NAI has not already purchased the Property or caused an Applicable Purchaser to purchase the Property pursuant to the Purchase Agreement, (i) BNPPLC will have the power and authority, to the extent provided by law, after proper notice and lapse of such time as may be required by law, to sell or arrange for a sale to foreclose its lien and security interest granted in Exhibit B, and (ii) BNPPLC, in lieu of or in addition to exercising any power of sale granted in Exhibit B, may proceed by a suit or suits in equity or at law, whether for a foreclosure or sale of the Property, or against NAI for the Lease Balance, or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure or sale of the Property, or for the enforcement of any other appropriate legal or equitable remedy.
     (C) Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement. During the Term, so long as NAI remains in possession of the Property and there has been no termination of the Purchase Option as provided in Paragraph 6(B) of the Purchase Agreement, BNPPLC’s right to exercise remedies provided in subparagraph 15(A) or to complete any foreclosure sale as provided in subparagraph 15(B) will be subject to the condition precedent that BNPPLC has notified NAI, at a time when an Event of Default has occurred and is continuing and no less than thirty days prior to exercising such remedies or completing such a sale, of BNPPLC’s intent to do so. The condition precedent is intended to provide NAI with an opportunity to exercise the Purchase Option before losing possession of the Property because of
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the remedies enumerated in subparagraph 15(A) or because of a sale authorized by subparagraph 15(B). 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, BNPPLC may proceed immediately to exercise remedies provided in subparagraph 15(A) or complete a sale authorized by subparagraph 15(B) at any time after the earliest of (i) thirty days after BNPPLC 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.
     (D) Enforceability. This Paragraph 15 will be enforceable to the maximum extent not prohibited by Applicable Laws, and the unenforceability of any provision in this Paragraph will not render any other provision unenforceable.
     (E) Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy, and each and every such right and remedy will be cumulative and in addition to any other right or remedy given to BNPPLC under this Lease or other Operative Documents or now or hereafter existing in favor of BNPPLC under Applicable Laws, except as otherwise expressly provided in the last provision of subparagraph 15(A)(3) above. In addition to other remedies provided in this Lease, BNPPLC will 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 Lease, or to a decree compelling performance of any of the other covenants, agreements, conditions or provisions of this Lease to be performed by NAI, or to any other remedy allowed to BNPPLC at law or in equity. Nothing contained in this Lease will limit or prejudice the right of BNPPLC to prove for and obtain in proceedings for bankruptcy or insolvency of NAI by reason of the termination of this 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 will modify, limit or impair any of the rights and remedies of BNPPLC under the Purchase Agreement, and BNPPLC will not be required to give the thirty day notice described in subparagraph 15(C) as a condition precedent to any acceleration of the Designated Sale Date or to taking any action to enforce the Purchase Agreement. However, to prevent a double recovery, BNPPLC acknowledges that BNPPLC’s right to recover Lease Termination Damages may be limited by the last provision of subparagraph 15(A)(3) above in the event BNPPLC collects or remains entitled to collect a Supplemental Payment as provided in the Purchase Agreement.
16 Default by BNPPLC. If BNPPLC should default in the performance of any of its obligations under this Lease, BNPPLC will 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
Amended and Restated Lease Agreement (Building 7) – Page 44

 

 

and specifying what action NAI believes is necessary to cure the default.
17 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, BNPPLC will not during the Term disturb NAI’s peaceable and quiet enjoyment of the Property; however, such enjoyment will be subject to the terms and conditions of this Lease, to the Ground Lease, to Permitted Encumbrances and to any other claims not constituting Liens Removable by BNPPLC. If any Lien Removable by BNPPLC is established against the Property, BNPPLC will remove the Lien Removable by BNPPLC promptly. Any breach by BNPPLC of this Paragraph will render BNPPLC liable to NAI for any monetary damages proximately caused thereby, but as more specifically provided in subparagraph 4(B) above, no such breach will entitle NAI to terminate this Lease or excuse NAI from its obligation to pay Rent.
18 Surrender Upon Termination. Unless NAI or an Applicable Purchaser is purchasing or has purchased BNPPLC’s entire interest in the Property pursuant to the terms of the Purchase Agreement, NAI must, upon the termination of NAI’s right to occupancy, surrender to BNPPLC 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 Lease, and (ii) demolition, alterations and additions which are expressly permitted by the terms of this Lease 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 BNPPLC so elects, will be deemed abandoned and become the property of BNPPLC without any payment or offset therefor. If BNPPLC does not so elect, BNPPLC may remove such property from the Property and store it at NAI’s risk and expense. NAI must bear the expense of repairing any damage to the Property caused by such removal by BNPPLC or NAI.
19 Holding Over by NAI. Should NAI not purchase BNPPLC’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 Lease without objection by BNPPLC, whether such termination occurs by lapse of time or otherwise, such holding over will constitute and be construed as a tenancy from day to day only on and subject to all of the terms, provisions, covenants and agreements on the part of NAI hereunder; except that the Base Rent required for each day the holding over continues will be due and payable by NAI to BNPPLC upon demand and will equal the difference computed by subtracting (a) any interest accruing on such day under the Purchase Agreement on any past due Supplemental Payment, from (b) an amount equal to (i) the difference computed by subtracting any Supplemental Payment previously made by NAI to
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BNPPLC from the Lease Balance, times (ii) the per annum Default Rate computed as of such day, divided by (iii) three hundred sixty. No payments of money by NAI to BNPPLC after the termination of this Lease will reinstate, continue or extend the Term of this Lease and no extension of this Lease after the termination thereof will be valid unless and until the same is reduced to writing and signed by both BNPPLC and NAI.
20 Recording Memorandum. Contemporaneously with the execution of this Lease, the parties will execute and record a memorandum of this Lease for purposes of effecting constructive notice to all Persons of NAI’s rights hereunder.
21 Independent Obligations Evidenced by Other Operative Documents. NAI acknowledges and agrees that nothing contained in this Lease will 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. Further, in the event of any inconsistency between the express terms and provisions of the Purchase Agreement and the express terms and provisions of this Lease, the express terms and provisions of the Purchase Agreement will control.
22 Proprietary Information and Confidentiality.
     (A) Proprietary Information. NAI will have no obligation to provide proprietary information (as defined in the next sentence) to BNPPLC, except and to the extent (1) expressly required by other terms and conditions of the Operative Documents, or (2) requested by BNPPLC in connection with any inspection of the Property pursuant to the various provisions hereof and, in BNPPLC’s reasonably determination, required to allow BNPPLC to accomplish the purposes of such inspection. (Before NAI delivers any such proprietary information in connection with any inspection of the Property, NAI may require that BNPPLC confirm and ratify the confidentiality agreements covering such proprietary information set forth herein.) For purposes of this Lease and the other Operative Documents, “proprietary information” means NAI’s intellectual property, trade secrets and other confidential information of value to NAI (including, among other things, information about NAI’s manufacturing processes, products, marketing and corporate strategies) that (1) is received by any representative of BNPPLC at the time of any on-site visit to the Property or (2) otherwise delivered to BNPPLC by or on behalf of NAI and labeled “proprietary” or “confidential” or by some other similar designation to identify it as information which NAI considers to be proprietary or confidential.
     (B) Confidentiality. BNPPLC will endeavor in good faith to use reasonable precautions to keep confidential any proprietary information that BNPPLC may receive from NAI or otherwise discover with respect to NAI or NAI’s business in connection with the administration of this Lease or any investigation by BNPPLC hereunder. This provision will not, however, render BNPPLC liable for any disclosures of proprietary information made by it or its
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employees or representatives, unless the disclosure is intentional and made for no reason other than to damage NAI’s business. Also, this provision will not apply to disclosures: (i) specifically and previously authorized in writing by NAI; (ii) to any assignee of BNPPLC as to any interest in the Property so long as such assignee has agreed in writing to use its reasonable efforts to keep such information confidential in accordance with the terms of this paragraph; (iii) to legal counsel, accountants, auditors, environmental consultants and other professional advisors to BNPPLC so long as BNPPLC informs such persons in writing (if practicable) of the confidential nature of such information and directs them to treat such information confidentially; (iv) to regulatory officials having jurisdiction over BNPPLC or BNPPLC’s Parent (although the disclosing party will request confidential treatment of the disclosed information, if practicable); (v) as required by legal process (although the disclosing party will request confidential treatment of the disclosed information, if practicable); (vi) of information which has previously become publicly available through the actions or inactions of a person other than BNPPLC not, to BNPPLC’s knowledge, in breach of an obligation of confidentiality to NAI; (vii) to any Participant so long as the Participant is bound by and has not repudiated a confidentiality provision concerning NAI’s proprietary information set forth in the Participation Agreement; or (vii) that are reasonably believed by BNPPLC to be necessary or helpful to the determination or enforcement of any contractual or other rights which BNPPLC has or may have against NAI or its Affiliates or which BNPPLC has or may have concerning the Property (provided, that BNPPLC must cooperate with NAI as NAI may reasonably request to mitigate any risk that such disclosures will result in subsequent disclosures of proprietary information which are not necessary or helpful to any such determination or enforcement; such cooperation to include, for example, BNPPLC’s agreement not to oppose a motion by NAI to seal records containing proprietary information in any court proceeding initiated because of a dispute between the parties over the Property or the Operative Documents).
Further, notwithstanding any other contrary provision contained in this Lease or the other Operative Documents, BNPPLC and NAI (and each of their respective employees, representatives or other agents) may disclose, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Lease and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment and tax structure, other than any information for which non-disclosure is reasonably necessary in order to comply with applicable securities laws and other than any information the disclosure of which would waive the attorney-client privilege, the tax advisor privilege under Section 7525 of the Internal Revenue Code, or similar privileges.
23 Amendment and Restatement of the Prior Lease. This Lease amends, restates and replaces entirely the Prior Lease. Without limiting the rights and obligations of NAI under this Lease, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Lease are now made subject to the terms and conditions of this Lease; and all rights and interests of BNPPLC in and to the Land or other Property under the
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Prior Lease are renewed and extended (rather than terminated) by this Lease.
[The signature pages follow.]
Amended and Restated Lease Agreement (Building 7) – Page 48

 

 

     IN WITNESS WHEREOF, this Amended and Restated Lease Agreement (Building 7) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
Amended and Restated Lease Agreement (Building 7) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Lease Agreement (Building 7) dated as of November 29, 2007]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Lease Agreement (Building 7) – Signature Page

 

 

Exhibit A
Legal Description
Parcel 7 and the Additional Leased Premises, as defined below, (collectively, the “Building 7 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the northern boundary of Parcel 7 and the southern boundary of Parcel 8, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 7 and Parcel 8, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 7 and Parcel 11, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 7 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
Exhibit A to Amended and Restated Lease Agreement (Building 7) – Page 2

 

 

Exhibit B
California Foreclosure Provisions
Without limiting any of the provisions set forth in the body of this Lease or other attachments to this Lease, the following provisions are included in and made a part of this Lease for all purposes:
GRANT OF LIEN AND SECURITY INTEREST.
     NAI, for and in consideration of the sum of Ten Dollars ($10.00) to NAI in hand paid by Lloyd G. Cox, Trustee, of Dallas County, Texas (in this Exhibit called the “Trustee”), in order to secure the recovery of the Lease Balance by BNPPLC and the payment of all of the other obligations, covenants, agreements and undertakings of NAI under this Lease or other Operative Documents (in this Exhibit called the “Secured Obligations”), does hereby irrevocably GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET OVER to the Trustee, IN TRUST WITH POWER OF SALE, for the benefit of BNPPLC, a leasehold estate in the Land (the terms and conditions of which leasehold estate are as set forth in the Ground Lease), together with (i) all the buildings and other improvements now on or hereafter located thereon; (ii) all materials, equipment, fixtures or other property whatsoever now or hereafter attached or affixed to or installed in said buildings and other improvements, including, but not limited to, all heating, plumbing, lighting, water heating, refrigerating, incinerating, ventilating and air conditioning equipment, utility lines and equipment (whether owned individually or jointly with others), sprinkler systems, fire extinguishing apparatus and equipment, water tanks, engines, machines, elevators, motors, cabinets, shades, blinds, partitions, window screens, screen doors, storm windows, awnings, drapes, and floor coverings, and all fixtures, accessions and appurtenances thereto, and all renewals or replacements of or substitutions for any of the foregoing, all of which are hereby declared to be permanent fixtures and accessions to the freehold and part of the realty conveyed herein as security for the obligations mentioned hereinabove; (iii) all easements and rights of way now and at any time hereafter used in connection with any of the foregoing property or as a means of ingress to or egress from the Land or for utilities to said property; (iv) all interests of NAI in and to any streets, ways, alleys and/or strips of land adjoining said land or any part thereof; (v) all rents, issues, profits, royalties, bonuses, income and other benefits derived from or produced by the Land or Improvements; (vi) all leases or subleases of the Land or Improvements or any part thereof now or hereafter in effect, including all security or other deposits, advance or prepaid rents, and deposits or payments of similar nature; (vii) all options to purchase or lease the Land or Improvements or any part thereof or interest therein, and any greater estate in the Land or Improvements now owned or hereafter acquired by NAI; (viii) all right, title, estate and interest of every kind and nature, at law or in equity, which NAI now has or may hereafter acquire in the Land or Improvements; and (ix) all other claims and demands with respect to the Land or Improvements or the Collateral (as hereinafter defined), including all claims or demands to all proceeds of all insurance now or hereafter in effect with respect to the Land, Improvements or Collateral, all awards made for the taking by condemnation or the power of eminent domain, or by any proceeding or purchase in lieu thereof, of the Land, Improvements or Collateral, or any part thereof, or any damage or injury thereto, all awards resulting from a

 

 

change of grade of streets, and all awards for severance damages; and (vi) all rights, estates, powers and privileges appurtenant or incident to the foregoing.
     TO HAVE AND TO HOLD the foregoing property (in this Exhibit called the “Mortgaged Property”) unto the Trustee, IN TRUST, and his successors or substitutes in this trust and to his or their successors and assigns upon the terms, provisions and conditions herein set forth for the benefit of BNPPLC.
     In order to secure the Secured Obligations, NAI also hereby grants to BNPPLC a security interest in: all components of the Property which constitute personalty, whether owned by NAI now or hereafter, and all fixtures, accessions and appurtenances thereto, and all renewals or replacements of or substitutions for any of the foregoing (including all building materials and equipment now or hereafter delivered to said premises and intended to be installed or in or incorporated as part of the Improvements); all rents and other amounts from and under leases of all or any part of the Property; all issues, profits and proceeds from all or any part of the Property; all proceeds (including premium refunds) of each policy of insurance relating to the Property; all proceeds from the taking of the Property or any part thereof or any interest therein or right or estate appurtenant thereto by eminent domain or by purchase in lieu thereof; all permits, licenses, franchises, certificates, and other rights and privileges obtained in connection with the Property; all plans, specifications, maps, surveys, reports, architectural, engineering and construction contracts, books of account, insurance policies and other documents, of whatever kind or character, relating to the use, construction upon, occupancy, leasing, sale or operation of the Property; all proceeds and other amounts paid or owing to NAI under or pursuant to any and all contracts and bonds relating to the construction, erection or renovation of the Property; and all oil, gas and other hydrocarbons and other minerals produced from or allocated to the Property and all products processed or obtained therefrom, the proceeds thereof, and all accounts and general intangibles under which such proceeds may arise, together with any sums of money that may now or at any time hereafter become due and payable to NAI by virtue of any and all royalties, overriding royalties, bonuses, delay rentals and any other amount of any kind or character arising under any and all present and future oil, gas and mining leases covering the Property or any part thereof (all of the property described in this section are collectively called the “Collateral” in this Exhibit) and all proceeds of the Collateral. (The Mortgaged Property and the Collateral are in this Exhibit sometimes collectively called the “Security”.)
FORECLOSURE BY POWER OF SALE
     Upon the occurrence of any Event of Default, the Trustee, its successor or substitute, and/or BNPPLC is authorized and empowered to execute all written notices then required by law to cause the Security to be sold under power of sale to satisfy the Secured Obligations. Trustee will give and record such notices as the law then requires as a condition precedent to a trustee’s sale. When the minimum period of time required by law after giving all required notices has elapsed, Trustee, without notice to or demand upon NAI except as otherwise required by law,
Exhibit B to Amended and Restated Lease Agreement (Building 7) – Page 2

 

 

will sell the Security at the time and place of sale fixed by it in the notice of sale, at one or several sales, either as a whole or in separate parcels and in such manner and order, all as BNPPLC or Trustee in its sole discretion may determine, at public auction to the highest bidder for cash, in lawful money of the United States, payable at the time of sale (the obligations hereby secured being the equivalent of cash for purposes of said sale). NAI will have no right to direct the order in which the Security is sold or to require that the Security be sold in separate lots or parcels or items. The sale by the Trustee of less than the whole of the Mortgaged Property will not exhaust the power of sale herein granted, and the Trustee is specifically empowered to make successive sale or sales under such power until the whole of the Mortgaged Property is sold; and, if the proceeds of such sale of less than the whole of the Mortgaged Property is less than the aggregate of the indebtedness secured hereby and the expense of executing this trust as provided herein, the rights and remedies of BNPPLC hereunder and the lien hereof will remain in full force and effect as to the unsold portion of the Mortgaged Property just as though no sale or sales had been made; provided, however, that NAI will never have any right to require the sale of less than the whole of the Mortgaged Property but BNPPLC will have the right, at its sole election, to request the Trustee to sell less than the whole of the Mortgaged Property. Subject to requirements and limits imposed by law, including California Civil Code § 2924g, Trustee may postpone sale of all or any portion of the Security by public announcement at such time and place of sale and from time to time may postpone the sale by public announcement at the time and place fixed by the preceding postponement. Any person or entity, including Trustee, NAI or BNPPLC, may purchase at the sale, and NAI hereby covenants to warrant and defend the title of such purchaser or purchasers. Trustee will deliver to the purchaser at such sale a deed conveying the Security or portion thereof so sold, but without any covenant or warranty, express or implied. At any such sale (i) NAI hereby agrees, in its behalf and in behalf of its heirs, executors, administrators, successors, personal representatives and assigns, that any and all recitals made in any deed of conveyance given by Trustee of any matters or facts stated therein, including without limitation, the identity of BNPPLC, the occurrence or existence of any default, the acceleration of the maturity of any of the Secured Obligations, the request to sell, the notice of sale, the giving of notice to all debtors legally entitled thereto, the time, place, terms, and manner of sale, and receipt, distribution and application of the money realized therefrom, and the due and proper appointment of a substitute Trustee and any other act or thing duly done by BNPPLC or by Trustee hereunder, will be taken by all courts of law and equity as prima facie evidence that the statement or recitals state facts and are without further question to be so accepted as conclusive proof of the truthfulness thereof, and NAI hereby ratifies and confirms every act that Trustee or any substitute Trustee hereunder may lawfully do in the premises by virtue hereof; and (ii) the purchaser may disaffirm any easement granted, or rental, lease or other contract made, in violation of any provision of any of the Operative Documents, and may take immediate possession of the Security free from, and despite the terms, of, such grant of easement and rental or lease contract.
BNPPLC may elect to cause the Security or any part thereof to be sold under the power of sale herein granted in any manner permitted by applicable law. In connection with any sale or sales
Exhibit B to Amended and Restated Lease Agreement (Building 7) – Page 3

 

 

hereunder, BNPPLC may elect to treat any portion of the Security which consists of a right in action or which is property that can be severed from the Security without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of the real property. Any sale of any personal property hereunder will be conducted in any manner permitted by the California Uniform Commercial Code (in this Exhibit called the “Code”). Where any portion of the Security consists of real property and personal property or fixtures, whether or not such personal property is located on or within the real property, BNPPLC may elect in its discretion to exercise its rights and remedies against any or all of the real property, personal property and fixtures, in such order and manner as is now or hereafter permitted by applicable law. Without limiting the generality of the foregoing, BNPPLC may, in its sole and absolute discretion and without regard to the adequacy of its security, elect to proceed against any or all of the real property, personal property and fixtures in any manner permitted by the Code; and if BNPPLC elects to sell both personal property and real property together as permitted by the Code, the power of sale herein granted will be exercisable with respect to all or any of the real property, personal property and fixtures covered hereby, as designated by BNPPLC, and Trustee is hereby authorized and empowered to conduct any such sale of any real property, personal property and fixtures in accordance with the procedures applicable to real property. Where any portion of the Security consists of real property and personal property, any reinstatement of the Secured Obligations, following default and an election by BNPPLC to accelerate the maturity of said obligations, which is made by NAI or any other person or entity permitted to exercise the right of reinstatement under § 2924c of the California Civil Code or any successor statute, will, in accordance with the terms of Code, not prohibit BNPPLC or Trustee from conducting a sale or other disposition of any personal property or fixtures or from otherwise proceeding against or continuing to proceed against any personal property or fixtures in any manner permitted by the Code, nor will any such reinstatement invalidate, rescind or otherwise affect any sale, disposition or other proceeding held, conducted or instituted with respect to any personal property or fixtures prior to such reinstatement or pending at the time of such reinstatement. Any sums paid to BNPPLC in effecting any reinstatement pursuant to § 2924c of the California Civil Code will be applied to the indebtedness secured hereby, and to BNPPLC’s reasonable costs and expenses in the manner required by § 2924c. Should BNPPLC elect to sell any portion of the Security which is real property, or which is personal property or fixtures that BNPPLC has elected to sell together with the real property in accordance with the laws governing a sale of real property, BNPPLC or Trustee will give such notice of default and election to sell as may then be required by law, and without the necessity of any demand on NAI, Trustee, at the time(s) and place(s) specified in the notice of sale, will sell said real property, and all estate, right, title, interest, claim and demand therein, and equity and right of redemption thereof, at such times and places as required or permitted by law, upon such terms as BNPPLC or Trustee may fix and specify in the notice of sale or as may be required by law. If the Security consists of several lots, parcels or items of property, BNPPLC may: (i) designate the order in which such lots, parcels or items will be offered for sale or sold, or (ii) elect to sell such lots, parcels or items through a single sale, or through two or more successive sales, or in any other manner BNPPLC deems in its best interest.
Exhibit B to Amended and Restated Lease Agreement (Building 7) – Page 4

 

 

Should BNPPLC desire that more than one sale or other disposition of the Mortgaged Property be conducted, BNPPLC may, at its option, cause the same to be conducted simultaneously, or successively, on the same day, or on such different days or times and in such order as BNPPLC may deem to be in its best interests, and no such sale will exhaust the power of sale herein granted or terminate or otherwise affect the lien granted by NAI herein on, or the security interests of BNPPLC in, any part of the Security not sold, until all of the indebtedness secured hereby has been fully paid and satisfied. In the event BNPPLC elects to dispose of the Security through more than one sale, NAI agrees to pay the costs and expenses of each such sale and of any judicial proceedings wherein the same may be made, including reasonable compensation to BNPPLC and Trustee, their agents and counsel, and to pay all expenses, liabilities and advances made or incurred by BNPPLC and Trustee (or either of them) in connection with such sale or sale, together with interest on all such advances made by BNPPLC and Trustee (or either of them) at the Default Rate..
JUDICIAL FORECLOSURE
     This instrument will be effective as a mortgage as well as a deed of trust and upon the occurrence of an Event of Default may be foreclosed as to any of the Security in any manner permitted by the laws of the State of California or of any other state in which any part of the Security is situated, and any foreclosure suit may be brought by the Trustee or by BNPPLC. In the event a foreclosure hereunder is commenced by the Trustee, or his substitute or successor, BNPPLC may at any time before the sale of the Security direct the said Trustee to abandon the sale, and may then institute suit for the collection of the Secured Obligations and for the judicial foreclosure of this instrument. It is agreed that if BNPPLC should institute a suit for the collection of the Secured Obligations and for the foreclosure of this instrument, BNPPLC may at any time before the entry of a final judgment in said suit dismiss the same, and require the Trustee, his substitute or successor to exercise the power of sale granted herein to sell the Security in accordance with the provisions of this instrument.
BNPPLC AS PURCHASER
     BNPPLC will have the right to become the purchaser at any sale held by any Trustee or substitute or successor or by any receiver or public officer, and any BNPPLC purchasing at any such sale will have the right to credit upon the amount of the bid made therefor, to the extent necessary to satisfy such bid, the outstanding Lease Balance and other Secured Obligations owing to such BNPPLC.
UNIFORM COMMERCIAL CODE REMEDIES
     Upon the occurrence of an Event of Default, BNPPLC may exercise its rights of enforcement with respect to the Collateral under the California Uniform Commercial Code, as
Exhibit B to Amended and Restated Lease Agreement (Building 7) – Page 5

 

 

amended, and in conjunction with, in addition to or in substitution for those rights and remedies:
     (a) BNPPLC may enter upon the Land to take possession of, assemble and collect the Collateral or to render it unusable; and
     (b) BNPPLC may require NAI to assemble the Collateral and make it available at a place BNPPLC designates which is mutually convenient to allow BNPPLC to take possession or dispose of the Collateral; and
     (c) written notice mailed to NAI as provided herein ten (10) days prior to the date of public sale of the Collateral or prior to the date after which private sale of the Collateral will be made shall constitute reasonable notice; and
     (d) any sale made pursuant to the provisions of this section will be deemed to have been a public sale conducted in a commercially reasonable manner if held contemporaneously with the sale of the Mortgaged Property under power of sale as provided herein upon giving the same notice with respect to the sale of the Collateral hereunder as is required for such sale of the Mortgaged Property under power of sale; and
     (e) in the event of a foreclosure sale, whether made by the Trustee exercising the power of sale granted herein, or under judgment of a court, the Collateral and the Mortgaged Property may, at the option of BNPPLC, be sold as a whole; and
     (f) it will not be necessary that BNPPLC take possession of the Collateral or any part thereof prior to the time that any sale pursuant to the provisions of this section is conducted and it will not be necessary that the Collateral or any part thereof be present at the location of such sale; and
     (g) prior to application of proceeds of disposition of the Collateral to the Secured Obligations, such proceeds will be applied to the reasonable expenses of retaking, holding, preparing for sale or lease, selling, leasing and the like and the reasonable attorney’s fees and legal expenses incurred by BNPPLC; and
     (h) any and all statements of fact or other recitals made in any bill of sale or assignment or other instrument evidencing any foreclosure sale hereunder as to nonpayment of the Secured Obligations or as to the occurrence of any Event of Default, or as to BNPPLC having declared any of the Secured Obligations to be due and payable, or as to notice of time, place and terms of sale and of the properties to be sold having been duly given, or as to any other act or thing having been duly done by BNPPLC, will be taken as prima facie evidence of the truth of the facts so stated and recited; and
     (i) BNPPLC may appoint or delegate any one or more persons as agent to
Exhibit B to Amended and Restated Lease Agreement (Building 7) – Page 6

 

 

perform any act or acts necessary or incident to any sale held by BNPPLC, including the sending of notices and the conduct of the sale, but in the name and on behalf of BNPPLC.
APPOINTMENT OF A RECEIVER
     In addition to all other remedies herein provided for, if any Event of Default occurs or continues after the Designated Sale Date, BNPPLC will as a matter of right be entitled to the appointment of a receiver or receivers for all or any part of the Security, whether such receivership be incident to a proposed sale of such property or otherwise, and without regard to the adequacy of the security or the value of the Security or the solvency of any person or persons liable for the payment of the Secured Obligations, and NAI does hereby irrevocably consent to the appointment of such receiver or receivers, waives any and all defenses to such appointment and agrees not to oppose any application therefor by BNPPLC, but nothing herein is to be construed to deprive BNPPLC of any other right, remedy or privilege it may now have under the law to have a receiver appointed. Any such receiver or receivers will have all of the usual powers and duties of receivers in like or similar cases and will continue as such and exercise all such powers until the date of confirmation of sale of the Security unless such receivership is sooner terminated. Any money advanced by BNPPLC in connection with any such receivership will be a demand obligation owing by NAI to BNPPLC and will bear interest from the date of making such advancement by BNPPLC until paid at the Default Rate and will be a part of the Secured Obligations and will be secured by this lien and by any other instrument securing the Secured Obligations.
PROVISIONS CONCERNING THE TRUSTEE
     Trustee accepts this trust when a Short Form Lease or memorandum referencing the provisions of this Exhibit, duly executed and acknowledged, is made a public record as provided by law. The trust hereby created will be irrevocable by NAI.
     In the event the Trustee takes any action pursuant to the provisions of this Exhibit, NAI must pay to Trustee reasonable compensation for services rendered in the administration of this trust, which will be in addition to any required reimbursement for Attorney’s Fees or other expenses.
     BNPPLC may appoint a substitute to replace and act as the Trustee hereunder in any manner now or hereafter provided by law, or in lieu thereof, BNPPLC may from time to time, by an instrument in writing, appoint substitutes as successor or successors to any Trustee named herein or acting hereunder, which instrument, executed and acknowledged by BNPPLC and recorded in the Office of the Recorder of the county in which the Property is located, will be conclusive proof of proper substitution of such successor Trustee or Trustees, who will thereupon and without conveyance from the predecessor Trustee, succeed to all its title, estate, rights,
Exhibit B to Amended and Restated Lease Agreement (Building 7) – Page 7

 

 

powers and duties. Such instrument must contain the name of the original NAI, Trustee and BNPPLC hereunder, the instrument number of this Deed of Trust, and the name and address of the successor Trustee. In the event the Secured Obligations are at any time owned by more than one person or entity, the holder or holders of not less than a majority in the amount of such Secured Obligations will have the right and authority to make the appointment of a successor or substitute trustee provided for in the preceding sentences. Such appointment and designation by BNPPLC or by the holder or holders of not less than a majority of the Secured Obligations will be full evidence of the right and authority to make the same and of all facts therein recited. If BNPPLC is a corporation and such appointment is executed in its behalf by an officer of such corporation, such appointment will be conclusively presumed to be executed with authority and will be valid and sufficient without proof of any action by the board of directors or any superior officer of the corporation. Upon the making of any such appointment and designation, all of the estate and title of the Trustee in the Security will vest in the named successor or substitute trustee and he will thereupon succeed to and will hold, possess and execute all the rights, powers, privileges, immunities and duties herein conferred upon the Trustee; but nevertheless, upon the written request of BNPPLC or of the successor or substitute Trustee, the Trustee ceasing to act must execute and deliver an instrument transferring to such successor or substitute Trustee all of the estate and title in the Security of the Trustee so ceasing to act, together with all the rights, powers, privileges, immunities and duties herein conferred upon the Trustee, and must duly assign, transfer and deliver any of the properties and moneys held by said Trustee hereunder to said successor or substitute Trustee. All references herein to the Trustee will be deemed to refer to the Trustee (including any successor or substitute appointed and designated as herein provided) from time to time acting hereunder. NAI hereby ratifies and confirms any and all acts which the herein named Trustee or his successor or successors, substitute or substitutes, in this trust, do lawfully by virtue hereof.
     THE TRUSTEE WILL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT OR ACT DONE BY THE TRUSTEE IN GOOD FAITH, OR BE OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES WHATSOEVER (INCLUDING THE TRUSTEE’S NEGLIGENCE), EXCEPT FOR THE TRUSTEE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. The Trustee will have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by him hereunder, believed by him in good faith to be genuine. All moneys received by the Trustee will, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law), and the Trustee will be under no liability for interest on any moneys received by him hereunder. NAI WILL REIMBURSE THE TRUSTEE FOR, AND INDEMNIFY AND SAVE HIM HARMLESS AGAINST, ANY AND ALL LIABILITY AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES) WHICH MAY BE INCURRED BY HIM IN THE PERFORMANCE OF HER DUTIES HEREUNDER (INCLUDING ANY LIABILITY AND EXPENSES RESULTING FROM THE TRUSTEE’S OWN NEGLIGENCE). The foregoing indemnity will not terminate upon release, foreclosure or other termination of this
Exhibit B to Amended and Restated Lease Agreement (Building 7) – Page 8

 

 

instrument.
MISCELLANEOUS
     BNPPLC may resort to any security given by this instrument or to any other security now existing or hereafter given to secure the payment of the Secured Obligations, in whole or in part, and in such portions and in such order as may seem best to BNPPLC in its sole and uncontrolled discretion, and any such action will not in anywise be considered as a waiver of any of the rights, benefits, liens or security interests evidenced by this instrument.
     To the full extent NAI may do so, NAI agrees that NAI will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force pertaining to the rights and remedies of sureties or redemption, and NAI, for NAI and NAI’s successors and assigns, and for any and all persons ever claiming any interest in the Security, to the extent permitted by law, hereby waives and releases all rights of redemption, valuation, appraisement, stay of execution, notice of intention to mature or declare due the whole of the Secured Obligations, notice of election to mature or declare due the whole of the Secured Obligations and all rights to a marshaling of the assets of NAI, including the Security, or to a sale in inverse order of alienation in the event of foreclosure of the liens and security interests hereby created. NAI will not have or assert any right under any statute or rule of law pertaining to the marshaling of assets, sale in inverse order of alienation, the exemption of homestead, the administration of estates of decedents or other matters whatever to defeat, reduce or affect the right of BNPPLC under the terms of this instrument to a sale of the Security for the collection of the Secured Obligations without any prior or different resort for collection, or the right of BNPPLC under the terms of this instrument to the payment of the Secured Obligations out of the proceeds of sale of the Security in preference to every other claimant whatever. If any law referred to in this section and now in force, of which NAI or NAI’s successors and assigns and such other persons claiming any interest in the Security might take advantage despite this provision, is hereafter repealed or ceases to be in force, such law shall not thereafter be deemed to preclude the application of this provision.
     In the event there is a foreclosure sale hereunder and at the time of such sale NAI or NAI’s successors or assigns or any other persons claiming any interest in the Security by, through or under NAI are occupying or using the Security, or any part thereof, each and all will immediately become the tenant of the purchaser at such sale. Such tenancy will be a tenancy from day-to-day, terminable at the will of either landlord or tenant, at a reasonable rental per day based upon the value of the property occupied, such rental to be due daily to the purchaser. In the event the tenant fails to surrender possession of said property upon demand, the purchaser will be entitled to institute and maintain an action to obtain possession in any court of competent jurisdiction in California.
     NAI agrees to pay BNPPLC for each statement of BNPPLC (as beneficiary) regarding the
Exhibit B to Amended and Restated Lease Agreement (Building 7) – Page 9

 

 

obligations secured hereby the maximum fee allowed by law or, if there is no maximum fee, such reasonable fee as is then charged by BNPPLC for rendering such statement.
     Notwithstanding any contrary provisions regarding the giving of notices in the Common Definitions or Provisions Agreement or other Operative Documents, any service of a notice required by California Civil Code §2924 will be considered complete when the requirements of that statute are met.
     All rights of action under this Exhibit be enforced by BNPPLC or Trustee without the possession of any instruments secured hereby and without the production thereof or of this Lease or other Operative Documents at any trial or other proceeding relative thereto.
Exhibit B to Amended and Restated Lease Agreement (Building 7) – Page 10

 

exv10w34
Exhibit 10.34
AMENDED AND RESTATED
COMMON DEFINITIONS
AND PROVISIONS AGREEMENT
(BUILDING 7)
between
BNP PARIBAS LEASING CORPORATION
and
NETWORK APPLIANCE, INC.
Dated as of November 29, 2007
 

 

 

TABLE OF CONTENTS
         
    Page  
ARTICLE I — LIST OF DEFINED TERMS
     1  
97-10/Maximum Permitted Prepayment
     1  
97-10/Meltdown Event
     1  
97-10/Prepayment
     1  
97-10/Project Costs
     1  
97-10/Pronouncement
     1  
ABR
     2  
ABR Period Election
     2  
Active Negligence
     2  
Additional Rent
     2  
Administrative Fees
     2  
Advance Date
     2  
Affiliate
     3  
After Tax Basis
     3  
Applicable Laws
     3  
Applicable Purchaser
     3  
Appurtenant Easements
     3  
Arrangement Fee
     3  
Attorneys’ Fees
     3  
Balance of Unpaid Construction Period Losses
     3  
Banking Rules Change
     3  
Base Rent
     4  
Base Rent Commencement Date
     4  
Base Rent Date
     4  
Base Rent Period
     5  
BNPPLC
     5  
BNPPLC’s Parent
     5  
Breakage Costs
     6  
Break Even Price
     6  
Business Day
     6  
Capital Adequacy Charges
     6  
Carrying Costs
     6  
Closing Certificate
     7  
Closing Letter
     7  
Code
     7  
Commitment Fees
     7  
Common Definitions and Provisions Agreement
     7  
Completion Date
     7  
Completion Notice
     7  
Consolidated Debt for Borrowed Money
     7  

 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
Consolidated EBITDA
     7  
Constituent Documents
     7  
Construction Advances
     7  
Construction Advance Request
     7  
Construction Agreement
     7  
Construction Allowance
     8  
Construction Period
     8  
Construction Project
     8  
Covered Construction Period Losses
     8  
Default
     8  
Default Rate
     8  
Defective Work
     8  
Designated Sale Date
     8  
Effective Date
     9  
Effective Rate
     10  
Eligible Financial Institution
     10  
Environmental Cutoff Date
     11  
Environmental Laws
     11  
Environmental Losses
     11  
Environmental Report
     12  
ERISA
     12  
ERISA Affiliate
     12  
ERISA Termination Event
     12  
Escrowed Proceeds
     13  
Established Misconduct
     13  
Eurocurrency Liabilities
     14  
Eurodollar Rate Reserve Percentage
     14  
Event of Default
     14  
Excluded Taxes
     17  
Fed Funds Rate
     18  
Fixed Rate
     18  
Fixed Rate Lock
     18  
Fixed Rate Lock Date
     18  
Fixed Rate Lock Termination
     18  
Fixed Rate Lock Termination Date
     18  
Fixed Rate Lock Notice
     19  
Fixed Rate Loss
     19  
Fixed Rate Settlement Amount
     19  

(ii)

 

TABLE OF CONTENTS
(Continued)
         
    Page  
Fixed Rate Swap
     19  
Floating Rate Payor
     19  
FOCB Notice
     19  
Force Majeure Event
     19  
Fully Subordinated or Removable
     20  
Funded Construction Allowance
     20  
Funding Advances
     20  
Future Work
     20  
GAAP
     20  
Ground Lease
     21  
Hazardous Substance
     21  
Hazardous Substance Activity
     21  
Improvements
     21  
Increased Commitment
     22  
Increased Funding Commitment
     22  
Increased Time Commitment
     22  
Indebtedness
     22  
Initial Advance
     23  
Initial Lease Balance
     23  
Interested Party
     24  
Interest Rate Swap
     24  
Land
     24  
Lease
     24  
Lease Balance
     24  
Lease Termination Damages
     25  
Liabilities
     25  
LIBOR
     25  
LIBOR Period Election
     26  
Lien
     27  
Liens Removable by BNPPLC
     27  
Local Impositions
     28  
Losses
     28  
Market Quotation
     28  
Maximum Construction Allowance
     29  
Maximum Remarketing Obligation
     29  
Minimum Insurance Requirements
     29  
Multiemployer Plan
     29  
NAI
     29  

(iii)

 

TABLE OF CONTENTS
(Continued)
         
    Page  
NAI’s Estimate of Force Majeure Excess Costs
     29  
NAI’s Estimate of Force Majeure Delays
     29  
NAI’s Initial Remarketing Right
     29  
Notice of NAI’s Intent to Terminate
     29  
Notice of NAI’s Intent to Terminate Because of a Force Majeure Event
     29  
Notice of Termination by NAI
     29  
Operative Documents
     29  
Outstanding Construction Allowance
     30  
Owner’s Election to Continue Construction
     30  
Participant
     30  
Participation Agreement
     30  
Period
     31  
Permitted Encumbrances
     31  
Permitted Hazardous Substance Use
     31  
Permitted Hazardous Substances
     32  
Permitted Transfer
     32  
Person
     32  
Personal Property
     33  
Plan
     33  
Pre-lease Casualty
     33  
Pre-lease Force Majeure Delays
     33  
Pre-lease Force Majeure Event
     33  
Pre-lease Force Majeure Event Notice
     33  
Pre-lease Force Majeure Excess Costs
     33  
Pre-lease Force Majeure Losses
     33  
Prime Rate
     33  
Prior Closing Certificate and Agreement
     33  
Prior Common Definitions and Provisions Agreement
     34  
Prior Construction Agreement
     34  
Prior Ground Lease
     34  
Prior Lease
     34  
Prior Operative Documents
     34  
Prior Purchase Agreement
     34  
Prior Work
     34  
Projected Cost Overruns
     34  
Property
     34  
Purchase Agreement
     34  
Purchase Option
     34  

(iv)

 

TABLE OF CONTENTS
(Continued)
         
    Page  
Qualified Affiliate
     34  
Qualified Income Payments
     35  
Qualified Prepayments
     35  
Real Property
     36  
Reimbursable Construction-Period Costs
     36  
Remedial Work
     36  
Rent
     36  
Responsible Financial Officer
     36  
Rolling Four Quarters Period
     36  
Scope Change
     36  
Spread
     36  
Subsidiary
     38  
Supplemental Payment
     38  
Supplemental Payment Obligation
     38  
Tangible Personal Property
     38  
Target Completion Date
     38  
Term
     39  
Termination of NAI’s Work
     39  
Third Party Contract
     39  
Third Party Contract/Termination Fees
     39  
Transaction Expenses
     39  
Unfunded Benefit Liabilities
     39  
Upfront Fees
     39  
Work
     39  
Work/Suspension Event
     39  
Work/Suspension Notice
     39  
Work/Suspension Period
     39  
               
ARTICLE II — SHARED PROVISIONS   39  
1.    
Notices
     39  
2.    
Severability
     42  
3.    
No Merger
     42  
4.    
No Implied Waiver
     42  
5.    
Entire and Only Agreements
     43  
6.    
Binding Effect
     43  
7.    
Time is of the Essence
     43  
8.    
Governing Law
     43  

(v)

 

TABLE OF CONTENTS
(Continued)
               
          Page  
9.    
Paragraph Headings
     43  
10.    
Negotiated Documents
     43  
11.    
Terms Not Expressly Defined in an Operative Document
     43  
12.    
Other Terms and References
     43  
13.    
Execution in Counterparts
     44  
14.    
Not a Partnership, Etc
     45  
15.    
No Fiduciary Relationship Intended
     45  
16.    
Amendment and Restatement of Prior Agreement
     45  
Annexes
     
Annex 1
  ABR Period Election Form
 
    
Annex 2
  Fixed Rate Lock Notice Form
 
    
Annex 3
  LIBOR Period Election Form
 
    
Annex 4
  Minimum Insurance Requirements

(vi)

 

AMENDED AND RESTATED
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(BUILDING 7)
     This AMENDED AND RESTATED COMMON DEFINITIONS AND PROVISIONS AGREEMENT (BUILDING 7) (this “Agreement”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Agreement, NAI and BNPPLC are executing the Closing Certificate (as defined below), the Ground Lease (as defined below), the Lease (as defined below), the Construction Agreement (as defined below) and the Purchase Agreement (as defined below), all of which concern NAI or the Property (as defined below). Each of the Closing Certificate, the Ground Lease, the Lease, the Construction Agreement and the Purchase Agreement (together with this Agreement, the “Operative Documents”) are intended to create separate and independent obligations upon the parties thereto. However, NAI and BNPPLC intend that all of the Operative Documents share certain consistent definitions and other miscellaneous provisions. To that end, the parties are executing this Agreement 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 will have the respective indicated meanings as used herein and in the other Operative Documents:
     “97-10/Maximum Permitted Prepayment” has the meaning indicated in the Construction Agreement .
     “97-10/Meltdown Event” has the meaning indicated in the Construction Agreement.
     “97-10/Prepayment” has the meaning indicated in the Construction Agreement.
     “97-10/Project Costs“has the meaning indicated in the Construction Agreement.
     “97-10/Pronouncement” has the meaning indicated in the Construction Agreement.

 

 

     “ABR” means, for any day, a fluctuating rate of interest per annum (rounded upwards, if necessary, to the next 1/100th of 1%) equal to the higher of (a) the Prime Rate in effect on such day and (b) the Fed Funds Rate in effect one day prior to such day plus 1/4 of 1% per annum. For any period (including any Base Rent Period), “ABR” means the average of the ABR for each day during such period.
     “ABR Period Election” means an election to have the Effective Rate for any Period calculated by reference to the ABR, rather than by reference to LIBOR or a Fixed Rate. NAI may (subject to the limitations and qualifications set forth in this definition) make any Period after the first Construction Period subject to an ABR Period Election by a notice given to BNPPLC in the form attached as Annex 1 at least five Business Days prior to the commencement of such Period. After an ABR Period Election becomes effective, it will remain in effect for all subsequent Periods until the Fixed Rate Lock Date for any Fixed Rate Lock or a different election is made in accordance with the provisions of this definition and the definition of LIBOR Period Election. In no event will changes in any ABR Period Election or LIBOR Period Election become effective except upon the commencement of a new Period. (For purposes of the Operative Documents, an ABR Period Election for any Period will also be considered in effect on the Effective Date, Advance Date, Base Rent Commencement Date or Base Rent Date upon which such Period begins.)
     “Active Negligence” of any Person 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 (other than NAI) in a manner that proximately causes actual bodily injury or property damage for which NAI does not carry (and is not obligated by the Construction Agreement or the Lease to carry) insurance. “Active Negligence” will not include (1) any negligent failure of BNPPLC to act when the duty to act would not have been imposed but for BNPPLC’s status as owner of any interest in the Land, the Improvements or any other Property or as a party to the transactions described in the Lease or the other Operative Documents, (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 BNPPLC or participation or facilitation in any manner, directly or indirectly, of the transactions described in the Lease or other Operative Documents, or (3) the exercise in a lawful manner by BNPPLC (or any party lawfully claiming through or under BNPPLC) of any right or remedy provided in or under the Lease or the other Operative Documents.
     “Additional Rent” has the meaning indicated in subparagraph 3(F) of the Lease.
     “Administrative Fees” means the fees identified as such in subparagraph 3(E) of the Lease and subparagraph 3(A) of the Construction Agreement.
     “Advance Date” means, regardless of whether any Construction Advance is actually
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 2

 

 

made on such date, the first Business Day of every calendar month, beginning with the first Business Day in December, 2007 and continuing regularly thereafter to and including the Base Rent Commencement Date, which will be the last Advance 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.
     “After Tax Basis” has the meaning indicated in subparagraph 5(C)(1) of the Lease.
     “Applicable Laws” means any or all of the following, to the extent applicable to BNPPLC, NAI, the Property or the Operative Documents, after giving effect to the contractual choice of law provisions in the 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 to purchase BNPPLC’s interest in the Property and in any Escrowed Proceeds as provided in the Purchase Agreement.
     “Appurtenant Easements” has the meaning indicated in Exhibit A attached to the Ground Lease.
     “Arrangement Fee” has the meaning indicated in the Construction Agreement.
     “Attorneys’ Fees” means the expenses and reasonable fees of counsel to the parties incurring the same, including costs or expenses of in-house counsel (whether or not accounted for as general overhead or administrative expenses) and 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 will also include all such expenses and reasonable fees 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 Losses” has the meaning indicated in the Purchase Agreement.
     “Banking Rules Change” means either: (1) the introduction of or any change after the
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 3

 

 

Effective Date (other than any change by way of imposition or increase of reserve requirements included in the Eurodollar Rate Reserve Percentage) in any law or regulation applicable to BNPPLC, BNPPLC’s Parent or any 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 BNPPLC, BNPPLC’s Parent or any Participant with any new guideline or new request issued after the Effective Date from any central bank or other governmental authority (whether or not having the force of law).
     “Base Rent” means the rent payable by NAI pursuant to subparagraph 3(A) of the Lease.
     “Base Rent Commencement Date” means the first Business Day of the first calendar month after the Completion Date.
     “Base Rent Date” means a date upon which Base Rent must be paid under the Lease, all of which dates will be the first Business Day of a calendar month. The first Base Rent Date will be determined as follows:
     a) If an ABR Period Election or 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 will be the first Base Rent Date.
     b) If a LIBOR Period Election of three months or six months is in effect on the Base Rent Commencement Date, then the first Business Day of the third calendar month following the Base Rent Commencement Date will be the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date will 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 an ABR Period Election or a LIBOR Period Election of one month is in effect on a Base Rent Date, or if a Fixed Rate Lock commences or continues on a Base Rent Date, then the first Business Day of the first calendar month following such Base Rent Date will be the next following Base Rent Date.
     (2) If a LIBOR Period Election of three months or longer is in effect on a Base Rent Date, then the first Business Day of the third calendar month following such Base Rent Date will be the next following Base Rent Date.
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 4

 

 

Thus, for example, if the Base Rent Commencement Date falls on the first Business Day of September, 2008 and a LIBOR Period Election of three months commences on the Base Rent Commencement Date, then the first Base Rent Date will be the first Business Day of December, 2008.
     “Base Rent Period” means a period for which Base Rent must be paid under the Lease, each of which periods will correspond to the ABR Period Election or LIBOR Period Election for the period (except when a Fixed Rate Lock continues in effect). The first Base Rent Period will begin on and include the Base Rent Commencement Date, and each successive Base Rent Period will begin on and include the Base Rent Date upon which the preceding Base Rent Period ends. Each Base Rent Period, including the first Base Rent Period, will 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 an ABR Period Election or a LIBOR Period Election of one month or three months is in effect for a Base Rent Period, or if a Fixed Rate Lock commences or continues on the first day of the Base Rent Period, then such Base Rent Period will end on but not include the first Base Rent Date after the Base Rent Date upon which such period began.
     (2) If a LIBOR Period Election of six months is in effect for a Base Rent Period, then such Base Rent Period will end on but not include 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, 2009, 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 but not include the first Business Day in April, 2009, the third calendar month after January, 2009.
     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, 2009, 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, 2009.
     “BNPPLC” means BNPPLC Leasing Corporation, a Delaware corporation.
     “BNPPLC’s Parent” means BNP Paribas, a bank organized and existing under the laws of France, and any successors of such bank.
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 5

 

 

     “Breakage Costs” means any and all costs, losses or expenses incurred or sustained by BNPPLC’s Parent (as a Participant or otherwise) or any Participant, for which BNPPLC’s Parent or the Participant requests reimbursement from BNPPLC, because of:
     (1) the resulting liquidation or redeployment of deposits or other funds that were 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) the resulting liquidation or redeployment of deposits or other funds that were reserved to provide a Construction Advance requested by NAI, if and when the Construction Advance is not made as anticipated, either because NAI declined to accept the Construction Advance for any reason or because NAI failed to satisfy any of the conditions to such Construction Advance specified in the Construction Agreement; or
     (3) the resulting liquidation or redeployment of deposits or other funds that were used to make or maintain Funding Advances upon the acceleration of the end of any Construction Period or Base Rent Period because of an acceleration of the Designated Sale Date as described in clauses (2) or (3) of the definition thereof.
Breakage Costs will include, for example, losses on Funding Advances maintained by BNPPLC’s Parent or any Participant which are attributable to any decline in LIBOR as of the effective date of any application described in the clause (1) preceding, as compared to the LIBOR used to determine the Effective Rate then in effect. Each determination of Breakage Costs by BNPPLC’s Parent or by any Participant, as applicable, will be conclusive and binding upon NAI in the absence of clear and demonstrable error.
     “Break Even Price” has the meaning indicated in 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, 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” will mean any day described in clause (1).
     “Capital Adequacy Charges” means any additional amounts BNPPLC’s Parent or any Participant requests BNPPLC to pay as compensation for an increase in required capital as provided in subparagraph 5(B)(2) of the Lease.
     “Carrying Costs” has the meaning indicated in the Construction Agreement.
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 6

 

 

     “Closing Certificate” means the Amended and Restated Closing Certificate and Agreement (Building 7) dated as of the Effective Date executed by NAI and BNPPLC, as such Closing Certificate and Agreement may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
     “Closing Letter” means the letter agreement dated as of the Effective Date between BNPPLC and NAI confirming the amount of the Initial Advance and the Transactions Expenses paid from the Initial Advance.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Commitment Fees” has the meaning indicated in the Construction Agreement.
     “Common Definitions and Provisions Agreement” means this Agreement, which is incorporated by reference into each of the other Operative Documents, as this Agreement may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
     “Completion Date” has the meaning indicated in the Construction Agreement.
     “Completion Notice” has the meaning indicated in the Construction Agreement.
     “Consolidated Debt for Borrowed Money” has the meaning indicated in subparagraph 3(A) of the Closing Certificate.
     “Consolidated EBITDA” has the meaning indicated in subparagraph 3(A) of the Closing Certificate.
     “Constituent Documents” of any entity means the organizational documents pursuant to which such entity was created and is governed, such as the articles of incorporation and bylaws of a corporation, the articles of organization and regulations of a limited liability company or the partnership agreement of a partnership.
     “Construction Advances” has the meaning indicated in the Construction Agreement.
     “Construction Advance Request” has the meaning indicated in the Construction Agreement.
     “Construction Agreement” means the Amended and Restated Construction Agreement (Building 7) dated as of the Effective Date between BNPPLC and NAI, as such Construction Agreement may be extended, supplemented, amended, restated or otherwise modified from time
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 7

 

 

to time in accordance with its terms.
     “Construction Allowance” has the meaning indicated in the Construction 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 will begin on and include the day on which the preceding Construction Period ends and will end on but not include the next following Advance Date, until the last Construction Period, which will 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 purchases BNPPLC’s interest in the Property pursuant to the Purchase Agreement.
     “Construction Project” has the meaning indicated in the Construction Agreement.
     “Covered Construction Period Losses” has the meaning indicated in the Construction Agreement.
     “Default” means any event or circumstance which constitutes, or which would with the passage of time or the giving of notice or both (if not cured within any applicable cure period) constitute, an Event of Default.
     “Default Rate” means, a floating per annum rate equal to two percent (2%) above ABR, except that for purposes of computing interest accruing for any period that commences thirty or more days after the Designated Sale Date on any 97-10/Prepayment, Base Rent or Supplemental Payment that has become due, but remains to be paid to BNPPLC by NAI, the Default Rate will mean a floating per annum rate equal to five percent (5%) above ABR. Notwithstanding the foregoing, in no event will the “Default Rate” at any time exceed the maximum interest rate permitted by Applicable Laws.
     “Defective Work” has the meaning indicated in the Construction Agreement.
     “Designated Sale Date” means the earliest of:
     (1) the date upon which the Term is scheduled to expire as provided in Paragraph 1(A) of the Lease (i.e., the first Business Day of January, 2013); or
     (2) any Business Day designated as the “Designated Sale Date” for purposes of this Agreement and the other Operative Documents in an irrevocable, unconditional notice given by NAI to BNPPLC before any 97-10/Meltdown Event has occurred; provided, that if the Business Day so designated by NAI as the Designated Sale Date is
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 8

 

 

not at least twenty days after the date of such notice, the notice will be of no effect for purposes of this definition; and provided, further, that to be effective, any such notice must include an irrevocable exercise by NAI of the Purchase Option under subparagraph 2(A)(1) of the Purchase Agreement and thereby obligate NAI to tender payment of the full Break Even Price to BNPPLC on the Business Day so designated; or
     (3) any Business Day designated as the “Designated Sale Date” for purposes of this Agreement and the other Operative Documents in a notice given by BNPPLC to NAI:
• when an Event of Default has occurred and is continuing and after the Completion Date; or
• after a 97-10/Meltdown Event or after BNPPLC’s receipt of a Pre-lease Force Majeure Event Notice from NAI; or
• following any change in the zoning or other Applicable Laws after the Completion Date affecting the permitted use or development of the Property that, in BNPPLC’s judgment, materially reduces the value of the Property; or
• following any discovery of conditions or circumstances on or about the Property after the Completion Date, such as the presence of an endangered species, which are likely to substantially impede the use or development of the Property and thereby, in BNPPLC’s judgment, materially reduce the value of the Property;
provided, however, that if the Business Day so designated by BNPPLC as the Designated Sale Date is not at least thirty days after the date of such notice, the notice will be of no effect for purposes of this definition; or
     (4) the first Business Day after the commencement of any Event of Default described in clauses (G), (H) or (I) of the definition Event of Default herein that occurs because of any bankruptcy proceeding instituted by or against NAI, as debtor, under Title 11 of the United States Code; or
     (5) any date upon which the Lease terminates pursuant to subparagraph 1(B) or subparagraph 1(C) of the Lease.
     “Effective Date” means November 29, 2007.
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 9

 

 

     “Effective Rate” means, for each Period, a per annum rate determined as follows:
     (1) In the case of any Period subject to a LIBOR Period Election, the Effective Rate will equal the rate per annum determined by dividing (A) LIBOR for such Period, by (B) one hundred percent (100%) minus the Eurodollar Rate Reserve Percentage for such Period.
     (2) In the case of any Period that is not subject to a LIBOR Period Election, the Effective Rate will equal the ABR for such Period.
     (3) Notwithstanding the foregoing, for any Base Rent Period that begins on or after the Fixed Rate Lock Date applicable to a Fixed Rate Lock and that ends before or on the date such Fixed Rate Lock is terminated as provided in subparagraph 3(C) of the Lease, the Effective Rate will equal the Fixed Rate.
So long as any LIBOR Period Election remains in effect, as LIBOR or the Eurodollar Rate Reserve Percentage changes from Period to Period, the Effective Rate will be automatically increased or decreased, as the case may be, without prior notice to NAI. Also, during any period when no LIBOR Period Election or Fixed Rate Lock is in effect, as the ABR changes from Period to Period, the Effective Rate will be automatically increased or decreased, as the case may be, without prior notice to NAI.
If for any reason BNPPLC determines that it is impossible or unreasonably difficult to determine the Effective Rate with respect to a given Period in accordance with the foregoing, then the “Effective Rate” for that Period will equal any published index or per annum interest rate determined in good faith by BNPPLC 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 BNPPLC’s comparison of past eurodollar market rates to past yields on such Treasury obligations.
     “Eligible Financial Institution” means (a) a commercial bank organized under the laws of the United States, or any State thereof or the District of Columbia, and having total assets in excess of $5,000,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (“OECD”) or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having total assets in excess of $5,000,000,000; provided, that such bank is acting through a branch or agency located in the United States; (c) the central bank of any country which is a member of the OECD; and (d) a finance company, insurance company or other financial
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 10

 

 

institution (whether a corporation, partnership or other entity, but excluding any savings and loan association) which is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business, and having total assets in excess of $5,000,000,000; provided, however, that in no event will any bank or other Person qualify as an Eligible Financial Institution at any time when it has outstanding obligations with a credit rating less than investment grade from Standard & Poor’s, a division of the McGraw-Hill Companies, or Moody’s Investors Service, Inc. or another nationally recognized rating service.
     “Environmental Cutoff Date” means the later of the dates upon which (i) the Lease terminates or NAI’s interests in the Property are sold at foreclosure as provided in Exhibit B attached to the Lease, 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 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, 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.
     “Environmental Losses” means Losses suffered or incurred by BNPPLC 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 that occurs or is alleged to have occurred on or prior to the Environmental Cutoff Date; (ii) any violation of any applicable Environmental Laws relating to the Land or the Property or to the ownership, use, occupancy or operation thereof that occurs or is alleged to have occurred in whole or in part on or prior to the Environmental Cutoff Date; (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 in whole or in part 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 Lease, any actual or alleged Hazardous Substance Activity or violation of Environmental Laws relating to the Land or 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
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 11

 

 

Date.
     “Environmental Report” means, collectively, the following reports, which were provided by NAI to BNPPLC prior to the Effective Date:
     (1) Phase I and Screen Level Phase II Environmental Assessment for 495 Java Drive, Sunnyvale, California dated October 1, 1997 provided by McLaren Hart Environmental Engineering Corporation;
     (2) Phase I and Screen Level Phase II Environmental Assessment for 475 Java Drive, Sunnyvale, California dated March 24, 1998 provided by McLaren Hart Environmental Engineering Corporation;
     (3) Phase I Environmental Site Assessment for 1275 Crossman Avenue, Sunnyvale, California dated June 29, 1998 provided by Dames & Moore Group; and
     (4) Phase I Environmental Site Assessment for 1330 & 1350 Geneva Drive and 1345 & 1347 Crossman Avenue, Sunnyvale, California dated November 1, 1999 provided 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.
     “ERISA Termination Event” means (a) the occurrence with respect to any Plan of (1) a reportable event described in Sections 4043(b)(5) or (6) of ERISA or (2) any other reportable event described in Section 4043(b) of ERISA other than a reportable event not subject to the provision for thirty-day notice to the Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation under Section 4043(a) of ERISA, or (b) the withdrawal of NAI or any ERISA Affiliate from a Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of intent to terminate any Plan or the treatment of any Plan amendment as a termination under Section 4041 of ERISA, or (d) the institution of proceedings to terminate any Plan by the Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.
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     “Escrowed Proceeds” means, subject to the exclusions specified in the next sentence, any money that is received by BNPPLC 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 (including any indirect condemnation by means of a taking of any of the Land or appurtenant easements), (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 will be deducted all expenses and costs of every type, kind and nature (including Attorneys’ Fees) incurred by BNPPLC to collect such proceeds. Notwithstanding the foregoing, “Escrowed Proceeds” will not include (A) any payment to BNPPLC by a Participant or an Affiliate of BNPPLC that is made to compensate BNPPLC for the Participant’s or Affiliate’s share of any Losses BNPPLC 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, Fixed Rate Settlement Amount 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, BNPPLC returns or pays to a third party because of BNPPLC’s good faith belief that such return or payment is required by law, (D) any money or proceeds paid by BNPPLC to NAI or offset against any amount owed by NAI, or (E) any money or proceeds used by BNPPLC in accordance with the 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 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, BNPPLC will keep the same deposited in one or more interest bearing accounts, and all interest earned on such account will 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, conduct of such Person that constitutes a breach by it of the express provisions of the Operative Documents or the Participation Agreement, as applicable, and that continues beyond any period for cure provided therein, 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) conduct of such Person or its Affiliates that has been determined to constitute willful 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
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determination.
In no event, however, will Established Misconduct include actions of any Person undertaken in good faith to mitigate Losses that such Person may suffer because of a breach or repudiation by NAI of any of the Operative Documents. Further, negligence other than Active Negligence will not in any event constitute Established Misconduct. For purposes of this definition, “conduct of a Person” will consist of (1) the conduct of any employee of that Person to the extent (and only to the extent) that the employee is acting within the scope of his employment by that Person, 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 (a) acting within the scope of the authority granted to him by such Person, and (b) neither NAI nor acting with the consent or approval of or at the request of or under the direction of NAI or NAI’s Affiliates, employees or agents. Established Misconduct of one Interested Party will not be attributed to a second Interested Party unless the second Interested Party is an Affiliate of the first, and it is understood that BNPPLC has not been authorized, and nothing in the Participation Agreement will be construed as authorizing BNPPLC, to act as an “agent” for any Participant as the term is used in this definition.
     “Eurocurrency Liabilities” has the meaning indicated 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 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 BNPPLC’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” means any of the following:
     (A) NAI fails to pay when due any installment of Base Rent or Administrative Fees required by the Lease, and such failure continues for three Business Days after NAI is notified in writing thereof.
     (B) NAI fails to pay the full amount of any 97-10/Prepayment when due as provided in the Construction Agreement or fails to pay the full amount of any Supplemental Payment as provided in the Purchase Agreement on the Designated Sale Date.
     (C) NAI fails to pay when first due any amount required by the Operative Documents
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(other than Base Rent or Administrative Fees required as provided in the Lease, any 97-10/Prepayment required as provided in the Construction Agreement or any Supplemental Payment required as provided in the Purchase Agreement) and such failure continues for ten Business Days after NAI is notified thereof.
     (D) NAI fails to cause any representation or warranty of NAI contained in any of the Operative Documents 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 definition), or NAI fails to comply with any provision of the Operative Documents (other than as described in the other clauses of this definition), and in either case does not cure such failure prior to the earlier of (A) thirty days after notice thereof is given to NAI or (B) the date any writ or order is issued for the levy or sale of any property owned by BNPPLC (including the Property) or any criminal prosecution is instituted or overtly threatened against BNPPLC 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 will be extended for a further period (not to exceed an additional one hundred twenty days) as is 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 promptly commences to cure such failure and thereafter continuously prosecutes 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 to or beyond the Designated Sale Date.
     (E) NAI abandons any material part of the Property.
     (F) NAI or any Subsidiary of NAI fails to pay any principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event occurs or condition exists under any agreement or instrument relating to any such Indebtedness and continues after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate the maturity of such Indebtedness; or any such Indebtedness is declared by the creditor to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness is required to be made, in each case prior to the stated maturity thereof.
     (G) NAI or any Subsidiary of NAI is generally not paying its debts as such debts become due, or admits in writing its inability to pay its debts generally, or makes a general assignment for the benefit of creditors; or any proceeding is instituted by or against NAI or any
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Subsidiary of NAI seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding remains undismissed or unstayed for a period of sixty consecutive days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) occurs; or NAI or any Subsidiary of NAI takes any corporate action to authorize any of the actions set forth above in this clause.
     (H) Any order, judgment or decree is entered in any proceedings against NAI or any of NAI’s Subsidiaries decreeing its dissolution and such order, judgment or decree remains unstayed and in effect for more than sixty days.
     (I) Any order, judgment or decree is entered in any proceedings against NAI or any of NAI’s Subsidiaries decreeing a divestiture of any of assets that represent a substantial part, or the divestiture of the stock of any of NAI’s Subsidiaries whose assets represent a substantial part, of the total assets of NAI and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) or which requires the divestiture of assets, or stock of any of NAI’s Subsidiaries, which have contributed a substantial part of the net income of NAI and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) for any of the three fiscal years then most recently ended, and such order, judgment or decree remains unstayed and in effect for more than sixty days.
     (J) A judgment or order for the payment of money in an amount (not covered by insurance) which exceeds $25,000,000 is rendered against NAI or any of NAI’s Subsidiaries and either (i) enforcement proceedings is commenced by any creditor upon such judgment, or (ii) within thirty days after the entry thereof, such judgment or order is not discharged or execution thereof stayed pending appeal, or within thirty days after the expiration of any such stay, such judgment is not discharged.
     (K) Any ERISA Termination Event occurs that BNPPLC determines in good faith would constitute grounds for a termination of any Plan or for the appointment by the appropriate United States district court of a trustee to administer any Plan and such ERISA Termination Event is continuing thirty days after notice to such effect is given to NAI by BNPPLC, or any Plan is terminated, or a trustee is appointed by a United States district court to administer any Plan, or the Pension Benefit Guaranty Corporation institutes proceedings to terminate any Plan or to appoint a trustee to administer any Plan.
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     (L) NAI enters into any transaction which would cause any of the Operative Documents or any other document executed in connection herewith (or any exercise of BNPPLC’s rights hereunder or thereunder) to constitute a non-exempt prohibited transaction under ERISA.
     (M) NAI fails to comply with the financial covenants set forth in subparagraph 3(C) of the Closing Certificate.
     (N) Any Change in Control (as defined in subparagraph 3(A) of the Closing Certificate) shall occur.
     “Excluded Taxes” means:
     (A) taxes upon or measured by net income to the extent such taxes are payable in respect of Base Rent or other Qualified Income Payments;
     (B) transfer or change of ownership taxes assessed because of BNPPLC’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 taxes assessed because of any Permitted Transfer under clauses (1), (4) or (5) of the definition of Permitted Transfer in this Agreement);
     (C) federal, state and local income taxes upon any amounts paid as reimbursement for or to satisfy Losses incurred by BNPPLC or any Participant to the extent, but only to the extent, such taxes are offset by a corresponding reduction of BNPPLC’s or the applicable Participant’s income taxes which are not otherwise subject to reimbursement or indemnification by NAI because of BNPPLC’s or such Participant’s deduction of the reimbursed Losses from its taxable income or because of any tax credits attributable thereto;
     (D) income taxes that are (i) payable by BNPPLC in respect of any Qualified Prepayment or any net sales proceeds paid to BNPPLC upon a sale of the Property because of Forced Recharacterization as described in subparagraph 4(C)(3) of the Lease, and (ii) offset in the same taxable period by a reduction in the taxes of BNPPLC which are not otherwise subject to reimbursement or indemnification by NAI resulting from depreciation deductions or other tax benefits available to BNPPLC only because of the refusal of the tax authorities to treat the Lease and other Operative Documents as a financing arrangement;
     (E) any withholding taxes that subparagraph 13(A) of the Lease excuses NAI from paying or requires BNPPLC to pay; and
     (F) any franchise taxes payable by BNPPLC, but only to the extent that such franchise taxes would be payable by BNPPLC even if the transactions contemplated by the Lease and the
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other Operative Documents were characterized for tax purposes as a mere financing arrangement and not as a lease or sale.
It is understood that if tax rates used to calculate income taxes which constitute Excluded Taxes under clause (1) of this definition are increased, the resulting increase will not be subject to reimbursement or indemnification by NAI. If, however, a change in Applicable Laws after the Effective Date, as applied to the transactions contemplated by the Operative Documents on a stand-alone basis, results in an increase in such income 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 (1) of this definition), then for purposes of the Operative Documents, the term “Excluded Taxes” will not include the actual increase in such taxes attributable to the change. Accordingly, BNPPLC or any Participant may recover any such net increase from NAI pursuant to subparagraph 5(B) of the Lease.
It is also understood that nothing in this definition of “Excluded Taxes” will prevent any Original Indemnity Payment (as defined in subparagraph 5(C)(1) of the Lease) from being paid on an After Tax Basis.
     “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 on 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 each day during such period on such transactions received by BNPPLC’s Parent from three Federal funds brokers of recognized standing selected by BNPPLC’s Parent.
     “Fixed Rate” means the fixed rate of interest established by BNPPLC’s execution of an Interest Rate Swap as described in subparagraph 3(B)(4) of the Lease.
     “Fixed Rate Lock” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease.
     “Fixed Rate Lock Date” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease.
     “Fixed Rate Lock Termination” means any termination in whole or in part of the Fixed Rate Swap as described in the first and second sentences of subparagraph 3(C) of the Lease.
     “Fixed Rate Lock Termination Date” means the date upon which a Fixed Rate Lock Termination is effective. In the case of a Fixed Rate Lock Termination that results from
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BNPPLC’s receipt of a Qualified Prepayment, the date such Qualified Prepayment is applied to reduce the Lease Balance will constitute the Fixed Rate Lock Termination Date. In the case of any Fixed Rate Lock Termination resulting from an acceleration of the Designated Sale Date as provided in clauses (2) or (3) the definition thereof in this Agreement, the Fixed Rate Lock Termination Date will constitute the Designated Sale Date.
     “Fixed Rate Lock Notice” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease, which includes a reference to the form attached as Annex 2.
     “Fixed Rate Loss” means an amount reasonably determined in good faith by the Floating Rate Payor to be its total losses and costs in connection with any Fixed Rate Lock Termination. Fixed Rate Loss will include any loss of bargain, cost of funding or, at the election of the Floating Rate Payor but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position. The Floating Rate Payor will be expected to determine the Fixed Rate Loss as of the date of the relevant Fixed Rate Lock Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. The Floating Rate Payor may (but need not) determine its Fixed Rate Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets.
     “Fixed Rate Settlement Amount” means, with respect to any Fixed Rate Lock Termination:
(a) the Market Quotation for such Fixed Rate Lock Termination, if a Market Quotation can be determined and if (in the reasonable belief of the Floating Rate Payor as the party making the determination) determining a Market Quotation would produce a commercially reasonable result; or
(b) the Fixed Rate Loss, if any, for such Fixed Rate Lock Termination if a Market Quotation cannot be determined or would not (in the reasonable belief of the Floating Rate Payor as the party making the determination) produce a commercially reasonable result.
     “Fixed Rate Swap” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease.
     “Floating Rate Payor” means BNP Paribas or any successor or assign of BNP Paribas under an Interest Rate Swap.
     “FOCB Notice” has the meaning indicated in the Construction Agreement.
     “Force Majeure Event” has the meaning indicated in the Construction Agreement.
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     “Fully Subordinated or Removable” means, with respect to any Lien encumbering the Land or any appurtenant easement, that such Lien is, either by operation of Applicable Laws or by the express terms of documents which grant or create such Lien:
     (1) fully subject and subordinate to the Ground Lease and to all rights and property interests of BNPPLC under the Operative Documents; or
     (2) subject to release and removal by BNPPLC or any subsequent owner of the Property at any time after a Designated Sale Date without any requirement that BNPPLC or the subsequent owner compensate the holder of such Lien or make any other significant payment in connection with such release and removal;
provided, however, a Lien will not qualify as Fully Subordinated or Removable under clause (1) preceding if a purchase of the Land by BNPPLC pursuant to the purchase option set forth in the Ground Lease (as such option may be modified from time to time by agreement of lessor and lessee under the Ground Lease) will not, by operation of law or the express agreement of the holder of the Lien, effectively cut off and terminate such Lien insofar as it applies to or affects the Improvements and the Land purchased by BNPPLC; and, provided further, a Lien will not qualify as Fully Subordinated or Removable under clause (2) preceding if it provides or includes a power of sale or other right or remedy in favor of the holder of such Lien which could result in a foreclosure sale or other forfeiture of BNPPLC’s rights or interests under the Ground Lease or in the Property.
     “Funded Construction Allowance” has the meaning indicated in the Construction Agreement.
     “Funding Advances” means all advances made by BNPPLC’s Parent or any Participant to or on behalf of BNPPLC to allow BNPPLC to make the Initial Advance and to provide the Construction Allowance or maintain its investment in the Property.
     “Future Work” has the meaning indicated in the Construction 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 2(A)(4) of the Closing Certificate (except for changes with which NAI’s independent public accountants concur).
     “Governmental Authority” means (1) the United States, the state, the county, the municipality, and any other political subdivision in which the Land is located, and (2) any other nation, state or other political subdivision or agency or instrumentality thereof having or asserting jurisdiction over NAI or the Property.
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     “Ground Lease” means the Amended and Restated Ground Lease (Building 7) dated as of the Effective Date, under which the Land is leased from NAI to BNPPLC, as such Ground Lease may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
     “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 (iv)  any other material that, because of its quantity, concentration or physical or chemical characteristics, is the subject of regulation under Applicable Law or 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 Land or 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 Land or the Property to any remedial obligations under, any Environmental Laws, assuming disclosure to the applicable Governmental Authorities of all relevant facts, conditions and circumstances pertaining to the Property.
     “Improvements” means any and all (1) buildings and other real property improvements previously 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
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or other real property improvements.
     “Increased Commitment” has the meaning indicated in the Construction Agreement.
     “Increased Funding Commitment” has the meaning indicated in the Construction Agreement.
     “Increased Time Commitment” has the meaning indicated in the Construction Agreement.
     “Indebtedness” of any Person means (without duplication of any item) Liabilities of such Person in any of the following categories:
     (A) Liabilities for borrowed money;
     (B) Liabilities constituting an obligation to pay the deferred purchase price of property or services;
     (C) Liabilities evidenced by a bond, debenture, note or similar instrument;
     (D) Liabilities which (1) would under GAAP be shown on such Person’s balance sheet as a liability, and (2) are payable more than one year from the date of creation thereof (other than reserves for taxes and reserves for contingent obligations);
     (E) Liabilities constituting principal under leases capitalized in accordance with GAAP;
     (F) Liabilities arising under conditional sales or other title retention agreements;
     (G) Liabilities owing under direct or indirect guaranties of Liabilities of any other Person or otherwise constituting obligations to purchase or acquire or to otherwise protect or insure a creditor against loss in respect of Liabilities of any other Person (such as obligations under working capital maintenance agreements, agreements to keep-well, or agreements to purchase Liabilities, assets, goods, securities or services), but excluding endorsements in the ordinary course of business of negotiable instruments in the course of collection;
     (H) Liabilities (for example, repurchase agreements, mandatorily redeemable preferred stock and sale/leaseback agreements) consisting of an obligation to purchase or redeem securities or other property, if such Liabilities arises out of or in connection with
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the sale or issuance of the same or similar securities or property;
     (I) Liabilities with respect to letters of credit or applications or reimbursement agreements therefor;
     (J) Liabilities with respect to payments received in consideration of oil, gas, or other commodities yet to be acquired or produced at the time of payment (including obligations under “take-or-pay” contracts to deliver gas in return for payments already received and the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment);
     (K) Liabilities with respect to other obligations to deliver goods or services in consideration of advance payments therefor; or
     (L) Liabilities under any “synthetic” or other lease of property or related documents (including a separate purchase agreement) which obligate such Person or any of its Affiliates (whether by purchasing or causing another Person to purchase any interest in the leased property or otherwise) to guarantee a minimum residual value of the leased property to the lessor.
For purposes of this definition, the amount of Liabilities described in the last clause of the preceding sentence with respect to any lease classified according to GAAP as an “operating lease,” will 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; except that such amount will not exceed the price, as of the date a determination of Indebtedness 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 will be excused from paying rentals or other minimum lease payments that would otherwise accrue after the purchase.
Notwithstanding the foregoing, the “Indebtedness” of any Person will not include Liabilities that were incurred by such Person on ordinary trade terms to vendors, suppliers, or other Persons providing goods and services for use by such Person in the ordinary course of its business, unless and until such Liabilities are outstanding more than 90 days past the original invoice or billing date therefor.
     “Initial Advance” has the meaning indicated in the Construction Agreement.
     “Initial Lease Balance” means $41,627,920.39. Such amount equals the Lease Balance outstanding under and as defined in the Prior Operative Documents immediately before the
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execution of the Operative Documents, which amend and restate the Prior Operative Documents.
     “Interested Party” means each of following Persons and their Affiliates: (1) BNPPLC and its successors and permitted assigns as to the Property or any part thereof or any interest therein, (2) BNPPLC’s Parent, and (3) the Participants and their successors and permitted assigns under the Participation Agreement; provided, however, none of the following Persons will constitute an Interested Party: (a) any Person to whom BNPPLC 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 a transfer by such a Person, (b) NAI and its Affiliates, (c) any Person claiming through or under a conveyance made by NAI after any purchase by NAI of BNPPLC’s interest in the Property pursuant to the Purchase Agreement, or (d) any Applicable Purchaser designated by NAI under the Purchase Agreement who purchases the Property pursuant to a sale arranged by NAI and any Person that cannot lawfully claim an interest in the Property except through or under a conveyance from such an Applicable Purchaser.
     “Interest Rate Swap” means an interest rate exchange transaction, entered into between BNPPLC, as the fixed rate payor, and BNP Paribas, as the swap counterparty and floating rate payor, under the then most recent form of Master Agreement published by the International Swaps and Derivatives Association, Inc., as supplemented by the definitions and such schedules, annexes, exhibits and supplements as are agreed upon by the parties thereto, pursuant to which BNP Paribas agrees to pay monthly to BNPPLC a floating rate of interest equal to LIBOR and BNPPLC agrees to pay monthly to BNP Paribas a fixed rate of interest for a term that commences on the Fixed Rate Lock Date and ends on the last day of the scheduled Term of the Lease. The notional principal amount used for any such interest rate exchange transaction will equal the Lease Balance calculated as of the date such transaction is entered into.
     “Land” means the land described in Exhibit A attached to the Closing Certificate, the Lease, the Ground Lease and the Purchase Agreement.
     “Lease” means the Amended and Restated Lease Agreement (Building 7) dated as of the Effective Date between BNPPLC, as landlord, and NAI, as tenant, pursuant to which NAI has agreed to lease BNPPLC’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.
     “Lease Balance” as of any date means the amount equal to the sum of the Initial Lease Balance, plus the Initial Advance, plus the sum of all Construction Advances, Carrying Costs and other amounts added to the Outstanding Construction Allowance as provided in the Construction Agreement on or prior to such date, minus all funds actually received by BNPPLC and applied as Qualified Prepayments on or prior to such date. Under no circumstances will any payment of
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Base Rent or other Qualified Income Payments reduce the Lease Balance.
     “Lease Termination Damages” has the meaning indicated in subparagraph 15(A)(3)(c) of the Lease.
     “Liabilities” means, as to any Person, all indebtedness, liabilities and obligations of such Person, whether matured or unmatured, liquidated or unliquidated, primary or secondary, direct or indirect, absolute, fixed or contingent, and whether or not required to be considered pursuant to GAAP.
     “LIBOR” means, for purposes of determining the Effective Rate for any Period, the per annum rate equal to:
     (a) the offered rate for deposits in U.S. dollars as of approximately 11:00 a.m., London time, on the day that is two London Banking Days (hereinafter defined) prior to the day upon which such Period begins (the “Reset Date”), as reported:
     (1) on Reuters Screen LIBOR01 page (or any replacement page or pages on which London interbank rates of major banks for U.S. dollars are displayed) by the Reuters service; or
     (2) on Moneyline Telerate Page 3750, British Bankers Association Interest Settlement Rates, or another news page selected by BNPPLC’s Parent if the Reuters Screen LIBOR01 page is removed from the Reuters system or changed such that, in the opinion of BNPPLC’s Parent, the interest rates shown on it no longer represent the same kind of interest rates as when the Operative Documents were executed; or
     (b) if such offered rate is for any reason unavailable, the rate per annum determined by BNPPLC’s Parent on the basis of rates offered for deposits in U.S. dollars by four major banks in the London interbank market selected by BNPPLC’s Parent (“Reference Banks”) at approximately 11:00 a.m., London time, on the day that is two London Banking Days preceding the Reset Date to prime banks in the London interbank market for a period corresponding as nearly as possible to the applicable Period. ( If this clause (b) applies, BNPPLC’s Parent will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two quotations are provided, “LIBOR” will be the arithmetic mean of the quotations. If, however, fewer than two quotations are provided, “LIBOR” will be the arithmetic mean of the rates quoted by major banks in New York selected by BNPPLC’s Parent, at approximately 11:00 a.m., New York time, on the Reset Date for loans in U.S. dollars to leading U.S. banks for a period corresponding as nearly as possible to the applicable Period.)
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As used in this definition, “London Banking Day” means any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London, England.
     “LIBOR Period Election” means an election to have the Effective Rate for any Period calculated by reference to LIBOR, rather than by reference to the ABR or the Fixed Rate, and to have such period extend for approximately one month, three months or six months. The first Construction Period will be subject to a LIBOR Period Election of one month; and, subject to the limitations and qualifications set forth in this definition, NAI may make any subsequent Period subject to a LIBOR Period Election by a notice given to BNPPLC in the form attached as Annex 3 at least five Business Days prior to the commencement of such Period. After a LIBOR Period Election becomes effective, it will remain in effect for all subsequent Periods until a different election is made in accordance with the provisions of this definition and the definition of ABR Period Election above. (For purposes of the Construction Agreement and the Lease a LIBOR Period Election for any Period will also be considered the LIBOR Period Election in effect on the Effective Date, Advance Date, Base Rent Commencement Date or Base Rent Date upon which such Period begins.) Notwithstanding the foregoing:
  •   No LIBOR Period Election for a period of more than one month will be effective prior to the Completion Date.
 
  •   No LIBOR Period Election will be effective that would cause a Base Rent Period to extend beyond the end of the scheduled Term or beyond a Fixed Rate Lock Date.
 
  •   No LIBOR Period Election will commence or continue during any period that begins on or after the Fixed Rate Lock Date applicable to a Fixed Rate Lock and that ends before or on the date such Fixed Rate Lock is terminated as provided in subparagraph 3(C) of the Lease.
 
  •   Changes in any ABR Period Election or LIBOR Period Election will become effective only upon the commencement of a new Period.
 
  •   In the event BNPPLC determines that it would be unlawful (or any central bank or governmental authority asserts that it would be unlawful) for BNPPLC, BNPPLC’s Parent or any Participant to provide or maintain Funding Advances during a Period if the Carrying Costs or Base Rent accrued during such Period at a rate based upon LIBOR, NAI will be deemed to have made such Period subject to an ABR Period Election, not a LIBOR Period Election.
 
  •   If for any reason (including BNPPLC’s receipt of a notice from NAI purporting to
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      make a LIBOR Period Election that is contrary to the foregoing provisions), BNPPLC is unable to determine with certainty whether a particular Period is subject to a specific LIBOR Period Election of one month, three months or six months, or if any Event of Default has occurred and is continuing on the third Business Day preceding the commencement of a particular Period, NAI will be deemed to have made an ABR Period Election for that particular Period.
     “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).
     “Liens Removable by BNPPLC” means, and is limited to, Liens encumbering the Property that are asserted (1) other than as contemplated in the Operative Documents, by BNPPLC itself or by BNPPLC’s Parent, (2) by third parties lawfully claiming through or under BNPPLC (which for purposes of the Operative Documents will include any judgment liens established against the Property because of a judgment rendered against BNPPLC and will also include any liens established against the Property to secure past due Excluded Taxes), or (3) by third parties claiming under a deed or other instrument duly executed by BNPPLC; provided, however, Liens Removable by BNPPLC will not include (A) any Permitted Encumbrances (regardless of whether claimed through or under BNPPLC), (B) the Operative Documents or any other document executed by BNPPLC with the knowledge of (and without objection by) NAI or NAI’s counsel contemporaneously with the execution and delivery of the Operative Documents, (C) Liens which are neither lawfully claimed through or under BNPPLC (as described above) nor claimed under a deed or other instrument duly executed by BNPPLC, (D) Liens claimed by NAI or claimed through or under a conveyance made by NAI other than NAI’s conveyance of the leasehold estate to BNPPLC under the Ground Lease, (E) Liens arising because of BNPPLC’s compliance with Applicable Law, the Operative Documents, Permitted Encumbrances 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) BNPPLC’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 any Applicable Purchaser does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
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     “Local Impositions” means all sales, excise, ad valorem, gross receipts, business, transfer, stamp, occupancy, rental and other taxes (other than taxes on net income and corporate franchise taxes), levies, fees, charges, surcharges, assessments, interest, additions to tax, or penalties imposed by the State of California or any agency or political subdivision thereof upon BNPPLC or any owner of the Property or any part of or interest in the Property because of (i) the Lease or other Operative Documents, (ii) the status of record title to the Property, (iii) the ownership, leasing, occupancy, sale or operation of the Property or any part thereof or interest therein, or (iv) the Permitted Encumbrances; excluding, however, Excluded Taxes. “Local Impositions” will include any real estate taxes imposed because of a change of use or ownership of the Property resulting from, or occurring on or prior to the date of, any sale by BNPPLC pursuant to the Purchase Agreement.
     “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 of settlement and other 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, known and unknown.
     “Market Quotation” means, with respect to any Fixed Rate Lock Termination, an amount determined by the Floating Rate Payor on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid by the Floating Rate Payor in consideration of an agreement between it and the quoting Reference Market-maker to enter into a transaction (the “Replacement Transaction”) that would have the effect of preserving for the Floating Rate Payor the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) that would, but for the occurrence of the relevant Fixed Rate Lock Termination, have been required under the Fixed Rate Swap. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The Floating Rate Payor (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on the effective date of or as soon as reasonably practicable after the relevant Fixed Rate Lock Termination. The date and time as of which those quotations are to be obtained will be selected in good faith by the Floating Rate Payor. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations will be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Fixed Rate Lock Termination cannot be determined.
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     “Material Adverse Effect” means a material adverse effect on (a) the assets, operations, financial condition or businesses of NAI, (b) the ability of NAI to perform any of its obligations under the Operative Documents, (c) the rights of or benefits available to BNPPLC under the Operative Documents, (d) the value, utility or useful life of the Property or (e) the priority, perfection or status of any of BNPPLC’s interests in the Property or in any of the Operative Documents.
     “Maximum Construction Allowance” has the meaning indicated in the Construction Agreement.
     “Maximum Remarketing Obligation” has the meaning indicated in the Purchase Agreement.
     “Minimum Insurance Requirements” means the insurance requirements outlined in Annex 4 attached to this 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 Delaware corporation.
     “NAI’s Estimate of Force Majeure Excess Costs” has the meaning indicated in the Construction Agreement.
     “NAI’s Estimate of Force Majeure Delays” has the meaning indicated in the Construction Agreement.
     “NAI’s Initial Remarketing Right” has the meaning indicated in the Purchase Agreement.
     “Notice of NAI’s Intent to Terminate” has the meaning indicated in the Construction Agreement.
     “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” has the meaning indicated in the Construction Agreement.
     “Notice of Termination by NAI” has the meaning indicated in the Construction Agreement.
     “Operative Documents” means the Closing Letter, the Closing Certificate, the Ground
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Lease, the Lease, the Construction Agreement, the Purchase Agreement and this Common Definitions and Provisions Agreement.
     “Outstanding Construction Allowance” has the meaning indicated in the Construction Agreement.
     “Owner’s Election to Continue Construction” has the meaning indicated in the Construction Agreement.
     “Participant” means any Person other than BNPPLC that from time to time, by executing the Participation Agreement or supplements as contemplated therein, becomes a party to the Participation Agreement and thereby agrees to participate in all or some of the risks and rewards to BNPPLC of the Operative Documents; provided, however, no such Person will qualify as a Participant for purposes of the Operative Documents unless (i) such Person is approved to be a Participant by NAI or (ii) such Person becomes a Participant when an Event of Default has occurred and is continuing. As of the Effective Date, NAI has approved only BANK OF AMERICA, N.A.; GOLDMAN SACHS CREDIT PARTNERS L.P.; JPMORGAN CHASE BANK, NATIONAL ASSOCIATION; KEYBANK NATIONAL ASSOCIATION; MORGAN STANLEY BANK; SUMITOMO MITSUI BANKING CORPORATION; and WELLS FARGO BANK, N.A. (all of which are original parties to the Participation Agreement). BNPPLC may, however, from time to time request NAI’s approval for other prospective Participants. NAI will not unreasonably withhold or delay any approval required for any prospective Participant which is an Eligible Financial Institution. However, as to any prospective Participant that is not already a party to the Participation Agreement or an Eligible Financial Institution, NAI may withhold such approval in its sole discretion. Further, it is understood that if giving such approval will increase NAI’s liability for withholding taxes or other taxes not constituting Excluded Taxes under tax laws or regulations then in effect, NAI may reasonably refuse to give such approval.
     “Participation Agreement” means the Participation Agreement (Building 7) dated as of the Effective Date, pursuant to which BANK OF AMERICA, N.A.; GOLDMAN SACHS CREDIT PARTNERS L.P.; JPMORGAN CHASE BANK, NATIONAL ASSOCIATION; KEYBANK NATIONAL ASSOCIATION; MORGAN STANLEY BANK; SUMITOMO MITSUI BANKING CORPORATION; and WELLS FARGO BANK, N.A. are agreeing with BNPPLC to participate in the risks and rewards to BNPPLC of the 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 will expressly make NAI a third party beneficiary of each Participant’s obligations thereunder to make advances to BNPPLC in connection with Construction Advances under the Construction Agreement, NAI’s consent will be required to any amendment of the Participation Agreement that limits or excuses such obligations.
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     “Period” means a Construction Period or Base Rent Period.
     “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 BNPPLC at the request of or with the consent of NAI, (iii) any Liens securing the payment of Local Impositions which are not delinquent or claimed to be delinquent or which are being contested in accordance with subparagraph 5(A) of the Lease, (iv) statutory liens, if any, in the nature of contractors’, mechanics’ or materialmen’s liens for amounts not past due or claimed to be past due for more than thirty days or which are being contested in accordance with subparagraph 11(B) of the Lease, (v) Liens which are Fully Subordinated or Removable, (vi) any documents or maps which NAI executes and records, with the consent of BNPPLC as provided in subparagraph 4(C) of the Closing Certificate, and (vii) other easements (if any) that (A) have previously been executed by NAI (as owner of the Land) in favor of the City of Sunnyvale or a local utility provider for the use or installation of streets, sidewalks or utilities, (B) do not extend under, over or through any building or other structure constructed or be constructed on the Land, (C) do not and will not have any significant adverse impact on the value of the Property, and (D) do and will not preclude or significantly impede any development or construction contemplated in or permitted by the Operative Documents.
     “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 will not:
     (1) exceed that reasonably required for the construction of the Construction Project in accordance with the Construction Agreement or for the use and operation of the Property for the purposes expressly permitted under subparagraph 2(A) of the 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.
Further, notwithstanding anything to the contrary herein contained, Permitted Hazardous Substance Use will not include any use of the Property (including as a landfill, incinerator or other waste disposal facility) in a manner that requires a treatment, storage or disposal permit
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under 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..
     “Permitted Hazardous Substances” means Hazardous Substances used and reasonably required for the construction of the Construction Project or for the use and operation of the Property by NAI and its permitted subtenants and assigns for the purposes expressly permitted by subparagraph 2(A) of the 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 will include usual and customary office and janitorial products.
     “Permitted Transfer” means any one or more of the following:
     (1) the creation or conveyance by BNPPLC of rights and interests in favor of Participants pursuant to the Participation Agreement;
     (2) any lien, security interest or assignment covering the Property or the Rents which is granted by BNPPLC in favor of Participants or an agent appointed for them to secure their rights under the Participation Agreement, and any subsequent assignment or conveyance made to accomplish a foreclosure of such lien or security interest, provided that such lien, security interest or assignment and any such subsequent assignment or conveyance are all made expressly subject to the rights of NAI under the Operative Documents;
     (3) other than as described in the preceding clauses, any conveyance to BNPPLC’s Parent or to any Qualified Affiliate of BNPPLC of all or any interest in or rights with respect to the Property or any portion thereof, provided that NAI and Participants must be notified before any such conveyance to BNPPLC’s Parent or a Qualified Affiliate which will be recorded in the real property records of the county in which the Land is situated;
     (4) any assignment or conveyance by BNPPLC requested by NAI or required by any Permitted Encumbrance, by the Purchase Agreement or by Applicable Laws; or
     (5) any assignment or conveyance after a Designated Sale Date on which NAI does not purchase or cause an Applicable Purchaser to purchase BNPPLC’s interest in the Property and, if applicable, after the expiration of the thirty day cure period specified in Paragraph 3(A) of the Purchase Agreement.
     “Person” means an individual, a corporation, a partnership, an unincorporated
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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” has the meaning indicated on page 2 of the 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 during the preceding six years and which is covered by Title IV of ERISA, including any Multiemployer Plan.
     “Pre-lease Casualty” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Delays” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Event” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Event Notice” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Excess Costs” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Losses” has the meaning indicated in the Construction Agreement.
     “Prime Rate” means the prime interest rate or equivalent charged by BNPPLC’s Parent in the United States of America as announced or published by BNPPLC’s Parent from time to time, which need not be the lowest interest rate charged by BNPPLC’s Parent. If for any reason BNPPLC’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 BNPPLC will 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 Closing Certificate and Agreement” means the Closing Certificate and Agreement dated as of December 15, 2005 between NAI and BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Closing Certificate.
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     “Prior Common Definitions and Provisions Agreement” means the Common Definitions and Provisions Agreement dated as of December 15, 2005 between NAI and BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by this Agreement.
     “Prior Construction Agreement” means the Construction Management Agreement dated as of December 15, 2005 between NAI and BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Construction Agreement.
     “Prior Ground Lease” means the Ground Lease dated as of December 15, 2005 from NAI to BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Ground Lease.
     “Prior Lease” means the Lease Agreement dated as of December 15, 2005 between NAI (as tenant) and BNPPLC (as landlord), as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Lease.
     “Prior Operative Documents” means the documents defined as “Operative Documents” in the Prior Common Definitions and Provisions Agreement.
     “Prior Purchase Agreement” means the Purchase Agreement dated as of December 15, 2005 between NAI and BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Purchase Agreement.
     “Prior Work” has the meaning indicated in the Construction Agreement.
     “Projected Cost Overruns” has the meaning indicated in the Construction 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, but the leasehold estate conveyed to BNPPLC under the Ground Lease will be included.
     “Purchase Agreement” means the Amended and Restated Purchase Agreement (Building 7) dated as of the Effective Date between BNPPLC 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 Option” has the meaning indicated in the Purchase Agreement.
     “Qualified Affiliate” means any Person that, like BNPPLC, (i) is one hundred percent (100%) owned, directly or indirectly, by BNPPLC’s Parent or any successor of such bank, (ii) can
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make (and has in writing made) the same representations to NAI that BNPPLC has made in subparagraphs 4(A) and 4(B) of the Closing Certificate (except that it need not be incorporated in or qualified to do business in Delaware), and (iii) is an entity organized under the laws of the State of Delaware or another state within the United States of America.
     “Qualified Income Payments” means: (A) Base Rent; (B) payments that are made to BNPPLC only because the following amounts are capitalized (i.e., added to the Lease Balance) as described in subparagraph 3 of the Construction Agreement: the Upfront Fees, the Arrangement Fee, Administrative Fees, Commitment Fees, Increased Cost Charges and Capital Adequacy Charges; (C) payments of the following made to BNPPLC to satisfy the Lease: Administrative Fees, Increased Cost Charges and Capital Adequacy Charges; (D) any interest paid to BNPPLC or any Participant pursuant to subparagraph 3(G) of the Lease; and (E) payments by BNPPLC to Participants required under the Participation Agreements because of BNPPLC’s receipt of payments described in the preceding clauses (A) through (D).
     “Qualified Prepayments” means any payments received by BNPPLC 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 (including any indirect condemnation by means of a taking of any of the Land or appurtenant easements), (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. For the purposes of determining the amount of any Qualified Prepayment and other amounts dependent upon Qualified Prepayments (e.g., the Lease Balance, the Outstanding Construction Allowance and the Break Even Price):
     (i) there will be deducted all expenses and costs of every kind, type and nature (including taxes and Attorneys’ Fees) incurred by BNPPLC with respect to the collection or application of such payments;
     (ii) Qualified Prepayments will not include any payment to BNPPLC by a Participant or an Affiliate of BNPPLC that is made to compensate BNPPLC for the Participant’s or Affiliate’s share of any Losses BNPPLC may incur as a result of any of the events described in the preceding clauses (1) through (4);
     (iii) Qualified Prepayments will not include any payments received by BNPPLC that BNPPLC has paid or is obligated to pay to NAI for the repair, restoration or replacement of the Property or that BNPPLC is holding as Escrowed Proceeds in accordance with the Paragraph 10 of the Lease or other provisions of the Operative Documents;
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     (iv) payments described in the preceding clauses (i) through (iii) will be considered as Escrowed Proceeds, not Qualified Prepayments, until they are actually applied as Qualified Prepayments by BNPPLC as provided in Paragraph 10 of the Lease; and
     (v) in no event will interest that accrues under the Purchase Agreement on a past due Supplemental Payment constitute a Qualified Prepayment.
For purposes of computing the total Qualified Prepayments (and other amounts dependent upon Qualified Prepayments, such as the Lease Balance, the Outstanding Construction Allowance and the Break Even Price) paid to or received by BNPPLC 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 BNPPLC as provided in the Paragraph 10 of the Lease.
     “Real Property” has the meaning indicated on page 2 of the Lease.
     “Reimbursable Construction-Period Costs” has the meaning indicated in the Construction 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.
     “Rent” means the Base Rent and all Additional Rent.
     “Responsible Financial Officer” means the chief financial officer, the controller, the treasurer or the assistant treasurer of NAI.
     “Rolling Four Quarters Period” has the meaning indicated in subparagraph 3(A) of the Closing Certificate.
     “Scope Change” has the meaning indicated in the Construction Agreement.
     “Spread” means, for each Construction Period and for 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 of the date (in this definition, the
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“Spread Test Date”) that is two Business Days prior to such period by reference to the pricing grid below, based upon the ratio calculated by dividing (1) Consolidated EBITDA for the then latest Rolling Four Quarters Period that ended prior to (and for which NAI has reported earnings as necessary to compute Consolidated EBITDA) into (2) the Consolidated Debt for Borrowed Money as of the end of such Rolling Four Quarters Period. In each case, the Spread will be established at the Level in the pricing grid below which corresponds to such ratio; provided, that:
     (a) promptly after earnings are reported by NAI for the latest quarter in any Rolling Four Quarters Period, NAI must notify BNPPLC of any resulting change in the Spread under this definition, and no reduction in the 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 BNPPLC with a written notice setting forth and certifying the calculation under this definition that justifies the reduction;
     (b) if Carrying Costs are understated or Base Rent is underpaid for any Period because of any misstatement, subsequently discovered, of Consolidated EBITDA or Consolidated Debt for Borrowed Money, BNPPLC will be entitled to collect from NAI all additional payments that would have been expected under the Operative Documents but for the misstatement, together with interest on each such additional payment computed at the Default Rate from the date it would have been expected to the date it is actually paid; and
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     (c) notwithstanding anything to the contrary in this definition, on any date when an Event of Default has occurred and is continuing, the Spread will equal the Default Rate less the Effective Rate.
         
    Ratio of Consolidated Debt for    
    Borrowed Money to    
Levels   Consolidated EBITDA   Spread
Level I
  less than 0.5   35.0 basis points
 
        
Level II
  greater than or equal to 0.5, but less than 1.0   45.0 basis points
 
        
Level III
  greater than or equal to 1.0, but less than 1.5   55.0 basis points
 
        
Level IV
  greater than or equal to 1.5, but less than 2.0   70.0 basis points
 
        
Level IV
  greater than or equal to 2.0   85.0 basis points
All determinations of the Spread by BNPPLC will, in the absence of clear and demonstrable error, be binding and conclusive for purposes of the Operative Documents. Further BNPPLC may, but will not be required, to rely on the determination of the Spread set forth in any notice delivered by NAI as described above in clause (a) of this definition.
     “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” has the meaning indicated in the Purchase Agreement.
     “Supplemental Payment Obligation” has the meaning indicated in the Purchase Agreement.
     “Tangible Personal Property” has the meaning indicated on page 2 of the Lease.
     “Target Completion Date” has the meaning indicated in the Construction Agreement.
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 38

 

 

     “Term” has the meaning indicated in subparagraph 1(A) of the Lease.
     “Termination of NAI’s Work” has the meaning indicated in the Construction Agreement.
     “Third Party Contract” has the meaning indicated in the Construction Agreement.
     “Third Party Contract/Termination Fees” has the meaning indicated in the Construction 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, 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 exceeds the market value of all Plan assets allocable to such benefit liabilities, as determined on the most recent valuation date of the Plan and in accordance with the provisions of ERISA for calculating the potential liability of NAI or any ERISA Affiliate under Title IV of ERISA.
     “Upfront Fees” has the meaning indicated in the Construction Agreement.
     “Work” has the meaning indicated in the Construction Agreement.
     “Work/Suspension Event” has the meaning indicated in the Construction Agreement.
     “Work/Suspension Notice” has the meaning indicated in the Construction Agreement.
     “Work/Suspension Period” has the meaning indicated in the Construction Agreement.
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 39

 

 

ARTICLE II — SHARED PROVISIONS
     The following provisions will apply to and govern the construction of this Agreement and the other Operative Documents (including attachments), except to the extent (if any) a clear, contrary intent is expressed herein or therein:
     1. Notices. Any provision of (1) any of the Operative Documents, (2) any other document which references this provision for purposes of establishing notice requirements (in this provision, a “Related Document”), or (3) any Applicable Law, that makes reference to any required payment from NAI or BNPPLC to the other or that makes reference to the sending, mailing or delivery of any notice or demand will be subject to the following provisions (except that any notice given by BNPPLC to satisfy any statutory requirement, including any notice of eviction or foreclosure, will be considered sufficient if it satisfies the statutory requirements applicable to the notice, regardless of whether the notice or payment satisfies the following provisions):
     (i) All Rent and other amounts required to be paid by NAI to BNPPLC must be paid to BNPPLC in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
BNP Paribas — New York Branch
Favor: BNP Paribas Leasing Corporation
ABA 026 007 689
/AC/ 0200-517000-070-78
Reference: Network Appliance, Inc./Building 7 Lease
or at such other place and in such other manner as BNPPLC may designate in a notice to NAI.
     (ii) All advances paid to NAI by BNPPLC under the Construction Agreement or in connection therewith will be paid by wire transfer to:
Wells Fargo Bank
San Francisco, CA
ABA#121000248
Acct#4311-790562
Account of: Network Appliance
Reference: BNP Lease
or at such other place and in such other manner as NAI may reasonably designate from
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 40

 

 

time to time by notice to BNPPLC signed by a Responsible Financial Officer of NAI.
     (iii) All notices, demands, approvals, consents and other communications to be made under any Operative Document or Related Document to or by the parties thereto must, to be effective for purposes thereof, be in writing. Notices, demands and other communications required or permitted under any Operative Document or Related Document must be given by any of the following means: (A) personal service (including local and overnight courier), with proof of delivery or attempted delivery retained; (B) electronic communication, whether by electronic mail 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 will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to clause (C) will be deemed received five days following deposit in the mail. Notices, demands and other communications required or permitted by any Related Document are to be sent to the addresses set forth therein; and notices, demands and other communications required or permitted by under any Operative Document are to be sent to the following addresses (or in the case of communications to Participants, at the addresses set forth in Schedule 1 to the Participation Agreement):
Address of BNPPLC:

BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Address of NAI:
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 41

 

 

With a copy to:
Network Appliance, Inc.
495 East Java Drive
Sunnyvale, California 94089
Attention: Mr. Thom Bryant
Telecopy: (408)-822-4463
However, any party to any Operative Document or Related Document may change its address above or in the Related Document, as applicable, by written notice to the other parties to such Operative Document or Related Document given in accordance with this provision.
     2. Severability. If any term or provision of any Operative Document or the application thereof is to any extent 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, will not be affected thereby.
     3. No Merger. There will be no merger of the Lease or of the leasehold estate created by the Lease or of the mortgage and security interest granted in subparagraph 4(C)(1) of the 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 Lease or the leasehold estate created thereby or such mortgage and security interest 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 has occurred. There will 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 rights and options granted by the Purchase Agreement 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 has occurred.
     4. No Implied Waiver. The failure of any party to any Operative Document to insist at any time upon the strict performance of any covenant or agreement therein or to exercise any option, right, power or remedy contained therein will 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 will not prevent a similar subsequent act from constituting a violation. Any express waiver of any provision of any Operative Document will 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 will be deemed to have been made unless expressed in writing and signed by the party to be bound by
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 42

 

 

the waiver. A receipt by any party to any Operative Document of any payment thereunder (including the receipt by BNPPLC of any Rent paid under the Lease) with knowledge of the breach by another party of any covenant or agreement contained in that or any other Operative Document will not be deemed a waiver of such breach.
     5. Entire and Only Agreements. The Operative Documents supersede any prior negotiations and agreements between BNPPLC and NAI concerning the Property, and no amendment or modification of any Operative Document will 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 will 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 created by the Operative Documents and as to all notices expressly required by the Operative Documents.
     8. Governing Law. Each Operative Document will be governed by and construed in accordance with the laws of the State of California without regard to conflict or choice of laws principles that might require the application of the laws of another jurisdiction.
     9. Paragraph Headings. The paragraph and section headings contained in the Operative Documents are for convenience only and will in no way enlarge or limit the scope or meaning of the various and several provisions thereof.
     10. Negotiated Documents. All 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 will 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 Agreement, but is defined in another Operative Document, will 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 will be held and construed to include any other gender, and words in the singular number will be held to include the plural and vice versa, unless the context otherwise requires.
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 43

 

 

References in any Operative Document to Paragraphs, subparagraphs, Sections, subsections or other subdivisions 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 refer to the corresponding Schedule or Exhibit attached to that Operative Document, which are made a part thereof by such reference. All capitalized terms used in each Operative Document which refer to other documents will 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 BNPPLC or NAI is a party or intended beneficiary, without its consent. All accounting terms used but not specifically defined in any Operative Document will 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, and the words “include”, “including” and similar terms will be construed as if followed by “without limitation to”. The rule of ejusdem generis will not be applied to limit the generality of a term in any of the Operative Documents when followed by specific examples. When used to qualify any representation or warranty made by a Person, the phrases “to the knowledge of [such Person]” or “to the best knowledge of [such Person]” are intended to mean only that such Person does not have knowledge of facts or circumstances which make the representation or warranty false or misleading in some material respect; such phrases are not intended to suggest that the Person does indeed know the representation or warranty is true.
     13. Execution in Counterparts. To facilitate execution, each of the Operative Documents may be executed in multiple identical counterparts. It will 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, will collectively constitute a single instrument. But it will not be necessary in making proof of any of the Operative Documents to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties to such document. Any signature page may be detached from one counterpart and then attached to a second counterpart with identical provisions without impairing the legal effect of the signatures on the signature page. Signing and sending a counterpart (or a signature page detached from the counterpart) by facsimile or other electronic means to another party will have the same legal effect as signing and delivering an original counterpart to the other party. A copy (including a copy produced by facsimile or other electronic means) of any signature page that has been signed by or on behalf of a party to any of the Operative Documents will be as effective as the original signature page for the purpose of
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 44

 

 

proving such party’s agreement to be bound.
     14. Not a Partnership, Etc. Nothing in any Operative Document is intended to create any partnership, joint venture, or other joint enterprise between NAI and BNPPLC or any other Interested Party.
     15. No Fiduciary Relationship Intended. Neither the execution of the Operative Documents or other documents referenced in this Agreement nor the administration thereof by BNPPLC will create any fiduciary obligations of BNPPLC (or any other Interested Party) to NAI. Moreover, BNPPLC and NAI disclaim any intent to create any fiduciary or special relationship between themselves (or on the part of any other Interested Party) under or by reason of the Operative Documents or the transactions described therein or any other documents or agreements referenced therein.
     16. Amendment and Restatement of Prior Agreement. This Agreement amends, restates and replaces entirely the Prior Common Definitions and Provisions Agreement.
[The signature pages follow.]
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Page 45

 

 

     IN WITNESS WHEREOF, this Amended and Restated Common Definitions and Provisions Agreement (Building 7) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Common Definitions and Provisions Agreement (Building 7) dated as of November 29, 2007]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Common Definitions
and Provisions Agreement (Building 7) – Signature Page

 

 

Annex 1
Notice of ABR Period Election
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Amended and Restated Common Definitions and Provisions Agreement (Building 7) dated as of November 29, 2007, between you, BNP Paribas Leasing Corporation, and the undersigned, Network Appliance, Inc. This letter constitutes notice of our election to make the first Construction Period or Base Rent Period beginning on or after                    , 20___ subject to an ABR Period Election.
     We understand that until a different election becomes effective as provided in definitions of “ABR Period Election” and “LIBOR Period Election” in the Amended and Restated Common Definitions and Provisions Agreement (Building 7), all subsequent Periods will also be subject to an ABR Period Election.
NOTE: YOU ARE ENTITLED TO DISREGARD THIS NOTICE IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF THE ABR PERIOD ELECTION IS LESS THAN FIVE 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.
                 
    NETWORK APPLIANCE, INC., a Delaware
corporation		    
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
[cc all Participants]

 

 

Annex 2
Fixed Rate Lock Notice
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Amended and Restated Common Definitions and Provisions Agreement (Building 7) dated as of November 29, 2007, between you, BNP Paribas Leasing Corporation, and the undersigned, Network Appliance, Inc.. By this letter, which is given pursuant to subparagraph 3(B)(4) of the Lease, NAI requests that BNPPLC promptly establish a Fixed Rate for a notional amount equal to the Lease Balance as of the date of this letter for use in the calculation of the Effective Rate for all Base Rent Periods commencing on or after the following Fixed Rate Lock Date:                     , 20___.
     As contemplated in the conditions set forth in subparagraph 3(B)(4) of the Lease, such Fixed Rate Lock Date is the first Business Day of a calendar month which falls after the projected Base Rent Commencement Date; such Fixed Rate Lock Date does not fall prior to the end of any Base Rent Period which has commenced or will commence before BNPPLC receives this notice; and NAI expects BNPPLC to receive this notice more than ten days prior to such Fixed Rate Lock Date.
     In an earlier phone conversation today between a representative of NAI and                      at the New York Branch of BNP Paribas, NAI requested an estimate from BNP Paribas of the Fixed Rate that would be established by BNPPLC and BNP Paribas entering into an Interest Rate Swap. The estimate provided by telephone was:                      percent (                    %) per annum.
     By this letter, NAI confirms that it will accept such a rate or any lower rate as the Fixed Rate for purposes of the Lease.
NOTE: BNPPLC will be entitled to disregard this notice if the conditions to a Fixed Rate Lock, as specified in subparagraph 3(B)(4) of the Lease, have not been satisfied. However, NAI requests that BNPPLC notify NAI immediately if for any reason BNPPLC believes this notice will not be effective.

 

 

                 
    NETWORK APPLIANCE, INC., a Delaware
corporation		    
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
[cc all Participants]
Annex 2 – Page 2

 

 

Annex 3
Notice of LIBOR Period Election
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Amended and Restated Common Definitions and Provisions Agreement (Building 7) dated as of November 29, 2007, between you, BNP Paribas Leasing Corporation, and the undersigned, Network Appliance, Inc.. This letter constitutes notice of our election to make the first Construction Period or Base Rent Period beginning on or after                    , 20___ subject to a LIBOR Period Election of                      month(s).
     We understand that until a different election becomes effective as provided in definitions of “ABR Period Election” and “LIBOR Period Election” in the Amended and Restated Common Definitions and Provisions Agreement (Building 7), all subsequent Periods will also be subject to the same LIBOR Period Election.
NOTE: YOU ARE 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 AMENDED AND RESTATED COMMON DEFINITIONS AND PROVISIONS AGREEMENT (BUILDING 7), OR IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF THE LIBOR PERIOD ELECTION IS LESS THAN FIVE 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.
                 
    NETWORK APPLIANCE, INC., a Delaware
corporation		    
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
[cc all Participants]

 

 

Annex 4
Minimum Insurance Requirements
A. PROVISIONS APPLICABLE BOTH BEFORE AND AFTER THE COMPLETION DATE.
     1. Other Requirements Not Affected: The insurance coverages required by this Annex represent minimum requirements of BNPPLC and other Interested Parties and are not to be construed to modify or limit NAI’s indemnities or other agreements in the Agreement to which this Annex is attached or in any other Operative Document. Such required coverages do not constitute a representation or determination by BNPPLC of the minimum insurance coverages NAI should maintain for its own protection.
     2. Requirements Apply Only to the Property: Further, the insurance coverages required by this Annex apply only to the Property, it being understood that nothing in this Annex is intended to impose minimum insurance requirements upon NAI with respect to other properties owned or leased by NAI.
     3. Failure to Obtain: Failure of BNPPLC to demand certificate or other evidence of full compliance with these insurance requirements, or failure of BNPPLC to identify a deficiency from evidence that is provided, will not be construed as a waiver of NAI’s obligation to maintain required insurance.
     4. Copies of Policies: NAI must provide to BNPPLC, at the offices of NAI, copies of all insurance policies required herein within ten (10) days after receipt of a request for such copies from BNPPLC or as soon as practicable if policies are in the process of being issued by the applicable insurer. Such copies must be certified as complete and correct by an authorized representative of the applicable insurer, subject to availability from the insurance company.
     5. Inconsistent Endorsements. The insurance policies maintained to comply with these requirements will contain no endorsements that restrict, limit, or exclude coverages in any manner that is inconsistent with these express requirements without the prior express written approval of BNPPLC.
     6. Limits of Liability. The limits of liability necessary to satisfy these requirements may be provided by a single policy of insurance or by a combination of primary and umbrella/excess policies, but in no event will the total limits of liability available for any one occurrence or accident be less than the amount required herein.
     7. Additional Insured Status. Additional insured status will be provided in favor
Annex 4 – Page 1

 

 

of BNPPLC and other Interested Parties on all liability insurance required herein except workers’ compensation and employer’s liability. Such additional insured status will be provided on a basis that neither limits coverage to the additional insured by reason of its negligence (sole or otherwise) nor excludes coverage for completed operations with respect to construction of the Improvements.
     8. Primary Liability. The insurance policies maintained to comply with these requirements will be primary to all insurance available to BNPPLC and other Interested Parties, collectively or individually, with BNPPLC and other Interested Parties’ insurance being excess, secondary and non-contributing (except in the case of workers’ compensation and employer’s liability insurance). Where necessary, coverage will be endorsed to provide such primary liability.
B. PROVISIONS APPLICABLE BEFORE THE COMPLETION DATE.
     1. General Terms and Conditions.
     A. Definitions: For purposes of this Annex:
“Construction Period Policies” means insurance policies that satisfy the minimum requirements set forth in this Annex and that NAI has obtained or required its Contractors to obtain with respect to the Property prior to the Completion Date.
“Contractor” will include subcontractors of any tier.
“ISO” means Insurance Services Office.
B. Status and Rating of Insurance Company. All insurance coverages required herein prior to the Completion Date will be written through insurance companies admitted to do business in the State of California and rated upon each renewal no less than A-: VII in the then most current edition of A.M. Best’s Key Rating Guide.
C. Waiver of Subrogation. All insurance coverages carried by NAI with respect to the Construction Project, whether required herein or not, will provide a waiver of subrogation in favor of BNPPLC and other Interested Parties.
D. Release and Waiver: Without limiting other waivers or provisions in favor of BNPPLC and other Interested Parties in any of the Operative Documents or other attachments thereto, NAI hereby releases, and agrees to cause all Contractors performing any Work prior to the Completion Date (other than subcontractors providing goods and/or
Annex 4 – Page 2

 

 

services with a value of less than $100,000) to release, BNPPLC and all other Interested Parties from any and all claims or causes of action whatsoever that NAI and/or such Contractors might otherwise now or hereafter have resulting from or in any way connected with any loss covered by insurance, whether required herein or not, or which would have been covered by insurance required herein but for a failure of NAI and/or its Contractors to maintain such insurance.
E. Initial Insurance Representations to BNPPLC and Other Interested Parties: NAI represents, acknowledges and agrees that:
     1. Any Construction Period Policies not previously obtained will be obtained by NAI (or by the primary Contractor engaged by NAI to perform the Work), and the initial premiums for all Construction Period Policies will be paid, before NAI requests Construction Advances that cause the Lease Balance to exceed $2,000,000; and notwithstanding anything to the contrary in the Construction Agreement, BNPPLC may refuse to fund any Construction Advances that would cause the Lease Balance to exceed $2,000,000 prior to such time as BNPPLC is satisfied that NAI has obtained and paid the premiums for the Construction Period Policies. Moreover, in the case of the Builder’s Risk Policy, the premium must be paid or prepaid for the entire period through the projected Completion Date before the Lease Balance exceeds $2,000,000.
     2. The coverages provided by the Construction Period Policies will not be terminated or modified to reduce, limit or qualify coverages in any material respect without BNPPLC’s prior written consent in each case by reason of any act or omission on the part of NAI or anyone acting for or authorized to act for NAI (including any Contractor engaged by NAI to obtain the Construction Period Policies for NAI). Without limiting the foregoing, NAI will not do or authorize any act or omission that could cause the coverage provided with respect to any Improvements by the Builder’s Risk Policy to expire or lapse before the Completion Date.
     3. NAI must notify BNPPLC with reasonable promptness of any possible damage claims known to NAI that NAI believes are, individually or taken together, reasonably likely to a exceed seventy-five percent (75%) of any aggregate limit of the Builder’s Risk Policy required herein.
     4. NAI will endeavor in good faith to cause each certificate of insurance which is provided to BNPPLC by an insurer, or its authorized
Annex 4 – Page 3

 

 

representative, at the request of NAI in regard to any Construction Period Policies to include the following express provision:
This is to certify that the policies of insurance described herein have been issued to the Insured for whom this certificate is executed and are in force at this time. In the event of cancellation or non-renewal of coverage affecting the certificate holder, other than by reason of nonpayment of premium, thirty (30) days prior written notice will be given to the certificate holder by certified mail or registered mail, return receipt requested. In the event of cancellation or non-renewal of coverage affecting the certificate holder by reason of nonpayment of premium, ten (10) days prior written notice will be given to the certificate holder by certified mail or registered mail, return receipt requested.
It is understood, however, that an insurer issuing such a certificate may decline to include the foregoing statement in the certificate, in which case NAI will instead deliver the certificate to BNPPLC with a cover letter from NAI itself which states substantially as follows:
Enclosed is a certificate of insurance, which has been issued by an insurer or its authorized representative, and which we are providing to you to confirm that policies described in the certificate have been issued to NAI or another insured named in the certificate and are in force at this time. NAI also certifies to you that such policies have been issued, and in the event of any cancellation, non-renewal, or reduction in coverage affecting you (BNP Paribas Leasing Corporation) or other Interested Parties, NAI will give you thirty (30) days prior written notice by certified mail or registered mail, return receipt requested.
     5. NAI will also endeavor in good faith to cause each Construction Period Policy to be endorsed to provide, in effect, that (A) in the event of cancellation, non-renewal, or reduction in coverage affecting BNPPLC, other than by reason of nonpayment of premium, thirty (30) days prior written notice will be given by the insurer to BNPPLC by certified mail or registered mail, return receipt requested; and (B) in the event of cancellation, non-renewal, or reduction in coverage affecting BNPPLC by reason of nonpayment of premium, ten (10) days prior written
Annex 4 – Page 4

 

 

notice will be given by the insurer to BNPPLC by certified mail or registered mail, return receipt requested.
     2. Commercial General Liability Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain commercial general liability insurance in accordance with the following requirements:
A. Coverage: Such insurance will cover liability (as to claims covered by the form of CGL policy specified below, including claims for bodily injury and property damage) arising from any occurrence on or about the Land or from any operations conducted on or about the Land, including but not limited to tort liability assumed under any of the Operative Documents. Defense will be provided as an additional benefit and not included within the limit of liability.
B. Form: Commercial General Liability Occurrence form (ISO CG 0001, dated 12 04, or an equivalent substitute form providing the same or greater coverage, and in any case written to provide primary coverage to BNPPLC as provided in Part A.8 above).
C. Amount of Insurance: Coverage will be provided with limits of not less than:
                 
 
   i.   Each Occurrence Limit   $ 1,000,000  
 
                
 
   ii.   General Aggregate Limit   $ 2,000,000  
 
                
 
   iii.   Product-Completed        
 
       Operations Aggregate Limit   $ 2,000,000  
 
                
 
   iv.   Personal and Advertising Injury Limit   $ 1,000,000  
     D. Required Endorsements:
             
 
  i.   Additional Insured.   as required in Part A.7 above.
 
            
 
  ii.   Aggregate Per Location   The aggregate limit will apply separately to each location through use of an Aggregate Limit of Insurance Per Location endorsement (ISO CG 2504 1185 or its equivalent).
Annex 4 – Page 5

 

 

             
 
  iii.   Notice of Cancellation, Nonrenewal or Reduction in Coverage:   Consistent with Part B.1.E.5 above.
 
            
 
  iv.   Personal Injury Liability:   The personal injury contractual liability exclusion will be deleted.
 
            
 
  v.   Primary Liability:   As required in Part A.8 above.
 
            
 
  vi.   Waiver of Subrogation:   As required in Part B.1.C above.
E. Deductible or Self Insured Retention Under Liability Policies: If a gap in the liability insurance coverage provided to BNPPLC or another Interested Party under any Construction Period Policy results from any deductible, self-insured retention or other similar arrangement to which NAI agrees, then such gap must be covered by one or more other Construction Period Policies, such that liability insurance protection afforded to BNPPLC and other Interested Parties by all such Construction Period Policies, taken together, is no less than it would be if NAI had not agreed to the deductible, self-insured retention or other similar arrangement.
     3. Workers’ Compensation/Employer’s Liability Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain workers’ compensation and employer’s liability insurance in accordance with the following requirements:
     A. Coverage: Such insurance will cover liability arising out of NAI’s employment of workers and anyone for whom NAI may be liable for workers’ compensation claims.
     B. Amount of Insurance: Coverage will be provided with a limit of not less than:
             
 
  i.   Workers’ Compensation:   Statutory limits.
 
            
 
  ii.   Employer’s Liability:   $1,000,000 each accident and each disease.
     C. Required Endorsements:
             
 
  i.   Notice of Cancellation, Nonrenewal or Reduction in Coverage:   Consistent with Part B.1.E.5 above.
 
            
 
  ii.   Waiver of Subrogation:   As required in Part B.1.C above.
Annex 4 – Page 6

 

 

     4. Umbrella/Excess Liability Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain umbrella/excess liability insurance in accordance with the following requirements:
A. Coverage: Such insurance will be excess over and be no less broad than all coverages described in the preceding subsections 1, 2 and 3 and will include a drop-down provision if commercially available.
B. Form: This policy will have the same inception and expiration dates as the commercial general liability insurance required above or a nonconcurrency endorsement.
C. Amount of Insurance: Coverage will be provided with a limit of not less than $10,000,000 per occurrence and in the aggregate.
     5. Builders Risk Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain or cause to be maintained property insurance (Builders Risk Insurance) in accordance with the following requirements:
A. Insureds: Protection will extend to BNPPLC as a Named Insured or Additional Named Insured as its interest may appear; and the policy will be modified if necessary so that the protection afforded to BNPPLC is not reduced or impaired by acts or omissions of NAI or any other beneficiary or insured. (Such modification of the policy may be by endorsement comparable to a standard mortgagee clause; not limited, however, by its terms to BNPPLC’s rights “as a mortgagee” and not conditioned upon rights of the insurer to be subrogated to BNPPLC’s rights under the Operative Documents in the event of a payment of insurance proceeds to BNPPLC.)
     B. Covered Property: Such insurance will cover:
  i.   Improvements and any equipment made or to be made a permanent part of the Property;
 
  ii.   structure(s) under construction;
 
  iii.   property including materials and supplies on site for installation;
 
  iv.   property including materials and supplies at other locations but intended for use at the site;
 
  v.   property including materials and supplies in transit to the site for installation; and
Annex 4 – Page 7

 

 

  vi.   temporary structures (e.g., scaffolding, falsework, and temporary buildings) located at the site.
C. Form: Coverage will be on an “all risk” form, will include theft, flood, earthquake, and earthquake sprinkler leakage, and be written on a completed-value basis with no co-insurance provision. No protective safeguard warranty will be permitted.
D. Amount of Insurance: Real property coverage will be provided in an amount equal at all times to the full replacement value, exclusive of land, foundation, footings, excavations and grading.
E. Deductibles. Deductibles applicable to the Builder’s Risk Policy will not exceed the following:
             
 
  i.   All Risks of Direct Damage, Per Occurrence, except flood or water damage and earthquake   $50,000
 
            
 
  ii.   Delayed Opening Waiting Period   30 Days
 
            
 
  iii   Water Damage (including flood), Per Occurrence   $50,000; or (in the case of flood) excess of NFIP if in Flood Zone A
 
            
 
  iv   Earthquake and Earthquake Sprinkler Leakage, Per Occurrence   5% of total project value at risk at the time of the loss, subject to a minimum of $100,000
F. Termination of Coverage: The termination of coverage provision will be endorsed to permit occupancy of the covered property being constructed. Further, NAI will maintain or cause the insurance to be maintained in effect, unless otherwise provided for the Operative Documents, until the earliest of the following dates:
  i.   the date on which all persons and organizations who are insureds under the policy agree that it is terminated;
 
  ii.   any termination or expiration of the Lease upon the Designated Sale Date, which is the date upon which final payment is expected under the Operative Documents; or
Annex 4 – Page 8

 

 

  iii.   the date on which the insurable interests in the Covered Property of all insureds other than NAI have ceased;
     G. Required Endorsements and Minimum Sublimits:
             
 
  i.   Additional Expenses Due To Delay In Completion Project, including but not limited to financing costs including interest expenses, insurance expenses, professional fees and taxes;   Included with specific sublimits (based on an estimated 12 period of indemnity) as follows:

$1,900,000 — construction financing interest.
 
            
 
          $380,000 — real estate taxes
 
            
 
          $204,000 — insurance premiums
 
            
 
  ii.   Agreed Value;   No coinsurance
 
            
 
  iii.   Boiler & Machinery on a Comprehensive Basis;   Included without sublimit
 
            
 
  iv.   Damage Resulting From or Arising From Error, Omission or Deficiency In Design, Specifications, Workmanship or Materials, Including Collapse;   Included without sublimit
 
            
 
  v.   Debris Removal Additional Limit; Debris Removal   $4,000,000 sublimit
 
            
 
  vi.   Earthquake including Sprinkler Leakage;   $10,000,000 sublimit
 
            
 
  vii.   Expediting Expenses;   $50,000 sublimit
 
            
 
  viii.   Flood — Annual Aggregate including Earthquake Sprinkler Leakage;   $10,000,000 sublimit
Annex 4 – Page 9

 

 

             
 
  ix.   Freezing;   $100,000 sublimit
 
            
 
  x.   Notice of Cancellation or Reduction;   Consistent with Part B.1.E.5 above
 
            
 
  xi.   Occupancy Clause;   Consistent with Part B.5.F above
 
            
 
  xii.   Demolition /Increased Cost of Cost of Construction — Per Occurrence   $1,000,000 sublimit
 
            
 
  xiii.   Pollutant Clean-Up and Removal, provided that such condition ensues following a loss from a covered peril;   Included in Debris
Removal sublimit
 
            
 
  xiv.   Preservation of Property;   Included without sublimit
 
            
 
  xv.   Repair, Replace or Re-erect Valuation Clause;   Included without sublimit
 
            
 
  xvi.   Testing;   Included without sublimit
 
            
 
  xvii.   Waiver of Subrogation.   As required in Part B.1.C above
     6. Evidence of Insurance. NAI will provide confirmation of the insurance required prior to the Completion Date in accordance with the following:
A. Provision of Evidence. Evidence of the insurance coverage required to be maintained by NAI, represented by certificates of insurance or policies and endorsements issued by the insurance company or its legal agent, must be furnished to BNPPLC prior to the Effective Date. New certificates of insurance or policies and endorsements will be provided to BNPPLC prior to or concurrent with the termination date of the current certificates of insurance or policies and endorsements.
     B. Form:
  i   The Builders Risk Insurance will be evidenced by ACORD form 28, “Evidence of Property Insurance”, completed in a manner satisfactory to BNPPLC to show compliance with the requirements of this Annex. To the extent requested by BNPPLC, copies of endorsements to such insurance must be attached to such form.
Annex 4 – Page 10

 

 

  ii.   All liability insurance required herein will be evidenced by ACORD form 25, “Certificate of Insurance”, in each case completed in a manner satisfactory to BNPPLC to show compliance with the requirements of this Annex. To the extent requested by BNPPLC, copies of endorsements to this insurance must be attached to such form.
C. Specifications: Such certificates of insurance or policies and endorsements will specify:
  i.   BNPPLC as a certificate holder with correct mailing address as provided by BNPPLC.
 
  ii.   Insured’s name, which must match that on the Agreement to which this Annex is attached.
 
  iii.   Insurance companies affording each coverage, policy number of each coverage, policy dates of each coverage, all coverages and limits described herein, and signature of authorized representative of insurance company.
 
  iv.   Producer of the certificate with correct address and phone number listed.
 
  v.   Additional or named insured status of BNPPLC as required by this Annex.
 
  vi.   Aggregate limits per location (except as to the umbrella liability insurance) required by this Annex.
 
  vii.   Amount of any deductibles and/or retentions.
 
  viii.   Cancellation, nonrenewal and reduction in coverage notification consistent with Part B.1.E.5 above. Additionally, NAI will endeavor in good faith to cause any insurer issuing to BNPPLC a certificate on ACORD form 25 to delete the words “endeavor to” and “but failure to mail such notice shall impose no obligation or liability of any kind upon Company, it agents or representatives” from the cancellation provision of such form.
 
  ix.   Primary status as required by this Annex.
 
  x.   Waivers of subrogation as required by this Annex.
D. Required Endorsements. A copy of each required endorsement will, if and as requested by BNPPLC from time to time, also be provided.
Annex 4 – Page 11

 

 

E. Commencement of Construction. Commencement of construction without provision of the required certificate of insurance and/or required policies and endorsements, or without compliance with any other provision of this Annex or the Agreement to which it is attached, will not constitute a waiver by BNPPLC of any rights. BNPPLC will have the right, but not the obligation, of prohibiting NAI or any Contractor from performing any work until such certificate of insurance and/or required policies and endorsements are received by BNPPLC.
     7. Contractor’s Insurance: To the extent, if any, necessary to preserve or provide liability coverage for BNPPLC and other Interested Parties with regard to operations performed on or about the Property prior to the Completion Date, NAI will require Contractors to provide (or will provide the coverage on behalf of Contractors) similar to that required of NAI by the foregoing provisions of this Annex. In the event NAI requires any Contractor to maintain Construction Period Policies necessary to comply with these insurance requirements, NAI will also require such Contractor to provide and maintain certificates of insurance containing provisions as described herein (modified to recognize the Contractor, rather than NAI, as named insured) enumerating, among other things, the waivers of subrogation, additional or named insured status, and primary liability as required herein; and in such event NAI will cause the Contractor to make those insurance certificates available to BNPPLC upon request.
C. PROVISIONS APPLICABLE AFTER THE COMPLETION DATE.
     1. Liability Insurance: After the Completion Date and throughout the Term of the Lease, NAI must maintain commercial general liability insurance against claims for bodily injury, death, advertising injury and property damage occurring in or upon or resulting from any occurrence in or upon the Property under one or more insurance policies, all in such amounts, with such insurance companies and upon such terms and conditions (including self-insurance, whether by deductible, retention, or otherwise) as are consistent with NAI’s normal insurance practices in the United States. In any event, policies under which NAI maintains such liability insurance must provide, by endorsement or otherwise, that BNPPLC and other Interested Parties are also insured thereunder against such claims with coverage that is not limited by any negligence or allegation of negligence on their part and with coverage that is primary, not merely excess over or contributory with the other commercial general liability coverage they may themselves maintain.
     2. Property Insurance: After the Completion Date and throughout the Term of the Lease, NAI must 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, all in such amounts, with such insurance companies and upon such terms and conditions (including self-insurance, whether by deductible, retention, or otherwise) as are consistent with NAI’s normal insurance practices in the United States. In any event, policies under which NAI
Annex 4 – Page 12

 

 

maintains such insurance must:
  i.   show BNPPLC as an additional insured as its interest may appear; and
 
  ii    provide that the protection afforded to BNPPLC thereunder is primary (such that any policies maintained by BNPPLC itself will be excess, secondary and noncontributing) and is not to be reduced or impaired by acts or omissions of NAI or any other beneficiary or insured.
     3. Evidence of Insurance. NAI will provide confirmation of the insurance required after the Completion Date in accordance with the following:
A. Provision of Evidence. Evidence of the insurance coverage required to be maintained by NAI, represented by certificates of insurance, evidence of insurance, and endorsements issued by the insurance company or its legal agent, must be furnished to BNPPLC prior to the Completion Date. New certificates of insurance, evidence of insurance, and endorsements will be provided to BNPPLC prior to or concurrent with the termination date of the current certificates of insurance, evidence of insurance, and endorsements.
B. Form:
  i    The property insurance will be evidenced by ACORD form 28, “Evidence of Property Insurance”, completed in a manner reasonably satisfactory to BNPPLC to show compliance with the requirements of this Annex.
 
  ii.   The liability insurance will be evidenced by ACORD form 25, “Certificate of Insurance”, in each case completed in a manner reasonably satisfactory to BNPPLC to show compliance with the requirements of this Annex. To the extent requested by BNPPLC, copies of endorsements giving additional insured status to BNPPLC and other Interested Parties must be attached to such form.
C. Specifications: Such certificates of insurance or policies and endorsements will specify:
  i.   BNPPLC as a certificate holder with correct mailing address as provided by BNPPLC.
 
  ii.   Insured’s name, which must match that on the Agreement to which this Annex is attached.
Annex 4 – Page 13

 

 

  iii.   Insurance companies affording each coverage, policy number of each coverage, policy dates of each coverage, all coverages and limits described herein, and signature of authorized representative of insurance company.
 
  iv.   Producer of the certificate with correct address and phone number listed.
 
  v.   Additional or named insured status of BNPPLC as required by this Annex.
 
  vi.   Aggregate limits.
 
  vii.   Amount of any deductibles and/or retentions.
 
  viii.   Primary status as required by this Annex.
 
  ix.   Waivers of subrogation as required by this Annex.
Annex 4 – Page 14

 

exv10w35
Exhibit 10.35
AMENDED AND RESTATED
PURCHASE AGREEMENT
(BUILDING 7)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
         
    Page  
1   Additional Definitions
     2  
“97-1/Default (100%)”
     2  
“Adjusted Lease Balance”
     3  
“Applicable Purchaser”
     3  
“Balance of Unpaid Construction Period Losses”
     3  
“BNPPLC’s Actual Out of Pocket Costs”
     4  
“Break Even Price”
     5  
“Committed Price”
     5  
“Conditions to NAI’s Initial Remarketing Rights”
     5  
“Contingent Losses”
     5  
“Decision Not to Sell at a Loss”
     5  
“Deemed Sale”
     6  
“Extended Remarketing Period”
     6  
“Fair Market Value”
     6  
“Final Sale Date”
     6  
“Initial Remarketing Notice”
     6  
“Initial Remarketing Price”
     6  
“Lease Balance”
     7  
“Make Whole Amount”
     7  
“Maximum Remarketing Obligation”
     7  
“Must Sell Price”
     8  
“NAI’s Extended Remarketing Right”
     8  
“NAI’s Initial Remarketing Rights”
     8  
“NAI’s Target Price”
     8  
“Notice of Sale”
     8  
“Proposed Sale”
     8  
“Proposed Sale Date”
     8  
“Purchase Option”
     8  
“Put Option”
     8  
“Qualified Sale”
     8  
“Sale Closing Documents”
     9  
“Supplemental Payment”
     9  
“Supplemental Payment Obligation”
     9  
“Valuation Procedures”
     10  
 
        
2   NAI’s Options and Obligations on the Designated Sale Date
     10  
(A) Purchase Option; Initial Remarketing Rights; Supplemental Payment Obligation
     10  
(B) Designation of the Purchaser
     12  
(C)Delivery of Property Related Documents If BNPPLC Retains the Property
     12  
(D) Effect of the Purchase Option and NAI’s Initial Remarketing Rights on Subsequent Title Encumbrances
     12  

 

TABLE OF CONTENTS
(Continued)
         
    Page  
Subsequent Title Encumbrance
     12  
(E) Security for NAI’s Purchase Option
     13  
 
        
3   NAI’s Rights, Options and Obligations After the Designated Sale Date
     13  
(A) NAI’s Right to Buy During the Thirty Days After the Designated Sale Date
     13  
(B) NAI’s Obligation to Buy if Certain Conditions are Satisfied
     13  
(C) NAI’s Extended Right to Remarket
     14  
(D) Deemed Sale On the Second Anniversary of the Designated Sale Date
     15  
(E) NAI’s Right to Share in Sales Proceeds Received By BNPPLC From any Qualified Sale
     15  
 
        
4   Transfers By BNPPLC After the Designated Sale Date
     16  
(A) BNPPLC’s Right to Sell
     16  
(B) Survival of NAI’s Rights and the Supplemental Payment Obligation
     16  
(C) Easements and Other Transfers in the Ordinary Course of Business
     16  
 
        
5   Terms of Conveyance Upon Purchase
     17  
(A) Tender of Sale Closing Documents
     17  
(B) Delivery of Escrowed Proceeds
     17  
 
        
6   Survival and Termination of the Rights and Obligations of NAI and BNPPLC
     17  
(A) Status of this Agreement Generally
     17  
(B) Election by NAI to Terminate the Supplemental Payment Obligation Prior to the Completion Date
     18  
(C) Automatic Termination of NAI’s Rights
     19  
(D) Payment Only to BNPPLC
     19  
(E) Preferences and Voidable Transfers
     19  
(F) Remedies Under the Other Operative Documents
     19  
 
        
7   Certain Remedies Cumulative
     20  
 
        
8   Attorneys’ Fees and Legal Expenses
     20  
 
        
9   Successors and Assigns
     20  
 
        
10  Amendment and Restatement of Prior Purchase Agreement
     20  

(ii)

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
         
Exhibit A
   Legal Description
 
        
Exhibit B
   Valuation Procedures
 
        
Exhibit C
   Requirements Re: Forms to Accomplish Assignment and Conveyance
 
        
Exhibit C-1
   Agreement Concerning Ground Lease
 
        
Exhibit C-2
   Form of Assignment of Ground Lease and Improvements
 
        
Exhibit C-3
   Form of Bill of Sale and Assignment
 
        
Exhibit C-4
   Form of Acknowledgment of Disclaimer of Representations and Warranties
 
        
Exhibit D
   Secretary’s Certificate
 
        
Exhibit E
   FIRPTA Statement
 
        
Exhibit F
   Notice of Election to Terminate the Supplemental Payment Obligation

(iii)

 

AMENDED AND RESTATED
PURCHASE AGREEMENT
(BUILDING 7)
     This AMENDED AND RESTATED PURCHASE AGREEMENT (BUILDING 7) (this “Agreement”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Agreement, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (Building 7) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Agreement for all purposes. As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     Contemporaneously with this Agreement, BNPPLC is executing and accepting an Amended and Restated Ground Lease (Building 7) dated as of the Effective Date (the “Ground Lease”) from NAI, pursuant to which BNPPLC is acquiring a leasehold estate in the Land described in Exhibit A and any existing Improvements on the Land.
     Also contemporaneously with this Agreement, BNPPLC and NAI are executing an Amended and Restated Construction Agreement (Building 7) dated as of the Effective Date (the"Construction Agreement”) and an Amended and Restated Lease Agreement (Building 7) dated as of the Effective Date (the “Lease”). Pursuant to the Construction Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements. When the term of the Lease commences, the Lease will cover all Improvements on the Land described in Exhibit A. (As used herein, “Property” means (i) all of BNPPLC’s interests, including those created by the Ground Lease, in the Land and in the Improvements and in all other real and personal property from time to time covered or to be covered by the Lease and included within the “Property” as defined therein, and (ii) BNPPLC’s interest in any Escrowed Proceeds yet to be applied as a Qualified Prepayment or to the cost of repairs to the Improvements or other property covered by the Lease; except that, for purposes of this Agreement, the Property will not include any condemnation or insurance proceeds included in Escrowed Proceeds as a result of any Pre-lease Force Majeure Event, nor will it include any right to receive any such condemnation or insurance proceeds in the future, unless NAI itself or one of its Affiliates purchases the Property from BNPPLC as provided in subparagraphs 2(A)(1), 3(A) or 3(B) below.)
     NAI and BNPPLC have agreed on the terms and conditions upon which NAI may

 

 

purchase or arrange for the purchase of the Property, and by this Agreement they desire to confirm all such terms and conditions.
AGREEMENTS
1 Additional Definitions. As used in this Agreement, capitalized terms defined above have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and that are used but not otherwise defined have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms have the following respective meanings:
     “97-1/Default (100%)” means a Default that is or results from any of the following:
     (A) a failure of NAI to make any payment required by any Operative Document, including (i) any 97-10/Prepayment payable as provided in Paragraph 9 of the Construction Agreement, (ii) any other amounts payable under the Construction Agreement because of Covered Construction Period Losses, (iii) any payment of Rent required by the Lease or (iv) any Supplemental Payment required by this Agreement;
     (B) any Hazardous Substance Activities on or about the Land;
     (C) any failure of NAI after the Completion Date to insure, maintain, operate or repair the Property in accordance with all terms and conditions of the Lease;
     (D) any failure of NAI to apply insurance or condemnation proceeds received by NAI as required by the Construction Agreement or the Lease, as applicable;
     (E) any breach by NAI of the Ground Lease;
     (F) any bankruptcy or insolvency proceeding involving NAI or any of its Subsidiaries, as the debtor, or any of the events or circumstances described in clauses (G), (H) or (I) of the definition of Event of Default in the Common Definitions and Provisions Agreement;
     (G) any breach by NAI of the financial covenants in subparagraph 3(C) of the Closing Certificate that occurs or continues after the Completion Date;
     (H) a failure of NAI or any of its Subsidiaries, which occurs or continues after the Completion Date, to pay when due a regularly scheduled payment of the principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000, as described in clause (F) of the definition of Event of Default in
Amended and Restated Purchase Agreement (Building 7) – Page 2

 

 

the Common Definitions and Provisions Agreement;
     (I) a failure of NAI or any of its Subsidiaries, which occurs or continues after the Completion Date, to pay any judgment or order for the payment of money rendered against it in an amount (not covered by insurance) which exceeds $25,000,000, as described in clause (J) of the definition of Event of Default in the Common Definitions and Provisions Agreement;
     (J) any fraud, misapplication of Construction Advances or other funds, illegal acts or willful misconduct on the part of NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI (including any contractor working for NAI) that occurs prior to the Completion Date; or
     (K) subject to the proviso at the end of Exhibit B, any breach by NAI of the provisions set forth in Exhibit B.
Except as provided in subparagraph 3(B), the characterization of any Default as a 97-1/Default (100%) will not affect the rights or remedies available to BNPPLC because of the Default.
“Adjusted Lease Balance” means a dollar amount equal to the following (but not less than zero):
  •   the Lease Balance, less
 
  •   Pre-lease Force Majeure Losses (if any).
“Applicable Purchaser” means (1) the third party designated by NAI to purchase the Property at any sale arranged by NAI as provided in this Agreement, or (2) the third party designated by BNPPLC as the purchaser at any Qualified Sale not arranged by NAI.
“Balance of Unpaid Construction Period Losses” means, subject to the qualifications set forth below in this definition, an amount equal to the sum of:
  (1)   the total Losses (if any), including Contingent Losses, that have been incurred or suffered by BNPPLC or other Interested Parties at any time and from time to time prior to the Completion Date (or, if no Completion Date occurs prior to the Designated Sale Date, then prior to the Designated Sale Date) by reason of, in connection with or arising out of (A) their ownership or alleged ownership of any interest in the Property or the payments required by the Operative Documents, (B) the use or operation of the Property, (C) the negotiation, administration or
Amended and Restated Purchase Agreement (Building 7) – Page 3

 

 

      enforcement of the Operative Documents, (D) the making of Funding Advances, (E) the Construction Project, (F) the breach by NAI of this Agreement or any other Operative Document 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 of BNPPLC under the Ground Lease or the Closing Certificate, 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; plus
 
  (2)   interest accruing at the Default Rate, compounded annually, on each payment of any such Losses by BNPPLC or any other Interested Party from the date such payment was made to the Designated Sale Date.
For purposes of computing the Balance of Unpaid Construction Period Losses, Losses as described in clause (1) of this definition will include each reduction (if any) (i) in the Carrying Costs added to the Outstanding Construction Allowance as provided in the Construction Agreement, or (ii) in the Base Rent payable to BNPPLC as provided in the Lease, that results from Pre-lease Force Majeure Losses. In other words, the Losses described in clause (1) will include the additional (if any) Carrying Costs and Base Rent that would have accrued if Pre-lease Force Majeure Losses were set at zero dollars ($0.00) in the formulas set forth in the Construction Agreement and in the Lease for calculating Carrying Costs and Base Rent, respectively.
Notwithstanding the foregoing, however, none of the following will be included in the Balance of Unpaid Construction Period Losses: (i) amounts included in or paid by BNPPLC with the proceeds of the Initial Advance (including Transaction Expenses); (ii) Losses paid or reimbursed from Construction Advances (including Local Impositions, insurance premiums and amounts paid by NAI prior to the Completion Date and reimbursed to it through Construction Advances made pursuant to the Construction Agreement, and also including costs and expenditures incurred or paid by or on behalf of BNPPLC after any Owner’s Election to Continue Construction, to the extent that such costs and expenditures are considered to be Construction Advances as provided in the Construction Agreement); (iii) any other Losses which NAI has paid prior to the Designated Sale Date or for which NAI remains fully obligated to pay pursuant to the other Operative Documents (including Covered Construction Period Losses paid or payable by NAI pursuant to the Construction Agreement); and (iv) any decline in the value of the Property, including any such decline that is attributable solely to a Pre-lease Force Majeure Event and thus constitutes a Pre-lease Force Majeure Loss.
“BNPPLC’s Actual Out of Pocket Costs” means the out-of-pocket costs and expenses,
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if any, incurred by BNPPLC in connection with a sale of the Property under this Agreement or in connection with the collection of payments due to it under this Agreement (including any Breakage Costs; Attorneys’ Fees; appraisal costs; and income, transfer, withholding or other taxes which do not constitute Excluded Taxes; but not including Excluded Taxes or costs of removing any Lien Removable by BNPPLC).
“Break Even Price” means an amount equal to:
  •   the Lease Balance, plus
 
  •   BNPPLC’s Actual Out of Pocket Costs, and plus
 
  •   an amount equal to the Balance of Unpaid Construction Period Losses (if any).
If, however, the Balance of Unpaid Construction Period Losses includes Contingent Losses, then for purposes of computing the Break Even Price applicable to any proposed sale on the Designated Sale Date, NAI may elect to exclude such Contingent Losses from the Break Even Price by providing to BNPPLC, for the benefit of BNPPLC and other Interested Parties, a written agreement to indemnify and defend BNPPLC and other Interested Parties against the excluded Losses. However, to be effective for purposes of reducing 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)(1), (2), (3), (4) and (5) of the Lease and otherwise must be in form and substance reasonably satisfactory to BNPPLC.
“Committed Price” has the meaning indicated in subparagraph 3(C)(4).
“Conditions to NAI’s Initial Remarketing Rights” has the meaning indicated in subparagraph 2(A)(2)(a).
“Contingent Losses” means any Losses that consist of claims asserted against BNPPLC or another Interested Party prior to the Designated Sale Date, but that are not liquidated or paid on or prior to the Designated Sale Date. Any Contingent Losses included in the Unpaid Balance of Construction Period Losses, and thus which are relevant to the computation of the Break Even Price, will equal the sum as reasonably estimated by BNPPLC of (i) all Attorneys’ Fees and other costs that will be incurred to defend against such claims, and (ii) the amount for which BNPPLC or the other Interested Party can settle or satisfy such claims.
“Decision Not to Sell at a Loss” means a decision by BNPPLC not to sell the Property on the Designated Sale Date to an Applicable Purchaser as provided in
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subparagraph 2(A)(2), despite NAI’s satisfaction of the Conditions to NAI’s Initial Remarketing Rights.
“Deemed Sale” has the meaning indicated in subparagraph 3(D).
“Extended Remarketing Period” means a period beginning on the Designated Sale Date and ending on the Final Sale Date.
“Fair Market Value” has the meaning indicated in Exhibit B.
“Final Sale Date” means the earliest of:
  •   any date after the Designated Sale Date upon which BNPPLC conveys the Property to consummate a sale of the Property to NAI because of BNPPLC’s exercise of the Put Option as provided in subparagraph 3(B); or
 
  •   any date after the Designated Sale Date upon which BNPPLC conveys the Property to consummate a sale of the Property to NAI or to any Affiliate of NAI, including any such sale resulting from NAI’s exercise of its rights under subparagraph 3(A); or
 
  •   any date after the Designated Sale Date upon which BNPPLC conveys the Property to consummate a Qualified Sale, or would have done so but for a material breach of this Agreement by NAI (including any breach of its obligation to make any Supplemental Payment required in connection with such Qualified Sale); or
 
  •   the second anniversary of the Designated Sale Date, which will be the date of a Deemed Sale as provided in subparagraph 3(D) if no earlier date qualifies as the Final Sale Date and the entire Property is not sold by BNPPLC to NAI or an Applicable Purchaser prior to the second anniversary of the Designated Sale Date.
“Initial Remarketing Notice” means a notice delivered to BNPPLC by NAI prior to the Designated Sale Date in which NAI confirms NAI’s decision to exercise NAI’s Initial Remarketing Rights and the amount of the Initial Remarketing Price. (Once given, any such notice may not be rescinded or modified without BNPPLC’s consent.)
“Initial Remarketing Price” means the cash price set forth in an Initial Remarketing Notice delivered by NAI to BNPPLC as the price for which NAI has arranged a sale of the Property on the Designated Sale Date to an Applicable Purchaser which is not an Affiliate of NAI. Such price may be any price negotiated by the Applicable Purchaser in
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good faith and on an arms length basis with NAI.
“Lease Balance” means the Lease Balance (as defined in the Common Definitions and Provisions Agreement) on the Designated Sale Date, but computed without deduction for any Supplemental Payment or other amount paid to BNPPLC pursuant to this Agreement on the Designated Sale Date.
“Make Whole Amount” means the sum of the following:
     (1) the amount (if any) by which the Lease Balance on the Designated Sale Date exceeds the following, as applicable: (a) all 97-10/Prepayments (if any) which were actually paid to BNPPLC on or before the Designated Sale Date, or (b) any Supplemental Payment which was actually paid to BNPPLC on the Designated Sale Date; together with interest on such excess computed at the Default Rate for the period commencing on the Designated Sale Date and ending on the Final Sale Date; plus
     (2) any unpaid Base Rent or other amounts due to BNPPLC pursuant to the other Operative Documents; plus
     (3) BNPPLC’s Actual Out of Pocket Costs; plus
     (4) an amount equal to the Balance of Unpaid Construction Period Losses (if any), together with interest on thereon computed at the Default Rate for the period commencing on the Designated Sale Date and ending on the Final Sale Date; plus
     (5) the amount, but not less than zero, by which (i) all Local Impositions, insurance premiums and other Losses of every kind suffered or incurred by BNPPLC (whether or not reimbursed in whole or in part by another Interested Party) with respect to the ownership, operation or maintenance of the Property during the Extended Remarketing Period, exceeds (ii) any rents or other sums collected by BNPPLC during such period from third parties as consideration for any lease or other contracts made by BNPPLC that authorize the use and enjoyment of the Property by such parties; together with interest on such excess computed at the Default Rate for each day prior to the Final Sale Date.
“Maximum Remarketing Obligation” means a dollar amount equal to the following (but not less than zero):
  •   85% of the Adjusted Lease Balance; less
 
  •   any Fixed Rate Settlement Amount that NAI is required to pay pursuant to the
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      Lease because of any acceleration of the Designated Sale Date which causes it to occur prior to the date upon which the Term of the Lease is scheduled to expire (as such date is confirmed in clause (1) of the definition of Designated Sale Date in the Common Definitions and Provisions Agreement).
“Must Sell Price” means, with respect to any Proposed Sale arranged by NAI pursuant to subparagraph 3(C), a cash price to BNPPLC equal to the Make Whole Amount, computed as of the Proposed Sale Date applicable to such Proposed Sale, plus all reimbursements or payments by BNPPLC to NAI that will be required by clause (4) of subparagraph 3(E) in connection with the Proposed Sale.
“NAI’s Extended Remarketing Right” has the meaning indicated in subparagraph 3(C).
“NAI’s Initial Remarketing Rights” has the meaning indicated in subparagraph 2(A)(2).
“NAI’s Target Price” means the cash purchase price that, according to NAI, should reasonably be expected for the Property during the Extended Remarketing Period if the parties make a reasonable marketing effort to sell the Property, as such price is set forth in a notice given by NAI to BNPPLC after the Designated Sale Date. Once established by any such notice, the amount of NAI’s Target Price will not be increased, although nothing in this definition will be construed to prevent NAI from arranging a sale of the Property pursuant to this Agreement at a price higher than NAI’s Target Price. After providing a notice of NAI’s Target Price to BNPPLC, NAI may later decrease NAI’s Target Price by another notice to BNPPLC, but only if the decrease is justified by a material adverse change in the physical condition of the Property (e.g., significant damage to the Property by fire or other casualty).
“Notice of Sale” has the meaning indicated in subparagraph 3(C)(4).
“Proposed Sale” has the meaning indicated in subparagraph 3(C).
“Proposed Sale Date” has the meaning indicated in subparagraph 3(C)(4).
“Purchase Option” has the meaning indicated in subparagraph 2(A)(1).
“Put Option” has the meaning indicated in subparagraph 3(B).
“Qualified Sale” means any (1) Deemed Sale as described in subparagraph 3(D), or (2) actual sale (prior to any such Deemed Sale) of all or substantially all of the Property to an Applicable Purchaser that occurs after the thirty day period specified in subparagraph 3(A) and that:
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  •   results from NAI’s exercise of NAI’s Extended Remarketing Right as described in subparagraph 3(C); or
 
  •   is approved in advance as a Qualified Sale by NAI; or
 
  •   is to a third party which is not an Affiliate of BNPPLC and, if it is completed by a conveyance from BNPPLC prior to eighteen months after the Designated Sale Date, is for a price not less than the least of the following amounts:
  (a)   the lowest price at which BNPPLC will be obligated, pursuant to clause (4) of subparagraph 3(E), to reimburse to NAI (i) the entire amount of any Supplemental Payment theretofore made by NAI to BNPPLC, or (ii) if no such Supplemental Payment has been made, but NAI has theretofore made one or more 97-1/Prepayments to BNPPLC, all such 97-10/Prepayments; or
 
  (b)   (i) if NAI notified BNPPLC of NAI’s Target Price prior to the date BNPPLC and the third party agreed to a price for the sale, NAI’s Target Price, or (ii) if NAI did not notify BNPPLC of NAI’s Target Price prior to the date BNPPLC and the third party agreed to a price for the sale, any price satisfactory to BNPPLC in its sole good faith business judgment; or
 
  (c)   90% of the Fair Market Value of the Property.
NAI acknowledges that BNPPLC’s own marketing efforts after the Designated Sale Date will depend upon the minimum price required for a Qualified Sale, and such efforts could be hampered if NAI’s Target Price is too high. Thus, after receipt of any notice of NAI’s Target Price from NAI, BNPPLC may (but will not be obligated to) invoke the Valuation Procedures in order to determine the minimum price permitted under clause (c) preceding.
“Sale Closing Documents” means the following documents, which BNPPLC must tender pursuant to Paragraph 5(A) to consummate any sale of the Property pursuant to this Agreement: (1) documents in the forms required by Exhibit C, including either a termination of or an assignment of the Ground Lease and other rights and interests of BNPPLC in the Property, (2) a Secretary’s Certificate in the form attached as Exhibit D and (3) a certificate concerning tax withholding in the form attached as Exhibit E.
“Supplemental Payment” has the meaning indicated in subparagraph 2(A)(3).
“Supplemental Payment Obligation” has the meaning indicated in
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subparagraph 2(A)(3).
“Valuation Procedures” means procedures set forth in Exhibit B, which are to be followed in the event a determination of the Fair Market Value of the Property or any portion thereof is required by this Agreement.
2 NAI’s Options and Obligations on the Designated Sale Date.
     (A) Purchase Option; Initial Remarketing Rights; Supplemental Payment Obligation. Whether or not an Event of Default has occurred and is continuing, but subject to Paragraph 6 below:
     (1) NAI will have the right (the “Purchase Option”) to purchase or cause an Affiliate of NAI, as the Applicable Purchaser, to purchase the Property on the Designated Sale Date for a cash price equal to the Break Even Price.
     (2) If NAI does not exercise the Purchase Option, NAI will have the following rights (collectively, “NAI’s Initial Remarketing Rights”):
     (a) First, NAI will have the right to designate a third party, other than an Affiliate of NAI, as the Applicable Purchaser and to cause such Applicable Purchaser to purchase the Property on the Designated Sale Date for a cash price equal to the Initial Remarketing Price. Such right, however, will be subject to the conditions (the “Conditions to NAI’s Initial Remarketing Rights”) that (i) NAI deliver an Initial Remarketing Notice to BNPPLC within the thirty days prior to the Designated Sale Date, (ii) on the Designated Sale Date the Applicable Purchaser tenders to BNPPLC a payment equal to the Initial Remarketing Price, and (iii) NAI itself tenders to BNPPLC the Supplemental Payment, if any, which will be required by subparagraph 2(A)(3) in the event BNPPLC completes the sale to the Applicable Purchaser. Further, notwithstanding the satisfaction of the Conditions to NAI’s Initial Remarketing Rights on the Designated Sale Date, if the sum of the price to be paid by the Applicable Purchaser for the Property (i.e., the Initial Remarketing Price) and any Supplemental Payment required by subparagraph 2(A)(3) is less than the Break Even Price, then BNPPLC may affirmatively elect not to complete the sale of the Property to the Applicable Purchaser on the Designated Sale Date (and thereby defer the sale of the Property pursuant to this Agreement) by making a Decision Not to Sell at a Loss.
     (b) Second, if BNPPLC completes a sale of the Property to an Applicable Purchaser on the Designated Sale Date pursuant to subparagraph 2(A)(2)(a) and the price paid by the Applicable Purchaser for the
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Property (i.e., the Initial Remarketing Price) is greater than the Break Even Price, then BNPPLC will pay the excess to NAI or as otherwise required by Applicable Law.
     (3) If for any reason whatsoever BNPPLC does not receive a cash price for the Property on the Designated Sale Date equal to or in excess of the Break Even Price in connection with a sale made pursuant to subparagraph 2(A)(1) or subparagraph 2(A)(2)(a), then NAI will have the obligation (the “Supplemental Payment Obligation”) to pay to BNPPLC on the Designated Sale Date a supplemental payment (the “Supplemental Payment”) equal to the lesser of:
     (a) the amount by which the Break Even Price exceeds any such cash price actually received by BNPPLC on the Designated Sale Date; or
     (b) the Maximum Remarketing Obligation.
Without limiting the generality of the foregoing, NAI must (unless excused by subparagraph 6(B) below) make the Supplemental Payment even if BNPPLC does not sell the Property to NAI or an Applicable Purchaser on the Designated Sale Date because of (A) a Decision Not to Sell at a Loss, or (B) a failure of NAI to exercise, or a decision by NAI not to exercise, the Purchase Option or NAI’s Initial Remarketing Rights, or (C) a failure of NAI or any Applicable Purchaser to tender the price required by the forgoing provisions on the Designated Sale Date following any exercise of or attempt by NAI to exercise the Purchase Option or NAI’s Initial Remarketing Rights.
NAI acknowledges that it is undertaking the Supplemental Payment Obligation in consideration of the rights afforded to it by this Agreement, but that such obligation is not contingent upon any exercise by NAI of such rights or upon any purchase of the Property by NAI or an Applicable Purchaser. If any Supplemental Payment due according to this subparagraph 2(A)(3) is not actually paid to BNPPLC on the Designated Sale Date, then NAI must pay interest on the past due amount computed at the Default Rate. However, NAI will be entitled to a credit against the interest required by the preceding sentence equal to the Base Rent, if any, actually paid by NAI pursuant to the Lease for any period after the Designated Sale Date.
     (4) For the avoidance of doubt, BNPPLC acknowledges that NAI may elect not to exercise the Purchase Option or NAI’s Initial Remarketing Rights and instead pay to BNPPLC a Supplemental Payment equal to the Maximum Remarketing Obligation on the Designated Sale Date in full satisfaction of its obligations under this subparagraph 2(A).
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     (B) Designation of the Purchaser. To give BNPPLC the opportunity before the Designated Sale Date to prepare the Sale Closing Documents, NAI must, by a notice to BNPPLC given at least ten days prior to the Designated Sale Date, specify irrevocably, unequivocally and with particularity any party who will purchase the Property because of NAI’s exercise of its Purchase Option or of NAI’s Initial Remarketing Rights. If NAI fails to do so, BNPPLC may postpone the delivery of the Sale Closing Documents until a date after the Designated Sale Date and not more than ten 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 subparagraph 2(A)(3).
     (C) Delivery of Property Related Documents If BNPPLC Retains the Property. Unless NAI or its Affiliate or another Applicable Purchaser purchases the Property pursuant to subparagraph 2(A), promptly after the Designated Sale Date NAI must deliver and assign to BNPPLC all plans and specifications for the Property previously prepared for NAI or otherwise available to NAI (including those prepared in connection with the construction contemplated by the Construction Agreement), together with all other files, documents and permits of NAI (including any subleases then in force) which may be necessary or useful to any future owner’s or occupant’s use of the Property. Without limiting the foregoing, NAI will transfer or arrange the transfer to BNPPLC of all utility, building, health and other operating permits required by any municipality or other governmental authority having jurisdiction over the Property for uses of the Property permitted by the Lease or for any remaining construction required to complete the Improvements contemplated by the Construction Agreement if neither NAI nor any Affiliate or other Applicable Purchaser purchases the Property pursuant to subparagraph 2(A).
     (D) Effect of the Purchase Option and NAI’s Initial Remarketing Rights on Subsequent Title Encumbrances. Any conveyance made to consummate a sale of the Property to NAI or any Applicable Purchaser pursuant to subparagraph 2(A) will cut off and terminate all interests in the Property claimed by, through or under BNPPLC, including Liens Removable by BNPPLC (including any leasehold estate or other interests conveyed by BNPPLC to third parties, even if conveyed in the ordinary course of BNPPLC’s business, and including any judgment liens established against the Property because of a judgment rendered against BNPPLC), but not personal obligations of NAI to BNPPLC under the Lease or other Operative Documents (including obligations of NAI arising under the indemnities in the Construction Agreement or the Lease, which indemnities will survive any such sale). Anyone accepting or taking any interest in the Property through or under BNPPLC on or after the Effective Date will acquire such interest subject to the Purchase Option.
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     (E) Security for NAI’s Purchase Option. If (contrary to the intent of the parties as expressed in subparagraph 4(C) of the Lease) it is determined that NAI is not, under applicable state law as applied to the Operative Documents, the equitable owner of the Property and the borrower from BNPPLC in a financing arrangement, but rather is a tenant under the Lease with an option to purchase from BNPPLC as provided in subparagraph 2(A)(1), then the parties intend that the Purchase Option be secured by a lien and security interest against the Property. Accordingly, BNPPLC does hereby grant to NAI a lien and security interest against the Property, including all rights, title and interests of BNPPLC from time to time in and to the Land and Improvements, in order to secure (1) BNPPLC’s obligation to convey the Property to NAI or an Affiliate designated by it if NAI exercises the Purchase Option and tenders payment of the Break Even Price to BNPPLC on the Designated Sale Date as provided herein, and (2) NAI’s right to recover any damages from BNPPLC caused by a breach of such obligation, including any such breach caused by a rejection or termination of this Agreement in any bankruptcy or insolvency proceeding instituted by or against BNPPLC, as debtor. NAI may enforce such lien and security interest judicially after any such breach by BNPPLC, but not otherwise.
3 NAI’s Rights, Options and Obligations After the Designated Sale Date.
     (A) NAI’s Right to Buy During the Thirty Days After the Designated Sale Date. Even after a failure to pay any required Supplemental Payment on the Designated Sale Date, NAI may tender (or cause an Applicable Purchaser to tender) to BNPPLC the full Make Whole Amount (including all amounts then due under the other Operative Documents) on any Business Day within thirty days after the Designated Sale Date. If presented with such a tender within thirty days after the Designated Sale Date, BNPPLC must accept it and promptly thereafter deliver to NAI (or the Applicable Purchaser) the Sale Closing Documents and any Escrowed Proceeds then constituting Property held by BNPPLC. Otherwise, BNPPLC will have no further obligation to sell the Property to NAI or to any Affiliate of NAI pursuant to this Agreement, although BNPPLC will continue to have the option to require NAI to buy the Property if the conditions listed in the next subparagraph are satisfied.
     (B) NAI’s Obligation to Buy if Certain Conditions are Satisfied. Regardless of any prior Decision Not to Sell at a Loss, BNPPLC will have the option (the “Put Option”) to require NAI to purchase the Property upon demand at any time after the Designated Sale Date for a cash price equal to the Make Whole Amount if:
     (1) BNPPLC has not already conveyed the Property to consummate a sale of the Property to NAI or an Applicable Purchaser pursuant to other provisions of this Agreement; and
     (2) a 97-1/Default (100%) occurs or is continuing on or after the Designated
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Sale Date; and
     (3) BNPPLC notifies NAI of BNPPLC’s exercise of the Put Option within two years following the Designated Sale Date.
Further, and without limiting the foregoing, if any Event of Default occurs as described in clauses (G), (H) or (I) of the definition Event of Default in the Common Definitions and Provisions Agreement because of any bankruptcy proceeding instituted by or against NAI, as debtor, under Title 11 of the United States Code, then NAI will be obligated (without any further act or notice or demand by BNPPLC) to pay to BNPPLC the Make Whole Amount and purchase the Property, as if (i) BNPPLC had exercised the Put Option, and (ii) the second Business Day after the commencement of such Event of Default was the Final Sale Date.
     (C) NAI’s Extended Right to Remarket. If the Property is not sold to NAI or an Applicable Purchaser on the Designated Sale Date pursuant to this Agreement, NAI will have the right (“NAI’s Extended Remarketing Right”) during the Extended Remarketing Period to arrange a sale of the Property to an Applicable Purchaser, other than an Affiliate of NAI, for a price equal to or in excess of the Must Sell Price (a “Proposed Sale”). NAI’s Extended Remarketing Right will, however, be subject to all of the following conditions:
     (1) BNPPLC has not exercised the Put Option as provided in subparagraph 3(B) or already contracted with another Applicable Purchaser to convey the Property in connection with a Qualified Sale.
     (2) NAI’s Extended Remarketing Right is not terminated pursuant to subparagraph 6(C) because of NAI’s failure to pay any required Supplemental Payment.
     (3) NAI’s Extended Remarketing Right is not terminated pursuant to subparagraph 6(C) because of NAI’s failure to pay any required 97-10 Prepayment .
     (4) NAI must have provided a notice to BNPPLC (a “Notice of Sale”) setting forth (i) the date proposed by NAI as the Final Sale Date (the “Proposed Sale Date”), which must be no sooner than thirty days after BNPPLC’s receipt of the Notice of Sale and no later than the last Business Day of the Extended Remarketing Period, (ii) the full legal name of the Applicable Purchaser and such other information as is needed to prepare the Sale Closing Documents, and (iii) the cash price that will be tendered to BNPPLC for the Property (the “Committed Price”).
     (5) The Committed Price must be no less than the Must Sell Price, computed as of the Proposed Sale Date. Also, if NAI has notified BNPPLC of NAI’s Target Price, the Committed Price must be no less than NAI’s Target Price.
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     (D) Deemed Sale On the Second Anniversary of the Designated Sale Date. If no date prior to the second anniversary of the Designated Sale Date qualifies as the Final Sale Date, then on second anniversary of the Designated Sale Date BNPPLC will, for purposes of the next subparagraph, be deemed to have sold the Property (a “Deemed Sale”) to an Applicable Purchaser at a Qualified Sale for a net cash price equal to its Fair Market Value.
     (E) NAI’s Right to Share in Sales Proceeds Received By BNPPLC From any Qualified Sale. BNPPLC must apply the cash proceeds received by BNPPLC from any Qualified Sale (regardless of whether the sale is arranged by NAI as provided in subparagraph 3(C) or by BNPPLC itself), or deemed to be received in connection with any Deemed Sale, in the following order of priority:
     (1) first, to pay or reimburse to BNPPLC BNPPLC’s Actual Out of Pocket Costs incurred in connection with the Qualified Sale;
     (2) second, to pay or reimburse to BNPPLC the Local Impositions, insurance premiums and other Losses suffered or incurred by BNPPLC with respect to the ownership, operation or maintenance of the Property after the Designated Sale Date, together with interest on such Local Impositions, insurance premiums and other Losses computed at the Default Rate from the date paid or incurred to the date reimbursed from sales proceeds;
     (3) third, to pay to BNPPLC an amount equal to the difference, if any, computed by subtracting (i) the aggregate payments, if any, previously paid by NAI to BNPPLC as a Supplemental Payment or as a 97-10/Prepayment, from (ii) the Adjusted Lease Balance;
     (4) fourth, to reimburse NAI for the aggregate payments, if any, previously made by NAI to BNPPLC as a Supplemental Payment or as 97-10/Prepayments;
     (5) fifth, to pay to BNPPLC an amount that, when added to all payments or reimbursements to BNPPLC described in the preceding clauses (1), (2) and (3), will equal the Make Whole Amount;
     (6) sixth, to pay to BNPPLC any other amounts then due from NAI to BNPPLC under any of the Operative Documents; and
     (7) last, if any such cash proceeds exceed all the payments and reimbursements that are required or may be required as described in the preceding clauses of this subparagraph, BNPPLC may retain the excess.
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If, however, BNPPLC completes any sale and conveyance of the Property after the Extended Remarketing Period expires or is terminated, BNPPLC will not be required by this subparagraph to share any proceeds of the sale or conveyance with NAI or any other party claiming through or under NAI.
4 Transfers By BNPPLC After the Designated Sale Date.
     (A) BNPPLC’s Right to Sell. At any time more than thirty days after the Designated Sale Date, if the Property has not already been sold and conveyed by BNPPLC pursuant to Paragraph 2 or Paragraph 3, BNPPLC will 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 BNPPLC in its sole good faith business judgment.
     (B) Survival of NAI’s Rights and the Supplemental Payment Obligation. If the Property is not sold on the Designated Sale Date, and if BNPPLC completes a sale or other transfer of the Property after the Designated Sale Date, other than a Qualified Sale, the Supplemental Payment Obligation will survive in favor of BNPPLC’s successors and assigns with respect to the Property, and BNPPLC’s successors and assigns will take the Property subject to NAI’s rights under Paragraph 3, all on the same terms and conditions as would have applied to BNPPLC itself if BNPPLC had not transferred or sold the Property. Without limiting the foregoing, any purchaser that acquires the Property from BNPPLC during the Extended Remarketing Period, other than at a Qualified Sale, will be obligated to distribute proceeds of a subsequent Qualified Sale of the Property as described in the subparagraph 3(E) in the same manner and to the same extent that BNPPLC itself would have been obligated if not for the sale by BNPPLC to the purchaser.
     (C) Easements and Other Transfers in the Ordinary Course of Business. No “Permitted Transfer” described in clause (5) (the last clause) of the definition thereof in the Common Definitions and Provisions Agreement will constitute a Qualified Sale if it covers less than all or substantially all of BNPPLC’s then existing interests in the Property. Any such Permitted Transfer of less than all or substantially all of BNPPLC’s then existing interests in the Property will not be prohibited by this Agreement during the Extended Remarketing Period or otherwise; provided, however, any such Permitted Transfer made before the end of one hundred eighty days after the Designated Sale Date, or made to an Affiliate of BNPPLC before the end of the Extended Remarketing Period, or otherwise not made in the ordinary course of business, will be made subject to NAI’s rights under Paragraph 3. Thus, for example, if the Property is not sold by BNPPLC to an Applicable Purchaser on the Designated Sale Date, then at any time more than one hundred eighty days after the Designated Sale Date BNPPLC may in the ordinary course of business convey a utility easement or a lease of space in the Improvements to a Person not an Affiliate of BNPPLC free from NAI’s rights under Paragraph 3, although following such conveyance of the lesser estate, NAI’s rights under Paragraph 3 will continue during the Extended
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Remarketing Period as to BNPPLC’s remaining interest in the Land and the Improvements.
5 Terms of Conveyance Upon Purchase.
     (A) Tender of Sale Closing Documents. As necessary to consummate any sale of the Property to NAI or an Applicable Purchaser pursuant to this Agreement, BNPPLC must, subject to any postponement permitted by subparagraph 2(B), promptly after the tender of the purchase price and any other payments to BNPPLC required pursuant to Paragraph 2 or Paragraph 3, as applicable, convey the Property to NAI or the Applicable Purchaser, as the case may be, by BNPPLC’s execution, acknowledgment (where appropriate) and delivery of the Sale Closing Documents. Such conveyance by BNPPLC will be subject to the Permitted Encumbrances and any other encumbrances that do not constitute Liens Removable by BNPPLC, and such conveyance will not include the rights of BNPPLC 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 Loss incurred by BNPPLC or another Interested Party resulting in whole or in part from events or circumstances occurring or alleged to have occurred before such conveyance. The costs, both foreseen and unforeseen, of any purchase by NAI or an Applicable Purchaser will be the responsibility of the purchaser to the extent (if any) not included in any Break Even Price or Make Whole Amount actually paid to BNPPLC. If for any reason BNPPLC fails to tender the Sale Closing Documents as required by this Paragraph 5(A), BNPPLC will have the right and obligation to cure such failure at any time before thirty days after receipt of a demand for such cure from NAI. Prior to the end of such cure period, NAI may initiate appropriate legal action to specifically enforce BNPPLC’s obligation to deliver the Sale Closing Documents or to foreclose NAI’s liens or security interests against the Property which secure such obligation, but if BNPPLC does cure within such thirty day period, BNPPLC will not be liable for monetary damages because of its prior failure to deliver the Sale Closing Documents.
     (B) Delivery of Escrowed Proceeds. BNPPLC may deliver any Escrowed Proceeds constituting Property directly to NAI or to any Applicable Purchaser purchasing the Property 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; BNPPLC will not be responsible for the proper distribution or application by NAI or any Applicable Purchaser of any such Escrowed Proceeds; and any such payment of Escrowed Proceeds to NAI or an Applicable Purchaser will discharge any obligation of BNPPLC to deliver the same to all Persons claiming an interest therein.
6 Survival and Termination of the Rights and Obligations of NAI and BNPPLC.
     (A) Status of this Agreement Generally. Except as expressly provided in the next
Amended and Restated Purchase Agreement (Building 7) – Page 17

 

 

subparagraph or other provisions of this Agreement, this Agreement will not terminate; nor will NAI have any right to terminate this Agreement; nor will NAI be entitled to any reduction (by setoff or otherwise) of the Break Even Price, the Make Whole Amount or any payment required under this Agreement; nor will any of the obligations of NAI to BNPPLC under Paragraph 2 or Paragraph 3 be excused by reason of (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 BNPPLC under this Agreement or any other Operative Document or any other agreement to which BNPPLC 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 BNPPLC 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) NAI’s prior acquisition or ownership of any interest in the Property, or (ix) 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 under this Agreement (including the obligation to make any Supplemental Payment as provided in Paragraph 2) be separate from and independent of BNPPLC’s obligations under this Agreement or any other agreement between BNPPLC and NAI; however, nothing in this subparagraph will 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 BNPPLC’s failure to remove a Lien Removable by BNPPLC or because of any other default by BNPPLC under this Agreement: (A) the recovery of monetary damages, (B) injunctive relief in case of the violation, or attempted or threatened violation, by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Agreement which are binding upon BNPPLC, or (C) a decree compelling performance by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Agreement which are binding upon BNPPLC.
     (B) Election by NAI to Terminate the Supplemental Payment Obligation Prior to the Completion Date. By delivery of a notice to BNPPLC in the form attached as Exhibit F, NAI may terminate its Supplemental Payment Obligation, but only prior to the Completion Date and only if at the time of such exercise (1) NAI has given (and not rescinded) a Notice of NAI’s Intent to Terminate as provided in the Construction Agreement, or (2) BNPPLC has given any FOCB Notice as provided in the Construction Agreement. (If for any reason BNPPLC does not receive a notice terminating the Supplemental Payment Obligation as described in the preceding sentence prior to the Completion Date, then without any notice or other action by the parties to this Agreement, NAI will cease to have any right to terminate the Supplemental Payment Obligation.) If NAI does send a notice to BNPPLC in the form attached as Exhibit F, such notice will (as
Amended and Restated Purchase Agreement (Building 7) – Page 18

 

 

provided therein) constitute an irrevocable and absolute waiver by NAI of NAI’s rights to purchase the Property or to cause any of its Affiliates to purchase the Property pursuant to this Agreement. However, no such notice will terminate BNPPLC’s right to exercise the Put Option, which BNPPLC may exercise if NAI fails to make a 97-10/Permitted Prepayment required by the Construction Agreement.
     (C) Automatic Termination of NAI’s Rights. If NAI fails to pay the full amount of any Supplemental Payment required by subparagraph 2(A)(3) on the Designated Sale Date, then the Purchase Option, NAI’s Initial Remarketing Rights, NAI’s Extended Remarketing Right and all other rights of NAI under this Agreement, other than its rights under subparagraph 3(A), will terminate automatically. If, however, prior to the Designated Sale Date NAI effectively terminates the Supplemental Payment Obligation pursuant to subparagraph 6(B) by the delivery of a notice to BNPPLC in the form attached as Exhibit F, so that NAI is excused from the obligation to make any Supplemental Payment pursuant to subparagraph 2(A)(3), then NAI’s Extended Remarketing Right will not terminate automatically pursuant to this subparagraph 6(C), but rather will survive except to the extent waived by such notice. No termination of NAI’s rights as described in this subparagraph will limit BNPPLC’s other remedies, including its right to sue NAI for any 97-10/Prepayments, pursuant to any of the Operative Documents or (following a 97-1/Default (100%)) its right to exercise the Put Option.
     (D) Payment Only to BNPPLC. All amounts payable under this Agreement by NAI and, if applicable, by an Applicable Purchaser must be paid directly to BNPPLC. If paid to other parties, such payments will not be effective for purposes of this Agreement.
     (E) Preferences and Voidable Transfers. If any payment to BNPPLC by an Applicable Purchaser is held to constitute a preference or a voidable transfer under Applicable Laws, or must for any other reason be refunded by BNPPLC to the Applicable Purchaser or to another Person, and if such payment to BNPPLC reduced or had the effect of reducing a payment required of NAI by this Agreement (e.g., the Supplemental Payment) or increased or had the effect of increasing any sale proceeds paid over to NAI pursuant to subparagraph 2(A)(2)(b) or pursuant to subparagraph 3(E), then NAI must pay to BNPPLC upon demand an amount equal to the reduction of the payment required of NAI or to the increase of the excess sale proceeds paid to NAI, as applicable, and this Agreement will continue to be effective or will be reinstated as necessary to permit BNPPLC to enforce its right to collect such amount from NAI.
     (F) Remedies Under the Other Operative Documents. No repossession of or re-entering upon the Property or exercise of any other remedies available to BNPPLC under the other Operative Documents will terminate NAI’s rights or obligations under this Agreement, all of which will survive BNPPLC’s exercise of remedies under the other Operative Documents. NAI acknowledges that the consideration for this Agreement is separate from and independent of the consideration for the Construction Agreement, the Lease, the Closing Certificate and other
Amended and Restated Purchase Agreement (Building 7) – Page 19

 

 

agreements executed by the parties, and NAI’s obligations under this Agreement will not be affected or impaired by any event or circumstance that would excuse NAI from performance of its obligations under such other Operative Documents.
7 Certain Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy BNPPLC has with respect to the Property, and each and every right and remedy of BNPPLC will be cumulative and in addition to any other right or remedy given to it under this Agreement or now or hereafter existing in its favor at law or in equity. In addition to other remedies available under this Agreement, either party may obtain a decree compelling specific performance of any of the other party’s agreements hereunder.
8 Attorneys’ Fees and Legal Expenses. If BNPPLC commences any legal action or other proceeding because of any breach of this Agreement by NAI, BNPPLC may recover all Attorneys’ Fees incurred by it in connection therewith from NAI, whether or not such controversy, claim or dispute is prosecuted to a final judgment. Any Attorneys’ Fees incurred by BNPPLC in enforcing a judgment in its favor under this Agreement will 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.
9 Successors and Assigns. The terms, provisions, covenants and conditions hereof will be binding upon NAI and BNPPLC and their respective permitted successors and assigns and will inure to the benefit of NAI and BNPPLC and all permitted transferees, mortgagees, successors and assignees of NAI and BNPPLC with respect to the Property; except that (A) the rights of BNPPLC hereunder will not pass to NAI or any Applicable Purchaser or any subsequent owner claiming through NAI or an Applicable Purchaser, (B) BNPPLC will not assign this Agreement or any rights hereunder except pursuant to a Permitted Transfer, and (C) NAI will not assign this Agreement or any rights hereunder without the prior written consent of BNPPLC.
10 Amendment and Restatement of Prior Purchase Agreement. This Agreement amends, restates and replaces entirely the Prior Purchase Agreement. Without limiting the rights and obligations of NAI under this Agreement, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Purchase Agreement are now made subject to the terms and conditions of this Agreement; and all rights and interests of BNPPLC in and to the Land or other Property under the Prior Purchase Agreement are renewed and extended (rather than terminated) by this Agreement.
[The signature pages follow.]
Amended and Restated Purchase Agreement (Building 7) – Page 20

 

 

     IN WITNESS WHEREOF, this Amended and Restated Purchase Agreement (Building 7) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
Amended and Restated Purchase Agreement (Building 7) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Purchase Agreement (Building 7) dated as of November 29, 2007.]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Purchase Agreement (Building 7) – Signature Page

 

 

Exhibit A
Legal Description
Parcel 7 and the Additional Leased Premises, as defined below, (collectively, the “Building 7 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the northern boundary of Parcel 7 and the southern boundary of Parcel 8, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 7 and Parcel 8, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 7 and Parcel 11, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 7 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
Exhibit A to Amended and Restated Purchase Agreement (Building 7) – Page 2

 

 

Exhibit B
Valuation Procedures
     This Exhibit explains the procedures to be used to determine Fair Market Value of the Property if such a determination is required by this Agreement. In such event, either party may invoke the procedures set out herein prior to the date the determination will be needed so as to minimize any postponement of any payment, the amount of which depends upon Fair Market Value. In the event such a payment becomes due before the required determination of Fair Market Value is complete, such payment will be postponed until the determination is complete. But in that event, when the required determination is complete, the payment will be made together with interest thereon, computed at a rate equal to ABR, accruing over the period the payment was postponed.
     If any determination of Fair Market Value is required, NAI and BNPPLC will attempt in good faith to reach a written agreement upon the Fair Market Value without unnecessary delay, and either party may propose such an agreement to the other. If, however, for any reason whatsoever, they do not execute such an agreement within seven days after the first such proposed agreement is offered by one party to the other, then the determination will be made by independent appraisers in accordance with the following procedures:
1. Definitions and Assumptions. For purposes of the determination, Fair Market Value will be defined as follows, and all appraisers or others involved in the determination will be instructed to use the following definition:
     “Fair Market Value” means the most probable net cash price, as of a specified date, for which the Property should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.
In addition, the appraisers or others making the determination will be instructed to assume that ordinary and customary brokerage fees, title insurance costs and other sales expenses will be incurred and deducted in the calculation of such net cash price. Such appraisers or others making the determination will also be instructed to assume that the value of the Property (or applicable portion thereof) is neither enhanced nor reduced by any lease to another tenant that BNPPLC may have executed subsequent to the termination or expiration of the Lease (a “Replacement Lease”). In other words, rather than determine value in light of actual rents generated or to be generated by any such Replacement Lease, the Property (or applicable portion thereof) will be valued in light of the most probable rent that it should bring in a competitive and open market (in this section, a “Fair Market Rental”), taking into account:
     (i) the fact that the Ground Lease exists to permit the continued use and enjoyment of the Property during the term of the

 

 

Ground Lease 1 ; and
     (ii) the actual physical condition of the Property 2 ; and
     (iii) that a reasonable period of time may be required to market the Property (or applicable portion thereof) for lease and make it ready for use or occupancy before it is leased at a Fair Market Rental.
2. Initial Selection of Appraisers; Appraiser’s Agreement as to Value. After having failed to reach a written agreement upon Fair Market Value as described in the second paragraph of this Exhibit, either party may deliver a notice to the other demanding the appointment of appraisers (the “First Appraisal Notice”) pursuant to this Exhibit. In such event:
     (a) Within fifteen days after the First Appraisal Notice is delivered, NAI and BNPPLC must each appoint an independent property appraiser who has experience appraising commercial properties in California and notify the other party of such appointment, including the name of the appointed appraiser (a “Notice of Appointment”).
     (b) If the appraiser appointed by NAI and the appraiser appointed by BNPPLC agree in writing upon the Fair Market Value (an “Appraiser’s Agreement As To Value”), such agreement will be binding upon NAI and BNPPLC. Both NAI and BNPPLC will instruct their respective appraisers to attempt in good faith to quickly reach an Appraiser’s Agreement As To Value. Neither appraiser will be required to produce a formal appraisal prior to reaching an Appraiser’s Agreement As To Value.
3. Selection of a Third Appraiser. If the two appraisers fail to deliver an Appraiser’s Agreement As to Value within thirty days following the later of the dates upon which NAI or BNPPLC delivers its Notice of Appointment, then either party (NAI or BNPPLC) may deliver another notice to the other (a “Third Appraisal Notice”), demanding that the two appraisers appoint a third independent property appraiser to help with the determination of Fair Market Value. Immediately after the Third Appraisal Notice is delivered, each of the first two appraisers
 
     1 But for the Ground Lease, the Improvements could not be used and maintained in place. Thus, the parties believe that, but for the Ground Lease, the Improvements would be worth much less. However, it is understood that Property does not include the fee estate in the Land, and the continued use of the Improvements will necessitate the payment of rents as required by the Ground Lease and compliance with the other terms and conditions thereof. Accordingly, the value of the Land itself will not be included in the Fair Market Value of the Property.
 
     2 If, however, the use of the Property by BNPPLC or any tenant under any Replacement Lease after NAI vacated the Property has resulted in excess wear and tear, such excess wear and tear will be assumed not to have occurred for purposes of determining Fair Market Value.
Exhibit B to Amended and Restated Purchase Agreement (Building 7) – Page 2

 

 

must act promptly, reasonably and in good faith to try to reach agreement upon the third appraiser. If, however, the two appraisers fail to reach agreement upon a third appraiser within ten days after the Third Appraisal Notice is delivered:
     (a) NAI and BNPPLC will each cause its respective appraiser to deliver, no later than fifteen days after the delivery of the Third Appraisal Notice, an unqualified written promise addressed to both of NAI and BNPPLC: (i) to act promptly, reasonably and in good faith in trying to reach agree upon the third appraiser, and (ii) to propose and consider proposals of persons as the third appraiser on the basis of objectivity and competence, not on the basis of such persons’ relationships with the other appraisers or with NAI or BNPPLC, and not on the basis of preferences expressed by NAI or BNPPLC.
     (b) If, despite the delivery of the promises described in the preceding subsection, the two appraisers fail to reach agreement upon a third appraiser within thirty days after the Third Appraisal Notice is delivered, then each of the first two appraisers must 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 NAI or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within ten days after such choices are submitted to him.
4. Resolution of Issues by the Third Appraiser. If a third appraiser is selected under the procedure set out above:
     (a) No later than thirty days after a third appraiser is selected, each of the first two appraisers must submit (and NAI and BNPPLC will each cause its appointed appraiser to submit) his best estimate of Fair Market Value, together with a written report supporting such estimate. (Such report need not be in the form of a formal appraisal, and may contain any qualifications the submitting appraiser deems necessary under the circumstances. Any such qualifications, however, may be considered by the third appraiser for purposes of the selection required by the next subsection.)
     (b) After receipt of the two estimates required by the preceding subsection, and no later than forty-five days after the third appraiser is selected, he must (i) choose one or the other of the two estimates of Fair Market Value submitted by the first two appraisers as being the more accurate in his opinion, and (ii) notify NAI and BNPPLC of which estimate he chose. The third appraiser will not be asked or allowed to specify an amount as Fair Market Value that is different than an estimate provided by one of the other two appraisers (either by averaging the two estimates or otherwise). The estimate of Fair Market Value thus chosen by the third appraiser as being the more accurate will be binding upon NAI and BNPPLC.
5. Criteria For Selecting Appraisers; Cost of Appraisals. All appraisers selected for the
Exhibit B to Amended and Restated Purchase Agreement (Building 7) – Page 3

 

 

appraisal process set out in this Exhibit will be disinterested, reputable, qualified appraisers with the designation of MAI or equivalent and with at least five years experience in appraising commercial properties comparable to the Property. NAI and BNPPLC will 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 NAI and BNPPLC.
6. Time is of the Essence; Defaults.
     (a) All time periods and deadlines specified in this Exhibit are of the essence.
     (b) Each party must cause the appraiser appointed by it (as set forth in Section 2(a)) to comply in a timely manner with the requirements of this Exhibit applicable to such appraiser. Accordingly, if an appraiser appointed by one of the parties as provided in Section 2(a) fails to comply in a timely manner with any provision of this Exhibit, such failure will be considered a default by the party who appointed such appraiser.
     (c) Any breach of or default under this Exhibit by either party will be construed as a breach of the Amended and Restated Purchase Agreement to which this Exhibit is attached.
     (d) Any such breach or default by NAI will constitute a 97-1/Default (100%); provided, however:
     (1) Before characterizing any such breach or default as a 97-1/Default (100%), BNPPLC must first notify NAI of the breach or default and give NAI the opportunity, during the five days after delivery of such notice, to fully rectify the breach or default.
     (2) Any breach or default by NAI under this Exhibit will be deemed rectified if, within such five day period, NAI offers BNPPLC an unqualified written agreement that all determinations of Fair Market Value required by this Agreement will, if made by the appraiser appointed by BNPPLC as hereinabove provided, be binding upon BNPPLC and NAI. (It is understood that following the delivery of any such agreement by NAI, no further input from NAI’s appraiser or from any official of the California bar association or from a third appraiser will be required for any required determination of Fair Market Value.)
Exhibit B to Amended and Restated Purchase Agreement (Building 7) – Page 4

 

 

Exhibit C
Requirements Re: Forms to Accomplish Assignment and Conveyance
The form of the documents to be used to accomplish any conveyance of BNPPLC’s interest in the Improvements and other Property pursuant to this Agreement will depend upon whether the conveyance is to NAI or an Applicable Purchaser and, in the case of an conveyance by NAI itself, upon whether NAI elects to take an assignment of the Ground Lease or to terminate the Ground Lease.
If NAI is itself acquiring BNPPLC’s interest in the Property, the conveyance of such interest will be accomplished either by (A) the execution of an Agreement Concerning Ground Lease in the form attached as Exhibit C-1, which (among other things) will effectively terminate the Ground Lease with the result that BNPPLC’s interest in all Improvements will revert to NAI by operation of law, or (B) BNPPLC’s execution of assignments in the forms attached as Exhibit C-2 and Exhibit C-3 and NAI’s execution of an Acknowledgment of Disclaimer of Representations and Warranties in the form attached as Exhibit C-4. NAI may choose between the Agreement Concerning Ground Lease or the alternative forms attached as Exhibits C-2, C-3 and C-4; however, if NAI fails to notify BNPPLC at least fifteen days prior to the Designated Sale Date that NAI chooses to receive the assignments in the forms attached as Exhibit C-2 and Exhibit C-3, BNPPLC may assume that NAI has elected instead to have BNPPLC execute the Agreement Concerning Ground Lease in the form attached as Exhibit C-1. If NAI does choose to receive the assignments in the forms attached as Exhibit C-2 and Exhibit C-3, NAI must execute and deliver to BNPPLC the Acknowledgment of Disclaimer of Representations and Warranties in the form attached as Exhibit C-4.
If an Applicable Purchaser is acquiring BNPPLC’s interest in the Improvements and other Property, such interest will be conveyed by BNPPLC’s execution and delivery of assignments in the forms attached as Exhibit C-2 and Exhibit C-3, and the Applicable Purchaser must execute and deliver to BNPPLC an Acknowledgment of Disclaimer of Representations and Warranties in the form attached as Exhibit C-4.

 

 

Exhibit C-1
RECORDING REQUESTED BY AND,
WHEN RECORDED, RETURN TO:
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
AGREEMENT CONCERNING GROUND LEASE
     THIS AGREEMENT CONCERNING GROUND LEASE (this “Agreement”) dated as of                     , 20        (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
This Agreement is entered into upon, and with respect to, the following facts and intentions:
     A. BNPPLC and NAI have heretofore entered into the following agreements:
     (1) Amended and Restated Ground Lease (Building 7) dated as of November 29, 2007 and recorded (or referenced in a memorandum thereof recorded) in the official records of Santa Clara County, California (the “Official Records”) on or about November 29, 2007 as Instrument Number                      (as the same may have been modified, the “Ground Lease”), whereby NAI, as ground lessor, ground leased to BNPPLC, as ground lessee, that certain land more particularly described in Annex A, attached hereto and incorporated herein by this reference (herein the “Land”); and
     (2) Amended and Restated Lease Agreement (Building 7) dated as of November 29, 2007 (as the same may have been modified, the “Sublease”), which was the subject of that certain Short Form of Sublease, dated as of November 29, 2007, recorded in the Official Records on or about November 29, 2007 as Instrument Number                      (the “Short Form of Sublease”), whereby BNPPLC, as sublessor, leased to NAI, as sublessee, its ground leasehold interest in the Land and all of the improvements located thereon (collectively the “Subleased Premises”); and
     (3) Amended and Restated Purchase Agreement (Building 7) dated as of November 29, 2007 (has the same may have been modified, the “Purchase Agreement”), which was the subject of that certain Memorandum of Purchase Agreement, dated as of November 29, 2007, recorded in the Official Records on or about November 29, 2007 as Instrument Number                     .

 

 

     (4) Amended and Restated Common Definitions and Provisions Agreement (Building 7) dated as of November 29, 2007 Date (as the same may have been modified, the “Common Definitions and Provisions Agreement”). As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     B. BNPPLC and NAI now mutually wish to terminate the Ground Lease on the terms and conditions more particularly herein set forth.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration the adequacy of which is hereby acknowledges, the parties hereto agree as follows:
     1. Termination of Ground Lease. As of the Effective Date, BNPPLC hereby surrenders all of its right title and interest in the Ground Lease unto NAI, subject only to the “Permitted Encumbrances” described in Annex B attached hereto and incorporated herein by this reference, and the Ground Lease is hereby terminated. Notwithstanding anything to the contrary in this Agreement, BNPPLC does, for itself and its successors, covenant, warrant and agree to defend the title to the Land against claims and demands of any person claiming under or through a Lien Removable by BNPPLC. Except as expressly set forth in the preceding sentence, BNPPLC makes no warranty of title, express or implied.
     2. Acknowledgment of Reversion. BNPPLC also acknowledges and agrees that because of the termination of the Ground Lease, all of BNPPLC’s right, title and interest in and to the following property will revert to NAI and BNPPLC does hereby forever relinquish, waive, and quitclaim unto NAI (subject to such Permitted Encumbrances):
  A.   the Sublease;
 
  B.   the Purchase Agreement;
 
  C.   any pending or future award made because of our condemnation affecting the Property or because of any conveyance to be made in lieu thereof, and any unpaid proceeds of insurance or claim or cause of action for damages, loss or injury to the Subleased Premises; and
 
  D.   all other property included within the definition of “Property” as set forth in the Purchase Agreement;
provided, however, that excluded from this conveyance and reserved to BNPPLC are any rights or privileges of BNPPLC under the following are expressly reserved and retained by BNPPLC: (i) the indemnities set forth in the Sublease and the Ground Lease, whether such rights are
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 7) – Page 2

 

 

presently known or unknown, including rights of BNPPLC to be indemnified against environmental claims of third parties, as provided in the Ground Lease which may not presently be known; and (ii) provision in the Sublease that establish the right of BNPPLC to recover any accrued unpaid rent under the Sublease which may be outstanding as of the date hereof; and (iii) agreements between BNPPLC and BNPPLC’s Parent or any Participant, or any modification or extension thereof.
BNPPLC agrees to warrant and defend the title to the Subleased Premises as herein assigned, against claims and demands of any person claiming under or through a Lien Removable by BNPPLC relating to the Subleased Premises.
     3. “As Is” Reversion. Notwithstanding any contrary provisions contained herein, NAI acknowledges that BNPPLC 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 Subleased Premises, and NAI, by acceptance of this agreement, accepts the Subleased Premises “As Is,” “Where Is,” and “With All Faults,” and without any such representation or warranty by BNPPLC as to environmental matters, the physical condition of the Subleased Premises, compliance with subdivision or platting requirements or construction of any improvements. Without limiting the generality of the foregoing, NAI hereby further acknowledges and agrees that warranties of merchantability and fitness for a particular purpose are excluded from the transactions contemplated by this Agreement, as are any warranties arising from a course of dealing or usage of trade. NAI hereby assumes all risk and liability (and agrees that BNPPLC will not be liability 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 Subleased Premises, except for damages proximately caused by (and attributed by any applicable principles of comparative fault to) the “Established Misconduct” of BNPPLC.
     4. Binding Effect. The terms, provisions, covenants, and conditions hereof will be binding upon NAI and BNPPLC and their respective successors and assigns, and any other party claiming through either of them, and will inure to the benefit of NAI and BNPPLC and all transferees, mortgages, successors and assigns.
     5. Miscellaneous. This Agreement and any other agreement relating hereto and executed concurrently herewith represent the entire agreement of the parties hereto with respect to the subject matter hereof and supersede any prior negotiations and agreement between BNPPLC and NAI concerning the subject matter hereof. No amendment or modification of this Agreement will be binding or valid unless express in a writing executed by both parties hereto. This Agreement will be governed by and construed in accordance with the laws of the State of California without regard to conflict or choice of laws. Words in the singular number will be held to include the plural and vice versa, unless the context otherwise requires. This Agreement may be executed in counterparts, each of which will be an original and all of which together will be a single
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 7) – Page 3

 

 

instrument.
[Signature pages follow.]
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 7) – Page 4

 

 

IN WITNESS WHEREOF, BNPPLC and NAI have signed this Agreement Concerning Ground Lease to be effective as of                     , 20___.
             
    BNP PARIBAS LEASING CORPORATION, a Delaware
corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
                 
STATE OF
        )      
 
               
 
        )     SS
COUNTY OF
        )      
 
               
On                     , 200___, before me                                          , a Notary Public in and for the County and State aforesaid, personally appeared                                          , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
   
 
    
 
    
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 7) – Page 5

 

 

[Continuation of signature pages to Agreement Concerning Ground Lease dated to be effective as of                     , 20___.]
             
    NETWORK APPLIANCE, INC., a Delaware
corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
                 
STATE OF
        )      
 
               
 
        )     SS
COUNTY OF
        )      
 
               
     On                      , 200___, before me                                            , a Notary Public in and for the County and State aforesaid, personally appeared                                            , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
   
 
    
 
    
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 7) – Page 6

 

 

Annex A
Legal Description
[DRAFTING NOTE: TO THE EXTENT THAT THE “LAND” COVERED BY THE GROUND LEASE CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPPLC’S CONSENT OR APPROVAL AS PROVIDED IN THE CLOSING CERTIFICATE, 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 ASSIGNMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
Parcel 7 and the Additional Leased Premises, as defined below, (collectively, the “Building 7 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the northern boundary of Parcel 7 and the southern boundary of Parcel 8, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 7 and Parcel 8, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 7 and Parcel 11, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 7 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 7) – Page 7

 

 

(MAP)
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 7) – Page 8

 

 

Annex B
Permitted Encumbrances
[DRAFTING NOTE: BEFORE THIS AGREEMENT IS ACTUALLY EXECUTED AND DELIVERED BY BNPPLC: ALL PERMITTED ENCUMBRANCES LISTED IN EXHIBIT B TO THE CLOSING CERTIFICATE WILL BE SET OUT BELOW, IN ADDITION TO THE ITEMS ALREADY LISTED. ALSO, IF ANY ENCUMBRANCES (OTHER THAN “LIENS REMOVABLE BY BNPPLC”) ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW OR IN EXHIBIT B TO THE CLOSING CERTIFICATE, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW. AFTER SUCH ADJUSTMENTS ARE MADE, THIS “DRAFTING NOTE” WILL BE DELETED. THE ADDITIONAL ENCUMBRANCES TO BE LISTED BELOW WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPPLC AS “PERMITTED ENCUMBRANCES” FROM TIME TO TIME OR BECAUSE OF NAI’s REQUEST FOR BNPPLC’S CONSENT OR APPROVAL TO AN ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a “Lien Removable by BNPPLC” (as defined in the Amended and Restated Common Definitions and Provisions Agreement), including the following matters to the extent the same are still valid and in force:
1. Taxes and assessments for the year 200___ and subsequent years, which are not yet due and 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   : Slope Easement
 
  In favor of   : City of Sunnyvale
 
  Recorded   : October 9, 1964 in Book 6695, page 430, Official Records
 
  Affects   : Easterly 18 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
4. EASEMENT for the purposes stated herein and incidents thereto
         
 
  Purpose   : Public utilities easement
 
  In favor of   : City of Sunnyvale
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 7) – Page 9

 

 

         
 
  Recorded   : October 9, 1964 in Book 6695, page 450, Official Records
 
  Affects   : Easterly 7 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
5. Covenants, Conditions and Restrictions in the Declaration of Protective Covenants — Moffett Industrial Park No. 2) recorded December 23, 1971 in Book 9640, page 443, Official Records; which provide that a violation thereof shall not defeat or render invalid the lien of any Mortgage or Deed of Trust made in good faith and for value. Said Covenants, Conditions and Restrictions do not provide for reversion of title in the event of a breach thereof. Restrictions, if any, based upon race, color, religion, sex, handicap, familial status, or national origin are deleted, unless and only to the extent that said covenant (a) is exempt under Chapter 42, Section 3607, of the United States Code, or (b) related to handicap but does not discriminate against handicapped persons.
     ASSIGNMENT AND ASSUMPTION of the rights, powers, duties, obligations, and reservations of Moffett Park Associates, in favor of The Prudential Insurance Company of America, recorded February 8, 1977 in Book C583, page 685, Official Records.
6. EASEMENT for the purposes stated herein and incidents thereto
         
 
  Purpose   : Public utilities
 
  Granted to   : City of Sunnyvale
 
  Recorded   : November 16, 1976 in Book C414, page 105, Official Records
 
  Affects   : Southerly 10 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
7. LIMITATIONS, covenants, restrictions, reservations, exceptions or terms, 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 USC 3604(c), contained in the document recorded February 5, 1980 in Book F122, page 460, Official Records.
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 7) – Page 10

 

 

Exhibit C-2
Form of Assignment of Ground Lease and Improvements
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
         
NAME:   [NAI or the Applicable Purchaser]
ADDRESS:
        
 
       
ATTN:
        
 
       
CITY:
        
 
       
STATE:
        
 
       
Zip:
        
 
 
 
    
ASSIGNMENT OF GROUND LEASE AND IMPROVEMENTS
(Covering Improvements and Leasehold Estate in Land)
     BNP Paribas Leasing Corporation (“Assignor”), a Delaware corporation, for and in consideration of the sum of Ten Dollars ($10.00) and other valuable consideration paid to Assignor by [NAI or the Applicable Purchaser] (hereinafter called “Assignee”), the receipt and sufficiency of which are hereby acknowledged, does hereby GRANT, SELL, CONVEY, ASSIGN and DELIVER to Assignee (1) the leasehold estate created by an Amended and Restated Ground Lease (Building 7) from NAI to Assignor dated as of November 29, 2007, which covers the land described in Annex A attached hereto and hereby made a part hereof, and (2) all other rights, titles and interests of Assignor in and to (a) such land, (b) the buildings and other improvements situated on such land, (c) any fixtures and other property affixed thereto and (d) the adjacent streets, alleys and rights-of-way (all of the property interests conveyed hereby being hereinafter collectively referred to as the “Property”); however, this conveyance is made by Assignor and accepted by Assignee subject to the terms and conditions of the aforementioned Ground Lease and to all zoning and other ordinances affecting the Property, all general or special assessments due and payable after the date hereof, all encroachments, variations in area or in measurements, boundary line disputes, roadways and other matters not of record which would be disclosed by a current survey and inspection of the Property, and the encumbrances listed in Annex B attached hereto and made a part hereof (collectively, the “Permitted Encumbrances”).
     TO HAVE AND TO HOLD the Property, together with all and singular the rights and appurtenances thereto belonging unto Assignee, its successors and assigns, forever, and Assignor does hereby bind Assignor and Assignor’s successors and assigns to warrant and forever defend all and singular the said premises unto Assignee, its successors and assigns against every person whomsoever lawfully claiming, or to claim the same, or any part thereof by, through or under Assignor, but not otherwise; subject, however, to the Permitted Encumbrances. Except as expressly set forth in the preceding sentence, Assignor makes no warranty of title, express or implied.

 

 

     Assignor 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 Property, and Assignee, by acceptance of this Assignment, accepts the Property “AS IS,” “WHERE IS,” “WITH ALL FAULTS” and without any such representation or warranty by Assignor as to environmental matters, the physical condition of the Property, compliance with subdivision or platting requirements or construction of any improvements. Without limiting the generality of the foregoing, by acceptance of this Assignment, Assignee hereby further acknowledges and agrees that warranties of merchantability and fitness for a particular purpose are excluded from the transaction contemplated by this Assignment, as are any warranties arising from a course of dealing or usage of trade.
     Assignee hereby assumes the obligations (including any personal obligations) of Assignor, 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 Assignment.
[Signature pages follow.]
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 7) – Page 2

 

 

IN WITNESS WHEREOF, Assignor and Assignee have signed this Assignment to be effective as of                     , 20___.
             
    BNP PARIBAS LEASING CORPORATION, a Delaware
corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
                 
STATE OF
        )      
 
               
 
        )     SS
COUNTY OF
        )      
 
               
     On                      , 200___, before me                                            , a Notary Public in and for the County and State aforesaid, personally appeared                                            , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
   
 
    
 
    
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 7) – Page 3

 

 

[Continuation of signature pages to Assignment of Ground Lease and Improvements dated to be effective as of                     , 20___.]
[NAI or the Applicable Purchaser]
         
By:
        
 
       
Name:
        
 
       
Title:
        
 
 
 
    
                 
STATE OF
        )      
 
               
 
        )     SS
COUNTY OF
        )      
 
               
On                     , 200___, before me                                          , a Notary Public in and for the County and State aforesaid, personally appeared                                          , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
   
 
    
 
    
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 7) – Page 4

 

 

Annex A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE “LAND” COVERED BY THE GROUND LEASE CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPPLC’S CONSENT OR APPROVAL AS PROVIDED IN THE CLOSING CERTIFICATE, 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 ASSIGNMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
Parcel 7 and the Additional Leased Premises, as defined below, (collectively, the “Building 7 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the northern boundary of Parcel 7 and the southern boundary of Parcel 8, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 7 and Parcel 8, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 7 and Parcel 11, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 7 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 7) – Page 5

 

 

(MAP)
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 7) – Page 6

 

 

Annex B
Permitted Encumbrances
[DRAFTING NOTE: BEFORE THIS ASSIGNMENT IS ACTUALLY EXECUTED AND DELIVERED BY BNPPLC: ALL PERMITTED ENCUMBRANCES LISTED IN EXHIBIT B TO THE CLOSING CERTIFICATE WILL BE SET OUT BELOW, IN ADDITION TO THE ITEMS ALREADY LISTED. ALSO, IF ANY ENCUMBRANCES (OTHER THAN “LIENS REMOVABLE BY BNPPLC”) ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW OR IN EXHIBIT B TO THE CLOSING CERTIFICATE, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW. AFTER SUCH ADJUSTMENTS ARE MADE, THIS “DRAFTING NOTE” WILL BE DELETED. THE ADDITIONAL ENCUMBRANCES TO BE LISTED BELOW WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPPLC AS “PERMITTED ENCUMBRANCES” FROM TIME TO TIME OR BECAUSE OF NAI’s REQUEST FOR BNPPLC’S CONSENT OR APPROVAL TO AN ADJUSTMENT.]
     This conveyance is subject to all encumbrances not constituting a “Lien Removable by BNPPLC” (as defined in the Amended and Restated Common Definitions and Provisions Agreement (Building 7) incorporated by reference into the Amended and Restated Lease Agreement (Building 7) 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 and assessments for the year 200___ and subsequent years, which are not yet due and 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   : Slope Easement
 
  In favor of   : City of Sunnyvale
 
  Recorded   : October 9, 1964 in Book 6695, page 430, Official Records
 
  Affects   : Easterly 18 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
4. EASEMENT for the purposes stated herein and incidents thereto
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 7) – Page 7

 

 

         
 
  Purpose   : Public utilities easement
 
  In favor of   : City of Sunnyvale
 
  Recorded   : October 9, 1964 in Book 6695, page 450, Official Records
 
  Affects   : Easterly 7 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
5. Covenants, Conditions and Restrictions in the Declaration of Protective Covenants — Moffett Industrial Park No. 2) recorded December 23, 1971 in Book 9640, page 443, Official Records; which provide that a violation thereof shall not defeat or render invalid the lien of any Mortgage or Deed of Trust made in good faith and for value. Said Covenants, Conditions and Restrictions do not provide for reversion of title in the event of a breach thereof. Restrictions, if any, based upon race, color, religion, sex, handicap, familial status, or national origin are deleted, unless and only to the extent that said covenant (a) is exempt under Chapter 42, Section 3607, of the United States Code, or (b) related to handicap but does not discriminate against handicapped persons.
     ASSIGNMENT AND ASSUMPTION of the rights, powers, duties, obligations, and reservations of Moffett Park Associates, in favor of The Prudential Insurance Company of America, recorded February 8, 1977 in Book C583, page 685, Official Records.
6. EASEMENT for the purposes stated herein and incidents thereto
         
 
  Purpose   : Public utilities
 
  Granted to   : City of Sunnyvale
 
  Recorded   : November 16, 1976 in Book C414, page 105, Official Records
 
  Affects   : Southerly 10 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
7. LIMITATIONS, covenants, restrictions, reservations, exceptions or terms, 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 USC 3604(c), contained in the document recorded February 5, 1980 in Book F122, page 460, Official Records.
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 7) – Page 8

 

 

Exhibit C-3
BILL OF SALE AND ASSIGNMENT
     Reference is made to: (1) that certain Amended and Restated Purchase Agreement (Building 7) dated as of November 29, 2007, (the “Purchase Agreement”) between BNP Paribas Leasing Corporation (“Assignor”), a Delaware corporation, and Network Appliance, Inc. , a Delaware corporation, and (2) that certain Amended and Restated Lease Agreement dated as of November 29, 2007 (the “Lease”) between Assignor, as landlord, and Network Appliance, Inc. , a Delaware corporation, as tenant. (Capitalized terms used and not otherwise defined in this document are intended to have the meanings assigned to them in the Amended and Restated Common Definitions and Provisions Agreement (Building 7) incorporated by reference into both the Purchase Agreement and Lease.)
     As contemplated by the Purchase Agreement, Assignor hereby sells, transfers and assigns unto [NAI or the Applicable Purchaser], 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 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 personal or intangible 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 6 of the Lease or otherwise acquired by Assignor, at the time of the execution and delivery of the 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 Lease and Purchase Agreement or thereafter arising, under Permitted Encumbrances; and (iii) any general intangibles, 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 interest of Assignor in and to the Property instead of Assignor.
Provided, however, excluded from this conveyance and reserved to Assignor are any rights or privileges of Assignor under the following: (1) the indemnities set forth in the Construction Agreement, the Lease and the Ground 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 Construction Agreement and the Lease which may not presently be known, all of which indemnities will survive the deliver of this Bill of Sale and Assignment and other documents required by the Purchase Agreement, (2) provisions in the Lease that establish the right of Assignor to recover any accrued unpaid rent under the Lease which may be outstanding as of the date hereof, (3) agreements between Assignor and Assignor’s Parent or any Participant, or (4) any other instrument being delivered to Assignor contemporaneously herewith pursuant to the Purchase Agreement.[Drafting Note: The following sentence will be included unless the Property is being sold to NAI or an Affiliate pursuant to subparagraph 2(A)(1), 3(A) or 3(B) of the Purchase Agreement: Also excluded from this conveyance and reserved to Assignor are (i) the right to retain Escrowed Proceeds, if any, that consist of condemnation or insurance proceeds resulting from a Pre-completion Force Majeure Event, and (ii) any right to receive future payments of any such condemnation or insurance proceeds. ]
     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 Assignor, but not otherwise.
     Assignee hereby assumes and agrees to keep, perform and fulfill Assignor’s obligations, if any, relating to any permits or contracts (including the Lease), under which Assignor has rights being assigned herein.
[Signature pages follow.]
Exhibit C-3 to Amended and Restated Purchase Agreement (Building 7) – Page 2

 

 

IN WITNESS WHEREOF, Assignor and Assignee have signed this Bill of Sale and Assignment to be effective as of                     , 20___.
             
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
                 
STATE OF
        )      
 
               
 
        )     SS
COUNTY OF
        )      
 
               
     On                     , 200___, before me                                            , a Notary Public in and for the County and State aforesaid, personally appeared                                          , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
   
 
    
 
    
Exhibit C-3 to Amended and Restated Purchase Agreement (Building 7) – Page 3

 

 

[Continuation of signature pages to Bill of Sale and Assignment dated to be effective as of                     , 20___.]
[NAI or the Applicable Purchaser]
         
By:
        
 
       
Name:
        
 
       
Title:
        
 
 
 
    
                 
STATE OF
        )      
 
               
 
        )     SS
COUNTY OF
        )      
 
               
On                     , 200___, before me                                          , a Notary Public in and for the County and State aforesaid, personally appeared                                          , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
   
 
    
 
    
Exhibit C-3 to Amended and Restated Purchase Agreement (Building 7) – Page 4

 

 

Exhibit C-4
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], a                      (“Assignee”).
     Contemporaneously with the execution of this Certificate, BNP Paribas Leasing Corporation (“Assignor”), a Delaware corporation, is executing and delivering to Assignee (1) an Assignment of Ground Lease and Improvements, 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, Assignee acknowledges that Assignor 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 Assignee, 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, Assignee 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. Assignee hereby assumes all risk and liability (and agrees that Assignor will 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 Assignor. As used in the preceding sentence, “Established Misconduct” is intended to have, and be limited to, the meaning given to it in the Amended and Restated Common Definitions and Provisions Agreement (Building 7) incorporated by reference into the Amended and Restated Purchase Agreement (Building 7) dated as of November 29, 2007 between Assignor and Network Appliance, Inc., pursuant to which Amended and Restated Purchase Agreement Assignor is delivering the Conveyancing Documents.
     The provisions of this Certificate will be binding on Assignee, its successors and assigns and any other party claiming through Assignee. Assignee hereby acknowledges that Assignor is entitled to rely and is relying on this Certificate.
[Signature page follows.]

 

 

Exhibit C-4 to Amended and Restated Purchase Agreement (Building 7) – Page 2

 

IN WITNESS WHEREOF, Assignor and Assignee have signed this Bill of Sale and Assignment to be effective as of                     , 20___.
[NAI or the Applicable Purchaser]
         
By:
        
 
       
Name:
        
 
       
Title:
        
 
 
 
    
                 
STATE OF
        )      
 
               
 
        )     SS
COUNTY OF
        )      
 
               
On                      , 200___, before me                                            , a Notary Public in and for the County and State aforesaid, personally appeared                                            , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
   
 
    
 
    
Exhibit C-4 to Amended and Restated Purchase Agreement (Building 7) – Page 3

 

 

Exhibit D
SECRETARY’S CERTIFICATE
     The undersigned, [Secretary or Assistant Secretary] of BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware 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 BNPPLC 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 Sale Closing Documents on behalf of BNPPLC.]
         
Name   Title   Signature
 
        
 
       
 
        
 
       
     3. That the resolutions attached hereto and made a part hereof were duly adopted by the Board of Directors of BNPPLC in accordance with BNPPLC’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                                         , 20    .
 
[signature and title]

 

 

CORPORATE RESOLUTIONS OF
BNP PARIBAS LEASING CORPORATION
[DRAFTING NOTE: INSERT HERE COPIES OF RESOLUTIONS ADOPTED BY THE BOARD OF DIRECTORS OF BNPPLC SUFFICIENT TO AUTHORIZE THE DELIVERY OF SALE CLOSING DOCUMENTS. SUCH RESOLUTIONS MAY BE AS FOLLOWS:
     WHEREAS, pursuant to that certain Amended and Restated Purchase Agreement (Building 7) (herein called the “Purchase Agreement”) dated as of November 29, 2007, by and between BNP Paribas Leasing Corporation (“BNPPLC”) and Network Appliance, Inc. (“NAI”) , BNPPLC 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 Santa Clara County, California, more particularly described therein.
     NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of BNPPLC, in its best business judgment, deems it in the best interest of BNPPLC and its shareholders that BNPPLC convey the Property to NAI or the Applicable Purchaser pursuant to and in accordance with the terms of the Purchase Agreement.
     RESOLVED FURTHER, that the proper officers of BNPPLC, and each of them, are hereby authorized and directed in the name and on behalf of BNPPLC to cause BNPPLC to fulfill its obligations under the Purchase Agreement.
     RESOLVED FURTHER, that the proper officers of BNPPLC, 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, assignments and other documents, instruments and agreements that are 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 D to Amended and Restated Purchase Agreement (Building 7) – Page 2

 

 

Exhibit E
CERTIFICATION OF NON-FOREIGN STATUS
          Section 1445 of the Internal Revenue Code 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] (“Transferee”) that withholding of tax is not required upon the disposition of a U.S. real property interest by BNP PARIBAS LEASING CORPORATION (“Transferor”), a Delaware corporation, the undersigned hereby certifies the following on behalf of Transferor:
1. Transferor 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. Transferor is not a disregarded entity (as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax Regulations);
3. Transferor’s U.S. employer identification number is 75-2252918; and
4. Transferor’s office address is:
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Transferor understands that this Certification of Non-Foreign Status may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this Certification of Non-Foreign Status 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 Transferor.
     Dated:                     , 20___.
             
 
            
         
 
      Name:    
 
           
 
      Title:    
 
           

 

 

Exhibit F
Notice of Election to Terminate the Supplemental Payment Obligation
and Irrevocable Release and Waiver of the Right to Purchase
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Purchase Agreement (Building 7) dated as of November 29, 2007 (the “Purchase Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Purchase Agreement referenced above. This letter will constitute a notice given pursuant to subparagraph 6(B) of the Purchase Agreement. As provided in that subparagraph, NAI irrevocably elects to terminate the Supplemental Payment Obligation effective immediately, subject only to the conditions described below. In addition, NAI irrevocably waives and releases its rights to purchase or cause an Affiliate of NAI to purchase the Property granted to it by the Purchase Agreement. Because of (but without limiting) such waiver and release, the Purchase Option is terminated and so are all rights of NAI under subparagraphs 2(A) and 3(A) of the Purchase Agreement.
     NAI acknowledges that this notice will not be effective to terminate the Supplemental Payment Obligation if it is not received by BNPPLC prior to the Completion Date.
     NAI also acknowledges that even if no prior 97-10/Meltdown Event has occurred, the delivery of this notice is in and of itself a 97-10/Meltdown Event under and as defined in the Construction Agreement. Therefore, after receipt of this notice BNPPLC will be entitled to demand and receive a 97-10/Prepayment, if BNPPLC has not already done so, on and subject to the terms and conditions of Paragraph 9 of the Construction Agreement. Further, if NAI fails to make a 97-10/Permitted Prepayment required by the Construction Agreement, BNPPLC may exercise the Put Option as provided in subparagraph 3(B) of the Purchase Agreement.
     NAI also acknowledges that its right to terminate the Supplemental Payment Obligation is subject to the condition precedent that: (1) NAI must have given (and not rescinded) a Notice of NAI’s Intent to Terminate as provided in the Construction Agreement, or (2) BNPPLC must

 

 

have given any FOCB Notice as provided in the Construction Agreement. Accordingly, if neither of the notices described in the preceding sentence have been given, the Supplemental Payment Obligation will not terminate by reason of this notice.
     Finally, NAI acknowledges that because the delivery of this notice constitutes a 97-10/Meltdown Event, BNPPLC will have the right at any time for any reason or no reason to terminate the Lease by notice to NAI.
             
    NETWORK APPLIANCE, INC., a Delaware corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
[cc all Participants]
Exhibit F to Amended and Restated Purchase Agreement (Building 7) – Page 2

 

exv10w36
Exhibit 10.36
AMENDED AND RESTATED
GROUND LEASE
(BUILDING 7)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
         
    Page
RECITALS
     1  
GRANTING CLAUSES
     1  
GENERAL TERMS AND CONDITIONS
     3  
 
        
1 Additional Definitions
     3  
“Contingent Purchase Option”
     3  
“Fair Rental Value”
     3  
“Ground Lease Default”
     3  
“Ground Lease Rent”
     3  
“Ground Lease Term”
     3  
“Leasehold Mortgage”
     3  
“Leasehold Mortgagee”
     4  
“Turnover Date”
     4  
 
        
2 Ground Lease Term and Early Termination
     4  
 
        
3 Ground Lease Rent
     4  
 
        
4 Receipt and Application of Insurance and Condemnation Proceeds
     5  
 
        
5 No Lease Termination
     5  
 
        
6 The Lease and Other Operative Documents
     5  
 
        
7 Use of Leased Property
     5  
 
        
8 Assignment and Subletting; Pass Through of BNPPLC’s Liability Insurance and Indemnity Rights
     6  
 
        
9 Estoppel Certificate
     6  
 
        
10 Leasehold Mortgages
     7  
 
        
11 Other Representations, Warranties and Covenants of NAI
     9  
(A) Condition of the Property
     9  
(B) Environmental Representations
     10  
(C) Current Status of Title to the Land
     10  
(D) Intentionally Deleted
     10  
(E) Title to Improvements
     10  
(F) Defense of Adverse Title Claims
     11  
(G) Prohibition Against Consensual Liens on the Leased Property
     12  
(H) Compliance With Permitted Encumbrances
     12  

 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
(I) Compliance With Laws
     12  
(J) Modification of Permitted Encumbrances
     12  
(K) Performance and Preservation of the Permitted Encumbrances for the Benefit of BNPPLC
     13  
(L) Cooperation by NAI and its Affiliates
     13  
(M) Intentionally Deleted
     14  
(N) Omissions
     14  
(O) Insurance and Casualty
     14  
(P) Condemnation
     14  
(Q) Further Assurances
     15  
 
        
12 Ground Lease Defaults
     15  
(A) Definition of Ground Lease Default
     15  
(B) Remedy
     16  
 
        
13 Quiet Enjoyment
     16  
 
        
14 Option to Purchase
     16  
 
        
15 Miscellaneous
     16  
(A) No Merger
     16  
(B) Recording; Memorandum of Lease
     17  
 
        
16 Certain Remedies Cumulative
     17  
 
        
17 Attorney’s Fees and Legal Expenses
     17  
 
        
18 Successors and Assigns
     17  
 
        
19 Amendment and Restatement of Prior ground Lease
     17  

(ii) 

 

TABLE OF CONTENTS
(Continued)
         
Exhibits and Schedules
Exhibit A
      Legal Description
 
        
Exhibit B
      Permitted Encumbrances List
 
        
Exhibit C
      Contingent Purchase Option
 
        
Exhibit D
      Determination of Fair Value

(iii) 

 

AMENDED AND RESTATED
GROUND LEASE
(BUILDING 7)
     This AMENDED AND RESTATED GROUND LEASE (BUILDING 7) (this “Ground Lease”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Ground Lease, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (Building 7) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Ground Lease for all purposes. As used in this Ground Lease, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Ground Lease are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     At the request of NAI, and to facilitate the transactions contemplated in the other Operative Documents, BNPPLC is executing this Ground Lease to acquire from NAI a leasehold estate of 99 years in the Land described in Exhibit A attached hereto (the “Land”) and any existing Improvements on the Land.
     Also contemporaneously with this Ground Lease, BNPPLC and NAI are executing an Amended and Restated Construction Agreement (Building 7) (the ”Construction Agreement”) and an Amended and Restated Lease Agreement (Building 7) (the “Lease”). Pursuant to the Construction Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements. When the term of the Lease commences, the Lease will cover all Improvements on the Land.
     Pursuant to an Amended and Restated Purchase Agreement (Building 7) dated as of the Effective Date (the “Purchase Agreement”) between BNPPLC and NAI, NAI will have the right to purchase, among other things, BNPPLC’s leasehold estate under this Ground Lease on and subject to the terms and conditions set forth therein.
GRANTING CLAUSES
     In consideration of the rent to be paid and the covenants and agreements to be performed by BNPPLC, as hereinafter set forth, NAI does hereby LEASE, DEMISE and LET unto BNPPLC for the term hereinafter set forth the Land, together with:

 

 

     (A) all easements and rights-of-way now owned or hereafter acquired by NAI for use in connection with the Land or any Improvements constructed thereon or as a means of access thereto and any and all easements and rights appurtenant to the Land; and
     (B) all right, title and interest of NAI, 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 abutting land not owned by NAI.
The Land and all of the property described in items (1) and (2) above 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 NAI as the owner of any interest in the Real Property, NAI also hereby grants and assigns to BNPPLC for the term of this Ground Lease the right to use and enjoy (and, in the case of contract rights, to enforce) such rights or interests of NAI:
     (A) the Permitted Encumbrances; and
     (B) any general intangibles, permits, licenses, franchises, certificates, and other rights and privileges related to the Real Property that BNPPLC (rather than NAI) would have acquired if BNPPLC had itself acquired the fee estate in the Real Property (excluding, however, the rights and privileges of NAI under this Ground Lease, the Construction Agreement, the Lease, the Purchase Agreement and any other Operative Documents).
Such rights and interests of NAI, 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 “Leased Property.” The Leased Property and all Improvements on the Land now or in the future (whether such Improvements are owned by BNPPLC or NAI) are hereinafter sometimes called the “Improved Property”.
     However, the leasehold estate conveyed hereby and BNPPLC’s rights hereunder are expressly made subject and subordinate to the Permitted Encumbrances listed on Exhibit B.
     Further, so long as any of the other Operative Documents remain in force, the rights and obligations of NAI and BNPPLC hereunder will be subject to any contrary provisions therein, including provisions in the Construction Agreement and the Lease that govern the collection and application of condemnation and
Amended and Restated Ground Lease (Building 7) – Page 2

 

 

INSURANCE PROCEEDS IN THE EVENT OF ANY TAKING OF OR DAMAGE TO THE Improved Property.
GENERAL TERMS AND CONDITIONS
     The Leased Property is leased by NAI to BNPPLC and is accepted and is to be used and possessed by BNPPLC upon and subject to the following terms, provisions, covenants, agreements and conditions:
1 Additional Definitions. As used in this Ground Lease, capitalized terms defined above have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and that are used but not otherwise defined have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms have the following respective meanings:
     “Contingent Purchase Option” means the option granted BNPPLC by NAI as provided in Exhibit C attached to this Ground Lease.
     “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 Exhibit D, 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 (including appurtenances) 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 this Ground Lease 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.
     “Ground Lease Default” has the meaning assigned to it in subparagraph 13(A) below.
     “Ground Lease Rent” means the rent payable by BNPPLC pursuant to Paragraph 3 below.
     “Ground Lease Term” has the meaning assigned to it in Paragraph 2 below.
     “Leasehold Mortgage” means any mortgage, deed of trust (with or without a
Amended and Restated Ground Lease (Building 7) – Page 3

 

 

private power of sale), security agreement or assignment executed by BNPPLC to secure an obligation to repay borrowed money or other voluntary obligations, which covers BNPPLC’s leasehold estate hereunder or any part thereof or any rents or other charges to be paid to BNPPLC pursuant to any sublease.
     “Leasehold Mortgagee” means any lender or other beneficiary of a Leasehold Mortgage that has notified NAI of the existence such Leasehold Mortgage and of its address to which notices should be delivered.
     “Turnover Date” means the day which is thirty days after any Designated Sale Date upon which, for any reason whatsoever, NAI does not purchase the Improved Property from BNPPLC pursuant to the Purchase Agreement.
2 Ground Lease Term and Early Termination. The term of this Ground Lease (herein called the “Ground Lease Term”) will commence on and include the Effective Date and end on the last Business Day prior to the ninety-ninth (99th) anniversary of the Effective Date. However, subject to the prior approval of any Leasehold Mortgagee, BNPPLC will have the right to terminate this Ground Lease by giving a notice to NAI stating that BNPPLC 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.
3 Ground Lease Rent. The rent required by this Ground Lease (herein called “Ground Lease Rent”) will equal the Fair Rental Value, determined as provided in Exhibit D, and be paid as follows:
     Prior to the Completion Date, BNPPLC must pay Ground Lease Rent to NAI on the first Business Day of every calendar month for the preceding month. Consistent with the agreement of the parties in Exhibit D that the initial Fair Rental Value is $300,000 per annum, and each such required monthly payment prior to the Completion Date is $25,000. (Notwithstanding the forgoing, as was agreed by the parties for administrative convenience at the time of the execution of the Prior Ground Lease, BNPPLC has already prepaid all of the Ground Lease Rent expected to accrue prior to the Completion Date, rather than pay it monthly on the first Business Day of each month.)
     After the Completion Date, Ground Lease Rent will be paid annually in arrears on each anniversary of the Effective Date. So long as the Lease continues, each such payment by BNPPLC may be offset against the reimbursement for such payment required of NAI by the Lease. After the Lease expires or terminates, however, BNPPLC’s obligation for the payment of Ground Lease will continue so long as this Ground Lease continues, on and subject to the terms and conditions set forth herein.
Amended and Restated Ground Lease (Building 7) – Page 4

 

 

4 Receipt and Application of Insurance and Condemnation Proceeds. All insurance and condemnation proceeds payable with respect to any damage to or taking of the Leased Property will be payable to and become the property of BNPPLC; provided, however, NAI will be entitled to receive condemnation proceeds awarded for the value of NAI’s remainder interest in the Land exclusive of the Improvements. BNPPLC is authorized to take all action necessary on behalf of both BNPPLC and NAI (as lessor under this Ground Lease) to collect insurance and condemnation proceeds.
5 No Lease Termination. Except as expressly provided herein, this Ground Lease will not terminate, nor will NAI have any right to terminate this Ground Lease nor will the obligations of NAI under this Ground Lease be excused, for any reason whatsoever, including without limitation any of the following: (i) any damage to or the destruction of all or any part of the Leased Property from whatever cause, (ii) the taking of the Leased Property or any portion thereof by eminent domain or otherwise for any reason, (iii) any default on the part of BNPPLC under this Ground Lease or under any other agreement to which NAI and BNPPLC are parties, or (iv) any other cause whether similar or dissimilar to the foregoing, any existing or future law to the contrary notwithstanding. Notwithstanding the foregoing, after any purchase by NAI of BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement and payment to BNPPLC of the purchase price required by the Purchase Agreement and all other sums dues under any of the other Operative Documents, NAI (as the holder of both the lessor’s and lessee’s interests hereunder) may elect to terminate this Ground Lease; and after a purchase by BNPPLC of the Land because of BNPPLC exercise of the Contingent Purchase Option, BNPPLC (as the holder of both the lessor’s and lessee’s interests hereunder) may elect to terminate this Ground Lease. It is the intention of the parties hereto that the obligations of NAI hereunder will be separate and independent of the covenants and agreements of BNPPLC. However, nothing in this Paragraph will be construed as a waiver by NAI of any right NAI may have at law or in equity to recover monetary damages for any default under this Ground Lease by BNPPLC.
6 The Lease and Other Operative Documents. Nothing contained in this Ground Lease will limit, modify or otherwise affect any of NAI’s or BNPPLC’s respective rights and obligations under the other Operative Documents, which rights and obligations are intended to be separate, independent and in addition to, and not in lieu of, the obligations established by this Ground Lease. In the event of any inconsistency between the terms and provisions of the other Operative Documents and the terms and provisions of this Ground Lease, the terms and provisions of the other Operative Documents will control.
7 Use of Leased Property. Subject to the Permitted Encumbrances and the terms hereof, BNPPLC may use and occupy the Leased Property for any purpose permitted by Applicable Laws and may construct, modify, renovate, replace and remove any Improvements on the Land from time to time, subject only to the constraints that Applicable Laws would impose
Amended and Restated Ground Lease (Building 7) – Page 5

 

 

upon the owner of the Land if the owner were constructing, modifying, renovating, replacing or removing Improvements. To provide NAI an opportunity to file any applicable statutory notice of nonresponsibility, BNPPLC will, before commencing the construction any major Improvements upon the Land after the Turnover Date, endeavor to notify NAI that BNPPLC intends to commence such construction; provided, however, BNPPLC will have no liability for its failure to provide such a notice.
8 Assignment and Subletting; Pass Through of BNPPLC’s Liability Insurance and Indemnity Rights. BNPPLC may sublet or assign this Ground Lease without the consent of NAI or any of its Affiliates, subject only to limitations set forth in the Lease for the benefit of NAI so long as those limitations remain in force.
     To the extent that BNPPLC may from time to time after the Turnover Date require any subtenant to agree to maintain liability insurance against claims of third parties and agree to make BNPPLC an additional or named insured under such insurance, BNPPLC will also require the subtenant to agree to make NAI an additional or named insured. However, BNPPLC will have no liability to NAI for a breach by the subtenant of any such agreements, and to the extent that BNPPLC’s rights as an additional or named insured are subject to exceptions or limitations concerning BNPPLC’s own acts or omissions or the acts or omissions of anyone other than the subtenant, so too may NAI’s rights as an additional or named insured be subject to exceptions or limitations concerning NAI’s own acts or omissions or the acts or omissions of anyone other than the subtenant.
     To the extent that BNPPLC may itself from time to time after the Turnover Date 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 Leased Property, BNPPLC will cause NAI to be an additional or named insured under such insurance, provided NAI pays or reimburses BNPPLC for any additional insurance premium required to have NAI made an insured.
     To the extent that BNPPLC may from time to time after the Turnover Date require any subtenant to agree to indemnify BNPPLC against Environmental Losses or other Losses concerning the Leased Property, BNPPLC will also require the subtenant to agree to indemnify NAI. However, BNPPLC will have no liability to NAI for a breach by the subtenant of any such agreement, and to the extent that BNPPLC’s rights as an indemnitee of the subtenant are subject to exceptions or limitations concerning BNPPLC’s own acts or omissions or the acts or omissions of anyone other than the subtenant, so too may NAI’s rights as an indemnitee be subject to exceptions or limitations concerning NAI’s own acts or omissions or the acts or omissions of anyone other than the subtenant.
9 Estoppel Certificate. NAI and BNPPLC will from time to time, within ten days after receipt of request by the other party hereto, deliver a statement in writing to such other party
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or other Person(s) designated by such party 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 the party providing such certificate, the other party 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 the party so certifying is able to provide;
     (C) the term of this Ground Lease and the Ground Lease Rent then in effect and any additional charges;
     (D) that to the knowledge of the party providing such certificate, the other party is not in default under any provision of this Ground Lease (or if in default, the nature thereof in detail) and, in any certificate provided by NAI, a statement as to any outstanding obligations on the part of NAI or BNPPLC; and
     (E) in any certificate provided by NAI, such other factual matters concerning the Leased Property or BNPPLC’s rights and obligations under this Ground Lease as are requested by BNPPLC.
NAI’s failure to deliver such statement within such time will constitute an admission by NAI (i) that this Ground Lease is in full force and effect, without modification except as may be represented by BNPPLC, and (ii) that there are no uncured defaults in BNPPLC’s performance hereunder.
10 Leasehold Mortgages.
     (A) By Leasehold Mortgage BNPPLC may encumber BNPPLC’s leasehold estate in the Leased Property created by this Ground Lease and BNPPLC’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 BNPPLC from the Leased Property. However, prior to the Turnover Date, a Leasehold Mortgage will be permitted hereunder only if it constitutes a Permitted Transfer and only if it is made expressly subject to the rights of NAI under the other Operative Documents.
     (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 BNPPLC’s rights and interests in the improvements, equipment, fixtures and other property assigned as additional security pursuant to a Leasehold Mortgage, by foreclosure of a
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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 NAI.
     (C) NAI must serve notice of any default by BNPPLC hereunder upon any Leasehold Mortgagee for which NAI has received written notification from BNPPLC of the Leasehold Mortgagee’s address for such notice. No notice of a default by BNPPLC will be deemed effective until it is so served. Any Leasehold Mortgagee will 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 BNPPLC under this Ground Lease to correct or cure defaults, plus an additional period of thirty days thereafter. NAI will accept performance by any Leasehold Mortgagee of any covenant, condition or agreement on BNPPLC’s part to be performed hereunder with the same force and effect as though performed by BNPPLC.
     (D) If this Ground Lease should terminate by reason of a disaffirmance or rejection of this Ground Lease by BNPPLC or any receiver, liquidator or trustee for the property of BNPPLC, or by any governmental authority which had taken possession of the business or property of BNPPLC by reason of the insolvency or alleged insolvency of BNPPLC, then:
     (1) NAI must give notice thereof to each Leasehold Mortgagee for which NAI has received written notification from BNPPLC of the Leasehold Mortgagee’s address for such notice; and upon request of any Leasehold Mortgagee made within sixty days after NAI has given such notice, NAI must enter into a new ground lease of the Leased 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 (including subparagraph 11(E)) as are contained in this Ground Lease (a “New Ground Lease”).
     (2) The estate of the Leasehold Mortgagee, as lessee under the New Ground Lease, will have priority equal to the estate of BNPPLC hereunder. That is, there will be no charge, lien or burden upon the Leased Property prior to or superior to the estate granted by such New Ground Lease which was not prior to or superior to the estate of BNPPLC under this Ground Lease as of the date immediately preceding the termination of this Ground Lease. To the extent, however, that the other Operative Documents are in effect at the time of execution of such New Ground Lease, the New Ground Lease will be made expressly subject to the other Operative Documents.
     (3) Notwithstanding the foregoing, if NAI receives requests to enter into a New Ground Lease from more than one Leasehold Mortgagee because of the expiration or termination of this Ground Lease, NAI will be required to enter into only one New
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Ground Lease, and the New Ground Lease will be to the requesting Leasehold Mortgagee who holds the highest priority lien or interest in BNPPLC’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 will name all such Leasehold Mortgagees as co-tenants thereunder.
     (E) If BNPPLC 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 BNPPLC, and if NAI has been notified in writing of such agreement, such consent will be required for such Leasehold Mortgagee to be bound by any such modification or early termination of this Ground Lease.
     (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 Leased Property, unless and until the Leasehold Mortgagee acquires BNPPLC’s leasehold estate in the Leased 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, NAI agrees to include, in addition to the items specified in Paragraph 9, confirmation of the foregoing with respect to any Leasehold Mortgagee or prospective Leasehold Mortgagee in any statement delivered to such Leasehold Mortgagee which is provided to a pursuant to Paragraph 9.
11 Other Representations, Warranties and Covenants of NAI. NAI represents, warrants and covenants as follows:
     (A) Condition of the Property. The Land described in Exhibit A is the same as the land described in the Title Policy and as shown on the plat included as part of the survey prepared by December 2, 1999, prepared by Kier & Wright, Job No. 97208-16 (the “Survey”), which survey was delivered to BNPPLC at the request of NAI. All material improvements on the Land as of the Effective Date are as shown on the Survey, and except as shown on the Survey there are no easements or encroachments encumbering or affecting the Improved Property. No part of the Land is within a flood plain as designated by any governmental authority. Existing Improvements, if any, are free from latent or patent defects or deficiencies that, either individually or in the aggregate, could materially and adversely affect the use or occupancy of the Improved Property as permitted by the Lease or could reasonably be anticipated to cause injury or death to any person. When the construction contemplated by the Construction Agreement is complete in accordance with plans approved as described therein, the Improved Property and use thereof permitted by the Lease will comply in all material respects with all Applicable Laws,
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including laws regarding access and use by disabled persons and local zoning ordinances. Adequate provision has been made (or can be made at a cost that is reasonable in connection with future development of the Land) for the Land 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 Improved Property for the construction contemplated by the Construction Agreement or uses permitted by the Lease have been completed and are serviceable or will be completed and made serviceable as part of the construction contemplated by the Construction Agreement. No extraordinary circumstances (including any use of the Land as a habitat for endangered species) exist that would materially and adversely affect such construction or uses of the Improved Property. The Improvements, when constructed as contemplated in the Construction Agreement, will be useable for their intended purpose without the need to obtain any additional easements, rights-of-way or concessions from any third party or parties.
     (B) Environmental Representations. Except as otherwise disclosed in the Environmental Report, to the knowledge of NAI: (i) no Hazardous Substances Activity has occurred prior to the Effective Date; (ii) no owner or operator of the Improved Property has reported or been required to report any release of any Hazardous Substances on or from the Leased Property pursuant to any Environmental Law; and (iii) no owner or operator of the Leased 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 Leased Property or regarding a suspected or known violation of Environmental Laws concerning the Leased Property. Further, NAI represents, to its knowledge, that the Environmental Report taken as a whole is not misleading or inaccurate in any material respect.
     (C) Current Status of Title to the Land. NAI holds good and indefeasible title to the Land, free and clear of all liens and encumbrances, other than the Permitted Encumbrances and any Liens Removable by BNPPLC.
     (D) Intentionally Deleted.
     (E) Title to Improvements. The leasehold estate created in favor of BNPPLC by this Ground Lease will extend to and include the rights to use and enjoy any and all Improvements of whatever nature at any time and from time to time located on the Land. Thus, throughout the term of this Ground Lease, BNPPLC and its sublessees, assignees, licensees and concessionaires will be entitled to use and enjoy such Improvements — to the exclusion of NAI as the lessor hereunder, but subject to NAI’s rights under the Operative Documents (including the Lease) so long as they remain in effect — as if the lessee hereunder was the owner of the Improvements. Further, although any Improvements which remain on the Land when this Ground Lease expires or is terminated will revert to NAI, it is also understood and agreed that the lessee hereunder may
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at any time and from time to time — after NAI ceases to have possession of the Leased Property pursuant to the Construction Agreement or 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 NAI and without any obligation to NAI or its Affiliates to provide compensation or to construct other Improvements on or about the Land. Any Improvements removed as provided in the preceding sentence will be considered severed from the Land and thereupon become personal property of the lessee hereunder.
     (F) Defense of Adverse Title Claims. If any encumbrance or title defect whatsoever affecting the Improved Property, other than Permitted Encumbrances or Liens Removable by BNPPLC, is claimed or discovered (including Liens against any part of or interest in the Improved Property which are not Fully Subordinated or Removable) or if any legal proceedings are instituted with respect to any such claimed or discovered encumbrance or title defect, NAI must give prompt notice thereof to BNPPLC and at NAI’s own cost and expense will promptly remove any such encumbrance and cure any such defect and will take all necessary and proper steps for the defense of any such legal proceedings, including the employment of counsel, the prosecution or defense of litigation and the release or discharge of all adverse claims. If NAI fails to promptly remove any encumbrance or cure any title defect as required by the preceding sentence, BNPPLC (whether or not named as a party to legal proceedings with respect thereto) may take such additional steps as in its judgment may be necessary or proper to remove such encumbrance or cure such defect or for the defense of any such attack or legal proceedings or the protection of BNPPLC’s leasehold or other interest in the Improved Property, including the employment of counsel, the prosecution or defense of litigation, the compromise or discharge of any adverse claims made with respect to the Improved Property, the removal of prior liens or security interests, and all expenses (including Attorneys’ Fees) so incurred of every kind and character will be a demand obligation owing by NAI.
     For purposes of this subparagraph 11(B), NAI will be deemed to be acting promptly to remove any encumbrance or to cure any title defect, other than a Lien which NAI or any of its Affiliates has granted or authorized, so long as NAI is in good faith by appropriate proceedings contesting the validity and applicability of the encumbrance or defect, and pending such contest NAI will not be deemed in default under this subparagraph because of the encumbrance or defect, provided that NAI must satisfy the following conditions and requirements:
     (1) NAI must diligently prosecute the contest to completion in a manner reasonably satisfactory to BNPPLC.
     (2) NAI must immediately remove the encumbrance or cure the defect upon a final determination by a court of competent jurisdiction that it is valid and applicable to the Improved Property.
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     (3) NAI must in any event conclude the contest and remove the encumbrance or cure the defect and pay any claims asserted against BNPPLC or the Improved Property because of such encumbrance or defect, all prior to (i) the date any criminal charges may be brought against BNPPLC or any of its directors, officers or employees because of such encumbrance or defect or (ii) the date any action is taken or threatened against BNPPLC or any property owned by BNPPLC (including BNPPLC’s leasehold estate under this Ground Lease) by any governmental authority or any other Person who has or claims rights superior to BNPPLC because of the encumbrance or defect. Also, with respect to a contest of any encumbrance or defect discovered or claimed before the Designated Sale Date, NAI must conclude the contest and remove the encumbrance or cure the defect and pay any claims asserted against BNPPLC or the Improved Property because of such encumbrance or defect, all prior to the Designated Sale Date, unless on the Designated Sale Date NAI or an Affiliate of NAI or any Applicable Purchaser purchases the Improved Property pursuant to the Purchase Agreement for a net price to BNPPLC (when taken together with any additional payments made by NAI pursuant to Paragraph 1(a)(ii) of the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Lease Balance.
     (G) Prohibition Against Consensual Liens on the Leased Property. NAI will not, without the prior consent of BNPPLC, 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 Land or Improvements or any part thereof (other than Permitted Encumbrances and Liens Removable by BNPPLC). It is understood and agreed, however, that any Liens which are Fully Subordinated or Removable will constitute Permitted Encumbrances and thus will not be prohibited by this provision.
     (H) Compliance With Permitted Encumbrances. NAI must comply with and cause to be performed all of the covenants, agreements and obligations imposed upon NAI or the owner of the Leased Property by the Permitted Encumbrances.
     (I) Compliance With Laws. Without limiting the foregoing, the use of the Improved Property permitted by the Lease complies, or will comply after readily available permits are obtained, in all material respects with all Applicable Laws.
     (J) Modification of Permitted Encumbrances. NAI will not enter create any new Permitted Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted Encumbrance that would create or expand or purport to create or expand obligations or restrictions which would encumber the Leased Property or any Improvements constructed thereon without the prior consent of BNPPLC; provided, this provision will not limit any right of the NAI Parties to modify any Lien that is Fully Subordinated or Removable and will remain Fully Subordinated or Removable after the modification. Whether BNPPLC must give any such
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consent requested by NAI prior to the Designated Sale Date will be governed by subparagraph 4(C) of the Closing Certificate.
     (K) Performance and Preservation of the Permitted Encumbrances for the Benefit of BNPPLC. Not only prior to the expiration or termination of other Operative Documents, but thereafter throughout the term of this Ground Lease, NAI must comply with and perform the obligations imposed by the Permitted Encumbrances upon NAI or upon any owner of the Land and do whatever is required to preserve the rights and benefits conferred or intended to be conferred by the Permitted Encumbrances, as necessary to prevent any claim against or forfeiture of any of the Improved Property and to facilitate the construction and use of any Improvements on the Land after the Turnover Date by BNPPLC and its successors, assigns and subtenants under this Ground Lease. Further, NAI hereby agrees for itself and its Affiliates, as the owner of the Land and any other land now owned or hereafter acquired by NAI or its Affiliates, which is encumbered or benefitted by the Permitted Encumbrances, to assume liability for and to indemnify BNPPLC and other Interested Parties and to defend and hold them harmless from and against all Losses (including Losses caused by any decline in the value of the Leased Property or of the Improvements) that they would not have incurred or suffered but for:
     (1) any breach by NAI of its obligations under the preceding sentence,
     (2) any termination of any benefit to the owner, users or occupants of the Land or Improvements conferred by the Permitted Encumbrances if NAI agreed to the termination or the termination resulted from a breach of any Permitted Encumbrance by NAI or its Affiliates, or
     (3) any restrictions imposed by or asserted under any Permitted Encumbrance upon any transfer after (but only after) the Turnover Date by BNPPLC of any interests it may then have in the Leased Property or in any Improvements.
NAI’s obligations under this subparagraph 11(K) will be binding upon any successor or assign of NAI or its Affiliates with respect to the Land and other properties encumbered or benefitted by the Permitted Encumbrances, and such obligations will survive any sale of NAI’s interest in the Leased Property to BNPPLC because of BNPPLC’s exercise of the Contingent Purchase Option.
     (L) Cooperation by NAI and its Affiliates.
     (1) After the Turnover Date, if neither NAI nor an Applicable Purchaser has purchased BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement, and if a use of the Improved Property by BNPPLC or any new Improvements or any removal or modification of Improvements proposed by BNPPLC would violate any Permitted Encumbrance or Applicable Law unless NAI or any of its Affiliates, as an
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owner of adjacent land or otherwise, gave its consent or approval thereto or agreed to join in a modification of a Permitted Encumbrance, then NAI must give and cause its Affiliates to give such consent or approval or join in such modification.
     (2) After the Turnover Date, if neither NAI nor an Applicable Purchaser has purchased BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement, and if any Permitted Encumbrance or Applicable Law requires the consent or approval of NAI or any of its Affiliates or of the city or county in which the Improved Property is located or of any other Person to an assignment of any interest in the Improved Property by BNPPLC or by any of 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 BNPPLC to assist BNPPLC to obtain such consent or approval from the city, county or other Person.
     (3) NAI’s obligations under this subparagraph 11(L) will be binding upon any successor or assign of NAI or its Affiliates with respect to the Land and other properties encumbered or benefitted by the Permitted Encumbrances, and such obligations will survive (a) any sale of the Improved Property by BNPPLC, other than to NAI or an Applicable Purchaser under the Purchase Agreement, for the benefit of BNPPLC’s assignees, and (b) any sale of NAI’s interest in the Leased Property to BNPPLC because of BNPPLC’s exercise of the Contingent Purchase Option.
     (M) Intentionally Deleted.
     (N) Omissions. None of NAI’s representations or warranties contained in this Ground Lease or in any other document, certificate or written statement furnished to BNPPLC 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.
     (O) Insurance and Casualty. In the event any of the Leased Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance is maintained or required hereunder, (i) BNPPLC may make proof of loss, (ii) each insurance company concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC for application as required by Paragraph 4, and (iii) BNPPLC’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.
     (P) Condemnation. All proceeds of condemnation awards or proceeds of sale in lieu of condemnation with respect to the Leased Property and all judgments, decrees and awards for injury or damage to the Leased Property will be paid to BNPPLC and applied as provided in
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Paragraph 4 above. BNPPLC is hereby authorized, in the name of NAI, to execute and deliver valid acquittances for, and to appeal from, any such judgment, decree or award concerning condemnation of any of the Leased Property. BNPPLC will 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.
     (Q) Further Assurances. NAI must, on request of BNPPLC, (i) promptly correct any defect, error or omission which may be discovered in the contents of this Ground Lease or in any other instrument executed in connection herewith or in the execution or acknowledgment thereof; (ii) 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 Ground Lease and to subject to this Ground Lease any property intended by the terms hereof to be covered hereby including specifically, but without limitation, any renewals, additions, substitutions, replacements or appurtenances to the Leased Property; (iii) execute, acknowledge, deliver, procure and record or file any document or instrument deemed advisable by BNPPLC to protect BNPPLC’s rights in and to the Leased Property against the rights or interests of third persons; and (iv) 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 BNPPLC to enable BNPPLC or any Leasehold Mortgagee to comply with the requirements or requests of any agency or authority having jurisdiction over them.
12 Ground Lease Defaults.
     (A) Definition of Ground Lease Default. Each of the following events will be deemed to be a “Ground Lease Default” by BNPPLC under this Ground Lease:
     (1) A failure by BNPPLC to pay when due any installment of Ground Lease Rent due hereunder if such failure continues for sixty days after BNPPLC receives notice thereof.
     (2) A failure by BNPPLC to comply with any term, provision or covenant of this Ground Lease (other than as described in the other clauses of this subparagraph 13(A)) if such failure is not cured prior to the earlier of (A) ninety days after notice thereof is sent to BNPPLC, or (B) the date any writ or order is issued for the levy or sale of any property owned by NAI or its Affiliates (including the leasehold created by this Ground Lease) because of such failure or any criminal action is instituted against BNPPLC 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 BNPPLC has promptly commenced to cure the same and thereafter prosecutes the curing thereof with reasonable
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diligence, the period within which such failure may be cured will be extended for such further period as is necessary to complete the cure.
     (B) Remedy. Upon the occurrence of a Ground Lease Default which is not cured within any applicable period expressly permitted by subparagraph 13(A), NAI’s sole and exclusive remedies will be to sue BNPPLC for the collection of any amount due under this Ground Lease, to sue for the specific enforcement of BNPPLC’s obligations hereunder, or to enjoin the continuation of the Ground Lease Default, provided, however, no limitation of NAI’s remedies contained herein will prevent NAI from exercising rights expressly provided in other Operative Documents or from recovering any reasonable costs NAI may incur to mitigate its damages by curing a Ground Lease Default that BNPPLC has failed to cure itself (so long as the cure by NAI is pursued in a lawful manner and the costs NAI seeks to recover do not exceed the actual damages to be mitigated). NAI may not terminate this Ground Lease or BNPPLC’s right to possession under this Ground Lease, except as expressly provided in the Operative Documents. Any judgment which NAI may obtain against BNPPLC for amounts due under this Ground Lease may be collected only through resort of a judgement lien against BNPPLC’s interest in the Leased Property and any Improvements. BNPPLC will have no personal liability for the payment amounts due under this or for the performance of any obligations of BNPPLC under this Ground Lease.
13 Quiet Enjoyment. NAI warrants that neither it nor any third party lawfully claiming any right or interest in the Leased Property will, during the Ground Lease Term, disturb BNPPLC’s peaceable and quiet enjoyment of the Leased Property; however, such enjoyment will be subject to the terms, provisions, covenants, agreements and conditions of this Ground Lease and those Permitted Encumbrances which are listed on Exhibit B.
14 Option to Purchase. Subject to the terms and conditions set forth in Exhibit C, BNPPLC (and any assignee of BNPPLC’s entire interest in the Leased Property, but not any subtenant or assignee of a lesser interest) will have the option, and NAI hereby grants to BNPPLC such option, to purchase NAI’s interest in the Leased Property.
15 Miscellaneous.
     (A) No Merger. There will be no merger of this Ground Lease or of the leasehold estate hereby created with the fee or any other estate in the Leased Property or any part thereof by reason of the fact that the same person may acquire or hold, directly or indirectly, this Ground Lease or the leasehold estate hereby created or any interest in this Ground Lease or in such leasehold estate as well as the fee or any other estate in the Leased Property or any interest in such fee or other estate, unless all parties with an interest in the Leased Property that would be adversely affected by any such merger specifically agree in writing that such a merger has occurred.
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     (B) Recording; Memorandum of Lease. Either party may record this Ground Lease in the real property records of Santa Clara County, California. If NAI and BNPPLC decide not to record this Ground Lease, they will execute a memorandum of this Ground Lease in recordable form which will be filed in the real property records of Santa Clara County, California.
16 Certain Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy BNPPLC has with respect to the Improved Property, and each and every right and remedy of BNPPLC will be cumulative and in addition to any other right or remedy given to it under this Ground Lease or now or hereafter existing in its favor at law or in equity. In addition to other remedies available under this Ground Lease, either party will be entitled, to the extent permitted by applicable law, to a decree compelling performance of any of the other party’s agreements hereunder.
17 Attorney’s Fees and Legal Expenses. If BNPPLC commences any legal action or other proceeding because of any breach of this Ground Lease by NAI, BNPPLC may recover all Attorneys’ Fees incurred by it in connection therewith from NAI, whether or not such controversy, claim or dispute is prosecuted to a final judgment. Any Attorneys’ Fees incurred by BNPPLC in enforcing a judgment in its favor under this Ground Lease will be recoverable separately from such judgment, and the obligation for such Attorneys’ Fees is intended to be severable from other provisions of this Ground Lease and not to be merged into any such judgment.
18 Successors and Assigns. The terms, provisions, covenants and conditions of this Ground Lease will be binding upon NAI and BNPPLC and their respective permitted successors and assigns and will inure to the benefit of NAI and BNPPLC and all permitted transferees, mortgagees, successors and assignees of NAI and BNPPLC with respect to the Leased Property; except that (A) BNPPLC will not assign this Ground Lease or any rights hereunder except pursuant to a Permitted Transfer, and (C) NAI will not assign this Ground Lease or any rights hereunder prior to the Turnover Date without the prior written consent of BNPPLC.
19 Amendment and Restatement of Prior ground Lease. This Lease amends, restates and replaces entirely the Ground Lease dated as of December 15, 2005, between NAI (as lessor) and BNPPLC (as lessee) (as previously amended, the “Prior Ground Lease”). Without limiting the rights and obligations of the parties under this Ground Lease, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Ground Lease are now made subject to the terms and conditions of this Ground Lease; and all rights and interests of BNPPLC in and to the Land or other Property under the Prior Ground Lease are renewed and extended (rather than terminated) by this Ground Lease.
[The signature pages follow.]
Amended and Restated Ground Lease (Building 7) – Page 17

 

 

     IN WITNESS WHEREOF, this Amended and Restated Ground Lease (Building 7) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
             
STATE OF TEXAS
    )      
 
    )     SS
COUNTY OF DALLAS
    )      
On November 27, 2007, before me Kathryn Hackett, a Notary Public in and for the County and State aforesaid, personally appeared Lloyd G. Cox, Managing Director of BNP Paribas Leasing Corporation, who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity and that by his signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
WITNESS, my hand and official seal.
         
/s/ Kathryn Hackett
 
       NOTARY PUBLIC
STATE OF TEXAS
KATHRYN HACKETT
MY COMMISSION EXPIRES
June 21, 2011
Amended and Restated Ground Lease (Building 7) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Ground Lease (Building 7) dated as of November 29, 2007.]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate Treasurer   
       
 
             
STATE OF NORTH CAROLINA
    )      
 
    )     SS
COUNTY OF WAKE
    )      
On November 27th, 2007, before me Donna M. Mareotte, a Notary Public in and for the County and State aforesaid, personally appeared Ingemar Lanevi, Vice President and Corporate Treasurer of Network Appliance, Inc., who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
WITNESS, my hand and official seal.
     
/s/ Donna M. Mareotte
 
    
Amended and Restated Ground Lease (Building 7) – Signature Page

 

 

Exhibit A
Legal Description
Parcel 7 and the Additional Leased Premises, as defined below, (collectively, the “Building 7 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the northern boundary of Parcel 7 and the southern boundary of Parcel 8, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 7 and Parcel 8, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 7 and Parcel 11, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 7 Ground Lease Premises (the “Appurtenant Easements”) under, over and across adjacent parcels (“Adjacent Parcels”) which are owned by NAI for the purposes described below and on and subject to the express terms and conditions set forth below:
The Appurtenant Easements will be for the following purposes:
     1. The use, maintenance, repair, replacement expansion of utility lines under, over and across the Adjacent Parcels and related equipment (including lines or equipment for water, sanitary sewer, electricity, phone and gas) (collectively, the “Utility Lines”) to serve improvements constructed from time to time on the Building 7 Ground Lease Premises.
     2. Access and parking over and in paved driveways and parking lots or garages now or hereafter located on the Adjacent Parcels (“Driveways and Parking Areas”).
     3. The encroachment, support, maintenance, repair and replacement of any buildings constructed on Parcel 7 as shown on the Tentative Map during the period that BNPPLC owns or leases Parcel 7.
The Appurtenant Easements will be subject to the following terms and conditions:

 

 

     A. The Appurtenant Easements for Utility Lines will be limited to:
     (1) those Utility Lines, if any, existing on the first date upon which any instrument is recorded which gives notice of the Appurtenant Easements;
     (2) those Utility Lines, if any, constructed by or at the request of NAI itself;
     (3) any other Utility Lines reasonably necessary for the use of improvements constructed by NAI (whether constructed for BNPPLC or otherwise) on the Building 7 Ground Lease Premises (and in the case of Utility Lines permitted only because of this clause (3), such Utility Lines must be installed in a location that does not run through or under any then existing building or structured garage on the Adjacent Parcels); and
     (4) replacements (including replacements that may increase utility capacity) for any Utility Lines permitted under the preceding clauses (1) through (3).
     B. Any Utility Line on any Adjacent Parcel may be relocated to another location on the same Adjacent Parcel by the owner of such parcel and at its sole cost and expense, so long as the relocation is done in a good and workmanlike manner that does not and will not impose any significant or unexpected interruption of utility services or additional costs upon the owner or occupants of the Building 7 Ground Lease Premises.
     C. The use of Driveways and Parking Areas by the owner of the Building 7 Ground Lease Premises and its tenants and other invitees will not exceed that reasonably required to provide buildings constructed on the Building 7 Ground Lease Premises with parking that both (i) meets local zoning and other legal requirements, and (ii) when taken together with any permanent, concrete parking spaces from time to time constructed on the Building 7 Ground Lease Premises, provides at least the minimum number of parking spaces for buildings on the Building 7 Ground Lease Premises necessary to cause the parking ratio for buildings on the Building 7 Ground Lease Premises to be not less than 1 parking space per 333 square feet of interior building floor area (the “Minimum Parking Requirements”). However, for purposes of computing the Minimum Parking Requirements, parking spaces from time to time constructed on the Building 7 Ground Lease Premises which are made available for parking by owners or occupants of any Adjacent Parcel pursuant to any easement which encumbers the Building 7 Ground Lease Premises (or any leasehold estate therein) will be treated as if they did not exist. In other words, any such parking spaces available to owners or occupants of Adjacent Parcels will not be included in the numbers of parking spaces considered as available to owners or occupants of the Building 7 Ground Lease Premises to satisfy the Minimum Parking
Exhibit A Amended and Restated Ground Lease (Building 7) – Page 2

 

 

Requirements.
     D. NAI and its successors and assigns as the owners of Adjacent Parcels will always maintain a number of parking spaces on the Adjacent Parcels which is no less than the sum of (1) the spaces required to meet Minimum Parking Requirements for buildings on the Building 7 Ground Lease Premises, and (2) the spaces required to satisfy zoning or other parking requirements for other buildings on or served by parking on the Adjacent Parcels.
     E. The Appurtenant Easement for parking on Adjacent Parcels will be subject to the following condition subsequent: If a sufficient number of permanent, concrete parking spaces in parking lots or structured garages are constructed on the Building 7 Ground Lease Premises to satisfy Minimum Parking Requirements (computed as described above) without the need for additional parking spaces on Adjacent Parcels, then the owners of Adjacent Parcels may terminate such parking easement by notice to the owner of the Building 7 Ground Lease Premises and by recording a copy of such notice in the real property deed records. (This provision will not, however, be construed to require the construction of such lots or garages on the Building 7 Ground Lease Premises.)
     F. Notwithstanding the foregoing, at any time when BNPPLC or any successor of BNPPLC owns or leases (i) all or any part of the land shown on the Tentative Map as Parcel 9 and adjacent parking lots, driveways and other areas within Common Lot A (collectively, the “Building 9 Ground Lease Premises”) or (ii) all or any part of the land shown on the Tentative Map as Parcels 8 and 12 and adjacent parking lots, driveways and other areas within Common Lot A (collectively, the “Building 8 Ground Lease Premises”), BNPPLC may, at its sole option and at any time or from time to time, cause all or any portion of the Building 9 Ground Lease Premises and/or the Building 8 Ground Lease Premises to be released from all or any of the Appurtenant Easements. Notwithstanding any such release, the Appurtenant Easements will continue as to Adjacent Parcels other than the released portions of the Building 9 Ground Lease Premises and/or the Building 8 Ground Lease Premises, as applicable. BNPPLC may exercise such option by written notice recorded in the real property records of Santa Clara County, California.
Exhibit A Amended and Restated Ground Lease (Building 7) – Page 3

 

 

(MAP)
Exhibit A Amended and Restated Ground Lease (Building 7) – Page 4

 

 

Exhibit B
Permitted Encumbrances
     The leasehold and other interests in the Land hereby conveyed by NAI are conveyed subject to the following matters to the extent the same are still valid and in force:
1. TAXES for the fiscal year 2006-2007, 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   : Slope Easement
 
  In favor of   : City of Sunnyvale
 
  Recorded   : October 9, 1964 in Book 6695, page 430, Official Records
 
  Affects   : Easterly 18 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
4. EASEMENT for the purposes stated herein and incidents thereto
         
 
  Purpose   : Public utilities easement
 
  In favor of   : City of Sunnyvale
 
  Recorded   : October 9, 1964 in Book 6695, page 450, Official Records
 
  Affects   : Easterly 7 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
5. Covenants, Conditions and Restrictions in the Declaration of Protective Covenants — Moffett Industrial Park No. 2) recorded December 23, 1971 in Book 9640, page 443, Official Records; which provide that a violation thereof shall not defeat or render invalid the lien of any Mortgage or Deed of Trust made in good faith and for value. Said Covenants, Conditions and Restrictions do not provide for reversion of title in the event of a breach thereof. Restrictions, if any, based upon race, color, religion, sex, handicap, familial status, or national origin are deleted, unless and only to the extent that said covenant (a) is exempt under Chapter 42, Section 3607, of the United States Code, or (b) related to handicap but does not discriminate against handicapped persons.
     ASSIGNMENT AND ASSUMPTION of the rights, powers, duties, obligations, and reservations of Moffett Park Associates, in favor of The Prudential Insurance Company of

 

 

America, recorded February 8, 1977 in Book C583, page 685, Official Records.
6. EASEMENT for the purposes stated herein and incidents thereto
         
 
  Purpose   : Public utilities
 
  Granted to   : City of Sunnyvale
 
  Recorded   : November 16, 1976 in Book C414, page 105, Official Records
 
  Affects   : Southerly 10 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
7. LIMITATIONS, covenants, restrictions, reservations, exceptions or terms, 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 USC 3604(c), contained in the document recorded February 5, 1980 in Book F122, page 460, Official Records.
Exhibit B Amended and Restated Ground Lease (Building 7) – Page 2

 

 

Exhibit C
CONTINGENT PURCHASE OPTION
     Subject to the terms of this Exhibit, BNPPLC shall have an option (the “Option”) to buy NAI’ fee interest in the Leased Property at any time during the term of this Ground Lease after (but only after) any breach by NAI under the Purchase Agreement, provided NAI does not cure the breach within any time permitted for cure by the express provisions of the Purchase Agreement, for a purchase price (the “Option Price”) to NAI equal to fair market value.
     For the purposes of this Exhibit, “fair market value” 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 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 of BNPPLC’s exercise of the Option 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 the exercise of the Option.
     If BNPPLC exercises the Option, which BNPPLC may do by notifying NAI that BNPPLC has elected to buy NAI’ interest in the Leased Property as provided herein, then:
     (1) To the extent, if any, required as a condition imposed by law to the conveyance of the fee interest in the Leased Property to BNPPLC, NAI shall promptly at its expense do whatever is necessary and possible (including, without limitation, cooperating with BNPPLC in seeking any zoning variances requested by BNPPLC) to obtain approvals of a new recorded plat or lot line adjustments. Should it be determined that it is not possible to satisfy any such condition imposed by law, neither NAI nor BNPPLC shall be required to consummate any purchase pursuant to this Exhibit, and this Ground Lease will continue as if BNPPLC had not exercised the Option.
     (2) Upon BNPPLC’s tender of the Option Price to NAI, NAI will convey good and indefeasible title to the fee estate in the Land and its interest in all other Leased Property to BNPPLC by general warranty deed and assignment subject only to the Permitted Encumbrances, to any claims of BNPPLC or Liens Removable by BNPPLC, and (to the extent still in force) to the Lease and the Purchase Agreement.
     (3) BNPPLC’s obligation to close the purchase shall be subject to the following terms and conditions, all of which are for the benefit of BNPPLC: (a) BNPPLC shall have been furnished with evidence satisfactory to BNPPLC that NAI can convey title as required by the preceding subparagraph; (b) nothing shall have occurred or been discovered after BNPPLC exercised the Option that could significantly and adversely affect title to the Leased Property or BNPPLC’s use thereof, (c) all of the representations of NAI 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 NAI or any of NAI’ representatives, would continue to be true on the date of the closing if all relevant facts and circumstances were known to NAI and such representatives, and (d) BNPPLC shall have been tendered the deed and other documents which are described in this Exhibit as documents to be delivered to BNPPLC at the closing of BNPPLC’s purchase.
     (4) 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 Exhibit and after any approvals described in subparagraph (1) above are obtained, and prior to closing BNPPLC’s occupancy of the Leased Property shall continue to be subject to the terms and conditions of this Ground Lease, including the terms setting forth BNPPLC’s obligation to pay rent. Closing shall take place at the offices of any title insurance company reasonably selected by BNPPLC to insure title under the title insurance policy described below.
     (5) Any transfer taxes or notices or registrations required by law in connection with the sale contemplated by this Exhibit will be the responsibility of NAI.
     (6) NAI will deliver a certificate of nonforeign status to BNPPLC at closing as needed to comply with the provisions of the U.S. Foreign Investors Real Property Tax Act (FIRPTA) or any comparable federal, state or local law in effect at the time.
     (7) NAI will also pay for and deliver to BNPPLC 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 BNPPLC (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 BNPPLC and to Permitted Encumbrances.
     (8) NAI shall also deliver at the closing all other documents or things reasonably required to be delivered to BNPPLC or by the title insurance company to evidence NAI’ ability to transfer the Leased Property to BNPPLC.
     If NAI and BNPPLC do not otherwise agree upon the amount of the Option Price within twenty days after BNPPLC exercises the Option, the Option Price shall be determined in accordance with the following procedure:
     (a) NAI and BNPPLC 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
Exhibit C Amended and Restated Ground Lease (Building 7) – Page 2

 

 

described in this Exhibit has been invoked. The agreement of the two appraisers as to the Option Price will be binding upon NAI and BNPPLC. 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 third appraiser as the closest to the prevailing monthly fair market value will be binding upon NAI and BNPPLC. Notification in writing of the Option Price shall be made to NAI and BNPPLC within fifteen days following the selection of the third appraiser.
     (b) If appraisers must be selected under the procedure set out above and either BNPPLC or NAI 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 Exhibit 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.
     (c) 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 NAI and BNPPLC may require the first two appraisers to immediately submit its top choice for the third appraiser to the then highest ranking officer of the Dallas, Texas Bar Association who will agree to help and who has no attorney/client or other significant relationship to either NAI or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within ten days after such choices are submitted to him.
     (d) Either NAI or BNPPLC 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
Exhibit C Amended and Restated Ground Lease (Building 7) – Page 3

 

 

by the other appraiser (i.e., the notifying party’s appraiser) will be binding upon NAI and BNPPLC.
     (e) NAI and BNPPLC shall each bear the expense of the appraiser appointed by it, and the expense of the third appraiser and of any officer of the Dallas, Texas Bar Association who participates in the appraisal process described above will be shared equally by NAI and BNPPLC.
Exhibit C Amended and Restated Ground Lease (Building 7) – Page 4

 

 

Exhibit D
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 Exhibit, “Rental Determination Date” means the (1) the Effective Date, (2) the earliest anniversary of the Effective Date to follow the Turnover Date by more than thirty days, and (3) after the second Rental Determination Date described in clause (2), each fifth anniversary of the preceding Rental Determination Date.
     As of the Effective Date (i.e., the first Rental Determination Date), the parties have agreed that Fair Rental Value is the dollar amount set forth in Paragraph 3 of this Ground Lease.
     If NAI and BNPPLC have not agreed upon Fair Rental Value as of any subsequent Rental Determination Date within one hundred eighty days after the such date, then Fair Rental Value will be determined as follows:
     (a) NAI and BNPPLC 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 Exhibit has been invoked. The agreement of the two appraisers as to Fair Rental Value will be binding upon NAI and BNPPLC. 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 NAI and BNPPLC. Notification in writing of this estimate shall be made to NAI and BNPPLC within fifteen days following the selection of the third appraiser.
     (b) If appraisers must be selected under the procedure set out above and either BNPPLC or NAI 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 Exhibit 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.
     (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 NAI and BNPPLC may require the first two appraisers to immediately submit its top choice for the third appraiser to the then highest ranking officer of the Dallas, Texas Bar Association who will agree to help and who has no attorney/client or other significant relationship to either NAI or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within twenty days after such choices are submitted to him.
     (d) Either NAI or BNPPLC 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 NAI and BNPPLC.
     (e) NAI and BNPPLC shall each bear the expense of the appraiser appointed by it, and the expense of the third appraiser and of any officer of the Dallas, Texas Bar Association who participates in the appraisal process described above will be shared equally by NAI and BNPPLC.
Exhibit D Amended and Restated Ground Lease (Building 7) – Page 2

 

exv10w37
Exhibit 10.37
FIRST MODIFICATION AGREEMENT
(BUILDING 7)
     This FIRST MODIFICATION AGREEMENT (BUILDING 7) (this “Amendment”), dated as of April 9, 2008 (the “Amendment Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETAPP, INC. (“NAI”), a Delaware corporation which is a successor by merger to Network Appliance, Inc.
RECITALS
     BNPPLC and Network Appliance, Inc. executed an Amended and Restated Common Definitions and Provisions Agreement (Building 7) dated as of November 29, 2007 (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Amendment for all purposes. As used in this Amendment, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Amendment are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     BNPPLC and Network Appliance, Inc. also executed other Operative Documents, including an Amended and Restated Closing Certificate and Agreement (Building 7) dated as of November 29, 2007 (the “Closing Certificate”), pursuant to which (among other things) NAI is currently bound by certain financial covenants set forth therein.
     Bank of America, N.A.; Goldman Sachs Credit Partners L.P.; JPMorgan Chase Bank, National Association; Keybank National Association; Morgan Stanley Bank; Sumitomo Mitsui Banking Corporation; and Wells Fargo Bank, N.A., as “Participants” (herein so called), and BNPPLC have all previously become parties to a Participation Agreement (Building 7) dated as of November 29, 2007 (the “Participation Agreement”), in which the Participants have agreed with BNPPLC to participate in the risks and rewards to BNPPLC of the Operative Documents.
     BNPPLC and NAI now desire to amend the Common Definitions and Provisions Agreement and the Closing Certificate as more particularly provided below in this Amendment.
AGREEMENTS
     In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1 Amendments to the Operative Documents.
     (A) Amendments to the Closing Certificate. Effective as of the Amendment Date, but subject to the satisfaction of the condition precedent set forth in Section 9 below, the Closing Certificate is hereby amended as follows:

 

 

     (1) The definition of “Consolidated EBITDA” in Subparagraph 3(A) of the Closing Certificate is hereby amended and restated in its entirety as follows:
“Consolidated EBITDA” means, with reference to any period, the sum of the following: (a) Consolidated Net Income for such period, plus (b) without duplication and to the extent deducted from revenues in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii) expense for taxes paid or accrued during such period, (iii) all amounts attributable to depreciation, (iv) amortization during such period, (v) extraordinary non-cash charges incurred other than in the ordinary course of business during such period, (vi) nonrecurring extraordinary non-cash restructuring charges, (vii) share-based non-cash compensation expense, and (viii) any non-cash charge with respect to the amortization of the value or cost of any derivative instrument that is excluded from the definition of “Swap Agreement” below by reason of clause (b) or clause (c) of the proviso at the end of that definition, minus without duplication and to the extent included in determining such Consolidated Net Income, (c) interest income, (d) extraordinary non-cash gains realized other than in the ordinary course of business and (e) any cash payments made during such period in respect of the item described in clause (vii) above subsequent to the fiscal quarter in which the relevant share-based non-cash compensation expense was incurred, all calculated for NAI and its Subsidiaries in accordance with GAAP on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period NAI or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period NAI or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by NAI and its Subsidiaries in excess of $50,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to NAI or any of its Subsidiaries in excess of $50,000,000.
First Modification Agreement (Building 7) – Page 2

 

 

     (2) The definition of “Swap Agreement” in Subparagraph 3(A) of the Closing Certificate is hereby amended and restated in its entirety as follows:
“Swap Agreement” means any agreement entered into for the primary purpose of hedging or mitigating risk or speculation with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that the following shall be excluded from this definition: (a) any of the foregoing involving, or settled by reference to, Equity Interests of NAI and entered into or issued in connection with compensatory arrangements for directors, officers, employees or consultants of NAI or any of the Subsidiaries, (b) any of the foregoing that is, or at the election of the issuer may be, settled (after payment of any premium for any option or any prepayment under any forward contract) through the issuance of Equity Interests of NAI, and (c) any of the foregoing to the extent it constitutes a derivative embedded in a convertible security issued by NAI that involves, or is settled by reference to, Equity Interests of NAI (including, for avoidance of doubt, “net share settled” convertible securities).
     (B) Amendment to the Common Definitions and Provisions Agreement. Effective as of the Amendment Date, but subject to the satisfaction of the condition precedent set forth in Section 9 below, clause (F) of the definition of “Event of Default” in Article 1 of the Common Definitions and Provisions Agreement is hereby amended and restated in its entirety as follows:
(F) NAI or any Subsidiary of NAI fails to pay any principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event occurs or condition exists under any agreement or instrument relating to any such Indebtedness and continues after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate the maturity of such Indebtedness (other than by conversion of any convertible debt instrument pursuant to its terms); or any such Indebtedness is declared by the creditor to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness is required to be made, in each case prior to the stated maturity thereof (other than, in each case, by conversion of any convertible debt instrument pursuant to its terms).
First Modification Agreement (Building 7) – Page 3

 

 

2 Confirmation of Operative Documents by NAI. NAI confirms that it is, as successor by merger to Network Appliance, Inc., a party to and bound by the Operative Documents as was Network Appliance, Inc. Further, NAI ratifies and confirms all terms and conditions of the Operative Documents, as hereby amended, including the representations made by Network Appliance, Inc. concerning the Property in the Ground Lease. NAI also confirms that (a) all such representations which concern the Property would continue to be accurate and complete in all material respects if made as of the Amendment Date, and (b) NAI is not currently aware of any Default or Event of Default which has occurred and is continuing or of any defense, counterclaim, set-off, right of recoupment, abatement or other claim which NAI may now have against BNPPLC under the Operative Documents.
3 Other Representations and Covenants of NAI. NAI also represents and covenants to BNPPLC as follows:
     (A) Concerning NAI and this Amendment.
     (1) Authority. The Constituent Documents of NAI permit the execution, delivery and performance of this Amendment by NAI, and all actions and approvals necessary to bind NAI under this Amendment have been taken and obtained. Without limiting the foregoing, this Amendment will be binding upon NAI when signed on behalf of NAI by Ingemar Lanevi, Vice President and Corporate Treasurer of NAI.
     (2) Truth of Information. Any reports, financial statements or other data furnished by NAI to BNPPLC in connection with the agreements set forth in this Amendment are true and correct in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading. No material adverse change has occurred since the dates of such reports, statements and other data in the financial condition of NAI.
     (3) No Default or Violation. The execution and performance by NAI of this Amendment do not and will not contravene or result in a breach of or default under any other agreement to which NAI is a party or by which NAI is bound or which affects any assets of NAI. Such execution and performance by NAI do not contravene any law, order, decree, rule or regulation to which NAI is subject. Further, such execution 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, any property of NAI pursuant to the provisions of any such other agreement.
     (4) Enforceability. This Amendment constitutes the legal, valid and binding obligations of NAI enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
First Modification Agreement (Building 7) – Page 4

 

 

     (B) Further Assurances. NAI will, upon the reasonable request of BNPPLC, (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 Amendment and to subject to this Amendment any property intended to be covered hereby, 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 BNPPLC 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 BNPPLC to enable BNPPLC to comply with the requirements or requests of any agency or authority having jurisdiction over it.
     (C) Reimbursement of Costs. NAI will pay or reimburse BNPPLC, upon demand, for all reasonable out-of-pocket costs and expenses (including the reasonable fees, charges and disbursements of counsel) incurred by BNPPLC in connection with the preparation, negotiation, execution and delivery of this Amendment.
4 Reservation of Rights. The execution and delivery by BNPPLC of this Amendment will not be deemed to create a course of dealing or otherwise obligate BNPPLC to enter into amendments under the same, similar, or any other circumstances in the future. NAI is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon BNPPLC or Participants or any other Person. Except as expressly provided above, this Amendment will not limit, modify or otherwise affect any of NAI’s obligations under any of the Operative Documents, as heretofore amended.
5 No Implied Representations or Promises by BNPPLC. NAI acknowledges and agrees that neither BNPPLC nor its representatives or agents have made any representations or promises with respect to the subject matter of this Amendment except as expressly set forth herein.
6 Provisions Incorporated by Reference from the Common Definitions and Provisions Agreement. All terms and conditions set forth in Article II of the Common Definitions and Provisions Agreement will apply to this Amendment as if this Amendment was one of the Operative Documents referenced therein.
7 References to Operative Documents. From and after the Amendment Date, all references to any of the Operative Documents in the Operative Documents or in other documents related to the transactions contemplated therein are intended to mean the Operative Documents, as modified by this Amendment, unless the context shall otherwise require.
First Modification Agreement (Building 7) – Page 5

 

 

8 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 and successors and, to the extent assignment is permitted under the Operative Documents, their respective assigns.
9 Condition Precedent — Consents of Participants. The Participation Agreement requires that BNPPLC obtain approval of a Majority (as defined in the Participation Agreement) before it becomes bound by one or more amendments set forth in Section 1 above. The Participation Agreement defines “Majority” by reference to the Percentages (as defined therein) of the parties thereto. More specifically, the Participation Agreement defines “Majority” as parties to the Participation Agreement (i.e., Participants or BNPPLC and Participants), the aggregate Percentages of which equal or exceed sixty-seven percent (67%) of the Percentages of BNPPLC and of all the Participants then entitled to vote on certain matters specified in the Participation Agreement. For purposes of such voting, the Percentages of BNPPLC and the Participants under the Participation Agreement are currently as follows:
         
BNP PARIBAS LEASING CORPORATION:
     23.1124807397 %
BANK OF AMERICA, N.A.:
     4.6224961479 %
GOLDMAN SACHS CREDIT PARTNERS L.P.
     3.0816640986 %
JPMORGAN CHASE BANK
     9.2449922958 %
KEYBANK NATIONAL ASSOCIATION
     22.1879815100 %
MORGAN STANLEY BANK
     8.4745762712 %
SUMITOMO MITSUI BANKING CORPORATION
     6.1633281972 %
WELLS FARGO BANK, N.A.
     23.1124807396 %
In order to comply with the requirements of the Participation Agreement, BNPPLC and NAI agree that the amendments set forth in Section 1 above shall not become effective until Participants with aggregate Percentages of at least 43.888% (i.e., 67% less the Percentage of BNPPLC itself) have executed this Amendment in the spaces provided below to evidence their consents. However, so long as Participants with aggregate percentages of at least 43.888% do sign this Amendment to evidence their consents, then the amendments in Section 1 above will become effective even if other Participants fail or refuse to sign this Amendment or give their consents.
[The signature pages follow.]
First Modification Agreement (Building 7) – Page 6

 

 

     IN WITNESS WHEREOF, this First Modification Agreement (Building 7) is executed to be effective as of April 9, 2008.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
First Modification Agreement (Building 7) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 7) dated as of April 9, 2008]
         
  NETAPP, INC., a Delaware corporation, which is the
successor by merger to Network Appliance, Inc.
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
First Modification Agreement (Building 7) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 7) dated as of April 9, 2008]
Consent of Participant
The undersigned, BANK OF AMERICA, N.A., joins in the execution of this First Modification Agreement (Building 7) as a Participant solely to evidence its consent to this First Modification Agreement (Building 7).
         
  BANK OF AMERICA, N.A.
 		  
  By:   /s/ Fred L. Thorne    
    Name:   Fred L. Thorne    
    Title:   Managing Director   
 
First Modification Agreement (Building 7) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 7) dated as of April 9, 2008]
Consent of Participant
The undersigned, GOLDMAN SACHS CREDIT PARTNERS L.P., joins in the execution of this First Modification Agreement (Building 7) as a Participant solely to evidence its consent to this First Modification Agreement (Building 7).
         
  GOLDMAN SACHS CREDIT PARTNERS L.P.
 		  
  By:   /s/ Andrew Caditz    
    Name:   Andrew Caditz   
    Title:   Authorized Signatory   
 
First Modification Agreement (Building 7) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 7) dated as of April 9, 2008]
Consent of Participant
The undersigned, JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, joins in the execution of this First Modification Agreement (Building 7) as a Participant solely to evidence its consent to this First Modification Agreement (Building 7).
         
  JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
 		  
  By:   /s/ Anthony Galea    
    Name:   Anthony Galea   
    Title:   Vice President   
 
First Modification Agreement (Building 7) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 7) dated as of April 9, 2008]
Consent of Participant
The undersigned, KEYBANK NATIONAL ASSOCIATION, joins in the execution of this First Modification Agreement (Building 7) as a Participant solely to evidence its consent to this First Modification Agreement (Building 7).
         
  KEYBANK NATIONAL ASSOCIATION
 		  
  By:   /s/ Raed Y. Alfayoumi    
    Name:   Raed Y. Alfayoumi   
    Title:   Vice President   
 
First Modification Agreement (Building 7) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 7) dated as of April 9, 2008]
Consent of Participant
The undersigned, MORGAN STANLEY BANK, joins in the execution of this First Modification Agreement (Building 7) as a Participant solely to evidence its consent to this First Modification Agreement (Building 7).
         
  MORGAN STANLEY BANK
 		  
  By:   /s/ Elizabeth Hendricks    
    Name:   Elizabeth Hendricks   
    Title:   Authorized Signatory   
 
First Modification Agreement (Building 7) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 7) dated as of April 9, 2008]
Consent of Participant
The undersigned, SUMITOMO MITSUI BANKING CORPORATION, joins in the execution of this First Modification Agreement (Building 7) as a Participant solely to evidence its consent to this First Modification Agreement (Building 7).
         
  SUMITOMO MITSUI BANKING CORPORATION
 		  
  By:   /s/ Leo E. Pagarigan    
    Name:   Leo E. Pagarigan    
    Title:   General Manager   
 
First Modification Agreement (Building 7) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 7) dated as of April 9, 2008]
Consent of Participant
The undersigned, WELLS FARGO BANK, N.A., joins in the execution of this First Modification Agreement (Building 7) as a Participant solely to evidence its consent to this First Modification Agreement (Building 7).
         
  WELLS FARGO BANK, N.A.
 		  
  By:   /s/ Alicia Kachmarik  
    Name:   Alicia Kachmarik  
    Title:   Assistant Vice President   
 
First Modification Agreement (Building 7) – Signature Page

 

exv10w39
Exhibit 10.39
AMENDED AND RESTATED
CLOSING CERTIFICATE
AND AGREEMENT
(BUILDING 8)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
                 
            Page  
1   Representations, Covenants and Acknowledgments of NAI Concerning the Property     2  
 
   (A)   Prior Inspections and Investigations Concerning the Property     2  
 
   (B)   Title     2  
 
   (C)   Compliance with Covenants and Laws     2  
 
                
 
   2   Representations and Covenants by NAI     2  
 
   (A)   Concerning NAI and the Operative Documents     2  
 
       (1) Entity Status     2  
 
       (2) Authority     3  
 
       (3) Solvency     3  
 
       (4) Financial Reports     3  
 
       (5) Pending Legal Proceedings     3  
 
       (6) No Default or Violation     4  
 
       (7) Use of Proceeds     4  
 
       (8) Enforceability     4  
 
       (9) Pari Passu     4  
 
       (10) Conduct of Business and Maintenance of Existence     4  
 
       (11) Investment Company Act, etc     4  
 
       (12) Not a Foreign Person     5  
 
       (13) ERISA     5  
 
       (14) Compliance With Laws     5  
 
       (15) Payment of Taxes Generally     5  
 
       (16) Maintenance of Insurance Generally     6  
 
       (17) Franchises, Licenses, etc     6  
 
       (18) Patents, Trademarks, etc     6  
 
       (19) Labor     6  
 
       (20) Title to Properties Generally     7  
 
       (21) Books and Records     7  
 
   (B)   Further Assurances     7  
 
   (C)   Syndication     7  
 
   (D)   Financial Statements; Required Notices; Certificates     7  
 
   (F)   OFAC     10  
 
                
 
   3   Financial Covenants and Negative Covenants of NAI     10  
 
   (B)   Negative Covenants     19  
 
       (1) Subsidiary Indebtedness     20  
 
       (2) Liens     21  
 
       (3) Fundamental Changes and Asset Sales     23  
 
       (4) Speculative Swap Agreements     24  
 
       (5) Transactions with Affiliates     24  
 
       (6) Restrictive Agreements     24  

 

 

TABLE OF CONTENTS
(Continued)
                 
            Page  
 
   (C)   Financial Covenants     25  
 
       (1) Maximum Leverage Ratio     25  
 
       (2) Minimum Liquidity     25  
 
                
 
   4   Limited Representations and Covenants of BNPPLC     25  
 
   (A)   Concerning Accounting Matters     25  
 
   (B)   Other Limited Representations     27  
 
       (1) Entity Status     27  
 
       (2) Authority     27  
 
       (3) Solvency     28  
 
       (4) Pending Legal Proceedings     28  
 
       (5) No Default or Violation     28  
 
       (6) Enforceability     28  
 
       (7) Conduct of Business and Maintenance of Existence     29  
 
       (8) Not a Foreign Person     29  
 
   (C)   Further Assurances     29  
 
   (D)   Actions Permitted by NAI Without BNPPLC's Consent     33  
 
   (E)   Waiver of Landlord's Liens     33  
 
   (F)   Estoppel Letters     34  
 
   (G)   No Implied Representations or Promises by BNPPLC     34  
 
                
 
   5   Usury Savings Provision     34  
 
                
 
   6   Obligations of NAI Under Other Operative Documents Not Limited by this Certificate     35  
 
                
 
   7   Obligations of NAI Hereunder Not Limited by Other Operative Documents     35  
 
                
 
   8   Waiver of Jury Trial     35  
 
                
 
   9   Amendment and Restatement of Prior Certificate     36  

(ii)

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
     
Exhibit A
  Legal Description
 
    
Exhibit B
  Quarterly Certificate
 
    
Exhibit C
  Form of Disclosure Letter
 
    
Exhibit D
  Certificate to be Provided by BNPPLC Re: Accounting

(iii)

 

AMENDED AND RESTATED
CLOSING CERTIFICATE AND AGREEMENT
(BUILDING 8)
     This AMENDED AND RESTATED CLOSING CERTIFICATE AND AGREEMENT (BUILDING 8) (this “Certificate”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Certificate, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (Building 8) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Certificate for all purposes. As used in this Certificate, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Certificate are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     Also contemporaneously with this Certificate, BNPPLC is executing and accepting an Amended and Restated Ground Lease (Building 8) from NAI (the “Ground Lease”), pursuant to which BNPPLC is acquiring a leasehold estate in the Land described in Exhibit A and any existing Improvements on the Land.
     Also contemporaneously with this Certificate, BNPPLC and NAI are executing an Amended and Restated Construction Agreement (Building 8) (the“Construction Agreement”) and an Amended and Restated Lease Agreement (Building 8) (the “Lease”). Pursuant to the Construction Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements. When the term of the Lease commences, the Lease will cover all Improvements on the Land described in Exhibit A.
     Also contemporaneously with this Certificate, BNPPLC and NAI are executing an Amended and Restated Purchase Agreement (Building 8) (the “Purchase Agreement”), pursuant to which NAI may purchase or arrange for the purchase of the Property and BNPPLC may collect a Supplemental Payment from NAI sufficient to cover all or a substantial portion of the Lease Balance not otherwise repaid to BNPPLC from the proceeds of any sale of the Property.
     As a condition to BNPPLC’s execution of the other Operative Documents, BNPPLC requires the representations and covenants of NAI set out below.
AGREEMENTS

 

 

     In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1 Representations, Covenants and Acknowledgments of NAI Concerning the Property. To induce BNPPLC to enter into the Ground Lease, and to enter into this Certificate and the other Operative Documents, NAI represents, covenants and acknowledges as follows:
     (A) Prior Inspections and Investigations Concerning the Property. NAI has thoroughly inspected, investigated and evaluated the condition of and title to the Property and Applicable Laws which will govern the construction, use and operation of the Property required or permitted by the Operative Documents, as necessary to make the representations concerning the Property set forth in this Certificate and other Operative Documents.
     (B) Title. Good and indefeasible title to the Land and any existing Improvements thereon is currently vested in NAI, subject only to the rights of BNPPLC under the Ground Lease, the Permitted Encumbrances and any Liens Removable by BNPPLC. Neither the construction contemplated by the Construction Agreement, nor the lease of property contemplated by the Ground Lease or by the Lease, nor any assignment or transfer contemplated by the Purchase Agreement, will violate any Permitted Encumbrance or invoke any purchase option, right of first refusal or other preferential purchase right contained in any Permitted Encumbrance. So long as NAI has any rights under the Construction Agreement, the Lease or the Purchase Agreement, NAI will not permit any Person to acquire rights of the landlord under the Ground Lease other than NAI itself or a corporation that controls, is controlled by or under common control with NAI.
     (C) Compliance with Covenants and Laws. The construction contemplated by the Construction Agreement and use of the Property permitted by the Lease comply, or will comply after NAI obtains readily available permits (either as the construction manager under the Construction Agreement or as the tenant under the Lease), in all material respects with all Applicable Laws. NAI has obtained or can and will promptly obtain all utility, building, health and operating permits required by any governmental authority or municipality having jurisdiction over the Property for the construction contemplated in the Construction Agreement and the use of the Property permitted by the Lease.
2 Representations and Covenants by NAI. NAI also represents and covenants to BNPPLC as follows:
     (A) Concerning NAI and the Operative Documents.
     (1) Entity Status. NAI is a corporation duly incorporated and validly existing
Amended and Restated Closing Certificate and Agreement (Building 8) – Page 2

 

 

in the State of Delaware and is authorized to do business in and is in good standing under the laws of California.
     (2) Authority. The Constituent Documents of NAI permit the execution, delivery and performance of the Operative Documents by NAI, and all actions and approvals necessary to bind NAI under the Operative Documents have been taken and obtained. Without limiting the foregoing, the Operative Documents will be binding upon NAI when signed on behalf of NAI by Ingemar Lanevi, Vice President and Corporate Treasurer of NAI. NAI has all requisite power and all governmental certificates of authority, licenses, permits and qualifications to carry on its business as now conducted and contemplated to be conducted and to perform the Operative Documents.
     (3) Solvency. NAI is not “insolvent” on the Effective Date (that is, the sum of NAI’s absolute and contingent liabilities — including the obligations of NAI under the Operative Documents — does not exceed the fair market value of NAI’s assets), and NAI 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 by the Operative Documents 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. No petition or answer has been filed by or, to NAI’s knowledge, against NAI in bankruptcy or other legal proceedings that seeks 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, a reorganization, arrangement, rearrangement, composition, extension, liquidation or dissolution of NAI or similar relief under the federal Bankruptcy Code or any state law.
     (4) Financial Reports. All reports, financial statements and other data furnished by NAI to BNPPLC in connection with the agreements set forth in the Operative Documents are true and correct in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading. No material adverse change has occurred since the dates of such reports, statements and other data in the financial condition of NAI.
     (5) Pending Legal Proceedings. No judicial or administrative investigations, actions, suits or proceedings are pending or, to the knowledge of NAI, threatened against or affecting NAI by or before any court or other Governmental Authority that have or could reasonably be expected to have a Material Adverse Effect. NAI is not in default with respect to any order, writ, injunction, decree or demand of any court or other Governmental Authority in a manner that has or could reasonably be expected to have a Material Adverse Effect.
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     (6) No Default or Violation. The execution and performance by NAI of the Operative Documents do not and will not contravene or result in a breach of or default under any other agreement to which NAI is a party or by which NAI is bound or which affects any assets of NAI. Such execution and performance by NAI do not contravene any law, order, decree, rule or regulation to which NAI is subject. Further, such execution 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, any property of NAI pursuant to the provisions of any such other agreement.
     (7) Use of Proceeds. In no event will the funds from any Funding Advance 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 in Regulation U 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 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.
     (8) Enforceability. The Operative Documents constitute the legal, valid and binding obligations of NAI enforceable in accordance with their terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
     (9) Pari Passu. The claims of BNPPLC against NAI under the Operative Documents rank at least pari passu with the claims of all its other unsecured creditors, except those whose claims are preferred solely by any laws of general application having effect in relation to bankruptcy, insolvency, liquidation or other similar events.
     (10) Conduct of Business and Maintenance of Existence. So long as any obligations of NAI under the Operative Documents remain outstanding, NAI will continue to engage in business of the same general type as now conducted by it and will preserve, renew and keep in full force and effect its corporate existence and its rights, privileges and franchises necessary or desirable in the normal conduct of business.
     (11) Investment Company Act, etc. NAI is not and will not become, by reason of the Operative Documents or any business or transactions in which it participates voluntarily, (a) an “investment company” or a company “controlled” by an “investment company” (as each of the quoted terms is defined or used in the Investment Company Act of 1940, as amended), or (b) subject to regulation under the Federal Power Act, or any foreign, federal or local statute or regulation limiting NAI’s ability to incur or guarantee
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indebtedness or obligations, or to pledge its assets to secure indebtedness or obligations, as contemplated by any of the Operative Documents.
     (12) 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).
     (13) 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. No ERISA Termination Event has occurred with respect to any Plan, and NAI and its Subsidiaries are in compliance with ERISA. Neither NAI nor its Subsidiaries are required to contribute to, or has any other absolute or contingent liability in respect of, any Multiemployer Plan. As of the Effective Date no “accumulated funding deficiency” (as defined in Section 412(a) of the Code) exists with respect to any Plan, whether or not waived by the Secretary of the Treasury or his delegate, and there are no Unfunded Benefit Liabilities with respect to any Plan.
     (14) Compliance With Laws. NAI and its Subsidiaries comply and will comply with all Applicable Laws (including environmental laws and ERISA and the rules and regulations thereunder), except when the necessity of compliance is contested in good faith by appropriate proceedings which do not have and could not reasonably be expected to have a Material Adverse Effect. Neither NAI nor its Subsidiaries have received any notice asserting or describing a material failure on the part of NAI or any Subsidiary to comply with Applicable Laws, other than failures that have been fully rectified by NAI or the Subsidiary, as the case may be, in a manner approved or accepted by Governmental Authorities responsible for the enforcement of the Applicable Laws.
     (15) Payment of Taxes Generally. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect (taking into account any appropriate contest of taxes), NAI and its Subsidiaries have filed and will file all tax declarations, reports and returns which are required by (and in the form required by) Applicable Laws and have paid and will pay all taxes or other charges shown to be due and payable on such declarations, reports and returns and all assessments made against it or its assets by any Governmental Authority; and no liens have been filed or established by any Governmental Authority against NAI or its assets or against any Subsidiary or its assets to secure the payment of taxes or assessments that are past due or
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claimed to be past due.
     (16) Maintenance of Insurance Generally. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have maintained and will maintain insurance with respect to its properties and businesses, with financially sound and reputable insurers, having coverages against losses or damages of the kinds customarily insured against by reputable companies in the same or similar businesses, such insurance being the types, and in amounts no less than the amounts, which are customary for such companies under similar circumstances.
     (17) Franchises, Licenses, etc. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and comply with, and will have and will comply with, all franchises, certificates, licenses, permits and other authorizations from Governmental Authorities that are necessary for the ownership, maintenance and operation of its properties and assets.
     (18) Patents, Trademarks, etc. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and will have and maintain in full force and effect all patents, trademarks, service marks, trade names, copyrights, licenses and other such rights, free from burdensome restrictions, which are necessary for the operation of its businesses. Without limiting the foregoing, to the knowledge of NAI, no product, process, method, service or other item presently sold by or employed by NAI or any Subsidiary in connection with its business as presently conducted infringes any patents, trademark, service mark, trade name, copyright, license or other right owned by any other Person. No claim or litigation is presently pending, or to the knowledge of NAI, threatened against or affecting NAI or any Subsidiary that contests its right to sell or use any such product, process, method, substance or other item and that has or could reasonably be expected to have a Material Adverse Effect.
     (19) Labor. Neither NAI nor any of its Subsidiaries has experienced strikes, labor disputes, slow downs or work stoppages due to labor disagreements that currently have or could reasonably be expected to have a Material Adverse Effect, and to the knowledge of NAI there are no such strikes, disputes, slow downs or work stoppages threatened against it or against any Subsidiary. The hours worked and payment made to employees of NAI and its Subsidiaries have not been in violation in any material respect of the Fair Labor Standards Act or any other Applicable Laws dealing with such matters. All material payments due on account of wages or employee health and welfare insurance and other benefits from NAI or from any Subsidiary have been paid or accrued as
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liabilities on its books.
     (20) Title to Properties Generally. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and will have and maintain good and indefeasible fee simple title to or valid leasehold interests in all of its real property and good title to or a valid leasehold interest in all of its other material assets, as such properties and assets are reflected in the most recent financial statements delivered to BNPPLC, other than properties or assets disposed of in the ordinary course of business since such date; subject, however, in the case of the Property, to Permitted Encumbrances and Liens created by the Operative Documents. NAI enjoys peaceful and undisturbed possession under all of its leases.
     (21) Books and Records. NAI will keep proper books of record and account, containing complete and accurate entries of all its financial and business transactions.
     (B) Further Assurances. NAI will, upon the reasonable request of BNPPLC, (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 the Operative Documents and to subject to any of the Operative Documents any property intended by the terms thereof to be covered 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 BNPPLC 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 BNPPLC to enable BNPPLC to comply with the requirements or requests of any agency or authority having jurisdiction over it.
     (C) Syndication. Without limiting the foregoing, NAI will cooperate with BNPPLC as reasonably required to allow BNPPLC to induce banks not affiliated with BNPPLC to become Participants. Such cooperation will include the execution of any modification proposed by BNPPLC to any of the Operative Documents at the request of a prospective Participant; subject, however, to the conditions that (i) in no event will NAI be required to approve or accept an increase in the Spread or other modifications that change the economics of the transactions contemplated by the Operative Documents to NAI, and (ii) in other respects the form and substance of any such modification agreement must not be reasonably objectionable to NAI.
     (D) Financial Statements; Required Notices; Certificates. Prior to the Completion Date and throughout the Term of the Lease, NAI will deliver to BNPPLC and to each Participant of which NAI has been notified:
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     (1) as soon as available and in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of NAI, the unaudited consolidated balance sheet of NAI and its Subsidiaries as of the end of such quarter and consolidated unaudited statements of income, stockholders’ equity and cash flow of NAI and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in comparative form figures for the corresponding period in the preceding fiscal year, in the case of such statements of income, stockholders’ equity and cash flow, and figures for the preceding fiscal year in the case of such balance sheet, all in reasonable detail, in accordance with GAAP, and certified in a manner acceptable to BNPPLC by a Responsible Financial Officer of NAI (subject to normal year-end adjustments); provided, that so long as NAI is a company subject to the periodic reporting requirements of Section 12 of the Securities Exchange Act of 1934, as amended, NAI will be deemed to have satisfied its obligations under this clause (1) if NAI delivers to BNPPLC the same quarterly reports, certified by a Responsible Financial Officer of NAI (subject to year-end adjustments), that NAI delivers to its shareholders;
     (2) as soon as available and in any event within ninety days after the end of each fiscal year of NAI, the consolidated balance sheet of NAI and its Subsidiaries as of the end of such fiscal year and consolidated statements of income, stockholders’ equity and cash flow of NAI and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such fiscal year, setting forth in comparative form figures for the preceding fiscal year, all in reasonable detail, in accordance with GAAP, and certified in a manner acceptable to BNPPLC by independent public accountants of recognized national standing reasonably acceptable to BNPPLC; provided, that so long as NAI is a company subject to the periodic reporting requirements of Section 12 of the Securities Exchange Act of 1934, as amended, NAI will be deemed to have satisfied its obligations under this clause (ii) if NAI delivers to BNPPLC the same annual report and report and opinion of accountants that NAI delivers to its shareholders;
     (3) in each case if requested in writing by BNPPLC, together with the financial statements furnished in accordance with subparagraph 2(D)(1) and 2(D)(2), a certificate of a Responsible Financial Officer of NAI in the form of certificate attached hereto as Exhibit B (a) representing that no Event of Default or material Default by NAI has occurred (or, if an Event of Default or material Default by NAI has occurred, stating the nature thereof and the action which NAI has taken or proposes to take to rectify it), (b) stating that the representations and warranties by NAI contained herein are true and complete in all material respects on and as of the date of such certificate as though made on and as of such date, and (c) setting forth calculations which show whether NAI is complying with financial covenants set forth in subparagraph 3(C);
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     (4) as soon as possible and in any event within five days after the occurrence of each Event of Default or material Default known to a Responsible Financial Officer of NAI, a statement of NAI setting forth details of such Event of Default or material Default and the action which NAI has taken and proposes to take with respect thereto;
     (5) promptly after the sending or filing thereof, copies of all such financial statements, proxy statements, notices and reports which NAI or any Subsidiary sends to its public stockholders, and copies of all reports and registration statements (without exhibits) which NAI or any Subsidiary files with the Securities and Exchange Commission (or any governmental body or agency succeeding to the functions of the Securities and Exchange Commission) or any national securities exchange;
     (6) as soon as practicable and in any event within thirty days after a Responsible Financial Officer of NAI knows or has reason to know that any ERISA Termination Event with respect to any Plan has occurred, a statement of a Responsible Financial Officer of NAI describing such ERISA Termination Event and the action, if any, which NAI proposes to take with respect thereto;
     (7) upon request by BNPPLC, 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 either stating that no Default exists under the Operative Documents or specifying each such Default; it being intended that any such statement by NAI may be relied upon by any prospective purchaser or mortgagee of the Property or any prospective Participant; and
     (8) such other information respecting the condition or operations, financial or otherwise, of NAI, of its Subsidiaries or of the Property as BNPPLC or BNPPLC’s Parent or any Participant through BNPPLC may from time to time reasonably request.
Reports and financial statements required to be delivered pursuant to paragraphs (1), (2) and (5) of this subparagraph 2(D) shall be deemed to have been delivered on the date on which such reports, or reports containing such financial statements, are posted for downloading (in a “PDF” or other readily available format) on one of NAI’s internet websites at www.netapp.com or www.investors.netapp.com or on the SEC’s internet website at www.sec.gov; provided, however, that after being posted they remain available for downloading at the applicable website for at least 90 days.
BNPPLC is hereby authorized to deliver a copy of any information or certificate delivered to it pursuant to this subparagraph 2(D) to any Participant and to any regulatory body having
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jurisdiction over BNPPLC, BNPPLC’s Parent or any Participant that requires or requests it.
     (E) Omissions. None of NAI’s representations in the Operative Documents or in any other document, certificate or written statement furnished to BNPPLC 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.
     (F) OFAC. None of NAI or any subsidiary or affiliate of NAI: (i) is a person named on the list of Specially Designated Nationals or Blocked Persons maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise published from time to time; or (ii) is (A) an agency of the government of a country, (B) an organization controlled by a country, or (C) a person resident in a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise published from time to time, as such program may be applicable to such agency, organization or person; or (iii) derives more than 15% of its assets or operating income from investments in or transactions with any such country, agency, organization or person. Further, none of the proceeds from the Initial Advance or any Construction Advance will be used to finance any operations, investments or activities in, or make any payments to, any such country, agency, organization, or person.
     (G) U.S. Patriot Act. NAI acknowledges that BNPPLC, BNPPLC’s Parent and Participants may be required, pursuant to the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), to obtain, verify, record and disclose to law enforcement authorities information that identifies the NAI, including the name and address of NAI. NAI will provide to BNPPLC and Participants any such information they may request pursuant to the Patriot Act, and NAI agrees that any of BNPPLC, BNPPLC’s Parent and Participants may disclose such information to law enforcement authorities if the authorities make a request or demand for disclosure pursuant to the Patriot Act. NAI also acknowledges that, in such event, none of BNPPLC, BNPPLC’s Parent or Participants may be required or even permitted by the Patriot Act to notify NAI of the request or demand for disclosure.
3 Financial Covenants and Negative Covenants of NAI. NAI represents and covenants as follows:
     (A) Definitions Applicable in this Paragraph. As used in (and only for purposes of) this Paragraph 3:
     “Accepted Contest Requirements” means, with respect to any Tax or other payment due or claimed to be due from NAI or any Subsidiary or any demand for payment made upon NAI or any Subsidiary, that (a) NAI or such Subsidiary must contest
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the validity or amount thereof in good faith by appropriate proceedings, (b) NAI or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment thereof pending such contest could not reasonably be expected to result in a Material Adverse Effect.
     “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
     “Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of Equity Interests representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of NAI; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of NAI by Persons who were neither (i) nominated by the board of directors of NAI nor (ii) appointed by directors so nominated; or (c) NAI ceasing to own, directly or indirectly, 100% of the issued and outstanding Equity Interests of each Material Domestic Subsidiary except in accordance with subparagraph 3(B)(3) below.
     “Consolidated Debt for Borrowed Money” means at any time (1) the sum, without duplication, of (a) items that, in accordance with GAAP, would be classified as indebtedness on the consolidated balance sheet of NAI and its Subsidiaries and (b) the capitalized portion of any synthetic leases, minus (2) the then aggregate outstanding principal amount of Indebtedness under NAI’s Secured Revolver and under that certain Loan Agreement dated as of March 31, 2006 by and among Network Appliance Global Ltd. and JPMorgan Chase Bank, National Association as initial lender and as administrative agent. (In clause (b) of this definition, “capitalized portion” means, with respect to any synthetic lease, the price for which the lessee can purchase the leased property or could purchase it if the synthetic lease expired on the date of the applicable calculation of the Consolidated Debt for Borrowed Money. Thus, for example, the “capitalized portion” of the transactions governed by the Operative Documents will equal the Lease Balance.)
     “Consolidated EBITDA” means, with reference to any period, the sum of the following: (a) Consolidated Net Income for such period, plus (b) without duplication and to the extent deducted from revenues in determining such Consolidated Net Income, the
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sum of (i) Consolidated Interest Expense for such period, (ii) expense for taxes paid or accrued during such period, (iii) all amounts attributable to depreciation, (iv) amortization during such period, (v) extraordinary non-cash charges incurred other than in the ordinary course of business during such period, (vi) nonrecurring extraordinary non-cash restructuring charges, and (vii) share-based non-cash compensation expense minus without duplication and to the extent included in determining such Consolidated Net Income, (c) interest income, (d) extraordinary non-cash gains realized other than in the ordinary course of business and (e) any cash payments made during such period in respect of the item described in clause (vii) above subsequent to the fiscal quarter in which the relevant share-based non-cash compensation expense was incurred, all calculated for NAI and its Subsidiaries in accordance with GAAP on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period NAI or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period NAI or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by NAI and its Subsidiaries in excess of $50,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to NAI or any of its Subsidiaries in excess of $50,000,000.
     “Consolidated Interest Expense” means, with reference to any period, the interest expense (including without limitation interest expense under Capital Lease Obligations that is treated as interest in accordance with GAAP) of NAI and its Subsidiaries calculated on a consolidated basis for such period with respect to (a) all outstanding Indebtedness of NAI and its Subsidiaries allocable to such period in accordance with GAAP and (b) Swap Agreements (including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers acceptance financing and net costs under interest rate Swap Agreements to the extent such net costs are allocable to such period in accordance with GAAP). In addition, for purposes of calculating the Leverage Ratio only, rents payable for any period pursuant to NAI’s synthetic leases shall be included in Consolidated Interest Expense for
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such period; excluding, however, any amounts (whether on not designated as rents) paid or to be paid as compensation for or reimbursement of any Losses, and also excluding any payments which reduce or will reduce the outstanding lease balance of any synthetic lease. For example, Base Rents payable under the Lease will be included in Consolidated Interest Expense, but not Additional Rents.
     “Consolidated Net Income” means, with reference to any period, the net income (or loss) of NAI and its Subsidiaries calculated in accordance with GAAP on a consolidated basis (without duplication) for such period.
     “Consolidated Total Assets” means, as of the date of any determination thereof, total assets of NAI and its Subsidiaries calculated in accordance with GAAP on a consolidated basis as of such date.
     “Disclosure Letter” means the disclosure letter (the form of which is attached to this Certificate as Exhibit C) given by NAI to Chase Bank, National Association, as Administrative Agent, in connection with NAI’s recently executed Credit Agreement dated as of November 2, 2007, as amended or supplemented from time to time by NAI with the written consent of BNPPLC.
     “Domestic Subsidiary” means any Subsidiary that is incorporated or organized under the laws of the United States of America, any state thereof or in the District of Columbia.
     “Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.
     “Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
     “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to
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advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.
     “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are paid or payable, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (k) the Net Mark-to Market Exposure of all Swap Obligations of such Person, and (l) any other Off-Balance Sheet Liability. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
     “Leverage Ratio” means the ratio, determined as of the end of each fiscal quarter of NAI, of Consolidated Debt for Borrowed Money as of the end of such fiscal quarter to Consolidated EBITDA for the period of 4 consecutive fiscal quarters ending with the end of such fiscal quarter.
     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or other security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
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     “Liquidity” means, with respect to NAI and its Subsidiaries as of any date of determination, the sum of all unrestricted cash and unrestricted Permitted Investments which are not subject to any Lien (other than Liens permitted under subparagraph 3(B)(2)(e)) and which would be included on the consolidated balance sheet of NAI and such Subsidiaries in accordance with GAAP as of such date of determination.
     “Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations or condition, financial or otherwise, of NAI and its Subsidiaries taken as a whole, or (b) the ability of NAI or any Material Domestic Subsidiary to perform any of its obligations under any of the Operative Documents or (c) the rights of or benefits available to BNPPLC under any of the Operative Documents.
     “Material Domestic Subsidiary” means each Material Subsidiary that is a Domestic Subsidiary. The Material Domestic Subsidiaries on the Effective Date are identified as such in Schedule 3.01 to the Disclosure Letter.
     “Material Subsidiary” means each Subsidiary (a) which, as of the most recent fiscal quarter of NAI, for the period covering the then most recently ended fiscal year and the portion of the then current fiscal year ending at the end of such fiscal quarter, for which financial statements have been delivered pursuant to subparagraph 2(D), contributed greater than five percent (5%) of NAI’s Consolidated EBITDA for such period or (b) which contributed greater than five percent (5%) of NAI’s Consolidated Total Assets as of such date.
     “Moody’s” means Moody’s Investors Service, Inc.
     “NAI’s Secured Revolver” means the Secured Credit Agreement dated as of October 5, 2007 by and among NAI, certain lenders and JPMorgan Chase Bank, National Association, as administrative agent, as it exists and is in force on the Effective Date.
     “Net Mark-to-Market Exposure” of a Person means, as of any date of determination, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from each Swap Agreement transaction. “Unrealized losses” means the fair market value of the cost to such Person of replacing such transaction as of the date of determination (assuming such transaction were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such transaction as of the date of determination (assuming such transaction was to be terminated as of that date).
     “Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person
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that is related to retained credit risk, or (b) any indebtedness, liability or obligation under any so-called “synthetic lease” transaction entered into by such Person.
     “Permitted Liens or Encumbrances” means:
     (a) Liens imposed by law for Taxes or other governmental charges that are not yet due or are being contested in accordance with Accepted Contest Requirements;
     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than sixty (60) days or are being contested in accordance with Accepted Contest Requirements;
     (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;
     (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;
     (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (J) of the definition thereof in the Common Definitions and Provisions Agreement;
     (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere in any material respect with the ordinary conduct of business of NAI or any Subsidiary;
     (g) leases or subleases granted to other Persons and not interfering in any material respect with the business of the lessor or sublessor;
     (h) Liens arising from precautionary Uniform Commercial Code filings or similar filings relating to operating leases;
     (i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection within the importation of goods;
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     (j) Liens on insurance proceeds securing the premium of financed insurance proceeds;
     (k) Liens incurred in the ordinary course of business on cash collateral to secure letters of credit, bank guarantees and banker’s acceptances and Swap Agreements;
     (l) licenses of intellectual property in the ordinary course of business;
     (m) any interest or title of a lessor or sublessor under any lease of real property or personal property; and
     (n) other Liens on assets securing Indebtedness or other obligations not prohibited under provisions of the Operative Documents other than this Paragraph 3 in an aggregate amount not to exceed $50,000,000 at any time outstanding;
provided that the term “Permitted Liens or Encumbrances” shall not include any Lien securing Indebtedness.
     “Permitted Investments” means:
     (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;
     (b) investments in commercial paper maturing within 365 days from the date of acquisition thereof and having, at such date of acquisition, a rating of “A-2” (or better) from S&P or “P-2” (or better) from Moody’s;
     (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof or any other country which has a combined capital and surplus and undivided profits of not less than $500,000,000;
     (d) fully collateralized repurchase agreements with a term of not more
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than thirty (30) days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above;
     (e) money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, as amended, to the extent such money market fund is governed thereby, (ii) are rated AA by S&P and Aa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000;
     (f) investments made pursuant to a cash management investment policy approved by the board of directors of the Person making such investment and as in effect on the Effective Date, as such policy may be amended or otherwise modified from time to time with the written consent of BNPPLC; and
     (g) investments described in the following table:
     
Type of Security   Remaining Maturity/ S&P/ Moody’s Rating
JPMorgan Certificates of Deposit
    
 
    
US Treasury Treasuries
    
 
    
US Agency Securities
  Less than 30 years
 
    
USD Commercial Paper
  A1/P1 Less than or equal to 270 days
 
    
Money Market Funds (Must be through JPMorgan)
  US Gov’t
 
  Treasury Plus
 
  Cash Management
 
  100% US Treasury
 
  Federal Money Market
 
    
Medium Term Notes, Corporate Bonds, Corporate Debentures, Floating Rate Notes, and Auction Rate Securities
  A or better
     “S&P” means Standard & Poor’s, a division of the McGraw-Hill Companies.
     “Sale and Leaseback Transaction” means any sale or other transfer of assets or property by any Person with the intent to lease any such asset or property as lessee.
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     “Subordinated Indebtedness” means any Indebtedness of NAI or any Subsidiary the payment of which is subordinated to payment of the obligations under the Operative Documents to the written satisfaction of BNPPLC.
     “subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.
     “Subsidiary” means any subsidiary of NAI.
     “Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of NAI or the Subsidiaries shall be a Swap Agreement.
     “Swap Obligations” of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any such Swap Agreement transaction.
     “Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.
     (B) Negative Covenants. Prior to the Designated Sale Date and so long thereafter as any amount shall continue to be due and payable by NAI to BNPPLC pursuant to any of the Operative Documents, NAI covenants and agrees as follows:
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     (1) Subsidiary Indebtedness. NAI will not permit any Subsidiary to create, incur, assume or permit to exist any Indebtedness, except:
     (a) by Guarantee or assumption of any obligations evidenced or created by (x) any of the Operative Documents, (y) or other comparable agreements between BNPPLC and NAI covering other properties, or (z) the Credit Agreement referenced on the first page of the Disclosure Letter;
     (b) Indebtedness existing on the date hereof and set forth in Schedule 6.01 to the Disclosure Letter and extensions, renewals and replacements of any such Indebtedness that do not increase the then outstanding principal amount thereof;
     (c) Indebtedness of (i) any Subsidiary to any Material Domestic Subsidiary and (ii) any Subsidiary that is not a Material Domestic Subsidiary to any other Subsidiary that is not a Material Domestic Subsidiary;
     (d) Guarantees by any Subsidiary of Indebtedness of NAI or any other Subsidiary;
     (e) Indebtedness of any Subsidiary incurred to finance the acquisition, construction or improvements of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets (and additions, accessions, parts, improvement and attachments thereto and the proceeds thereof) prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the then outstanding principal amount thereof; provided that such Indebtedness is incurred prior to or within 120 days after such acquisition or the completion of such construction or improvement; and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof;
     (f) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof;
     (g) Indebtedness of any Subsidiary as an account party in respect of letters of credit, bank guarantees and bankers’ acceptances;
     (h) Indebtedness in respect of Swap Agreements permitted under
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subparagraph 3(B)(4);
     (i) Indebtedness of Subsidiaries which are not Material Domestic Subsidiaries in an aggregate principal amount not exceeding 5% of Consolidated Total Assets at any time outstanding; and
     (j) other Indebtedness of any Subsidiary which is a Material Domestic Subsidiary so long as, at the time of the incurrence thereof and after giving effect thereto (on a pro forma basis), NAI is in pro forma compliance with the maximum Leverage Ratio permitted under subparagraph 3(C)(1).
     (2) Liens. NAI will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it (and for purposes hereof, any capital stock issued by NAI which is held by NAI as treasury stock shall not be deemed to be property or an asset of NAI and shall not be subject to this subparagraph 3(B)(2)), or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except that the following shall be permitted so long as they do not encumber any interest in the Property in violation of other provisions of the Operative Documents:
     (a) Permitted Liens or Encumbrances;
     (b) any Lien on any property or asset of NAI or any Subsidiary existing on the date hereof and set forth in Schedule 6.02 to the Disclosure Letter; provided that (i) such Lien shall not apply to any other property or asset of NAI or any Subsidiary and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;
     (c) any Lien existing on any property or asset prior to the acquisition thereof by NAI or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of NAI or any Subsidiary and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be, and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;
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     (d) Liens on fixed or capital assets (and additions, accessions, parts, improvements and attachments thereto and the proceeds thereof) acquired, constructed or improved by NAI or any Subsidiary; provided that:
     (i) such security interests secure Indebtedness not otherwise prohibited under the Operative Documents;
     (ii) such security interests and the Indebtedness secured thereby are either (A) incurred prior to or within one hundred twenty (120) days after such acquisition or the completion of such construction or improvement, or (B) granted and incurred to extend, renew or replace any security interest and Indebtedness secured thereby that are permitted by this clause (d) and do not increase the outstanding principal amount thereof by more than 5%;
     (iii) the Indebtedness secured thereby does not exceed 105% of the cost of acquiring, constructing or improving such fixed or capital assets; and
     (iv) such security interests shall not apply to any other property or assets of NAI or any Subsidiary;
     (e) customary bankers’ Liens and rights of setoff arising by operation of law or contract and incurred on deposits made in the ordinary course of business;
     (f) assignments of the right to receive income effected (i) as a part of the sale of a Subsidiary or a business unit or (ii) for factoring in the ordinary course of business;
     (g) Liens on any cash earnest money deposit made by NAI or any Subsidiary in connection with any letter of intent or acquisition agreement that is not prohibited by the Operative Documents;
     (h) customary Liens granted in favor a trustee to secure fees and other amounts owing to such trustee under an indenture or other agreement pursuant to Indebtedness not otherwise prohibited under the Operative Documents; and
     (i) Liens granted as provided in and securing Indebtedness under NAI’s Secured Revolver, provided such Liens do not at any time secure an outstanding principal balance of more than $500,000,000.
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     (3) Fundamental Changes and Asset Sales.
     (a) NAI will not, and will not permit any Subsidiary to, merge into, consolidate with, or otherwise be acquired by, any other Person, or sell, transfer, lease or otherwise dispose (including pursuant to a Sale and Leaseback Transaction) of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or here-after acquired, and for purposes hereof, any capital stock issued by NAI which is held by NAI as treasury stock shall not be deemed to be property or an asset of NAI and shall not be subject to this subparagraph 3(B)(3), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Subsidiary may merge into a Material Domestic Subsidiary in a transaction in which the surviving entity is such Material Domestic Subsidiary, (ii) any wholly owned Subsidiary may merge into or consolidate with any wholly owned Subsidiary in a transaction in which the surviving entity is a wholly owned Subsidiary and no Person other than NAI or a wholly owned Subsidiary receives any consideration, provided that if any such merger described in this clause (ii) shall involve a Material Domestic Subsidiary, the surviving entity of such merger shall be a Material Domestic Subsidiary, (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to a Material Domestic Subsidiary or any wholly owned Subsidiary pursuant to a transaction not otherwise prohibited under the Operative Documents, (iv) any Subsidiary may liquidate or dissolve if NAI determines in good faith that such liquidation or dissolution is in the best interests of NAI, (v) NAI may merge with any other Person so long as NAI is the surviving entity, (vi) any Subsidiary may merge with any other Person so long as the surviving entity is, in the case of a Subsidiary Guarantor, the Subsidiary Guarantor, and in all other cases, a wholly owned Subsidiary and (vii) any Subsidiary other than a Subsidiary Guarantor may merge into, and NAI or any Subsidiary may dispose of assets to, any other Person so long as NAI delivers a certificate to BNPPLC demonstrating pro forma compliance with subparagraph 3(C) after giving effect to such transaction.
     (b) NAI will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by NAI and its Subsidiaries on the date of execution of the Operative Documents and businesses reasonably related thereto.
     (c) NAI will not, and will not permit any of its Subsidiaries to, change its fiscal year to end on a day other than as such fiscal year end is currently
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determined or change NAI’s method of determining fiscal quarters.
     (4) Speculative Swap Agreements. NAI will not, and will not permit any of its Subsidiaries to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which NAI or any Subsidiary has actual exposure (other than those in respect of Equity Interests or Subordinated Indebtedness of NAI or any of its Subsidiaries), and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of NAI or any Subsidiary.
     (5) Transactions with Affiliates. NAI will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to NAI or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among NAI and its wholly owned Subsidiaries not involving any other Affiliate, (c) to enter into indemnification arrangements with or to pay customary fees and reimburse out-of-pocket expenses of directors or (d) as set forth on the Disclosure Letter.
     (6) Restrictive Agreements. NAI will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of NAI or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to NAI or any other Subsidiary or to Guarantee Indebtedness of NAI or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law, by any Operative Document, by any document relating to NAI’s unsecured syndicated revolving credit facility from certain lenders and JPMorgan Chase Bank, National Association as administrative agent, by NAI’s Secured Revolver, or by any document relating to NAI’s synthetic lease facilities, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.06 to the Disclosure Letter (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of assets or of a Subsidiary pending such sale, provided such restrictions and conditions apply only to such assets or such Subsidiary that are to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by the
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Operative Documents if such restrictions or conditions apply only to the property or assets securing such Indebtedness, and (v) clause (a) of the foregoing shall not apply to customary provisions in leases, licenses, joint venture agreements and other agreements entered into in the ordinary course of business restricting the assignment thereof.
     (C) Financial Covenants. Prior to the Designated Sale Date and so long thereafter as any amount shall continue to be due and payable by NAI to BNPPLC pursuant to any of the Operative Documents:
     (1) Maximum Leverage Ratio. NAI will not permit the Leverage Ratio to be greater than 3.0 to 1.0.
     (2) Minimum Liquidity. NAI and its Subsidiaries on a consolidated basis shall maintain, at all times, Liquidity of not less than $300,000,000.
4 Limited Representations and Covenants of BNPPLC
     (A)  Concerning Accounting Matters.
     (1) To permit NAI to determine the appropriate accounting for NAI’s relationship with BNPPLC under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN 46”), BNPPLC represents that to the knowledge of BNPPLC the fair value of the Property and of other properties, if any, leased to NAI by BNPPLC (collectively, whether one or more, the “Properties Leased to NAI”) are, as of the Effective Date, less than half of the total of the fair values of all assets of BNPPLC, excluding any assets of BNPPLC held within a silo. Further, none of the Properties Leased to NAI are, as of the Effective Date, held within a silo. Consistent with the directions of NAI (based upon the current interpretation of FIN 46 by NAI and its auditors), and for purposes of this representation only:
  •   “held within a silo” means, with respect to any asset or group of assets leased by BNPPLC to a single lessee or group of affiliated lessees, that BNPPLC has obtained funds equal to or in excess of 95% of the fair value of the leased asset or group of assets to acquire or maintain its investment in such asset or group of assets through non-recourse financing or other contractual arrangements (such as targeted equity or bank participations), the effect of which is to leave such asset or group of assets (or proceeds thereof) as the only significant asset or assets of BNPPLC at risk for the repayment of such funds;
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  •   “fair value” means, with respect to any asset, the amount for which the asset could be bought or sold in a current transaction negotiated at arms length between willing parties (that is, other than in a forced or liquidation sale);
 
  •   with respect to the Properties Leased to NAI (regardless of how BNPPLC accounts for the leases of the Properties Leased to NAI), and with respect to other assets that are subject to leases accounted for by BNPPLC as operating leases pursuant to Financial Accounting Standards Board Statement 13 (“FAS 13”), fair value is determined without regard to residual value guarantees, remarketing agreements, non-recourse financings, purchase options or other contractual arrangements, whether made by BNPPLC with NAI or with other parties, that might otherwise impact the fair value of such assets;
 
  •   with respect to assets, other than Properties Leased to NAI, that are subject to leases accounted for by BNPPLC as leveraged leases pursuant to FAS 13, fair value is determined on a gross basis prior to the application of leveraged lease accounting, recognizing that equity investments made by BNPPLC in its assets subject to leveraged lease accounting should be grossed up in applying this test (however, equity investments made by BNPPLC through another legal entity should not be so grossed up in applying this test);
 
  •   with respect to assets, other than Properties Leased to NAI, that are subject to leases accounted for by BNPPLC as direct financing leases pursuant to FAS 13, fair value is determined as the sum of the fair values (considering current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities) of the corresponding finance lease receivables and related unguaranteed residual values.
     (2) BNPPLC also represents that BNPPLC’s Parent is, as of the Effective Date, including BNPPLC as a consolidated subsidiary in the audited financial statements issued by BNPPLC’s Parent.
     (3) BNPPLC covenants that, as reasonably requested by NAI from time to time with respect to any accounting period during which the Lease is or was in effect, BNPPLC will provide to NAI confirmation of facts concerning BNPPLC and its assets as
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necessary to permit NAI to determine the proper accounting for the Lease (including updates of the facts set forth in clauses (1) and (2) above); except that BNPPLC will not be required by this provision to (w) provide any information that is not in the possession or control of BNPPLC or its Affiliates, (x) disclose the specific terms and conditions of its leases or other transactions with other parties or the names of such parties, (y) make disclosures prohibited by any law applicable to BNPPLC or BNPPLC’s Parent, or (z) disclose any other information that is protected from disclosure by confidentiality provisions in favor of such other parties or would be protected if their agreements with BNPPLC contained confidentiality provisions similar in scope and substance to any confidentiality provisions set forth in the Operative Documents for the benefit of NAI or its Affiliates. BNPPLC will represent that information provided by it pursuant to this clause is true and complete in all material respects, but only to the knowledge of BNPPLC as of the date it is provided, utilizing the form of the certificate attached hereto as Exhibit D (signed by an officer of BNPPLC), which certificate will be provided periodically by BNPPLC within five business days of reasonable written request therefor by NAI as provided above, or such longer period of time as may be reasonably necessary under the circumstances in order for BNPPLC to confirm such information.
     (4) Although the representations required of BNPPLC by this subparagraph are intended to cover facts, it is understood and agreed (consistent with subparagraph 4(C) of the Lease) that BNPPLC has not made and will not make any representation or warranty as to the proper accounting by NAI or its Affiliates of the Lease or as to other accounting conclusions.
     (B) Other Limited Representations. BNPPLC represents that:
     (1) Entity Status. BNPPLC is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware.
     (2) Authority. The Constituent Documents of BNPPLC permit the execution, delivery and performance of the Operative Documents by BNPPLC, and all actions and approvals necessary to bind BNPPLC under the Operative Documents have been taken and obtained. Without limiting the foregoing, the Operative Documents will be binding upon BNPPLC when signed on behalf of BNPPLC by Lloyd G. Cox, Managing Director of BNPPLC. BNPPLC has all requisite power and all governmental certificates of authority, licenses, permits and qualifications to carry on its business as now conducted and contemplated to be conducted and to perform the Operative Documents, except that BNPPLC makes no representation as to whether it has obtained governmental certificates of authority, licenses, permits, qualifications or other documentation required by state or local Applicable Laws. With regard to any such state or local requirements, NAI may require that BNPPLC obtain a specific governmental certificates of authority, licenses,
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permits, qualifications or other documentation pursuant to subparagraph 4(C), subject to the conditions set forth in that subparagraph.
     (3) Solvency. BNPPLC is not “insolvent” on the Effective Date (that is, the sum of BNPPLC’s absolute and contingent liabilities — including the obligations of BNPPLC under the Operative Documents — does not exceed the fair market value of BNPPLC’s assets), and BNPPLC has no outstanding liens, suits, garnishments or court actions which could render BNPPLC insolvent or bankrupt. BNPPLC’s capital is adequate for the businesses in which BNPPLC is engaged and intends to be engaged. BNPPLC has not incurred (whether by the Operative Documents or otherwise), nor does BNPPLC intend to incur or believe that it will incur, debts which will be beyond its ability to pay as such debts mature. No petition or answer has been filed by or, to BNPPLC’s knowledge, against BNPPLC in bankruptcy or other legal proceedings that seeks an assignment for the benefit of creditors, the appointment of a receiver, trustee, custodian or liquidator with respect to BNPPLC or any significant portion of BNPPLC’s property, a reorganization, arrangement, rearrangement, composition, extension, liquidation or dissolution of BNPPLC or similar relief under the federal Bankruptcy Code or any state law. (As used in the Operative Documents, “BNPPLC’s knowledge” and words of like effect mean the present actual knowledge of Lloyd G. Cox and Barry Mendelsohn, the current officers of BNPPLC having primary responsibility for the negotiation of the Operative Documents.)
     (4) Pending Legal Proceedings. No judicial or administrative investigations, actions, suits or proceedings are pending or, to the knowledge of BNPPLC, threatened against or affecting BNPPLC by or before any court or other Governmental Authority. BNPPLC is not in default with respect to any order, writ, injunction, decree or demand of any court or other Governmental Authority in a manner that has or could reasonably be expected to have a a material adverse effect on BNPPLC or its ability to perform its obligations under the Operative Documents.
     (5) No Default or Violation. The execution and performance by BNPPLC of the Operative Documents do not and will not contravene or result in a breach of or default under any other agreement to which BNPPLC is a party or by which BNPPLC is bound or which affects any assets of BNPPLC. Such execution and performance by BNPPLC do not contravene any law, order, decree, rule or regulation to which BNPPLC is subject. Further, such execution and performance by BNPPLC 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, any property of BNPPLC pursuant to the provisions of any such other agreement.
     (6) Enforceability. The Operative Documents constitute the legal, valid and
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binding obligations of BNPPLC enforceable in accordance with their terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
     (7) Conduct of Business and Maintenance of Existence. So long as any of the Operative Documents remains in force, BNPPLC will continue to engage in business of the same general type as now conducted by it and will preserve, renew and keep in full force and effect its corporate existence and its rights, privileges and franchises necessary or desirable in the normal conduct of business.
     (8) Not a Foreign Person. BNPPLC is not a “foreign person” within the meaning of Sections 1445 and 7701 of the Code (i.e. BNPPLC 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).
Notwithstanding the foregoing, however or any other provision herein or in other Operative Documents to the contrary, it is understood that NAI is not relying upon BNPPLC for any evaluation of California or local Applicable Laws upon the transactions contemplated in the Operative Documents, and BNPPLC makes no representation and will not make any representation 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.
     (C) Further Assurances. Prior to the Completion Date and during the Term of the Lease BNPPLC will take any action reasonably requested by NAI to facilitate the construction contemplated by the Construction Agreement or the use of the Property permitted by the Lease or the establishment of a commercial condominium regime that includes the Property (a “Condominium Regime”) or replatting of the Land and other adjacent land owned by NAI (a “Replatting”); subject, however, to the following terms and conditions:
     (1) This subparagraph 4(C) will not impose upon BNPPLC the obligation to take any action that can be taken by NAI, NAI’s Affiliates or anyone else other than BNPPLC as the lessee under the Ground Lease or the owner of the Property.
     (2) BNPPLC will not be required by this subparagraph 4(C) to incur any expense or make any payment to another Person unless (a) BNPPLC has received funds from NAI, in excess of any other amounts due from NAI under any of the Operative Documents, sufficient to cover the expense or make the payment or (b) the request by NAI which will result in such expense or payment is made before the Completion Date and BNPPLC can include such expense or payment in the Outstanding Construction Allowance for purposes of the Construction Agreement.
Amended and Restated Closing Certificate and Agreement (Building 8) – Page 29

 

 

     (3) BNPPLC will have no obligations whatsoever under this subparagraph 4(C) at any time after a 97-10/Meltdown Event or when a Default has occurred and is continuing.
     (4) NAI must request any action to be taken by BNPPLC pursuant to this subparagraph 4(C), and such request must be specific and in writing, if required by BNPPLC at the time the request is made.
     (5) No action may be required of BNPPLC pursuant to this subparagraph 4(C) that could constitute a violation of any Applicable Laws or compromise or constitute a waiver of BNPPLC’s rights under other provisions of this Certificate or any of the other Operative Documents or that for any other reason is reasonably objectionable to BNPPLC.
     The actions BNPPLC will take pursuant to this subparagraph 4(C) 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, relocation 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 (which will, in the case of agreements made with NAI or its Affiliates, remain subject to subparagraphs (J), (K) and (L) of Paragraph 11 of the Ground Lease or comparable provisions included in amendments to the Operative Documents) 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”, (VII) modifications of Permitted Encumbrances, (VIII) permit applications or other documents required to accommodate the Construction Project or any Replatting, (IX) confirmations of NAI’s rights under any particular provisions of the Operative Documents which NAI may wish to provide to a third party, (X) tract or parcel map subdividing the Land and adjacent land into lots or parcels as part of a final Replatting consistent with the tentative map attached to and made a part of Exhibit A, or (XI) condominium documents (e.g., a condominium declaration or map) meeting the requirements of Applicable Laws to establish a Condominium Regime. However, the determination of whether any such action is reasonably requested or reasonably objectionable to BNPPLC may depend in whole or in part upon the extent to which the requested action may result in a lien to secure payment or performance obligations against BNPPLC’s interest in the Property, may cause the
Amended and Restated Closing Certificate and Agreement (Building 8) – Page 30

 

 

value of the Property to be less than the Lease Balance after any Qualified Prepayments that may result from such action are taken into account, or may impose upon BNPPLC any present or future obligations greater than the obligations BNPPLC is willing to accept, taking into consideration the indemnifications provided by NAI under the Construction Agreement or the Lease, as applicable.
     In addition, with respect to any request made by NAI to facilitate a relocation of any easements or a substitution of new easements for those described in Exhibit A, the following will be relevant to the determination of whether the request is reasonable:
     (i) whether material encroachments will result from the relocation or replacement, and whether title to the land over or under which any such easement is to be relocated or replaced is encumbered by Liens other than those which are Fully Subordinated or Removable or which otherwise constitute Permitted Encumbrances;
     (ii) whether the relocation or replacement will result in any interruption of access or services provided to the Property which is likely to extend beyond the Designated Sale Date (it being understood, however, that any such interruption which is not likely to extend beyond the Designated Sale Date will not be a reason for BNPPLC to decline the request); and
     (iii) whether the relocation or replacement is to be accomplished in a manner that will not, when the relocation or replacement is complete, result in a material adverse change in the access to or services provided to the Improvements or the Land.
     With respect to any request made by NAI to facilitate the establishment of a Condominium Regime, the following will be relevant to the determination of whether the request is reasonable:
     (1) whether the Condominium Regime will create one or more distinct condominium units or parcels of land that include all significant Improvements constructed or to be constructed by NAI for BNPPLC pursuant to the Construction Agreement’ and only such Improvements (whether one or more, the “Applicable Units”);
     (2) whether NAI is willing to amend the Operative Documents by amendments in form and substance acceptable to BNPPLC (the “Anticipated Amendments”) as necessary to ensure that:
     (A) the Property will include all of the Applicable Units, together with appurtenant access, parking and other rights and easements (whether exclusive or nonexclusive) at least comparable to those existing or created as of the Effective
Amended and Restated Closing Certificate and Agreement (Building 8) – Page 31

 

 

Date by the Ground Lease (as described in Exhibit A thereto) (“Appurtenant Condo Rights”);
     (B) the land leased to BNPPLC pursuant to the Ground Lease will include the land over which exclusive possession and control must reasonably be vested in the owner of the Applicable Units to preserve the value and utility of the Applicable Units to such owner, taking into account Appurtenant Condo Rights; and
     (C) in the event discretionary approvals or consents are required from any “declarant” or “operator” or “owners’ association” by the Condominium Regime over the design, construction or alteration of Improvements or over the sale, use, leasing or financing of the Property, then (i) the “declarant” or “operator” or “owners’ association” will be NAI or controlled by it or another party acceptable to BNPPLC and will be bound by and remain bound by subparagraphs (J), (K) and (L) of Paragraph 11 of the Ground Lease or comparable provisions in the Anticipated Amendments with respect to such discretionary approvals or consents;
     (3) whether the request itself (if granted) or the proposed Condominium Regime is likely to have any material adverse impact on the value or utility of the Property, taken as a whole, after giving effect to the Anticipated Amendments and taking into account Appurtenant Condo Rights; and
     (4) whether the request itself (if granted) or the Condominium Regime will materially limit, or give NAI or its Affiliates discretionary control over, the rights of BNPPLC and its successors and assigns to use or lease, sell or otherwise transfer the Applicable Units in the event NAI declines for any reason to purchase the Property on the Designated Sale Date pursuant to the Purchase Agreement, but taking into account any superior rights BNPPLC has or may reserve under or by reference to subparagraphs (J), (K) and (L) of Paragraph 11 of the Ground Lease or comparable provisions in the Anticipated Amendments.
     Any and all Losses incurred by BNPPLC because of any action taken after the Completion Date pursuant to this subparagraph 4(C) will be covered by the indemnifications of BNPPLC set forth in Construction Agreement or in the Lease. Further, for purposes of such indemnification, any such action taken by BNPPLC 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 Lease or the other Operative Documents.
Amended and Restated Closing Certificate and Agreement (Building 8) – Page 32

 

 

     (D) Actions Permitted by NAI Without BNPPLC’s Consent. No refusal by BNPPLC to execute or join in the execution of any agreement, application or other document requested by NAI pursuant to the preceding subparagraph 4(C) will prevent NAI from itself executing such agreement, application or other document, so long as NAI is not purporting to act for BNPPLC and does not thereby create or expand any obligations or restrictions that encumber BNPPLC’s title to the Property. Further, subject to the other terms and conditions of the Lease and other Operative Documents, NAI may do any of the following in NAI’s own name and to the exclusion of BNPPLC before and during the Term of the Lease, so long as no 97-10/Meltdown Event has occurred and no Default has occurred and is continuing, and provided NAI is not purporting to act for BNPPLC and does not thereby create or expand any obligations or restrictions that encumber BNPPLC’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 Permitted Encumbrances;
     (2) perform obligations arising under and exercise and enforce the rights of NAI or the owner of the Property with respect to any other contracts or documents (such as building permits) included within the Personal Property; and
     (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 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 BNPPLC and NAI under the other Operative Documents with respect to the collection and application of such monetary damages will be the same as for condemnation proceeds payable because of a taking of all or any part of the Property.
     (E) Waiver of Landlord’s Liens. BNPPLC waives any security interest, statutory landlord’s lien or other interest BNPPLC 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; however, BNPPLC 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 Lease. Although computer equipment or other tangible personal property may be “bolted down” or otherwise firmly affixed to Improvements, it will 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 Lease.
     Without limiting the foregoing, BNPPLC acknowledges that NAI may obtain financing from other parties for inventory, furnishings, equipment, machinery and other personal property
Amended and Restated Closing Certificate and Agreement (Building 8) – Page 33

 

 

that is located in or about the Improvements, but that is not included in or integral to the Property, and to secure such financing NAI may grant a security interest under the California Uniform Commercial Code in such inventory, furnishings, equipment, machinery and other personal property. Further, BNPPLC acknowledges that the lenders providing such financing may require confirmation from BNPPLC of its agreements concerning landlord’s liens and other matters set forth in this subparagraph 4(E), and NAI may obtain such confirmation in any statement required of BNPPLC by the next subparagraph.
     (F) Estoppel Letters. Upon thirty days written request by NAI at any time and from time to time prior to the Designated Sale Date, BNPPLC must 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 Base Rent payable by NAI under the Lease has been paid, stating whether BNPPLC is aware of any Default by NAI that may exist under the Operative Documents and confirming BNPPLC’s agreements concerning landlord’s liens and other matters set forth in subparagraph 4(E). Any such statement by BNPPLC 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.
     (G) No Implied Representations or Promises by BNPPLC. NAI acknowledges and agrees that neither BNPPLC nor its representatives or agents have made any representations or promises with respect to the Property or the transactions contemplated in the Operative Documents except as expressly set forth in the Operative Documents, and no rights, easements or licenses are being acquired by NAI from BNPPLC by implication or otherwise, except as expressly set forth in the other Operative Documents.
5 Usury Savings Provision. Notwithstanding anything to the contrary in any of the Operative Documents, BNPPLC does not intend to contract for, charge or collect any amount of money from NAI that constitutes interest in excess of the maximum nonusurious rate of interest, if any, allowed by applicable usury laws (the “Maximum Rate”). BNPPLC and NAI agree that it is their intent in the execution of the Lease, the Purchase Agreement and other Operative Documents to contract in strict compliance with applicable usury laws, if any. In furtherance thereof, BNPPLC and NAI stipulate and agree that none of the provisions of the Lease, the Purchase Agreement or the other Operative Documents shall ever be construed to create a contract requiring compensation for the use, forbearance or detention of money at a rate in excess of the Maximum Rate, and the provisions of this paragraph shall control over all other provisions of this Certificate or other Operative Documents which may be in apparent conflict herewith. All interest paid or agreed to be paid by NAI to BNPPLC shall, to the extent permitted by applicable usury laws, be amortized, prorated, allocated, and spread throughout the period that any principal upon which such interest accrues is expected to be outstanding (including without limitation any
Amended and Restated Closing Certificate and Agreement (Building 8) – Page 34

 

 

renewal or extension of the term of the Lease) so that the amount of interest included in such payments does not exceed the maximum nonusurious amount permitted by applicable usury laws. If the Designated Sale Date is accelerated and as a result thereof amounts paid by NAI to BNPPLC as interest are determined to exceed the interest that would have accrued at the Maximum Rate for the period prior to the Designated Sale Date, then BNPPLC shall, at its option, either refund to NAI the amount of such excess or credit such excess as a Qualified Prepayment (and thus reduce the Lease Balance and other amounts, the determination of which depend upon Qualified Prepayments credited to NAI) and thereby shall render inapplicable any and all penalties of any kind provided by applicable usury laws as a result of such excess interest. If BNPPLC receives money (or anything else) that is determined to constitute interest and that would, but for this provision, increase the effective interest rate received by BNPPLC under or in connection with the Operative Documents to a rate in excess of the Maximum Rate, then the amount determined to constitute interest in excess of the maximum nonusurious interest shall, immediately following such determination, be returned to NAI or be credited as a Qualified Prepayment, in which event any and all penalties of any kind under applicable usury law shall be inapplicable. If BNPPLC does not actually receive, but shall contract for, request or demand, a payment of money (or anything else) which is determined to constitute interest and to increase the effective interest rate contracted for or charged to a rate in excess of the Maximum Rate, BNPPLC shall be entitled, following such determination, to waive or rescind the contractual claim, request or demand for the amount determined to exceed the Maximum Rate, in which event any and all penalties of any kind under applicable usury law shall be inapplicable. If at any time NAI should have reason to believe that the transactions evidenced by the Operative Documents are in fact usurious, NAI shall promptly give BNPPLC notice of such condition, after which BNPPLC shall have ninety days in which to make appropriate refund or other adjustment in order to correct such condition if it in fact exists.
6 Obligations of NAI Under Other Operative Documents Not Limited by this Certificate. Except as provided above in Paragraph 5, nothing contained in this Certificate will limit, modify or otherwise affect any of NAI’s obligations under the other Operative Documents. Subject to Paragraph 5, those obligations are intended to be separate, independent and in addition to, and not in lieu of, those established by this Certificate.
7 Obligations of NAI Hereunder Not Limited by Other Operative Documents. Recognizing that but for this Certificate (including the representations of NAI set forth in Paragraph 1) BNPPLC would not acquire the Property or enter into the other Operative Documents, NAI agrees that BNPPLC’s rights for any breach of this Certificate (including a breach of such representations) will not be limited by any provision of the other Operative Documents that would limit NAI’s liability thereunder.
8 Waiver of Jury Trial. Each of the parties hereto hereby waives its right to a jury trial of any claim or cause of action based upon or arising out of this Agreement, the other Operative
Amended and Restated Closing Certificate and Agreement (Building 8) – Page 35

 

 

Documents or any of the transactions contemplated hereby or thereby, including contract claims, tort claims, breach of duty claims, and all other common law or statutory claims (collectively, the “Claims”). If and to the extent that the foregoing waiver of the right to a jury trial is unenforceable for any reason in such forum, each of the parties hereto hereby consents to the adjudication of all Claims pursuant to judicial reference as provided in California Code of Civil Procedure Section 638, and the judicial referee shall be empowered to hear and determine all issues in such reference, whether fact or law. Each of the parties hereto represents that each has reviewed this waiver and consent and each knowingly and voluntarily waives its jury trial rights and consents to judicial reference following consultation with legal counsel on such matters. In the event of litigation, a copy of this Agreement may be filed as a written consent to a trial by the court or to judicial reference under California Code of Civil Procedure Section 638 as provided herein.
9 Amendment and Restatement of Prior Certificate. This Certificate amends, restates and replaces entirely the Prior Closing Certificate and Agreement. Without limiting the rights and obligations of NAI under this Certificate, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Closing Certificate and Agreement are now made subject to the terms and conditions of this Certificate; and all rights and interests of BNPPLC in and to the Land or other Property under the Prior Closing Certificate and Agreement are renewed and extended (rather than terminated) by this Certificate.
[The signature pages follow.]
Amended and Restated Closing Certificate and Agreement (Building 8) – Page 36

 

 

     IN WITNESS WHEREOF, this Amended and Restated Closing Certificate and Agreement (Building 8) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
Amended and Restated Closing Certificate and Agreement (Building 8) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Closing Certificate and Agreement (Building 8) dated as of November 29, 2007.]
         
  NETWORK APPLIANCE, INC., a Delaware
corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Closing Certificate and Agreement (Building 8) – Signature Page

 

 

Exhibit A
Legal Description
Proposed Parcel 8, and (except to the extent within a different platted Parcel as currently shown in the Map Records of the County of Santa Clara, California) proposed Parcel 12, and the Additional Leased Premises as defined below, (collectively, the “Building 8 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The southern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the southern boundary of Parcel 8 and the northern boundary of Parcel 7, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 8 and Parcel 7, as shown on the Tentative Map. The northern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 8 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
Exhibit A to Amended and Restated
Closing Certificate and Agreement (Building 8) – Page 2

 

 

Exhibit B
Quarterly Certificate
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Gentlemen:
     This Certificate is furnished pursuant to subparagraph 2(D)(3) of the Amended and Restated Closing Certificate and Agreement (Building 8) dated as of November 29, 2007 between Network Appliance, Inc. and BNP Paribas Leasing Corporation(as amended, the “Closing Certificate”). Terms defined in the Closing Certificate and used but not otherwise defined in this Certificate are intended to have the respective meanings ascribed to them in the Closing Certificate.
     The undersigned, being a Responsible Financial Officer of Network Appliance, Inc., represents and certifies the following to BNP Paribas Leasing Corporation:
     (a) No Event of Default or material Default by NAI has occurred except as follows:
[If an Event of Default or material Default by NAI has occurred, insert a description of the nature thereof and the action which NAI has taken or proposes to take to rectify it; otherwise, insert the word “none”.]
     (b) The representations and warranties by NAI in the Closing Certificate are true and complete in all material respects on and as of the date of this Certificate as though made on and as of such date.
     (c) the calculations set forth in the attachment to this Certificate, which show whether NAI is complying with financial covenants set forth in subparagraph 3(C) of the Closing Certificate based upon the most recent information available, are true and complete.

 

 

     Executed this                      day of                                          , 20                     .
[INSERT SIGNATURE BLOCK FOR A 
RESPONSIBLE FINANCIAL OFFICER]
Exhibit B to Amended and Restated
Closing Certificate and Agreement (Building 8) – Page 2

 

 

Exhibit C
Form of Disclosure Letter
 
 
NETWORK APPLIANCE, INC.
DISCLOSURE LETTER
To: JPMorgan Chase Bank, National Association, as Administrative Agent (“Agent”), under that certain Credit Agreement dated as of November ___, 2007 (as such agreement may be amended, restated or otherwise modified in writing from time to time, the “Credit Agreement”) among Network Appliance, Inc. (the “Borrower”), the lenders from time to time party thereto, BNP Paribas, as syndication agent, and Agent.
This Disclosure Letter is delivered to you pursuant to the Credit Agreement. The items set forth in the attached Schedules represent exceptions, qualifications, permitted items and disclosures that are listed herein pursuant to the terms of the Credit Agreement. Capitalized terms used herein (or in the attached schedules) and defined in the Credit Agreement shall have the meanings ascribed in the Credit Agreement, unless the context otherwise requires.
IN WITNESS WHEREOF, the undersigned has executed this Disclosure Letter as of November ___, 2007.
         
  NETWORK APPLIANCE, INC.
 		  
  By:      
            Name:   Ingemar Lanevi   
            Title:   Treasurer   

 

 

         
Schedule 3.01
Subsidiaries
                     
    Material            
    Domestic            
    Subsidiary           Percentage
Subsidiary   (Y/N)   Jurisdiction   Shareholder   Interest
Network Appliance Global Ltd.
  N   Bermuda   Network Appliance Inc.     100 %
Network Appliance Holdings Ltd.
  N   Cyprus   Network Appliance Global Ltd.     100 %
Network Appliance Holding & Manufacturing BV
  N   Netherlands   Network Appliance Holdings Ltd.     100 %
Network Appliance BV
  N   Netherlands   Network Appliance Holding & Mfg BV     100 %
Network Appliance ApS
  N   Denmark   Network Appliance Holdings Ltd.     100 %
Network Appliance Ltd
  N   UK   Network Appliance BV     100 %
Network Appliance SAS
  N   France   Network Appliance BV     100 %
Network Appliance GmbH
  N   Germany   Network Appliance BV     100 %
Network Appliance Srl.
  N   Italy   Network Appliance BV     100 %
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 8) – Page 2

 

 

                     
    Material            
    Domestic            
    Subsidiary           Percentage
Subsidiary   (Y/N)   Jurisdiction   Shareholder   Interest
Network Appliance GmbH
  N   Switzerland   Network Appliance BV     100 %
Network Appliance (Sales) Limited
  N   Ireland   Network Appliance BV     100 %
Network Appliance GesmbH
  N   Austria   Network Appliance BV     100 %
Network Appliance SL
  N   Spain   Network Appliance BV     100 %
Network Appliance BVBA
  N   Belgium   Network Appliance BV     100 %
Network Appliance Israel Ltd.
  N   Israel   Network Appliance BV     100 %
Network Appliance Israel R&D, Ltd.
  N   Israel   Network Appliance Inc.     100 %
Network Appliance Poland Sp. z.o.o.
  N   Poland   Network Appliance BV     100 %
Network Appliance Sweden AB
  N   Sweden   Network Appliance BV     100 %
Network Appliance South Africa (Pty) Ltd.
  N   South Africa   Network Appliance BV     100 %
Network Appliance Finland Oy
  N   Finland   Network Appliance BV     100 %
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 8) – Page 3

 

 

                     
    Material            
    Domestic            
    Subsidiary           Percentage
Subsidiary   (Y/N)   Jurisdiction   Shareholder   Interest
Network Appliance Norway AS
  N   Norway   Network Appliance BV     100 %
Network Appliance BV (Representative Office)
  N   UAE   Network Appliance BV     100 %
Network Appliance BV (Representative Office)
  N   Turkey   Network Appliance BV     100 %
Network Appliance BV (Representative Office)
  N   Russia   Network Appliance BV     100 %
Network Appliance Luxembourg S.a.r.l.
  N   Luxembourg   Network Appliance BV     100 %
Network Appliance BV (Representative Office)
  N   Indonesia   Network Appliance BV     100 %
Network Appliance BV (Representative Office
  N   Philippines   Network Appliance BV     100 %
Network Appliance KK
  N   Japan   Network Appliance Inc.     100 %
Network Appliance Pty. Ltd.
  N   Australia   Network Appliance Global Ltd.     100 %
Network Appliance Mexico S. de R.L. de C.V.
  N   Mexico   Network Appliance Inc.     100 %
Network Appliance Singapore Private Ltd.
  N   Singapore   Network Appliance Inc.     100 %
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 8) – Page 4

 

 

                     
    Material            
    Domestic            
    Subsidiary           Percentage
Subsidiary   (Y/N)   Jurisdiction   Shareholder   Interest
Network Appliance Sdn Bhd
  N   Malaysia   Network Appliance Inc.     100 %
Network Appliance Systems Private Ltd.
  N   India   Network Appliance Inc.     100 %
Network Appliance Argentina Srl
  N   Argentina   Network Appliance Inc.     100 %
Network Appliance Ltd.
  N   Brazil   Network Appliance     100 %
Network Appliance Canada Ltd.
  N   Canada   Inc. Network Appliance Inc.     100 %
Network Appliance (Shanghai) Commercial Co., Ltd.
  N   China   Network Appliance BV     100 %
Network Appliance (Hong Kong) Limited
  N   Hong Kong   Network Appliance BV     100 %
Network Appliance, Inc. (Representative Office)
  N   China, Beijing   Network Appliance Inc.     100 %
Network Appliance, Inc. (Representative Office)
  N   China, Shanghai   Network Appliance Inc.     100 %
Network Appliance, Inc. (Representative Office)
  N   China, Guangzhou   Network Appliance Inc.     100 %
Network Appliance, Inc. (Representative Office)
  N   Korea   Network Appliance Inc.     100 %
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 8) – Page 5

 

 

                     
    Material            
    Domestic            
    Subsidiary           Percentage
Subsidiary   (Y/N)   Jurisdiction   Shareholder   Interest
Network Appliance, Inc. (Representative Office)
  N   Taiwan   Network Appliance Inc.     100 %
Network Appliance, Inc. (Representative Office)
  N   Hong Kong   Network Appliance Inc.     100 %
Network Appliance Federal Systems, Inc.
  N   California   Network Appliance Inc.     100 %
Network Appliance Financial Solutions, Inc.
  N   Delaware   Network Appliance Inc.     100 %
Spinnaker Networks, Inc.
  N   Delaware   Network Appliance Inc.     100 %
Spinnaker Networks, LLC
  N   Delaware   Network Appliance Inc.     100 %
Alacritus, Inc.
  N   Delaware   Network Appliance Inc.     100 %
Decru, Inc.
  N   Delaware   Network Appliance Inc.     100 %
Decru BV
  N   Netherlands   Network Appliance Holding & Mfg BV     100 %
Network Appliance Limited
  N   Thailand   Network Appliance Inc.     100 %
Network Appliance Saudi Arabia LLFC
  N   Saudi Arabia   Network Appliance BV     100 %
Decru Ltd.
  N   U.K.   Decru Inc.     100 %
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 8) – Page 6

 

 

                     
    Material            
    Domestic            
    Subsidiary           Percentage
Subsidiary   (Y/N)   Jurisdiction   Shareholder   Interest
Topio, Inc.
  N   Delaware   Network Appliance Inc.     100 %
Commitments or Obligations of Borrower or any Subsidiary to issue capital or other equity interests:
     None.
Options, warrants or other rights to acquire capital or other equity interests of Borrower or any Subsidiary:
     None.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 8) – Page 7

 

 

Schedule 3.06
Disclosed Matters
     None.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 8) – Page 8

 

 

Schedule 6.01
Existing Indebtedness
Secured Credit Agreement, dated as of October 5, 2007, by and among Network Appliance, Inc., the lenders party thereto and JPMorgan Chase Bank, National Association, as administrative agent.
Loan Agreement, dated as of March 31, 2006, by and among Network Appliance Global, Ltd., as the borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. See attached schedule of existing letters of credit and bank guarantees.
Lease Agreements, dated as of December 15, 2005, December 16, 2006, and July 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc., and those certain Closing Certificates executed in connection with such Lease Agreements, dated as of December 15, 2005, December 16, 2006, and July 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 8) – Page 9

 

 

Schedule 6.02
Existing Liens
Liens in connection with items disclosed on Schedule 6.01.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 8) – Page 10

 

 

Schedule 6.05
Existing Affiliate Transactions
Transaction arising in connection with commissionaire agreements between Network Appliance B. V. and each of its subsidiaries and related arrangements with respect to payment of value added taxes.
Transactions arising in connection that certain Technology License Agreement, effective as of May 1, 2000, by and between Network Appliance Global Ltd. and Network Appliance B.V.
Transactions arising in connection that certain Technology License Agreement, effective as of May 1, 2000, by and between Network Appliance Global Ltd. and Network Appliance Inc.
Transactions arising in connection with that certain Technology License Agreement, entered into as of April 27, 2002, by and between Network Appliance, Inc. and Network Appliance Global Ltd.
Transactions arising in connection with that certain Technology License Agreement, entered into as of May 1, 2004, by and between Network Appliance Global Ltd. and Spinnaker Networks Inc.
Transactions arising in connection with that certain Technology License Agreement, entered into as of May 3, 2005, by and between Network Appliance Inc. and Alacritus Inc.
Transactions arising in connection with that certain Technology License Agreement, entered into as of April 29, 2006, by and between Network Appliance Global Ltd. and Decru Inc.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 8) – Page 11

 

 

Schedule 6.06
Existing Restrictive Agreements
Secured Credit Agreement, dated as of October 5, 2007, by and among Network Appliance, Inc., the lenders party thereto and JPMorgan Chase Bank, National Association, as administrative agent.
Loan Agreement dated as of March 31, 2006, by and among Network Appliance Global, Ltd., as the borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
Lease Agreements, dated as of December 15, 2005, December 16, 2006, and June 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc., and those certain
Closing Certificates executed in connection with such Lease Agreements, dated as of December 15, 2005, December 16, 2006, and June 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc.
Letter Agreement between Wells Fargo Bank, National Association, and Borrower, dated as of December 1, 2006, providing Borrower with a revolving line of credit for the issuance of letters of credit in an aggregate principal amount not to exceed $5,000,000.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (Building 8) – Page 12

 

 

Exhibit D
Certificate of BNPPLC Re: Accounting
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Gentlemen:
     This certificate is furnished pursuant to subparagraph 4(A) of the Amended and Restated Closing Certificate and Agreement (Building 8) dated as of November 29, 2007 between BNP Paribas Leasing Corporation and Network Appliance, Inc. (as amended, the “Closing Certificate”). Terms defined in the Closing Certificate and used but not otherwise defined in this certificate are intended to have the respective meanings ascribed to them in the Closing Certificate.
     BNP Paribas Leasing Corporation (“BNPPLC”) certifies that the following are true and complete in all material respects, but only to the knowledge of BNPPLC as of the date hereof:
     (A) The facts disclosed in any financial statements or other documents listed in the Annex attached to this certificate were (as of their respective dates) true and complete in all material respects. Copies of such statements or other documents were provided by or behalf of BNPPLC to NAI prior to the date hereof to permit NAI to determine the appropriate accounting for NAI’s relationship with BNPPLC under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN 46”).
     (B The fair value of the Property and of other properties, if any, leased to NAI by BNPPLC (collectively, whether one or more, the “Properties Leased to NAI”) are, as of the date hereof, less than half of the total of the fair values of all assets of BNPPLC, excluding any assets of BNPPLC which are held within a silo. Further, none of the Properties Leased to NAI are, as of the date hereof, held within a silo.
     Although the representations required of BNPPLC by this certificate are intended to cover facts, it is understood and agreed (consistent with subparagraph 4(C) of the Lease) that BNPPLC has not made and will not make any representation or warranty as to the proper accounting by NAI or its Affiliates of the Lease or other Operative Documents or as to other accounting conclusions.

 

 

     Executed this                      day of                                          , 20                    .
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:      
    Name:    
    Title:    
 
Exhibit D to Closing Amended and Restated
Certificate and Agreement (Building 8) – Page 2

 

exv10w40
Exhibit 10.40
AMENDED AND RESTATED
CONSTRUCTION AGREEMENT
(BUILDING 8)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
         
    Page  
ENGAGEMENT AND AUTHORIZATION
     1  
 
        
GENERAL TERMS AND CONDITIONS
     2  
 
        
1 Additional definitions
     2  
“97-10/Maximum Permitted Prepayment”
     2  
“97-10/Meltdown Event”
     2  
“97-10/Prepayment”
     3  
“97-10/Project Costs”
     3  
“97-10/Pronouncement”
     4  
“NAI’s Estimate of Force Majeure Delays”
     4  
“NAI’s Estimate of Force Majeure Excess Costs”
     4  
“Accrued Construction Period Interest Expense”
     4  
“Administrative Fee”
     5  
“Affiliate’s Contract”
     5  
“Arrangement Fee”
     5  
“Capital Adequacy Charges”
     5  
“Carrying Costs”
     5  
“Commitment Fee Rate”
     5  
“Commitment Fees”
     6  
“Complete Taking”
     7  
“Completion Date”
     7  
“Completion Notice”
     7  
“Construction Advances”
     7  
“Construction Advance Request”
     7  
“Construction Allowance”
     7  
“Construction Budget”
     7  
“Construction Project”
     7  
“Covered Construction Period Losses”
     8  
“Defective Work”
     8  
“FOCB Notice”
     8  
“Force Majeure Event”
     8  
“Funded Construction Allowance”
     8  
“Future Work”
     9  
“Ground Lease Rents”
     9  
“Increased Cost Charges”
     9  
“Increased Commitment”
     9  
“Increased Funding Commitment”
     9  
“Increased Time Commitment”
     9  
“Initial Advance”
     9  

 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
“Maximum Construction Allowance”
     9  
“Notice of NAI’s Intent to Terminate”
     9  
“Notice of NAI’s Intent to Terminate Because of a Force Majeure Event”
     9  
“Notice of Termination by NAI”
     9  
“Outstanding Construction Allowance”
     9  
“Owner’s Election to Continue Construction”
     9  
“Pre-lease Casualty”
     9  
“Pre-lease Force Majeure Delays”
     10  
“Pre-lease Force Majeure Event”
     10  
“Pre-lease Force Majeure Event Notice”
     10  
“Pre-lease Force Majeure Excess Costs”
     10  
“Pre-lease Force Majeure Losses”
     10  
“Prior Work”
     11  
“Projected Cost Overruns”
     11  
“Reimbursable Construction Period Costs”
     11  
“Remaining Proceeds”
     12  
“Scope Change”
     12  
“Target Completion Date”
     12  
“Termination of NAI’s Work”
     12  
“Third Party Contract”
     12  
“Third Party Contract/Termination Fees”
     12  
“Timing or Budget Shortfall”
     12  
“Upfront Fees”
     13  
“Work”
     13  
“Work/Suspension Event”
     13  
“Work/Suspension Notice”
     14  
“Work/Suspension Period”
     14  
 
        
2 Construction and Management of the Property by NAI
     14  
(A) The Construction Project
    14  
(1) Construction Approvals by BNPPLC
    14  
(a) Preconstruction Approvals by BNPPLC
    14  
(b) Approval of Scope Changes
     14  
(2) NAI’s Right to Possession and to Control Construction
    15  
(a) Performance of the Work
    15  
(b) Third Party Contracts
    16  
(c) Adequacy of Drawings, Specifications and Budgets
    16  
(d) Existing Condition of the Land and Improvements
    16  

(ii) 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
(e) Correction of Defective Work
    16  
(f) Clean Up
    17  
(g) No Damage for Delays
    17  
(h) No Fee For Construction Management
     17  
(3) Quality of Work
    17  
(B) Completion Notice
     17  
(C) Status of Property Acquired With BNPPLC’s Funds
     18  
(D) Insurance
    18  
(1) Liability Insurance
    18  
(2) Property Insurance
     19  
(3) Failure of NAI to Obtain Insurance
     19  
(4) Waiver of Subrogation
     19  
(E) Condemnation
    20  
(F) Additional Representations, Warranties and Covenants of NAI Concerning the Property
    20  
(1) Payment of Local Impositions
    20  
(2) Operation and Maintenance
    21  
(3) Debts for Construction, Maintenance, Operation or Development
    22  
(4) Permitted Encumbrances and the Ground Lease
     22  
(5) Books and Records Concerning the Property
    22  
(G) BNPPLC’s Right of Access
    23  
(1) Access Generally
    23  
(2) Failure of NAI to Perform
    23  
 
        
3 Amounts to be Added to the Lease Balance (in Addition to Construction Advances)
     24  
(A) Initial Advance
    24  
(B) Carrying Costs
    25  
(C) Commitment Fees
    25  
(D) Future Administrative Fees and Out-of-Pocket Costs
    26  
(E) Increased Cost Charges and Capital Adequacy Charges
     26  
(F) Ground Lease Payments
     27  
 
        
4 Construction Advances
     27  
(A) Costs Subject to Reimbursement Through Construction Advances
     27  
(B) Exclusions From Reimbursable Construction Period Costs
    29  
(C) Conditions to NAI’s Right to Receive Construction Advances
    29  
(1) Construction Advance Requests
    29  
(2) Amount of the Advances
    30  
(a) The Maximum Construction Allowance
    30  

(iii) 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
(b) Costs Previously Incurred by NAI
    30  
(c) Limits During any Work/Suspension Period
    31  
(d) Restrictions Imposed for Administrative Convenience
    31  
(3) No Advances After Certain Dates
    31  
(D) Breakage Costs for Construction Advances Requested But Not Taken
    31  
(E) No Third Party Beneficiaries
    32  
(F) No Waiver
    32  
 
        
  5 Application of Insurance and Condemnation Proceeds
     32  
(A) Collection and Application Generally
    32  
(B) Advances of Escrowed Proceeds to NAI
    33  
(C) Status of Escrowed Proceeds After Commencement of the Term of the Lease
     33  
(D) Special Provisions Applicable After a 97-10/Meltdown Event or Event of Default
    33  
(E) NAI’s Obligation to Restore
    33  
(F) Special Provisions Concerning a Complete Taking
     34  
 
        
  6 Notice of Cost Overruns and Pre-lease Force Majeure Events
     34  
(A) Notice of Projected Cost Overruns
    34  
(B) Pre-lease Force Majeure Event Events and Notices
    34  
 
        
  7 Suspension and Termination of NAI’s Work
     34  
(A) Rights and Obligations During a Work/Suspension Period
    34  
(B) NAI’s Election to Terminate NAI’s Work
    34  
(C) BNPPLC’s Election to Terminate NAI’s Work
    38  
(D) Surviving Rights and Obligations
    38  
(E) Cooperation After a Termination of NAI’s Work
    38  
 
        
  8 Continuation of Construction by BNPPLC
     40  
(A) Owner’s Election to Continue Construction
    40  
(1) Take Control of the Property
    40  
(2) Continuation of Construction
    40  
(3) Arrange for Turnkey Construction
    41  
(4) Suspension or Termination of Construction by BNPPLC
    41  
(B) Powers Coupled With an Interest
    42  
 
        
  9 NAI’s Obligation for 97-10/Prepayments
     42  
 
        
10 Indemnity for Covered Construction Period Losses
     43  

(iv) 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
(A) Covenant to Indemnify Against Covered Construction Period Losses
     43  
(B) Certain Losses Included or Excluded
    44  
(1) Back to Back Claims by Participants Against BNPPLC
     44  
(2) Environmental
     45  
(3) Failure to Maintain a Safe Work Site
     45  
(4) Failure to Complete Construction
     46  
(5) Fraud
     46  
(6) Excluded Taxes and Established Misconduct
     46  
(C) Express Negligence Protection
    46  
(D) Survival of Indemnity
    47  
(E) Due Date for Indemnity Payments
     47  
(F) Order of Application of Payments
    47  
(G) Defense of BNPPLC
     47  
(1) Assumption of Defense
     47  
(2) Indemnity Not Contingent
     47  
(H) Notice of Claims
     48  
(I) Withholding of Consent to Settlements Proposed by NAI
     48  
(J) Settlements Without the Prior Consent of NAI
     48  
(1) Election to Pay Reasonable Settlement Costs in Lieu of Actual
     48  
(2) Conditions to Election
     49  
(3) Indemnity Survives Settlement
     49  
(K) No Authority to Admit Wrongdoing on the Part of NAI
     49  
(L) Refunds of Covered Construction Period Losses Paid by NAI
    50  
(1) Payment by BNPPLC After Refund
     50  
(2) Meaning of Refund
     50  
(3) Conditions to Payment
     51  
 
        
11 Characterization of Operative Documents; Remedies
     51  
(A) Characterization of Operative Documents
     51  
(1) Confirmation of Lien and Security Interest Granted in the Lease
     51  
(2) Foreclosure Remedies
     51  
(B) Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement
     52  
(C) Remedies Cumulative
    52  
(D) Third Party Estoppels
     53  
 
        
12 Amendment and Restatement of Prior Construction Agreement
     53  

(v) 

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
     
Exhibit A  
Legal Description
   
 
Exhibit B  
Description of the Construction Project and Budget
   
 
Exhibit C  
Construction Advance Request Form
   
 
Exhibit D  
Pre-lease Force Majeure Event Notice
   
 
Exhibit E  
Notice of Termination by NAI’s Work
   
 
Exhibit F  
Notice of NAI’s Intent to Terminate
   
 
Exhibit G  
Notice of Increased Funding Commitment by BNPPLC
   
 
Exhibit H  
Notice of Increased Time Commitment by BNPPLC
   
 
Exhibit I  
Notice of Rescission of NAI’s Intent to Terminate
   
 
Exhibit J  
Form of Contractor Estoppel
   
 
Exhibit K  
Form of Design Professional Estoppel

(vi) 

 

AMENDED AND RESTATED
CONSTRUCTION AGREEMENT
(BUILDING 8)
     This AMENDED AND RESTATED CONSTRUCTION AGREEMENT (BUILDING 8) (this “Agreement”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Agreement, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (Building 8) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Agreement for all purposes. As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     At the request of NAI and to facilitate the transaction contemplated in the other Operative Documents, contemporaneously with this Agreement BNPPLC is executing and accepting an Amended and Restated Ground Lease (Building 8) from NAI (the “Ground Lease”), pursuant to which BNPPLC is acquiring a leasehold estate in the Land described in Exhibit A and any existing Improvements on such Land.
     Also contemporaneously with this Agreement, BNPPLC and NAI are executing an Amended and Restated Lease Agreement (Building 8) (the “Lease”), pursuant to which the parties expect that NAI will lease the Improvements on the Land described in Exhibit A from BNPPLC for a lease term that will commence on the Completion Date (as defined below).
     In anticipation of the construction of new or additional Improvements for NAI’s use pursuant to the Lease, BNPPLC and NAI have agreed upon the terms and conditions upon which BNPPLC is willing to authorize NAI to arrange and manage such construction and upon which BNPPLC is willing to provide funds for such construction, and by this Agreement BNPPLC and NAI desire to evidence such agreement.
ENGAGEMENT AND AUTHORIZATION
     Subject to the terms and conditions set forth in this Agreement, BNPPLC does hereby engage and authorize NAI — and NAI does hereby accept such engagement and authorization, as an independent contractor for BNPPLC — to construct the Construction Project on the Land and to

 

 

manage such construction for BNPPLC. As more particularly provided in subparagraph 2(A)(2) below, NAI will take possession and control of the Land and all Improvements on the Land to accomplish such construction. However, the rights and authority granted to NAI by this Agreement are expressly made subject and subordinate to the terms and condition hereinafter set forth and to the Ground Lease, to the Permitted Encumbrances and to any other claims or encumbrances affecting the Land or the Property that may be asserted by third parties other than Liens Removable by BNPPLC.
GENERAL TERMS AND CONDITIONS
1 Additional definitions. As used in this Agreement, capitalized terms defined above will have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and that are used but not defined herein will have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms will have the following respective meanings:
“97-10/Maximum Permitted Prepayment” as of any date means the amount equal to eighty-nine and nine-tenths of one percent (89.9%) of the aggregate of all 97-10/Project Costs paid or incurred on or prior to such date.
“97-10/Meltdown Event” means any of the following:
     (a) NAI gives a Notice of NAI’s Intent to Terminate and thereafter (i) fails to rescind the same as described in subparagraph 7(B)(7) within ten days after BNPPLC responds with any Increased Commitment, or (ii) gives a Notice of Termination by NAI as provided in subparagraph 7(B)(1); or
     (b) NAI gives a notice to terminate its Supplemental Payment Obligation under the Purchase Agreement as described in subparagraph 6(B) of the Purchase Agreement; or
     (c) BNPPLC gives notice to NAI as described in subparagraph 7(C) to cause a Termination of NAI’s Work; or
     (d) NAI fails for any reason whatsoever to substantially complete the Construction Project and give a Completion Notice to BNPPLC prior to the Target Completion Date; or
Amended and Restated Construction Agreement (Building 8) – Page 2

 

 

     (e) for any reason whatsoever (including the accrual of Carrying Costs), the Funded Construction Allowance exceeds the Maximum Construction Allowance.
“97-10/Prepayment” means any payment to BNPPLC required by Paragraph 9, which in each case will equal (A) the 97-10/Maximum Permitted Prepayment, computed as of the date on which the payment becomes due, less (B) the sum of (1) the accreted value of any prior payments actually received by BNPPLC from NAI constituting 97-10/Prepayments, and (2) amounts (if any) then owed by BNPPLC to NAI pursuant to this Agreement as reimbursements for Reimbursable Construction Period Costs paid by NAI and not theretofore reimbursed. For purposes of the preceding sentence, “accreted value” of a payment means 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 plus the Spread.
“97-10/Project Costs” means the following:
     (a) costs incurred for 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 any Permitted Encumbrance,
 
  •   site preparation costs, and
 
  •   costs of offsite and other public improvements required as conditions of governmental approvals for the Construction Project or required by any Permitted Encumbrances;
     (b) costs incurred to maintain insurance required by (and consistent with the requirements of) this Agreement prior to the Completion Date;
     (c) Local Impositions that have accrued or become due prior to the Completion Date;
     (d) Accrued Construction Period Interest Expense; and
     (e) any costs in addition to those described in clauses (a) through (d) preceding that GAAP (as it exists on the Effective Date) would allow BNPPLC to
Amended and Restated Construction Agreement (Building 8) – Page 3

 

 

capitalize as part of the cost of the Property or that the 97-10/Pronouncement would allow BNPPLC to characterize as project costs, including: (1) cancellation or termination fees or other compensation payable by NAI or BNPPLC pursuant to any contract concerning the Construction Project made by NAI or BNPPLC with any general contractor, architect, engineer or other third party because of any election by NAI or BNPPLC to cancel or terminate such contract, and (2) any costs that BNPPLC incurs and is allowed to capitalize to continue or complete the Construction Project after any Owner’s Election to Continue Construction as provided in subparagraph 8(A).
However, notwithstanding the foregoing, 97-10/Project Costs will not include Pre-lease Force Majeure Losses, Administrative Fees, the Arrangement Fee or any legal fees which are included in Transaction Expenses.
It is understood that 97-10/Project Costs will include all amounts paid, reimbursed or accrued prior to the Effective Date and included in the Initial Lease Balance that would qualify as 97-10/Project Costs under and as defined in the Prior Construction Agreement. However, it is also understood that 97-10/Project Costs will not include any costs that were paid, reimbursed or accrued prior to the Effective Date, but excluded from 97-10/Project Costs according to the definition thereof in the Prior Construction Agreement. For example, 97-10/Project Costs will not include the fee described and defined as an Arrangement Fee in the Prior Construction Agreement.
“97-10/Pronouncement” means the pronouncement issued by the Emerging Issues Task Force of the Financial Accounting Standards Board in 1998 titled “EITF 97-10: The Effect of Lessee Involvement in Asset Construction”, which provides that certain kinds of involvement by a lessee in pre-lease commencement construction will cause the lessee to be considered as the owner of the leased property during the construction period and then will require application of the appropriate sale and leaseback accounting rules.
“NAI’s Estimate of Force Majeure Delays” has the meaning indicated in subparagraph 7(B)(4).
“NAI’s Estimate of Force Majeure Excess Costs” has the meaning indicated in subparagraph 7(B)(3).
“Accrued Construction Period Interest Expense” means interest that has accrued and that BNPPLC has paid or is obligated to pay on Funding Advances for any period prior to the Completion Date. Such interest will include a percentage, equal to the aggregate Percentages of all Participants (under and as defined in the Participation Agreement), of Carrying Costs and Commitment Fees that accrue after the execution of any Participation Agreement and that are added to the Outstanding Construction Allowance as provided in
Amended and Restated Construction Agreement (Building 8) – Page 4

 

 

this Agreement, it being understood that the additional amounts BNPPLC must pay to the Participants under the Participation Agreement because of the accrual of Carrying Costs and Commitment Fees effectively constitute construction period interest on advances the Participants make to BNPPLC under the Participation Agreement. Accrued Construction Period Interest Expense will also include any interest and other finance charges that accrue prior to the Completion Date because of Funding Advances provided to BNPPLC by BNPPLC’s Parent in the form of loans, regardless of whether BNPPLC’s obligation in respect of such loans is limited to BNPPLC’s interest in the Property. However, any such interest and other finance charges accruing on Funding Advances provided by BNPPLC’s Parent and included in Accrued Construction Period Interest Expense will not exceed the Carrying Costs attributable to the portion of the Lease Balance funded or maintained by such Funding Advances. Further, Accrued Construction Period Interest will not include any portion of Carrying Costs included in Pre-lease Force Majeure Losses (as set forth in the definition thereof below) or interest or finance charges that BNPPLC must pay to the Participants under the Participation Agreement because of the accrual of such portion of Carrying Costs.
“Administrative Fee” has the meanings indicated in subparagraph 3(A) and subparagraph 3(D).
“Affiliate’s Contract” has the meaning indicated in subparagraph 2(A)(2)(b)2).
“Arrangement Fee” has the meaning indicated in subparagraph 3(A).
“Capital Adequacy Charges” has the meaning indicated in subparagraph 3(E)(1).
“Carrying Costs” has the meaning indicated in subparagraph 3(B).
“Commitment Fee Rate” means, for each Construction Period, the amount established as of the date (in this definition, the “CFR Test Date”) that is two Business Days prior to such period by reference to the pricing grid below, based upon the ratio calculated by dividing (1) Consolidated EBITDA for the then latest Rolling Four Quarters Period that ended prior to (and for which NAI has reported earnings as necessary to compute Consolidated EBITDA) into (2) the Consolidated Debt for Borrowed Money as of the end of such Rolling Four Quarters Period. In each case, the Commitment Fee Rate will be established at the Level in the pricing grid below which corresponds to such ratio; provided, that:
     (a) promptly after earnings are reported by NAI for the latest quarter in any Rolling Four Quarters Period, NAI must notify BNPPLC of any resulting change in the Commitment Fee Rate under this definition, and no reduction in the
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Commitment Fee Rate from one period to the next will be effective for purposes of this Agreement unless, prior to the CFR Test Date for the next period, NAI shall have provided BNPPLC with a written notice setting forth and certifying the calculation under this definition that justifies the reduction; and
     (b) if Commitment Fees are understated during any Construction Period because of any misstatement, subsequently discovered, of Consolidated EBITDA or Consolidated Debt for Borrowed Money, BNPPLC will be entitled to add to the Outstanding Construction Allowance or (after the Completion Date) collect from NAI all additional amounts that would have been added to the Outstanding Construction Allowance hereunder or expected to be paid under the other Operative Documents but for the misstatement, together with interest on each such additional amount computed at the Default Rate from the date it would have been included in the Outstanding Construction Allowance or expected to be paid to the date it is actually added or paid.
         
    Ratio of Consolidated Debt for    
    Borrowed Money to    
Levels   Consolidated EBITDA   Spread
Level I
  less than 0.5   6.0 basis points
 
        
Level II
  greater than or equal to 0.5, but less than 1.0   7.0 basis points
 
        
Level III
  greater than or equal to 1.0, but less than 1.5   8.0 basis points
 
        
Level IV
  greater than or equal to 1.5, but less than 2.0   10.0 basis point
 
        
Level V
  greater than or equal to 2.0   15.0 basis points
All determinations of the Commitment Fee Rate by BNPPLC will, in the absence of clear and demonstrable error, be binding and conclusive for purposes of this Agreement. Further BNPPLC may, but will 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 (a) of this definition.
“Commitment Fees” has the meaning indicated in subparagraph 3(C).
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“Complete Taking” means a taking by eminent domain prior to the Completion Date over NAI’s objection of all of the Land or the Property, or so much thereof as to make it impossible to complete the Construction Project for its intended uses on the Land regardless of any Scope Changes BNPPLC may be willing to approve or any Increased Commitment that BNPPLC may be willing to provide.
“Completion Date” means the date upon which NAI gives the notice to BNPPLC which is required by subparagraph 2(B), after having substantially completed the Construction Project and having obtained any certificate of occupancy or other permit (temporary or permanent) required for the commencement of NAI’s use of the Improvements.
“Completion Notice” means the notice required by subparagraph 2(B) from NAI to BNPPLC, advising BNPPLC that NAI has substantially completed construction of the Construction Project and has obtained any certificate of occupancy or other permit (temporary or permanent) required for the commencement of NAI’s use of the Improvements.
“Construction Advances” means (1) actual advances of funds made by or on behalf of BNPPLC to or on behalf of NAI as provided in Paragraph 4, which sets forth NAI’s rights to receive advances for Reimbursable Construction Period Costs, and (2) other amounts paid or incurred by BNPPLC that subparagraph 8(A) or other provisions of this Agreement allow BNPPLC to characterize as Construction Advances. The term “Construction Advances” will not, however, include advances of insurance proceeds, condemnation proceeds or other Escrowed Proceeds to pay or reimburse costs of repairs or restoration.
“Construction Advance Request” has the meaning indicated in subparagraph 4(C)(1).
“Construction Allowance” means the allowance to be provided by BNPPLC for the design and construction of the Construction Project, against which and from which Carrying Costs, Construction Advances and other amounts will be or may be charged and paid as provided in various provisions of this Agreement (including Paragraphs 3, 4 and 8).
“Construction Budget” means the budget for the Construction Project set forth in Exhibit B.
“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.
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“Covered Construction Period Losses” has the meaning indicated in subparagraph 10(A).
“Defective Work” has the meaning indicated in subparagraph 2(A)(2)(e).
“FOCB Notice” means a notice from BNPPLC to NAI advising NAI of any of the following events or circumstances, and also advising NAI that because of any of the following events or circumstances BNPPLC will be entitled to make the election described in subparagraph 7(C), which will constitute a Termination of NAI’s Work and a 97-10/Meltdown Event:
     (1) NAI has taken action to cancel or terminate or reduce the coverage available to BNPPLC under the builder’s risk insurance obtained for the Construction Project as required by this Agreement, or NAI has otherwise failed to maintain any insurance or to provide insurance certificates to BNPPLC as required by this Agreement and not cured such failure within ten days after receiving notice thereof, or
     (2) NAI has given any Pre-lease Force Majeure Event Notice to BNPPLC, or
     (3) an Event of Default has occurred and is continuing; or
     (4) a Work/Suspension Event has occurred and continued for more than thirty consecutive days after NAI’s receipt of a Work/Suspension Notice advising NAI of such Work/Suspension Event, and subsequent to such thirty day period the Work/Suspension Event has not been rectified by NAI.
“Force Majeure Event” means (A) any taking of any part of the Property by eminent domain prior to the Completion Date, and (B) any damage to the Improvements or disruption of the Work that occurs prior to the Completion Date and that is caused by fire or acts of God (such as flood, lightning, earthquake or hurricane), war, strikes and other labor disputes, or riot or similar civil disturbance, but only to the extent such damage or disruption (i) is beyond the control of and not caused in whole or in part by negligence, illegal acts or willful misconduct on the part of NAI or of its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI, and (ii) could not have been avoided or overcome by the exercise of due diligence or reasonable foresight on the part of NAI or of any other such party.
“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
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Outstanding Construction Allowance.
“Future Work” has the meaning indicated in subparagraph 4(C)(2)(b).
“Ground Lease Rents” has the meaning indicated in subparagraph 3(F).
“Increased Cost Charges” has the meaning indicated in subparagraph 3(E)(1).
“Increased Commitment” has the meaning indicated in subparagraph 7(B)(6).
“Increased Funding Commitment” has the meaning indicated in subparagraph 7(B)(6)(a).
“Increased Time Commitment” has the meaning indicated in subparagraph 7(B)(6)(b).
“Initial Advance” has the meaning indicated in subparagraph 3(A).
“Maximum Construction Allowance” means an amount equal to the difference computed by subtracting both the Initial Lease Balance and the Initial Advance from $65,000,000, as such amount may be increased from time to time by any Increased Funding Commitment made by BNPPLC as provided in subparagraph 7(B)(6).
“Notice of NAI’s Intent to Terminate” has the meaning indicated in subparagraph 7(B)(2).
“Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” has the meaning indicated in subparagraph 7(B)(5).
“Notice of Termination by NAI” has the meaning indicated in subparagraph 7(B)(1).
“Outstanding Construction Allowance” means, as of any date, the difference (but not less than zero) of (A) the total Construction Advances made by or on behalf of BNPPLC on or prior to such date in question, plus (B) all Carrying Costs, Commitment Fees, Administrative Fees, Increased Cost Charges and Capital Adequacy Charges added on or prior to the date as provided in Paragraph 3, less (C) any funds received and applied as Qualified Prepayments on or prior to such date.
“Owner’s Election to Continue Construction” has the meaning indicated in subparagraph 8(A).
“Pre-lease Casualty” has the meaning indicated in subparagraph 2(A)(2)(a).
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“Pre-lease Force Majeure Delays” means delays in the completion of the Work to the extent (but only to the extent) caused solely by a Pre-lease Force Majeure Event.
“Pre-lease Force Majeure Event” means a Force Majeure Event that occurs prior to the Completion Date; provided, however, that if NAI does not notify BNPPLC of any such Force Majeure Event by the delivery of a Pre-lease Force Majeure Event Notice within thirty days after the Force Majeure Event first occurs or commences, then such Force Majeure Event will not qualify as a “Pre-lease Force Majeure Event” for purposes of this Agreement or the other Operative Documents.
“Pre-lease Force Majeure Event Notice” has the meaning indicated in subparagraph 6(B).
“Pre-lease Force Majeure Excess Costs” means the amount (if any) by which the increases in the costs of the Work resulting directly and solely from a Pre-lease Force Majeure Event (such as, for example, the costs of repairing damage to the Improvements caused by a Pre-lease Force Majeure Event) exceed the amounts available to pay or reimburse NAI for such increased costs. Amounts available to pay or reimburse such increased costs will include (a) insurance proceeds or any recovery from a third party (including any Escrowed Proceeds held by BNPPLC), and (b) any part of the Construction Allowance (including any unused contingency amount in the Construction Budget) not used or needed to cover other Reimbursable Construction Period Costs.
“Pre-lease Force Majeure Losses” means any of the following Losses that BNPPLC suffers by reason of any taking or damage to the Improvements which constitutes a Pre-lease Force Majeure Event:
     (a) the costs of repairing any such damage to the extent that such costs have, as of the date of any required determination of Pre-lease Force Majeure Losses, been paid or reimbursed from a Construction Advance (and thus are included in the Lease Balance as of that date), to be distinguished from costs of repairs paid or reimbursed from insurance proceeds or from any recovery from a third party;
     (b) any diminution in the value of the Improvements resulting from any such taking or resulting from any such damage that has not, as of the date of the required determination of Pre-lease Force Majeure Losses, been repaired;
     (c) any increase in the total amount of Carrying Costs, Commitment Fees, Administrative Fees, Increased Cost Charges, Capital Adequacy Charges and Ground Lease Rents (and any other amounts) added to the Lease Balance as
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provided in Paragraph 3 solely by reason of Pre-lease Force Majeure Delays; and
     (d) to the extent not already included in the increase described in the preceding clause, all increases in Carrying Costs that are attributable to the amounts included in Pre-lease Force Majeure Losses pursuant to the preceding clause (a);
but in each case such amounts will constitute Pre-lease Force Majeure Losses only to the extent, if any, that they are not offset by condemnation or insurance proceeds which are (1) paid by reason of such Pre-lease Force Majeure Event (including insurance proceeds paid to compensate BNPPLC or NAI for increased financing costs, the lost time value of BNPPLC’s investment in the Project or business interruption) and (2) applied as a Qualified Prepayment to reduce the Lease Balance.
Also, for purposes of this definition, the diminution in the value of the Improvements, as described in the preceding clause (b), because of any damage that constitutes a Pre-lease Force Majeure Event will not exceed the amount thereof estimated in good faith by any independent appraiser or insurance adjuster engaged by BNPPLC to determine such amount after BNPPLC has received a Pre-lease Force Majeure Event Notice as provided in subparagraph 6(B), nor will it exceed the cost of repairing the damage as estimated in good faith by any such independent insurance adjuster or as indicated by any bona fide written bid to make the repairs that BNPPLC obtains from a reputable contractor capable of making the repairs.
“Prior Work” has the meaning indicated in subparagraph 4(C)(2)(b).
“Projected Cost Overruns” means 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 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, plus (ii) any Escrowed Proceeds then available or expected to be available to cover costs of repairs and restoration that NAI will perform as part of the Work after a casualty or condemnation, less (iii) all projected future Carrying Costs, Commitment Fees, Administrative Fees and other amounts to be added to the Outstanding Construction Allowance as provided in Paragraph 3.
“Reimbursable Construction Period Costs” has the meaning indicated in subparagraph 4(A).
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“Remaining Proceeds” has the meaning indicated in subparagraph 5(A).
“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 the site plan or 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 BNPPLC by NAI. As used in this definition, a “material difference” means a difference that could reasonably be expected to (a) cause the Lease Balance to exceed the fair market value of the Property when the Construction Project is completed and all Construction Advances required in connection therewith have been funded, or significantly increase any such excess, (b) change the general character of the Improvements from that needed to accommodate the uses to be permitted by subparagraph 2(A) of the Lease, or (c) cause or exacerbate Projected Cost Overruns.
“Target Completion Date” means January 31, 2009, as such date may be extended from time to time by any Increased Time Commitment made by BNPPLC as provided in subparagraph 7(B)(6)(b).
“Termination of NAI’s Work” means a termination of NAI’s rights and obligations to continue the Work because of an election to terminate made by NAI pursuant to subparagraph 7(B) or because of an election by BNPPLC made pursuant to subparagraph 7(C).
“Third Party Contract” has the meaning indicated in subparagraph 2(A)(2)(b)1).
“Third Party Contract/Termination Fees” means any amounts, 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 only by reason of Prior Work as of the date of any such termination will not be characterized as Third Party Contract/Termination Fees. If NAI reserves an absolute express right in a Third Party Contract to terminate such contract at any time, without cause, for a specified U.S. dollar amount, such amount will constitute a Third Party Contract/Termination Fee. If no such right is reserved in a Third Party Contract, the amount of damages that NAI is required to pay (in addition to payments required for Prior Work) upon a repudiation of the Third Party Contract by NAI will qualify as a “Third Party Contract/Termination Fee” applicable to such contract for purposes of this Agreement.
“Timing or Budget Shortfall” means that, as of any time prior to the Completion Date, (i) the remaining available Construction Allowance will not be sufficient to cover
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Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances (x) because the cost of the Work exceeds budgeted expectations (resulting in Projected Cost Overruns) through no fault of NAI or its employees or any other party acting under NAI’s control or with the approval or authorization of NAI, (y) because of any Pre-lease Force Majeure Event or (z) because NAI can no longer satisfy conditions to BNPPLC’s obligation to provide further Construction Advances, or (ii) the Work will not be substantially completed prior to the Target Completion Date through no fault of NAI or its employees or any other party acting under NAI’s control or with the approval or authorization of NAI. As used in this definition with respect to any party, the term “fault” will not include inadequate estimation of time or dollars unless shown to be caused by the negligence or wilful misconduct of that party.
“Upfront Fees” has the meaning indicated in subparagraph 3(A).
“Work” has the meaning indicated in subparagraph 2(A)(2)(a), and it includes all work and services, labor and materials provided by or on behalf of the Prior Construction Agreement.
“Work/Suspension Event” means any of the following:
     (1) Projected Cost Overruns have become more likely than not, in BNPPLC’s good faith judgment (taking into account any notices or Construction Draw Requests from NAI indicating that a Pre-lease Force Majeure Event may result in Projected Cost Overruns), and BNPPLC has notified NAI of such judgement and the reasons therefor.
     (2) Delays in the Work (including any delays resulting from damage to the Property by fire or other casualty or from any taking of any part of the Property by condemnation) have made it substantially unlikely, in BNPPLC’s good faith judgment, that NAI will be able to complete the Construction Project in accordance with the requirements of this Agreement prior to the Target Completion Date using only the funds available to NAI under this Agreement, and BNPPLC has notified NAI of such judgement and the reasons therefor.
     (3) BNPPLC has requested with respect to any Construction Advance, but NAI has failed to provide within thirty days after receipt of the request: (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 or other evidence reasonably establishing that all prior Construction Advances paid to NAI have been used by NAI to pay the Reimbursable Construction Period Costs for which the prior advances were requested and made.
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“Work/Suspension Notice” means a notice from BNPPLC to NAI advising NAI of any event or circumstances that constitute a Work/Suspension Event and advising NAI that (1) before the Work/Suspension Event is rectified BNPPLC may limit Construction Advances to NAI as permitted by this Agreement, and (2) unless NAI does rectify the Work/Suspension Event within thirty days after NAI’s receipt of such notice, BNPPLC may elect to send an FOCB Notice in anticipation of a Termination of NAI’s Work.
“Work/Suspension Period” means any period (1) beginning with the date of any Work/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 Work/Suspension Events are continuing, (ii) all previous FOCB Notices and Notices of NAI’s Intent to Terminate (if any) have been rescinded, and (iii) no 97-10/Meltdown Events have occurred, or (b) the effective date of any Termination of NAI’s Work as described in subparagraph 7(B) or subparagraph 7(C).
2 Construction and Management of the Property by NAI.
     (A) The Construction Project.
     (1) Construction Approvals by BNPPLC.
     (a) Preconstruction Approvals by BNPPLC. NAI has submitted and obtained BNPPLC’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 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, must not be inconsistent in any material respect with the plans or other items referenced in Exhibit B, except to the extent otherwise provided by any Scope Change approved by BNPPLC and except as otherwise provided in subparagraph 8(A) if BNPPLC should make an Owner’s Election to Continue Construction after any Termination of NAI’s Work.
     (b) Approval of Scope Changes. Before making a Scope Change, NAI must provide to BNPPLC a reasonably detailed written description of the Scope Change, a revised Construction Budget 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 BNPPLC before the Scope Change is implemented. After receiving such items, BNPPLC will endeavor in good faith to respond promptly (and in any event no later than thirty days after such receipt) to any request by NAI for approval of the Scope Change. BNPPLC
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will not, however, be liable for any failure to provide a prompt response. Further, BNPPLC’s approval will not in any event constitute a waiver of subparagraph 2(A)(3) or of any other provision of this Agreement or other Operative Documents.
     (2) NAI’s Right to Possession and to Control Construction. Subject to the terms and conditions set forth in this Agreement, and prior to any Termination of NAI’s Work as provided in subparagraphs 7(B) and 7(C), NAI will have possession of the Land and all Improvements on the Land to the exclusion of BNPPLC and will 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 vest in BNPPLC (as more particularly provided in subparagraph 2(C)), BNPPLC’s obligation with respect to the Construction Project will be limited to the making of advances under and subject to the conditions set forth in this Agreement. Without limiting the foregoing, NAI acknowledges and agrees that:
     (a) Performance of the Work. Except as provided in subparagraphs 7(A) and 7(D), NAI must, using its best skill and judgment and in an expeditious and economical manner not inconsistent with the interests of BNPPLC, perform or cause to be performed all work required, and must provide or cause to be provided all supplies and materials required, to design and complete construction of the Construction Project (collectively, the “Work”) no later than the Target Completion Date. 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, or required in connection with the use and occupancy thereof (e.g., 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 Completion Date (a “Pre-lease Casualty”); provided, however, the cost of any such repairs or restoration will be subject to reimbursement not only through Construction Advances made to NAI on and subject to the terms and conditions of this Agreement, but also through the application of Escrowed Proceeds as provided in Paragraph 5; and, provided further, like other Work, any such repairs and restoration to be provided by NAI will be subject to subparagraphs 7(A) and 7(B), which establish certain rights of NAI to suspend or discontinue any Work. 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.
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     (b) Third Party Contracts.
     1) NAI will 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 BNPPLC or otherwise purport to bind BNPPLC 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 must reserve the right to terminate such contract at any time, without cause, and without subjecting NAI to liability for any Third Party Contract/Termination Fee. Further, NAI must 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.
     (c) Adequacy of Drawings, Specifications and Budgets. BNPPLC has not made and will not make any representations as to the adequacy of the Construction Budget or any other budget or any 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.
     (d) Existing Condition of the Land and Improvements. NAI is familiar with the conditions of the Land and any existing Improvements on the Land. NAI will have no claim for damages against BNPPLC or for an increase in the Construction Allowance or for an extension of the deadline specified in subparagraph 2(A)(2)(a) for completing the Work by reason of any condition (concealed or otherwise) of or affecting the Land or Improvements.
     (e) Correction of Defective Work. NAI will promptly correct all Work performed prior to any Termination of NAI’s Work that does not comply with the requirements of this Agreement for any reason other than a Pre-lease Casualty (“Defective Work”). If NAI fails to correct any Defective Work or fails to carry out Work in accordance with this Agreement, BNPPLC may (but will not be required to) order NAI to stop all Work until the cause for such failure has been eliminated.
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     (f) 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.
     (g) No Damage for Delays. NAI will have no claim for damages against BNPPLC or for an increase in the Construction Allowance by reason of any delay in the performance of any Work. Nor will NAI have any claim for an extension of the deadline specified in subparagraph 2(A)(2)(a) for completing the Work because of any such period of delay, except that (i) in the case of any Pre-lease Force Majeure Delays, NAI will have certain rights as set forth in subparagraph 7(B) and other provisions of this Agreement, and (ii) in the event of intentional interference with the Work by BNPPLC itself for which NAI provides written notice to cease, NAI will be entitled to an extension of the deadline specified in subparagraph 2(A)(2)(a) as needed because of any delays resulting from such intentional interference. It is also understood that any such intentional interference by BNPPLC will constitute a Force Majeure Event. In no event, however, will BNPPLC’s exercise of its rights and remedies permitted under this Agreement or the other Operative Documents be construed as intentional interference with NAI’s performance of any Work; and thus neither BNPPLC’s exercise of its right to withhold Construction Advances at any time when NAI has failed to satisfy all conditions herein to such advances, nor BNPPLC’s exercise of its right to terminate Work by NAI as provided in subparagraph 7(C), be considered as intentional interference with the Work or a Pre-lease Force Majeure Event.
     (h) No Fee For Construction Management. NAI will have no claim under this Agreement for any fee or other compensation or for any reimbursement of internal administrative or overhead expenses (other than the out-of-pocket overhead expenses properly included in the Construction Budget, if any), it being understood that NAI is executing this Agreement in consideration of the rights expressly granted to it herein and in the other Operative Documents.
     (3) Quality of Work. NAI will 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, and (c) in compliance with the provisions of this Agreement and the material provisions of the Permitted Encumbrances.
     (B) Completion Notice. Within fifteen Business Days after NAI substantially completes construction of the Construction Project and obtains any certificate of occupancy or
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other permit (temporary or permanent) required by Applicable Laws for the commencement of NAI’s use and occupancy of the Improvements, NAI must provide a notice (a “Completion Notice”) to BNPPLC, advising BNPPLC thereof, and thereby establish the Completion Date. For purposes of this Agreement and the other Operative Documents, BNPPLC will be entitled to rely without investigation upon any such notice given by NAI as evidence that NAI has, in fact, substantially completed the Construction Project and has obtained any certificate of occupancy or other permit (temporary or permanent) required for the commencement of NAI’s use of the Improvements, and after giving any such notice NAI will be estopped from later claiming that the Completion Date has not occurred.
     (C) Status of Property Acquired With BNPPLC’s Funds. All Improvements constructed on the Land as provided in this Agreement or the Prior Construction Agreement will constitute “Property” for purposes of the Lease and other Operative Documents. Further, to the extent heretofore or hereafter acquired (in whole or in part) with funds previously advanced by BNPPLC under the Prior Construction Agreement or with any portion of the Initial Advance or with any Construction Advances or with other funds for which NAI receives reimbursement from such funds previously advanced, the Initial Advance or Construction Advances, all furnishings, furniture, chattels, permits, licenses, franchises, certificates and other personal property of whatever nature will be considered as having been acquired on behalf of BNPPLC by NAI and will constitute “Property” for purposes of the Lease and other Operative Documents, as will all renewals or replacements of or substitutions for any such Property. The parties intend that title to the Improvements and to any other such Property will vest in BNPPLC without passing through NAI or NAI’s Affiliates before it is transferred to BNPPLC from contractors, suppliers, vendors or other third Persons, but with the understanding that all such Property will be accepted by BNPPLC subject to the terms and conditions of the other Operative Documents, including subparagraph 4(C)(1) of the Lease (concerning the characterization of the Lease and other Operative Documents for tax and certain other purposes). Although nothing herein constitutes authorization of NAI by BNPPLC to bind BNPPLC to any construction contract or other agreement with a third Person, any construction contract or other agreement executed by NAI for the acquisition or construction of Improvements or other components of the Property may, as NAI deems appropriate, provide for the direct transfer of title to BNPPLC as described in the preceding sentence.
     (D) Insurance.
     (1) Liability Insurance. Throughout the period prior to any Termination of NAI’s Work, NAI must 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 Minimum Insurance Requirements, which are set forth in an exhibit to the Common Definitions and Provisions Agreement. NAI must deliver and maintain with
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BNPPLC for each liability insurance policy required by this Agreement 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 Minimum Insurance Requirements.
     (2) Property Insurance. Throughout the period prior to any Termination of NAI’s Work, NAI must also 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 Minimum Insurance Requirements. NAI must deliver and maintain with BNPPLC for each property insurance policy required by this Agreement 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 Minimum Insurance Requirements. If any of the Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance has been required hereunder, (i) BNPPLC may, but will not be obligated to, make proof of loss if not made promptly by NAI after notice from BNPPLC, (ii) each insurance company concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC for application as required by Paragraph 5, and (iii) BNPPLC may settle, adjust or compromise any and all claims for loss, damage or destruction under any policy or policies of insurance (provided, that so long as no 97-10/Meltdown Event has occurred and no Event of Default has occurred and is continuing, BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s intention to settle any such claim before settling it unless NAI has already approved of the settlement by BNPPLC). BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any insurance proceeds. If any casualty results in damage to or loss or destruction of the Property, NAI must give prompt notice thereof to BNPPLC and Paragraph 5 will apply.
     (3) Failure of NAI to Obtain Insurance. If NAI fails to obtain any insurance or to provide confirmation of any insurance as required by this Agreement, BNPPLC will 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 BNPPLC’s other remedies under the circumstances, BNPPLC may charge the cost of such insurance against the Construction Allowance as if it were a Construction Advance paid to NAI as hereinafter provided.
     (4) 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 BNPPLC or any other Interested Party for any and all Losses, to the extent that NAI is compensated by
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insurance or would be compensated by the insurance policies contemplated in this Agreement, 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 Agreement. 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.
     (E) 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 must promptly notify the other (provided, however, BNPPLC will have no liability for its failure to provide such notice) of the pendency of such proceedings. Prior to any Termination of NAI’s Work, NAI must, if requested by BNPPLC, diligently prosecute any such proceedings and consult with BNPPLC, its attorneys and experts and cooperate with them as reasonably 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 will be paid to BNPPLC as Escrowed Proceeds, and all such proceeds will be applied as provided in Paragraph 5. BNPPLC is hereby authorized, in its own name or in the name of NAI or in the name of both, to settle and deliver valid acquittances for, or to challenge and to appeal from, any such judgment, decree or award concerning condemnation of any of the Property (provided, that so long as no 97-10/Meltdown Event has occurred and no Event of Default has occurred and is continuing, BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s intention to settle any such claim before settling it unless NAI has already approved of the settlement by BNPPLC). BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any such proceeds, judgments, decrees or awards.
     (F) Additional Representations, Warranties and Covenants of NAI Concerning the Property. Without limiting the rights granted to NAI by other provisions of this Agreement to be reimbursed from Construction Advances for the cost of complying with the following, NAI represents, warrants and covenants as follows:
     (1) Payment of Local Impositions. Throughout the period prior to any Termination of NAI’s Work, NAI must pay or cause to be paid prior to delinquency all ad valorem taxes assessed against the Property and other Local Impositions. If requested by BNPPLC from time to time, NAI will furnish BNPPLC with receipts or other appropriate evidence showing payment of all Local Impositions prior to the applicable delinquency date therefor.
Notwithstanding the foregoing, NAI may in good faith, by appropriate proceedings,
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contest the validity, applicability or amount of any asserted Local Imposition, and pending such contest NAI will not be deemed in default under any of the provisions of this Agreement because of the Local Imposition if (1) NAI diligently prosecutes such contest to completion in a manner reasonably satisfactory to BNPPLC, 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 must be concluded and the contested Local Impositions must be paid by NAI prior to the earlier of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC 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 BNPPLC (including the Property) may be seized or sold or any other action is taken or overtly threatened against BNPPLC or against any property owned or leased by BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     (2) Operation and Maintenance. Throughout the period prior to any Termination of NAI’s Work, NAI must operate and maintain the Property in a good and workmanlike manner and in compliance with Applicable Laws in all material respects and 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 complaint or demand for corrective action given by any Governmental Authority to NAI, or to BNPPLC and forwarded by it to NAI, then for purposes of the preceding sentence, NAI will be considered not to have maintained the Property “in compliance with all Applicable Laws in all material respects” whether or not the noncompliance would be material in the absence of the complaint or demand.) NAI must 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. Without limiting the generality of the foregoing, NAI must not conduct or permit others to conduct Hazardous Substance Activities on the Property, except Permitted Hazardous Substance Use and Remedial Work; and NAI must not discharge or permit the discharge of anything (including Permitted Hazardous Substances) on or from the Property that would require any permit under applicable Environmental Laws, other than (1) storm water runoff, (2) fume hood emissions, (3) waste water discharges through a publicly owned treatment works, (4) discharges that are a necessary part of any Remedial Work, and (5) other similar discharges consistent with the definition of Permitted
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Hazardous Substance Use which do not significantly increase the risk of Environmental Losses to BNPPLC, in each case in strict compliance with Environmental Laws. To the extent that any of the following would, individually or in the aggregate, increase the likelihood of a 97-10/Meltdown Event or materially and adversely affect the value of the Property or the use of the Property for purposes permitted by this Agreement, NAI must not, without BNPPLC’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. NAI will 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 must not do anything that could reasonably be expected to significantly reduce the market value of the Property. If NAI receives a notice or claim from any federal, state or other governmental authority that the Property is not in compliance with any Applicable Law, or that any action may be taken against BNPPLC because the Property does not comply with any Applicable Law, NAI must promptly furnish a copy of such notice or claim to BNPPLC.
     (3) Debts for Construction, Maintenance, Operation or Development. NAI must promptly pay or cause to be paid all debts and liabilities incurred by it or its contractors or subcontractors in the construction, maintenance, operation or development of the Property. Such debts and liabilities will include those incurred for labor, material and equipment and all debts and charges for utilities servicing the Property.
     (4) Permitted Encumbrances and the Ground Lease. NAI must 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 or the Ground Lease throughout the period prior to any Termination of NAI’s Work. NAI must not, without the prior consent of BNPPLC, create any new Permitted Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted Encumbrance that would create or expand or purport to create or expand obligations or restrictions encumbering BNPPLC’s interest in the Property. (Whether BNPPLC must give any such consent requested by NAI prior to the Completion Date will be governed by subparagraph 4(C) of the Closing Certificate.)
     (5) Books and Records Concerning the Property. NAI must keep books and records that are accurate and complete in all material respects for NAI’s construction and management of the Property as contemplated in this Agreement and must 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)
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to be inspected and copied by BNPPLC.
     (G) BNPPLC’s Right of Access.
     (1) Access Generally. BNPPLC and BNPPLC’s representatives may enter the Property at any time for the purpose of making inspections or performing any work BNPPLC is authorized to undertake by the next subparagraph or for the purpose confirming whether NAI has complied with the requirements of this Agreement or the other Operative Documents. However, prior to any Termination of NAI’s Work, BNPPLC or BNPPLC’s representative will, before making any entry upon the Property or performing any work on the Property authorized by this Agreement, do the following
     (a) BNPPLC will give NAI at least 24 hours notice, unless BNPPLC believes in good faith that an emergency may exist or a Default has occurred and is continuing, because of which significant damage to the Property or other significant Losses may be sustained if BNPPLC delays entry to the Property; and
     (b) if then requested to do so by NAI in order to maintain NAI’s security, BNPPLC or its representative will: (i) sign in at NAI’s security or information desk if NAI has such a desk on the premises, (ii) wear a visitor’s badge or other reasonable identification, (iii) permit an employee of NAI to observe such inspection or work, and (iv) comply with other similar reasonable nondiscriminatory security requirements of NAI that do not, individually or in the aggregate, significantly interfere with inspections or work of BNPPLC authorized by this Agreement.
     (2) Failure of NAI to Perform. If NAI fails to perform any act or to take any action required of it by this Agreement or other Operative Documents, or to pay any money which NAI is required by this Agreement or other Operative Documents to pay, and if such failure or action constitutes an Event of Default or renders BNPPLC or any director, officer, employee or Affiliate of BNPPLC at risk of criminal prosecution or renders BNPPLC’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, BNPPLC may, perform or cause to be performed such act or take such action or pay such money. (To the extent that expenses so incurred by BNPPLC, or money so paid by BNPPLC, qualify as a Covered Construction Period Losses, NAI must pay the same to BNPPLC upon demand. If any such expenses incurred or money paid do not qualify as Covered Construction Period Losses, but do constitute 97-10/Project Costs, BNPPLC may treat them as Construction Advances hereunder. To the extent that any such expenses incurred or money paid do not qualify as Covered Construction Period Losses and do constitute 97-10/Project Costs, they will be included — with interest — in the
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Balance of Unpaid Covered Construction Period Losses under and as defined in the Purchase Agreement.) Further, BNPPLC, upon making such payment, will be subrogated to all of the rights of the person, corporation or body politic receiving such payment. But nothing herein will imply any duty upon the part of BNPPLC to do any work which, under any provision of this Agreement or otherwise, NAI may be required to perform, and the performance thereof by BNPPLC will not constitute a waiver of NAI’s default. BNPPLC may during the progress of any such work permitted by BNPPLC hereunder on or in the Property keep and store upon the Property all necessary materials, tools, and equipment. BNPPLC will 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 BNPPLC’s performance of any such work, or on account of bringing materials, supplies and equipment into or through the Property during the course of such work, and the obligations of NAI under this Agreement and the other Operative Documents will not thereby be excused in any manner.
3 Amounts to be Added to the Lease Balance (in Addition to Construction Advances).
     (A) Initial Advance. Upon execution and delivery of this Agreement by BNPPLC, an advance (the “Initial Advance”) will be made by BNPPLC to cover the cost of certain Transaction Expenses and other amounts described in this subparagraph. The amount of the Initial Advance, which will be included in the Lease Balance, may be confirmed by a separate closing certificate executed by NAI as of the Effective Date. An arrangement fee (the “Arrangement Fee”), an initial administrative agency fee (an “Administrative Fee”) and upfront fees (the “Upfront Fees”) will all be paid from the Initial Advance (and thus be included in the Lease Balance) in the amounts provided in the Closing Letter. To the extent that BNPPLC does not itself use the entire the Initial Advance to pay such fees and Transaction Expenses incurred by BNPPLC, the remainder thereof will be advanced to NAI, with the understanding that NAI will use any such amount advanced for one or more of the following purposes: (1) the payment or reimbursement of Transaction Expenses incurred by NAI and all “soft costs” incurred by NAI in connection with the planning, design, engineering, construction and permitting of the Construction Project; (2) the maintenance of the Property; or (3) the payment of other amounts due pursuant to the Operative Documents. (Before executing the separate closing certificate to confirm the Initial Advance, NAI will make a reasonable effort to determine all prior expenses incurred by it as described in clause (1) of the preceding sentence and to request an Initial Advance sufficient in amount to cover all such expenses in addition to the Arrangement Fee, the initial Administrative Fee, the Upfront Fees and all Transaction Expenses incurred by BNPPLC. However, no failure by NAI to identify and include all such expenses in the amount of the requested Initial Advance will preclude NAI from requesting reimbursement for the same through a subsequent Construction Advance as provided in Paragraph 4. Reimbursable
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Construction Period Costs to be paid or reimbursed pursuant to Paragraph 4 will not be limited to those incurred after the Effective Date.)
     (B) Carrying Costs. For each Construction Period certain charges (“Carrying Costs”) will accrue and be added to 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). If, however, for any reason the Lease Balance (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 will 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. Carrying Costs accruing for any Construction Period will be equal to:
  •   the amount equal on the first day of such Construction Period to the Lease Balance, times
 
  •   the sum of the Effective Rate and the Spread for such Construction Period, times
 
  •   a fraction, the numerator of which is the number of days in such Construction Period and the denominator of which is three hundred sixty.
     (C) Commitment Fees. For each Construction Period additional charges (“Commitment Fees”) will accrue and be added to 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). If, however, for any reason the Lease Balance (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 will include not only Commitment Fees added on or before the immediately preceding Advance Date computed as described below, but also Commitment Fees accruing on and after such preceding Advance Date to but not including the date in question. Commitment Fees for each Construction Period will be computed as follows:
  •   the Commitment Fee Rate for such Construction Period, times an amount equal to:
 
      (1) the Maximum Construction Allowance, less
 
      (2) the Funded Construction Allowance on the first day of such Construction Period; times
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  •   the number of days in such Construction Period; divided by
 
  •   three hundred sixty.
     (D) Future Administrative Fees and Out-of-Pocket Costs. If the Completion Date does not occur prior to the first anniversary of the Effective Date, then on each anniversary of the Effective Date prior to the Completion Date, an administrative agency fee (also, an “Administrative Fee”) will be added to the Outstanding Construction Allowance by BNPPLC in the amount provided in the Closing Letter. Also, to the extent that BNPPLC incurs any out-of-pocket costs prior to the Completion Date with respect to the administration of or performance of its obligations under this Agreement or other Operative Documents (e.g., any rents required by the Ground Lease and any Attorneys’ Fees or other costs incurred to evaluate lien releases and other information submitted by NAI with requests for Construction Advances), BNPPLC may add such costs to the Outstanding Construction Allowance from time to time.
     (E) Increased Cost Charges and Capital Adequacy Charges.
     (1) If after the Effective Date there is any increase in the cost to BNPPLC’s Parent or any Participant agreeing to make or making, funding or maintaining advances to BNPPLC in connection with the Property because of any Banking Rules Change, then BNPPLC may agree or become obligated to pay to BNPPLC’s Parent or such Participant, as the case may be, additional amounts (“Increased Cost Charges”) sufficient to compensate BNPPLC’s Parent or the Participant for such increased costs. Any Increased Cost Charges paid by BNPPLC or for which BNPPLC becomes obligated to pay, prior to the Completion Date, will be added to the Outstanding Construction Allowance by BNPPLC.
     (2) BNPPLC’s Parent or any Participant may demand additional payments (“Capital Adequacy Charges”) if BNPPLC’s Parent or the 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 BNPPLC to permit BNPPLC to maintain BNPPLC’s investment in the Property or to make Construction Advances. To the extent that BNPPLC’s Parent or a Participant demands Capital Adequacy Charges as compensation for the additional capital requirements reasonably allocable to such investment or advances, and BNPPLC pays or becomes obligated to pay to BNPPLC’s Parent or the Participant the amount so demanded prior to the Completion Date, such amount will also be added to the Outstanding Construction Allowance by BNPPLC.
     (3) Notwithstanding the foregoing provisions of this subparagraph 3(E), the Outstanding Construction Allowance will not be increased by Increased Cost Charges or
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Capital Adequacy Charges that arise or accrue (a) as a result of any change in the rating assigned to BNPPLC by rating agencies or bank regulators in regard to BNPPLC’s creditworthiness, record keeping or failure to comply with Applicable Laws (including U.S. banking regulations applicable to subsidiaries of a bank holding company), or (b) more than nine months prior to the date NAI is notified of the intent of BNPPLC’s Parent or a Participant to make a claim for such charges; provided, that if the Banking Rules Change which results in a claim for compensation is retroactive, then the nine month period will be extended to include the period of the retroactive effect of such Banking Rules Change. Further, BNPPLC will cause BNPPLC’s Parent and any Participant that is an Affiliate of BNPPLC to use commercially reasonable efforts to reduce or eliminate any claim for compensation pursuant to this subparagraph 3(E), including a change in the office of BNPPLC’s Parent or such Participant through which it provides and maintains Funding Advances if such change will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of BNPPLC’s Parent or such Participant, be otherwise disadvantageous to it. It is understood that NAI may also request similar commercial reasonable efforts on the part of any Participant that is not an Affiliate of BNPPLC, but if a claim for additional compensation by any such Participant is not eliminated or waived, then NAI may request that BNPPLC replace such Participant under the Participation Agreement.
     (F) Ground Lease Payments. All rentals payable by BNPPLC under the Ground Lease prior to the Completion Date (“Ground Lease Rents”) will be added to the Outstanding Construction Allowance by BNPPLC on the date paid.
4 Construction Advances.
     (A) Costs Subject to Reimbursement Through Construction Advances. Subject to the terms and conditions set forth herein, NAI will be entitled to a Construction Allowance, from which BNPPLC 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 have not yet been paid or reimbursed from advances by BNPPLC under the Prior Construction Agreement and are not already included in Transaction Expenses paid by BNPPLC from the Initial 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) 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:
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  •   soft costs payable to third parties (whether or not incurred prior to the Effective Date), such as legal fees, architectural fees, engineering fees, construction management fees, transaction management fees and fees and costs paid in connection with obtaining project permits and approvals required by governmental authorities or any of the Permitted Encumbrances,
 
  •   site preparation costs,
 
  •   costs of offsite and other public improvements required as conditions of governmental approvals for the Construction Project, and
 
  •   to the extent that funds from the Construction Allowance can be used for such costs without causing Projected Cost Overruns, the costs of constructing parking lots, driveways and other improvements on the land subject to the Appurtenant Easements;
     (3) the cost of title insurance in favor of BNPPLC and of maintaining other insurance required by (and consistent with the requirements of) this Agreement prior to the Completion Date, and costs of repairing any damage to the Improvements caused by a Pre-lease Casualty to the extent such costs are not covered by Escrowed Proceeds made available to NAI as provided herein prior to the Completion Date;
     (4) Local Impositions that accrue or become due prior to the Completion Date;
     (5) reasonable and ordinary out-of-pocket costs of operating and maintaining the Property prior to the Completion Date in accordance with the requirements of this Agreement;
     (6) Third Party Contract/Termination Fees, not to exceed in the aggregate ten percent (10%) of the Maximum Construction Allowance, 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 Work/Suspension Period; and
     (7) furniture, trade fixtures and equipment and other tenant improvements to support NAI’s use and occupancy of the Property for the permitted uses described in subparagraph 2(A) of the Lease, but that are not integral to or affixed in such a manner as to become part of the Improvements, the aggregate cost of which does not exceed ten percent (10%) of the Maximum Construction Allowance; provided, that no Construction Advance for furniture and other items described in this clause will be required of
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BNPPLC or requested by NAI before the Construction Project is substantially complete and substantially all other Reimbursable Construction Period Costs have been paid or reimbursed from Construction Advances.
     (B) Exclusions From Reimbursable Construction Period Costs. Notwithstanding anything herein to the contrary, BNPPLC will not be required to make any Construction Advance to pay or to reimburse or compensate NAI for Covered Construction Period Losses paid by NAI as provided in subparagraph 10(A) or for any of the following Losses which may be incurred by NAI or any other party:
     (1) Environmental Losses;
     (2) Losses that would not have been incurred but for any affirmative act taken by NAI or by any of NAI’s contractors or subcontractors, which act is contrary to the other terms and conditions of this Agreement or to the terms and conditions of the other Operative Documents (e.g., undertaking a Scope Change without prior authorization of BNPPLC);
     (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 NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI; and
     (4) Losses that would not have been incurred but for any bankruptcy proceeding involving NAI as the debtor.
     (C) Conditions to NAI’s Right to Receive Construction Advances. BNPPLC’s obligation to provide Construction Advances to NAI from time to time under this Agreement will be subject to the following terms and conditions, all of which terms and conditions are intended for the sole benefit of BNPPLC, and none of which will limit in any way the right of BNPPLC to treat costs or expenditures incurred or paid by or on behalf of BNPPLC as Construction Advances pursuant to subparagraph 8(A):
     (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 C. NAI will not submit more than one Construction Advance Request in any calendar month.
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     (2) Amount of the Advances.
     (a) The Maximum Construction Allowance. NAI will not be entitled to require any Construction Advance that would cause the Funded Construction Allowance to exceed the Maximum Construction Allowance or that would increase the amount of any such excess.
     (b) Costs Previously Incurred by NAI. NAI will not be entitled to require any Construction Advance 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 BNPPLC, substantiated as having been paid or incurred by NAI other than for Work (e.g., Local Impositions), plus
     (ii) the Reimbursable Construction Period Costs that NAI has, to the reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred for Prior Work as of the date of the Construction Advance Request in which NAI requests 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, as part of the Work in accordance with this Agreement prior to the date in question, and “Future Work” means labor and services performed or to be performed, and materials delivered or to be delivered, as part of the Work on or after the date in question. For purposes of this Agreement, NAI and BNPPLC 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 parties not affiliated with NAI (e.g., a construction contractor engaged by NAI); 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, BNPPLC will 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 BNPPLC’s right to challenge or verify allocations required with respect to future
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Construction Advances, rely without investigation upon the accuracy of NAI’s own Construction Advance Requests.
     (c) Limits During any Work/Suspension Period. Without limiting the other terms and conditions imposed by this Agreement for the benefit of BNPPLC with respect all Construction Advances, BNPPLC will have no obligation to make any Construction Advance during any Work/Suspension Period 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 BNPPLC, substantiated as having been paid or incurred by NAI other than for Work (e.g., Local Impositions), plus
     (ii) the Reimbursable Construction Period Costs that NAI has, to the reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred for Prior Work as of the date the Work/Suspension Period commenced.
For purposes of computing the limits described in this subparagraph 4(C)(2)(c), Reimbursable Construction Period Costs “other than for Work” will include Third Party Contract/Termination Fees that qualify as Reimbursable Construction Period Costs pursuant to subparagraph 4(A)(6). However, as provided in subparagraph 4(A)(6), the amount of such Third Party Contract/Termination Fees subject to reimbursement will not in any event exceed ten percent (10%) of the Maximum Construction Allowance. If NAI fails to manage and administer Third Party Contracts as necessary to ensure that NAI can (at any point in time) terminate all such contracts without becoming liable for Third Party Contract/Termination Fees in excess of ten percent (10%) of the Maximum Construction Allowance, then the excess will be the responsibility of NAI.
     (d) Restrictions Imposed for Administrative Convenience. NAI will not request any Construction Advance (other than the final Construction Advance NAI intends to request) for an amount less than $1,000,000.
     (3) No Advances After Certain Dates. BNPPLC will have no obligation to make any Construction Advance (x) after the last Advance Date, (y) on or after the Designated Sale Date, or (z) on or after the effective date of any Termination of NAI’s Work pursuant to subparagraph 7(B) or subparagraph 7(C).
     (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
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Construction Advance that it is not permitted to take because of its failure to satisfy any of the conditions specified in subparagraph 4(C), BNPPLC will be entitled to add any resulting Breakage Costs to the Outstanding Construction Allowance and the Lease Balance.
     (E) No Third Party Beneficiaries. No contractor or other third party will be entitled to require BNPPLC to make advances as a third party beneficiary of this Agreement, and nothing contained herein or in any of the other Operative Documents will be construed as an agreement obligating BNPPLC to make advances to anyone other than NAI itself.
     (F) No Waiver. No funding of Construction Advances and no failure of BNPPLC to object to any Work proposed or performed by or for NAI will constitute a waiver by BNPPLC of the requirements contained in this Agreement.
5 Application of Insurance and Condemnation Proceeds.
     (A) Collection and Application Generally. This Paragraph 5 will govern the application of proceeds received by BNPPLC or NAI from any third party prior to the commencement of the Term of the Lease (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 (e.g., damage resulting from a third party’s release of Hazardous Materials onto the Property); excluding, however, any funds paid to BNPPLC by BNPPLC’s Parent, by an Affiliate of BNPPLC or by any Participant that is made to compensate BNPPLC for any Losses BNPPLC may suffer or incur in connection with this Agreement or the Property. NAI will promptly pay over to BNPPLC any insurance, condemnation or other proceeds covered by this Paragraph 5 which NAI may receive from any insurer, condemning authority or other third party. All proceeds covered by this Paragraph 5, including those received by BNPPLC from NAI or third parties, will be applied as follows:
     (1) First, proceeds covered by this Paragraph 5 will be used to reimburse BNPPLC for any reasonable costs and expenses, including Attorneys’ Fees, that BNPPLC incurred to collect the proceeds.
     (2) Second, the proceeds remaining after such reimbursement to BNPPLC (the “Remaining Proceeds”) will be applied, as hereinafter more particularly provided, either as a Qualified Prepayment or to pay or reimburse NAI or BNPPLC for the actual out-of-pocket costs of repairing or restoring the Property. Until any Remaining Proceeds received by BNPPLC are applied by
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BNPPLC as a Qualified Prepayment or applied by BNPPLC to reimburse costs of repairs to or restoration of the Property pursuant to this Paragraph 5, BNPPLC will hold and maintain such Remaining Proceeds as Escrowed Proceeds in an interest bearing account, and all interest earned on such account will 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 5, BNPPLC will hold all such Escrowed Proceeds until they are advanced 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 Agreement. BNPPLC will so advance the Escrowed Proceeds as the applicable repair or restoration progresses and upon compliance by NAI with such conditions and requirements as may be reasonably imposed by BNPPLC, including conditions and requirements similar to those that set forth herein for the payment of Construction Advances. In no event, however, will BNPPLC be required to pay Escrowed Proceeds to NAI in excess of the actual out-of-pocket cost to NAI of the applicable repair, restoration or replacement, as evidenced by invoices or other documentation reasonably satisfactory to BNPPLC.
     (C) Status of Escrowed Proceeds After Commencement of the Term of the Lease. Any Remaining Proceeds governed by this Paragraph 5 which BNPPLC is continuing to hold as Escrowed Proceeds when the Term of the Lease commences will be applied in accordance with the terms and conditions of the Lease as if received by BNPPLC immediately after the Term commenced.
     (D) Special Provisions Applicable After a 97-10/Meltdown Event or Event of Default. Notwithstanding the foregoing, after any 97-10/Meltdown Event and when any Event of Default has occurred and is continuing, BNPPLC will be entitled to receive and collect all insurance, condemnation or other proceeds governed by this Paragraph 5 and to apply all Remaining Proceeds, when and in such order and to such extent deemed appropriate by BNPPLC in its sole discretion, either (A) to the reimbursement of NAI or BNPPLC 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, if the Property is damaged by fire or other casualty or any part of the Property is taken by condemnation, NAI must to the maximum extent possible, as part of the Work, 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 this Agreement; provided, however, like other Work, any such restoration and continuation of construction by NAI will be subject to subparagraphs 7(A) and 7(B), which establish certain rights of NAI to suspend or discontinue any Work; and, provided further, any additional costs required to complete the Construction Project resulting from such a casualty or taking prior to the Completion Date will, to the extent not covered by Remaining Proceeds paid to NAI as provided
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herein, be subject to reimbursement by BNPPLC as Reimbursable Construction Period Costs on the same terms and conditions that apply to reimbursements of other costs of the Work hereunder.
     (F) Special Provisions Concerning a Complete Taking. NAI may react to any threat of a Complete Taking from a governmental authority by exercising NAI’s right to accelerate the Designated Sale Date (as provided in the definition thereof) and by exercising the Purchase Option under the Purchase Agreement. By so doing, NAI will put itself in a position to control condemnation proceedings and to receive all proceeds of the Complete Taking. If, however, NAI does not buy the Property pursuant to the Purchase Agreement prior to any Complete Taking, then BNPPLC will be entitled to receive and retain all amounts paid for the Property in connection with the Complete Taking, notwithstanding any contrary provision herein or in the other Operative Documents and notwithstanding that such proceeds may exceed the Lease Balance.
6 Notice of Cost Overruns and Pre-lease Force Majeure Events.
     (A) Notice of Projected Cost Overruns. If, at the time NAI submits any Construction Advance Request, NAI believes 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) that Projected Cost Overruns are more likely than not, NAI must 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.
     (B) Pre-lease Force Majeure Event Events and Notices. NAI may from time to time provide a notice to BNPPLC in the form attached as Exhibit D (a “Pre-lease Force Majeure Event Notice”), describing any Pre-lease Force Majeure Event that has occurred or commenced within the 30 days prior to such notice and setting forth NAI’s preliminary good faith estimate of any Pre-lease Force Majeure Delays, Pre-lease Force Majeure Losses and Pre-lease Force Majeure Excess Costs that are likely to result from such event. BNPPLC will have the option to respond to any Pre-lease Force Majeure Event Notice with an FOCB Notice or, alternatively and if applicable, with an Increased Commitment as provided in subparagraph 7(B)(6).
7 Suspension and Termination of NAI’s Work.
     (A) Rights and Obligations During a Work/Suspension Period. During any Work/Suspension Period, NAI will have the right to suspend the Work; however, the obligations of NAI which are to survive any Termination of NAI’s Work as provided in subparagraph 7(D) will continue and survive during any Work/Suspension Period.
     (B) NAI’s Election to Terminate NAI’s Work. NAI may elect to terminate its rights
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and obligations to continue Work at any time prior to the Completion Date if at such time NAI believes in good faith that a Timing or Budget Shortfall exists. To be effective, however, any such election by NAI must be made in accordance with the following provisions:
     (1) Any such election by NAI to terminate its rights and obligations to continue the Work must be made by notice to BNPPLC in the form of Exhibit E (a “Notice of Termination by NAI”).
     (2) At least forty-five days before giving any such Notice of Termination by NAI, NAI must give a notice of NAI’s intent to terminate to BNPPLC in the form of Exhibit F (a “Notice of NAI’s Intent to Terminate”), and the Notice of NAI’s Intent to Terminate must state the reasons, in NAI’s good faith determination, for the Timing or Budget Shortfall.
     (3) Without limiting the forgoing, prior to giving any Notice of Termination by NAI predicated upon NAI’s belief that the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of a Pre-lease Force Majeure Event, NAI must — after having notified BNPPLC of the such event by the delivery of a Pre-lease Force Majeure Event Notice in accordance with subparagraph 6(B) — expressly set forth such belief in the Notice of NAI’s Intent to Terminate as indicated in Exhibit F. In any such Notice of NAI’s Intent to Terminate, NAI must also specify its good faith estimate of the Pre-lease Force Majeure Excess Costs likely to be incurred (“NAI’s Estimate of Force Majeure Excess Costs”).
     (4) Similarly, prior to giving any Notice of Termination by NAI predicated upon NAI’s belief that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays resulting from a Pre-lease Force Majeure Event, NAI must — after having notified BNPPLC of such event by the delivery of a Pre-lease Force Majeure Event Notice in accordance with subparagraph 6(B) — expressly set forth such belief in the Notice of NAI’s Intent to Terminate as indicated in Exhibit F. In any such Notice of NAI’s Intent to Terminate, NAI must also specify its good faith estimate of the Pre-lease Force Majeure Delays likely to occur (“NAI’s Estimate of Force Majeure Delays”).
     (5) As used herein, a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” means any Notice of NAI’s Intent to Terminate that sets forth NAI’s belief, by the optional provisions contemplated in Exhibit F, that either or both: (a) the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of a Pre-lease Force Majeure Event, or (b) the Work will not be substantially complete before the Target
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Completion Date only because of Pre-lease Force Majeure Delays resulting from a Pre-lease Force Majeure Event. Should any Termination of NAI’s Work occur before NAI sends a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event (in accordance with this subparagraph and in the form attached as Exhibit F), such Termination of NAI’s Work will, for purposes of determining whether any 97-10/Prepayment may be required pursuant to Paragraph 9, be conclusively presumed to have occurred for reasons other than a Pre-lease Force Majeure Event.
     (6) After receipt of any Notice of NAI’s Intent to Terminate and before receipt of a Notice of Termination by NAI, BNPPLC may, but will not be obligated to, respond to NAI with certain commitments as follows (such a response being hereinafter called an “Increased Commitment”):
     (a) In the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses NAI’s belief that the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs, BNPPLC may respond with a written commitment to increase the Construction Allowance (an “Increased Funding Commitment”) by an amount at least equal to NAI’s Estimate of Force Majeure Excess Costs as set forth in such Notice of NAI’s Intent to Terminate. Any such Increased Funding Commitment may be in the form of Exhibit G.
     (b) In the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses NAI’s belief that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays, BNPPLC may respond with a written commitment to extend the Target Completion Date (an “Increased Time Commitment”) by at least the number of days included in NAI’s Estimate of Force Majeure Delays as set forth in such Notice of NAI’s Intent to Terminate. Any such Increased Time Commitment may be in the form of Exhibit H.
     (c) In the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses NAI’s belief that both (i) the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs and (ii) the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays, BNPPLC may respond with both an Increased Funding Commitment and an Increased Time Commitment as provided in the preceding subparagraphs (a) and (b).
     (d) In the case of a Notice of Intent to Terminate which is not a Notice
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of Intent to Terminate Because of a Force Majeure Event (and thus not covered by any of the preceding subparagraphs (a) through (c)), BNPPLC may require NAI to promptly provide a good faith estimate of the minimum Increased Funding Commitment or Increased Time Commitment (or both) reasonably required to eliminate the reasons for NAI’s delivery of the Notice of Intent to Terminate. After receipt of NAI’s good faith estimate, BNPPLC may respond with an Increased Funding Commitment or Increased Time Commitment (or both) consistent with such estimate.
     (7) If BNPPLC does respond to a Notice of NAI’s Intent to Terminate with an Increased Commitment, NAI will be entitled to, and will not unreasonably refuse to, rescind such Notice of NAI’s Intent to Terminate within ten days after receipt of such Increased Commitment. To be effective, any such rescission must be by notice to BNPPLC in the form of Exhibit I. In any event, except as provided in the next subparagraph, the failure of NAI to so rescind any Notice of NAI’s Intent to Terminate within ten days after receipt of the Increased Commitment will, for purposes of determining whether any 97-10/Prepayment may be required pursuant to Paragraph 9, create a conclusive presumption that any Termination of NAI’s Work after the date of such response was made for reasons other than a Pre-lease Force Majeure Event.
     (8) For the avoidance of doubt, BNPPLC acknowledges that NAI’s rescission of any Notice of NAI’s Intent to Terminate (including any Notice of NAI’s Intent to Terminate Because of a Force Majeure Event) after receipt of an Increased Commitment as described in the preceding subsection will not preclude NAI from subsequently exercising its rights under this subparagraph 7(B) in the event NAI subsequently believes in good faith that a Timing or Budget Shortfall exists.
Thus, for example, if NAI rescinds a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event after receiving an Increased Commitment from BNPPLC, but subsequently determines that such Increased Commitment is insufficient (through no fault of NAI or its employees or any other party acting under NAI’s control or with the approval or authorization of NAI) to rectify the Timing or Budget Shortfall which caused NAI to send such notice, then NAI may deliver a second Notice of NAI’s Intent to Terminate Because of a Force Majeure Event, and in response thereto BNPPLC may elect to provide yet another Increased Commitment. Moreover, such process may be repeated any number of times, in each case without causing NAI to lose its right to subsequently invoke this subparagraph 7(B) and send yet another Notice of NAI’s Intent to Terminate (including another Notice of NAI’s Intent to Terminate Because of a Force Majeure Event).
     (9) Notwithstanding the foregoing, in the event of a Complete Taking, NAI
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may deliver a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event that explains the futility of continuing with the Construction Project on the Land regardless of any willingness of BNPPLC to approve or consider Scope Changes or an Increased Commitment, and no offer by BNPPLC of an Increased Commitment after a Complete Taking will preclude a “Termination of NAI’s Work Because of a Pre-lease Force Majeure Event” for the purposes of determining whether NAI must pay a 97-10/Prepayment pursuant to Paragraph 9.
     (C) BNPPLC’s Election to Terminate NAI’s Work. By notice to NAI BNPPLC may elect to terminate NAI’s rights and obligations to continue the Work at any time (i) more than thirty days after BNPPLC has given an FOCB Notice to NAI, or (ii) after BNPPLC’s receipt of a Notice of NAI’s Intent to Terminate and before an election by NAI to rescind the same as described in subparagraph 7(B)(7).
     (D) Surviving Rights and Obligations. Following any Termination of NAI’s Work as provided in subparagraph 7(B) or in 7(C), NAI will have no obligation to continue or complete any Work; however, no such Termination of NAI’s Work will reduce or excuse the following rights and obligations of the parties, it being intended that all such rights and obligations will survive and continue after any Termination of NAI’s Work:
     (1) NAI’s obligations described in the next subparagraph 7(E);
     (2) the rights and obligations of NAI and BNPPLC under the Ground Lease;
     (3) the rights and obligations of NAI and BNPPLC under the Purchase Agreement, other than NAI’s Supplemental Payment Obligation if it has been terminated as provided in subparagraph 6(B) of the Purchase Agreement;
     (4) any obligations of NAI under the other Operative Documents by reason of any misrepresentation or other act or omission of NAI that occurred prior to the Termination of NAI’s Work or during any subsequent period in which NAI remains in possession or control of the Construction Project; and
     (5) NAI’s obligations to indemnify BNPPLC as set forth in subparagraph 10(A).
     (E) Cooperation After a Termination of NAI’s Work. After any Termination of NAI’s Work as provided in subparagraph 7(B) or subparagraph 7(C), NAI must comply with the following terms and conditions, all of which will survive notwithstanding any such termination:
     (1) NAI must promptly deliver copies to BNPPLC of all Third Party Contracts
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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 must 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 BNPPLC made with respect to any Third Party Contract, NAI must deliver a letter confirming: (i) whether NAI has performed any act or executed any other instrument which invalidates or modifies such contract in whole or in part (and, if so, the nature thereof); (ii) the extent to which such contract is valid and subsisting and in full force and effect; (iii) that, to NAI’s knowledge, 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 or potential default, the nature of such default in detail); (iv) whether the services and construction contemplated by such contract are proceeding in a satisfactory manner in all material respects (and 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) NAI’s good faith estimate of the 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 BNPPLC may reasonably request to allow it to decide what steps it should take concerning the contract within BNPPLC’s rights under this Agreement and the other Operative Documents.
     (3) As and to the extent requested by BNPPLC, NAI will make every reasonable effort (but without any obligation to incur any expense or liability to do so, unless BNPPLC agrees to reimburse the same with reasonable promptness) to secure any required consents or approvals for an assignment of any then existing Third Party Contract to BNPPLC or its designee, upon terms satisfactory to BNPPLC. To the extent assignable, any then existing Third Party Contract will be assigned by NAI to BNPPLC upon request, without charge by NAI.
     (4) If NAI has canceled any Third Party Contract before and in anticipation of a Termination of NAI’s Work, then as and to the extent requested by BNPPLC, NAI must make every reasonable effort (but without any obligation to incur any expense or liability to do so, unless BNPPLC agrees to reimburse the same with reasonable promptness) to secure a reinstatement of such Third Party Contract in favor of BNPPLC and upon terms
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     satisfactory to BNPPLC.
     (5) For a period not to exceed thirty days after the Termination of NAI’s Work, NAI must 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. Without regard to the conditions applicable to other payments required of BNPPLC by this Agreement, BNPPLC must with reasonable promptness reimburse any reasonable out-of-pocket expenses incurred by NAI to comply with this subparagraph (5); however, BNPPLC may at any time or from time to time by notice to NAI limit or terminate such reimbursements as to expenses incurred after NAI’s receipt of such notice, and thereafter NAI will be excused from any obligation to incur expenses that BNPPLC may decline to reimburse.
8 Continuation of Construction by BNPPLC.
     (A) Owner’s Election to Continue Construction. Without limiting BNPPLC’s other rights and remedies under this Agreement or the other Operative Documents, and without terminating NAI’s surviving obligations under this Agreement or NAI’s obligations under the other Operative Documents, after any Termination of NAI’s Work as provided in subparagraph 7(B) or subparagraph 7(C), BNPPLC will 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 not substantially inconsistent (to the extent practicable under Applicable Laws) with the general description of the Construction Project set forth in Exhibit B. (As used herein, “Owner’s Election to Continue Construction” means any election by BNPPLC to continue or complete the Construction Project pursuant to the preceding sentence.) After any Owner’s Election to Continue Construction, BNPPLC may do any one or more of the following pursuant to this subparagraph without further notice and regardless of whether any breach of this Agreement by NAI is then continuing:
     (1) Take Control of the Property. BNPPLC may cause NAI and any contractors or other parties on the Property to vacate the Property until the Construction Project is complete or BNPPLC elects not to continue work on the Construction Project.
     (2) Continuation of Construction. BNPPLC 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 BNPPLC is not substantially inconsistent (to the extent practicable under Applicable Laws) with the general description of the Construction Project set forth in Exhibit B and the permitted use of the Property set forth in the Lease, BNPPLC will have complete discretion to:
     (a) proceed with construction according to such plans and
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     specifications as BNPPLC may from time to time approve;
     (b) establish and extend construction deadlines as BNPPLC from time to time deems appropriate, without obligation to adhere to any deadlines for construction by NAI set forth in this Agreement;
     (c) hire, fire and replace architects, engineers, contractors, construction managers and other consultants as BNPPLC 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 BNPPLC 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 BNPPLC from time to time reasonably deems appropriate;
     (e) pay, settle or compromise existing or future bills and claims which are or may be liens against the Property or as BNPPLC reasonably 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 BNPPLC from time to time deems appropriate; and
     (h) generally do anything that NAI itself might have done if NAI had satisfied or obtained BNPPLC’s waiver of the conditions specified therein.
     (3) Arrange for Turnkey Construction. Without limiting the generality of the foregoing, BNPPLC may engage any contractor or real estate developer BNPPLC believes to be reputable to take over and complete construction of the Construction Project on a “turnkey” basis.
     (4) Suspension or Termination of Construction by BNPPLC. Notwithstanding
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any Owner’s Election to Continue Construction, BNPPLC may subsequently elect at any time to suspend or terminate further construction without obligation to NAI.
For purposes of the Operative Documents (including the determination of the Outstanding Construction Allowance, the Lease Balance and the Break Even Price), after any Owner’s Election to Continue Construction, all costs and expenditures incurred or paid by or on behalf of BNPPLC to complete or continue construction as provided in this subparagraph 8(A) will be considered Construction Advances, 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 BNPPLC will include costs that BNPPLC has become obligated to pay to any third party that is not an Affiliate of BNPPLC (including any construction contractor), even if the payments for which BNPPLC has become so obligated constitute prepayments for work or services to be rendered after payment and notwithstanding that BNPPLC’s obligations for the payments may be conditioned upon matters beyond BNPPLC’s control. For example, even if a construction contract between BNPPLC and a contractor excuses BNPPLC from making further progress payments to the contractor upon NAI’s failure to make any required 97-10/Prepayment under this Agreement, the obligation to make a progress payment would nonetheless be “incurred” by BNPPLC, for purposes of determining whether BNPPLC has incurred costs considered to be 97-10/Project Costs and Construction Advances, when BNPPLC’s obligation to pay it became subject only to NAI’s payment of a 97-10/Prepayment or other conditions beyond BNPPLC’s control.
     (B) Powers Coupled With an Interest. BNPPLC’s rights under subparagraph 8(A) are intended to constitute powers coupled with an interest which cannot be revoked.
9 NAI’s Obligation for 97-10/Prepayments. After any 97-10/Meltdown Event NAI must make a 97-10/Prepayment to BNPPLC within three Business Days after receipt from BNPPLC of any demand for such a payment. BNPPLC may demand 97-10/Prepayments pursuant to this Paragraph at any time and from time to time (as 97-10/Project Costs increase) after a 97-10/Meltdown Event. NAI acknowledges that it is undertaking the obligation to make 97-10/Prepayments as provided in this Paragraph in consideration of the rights afforded to it by this Agreement, but that such obligation is not contingent upon any exercise by NAI of such rights or upon its rights under any other Operative Documents. If a 97-10/Meltdown Event does occur, NAI’s obligation to make 97-10/Prepayments as provided in this Paragraph will survive any Termination of NAI’s Work.
Notwithstanding the foregoing provisions of this Paragraph 9, if (as provided in subparagraph 7(B)) NAI effectively makes the election for a Termination of NAI’s Work because of a Pre-lease Force Majeure Event that resulted in Pre-lease Force Majeure Excess Costs or Pre-lease Force Majeure Delays, then NAI will be excused from the obligation to make 97-10/Prepayments until such time (if ever) that BNPPLC itself completes the Construction
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Project or causes it to be completed as BNPPLC is authorized to do by subparagraph 8(A).
10 Indemnity for Covered Construction Period Losses.
     (A) Covenant to Indemnify Against Covered Construction Period Losses. Subject to the qualifications in subparagraph 10(B), as directed by BNPPLC, NAI must indemnify and defend BNPPLC from and against all of the following Losses (“Covered Construction Period Losses”):
     (1) Losses suffered or incurred by BNPPLC, directly or indirectly, relating to or arising out of, based on or as a result of any of the following which occurs or is alleged to have occurred prior to any Termination of NAI’s Work: (i) any Hazardous Substance Activity; (ii) any violation of any applicable Environmental Laws relating to the Land or 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; or (iv) any claim, demand, cause of action or investigation, or any action or other proceeding, whether meritorious or not, brought or asserted against BNPPLC 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 provision or any allegation of any such matters;
     (2) Losses incurred or suffered by BNPPLC that BNPPLC 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 prior to any Termination of NAI’s Work (as provided in subparagraphs 7(B) and 7(C)) or during any other period that NAI remains in possession or control of the Construction Project (including any failure by NAI to obtain or maintain insurance as required by this Agreement during such periods; but excluding, however, as described below, certain Losses consisting of claims related to any failure of NAI to complete the Construction Project);
     (3) Losses incurred or suffered by BNPPLC 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 NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI; and
     (4) Losses incurred or suffered by BNPPLC that would not have been incurred but for any bankruptcy proceeding involving NAI as the debtor.
NAI’s obligations under this indemnity will apply whether or not BNPPLC is also indemnified as to the applicable Covered Construction Period Loss by any third party (including another
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Interested Party) and whether or not the Covered Construction Period Loss arises or accrues prior to the Effective Date. Further, in the event, for income tax purposes, BNPPLC must include in its taxable income any payment or reimbursement from NAI which is required by this indemnity (in this provision, the “Original Indemnity Payment”), and yet BNPPLC is not entitled during the same taxable year to a corresponding and equal deduction from its taxable income for the Covered Construction Period Loss paid or reimbursed by such Original Indemnity Payment (in this provision, the “Corresponding Loss”), then NAI must also pay to BNPPLC on demand the additional amount (in this provision, the “Additional Indemnity Payment”) needed to gross up the Original Indemnity Payment for any and all resulting additional income taxes. That is, NAI must pay an Additional Indemnity Payment as is needed so that the Corresponding Loss (computed net of the reduction, if any, of BNPPLC’s income taxes because of credits or deductions that are attributable to the BNPPLC’s payment or deemed payment of the Corresponding Loss and that are recognized for tax purposes in the same taxable year during which BNPPLC must recognize the Original Indemnity Payment as income) will not exceed the difference computed by subtracting (i) all income taxes (determined for this purpose based on the highest marginal income tax rates charged to corporations by federal, state and local tax authorities, as applicable, for the relevant period or periods) imposed because of the receipt or constructive receipt of the Original Indemnity Payment and the Additional Indemnity Payment, from (ii) the sum of the Original Indemnity Payment and the Additional Indemnity Payment. (With regard to any payment or reimbursement of an Original Indemnity Payment, “After Tax Basis” means that such payment or reimbursement is or will be made together with the additional amount needed to gross up such Original Indemnity Payment as described in this provision.)
     (B) Certain Losses Included or Excluded.
     (1) Back to Back Claims by Participants Against BNPPLC. Losses for which BNPPLC is entitled to be indemnified as described in subparagraph 10(A) will include claims made against BNPPLC by any Participant, and amounts (if any) reimbursed by BNPPLC to any Participant, because of the following:
     (a) Losses suffered or incurred by such Participant, directly or indirectly, relating to or arising out of any of the following which occurs or is alleged to have occurred prior to any Termination of NAI’s Work: (i) any Hazardous Substance Activity; (ii) any violation of any applicable Environmental Laws relating to the Land or 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; or (iv) any claim, demand, cause of action or investigation, or any action or other proceeding, whether meritorious or not, brought or asserted against such Participant which directly or indirectly relates to, arises from, is based on, or results from any of the
Amended and Restated Construction Agreement (Building 8) – Page 44

 

 

matters described in clauses (i), (ii), or (iii) of this provision or any allegation of any such matters;
     (b) Losses incurred or suffered by such Participant that such Participant 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 prior to any Termination of NAI’s Work (as provided in subparagraphs 7(B) and 7(C)) or during any other period that NAI remains in possession or control of the Construction Project (including any failure by NAI to obtain or maintain insurance as required by this Agreement during such periods; but excluding, however, as described below, certain Losses consisting of claims related to any failure of NAI to complete the Construction Project);
     (c) Losses incurred or suffered by such Participant 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 NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI; and
     (d) Losses incurred or suffered by such Participant that would not have been incurred but for any bankruptcy proceeding involving NAI as the debtor.
     (2) Environmental. As used in clause (1) of the preceding subparagraph 10(A) and clause (a) of the preceding subparagraph 10(B)(1), “Losses” will not include costs properly incurred in connection with the Work to prevent the occurrence of a violation of Environmental Laws that did not previously exist. (For example, Environmental Losses will not include the increase in costs resulting from NAI’s installation of fire proofing materials other than asbestos because of Environmental Laws that prohibit the use of asbestos.) However, any costs to correct or answer for any violation of Environmental Laws that occurred on or prior to the Effective Date or that NAI causes or permits to occur after the Effective Date in connection with the Work or the Property will constitute Environmental Losses. (Thus, for instance, if NAI releases Hazardous Materials from the Property in a manner that contaminates ground water in violation of Environmental Laws, the costs of correcting the contamination and any applicable fines or penalties will constitute Environmental Losses for which NAI must indemnify and defend BNPPLC pursuant to subparagraph 10(A).)
     (3) Failure to Maintain a Safe Work Site. If a third party asserts a claim for damages against BNPPLC because of injuries the third party sustained while on the Land as a result of NAI’s breach of its obligations under this Agreement to keep the Land and the Improvements thereon in a reasonably safe condition as Work progresses under NAI’s
Amended and Restated Construction Agreement (Building 8) – Page 45

 

 

direction and control, then any such claim and other Losses resulting from such claim will constitute Covered Construction Period Losses under clause (2) of subparagraph 10(A). Also, if the third party asserts a claim for damages against any Participant because of such injuries, and if the Participant requires BNPPLC to reimburse the Participant’s Losses attributable to such claim, then such reimbursement will constitute Covered Construction Period Losses under clause (2) of subparagraph 10(A), consistent with understanding confirmed by clause (b) of subparagraph 10(B)(1).
     (4) Failure to Complete Construction. Additional costs of construction may result from NAI’s failure to complete the Construction Project if a Termination of NAI’s Work occurs pursuant to subparagraphs 7(B) and 7(C). Nevertheless, it is understood that a failure of NAI to complete the Construction Project following any such Termination of NAI’s Work will not necessarily constitute a breach of this Agreement, and clause (2) of subparagraph 10(A) will not include any such additional costs of performing the Work or the cost to BNPPLC of completing the Construction Project after the Termination of NAI’s Work. (To the extent, however, that such costs qualify as 97-10/Project Costs, they may increase the 97-10/Maximum Permitted Prepayment.)
     (5) Fraud. As used in clause (3) of subparagraph 10(A) and clause (c) of subparagraph 10(B)(1), “fraud” or “willful misconduct” will include (i) any deliberate decision by NAI to make a Scope Change without BNPPLC’s prior written approval, (ii) any fraud or intentional misrepresentation by NAI, or its vendors, contractors or subcontractors regarding NAI’s ongoing compliance with the requirements of this Agreement, and (iii) the performance by NAI or its vendors, contractors or subcontractors of Defective Work, with NAI’s knowledge that it constitutes Defective Work, prior to any Termination of NAI’s Work as provided in subparagraphs 7(B) and 7(C).
     (6) Excluded Taxes and Established Misconduct. Nothing in this Paragraph 10 or other provisions of this Agreement will be construed to require NAI to reimburse or pay Excluded Taxes or Losses incurred or suffered by BNPPLC that are proximately caused by (and attributed by any applicable principles of comparative fault to) the Established Misconduct of BNPPLC.
     (C) Express Negligence Protection. Every release provided in this Agreement for BNPPLC or any other Interested Party, and the indemnity provided for the benefit of BNPPLC in the preceding subparagraph 10(A), will apply even if and when the subject matters thereof are alleged to be caused by or to arise out of the negligence or strict liability of BNPPLC or another Interested Party. Further, all such releases and the indemnity will apply even if insurance obtained by NAI or required of NAI by this Agreement is not adequate to cover Losses against or for which the releases and the indemnity are provided (although NAI’s liability for any failure to
Amended and Restated Construction Agreement (Building 8) – Page 46

 

 

obtain insurance required by this Agreement will not be limited to Losses against which indemnity is provided, it being understood that the parties have agreed upon insurance requirements for reasons that extend beyond providing a source of payment for Losses against which BNPPLC may be indemnified by NAI).
     (D) Survival of Indemnity. NAI’s obligations under this Paragraph 10 will survive the termination or expiration of this Agreement and any Termination of NAI’s Work with respect to Losses suffered by BNPPLC resulting or arising from events or circumstances which existed or occurred or are alleged to have existed or occurred prior to the Termination of NAI’s Work or during any subsequent period in which NAI remains in possession or control of the Construction Project, whether such Losses are asserted, suffered or paid before or after the Termination of NAI’s Work.
     (E) Due Date for Indemnity Payments. Any amount to be paid by NAI under this Paragraph 10 will be due fifteen days after a notice requesting such payment is received by NAI. Any such amount not paid by NAI when first due will bear interest at the Default Rate in effect from time to time from the date it first became 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.
     (F) Order of Application of Payments. BNPPLC will be entitled to apply any payments by or on behalf of NAI against NAI’s obligations under this Paragraph 10 or against other amounts owing by NAI and then past due under any of the other Operative Documents in the order the same became due or in such other order as BNPPLC may elect.
     (G) Defense of BNPPLC.
     (1) Assumption of Defense. By notice to NAI BNPPLC may direct NAI to assume on behalf of BNPPLC and to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation included in or concerning any Covered Construction Period Loss. NAI must promptly comply with any such direction using counsel selected by NAI and reasonably satisfactory to BNPPLC to represent BNPPLC. In the event NAI fails to promptly comply with any such direction from BNPPLC, BNPPLC may contest or settle the claim, proceeding or investigation using counsel of its own selection at NAI’s expense, subject only to subparagraph 10(I) if that subparagraph is applicable.
     (2) Indemnity Not Contingent. Also, although subparagraphs 10(I) and 10(J) will apply to tort claims asserted against BNPPLC related to the Property, the right of BNPPLC to be indemnified pursuant to subparagraph 10(A) for payments made to satisfy governmental requirements (“Government Mandated Payments”) (e.g., fines payable
Amended and Restated Construction Agreement (Building 8) – Page 47

 

 

because of any release of Hazardous Materials from the Property) will not be conditioned in any way upon NAI having consented to or approved of, or having been provided with an opportunity to defend against or contest, such Government Mandated Payments. In all cases, however, including those which may involve Government Mandated Payments, the rights of BNPPLC to be indemnified will be subject to subparagraph 10(K).
     (H) Notice of Claims. If BNPPLC receives a written notice of a claim for taxes or a claim alleging a tort or other unlawful conduct that BNPPLC believes is covered by the indemnity in subparagraph 10(A), then BNPPLC will be expected to promptly furnish a copy of such notice to NAI. The failure to so provide a copy of the notice will not excuse NAI from its obligations under subparagraph 10(A); except that if such failure continues for more than fifteen days after the notice is received by BNPPLC and NAI is unaware of the matters described in the notice, with the result that NAI is unable to assert defenses or to take other actions which could minimize its obligations, then NAI will be excused from its obligation to indemnify BNPPLC against the Covered Construction Period Losses, if any, which would not have been incurred or suffered but for such failure. For example, if BNPPLC fails to provide NAI with a copy of a notice of an overdue tax obligation covered by the indemnity set out in subparagraph 10(A) and NAI is not otherwise already aware of such obligation, and if as a result of such failure BNPPLC 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 BNPPLC (or any Affiliate of BNPPLC) to pay the excess.
     (I) Withholding of Consent to Settlements Proposed by NAI. With regard to any tort claim against BNPPLC for which NAI undertakes to defend BNPPLC as provided in subparagraph 10(G)(1), if BNPPLC unreasonably refuses to consent to a settlement of the claim which is proposed by NAI and which will meet the conditions listed in the next sentence, NAI’s liability for the cost of continuing the defense and for any other amounts payable in respect of the claim will be limited to the total cost for which the settlement proposed by NAI would have been accomplished but for the unreasonable refusal to consent. Any such settlement proposed by NAI must meet the following conditions: (A) at the time of the settlement by NAI, NAI must pay all amounts required to release BNPPLC and other affected Interested Parties (if any) and their property interests from any further obligation for or liens securing the applicable claim and from any interest, penalties and other related liabilities, and (B) the settlement or compromise must not involve an admission of fraud or criminal wrongdoing or result in some other material adverse consequence to BNPPLC or any other Interested Party.
     (J) Settlements Without the Prior Consent of NAI.
     (1) Election to Pay Reasonable Settlement Costs in Lieu of Actual. Except as otherwise provided in subparagraph 10(J)(2), if BNPPLC settles any tort claim for which
Amended and Restated Construction Agreement (Building 8) – Page 48

 

 

it is entitled to be indemnified by NAI without NAI’s consent, then NAI may, by notice given to BNPPLC no later than ten days after NAI is notified of the settlement, elect to pay Reasonable Settlement Costs to BNPPLC in lieu of a payment or reimbursement of actual settlement costs. (With respect to any tort claim asserted against BNPPLC, “Reasonable Settlement Costs” means the maximum amount that a prudent Person in the position of BNPPLC, but able to pay any amount, might reasonably agree to pay to settle the tort claim, taking into account the nature and amount of the claim, the relevant facts and circumstances known to BNPPLC at the time of settlement and the additional Attorneys Fees’ and other costs of defending the claim which could be anticipated but for the settlement.) After making an election to pay Reasonable Settlement Costs with regard to a particular tort claim, NAI will have no right to rescind or revoke the election, despite any subsequent determination that Reasonable Settlement Costs exceed actual settlement costs. It is understood that Reasonable Settlement Costs may be more or less than actual settlement costs and that a final determination of Reasonable Settlement Costs may not be possible until after NAI must decide between paying Reasonable Settlement Costs or paying actual settlement costs.
     (2) Conditions to Election. Notwithstanding the foregoing, NAI will have no right to elect to pay Reasonable Settlement Costs in lieu of actual settlement costs if BNPPLC settles claims without NAI’s consent at any time when an Event of Default has occurred and is continuing or after a failure by NAI to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation as provided in subparagraph 10(G)(1).
     (3) Indemnity Survives Settlement. Except as provided in this subparagraph 10(J), no settlement by BNPPLC of any claim made against it will excuse NAI from any obligation to indemnify BNPPLC against the settlement costs or other Covered Construction Period Losses suffered by reason of, in connection with, arising out of, or in any way related to such claim.
     (K) No Authority to Admit Wrongdoing on the Part of NAI. BNPPLC will not under any circumstances have any authority to bind NAI to an admission of wrongdoing or responsibility to any third party claimant with regard to matters for which BNPPLC claims a right to indemnification from NAI under this Agreement.
Further, nothing herein contained, including the foregoing provisions concerning settlements by BNPPLC of indemnified Losses, will be construed as authorizing BNPPLC to bind NAI to do or refrain from doing anything to satisfy a third party claimant. If, for example, a claim is made by a Governmental Authority that NAI must refrain from some particular conduct on or about the Land in order to comply with Applicable Laws, BNPPLC cannot bind NAI (and will not purport to bind NAI) to any agreement to refrain from such conduct or otherwise prevent NAI from
Amended and Restated Construction Agreement (Building 8) – Page 49

 

 

continuing to contest the claim by reason of any provision set forth herein.
Moreover, so long as this Agreement or the Lease continues, BNPPLC’s right to settle any claim involving the Property will not include the right to bind NAI to any agreement (including any consent decree proposed by any Governmental Authority) which purports to prohibit, limit or impose conditions upon any use of the Property by NAI without the prior written consent of NAI. In the case of any proposed settlement of a claim asserted by a Governmental Authority against BNPPLC, NAI will not unreasonably withhold such consent. However, for purposes of determining whether it is reasonable for NAI to withhold such consent, any diligent ongoing undertaking by NAI to contest such the claim on behalf of BNPPLC will be relevant.
Subject to the foregoing provisions in this subparagraph 10(K), BNPPLC may agree for itself (and only for itself) to act or refrain from doing anything as demanded or requested by a third party claimant; provided, however, in no event will such an agreement impede NAI from continuing to exercise its rights to operate its business on the Property or elsewhere in any lawful manner deemed appropriate by NAI, nor will any such agreement limit or impede NAI’s right to contest claims raised by any third party claimants (including Governmental Authorities) that NAI is not complying or has not complied with Applicable Laws.
     (L) Refunds of Covered Construction Period Losses Paid by NAI.
     (1) Payment by BNPPLC After Refund. If BNPPLC receives a refund of any Covered Construction Period Losses paid, reimbursed or advanced by NAI pursuant to subparagraph 10(A), BNPPLC will promptly pay to NAI the amount of such refund, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of such refund and such payment to NAI; provided, that the amount payable to NAI will not exceed the amount of the indemnity payment in respect of such refunded Covered Construction Period Losses that was made by NAI. If it is subsequently determined that BNPPLC was not entitled to such refund, the portion of such refund that is repaid or recaptured will be treated as a Covered Construction Period Loss for which NAI must indemnify BNPPLC pursuant to subparagraph 10(A) without regard to subparagraph 10(B)(6). If, in connection any such refund, BNPPLC also receives an amount representing interest on such refund, BNPPLC will promptly pay to NAI the amount of such interest, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of the receipt or accrual of such interest and as a result of the such payment to NAI; provided, that BNPPLC will not be required to make any such payment in respect of the interest (if any) that is fairly attributable to a period before NAI paid, reimbursed or advanced the Covered Construction Period Losses refunded to BNPPLC.
     (2) Meaning of Refund. With respect to Covered Construction Period Losses incurred or suffered by BNPPLC and paid or reimbursed by NAI on an After Tax Basis, if
Amended and Restated Construction Agreement (Building 8) – Page 50

 

 

taxes of BNPPLC which are not subject to indemnification by NAI are reduced because of such Losses (whether by reason of a deduction, credit or otherwise) and such reduction was not taken into account in the calculation of the required reimbursement or payment by NAI, then for purposes of this subparagraph 10(L) such reduction will be considered a “refund”.
     (3) Conditions to Payment. Notwithstanding the foregoing, in no event will BNPPLC be required to make any payment to NAI pursuant to this subparagraph 10(L) after any 97-10/Meltdown Event or when any Event of Default has occurred and is continuing.
11 Characterization of Operative Documents; Remedies.
     (A) Characterization of Operative Documents.
     (1) Confirmation of Lien and Security Interest Granted in the Lease. Reference is made to subparagraph 4(C) of the Lease, in which NAI and BNPPLC have confirmed their intent that (A) for the purposes of determining the proper accounting for the Lease by NAI, BNPPLC will be treated as the owner and landlord of the Property and NAI will be treated as the tenant of the Property, and (B) for income tax purposes and commercial law (including real estate and bankruptcy law) and regulatory purposes, (1) the Lease and the other Operative Documents (including this Agreement) will be treated as a financing arrangement, (2) BNPPLC will be deemed a lender making loans to NAI in the principal amount equal to the Lease Balance, which loans are secured by the Property, and (3) NAI will be treated as the owner of the Property and will be entitled to all tax benefits available to the owner of the Property. Consistent with such intent, by the provisions set forth in Exhibit B to the Lease, NAI is granting to BNPPLC a lien upon and mortgaging and warranting title to the leasehold estate in the Land created by the Ground Lease and the Improvements and all rights, titles and interests of NAI in and to other Property, WITH POWER OF SALE, to secure all obligations (monetary or otherwise) of NAI arising under or in connection with any of the Operative Documents (including this Agreement). NAI further confirms and agrees that (i) its grant of a lien and security interest as set forth in Exhibit B of the Lease is made as of the Effective Date, even though the Term of the Lease will not commence before the Completion Date, and (ii) the security interest granted in Exhibit B of the Lease will extend to and cover all Third Party Contracts, now existing or made in the future.
     (2) Foreclosure Remedies. Even before the Completion Date, at any time when an Event of Default has occurred and is continuing, BNPPLC may notify NAI of BNPPLC’s intent to pursue remedies described in Exhibit B to the Lease, and at any time thereafter, regardless of whether the Event of Default is continuing, if NAI has not
Amended and Restated Construction Agreement (Building 8) – Page 51

 

 

already purchased the Property or caused an Applicable Purchaser to purchase the Property pursuant to the Purchase Agreement, (i) BNPPLC will have the power and authority, to the extent provided by law, after proper notice and lapse of such time as may be required by law, to sell or arrange for a sale to foreclose its lien and security interest granted in Exhibit B to the Lease, and (ii) BNPPLC, in lieu of or in addition to exercising any power of sale granted in Exhibit B to the Lease, may proceed by a suit or suits in equity or at law for a foreclosure or sale of the Property or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure or sale of the Property, or for the enforcement of any other legal or equitable remedy permitted by law.
     (B) Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement. Prior to the Designated Sale Date, so long as NAI remains in possession of the Property and there has been no termination of the Purchase Option as provided in Paragraph 6(B) of the Purchase Agreement, BNPPLC’s right to complete any foreclosure sale as provided in subparagraph 11(A)(2) will be subject to the condition precedent that BNPPLC has notified NAI, at a time when an Event of Default has occurred and is continuing and no less than thirty days prior to completing such a sale, of BNPPLC’s intent to do so. The condition precedent is intended to provide NAI with an opportunity to exercise the Purchase Option before losing possession of the Property because of a sale authorized by subparagraph 11(A)(2). 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, BNPPLC may proceed immediately to complete a sale authorized by subparagraph 11(A)(2) at any time after the earliest of (i) thirty days after BNPPLC 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.
     (C) Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy, and each and every such right and remedy will be cumulative and in addition to any other right or remedy given to BNPPLC under other Operative Documents (including the right to accelerate the Designated Sale Date, as provided in the definition thereof in the Common Definitions and Provisions Agreement, and the right, when applicable, to exercise the Put Option as provided in subparagraph 3(B) of the Purchase Agreement) or now or hereafter existing in favor of BNPPLC under Applicable Laws. In addition to other remedies provided in this Agreement, BNPPLC will 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 Agreement. Nothing contained in this Agreement will limit or prejudice the right of BNPPLC to prove for and obtain in proceedings for bankruptcy or insolvency of NAI by reason of the termination of this Agreement, 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
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to be proved, whether or not the amount be greater, equal to, or less than the amount BNPPLC might recover under this Agreement. Without limiting the generality of the foregoing, nothing contained herein will modify, limit or impair any of the rights and remedies of BNPPLC under the Purchase Agreement, including its right to exercise the Put Option provided in subparagraph 3(B) of the Purchase Agreement if the conditions listed in subparagraph 3(B) of the Purchase Agreement are satisfied; and BNPPLC will not be required to give the thirty day notice described in subparagraph 11(B) as a condition precedent to any acceleration of the Designated Sale Date or to taking any action to enforce the Purchase Agreement
     (D) Third Party Estoppels. If requested by BNPPLC with respect to any material 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 BNPPLC an estoppel letter substantially in the form of Exhibit J. Similarly, if requested by BNPPLC 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 BNPPLC an estoppel letter substantially in the form of Exhibit K.
12 Amendment and Restatement of Prior Construction Agreement. This Agreement amends, restates and replaces entirely the Prior Construction Agreement. Without limiting the rights and obligations of NAI under this Agreement, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Construction Agreement are now made subject to the terms and conditions of this Agreement; and all rights and interests of BNPPLC in and to the Land or other Property under the Prior Construction Agreement are renewed and extended (rather than terminated) by this Agreement.
[The signature pages follow.]
Amended and Restated Construction Agreement (Building 8) – Page 53

 

 

     IN WITNESS WHEREOF, this Amended and Restated Construction Agreement (Building 8) is executed to be effective as of November 29, 2007.
             
    BNP PARIBAS LEASING CORPORATION, a Delaware corporation    
 
            
 
  By:   /s/ Lloyd G. Cox     
 
     
 
Lloyd G. Cox, Managing Director 		   
Amended and Restated Construction Agreement (Building 8) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Construction Agreement (Building 8) dated as of November 29, 2007.]
             
    NETWORK APPLIANCE, INC., a Delaware corporation    
 
            
 
  By:   /s/ Ingemar Lanevi     
 
     
 
Ingemar Lanevi, Vice President and Corporate Treasurer 		   
Amended and Restated Construction Agreement (Building 8) – Signature Page

 

 

Exhibit A
Legal Description
Proposed Parcel 8, and (except to the extent within a different platted Parcel as currently shown in the Map Records of the County of Santa Clara, California) proposed Parcel 12, and the Additional Leased Premises as defined below, (collectively, the “Building 8 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The southern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the southern boundary of Parcel 8 and the northern boundary of Parcel 7, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 8 and Parcel 7, as shown on the Tentative Map. The northern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 8 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
Exhibit A to Amended and Restated Construction Agreement (Building 8) – Page 2

 

 

Exhibit B
Description of the Construction Project and Construction Budget
Subject to future Scope Changes, the Construction Project will be substantially consistent with the following general description and with the site plan attached as part of Exhibit A and the elevations attached to this Exhibit:
A new 5-story class A office building containing a total of approximately 189,500 square feet of gross building area and approximately 177,500 square feet of net rentable area, including fixed building services and necessary land improvements. The subject building once completed will be constructed with a steel frame covered by GFRC (Glass Fiber Reinforced Concrete) walls, insulated windows, and built-up asphalt roofs. The structure will be built on reinforced concrete slab foundation with column footings and girders. Additionally the subject will have a four-story parking garage containing approximately 660 parking spaces. Land improvements consisting mainly of paved parking area (206 parking spaces), parking lot lighting, and landscaping.
     All of the improvements will be suitable for uses contemplated in the Lease and of a quality, when complete to be considered first class facilities for such uses. The location of improvements, including appurtenant parking areas, driveways and other facilities on the Land (or pursuant to appurtenant easements described in Exhibit A to the Ground Lease) will be as shown in the Tentative Parcel Map attached to and made a part of Exhibit A.
     The budget for the Construction Project is as shown on the attached pages.

 

 

Construction Budget
         
    Cost  
Unallocated Costs
        
 
        
Carrying Costs
   $ 6,448,496  
Insurance
     237,120  
 
        
Building 8 Costs
        
 
        
Design & Engineering
     1,240,816  
Permits
     5,055,240  
Site & Shell Construction
     29,361,240  
Interior Construction
     21,818,719  
 
      
Subtotal
     48,476,016  
 
        
Garage C Costs
        
Design & Engineering
     739,900  
Permits
     195,771  
Site & Shell Construction
     8,799,378  
 
      
Subtotal
     9,735,049  
 
        
 
      
Total Project Cost
   $ 64,896,681  
 
      
Exhibit B to Amended and Restated Construction Agreement (Building 8) – Page 2

 

 

(MAP)
Exhibit B to Amended and Restated Construction Agreement (Building 8) – Page 3

 

 

(MAP)
Exhibit B to Amended and Restated Construction Agreement (Building 8) – Page 4

 

 

Exhibit C
Construction Advance Request Form
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 8) dated as of November 29, 2007 (the “Construction Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”)
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement. This letter constitutes a Construction Advance Request, requesting a Construction Advance of:
$                     ,
on the Advance Date that will occur on:
                    , 20                    .
     To induce BNPPLC to make such Construction Advance, NAI represents and warrants as follows:
I. Calculation of limit imposed by Subparagraph 4(C)(2)(b) of the Construction 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
   $                       
 
        
(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
   $                       

 

 

         
     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 $                    .]
III. Construction Advances Covering Pre-lease Force Majeure Losses:
Neither the Construction Advance requested by this letter nor prior Construction Advances (if any) have been used or will be used to cover any costs of repairs that constitute Pre-lease Force Majeure Losses, except as follows: (if there are no exceptions, insert “No Exceptions")
     
 
   
 
    
 
   
 
    
 
   
 
    
 
   
IV. Absence of Certain Work/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 and with the requirements of the Construction 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")
     
 
   
 
    
 
   
 
    
 
   
 
    
 
   
Exhibit C to Amended and Restated Construction Agreement (Building 8) – Page 2

 

 

                 
    NETWORK APPLIANCE, INC., a Delaware
corporation
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
Exhibit C to Amended and Restated Construction Agreement (Building 8) – Page 3

 

 

Exhibit D
Pre-lease Force Majeure Event Notice
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 8) dated as of November 29, 2007 (the “Construction Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Agreement and other Operative Documents.
     This letter constitutes a Pre-lease Force Majeure Event Notice, given as provided in subparagraph 6(B) of the Construction Agreement to preserve the right of NAI to assert the occurrence of a Pre-lease Force Majeure Event.
     NAI certifies to BNPPLC that the following Pre-lease Force Majeure Event occurred or commenced on                     , 20___:
[INSERT DESCRIPTION OF EVENT HERE]
     NAI’s preliminary good faith estimate of the Pre-lease Force Majeure Delays, of the Pre-lease Force Majeure Losses and of the Pre-lease Force Majeure Excess Costs likely to result from such event are                      days, $                     and $                    , respectively. Such amounts, however, are only estimates.
     NAI acknowledges that after NAI gives this notice, BNPPLC may at any time deliver an FOCB Notice to NAI as described in the Construction Agreement.

 

 

                 
    NETWORK APPLIANCE, INC., a Delaware
corporation
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
Exhibit D to Amended and Restated Construction Agreement (Building 8) – Page 2

 

 

Exhibit E
Notice of Termination of NAI’s Work
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 8) dated as of November 29, 2007 (the “Construction Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Agreement and other Operative Documents.
     NAI has determined that the Construction Allowance to be provided to it under the Construction Agreement will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances for the reason or reasons set forth in the Notice of NAI’s Intent to Terminate dated                     , 200___, previously delivered to you as provided in subparagraph 7(B) of the Construction Agreement. That Notice of NAI’s Intent to Terminate has not been rescinded by NAI.
     NAI hereby irrevocably and unconditionally elects to terminate its rights and obligations to continue the Work under Construction Agreement effective as of the date of this letter (which, as required by subparagraph 7(B) of the Construction Agreement, is a date not less than forty-five days after the date the aforementioned Notice of NAI’s Intent to Terminate). This notice constitutes a “Notice of Termination by NAI” as described in subparagraph 7(B) of the Construction Agreement.
     NAI also acknowledges that a 97-10/Meltdown Event has occurred under and as defined in the Construction Agreement, and that BNPPLC is thus entitled to demand and receive 97-10/Prepayments under and as provided in Paragraph 9 of the Construction Agreement, unless the last sentence of Paragraph 9 excuses NAI from paying the same.

 

 

                 
    NETWORK APPLIANCE, INC., a Delaware
corporation		    
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
               
Exhibit E to Amended and Restated Construction Agreement (Building 8) – Page 2

 

 

Exhibit F
Notice of NAI’s Intent to Terminate
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 8) dated as of November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Agreement and other Operative Documents.
 
[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth below as being required after a Complete Taking in any “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event,” this letter must contain the following paragraph and inserts following such paragraph as indicated:
     NAI has determined that the Construction Allowance to be provided to it under the Construction Agreement will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances, because:
[INSERT ANY ONE OR MORE OF THE FOLLOWING REASONS THAT APPLY: (1) THE COST OF THE WORK EXCEEDS BUDGETED EXPECTATIONS (RESULTING IN PROJECTED COST OVERRUNS), (2) A PRE-LEASE FORCE MAJEURE EVENT HAS OCCURRED, OR (3) NAI CAN NO LONGER SATISFY CONDITIONS TO BNPPLC’S OBLIGATION TO PROVIDE CONSTRUCTION

 

 

ADVANCES IN THE CONSTRUCTION AGREEMENT.]
 
     The purpose of this letter is to give notice to BNPPLC and Participants of NAI’s intent to terminate NAI’s rights and obligations to perform Work under the Construction Agreement. This letter constitutes a “Notice of NAI’s Intent to Terminate” given pursuant to subparagraph 7(B) of the Construction Agreement. As provided in that subparagraph, as a condition to any effective Termination of NAI’s Work, NAI must deliver a subsequent notice of termination to BNPPLC and Participants, no less than forty-five days after the date BNPPLC receives this letter.
 
[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth below as being required for any “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event,” this letter must contain the following paragraph:
     The period running from the date of BNPPLC’s receipt of this letter to the effective date of any actual Termination of NAI’s Work by NAI or BNPPLC will constitute a Work/Suspension Period under the Construction Agreement. During such period BNPPLC’s funding obligations will be limited and NAI may suspend the Work to the extent so provided in the Construction Agreement. Moreover, NAI acknowledges that the delivery of this Notice of Intent to Terminate is a 97-10/Meltdown Event. Therefore, after receipt of this notice BNPPLC will have the rights to demand and receive 97-10/Prepayments from NAI as provided in Paragraph 9 of the Construction Agreement.]
[DRAFTING NOTE: This letter will qualify as a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” only if NAI includes one of the following alternative sets of provisions, as applicable.]
[ALTERNATIVE #1 (Applies only if there has been a Complete Taking):
     This letter constitutes a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement. A Complete Taking has occurred. Thus, regardless of any Scope Changes BNPPLC may be willing to approve or consider, and regardless of any Increased Commitment BNPPLC may be willing to provide, it would be futile to continue the Construction Project on the Land.
     NAI acknowledges and agrees that BNPPLC is entitled to all proceeds of the taking of the Property and all such proceeds must be paid to BNPPLC. NAI has no right and will not assert
Exhibit F to Amended and Restated Construction Agreement (Building 8) – Page 2

 

 

any right to share in such proceeds. NAI agrees to cooperate with BNPPLC as BNPPLC may from time to time request in order to maximize BNPPLC’s recovery of such proceeds.]
[ALTERNATIVE #2 (applies in the event of a Pre-lease Force Majeure Event other than a Complete Taking): Include the next (single sentence) paragraph, together with one or both (as applicable) of the two paragraphs following the next (single sentence) paragraph, and together with the remaining paragraphs after those two paragraphs, all with blanks filled in appropriately:
     This letter constitutes a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement.
     NAI now believes that the remaining available Construction Allowance will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of one or more Pre-lease Force Majeure Events. BNPPLC has previously been notified of such Pre-lease Force Majeure Event(s) by notice(s) dated                     , which NAI delivered to BNPPLC in accordance with subparagraph 6(B) of the Construction Agreement. NAI’s current good faith estimate of the Pre-lease Force Majeure Excess Costs that are most likely to be incurred because of such Pre-lease Force Majeure Event(s) is $                      .
     NAI now believes that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays resulting from one or more Pre-lease Force Majeure Events. BNPPLC has previously been notified of such Pre-lease Force Majeure Event(s) by notice(s) dated                     , which NAI delivered to BNPPLC in accordance with subparagraph 6(B) of the Construction Agreement. NAI’s current good faith estimate of the Pre-lease Force Majeure Delays that are most likely to occur because of such Pre-lease Force Majeure Event(s) is                      days.
     Also be advised that, as provided in subparagraph 7(B) of the Construction Agreement, BNPPLC is entitled to (but not obligated to) respond to this notice with an Increased Commitment. Responding with an Increased Commitment will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of NAI under the Purchase Agreement) that any Termination of NAI’s Work is for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified.
     In the event BNPPLC fails to respond with an Increased Commitment, the failure may excuse NAI from the obligation to make a 97-10/Prepayment under Paragraph 9 of the Construction Agreement notwithstanding any Termination of NAI’s Work, which would constitute a very material adverse consequence to BNPPLC. Moreover, the Construction Agreement grants to NAI a right to cause a Termination of NAI’s Work at any time more than
Exhibit F to Amended and Restated Construction Agreement (Building 8) – Page 3

 

 

forty-five days after giving this notice, provided that NAI continues to believe that a Timing or Budget Shortfall exists at that time. Thus, if BNPPLC intends to respond with an Increased Commitment, BNPPLC would be well advised to do so before the expiration of such forty-five day period.]
                 
    NETWORK APPLIANCE, INC., a Delaware
corporation
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
         
 
    
Exhibit F to Amended and Restated Construction Agreement (Building 8) – Page 4

 

 

Exhibit G
Notice of Increased Funding Commitment by BNPPLC
[Date]
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
     Re: Amended and Restated Construction Agreement (Building 8) dated as of November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     NAI has delivered a notice to BNPPLC dated                     , 20___, which by its terms expressed NAI’s intent that it constitute a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement. In such notice, NAI advised BNPPLC of NAI’s intent to terminate the Construction Agreement because of NAI’s belief that the Construction Allowance to be provided to it under the Construction Agreement will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances. Such notice also suggested NAI’s belief that, but for the cost of repairing damage to the Improvements caused by a Pre-lease Force Majeure Event, the remaining available Construction Allowance would be sufficient. In addition, such notice set forth the amount of $                     as NAI’s estimate of the Pre-lease Force Majeure Excess Costs most likely to be incurred because of such Pre-lease Force Majeure Event.
     This response to such notice constitutes an Increased Funding Commitment. BNPPLC hereby commits to increase the amount of the Construction Allowance by $                     (the estimate given by NAI as described above). Such commitment is made on and subject to all of the same terms and conditions set forth in the Construction Agreement and other Operative Documents as being applicable to the original Construction Allowance and to Construction Advances required thereunder.
     Please note that, according to the Construction Agreement, NAI will have ten days after the date of any Increased Commitment (which may be comprised of this Increased Funding Commitment and any separate Increased Time Commitment given contemporaneously herewith)

 

 

within which NAI may rescind the aforementioned Notice of NAI’s Intent to Terminate Because of a Force Majeure Event by a notice given in the form prescribed by the Construction Agreement. Any failure of NAI to so rescind the notice will constitute a 97-10/Meltdown Event under and as defined in the Construction Agreement and will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of NAI) that any Termination of NAI’s Work occurred for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified.
                 
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
               
Exhibit G to Amended and Restated Construction Agreement (Building 8) – Page 2

 

 

Exhibit H
Notice of Increased Time Commitment by BNPPLC
[Date]
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
     Re: Amended and Restated Construction Agreement (Building 8) dated as of November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     NAI has delivered a notice to BNPPLC dated                     , 20___, which by its terms expressed NAI’s intent that it constitute a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement. In such notice, NAI advised BNPPLC of NAI’s intent to elect a Termination of NAI’s Work because of NAI’s belief that the Work will not be substantially complete prior to the Target Completion Date only because of Pre-lease Force Majeure Delays. Such notice also expressed NAI’s belief that Pre-lease Force Majeure Delays are likely to be                      days in the aggregate.
     This response to such notice constitutes an Increased Time Commitment. BNPPLC hereby commits to extend the Target Completion Date by                      days (the estimate given by NAI as described above).
     Please note that, according to the Construction Agreement, NAI will have ten days after the date of any Increased Commitment (which may be comprised of this Increased Time Commitment and any separate Increased Funding Commitment given contemporaneously herewith) within which NAI may rescind the aforementioned Notice of NAI’s Intent to Terminate Because of a Force Majeure Event by a notice given in the form prescribed by the Construction Agreement. Any failure of NAI to so rescind the notice will constitute a 97-10/Meltdown Event under and as defined in the Construction Agreement and will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of NAI) that any Termination of NAI’s Work occurred for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified.

 

 

                 
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
               
Exhibit H to Amended and Restated Construction Agreement (Building 8) – Page 2

 

 

Exhibit I
Rescission of Notice of NAI’s Intent to Terminate
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (Building 8) dated as of November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     NAI has delivered to BNPPLC a Notice of NAI’s Intent to Terminate dated                     , 200___, and BNPPLC has responded with an Increased Commitment as of                     , 200___. NAI hereby accepts the Increased Commitment and, as provided in subparagraph 7(B) of the Construction Agreement, rescinds such Notice of NAI’s Intent to Terminate.
     NAI acknowledges that, because of such rescission, NAI must, as a condition precedent to any exercise of its remaining rights to terminate the Construction Agreement pursuant to subparagraph 7(B) thereof, deliver another Notice of NAI’s Intent to Terminate at least forty five days prior to the effective date of the Termination of NAI’s Work.
                 
    NETWORK APPLIANCE, INC., a Delaware
corporation
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
         
 
    

 

 

Exhibit J
Estoppel From Contractor
                    , 200__
BNP Paribas 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 Paribas Leasing Corporation, a Delaware corporation (“BNPPLC”), and covenants with BNPPLC 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 Building 8 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 an Amended and Restated Lease Agreement (Building 8) and an Amended and Restated Construction Agreement (Building 8), both dated as of November 29, 2007 (collectively, the “Building 8 Documents”), BNPPLC is leasing the Project to NAI and has agreed, subject to the terms and conditions of the Building 8 Documents, to provide a construction allowance for the design and construction of the Improvements. The undersigned has also been advised that the Building 8 Documents expressly provide that third parties (including the undersigned) are not intended as beneficiaries of the Building 8 Documents and, thus, will have no standing to enforce any obligations of NAI or BNPPLC under the Building 8 Documents, including any such obligation that BNPPLC may have to provide the construction allowance. The undersigned understands that the Building 8 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 BNPPLC or to otherwise bind BNPPLC 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.

 

 

BNP Paribas 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 BNPPLC, not to NAI. BNPPLC shall not, however, be liable for, and the undersigned shall not assert, any claims, demands or liabilities against BNPPLC 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 BNPPLC under the Construction Contract if BNPPLC 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 BNPPLC 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 BNPPLC 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 Building 8 Documents, including any eviction of NAI resulting from an Event of Default (as defined in the Building 8 Documents), BNPPLC 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 BNPPLC that NAI’s right to possession has been terminated, the undersigned shall send to BNPPLC 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
Exhibit J to Amended and Restated Construction Agreement (Building 8) – Page 2

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 3
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 BNPPLC may request to allow it to decide whether to assume the Construction Contract. BNPPLC shall have seven days from receipt of such written certificate containing all such requested information to decide whether to assume the Construction Contract. If BNPPLC fails to assume the Construction Contract within such time, the undersigned agrees that BNPPLC shall not be liable (and the undersigned shall not assert or bring any action against BNPPLC, 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 BNPPLC notifies the undersigned that BNPPLC 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 Building 8 Documents, the undersigned shall immediately discontinue the work under the Construction Contract and remove its personnel from the Project, and BNPPLC shall be entitled to take exclusive possession of the Project. The undersigned shall also, upon request by BNPPLC, deliver and assign to BNPPLC 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 BNPPLC 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 BNPPLC that BNPPLC 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 BNPPLC’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 BNPPLC is given the opportunity to elect whether or not to assume the Construction Contract as provided herein, BNPPLC shall nonetheless have the right hereunder to assume the Construction Contract, as if it
Exhibit J to Amended and Restated Construction Agreement (Building 8) – Page 3

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 4
had not been terminated, upon any termination of NAI’s right to possession of the Project under the Building 8 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 BNPPLC, for the additional costs incurred by the undersigned attributable to the disruption; and, provided further, that if BNPPLC does assume the Construction Contract, BNPPLC 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).
     e) No action taken by BNPPLC or the undersigned with respect to the Construction Contract shall prejudice any other rights or remedies of BNPPLC or the undersigned provided by law, by the Building 8 Documents, by the Construction Contract or otherwise against NAI.
     f) The undersigned agrees promptly to notify BNPPLC 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 BNPPLC 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 BNPPLC 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 BNPPLC 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 BNPPLC will include the time necessary to terminate NAI’s right to possession of the Project and evict NAI, provided that BNPPLC commences the steps required to exercise such right within sixty days after it is entitled to do so under the terms of the Building 8 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
Exhibit J to Amended and Restated Construction Agreement (Building 8) – Page 4

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 5
telecopy, addressed as follows:
         
To the undersigned:
        
 
       
 
 
        
 
 
 
    
 
        
 
       
 
  Telecopy: (___) ______-_________    
 
        
To BNPPLC:
  BNP Paribas 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:
     
Address of NAI:
  Network Appliance, Inc.
 
  7301 Kit Creek Road
 
  Research Triangle Park, NC 27709
 
  Attention: Ingemar Lanevi
 
  Telecopy: (919) 476-5750
 
With a copy to:
  Network Appliance, Inc.
 
  495 East Java Drive
Sunnyvale, California 94089
Attention: Mr. Thom Bryant
Telecopy: (408)-822-4463
     h) The undersigned acknowledges that it has all requisite authority to execute this letter. The undersigned further acknowledges that BNPPLC has requested this letter, and is relying on the truth and accuracy of the representations made herein, in connection with BNPPLC’s decision to advance funds for construction under the Building 8 Documents with NAI.
Exhibit J to Amended and Restated Construction Agreement (Building 8) – Page 5

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 6
                 
    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, BNPPLC to assume the Construction Contract in the event NAI is evicted from the Project.
                 
    Network Appliance, Inc.
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
               
Exhibit J to Amended and Restated Construction Agreement (Building 8) – Page 6

 

 

Exhibit K
Estoppel From Design Professionals
                    , 200___
BNP Paribas 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 Paribas Leasing Corporation, a Delaware corporation (“BNPPLC”), and covenants with BNPPLC 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 Building 8 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 an Amended and Restated Lease Agreement (Building 8) and an Amended and Restated Construction Agreement (Building 8), both dated as of November 29, 2007 (collectively, the “Building 8 Documents”), BNPPLC is leasing the Project to NAI and has agreed, subject to the terms and conditions of the Building 8 Documents, to provide a construction allowance for the design and construction of the Improvements. The undersigned has also been advised that the Building 8 Documents expressly provide that third parties (including the undersigned) are not intended as beneficiaries of the Building 8 Documents and, thus, will have no standing to enforce any obligations of NAI or BNPPLC under the Building 8 Documents, including any such obligation that BNPPLC may have to provide the construction allowance. The undersigned understands that the Building 8 Documents expressly provide that NAI is not authorized to enter into any Agreement or other agreement with any third party in the name of BNPPLC or to otherwise bind BNPPLC 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.

 

 

BNP Paribas 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 Agreement, 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 Agreement.
     The undersigned acknowledges and agrees that:
     a) BNPPLC shall not be liable for, and the undersigned shall not assert, any claims, demands or liabilities against BNPPLC 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 BNPPLC under the Agreement if BNPPLC 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 BNPPLC 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 BNPPLC 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 Building 8 Documents, including any eviction of NAI resulting from an Event of Default (as defined in the Building 8 Documents), BNPPLC 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 BNPPLC that NAI’s right to possession has been terminated, the undersigned shall send to BNPPLC 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
Exhibit K to Amended and Restated Construction Agreement (Building 8) – Page 2

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 3
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 BNPPLC may request to allow it to decide whether to assume the Agreement. BNPPLC shall have seven days from receipt of such written certificate containing all such requested information to decide whether to assume the Agreement. If BNPPLC fails to assume the Agreement within such time, the undersigned agrees that BNPPLC shall not be liable (and the undersigned shall not assert or bring any action against BNPPLC or, 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 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 BNPPLC notifies the undersigned that BNPPLC shall not assume the Agreement pursuant to the preceding paragraph following the termination of NAI’s right to possession of the Project under the Building 8 Documents, the undersigned shall immediately deliver and assign to BNPPLC 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 BNPPLC that BNPPLC 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 BNPPLC’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 BNPPLC is given the opportunity to elect whether or not to assume the Agreement as provided herein, BNPPLC 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 Building 8 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
Exhibit K to Amended and Restated Construction Agreement (Building 8) – Page 3

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 4
equitable adjustment to the price of the Agreement, following any assumption thereof by BNPPLC, for the additional costs incurred by the undersigned attributable to the disruption; and, provided further, that if BNPPLC does assume the Agreement, BNPPLC 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 BNPPLC or the undersigned with respect to the Agreement shall prejudice any other rights or remedies of BNPPLC or the undersigned provided by law, by the Building 8 Documents, by the Agreement or otherwise against NAI.
     f) The undersigned agrees promptly to notify BNPPLC 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 BNPPLC prominently marked “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 BNPPLC 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 BNPPLC 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: (___) _______-______    
Exhibit K to Amended and Restated Construction Agreement (Building 8) – Page 4

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 5
     
To BNPPLC:  
BNP Paribas 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:
     
Address of NAI:  
Network Appliance, Inc.
   
7301 Kit Creek Road
   
Research Triangle Park, NC 27709
   
Attention: Ingemar Lanevi
   
Telecopy: (919) 476-5750
 
With a copy to:  
Network Appliance, Inc.
   
495 East Java Drive
   
Sunnyvale, California 94089
   
Attention: Mr. Thom Bryant
   
Telecopy: (408)-822-4463
     h) The undersigned acknowledges that it has all requisite authority to execute this letter. The undersigned further acknowledges that BNPPLC has requested this letter, and is relying on the truth and accuracy of the representations made herein, in connection with BNPPLC’s decision to advance funds for design services under the Building 8 Documents with NAI.
                 
    Very truly yours,
 
                
         
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
               
Exhibit K to Amended and Restated Construction Agreement (Building 8) – Page 5

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 6
     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, BNPPLC to assume the Agreement in the event NAI is evicted from the Project.
                 
    Network Appliance, Inc.    
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
Exhibit K to Amended and Restated Construction Agreement (Building 8) – Page 6

 

exv10w41
Exhibit 10.41
AMENDED AND RESTATED
LEASE AGREEMENT
(BUILDING 8)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
         
    Page  
1            Term; Lease Obligations Deferred Until Completion of Initial Improvements; Termination Prior to Lease Commencement
     3  
(A) Scheduled Term; Deferral of Obligations
     3  
(B) Option of BNPPLC to Terminate
     3  
(C) Automatic Termination
     3  
(D) Extension of the Term
     3  
 
        
2            Use and Condition of the Property
     4  
(A) Use
     4  
(B) Condition of the Property
     5  
(C) Consideration for and Scope of Waiver
     5  
 
        
3            Rent
     6  
(A) Base Rent Generally
     6  
(B) Calculation of and Due Dates for Base Rent
     6  
(1) Determination of Payment Due Dates Generally
     6  
(2) Special Adjustments to Base Rent Payment Dates and Periods
     6  
(3) Base Rent Formula
     7  
(4) Fixed Rate Lock
     7  
(C) Early Termination of Fixed Rate Lock
     8  
(D) Additional Rent
     9  
(E) Administrative Fees
     9  
(F) No Demand or Setoff
    9  
(G) Default Interest and Order of Application
     9  
(H) Calculations by BNPPLC Are Conclusive
    9  
 
        
4            Nature of this Agreement
     9  
(A) “Net” Lease Generally
     9  
(B) No Termination
     10  
(C) Characterization of this Lease
     11  
 
        
5            Payment of Executory Costs and Losses Related to the Property
     13  
(A) Local Impositions
     13  
(B) Increased Costs; Capital Adequacy Charges
     13  
(C) NAI’s Payment of Other Losses; General Indemnification
     15  
(D) Exceptions and Qualifications to Indemnities
     19  
(E) Refunds and Credits Related to Losses Paid by NAI
     23  
(F) Reimbursement of Excluded Taxes Paid by NAI
     25  
(G) Collection on Behalf of Participants
     25  
 
        
6            Replacement of Participants
     25  

 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
(A) NAI’s Right to Substitute Participants
     25  
(B) Conditions to Replacement of Participants
     25  
 
        
7            Items Included in the Property
     26  
(A) Status of Property
     26  
(B) Changes in the Land Covered by the Ground Lease
     27  
 
        
8            Environmental
     27  
(A) Environmental Covenants by NAI
     27  
(B) Right of BNPPLC to do Remedial Work Not Performed by NAI
     28  
(C) Environmental Inspections and Reviews
     28  
(D) Communications Regarding Environmental Matters
     29  
 
        
9            Insurance Required and Condemnation
     30  
(A) Liability Insurance
     30  
(B) Property Insurance
    30  
(C) Failure to Obtain Insurance
     31  
(D) Condemnation
     31  
(E) Waiver of Subrogation
     32  
 
        
10           Application of Insurance and Condemnation Proceeds
     32  
(A) Collection and Application of Insurance and Condemnation Proceeds Generally
     32  
(B) Advances of Escrowed Proceeds to NAI
     33  
(C) Application of Escrowed Proceeds as a Qualified Prepayment
     33  
(D) Right of NAI to Receive and Apply Remaining Proceeds Below a Certain Level
     33  
(E) Special Provisions Applicable After a 97-10/Meltdown Event or an Event of Default
     33  
(F) NAI’s Obligation to Restore
     34  
(G) Takings of All or Substantially All of the Property on or after the Completion Date
     34  
(H) If Remaining Proceeds Exceed the Lease Balance
     34  
 
        
11           Additional Representations, Warranties and Covenants of NAI Concerning the Property
     35  
(A) Operation and Maintenance
     35  
(B) Debts for Construction, Maintenance, Operation or Development
     36  

(ii) 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
(C) Repair, Maintenance, Alterations and Additions
     36  
(D) Permitted Encumbrances
     37  
(E) Books and Records Concerning the Property
     37  
 
        
12          Assignment and Subletting by NAI
     38  
(A) BNPPLC’s Consent Required
     38  
(B) Standard for BNPPLC’s Consent to Assignments and Certain Other Matters
     38  
(C) Consent Not a Waiver
     39  
 
        
13          Assignment by BNPPLC
     39  
(A) Restrictions on Transfers
     39  
(B) Effect of Permitted Transfer or other Assignment by BNPPLC
     39  
 
        
14          BNPPLC’s Right to Enter and to Perform for NAI
    40  
(A) Right to Enter
     40  
(B) Performance for NAI
    40  
(C) Building Security
    40  
 
        
15          Remedies
     41  
(A) Traditional Lease Remedies
    41  
(B) Foreclosure Remedies
    43  
(C) Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement
     43  
(D) Enforceability
     44  
(E) Remedies Cumulative
     44  
 
        
16          Default by BNPPLC
     44  
 
        
17          Quiet Enjoyment
     45  
 
        
18          Surrender Upon Termination
     45  
 
        
19          Holding Over by NAI
     45  
 
        
20          Recording Memorandum
     46  
 
        
21          Independent Obligations Evidenced by Other Operative Documents
     46  

(iii) 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
22          Proprietary Information and Confidentiality
     46  
(A) Proprietary Information
     46  
(B) Confidentiality
     46  
 
23          Amendment and Restatement of the Prior Lease
     47  
Exhibits and Schedules
     
Exhibit A
  Legal Description
Exhibit B
  California Lien and Foreclosure Provisions

(iv) 

 

AMENDED AND RESTATED
LEASE AGREEMENT
(BUILDING 8)
     This AMENDED AND RESTATED LEASE AGREEMENT (BUILDING 8) (this “Lease”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Lease, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (Building 8) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Lease for all purposes. As used in this Lease, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Lease are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     At the request of NAI and to facilitate the transactions contemplated in the other Operative Documents, BNPPLC is entering into the Ground Lease, pursuant to which BNPPLC will have a leasehold estate in the Land described in Exhibit A and any existing improvements on the Land from NAI contemporaneously with the execution of this Lease.
     NAI is already in possession and control of the Land pursuant to the Prior Lease or the Prior Construction Agreement.
     In anticipation of BNPPLC’s acquisition of the leasehold estate under the Ground Lease and other property described below, BNPPLC and NAI have reached agreement as to the terms and conditions upon which BNPPLC is willing to sublease the Land to NAI and to lease to NAI any existing Improvements and the Improvements to be constructed on the Land as hereinafter provided, and by this Lease BNPPLC and NAI desire to evidence such agreement and to amend and restate the Prior Lease.
GRANTING CLAUSES
     BNPPLC does hereby LEASE, DEMISE and LET unto NAI for the Term (as hereinafter defined) all right, title and interest of BNPPLC, now owned or hereafter acquired, in and to:
     (1) the Land, including the leasehold estate in the Land acquired by BNPPLC under the Ground Lease;
     (2) any and all Improvements;

 

 

     (3) all easements and other rights appurtenant to the leasehold estate created by the Ground Lease or to the Improvements; and
     (4) (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 abutting land.
BNPPLC’s interest in all property described in clauses (1) through (4) above is 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 BNPPLC under the Ground Lease or as described in subparagraph 7(A) below, BNPPLC also hereby grants and assigns to NAI for the term of this Lease the right to use and enjoy (and, in the case of contract rights, to enforce) such rights or interests of BNPPLC:
     (a) any goods, equipment, furnishings, furniture and other tangible personal property of whatever nature that are located on the Real Property and all renewals or replacements of or substitutions for any of the foregoing (collectively, the “Tangible Personal Property”);
     (b) the benefits, if any, conferred upon the owner of the Real Property by the Permitted Encumbrances; and
     (c) any permits, licenses, franchises, certificates, and other rights and privileges against third parties related to the Real Property or Tangible Personal Property, including warranties, if any, given by vendors from whom any Tangible Personal Property was or may be acquired.
Such rights and interests of BNPPLC, 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 by this Lease and NAI’s rights hereunder are expressly made subject and subordinate to the terms and conditions of this Lease and the Ground Lease, to the matters listed in Exhibit B to the Closing Certificate and all other Permitted Encumbrances, and to any other claims or encumbrances not constituting Liens Removable by BNPPLC.
GENERAL TERMS AND CONDITIONS
Amended and Restated Lease Agreement (Building 8) – Page 2

 

 

     The Property is leased by BNPPLC 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; Lease Obligations Deferred Until Completion of Initial Improvements; Termination Prior to Lease Commencement.
     (A) Scheduled Term; Deferral of Obligations. The term of this Lease (the “Term”) will not commence until a Completion Date occurs because of a Completion Notice given by NAI to BNPPLC, as required by subparagraph 2(B) of the Construction Agreement after NAI substantially completes the Construction Project. The Term will begin on and include any such Completion Date and will end on December 14, 2013, unless the Term is extended as provided in subparagraph 1(D) or sooner terminated as expressly provided in other provisions of this Lease.
     BNPPLC and NAI intend to be legally bound by this Lease when it is executed by them. They also intend, however, that this Lease will not impose any payment obligations upon either of them prior to the Completion Date. Accordingly, neither NAI nor BNPPLC will have any obligation to make any payments under this Lease until the Completion Date, and if this Lease terminates before the Completion Date pursuant to subparagraph 1(B) or subparagraph 1(C), the Term will never commence and neither party will have any obligation for payments by reason of this Lease following the termination.
     Nothing in this subparagraph 1(A) nor any other provision of this Lease will defer or terminate the rights and obligations of the parties under the other Operative Documents. Unlike this Lease, the other Operative Documents will, when executed, immediately impose payment obligations upon BNPPLC and NAI.
     (B) Option of BNPPLC to Terminate. BNPPLC will have the option to terminate this Lease, which BNPPLC may exercise by notice to NAI, at any time after any 97-10/Meltdown Event or after BNPPLC’s receipt of a Pre-lease Force Majeure Notice. Such option may be exercised by BNPPLC as it deems appropriate in its sole and absolute discretion.
     (C) Automatic Termination. If NAI elects to accelerate the Designated Sale Date (as provided in the definition thereof in the Common Definitions and Provisions Agreement) prior to the Completion Date, or if a Termination of NAI’s Work occurs under and as provided in the Construction Agreement before the Completion Date, then this Lease will terminate automatically before the Term begins.
     (D) Extension of the Term. The Term may be extended at the option of NAI for up to two successive periods of five years each; provided, however, that prior to each such extension the following conditions must have been satisfied: (A) NAI must have delivered a notice of its election to exercise the option at least one hundred eighty days prior to the end of the Term, and
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prior to the commencement of any such extension BNPPLC and NAI must have agreed in writing upon, and received the written consent and approval of BNPPLC’s Parent and all Participants (other than Participants being replaced at the request of NAI as provided in Paragraph 6) to, (1) a corresponding extension of the date specified in clause (1) of the definition of Designated Sale Date in the Common Definitions and Provisions Agreement and of the term of the Ground Lease, and (2) an adjustment to the Rent that NAI will be required to pay during the extension, it being expected that the Rent for the extension may be different than the Rent required for the original Term or any prior extension, and it being understood that the Rent for any extension must in all events be satisfactory to both BNPPLC and NAI, each in its sole and absolute discretion; (B) at the time of NAI’s exercise of its option to extend, no Event of Default has occurred and is continuing, and no Event of Default will result from the extension; (C) immediately prior to any such extension, this Lease must then remain in effect; and (D) if this Lease has been assigned by NAI, then NAI must have executed a guaranty (or confirmed an existing guaranty, if applicable), guaranteeing NAI’s assignee’s obligations under the Operative Documents throughout such extended Term. With respect to the condition that BNPPLC and NAI must have agreed upon the Rent required for any extension of the Term, neither NAI nor BNPPLC is willing to submit itself to a risk of liability or loss of rights hereunder for being judged unreasonable. Similarly, neither BNPPLC’s Parent nor any Participant is expected to submit itself to a risk of liability or loss of rights for being judged to have unreasonably withheld consent or approval to any extension of the Term. Accordingly, NAI, BNPPLC, BNPPLC’s Parent and Participants will each have sole and absolute discretion in making its determination, and both NAI and BNPPLC 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 and satisfaction of the other conditions listed in this subparagraph, if NAI exercises its option to extend the Term as provided in this subparagraph, this Lease will continue in full force and effect, and the leasehold estate hereby granted to NAI will 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 Effective Date and before the extension.
2 Use and Condition of the Property.
     (A) Use. Subject to the Permitted Encumbrances, NAI may use and occupy the Property during the Term, but only for the following purposes and other lawful purposes incidental thereto:
     (1) construction and development of the Construction Project;
     (2) administrative and office space;
     (3) activities related to NAI’s research and development or production of products that are of substantially the same type and character as those regularly sold by NAI in the
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ordinary course of its business as of the Effective Date;
     (4) cafeteria and other support facilities that NAI may provide to its employees; and
     (5) 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 BNPPLC, which approval will not be unreasonably withheld after completion of the Construction Project (but NAI acknowledges that BNPPLC’s withholding of such approval shall be reasonable if BNPPLC determines in good faith that (1) giving the approval may materially increase BNPPLC’s risk of liability for any existing or future environmental problem, or (2) giving the approval is likely to substantially increase BNPPLC’s administrative burden of complying with or monitoring NAI’s compliance with the requirements of this Lease or other Operative Documents).
     (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 BNPPLC or other Interested Parties regarding the title thereto or the rights of any parties in possession of any part thereof, except as expressly set forth in Paragraph 17. BNPPLC will not be responsible for any latent or other defect or change of condition in the Land, Improvements or other Property or for any violations with respect thereto of Applicable Laws. Further, BNPPLC will not be required to furnish to NAI any facilities or services of any kind, including water, phone, sewer, steam, heat, gas, air conditioning, electricity, light or power.
     (C) Consideration for and Scope of Waiver. The provisions of subparagraph 2(B) have been negotiated by BNPPLC and NAI as being consistent with the Rent payable under this Lease, and such provisions are intended to be a complete exclusion and negation of any representations or warranties of BNPPLC or other Interested Parties, 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 BNPPLC is not intended to
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impair any representations or warranties made by other parties, including any architects, engineers or contractors engaged to work on the Construction Project, 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 must pay BNPPLC rent (“Base Rent”), calculated as provided below . Each payment of Base Rent must be received by BNPPLC no later than 1:00 p.m. (Eastern time) on the date it becomes due; if received after 1:00 p.m. (Eastern time) it will be considered for purposes of this 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 becomes due, BNPPLC will notify NAI in writing of the amount of each installment, calculated as provided below. Any failure by BNPPLC to so notify NAI, however, will not constitute a waiver of BNPPLC’s right to payment, but absent such notice NAI will 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 BNPPLC of the underpayment.
     (B) Calculation of and Due Dates for Base Rent. Payments of Base Rent will be calculated and become due as follows:
     (1) Determination of Payment Due Dates Generally. For Base Rent Periods subject to a LIBOR Period Election of six months, Base Rent will 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. For all other Base Rent Periods, Base Rent will be due in one installment on the Base Rent Date upon which the Base Rent Period ends.
     (2) Special Adjustments to Base Rent Payment Dates and Periods. Notwithstanding the foregoing, if NAI or any Applicable Purchaser purchases BNPPLC’s interest in the Property pursuant to the Purchase Agreement, any accrued unpaid Base Rent and all outstanding Additional Rent will be due on the date of purchase in addition to the purchase price and other sums due to BNPPLC under the Purchase Agreement.
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     (3) Base Rent Formula. Each installment of Base Rent payable for any Base Rent Period will equal:
•   the Lease Balance on the first day of such Base Rent Period, less Losses (if any) that BNPPLC suffered or incurred prior to the Term and that qualify as Pre-lease Force Majeure Losses (as defined in the Construction Agreement), times
•   the sum of the Effective Rate and the Spread, 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.
     Only for the purpose of illustration, assume the following for a hypothetical Base Rent Period: that prior to the first day of such Base Rent Period the Construction Allowance has been fully funded, and no Pre-lease Force Majeure Losses have occurred, but Qualified Prepayments have been received by BNPPLC, leaving a Lease Balance of $30,000,000; that the Effective Rate for the Base Rent Period is 6%; that the Spread is one hundred fifty basis points (150/100 of 1%); and that such Base Rent Period contains exactly thirty days. Under such assumptions, Base Rent for the hypothetical Base Rent Period will equal:
$30,000,000 x [6% + 1.50%] x 30/360 = $187,500.
     (4) Fixed Rate Lock. At any time during the Term, NAI may deliver a notice in the form attached to the Common Definitions and Provisions Agreement as Annex 2 (a “Fixed Rate Lock Notice”), requesting that BNPPLC establish a fixed rate for use in the calculation of the Effective Rate hereunder (a “Fixed Rate Lock”) for all Base Rent Periods commencing on or after a date specified in such notice, which date must be the first Business Day of a calendar month (the “Fixed Rate Lock Date”). Promptly after receiving a Fixed Rate Lock Notice, BNPPLC will enter into an Interest Rate Swap with BNP Paribas (the “Fixed Rate Swap”); except that BNPPLC may decline to enter into the Fixed Rate Swap and to establish a Fixed Rate Lock if:
          (a) NAI does not deliver the Fixed Rate Lock Notice to BNPPLC at least ten Business days prior to the Fixed Rate Lock Date specified therein;
          (b) NAI specifies a Fixed Rate Lock Date in the Fixed Rate Lock Notice that is prior to the end of any Base Rent Period which commenced before
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BNPPLC receives the Fixed Rate Lock Notice;
     (c) any notice has been given to accelerate the Designated Sale Date as provided in the definition thereof in the Common Definitions and Provisions Agreement;
     (d) the estimate of the Fixed Rate (hereinafter defined) specified by NAI in the Fixed Rate Lock Notice is for any reason less than the fixed rate available to BNPPLC under any Interest Rate Swap proposed by BNP Paribas;
     (e) at the time the Fixed Rate Lock Notice is given, the Interest Rate Swap requested thereby is contrary to any Applicable Laws or any interpretation thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency (including, without limitation, any such requirement imposed by the Board of Governors of the United States Federal Reserve System); or
     (f) any event has occurred or circumstance exists that constitutes a Default or a 97-10/Meltdown Event.
The notional principal amount of the Fixed Rate Swap will equal the Lease Balance on the date such notice is given. The fixed rate used to calculate payments required of BNPPLC under the Fixed Rate Swap, as the counterparty designated the fixed rate payor, will constitute the “Fixed Rate” for purposes of this Lease.
     (C) Early Termination of Fixed Rate Lock. After a Fixed Rate Lock is established, BNPPLC may cause or suffer a termination in whole or in part of the Fixed Rate Swap in the event that (i) NAI fails to make any payment of Base Rent required hereunder on the Base Rent Date when it first becomes due, (ii) the Designated Sale Date occurs before the date specified in clause (1) of the definition thereof in the Common Definitions and Provisions Agreement, (iii) for any reason a Qualified Prepayment is applied to reduce the Lease Balance, (iv) the Lease Balance on the Fixed Rate Lock Date is less than the notional amount of the Fixed Rate Swap for any reason. NAI must reimburse to BNPPLC any Fixed Rate Settlement Amount charged to BNPPLC in connection with such a termination, and if the termination is a complete, rather than a partial, termination of the Fixed Rate Swap then in effect, it will for purposes of this Lease constitute a termination of the Fixed Rate Lock itself. Further, if BNPPLC is charged penalties or interest because of its failure to make a timely payment required under the Fixed Rate Swap, and if BNPPLC’s failure to make the timely payment was caused by NAI’s failure to make a timely payment of Base Rent or other amounts due hereunder or under other Operative
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Documents, then such penalties or interest will constitute Losses against which BNPPLC is entitled to be indemnified pursuant to subparagraph 5(C). If a Fixed Rate Lock is terminated as provided in this subparagraph, NAI shall have no right to require BNPPLC to enter into another Interest Rate Swap in order to establish a new fixed rate.
     (D) Additional Rent. All amounts which NAI is required to pay to or on behalf of BNPPLC pursuant to this Lease, together with every charge, premium, interest and cost set forth herein which may be added for nonpayment or late payment thereof, will constitute rent (all such amounts, other than Base Rent, are herein called “Additional Rent”; and, collectively, Base Rent and Additional Rent are herein sometimes called “Rent”).
     (E) Administrative Fees. In addition to other amounts payable by NAI hereunder, on or before each anniversary of the Effective Date after the Completion Date and prior to the Designated Sale Date, NAI must pay BNPPLC an annual administrative agency fee (an “Administrative Fee”) as provided in the Closing Letter. Each payment of an Administrative Fee will represent Additional Rent for the first Base Rent Period during which it first becomes due.
     (F) No Demand or Setoff. Except as expressly provided herein, NAI must pay all Rent without notice or demand and without counterclaim, deduction, setoff or defense.
     (G) Default Interest and Order of Application. All Rent will 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. BNPPLC may 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 BNPPLC elects.
     (H) Calculations by BNPPLC Are Conclusive. All calculations by BNPPLC of Base Rent, Additional Rent or any amount needed to calculate Base Rent (including the Effective Rate for any Base Rent Period and the Lease Balance) or Additional Rent will, in the absence of clear and demonstrable error, be conclusive and binding upon NAI.
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 BNPPLC and NAI that Base Rent and other payments herein specified will be absolutely net to BNPPLC and that NAI must pay all costs, expenses and obligations of every kind relating to the Property or this Lease which may arise or become due. Further, it is understood that all amounts payable by NAI to BNPPLC under this Lease and the other Operative Documents are expressed as minimum payments to be made net of any deduction
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or withholding required under any Applicable Laws.
     (B) No Termination. Except as expressly provided in this Lease itself, this Lease will not terminate, nor will NAI have any right to terminate this Lease, nor will NAI be entitled to any abatement of or setoff against the Rent, nor will the obligations of NAI under this 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 BNPPLC under this Lease or any of the other Operative Documents or any other agreement to which BNPPLC 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 BNPPLC 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) NAI’s ownership of any interest in the Property, or (ix) 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 hereunder be separate and independent of the covenants and agreements of BNPPLC, that Base Rent and all other sums payable by NAI hereunder continue to be payable in all events and that the obligations of NAI hereunder continue unaffected, unless the requirement to pay or perform the same have been terminated or limited pursuant to an express provision of this 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 “warranty of suitability” or other warranties implied as a matter of law) (i) to quit, terminate or surrender this 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) will 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 BNPPLC’s failure to remove a Lien Removable by BNPPLC or because of any other default by BNPPLC under this Lease: (i) the recovery of monetary damages in the case of any default that continues beyond the period for cure provided in Paragraph 16, (ii) injunctive relief in case of the violation, or attempted or threatened violation, by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Lease which are binding upon BNPPLC (including the confidentiality provisions set forth in subparagraph 22(B) below), or (iii) a decree compelling performance by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Lease which are binding upon BNPPLC.
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     (C) Characterization of this Lease.
     (1) Both NAI and BNPPLC intend that (A) for the purposes of determining the proper accounting for this Lease by NAI, BNPPLC will be treated as the owner and landlord of the Property and NAI will be treated as the tenant of the Property, and (B) for income tax purposes and commercial law (including real estate and bankruptcy law) and regulatory purposes, (1) this Lease and the other Operative Documents will be treated as a financing arrangement, (2) BNPPLC will be deemed a lender making loans to NAI in the principal amount equal to the Lease Balance, which loans are secured by the Property, and (3) NAI will be treated as the owner of the Property and will be entitled to all tax benefits available to the owner of the Property. Consistent with such intent, by the provisions set forth in Exhibit B, NAI is granting to BNPPLC a lien upon and mortgaging and warranting title to a leasehold estate in the Land (the terms and conditions of which leasehold estate are as set forth in the Ground Lease) and the Improvements and all rights, titles and interests of NAI in and to other Property, WITH POWER OF SALE, to secure all obligations (monetary or otherwise) of NAI arising under or in connection with any of the Operative Documents. Without limiting the generality of the foregoing, NAI and BNPPLC desire that their intent as set forth in this subparagraph be given effect both in the context of any bankruptcy, insolvency or receivership proceedings concerning NAI or BNPPLC and in other contexts. Accordingly, NAI and BNPPLC expect that in the event of any bankruptcy, insolvency or receivership proceedings affecting NAI or BNPPLC or any enforcement or collection actions arising out of such proceedings, the transactions evidenced by this Lease and the other Operative Documents will be characterized and treated as loans made to NAI by BNPPLC, as an unrelated third party lender to NAI, secured by the Property.
     (2) Notwithstanding the foregoing, NAI acknowledges and agrees that none of BNPPLC or the other Interested Parties has made, or will be deemed to have made, in the Operative Documents or otherwise, any representations or warranties concerning how this Lease and the other Operative Documents will be characterized or treated under applicable accounting rules, income tax, regulatory, commercial or real estate law, bankruptcy, insolvency or receivership law or any other rules or requirements concerning the tax, accounting or legal characteristics of the Operative Documents. NAI further acknowledges and agrees that it is sophisticated and knowledgeable regarding all such matters and that it has, as it deemed appropriate, obtained from and relied upon its own professional accountants, counsel and other advisors for such tax, accounting and legal advice concerning the Operative Documents.
     (3) In any event, NAI will be required by subparagraph 5(C) below to indemnify and hold harmless BNPPLC from and against all additional taxes that may arise or become due because of any refusal of taxing authorities to recognize and give
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effect to the intention of the parties as set forth in subparagraph 4(C)(1) (“Unexpected Recharacterization Taxes”), including any additional income or capital gain tax that may become due because of payments to BNPPLC of the purchase price upon any sale under the Purchase Agreement resulting from any insistence of such taxing authorities that BNPPLC be treated as the “true owner” of the Property for tax purposes  (a “Forced Recharacterization”); provided, however, NAI will not be required to pay or reimburse Unexpected Recharacterization Taxes to the extent that they are, in any given tax year, eliminated or offset by actual savings to BNPPLC because of additional depreciation deductions or other tax benefits available to BNPPLC in the same year only by reason of the Forced Recharacterization (“Unexpected Tax Savings”). To the extent Unexpected Recharacterization Taxes are eliminated or offset by Unexpected Tax Savings in a given tax year, including the tax year in which any sale under the Purchase Agreement occurs (the “Year of Sale”), such Unexpected Recharacterization Taxes will constitute Excluded Taxes as provided in clause (D) of the definition thereof in the Common Definitions and Provisions Agreement. Also, for purposes of this provision, it is understood that any depreciation deductions first available to BNPPLC in tax years prior to the Year of Sale and resulting from a Forced Recharacterization (“Prior Year Depreciation Deductions”) will be considered “available to BNPPLC” in the Year of Sale (and thus will eliminate or offset any Unexpected Recharacterization Taxes resulting from the recapture of such Prior Year Depreciation Deductions upon a sale under the Purchase Agreement) to the extent that (A) such Prior Year Depreciation Deductions are not otherwise used to generate Unexpected Tax Savings or Unexpected Net Tax Benefits (as defined below), and (B) the tax laws and regulations applicable in the Year of Sale effectively permit BNPPLC to carry over the Prior Year Depreciation Deductions to the Year of Sale by allowing BNPPLC to carry over net operating losses from the years in which the Prior Year Depreciation Deductions were first available to BNPPLC to the Year of Sale.
     (4) After any Forced Recharacterization, BNPPLC will make a reasonable effort to determine whether Unexpected Tax Savings exceed Unexpected Recharacterization Taxes in any given tax year (any such excess being hereinafter called an “Unexpected Net Tax Benefit”); and if BNPPLC does determine that an Unexpected Net Tax Benefit has been realized and the amount thereof, BNPPLC will notify NAI of the same and either credit the amount thereof against payments otherwise then due or to become due from NAI under this Lease or the other Operative Documents or pay the amount of such Unexpected Net Tax Benefit to NAI. It is understood, however, that the tax position of BNPPLC (and the consolidated tax group of which it is a part) may, in any given tax year, be such that no Unexpected Net Tax Benefit exists or can be determined with a reasonable effort on the part of BNPPLC. Therefore, BNPPLC makes no representation that NAI will receive any credits or payments pursuant to this provision after any Forced Recharacterization. Also, the determination by BNPPLC of the amount of any Unexpected Net Tax Benefit will be conclusive absent clear and manifest error, as
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will any determination by BNPPLC that the amount of any Unexpected Net Tax Benefit in a given tax year cannot be calculated with a reasonable effort. If NAI is dissatisfied with any such determination by BNPPLC prior to the Designated Sale Date, NAI will be entitled to accelerate the Designated Sale Date (as provided in clause (2) of the definition thereof), after which NAI may purchase or cause an Applicable Purchaser to purchase the Property on the accelerated Designated Sale Date pursuant to the Purchase Agreement.
5 Payment of Executory Costs and Losses Related to the Property.
     (A) Local Impositions. Subject only to the exceptions listed in subparagraph 5(D) below, NAI must pay or cause to be paid prior to delinquency all Local Impositions. If requested by BNPPLC from time to time, NAI must furnish BNPPLC with receipts or other appropriate evidence showing payment of all Local Impositions at least ten days 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 Local Imposition, and pending such contest NAI will not be deemed in default under any of the provisions of this Lease because of the Local Imposition if (1) NAI diligently prosecutes such contest to completion in a manner reasonably satisfactory to BNPPLC, 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 must be concluded and the contested Local Impositions must be paid by NAI prior to the earliest of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC 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 BNPPLC (including the Property) may be seized or sold or any other action is taken or overtly threatened against BNPPLC or against any property owned or leased by BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price (when taken together with any Supplemental Payment paid by NAI pursuant to 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:
     (1) If there is any increase in the cost to BNPPLC’s Parent or any Participant of agreeing to make or making, funding or maintaining advances to BNPPLC in connection with the Property because of any Banking Rules Change, then NAI must from time to time (after receipt of a request from BNPPLC’s Parent or such Participant as
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provided below) pay to BNPPLC for the account of BNPPLC’s Parent or such Participant, as the case may be, additional amounts sufficient to compensate BNPPLC’s Parent or the Participant for such increased cost. A certificate as to the amount of such increased cost, submitted to BNPPLC and NAI by BNPPLC’s Parent or the Participant, will be conclusive and binding upon NAI, absent clear and demonstrable error.
     (2) BNPPLC’s Parent or any Participant may demand additional payments (“Capital Adequacy Charges”) if BNPPLC’s Parent or the 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 or for BNPPLC to permit BNPPLC to maintain BNPPLC’s investment in the Property. To the extent that BNPPLC’s Parent or any Participant demands Capital Adequacy Charges as compensation for the additional capital requirements reasonably allocable to such investment or advances, NAI must pay to BNPPLC for the account of BNPPLC’s Parent or the Participant, as the case may be, the amount so demanded.
     (3) Notwithstanding the foregoing provisions of this subparagraph 5(B), NAI will not be obligated to pay any claim for compensation pursuant to this subparagraph 5(B) that arises or accrues (a) in the case of BNPPLC’s Parent, as a result of any change in the rating assigned to BNPPLC by rating agencies or bank regulators in regard to BNPPLC’s creditworthiness, record keeping or failure to comply with Applicable Laws (including U.S. banking regulations applicable to subsidiaries of a bank holding company), or (b) in the case of BNPPLC’s Parent or any Participant, more than nine months prior to the date NAI is notified of the intent of BNPPLC’s Parent or such Participant to make a claim for such charges; provided, that if the Banking Rules Change which results in a claim for compensation is retroactive, then the nine month period will be extended to include the period of the retroactive effect of such Banking Rules Change. Further, BNPPLC will cause BNPPLC’s Parent and any Participant that is an Affiliate of BNPPLC to use commercially reasonable efforts to reduce or eliminate any claim for compensation pursuant to this subparagraph 5(B), including a change in the office of BNPPLC’s Parent or such Participant through which it provides and maintains Funding Advances if such change will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of BNPPLC’s Parent or such Participant, be otherwise disadvantageous to it. It is understood that NAI may also request similar commercial reasonable efforts on the part of any Participant that is not an Affiliate of BNPPLC, but if a claim for additional compensation by any such Participant is not eliminated or waived, then NAI may request that BNPPLC replace such Participant as provided in Paragraph 6. Nothing in this subparagraph will be construed to require BNPPLC’s Parent or any Participant to create any new office through which to make or maintain Funding Advances.
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     (4) Any amount required to be paid by NAI under this subparagraph 5(B) will be due ten days after a notice requesting such payment is received by NAI from BNPPLC’s Parent or the applicable Participant.
     (C) NAI’s Payment of Other Losses; General Indemnification. Subject only to the exceptions listed in subparagraph 5(D) below:
     (1) Agreement to Indemnify. As directed by BNPPLC, NAI must pay, reimburse, indemnify, defend, protect and hold harmless BNPPLC and all other Interested Parties from and against all Losses (including Environmental Losses) asserted against or incurred or suffered by any of them at any time and from time to time by reason of, in connection with, arising out of, or in any way related to the following:
  •   the ownership or alleged ownership of any interest in the Property or the Rents;
 
  •   the purchase, design, construction, preparation, installation, inspection, delivery, non-delivery, acceptance, rejection, possession, use, operation, maintenance, management, rental, lease, sublease, repossession, condition (including defects, whether or not discoverable), destruction, repair, alteration, modification, restoration, addition or substitution, storage, transfer of title, redelivery, return, sale or other disposition of all or any part of or interest in the Property;
 
  •   the imposition of any Lien (or incurring of any liability to refund or pay over any amount as a result of any Lien) against all or any part of or interest in the Property;
 
  •   any failure of the Property or NAI itself to comply with Applicable Laws;
 
  •   Permitted Encumbrances or any violation thereof;
 
  •   Hazardous Substance Activities, including those occurring prior to the Term;
 
  •   the negotiation, administration or enforcement of the Operative Documents or the Participation Agreement;
 
  •   the making or maintenance of Funding Advances;
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  •   any Interest Rate Swap that BNPPLC enters into as described in subparagraph 3(B)(4) of this Lease;
 
  •   the breach by NAI of this Lease, any other Operative Document or any other document executed by NAI pursuant to or in connection with any Operative Document;
 
  •   any obligations of BNPPLC under the Closing Certificate or the Ground Lease; or
 
  •   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.
NAI’s obligations under this indemnity will apply whether or not any Interested Party is also indemnified as to the applicable Loss by another Interested Party and whether or not the Loss arises or accrues because of any condition of the Property or other circumstance concerning the Property prior to the Effective Date.
Further, in the event, for income tax purposes, an Interested Party must include in its taxable income any payment or reimbursement from NAI which is required by this indemnity (in this provision, the “Original Indemnity Payment”), and yet the Interested Party is not entitled during the same taxable year to a corresponding and equal deduction from its taxable income for the Loss paid or reimbursed by such Original Indemnity Payment (in this provision, the “Corresponding Loss”), then NAI must also pay to such Interested Party on demand the additional amount (in this provision, the “Additional Indemnity Payment”) needed to gross up the Original Indemnity Payment for any and all resulting additional income taxes. That is, NAI must pay an Additional Indemnity Payment as is needed so that the Corresponding Loss (computed net of the reduction, if any, of the Interested Party’s income taxes because of credits or deductions that are attributable to the Interested Party’s payment or deemed payment of the Corresponding Loss and that are recognized for tax purposes in the same taxable year during which the Interested Party must recognize the Original Indemnity Payment as income) will not exceed the difference computed by subtracting (i) all income taxes (determined for this purpose based on the highest marginal income tax rates charged to corporations by federal, state and local tax authorities, as applicable, for the relevant period or periods) imposed because of the receipt or constructive receipt of the Original Indemnity Payment and the Additional Indemnity Payment, from (ii) the sum of the Original Indemnity Payment and the Additional Indemnity Payment. (With regard to any payment or reimbursement of an Original Indemnity Payment, “After Tax Basis” means that such payment or reimbursement is or will be made together with the additional amount needed
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to gross up such Original Indemnity Payment as described in this provision.)
     (2) Scope of Indemnities and Releases. Every indemnity and release provided in this Lease and the other Operative Documents for the benefit of BNPPLC or other Interested Parties, including the indemnity set forth in subparagraph 5(C)(1), will apply even if and when the subject matter of the indemnity or release arises out of or results from the negligence or strict liability of BNPPLC or any other Interested Party. Further, all such indemnities and releases will apply even if insurance obtained by NAI or required of NAI by this Lease or the other Operative Documents is not adequate to cover Losses against or for which the indemnities and releases are provided. (However, NAI’s liability for any failure to obtain insurance required by this Lease or the other Operative Documents will not be limited to Losses against which indemnities are provided, it being understood that the parties have agreed upon insurance requirements for reasons that extend beyond providing a source of payment for Losses against which BNPPLC and other Interested Parties may be indemnified by NAI.)
     (3) Nonexclusive List of Costs Covered by Indemnity. Costs and expenses for which NAI is responsible on an After Tax Basis pursuant to this subparagraph 5(C) will include all of the following, except to the extent that the following are included in the Initial Advance or in the calculation of any Break Even Price or Make Whole Amount paid to BNPPLC pursuant to the Purchase Agreement:
  •   appraisal fees;
 
  •   Uniform Commercial Code search fees;
 
  •   filing and recording fees;
 
  •   inspection fees and expenses;
 
  •   brokerage fees and commissions;
 
  •   survey fees;
 
  •   title policy premiums and escrow fees;
 
  •   any Breakage Costs or Fixed Rate Settlement Amount;
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  •   Attorneys’ Fees incurred by BNPPLC with respect to the drafting, negotiation, administration or enforcement of this Lease or the other Operative Documents; and
 
  •   all taxes (except Excluded Taxes) related to the Property or to the transactions contemplated in the Operative Documents.
Such costs and expenses will also include all rent or other payments required of BNPPLC under the Ground Lease, so long as this Lease remains in force or NAI remains in possession of the Property or is entitled to possession by this Lease. (It is understood, however, that with respect to payments which are required by the Ground Lease from BNPPLC to NAI and for which NAI is required to reimburse BNPPLC, such payments and the corresponding reimbursements will be offset and deemed paid by offsetting book entries rather than by an actual transfer of funds back and forth between the parties.)
     (4) Defense and Settlement of Indemnified Claims.
     (a) By notice to NAI BNPPLC may direct NAI to assume on behalf of BNPPLC or any other Interested Party and to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation included in or concerning any Loss for which NAI is responsible pursuant to subparagraph 5(C)(1). NAI must promptly comply with any such direction using counsel selected by NAI and reasonably satisfactory to BNPPLC or the other Interested Party, as applicable, to represent BNPPLC or the other Interested Party, as applicable. In the event NAI fails to promptly comply with any such direction from BNPPLC, BNPPLC or any other affected Interested Party may contest or settle the claim, proceeding or investigation using counsel of its own selection at NAI’s expense, subject to subparagraph 5(D)(3) if that subparagraph is applicable.
     (b) Also, although subparagraphs 5(D)(3) and 5(D)(4) will apply to tort claims asserted against any Interested Party related to the Property, the right of an Interested Party to be indemnified pursuant to this subparagraph 5(C) for taxes or other payments made to satisfy governmental requirements (“Government Mandated Payments”) will not be conditioned in any way upon NAI having consented to or approved of, or having been provided with an opportunity to defend against or contest, such Government Mandated Payments. In all cases, however, including those which may involve Government Mandated Payments, the rights of each Interested Party to be indemnified will be subject to subparagraph 5(D)(5).
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     (5) Payments Due. Any amount to be paid by NAI under this subparagraph 5(C) will be due ten days after a notice requesting such payment is given to NAI, subject to any applicable contest rights expressly granted to NAI by other provisions of this Lease.
     (6) Survival. NAI’s obligations under this subparagraph 5(C) will survive the termination or expiration of this Lease with respect to Losses suffered by any Interested Party on or prior to, or by reason of any actual or alleged occurrence or circumstances on or prior to, the later of the dates upon which (a) this Lease terminates or expires, or (b) NAI surrenders possession and control of the Property.
(D) Exceptions and Qualifications to Indemnities.
     (1) Exceptions. BNPPLC acknowledges and agrees that nothing in Paragraph 4 or the preceding subparagraphs of this Paragraph 5 will be construed to require NAI to pay or reimburse:
     •    Excluded Taxes; or
     •    Losses incurred or suffered by any Interested Party to the extent proximately caused by (and attributed by any applicable principles of comparative fault to) the Established Misconduct of that Interested Party; or
     •    Losses that result from any Liens Removable by BNPPLC; or
     •    transaction expenses (including Attorneys’ Fees) incurred by any of the Participants in connection with the drafting, negotiation or execution of the Participation Agreement (or supplements making them parties thereto) or in connection with any due diligence Participants may undertake before entering into the Participation Agreement; or
     •    Local Impositions or other Losses contested, if and so long as they are contested, by NAI in accordance with any of the provisions of this Lease or other Operative Documents which expressly authorize such contests; or
     •    transaction expenses or other Losses caused by or necessary to accomplish any conveyance by BNPPLC to BNPPLC’s Parent or a Qualified Affiliate which constitutes a Permitted Transfer only by reason of clause (3) of the definition of Permitted Transfer in the Common Definitions and Provisions Agreement; or
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     •    any amount which may from time to time be payable by BNPPLC to any Participant representing the excess of “Base Rent” as defined in the Participation Agreement over Base Rent as defined in and calculated pursuant to this Lease and the Common Definitions and Provisions Agreement; or
     •     any decline in the value of the Property solely by reason of decline in general market conditions and not because of any breach of this Lease or other Operative Documents by NAI.
Further, without limiting BNPPLC’s rights (as provided in other provisions of this Lease and other Operative Documents) to include the following in the calculation of the Lease Balance, the Break Even Price and the Make Whole Amount (as applicable) or to collect Base Rent, a Supplemental Payment and other amounts, the calculation of which depends upon the Lease Balance, BNPPLC acknowledges and agrees that nothing in Paragraph 4 or the preceding subparagraphs of this Paragraph 5 will be construed to require NAI to pay or reimburse an Interested Party for costs paid by BNPPLC with the proceeds of the Initial Advance as part of the Transaction Expenses or with Construction Advances.
     (2) Notice of Claims. If an Interested Party receives a written notice of a claim for taxes or a claim alleging a tort or other unlawful conduct that the Interested Party believes is covered by the indemnity in subparagraph 5(C)(1), 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 will not excuse NAI from its obligations under subparagraph 5(C)(1); except that if such failure continues for more than fifteen days after the notice is received by such Interested Party and NAI is unaware of the matters described in the notice, with the result that NAI is unable to assert defenses or to take other actions which could minimize its obligations, then NAI will be excused from its obligation to indemnify such Interested Party (and any Affiliate of such Interested Party) against Losses, if any, which would not have been incurred or suffered but for such failure. For example, if BNPPLC fails to provide NAI with a copy of a notice of an overdue tax obligation covered by the indemnity set out in subparagraph 5(C)(1) and NAI is not otherwise already aware of such obligation, and if as a result of such failure BNPPLC 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 BNPPLC (or any Affiliate of BNPPLC) to pay the excess.
     (3) Withholding of Consent to Settlements Proposed by NAI. With regard to any tort claim against an Interested Party for which NAI undertakes to defend the Interested Party as provided in subparagraph 5(C)(4)(a), if the Interested Party unreasonably refuses to consent to a settlement of the claim which is proposed by NAI
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and which will meet the conditions listed in the next sentence, NAI’s liability for the cost of continuing the defense and for any other amounts payable in respect of the claim will be limited to the total cost for which the settlement proposed by NAI would have been accomplished but for the unreasonable refusal to consent. Any such settlement proposed by NAI must meet the following conditions: (A) at the time of the settlement by NAI, NAI must pay all amounts required to release the Interested Party and its property interests from any further obligation for or liens securing the applicable claim and from any interest, penalties and other related liabilities, and (B) the settlement or compromise must not involve an admission of fraud or criminal wrongdoing or result in some other material adverse consequence to the Interested Party.
     (4) Settlements Without the Prior Consent of NAI.
     (a) Except as otherwise provided in subparagraph 5(D)(4)(b), if any Interested Party settles any tort claim for which it is entitled to be indemnified by NAI without NAI’s consent, then NAI may, by notice given to the Interested Party no later than ten days after NAI is notified of the settlement, elect to pay Reasonable Settlement Costs to the Interested Party in lieu of a payment or reimbursement of actual settlement costs. (With respect to any tort claim asserted against an Interested Party, “Reasonable Settlement Costs” means the maximum amount that a prudent Person in the position of the Interested Party, but able to pay any amount, might reasonably agree to pay to settle the tort claim, taking into account the nature and amount of the claim, the relevant facts and circumstances known to such Interested Party at the time of settlement and the additional Attorneys Fees’ and other costs of defending the claim which could be anticipated but for the settlement.) After making an election to pay Reasonable Settlement Costs with regard to a particular tort claim and a particular Interested Party, NAI will have no right to rescind or revoke the election, despite any subsequent determination that Reasonable Settlement Costs exceed actual settlement costs. It is understood that Reasonable Settlement Costs may be more or less than actual settlement costs and that a final determination of Reasonable Settlement Costs may not be possible until after NAI must decide between paying Reasonable Settlement Costs or paying actual settlement costs.
     (b) Notwithstanding the foregoing, NAI will have no right to elect to pay Reasonable Settlement Costs in lieu of actual settlement costs if an Interested Party settles claims without NAI’s consent at any time when an Event of Default has occurred and is continuing or after a failure by NAI to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation as provided in subparagraph 5(C)(4)(a).
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     (c) Except as provided in this subparagraph 5(D)(4), no settlement by any Interested Party of any claim made against it will excuse NAI from any obligation to indemnify the Interested Party against the settlement costs or other Losses suffered by reason of, in connection with, arising out of, or in any way related to such claim.
     (5) No Authority to Admit Wrongdoing by NAI or to Bind NAI to any Settlement. No Interested Party will under any circumstances have any authority to bind NAI to an admission of wrongdoing or responsibility to any third party claimant with regard to matters for which such Interested Party claims a right to indemnification from NAI under this Lease.
Further, nothing herein contained, including the foregoing provisions concerning settlements by Interested Parties of indemnified Losses, will be construed as authorizing any Interested Party to bind NAI to do or refrain from doing anything to satisfy a third party claimant. If, for example, a claim is made by a Governmental Authority that NAI must refrain from some particular conduct on or about the Land in order to comply with Applicable Laws, BNPPLC cannot bind NAI (and will not purport to bind NAI) to any agreement to refrain from such conduct or otherwise prevent NAI from continuing to contest the claim by reason of any provision set forth herein.
Moreover, so long as this Lease continues, no Interested Party may settle any claim involving the Property by executing any agreement (including any consent decree proposed by any Governmental Authority) which purports to prohibit, limit or impose conditions upon any use of the Property by NAI without the prior written consent of NAI. In the case of any proposed settlement of a claim asserted by a Governmental Authority against BNPPLC, NAI will not unreasonably withhold such consent. However, for purposes of determining whether it is reasonable for NAI to withhold such consent, any diligent ongoing undertaking by NAI to contest such the claim on behalf of BNPPLC will be relevant.
Subject to the foregoing provisions in this subparagraph 5(D)(5), any Interested Party may agree for itself (and only for itself) to act or refrain from doing anything as demanded or requested by a third party claimant; provided, however, in no event will such an agreement impede NAI from continuing to exercise its rights to operate its business on the Property or elsewhere in any lawful manner deemed appropriate by NAI, nor will any such agreement limit or impede NAI’s right to contest claims raised by any third party claimants (including Governmental Authorities) that NAI is not complying or has not complied with Applicable Laws.
     (6) Defense of Tax Claims. This Lease does not grant to NAI any right to
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control the defense of or contest any tax claim for which an Interested Party may have a right to indemnity under subparagraph 5(C), other than the right to contest Local Impositions as provided in subparagraph 5(A), nor does this Lease grant to NAI the right to inspect the income tax returns, books or records of any Interested Party. Nevertheless, if a tax claim is asserted against BNPPLC for which it is entitled to be indemnified pursuant to subparagraph 5(C), BNPPLC will consider in good faith any defenses and strategies proposed by NAI with regard to such claim. Further, if any such tax claim is asserted against BNPPLC which involves assertions that apply not only to the transactions contemplated by this Lease, but also to other similar transactions in which BNPPLC has participated, then BNPPLC will not settle the claim on a basis that results in a disproportionately greater tax burden with respect to the transactions contemplated herein than with respect to such other similar transactions. For example, if taxing authorities assert that both this Lease and other comparable lease agreements made by BNPPLC are not financing arrangements as intended by the parties thereto, and on the basis of such assertions the taxing authorities claim that BNPPLC owes income taxes which are not Excluded Taxes, then BNPPLC will not settle the claim in a manner that would cause NAI’s liability under subparagraph 5(C) to be disproportionately greater than the indemnity obligation of another similarly situated tenant of BNPPLC under another lease agreement with an indemnity provision comparable to subparagraph 5(C). Also, BNPPLC will not grant to another tenant the right to dictate to BNPPLC the tax position BNPPLC must take in regard to the Property or the Operative Documents, except that BNPPLC may include provisions comparable to the foregoing in other leases to assure other tenants against a disproportionately greater burden than NAI will bear in regard to any settlement of a tax claim by BNPPLC.
     (7) Indemnified Parties Other than Landlord. As a condition to making any indemnity payment for Losses directly to any Interested Party other than BNPPLC itself, NAI may require the Interested Party to confirm and agree in writing that it will be obligated to make the payments to NAI as provided in subparagraph 5(E)(2) in the event the Interested Party subsequently receives a refund of the Losses covered by such indemnity payment.
(E) Refunds and Credits Related to Losses Paid by NAI.
     (1) If BNPPLC receives a refund of any Losses paid, reimbursed or advanced by NAI pursuant to this Paragraph 5 that has not already been accounted for in the After Tax Basis calculation described in subparagraph 5(C)(1), BNPPLC will promptly pay to NAI the amount of such refund, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of the refund and such payment to NAI; provided, that the amount payable to NAI will not exceed the amount of the indemnity payment in respect of such refunded Losses that was made by NAI. If it is subsequently determined that BNPPLC
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was not entitled to the refund, the portion of the refund that is repaid or recaptured will be treated as a Loss for which NAI must indemnify BNPPLC pursuant to this Paragraph 5 without regard to subparagraph 5(D). If, in connection with any such refund, BNPPLC also receives an amount representing interest on such refund, BNPPLC will promptly pay to NAI the amount of such interest, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of the receipt or accrual of the interest and as a result of such payment to NAI; provided, that BNPPLC will not be required to make any such payment in respect of the interest (if any) that is fairly attributable to a period for which NAI had not yet paid, reimbursed or advanced the Losses refunded to BNPPLC.
     (2) If any Interested Party (other than BNPPLC itself) receives a refund of any Loss paid, reimbursed or advanced by NAI pursuant to this Paragraph 5 that has not already been accounted for in the After Tax Basis calculation described in subparagraph 5(C)(1), NAI may demand (and enforce the demand pursuant to any agreement previously delivered by the Interested Party as provided in subparagraph 5(D)(7)) that such Interested Party promptly pay to NAI the amount of such refund, plus or minus any net tax benefits or detriments realized by such Interested Party as a result of the refund and such payment to NAI; provided, that the amount payable to NAI will not exceed the amount of the indemnity payment in respect of such refunded Losses that was made by NAI. If it is subsequently determined that such Interested Party was not entitled to the refund, the portion of the refund that is repaid or recaptured will be treated as a Loss for which NAI must indemnify such Interested Party pursuant to this Paragraph 5 without regard to subparagraph 5(D). If, in connection with any such refund, such Interested Party also receives an amount representing interest on such refund, NAI may demand that such Interested Party promptly pay to NAI the amount of such interest, plus or minus any net tax benefits or detriments realized by such Interested Party as a result of the receipt or accrual of the interest and as a result of such payment to NAI; provided, that such Interested Party will not be required to make any such payment in respect of the interest (if any) which is fairly attributable to a period before NAI paid, reimbursed or advanced the Losses refunded to such Interested Party.
     (3) With respect to Losses incurred or suffered by an Interested Party and paid or reimbursed by NAI on an After Tax Basis, if taxes of such Interested Party which are not subject to indemnification by NAI are reduced because of such Losses (whether by reason of a deduction, credit or otherwise) and such reduction was not taken into account in the calculation of the required reimbursement or payment by NAI, then for purposes of this subparagraph 5(E) such reduction will be considered a “refund”.
     (4) Notwithstanding the foregoing, in no event will BNPPLC or any other Interested Party be required to make any payment to NAI pursuant to this subparagraph 5(E) when an Event of Default has occurred and is continuing.
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     (F) Reimbursement of Excluded Taxes Paid by NAI. If NAI is ever required (by laws imposing withholding tax obligations or otherwise) to pay Excluded Taxes that any Interested Party should have paid, but failed to pay when due, in connection with this Lease, such Interested Party must reimburse NAI for such Excluded Taxes (together with any additional amount required to preserve for NAI the full amount of such reimbursement after related taxes are considered, calculated in the same manner that an Additional Indemnity Payment would be calculated under subparagraph 5(C)(1) in the case of a reimbursement owed by NAI to an Interested Party) within 30 days after such Interested Party’s receipt of a written demand for such reimbursement by NAI.
     (G) Collection on Behalf of Participants. BNPPLC may, on behalf of any Participant or its Affiliates, collect any amount that becomes due from NAI to such Participant or its Affiliates pursuant to subparagraph 5(B) or 5(C), in which case BNPPLC will be obligated to such Participant in respect of the collected amount as provided in the Participation Agreement. Alternatively, as provided in the Participation Agreement, BNPPLC may assign the right to collect any such amount to such Participant, in which case the Participant will be entitled to collect the same directly from NAI.
6 Replacement of Participants.
     (A) NAI’s Right to Substitute Participants. During the Term, so long as no Event of Default exists and subject to the terms and conditions set forth in subparagraph 6(B), if any Participant which is not an Affiliate of BNPPLC (in this Paragraph, the “Unrelated Participant”) (1) declines to approve the Rent for an extension of this Lease under subparagraph 1(D), or (2) makes a demand for compensation under subparagraph 5(B), NAI may request that BNPPLC execute Participation Agreement Supplements (as defined in the Participation Agreement) as needed to transfer the rights of the Unrelated Participant thereunder to one or more new Participants (in this subparagraph, whether one or more, the “New Participants”) designated by NAI who are willing and able to accept such interests and to make Funding Advances as necessary to terminate the Unrelated Participant’s right to payments in respect of Base Rent and the Lease Balance under the Operative Documents. BNPPLC will execute such Participation Agreement Supplements within ten Business Days of the later to occur of such request by NAI and satisfaction of all conditions set forth in subparagraph 6(B).
     (B) Conditions to Replacement of Participants. NAI and BNPPLC, working together, will endeavor in good faith to identify New Participants that are willing to replace any Unrelated Participant described in the preceding subparagraph and that are acceptable to both NAI and BNPPLC. (The term New Participants may include new parties to the Participation Agreement and it may include existing Participants that increase their Funding Advances as needed to replace the Unrelated Participant.) However, nothing contained herein will be construed to require BNPPLC itself to increase its Percentage (as defined in the Participation Agreement) to
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replace an Unrelated Participant, and nothing herein contained will be construed to require BNPPLC itself to provide or to obtain from its Affiliates Funding Advances to replace the Funding Advances that an Unrelated Participant has provided or agreed to provide. Also, New Participants will be subject to the approval of BNPPLC; provided, that BNPPLC must not unreasonably withhold its approval for the substitution of any New Participant proposed by NAI for any Unrelated Participant so long as (i) no Event of Default has occurred and is continuing, (ii) BNPPLC determines it can give such approval without violating Applicable Laws, without breaching its obligations under the Participation Agreement, and without waiving rights or remedies it has under this Lease or the other Operative Documents, (iii) BNPPLC or BNPPLC’s Parent is not involved in any material litigation adverse to the New Participant in any pending lawsuit or other legal proceeding, and (iv) all of the conditions listed in the next sentence are satisfied. Any substitution of New Participants for an Unrelated Participant as provided in this Paragraph will be subject to the following conditions:
     (1) the proposed substitution does not include a waiver of rights by BNPPLC against any Unrelated Participant or require BNPPLC to pay any amounts out-of-pocket that are not reimbursed concurrently by NAI or the New Participants;
     (2) the New Participants must become parties to the Participation Agreement (by executing supplements to that agreement as provided therein) and must provide all funds due to the Unrelated Participant being replaced because of the termination of the Unrelated Participant’s rights to receive payments in respect of Net Cash Flow and Net Sales Proceeds (both as defined in the Participation Agreement); and
     (3) the obligations of BNPPLC to the New Participants must not exceed the obligations that BNPPLC would have had to the Unrelated Participant if there had been no substitution, other than those for which NAI is liable.
Upon consummation of any such substitution NAI must pay to the replaced Participant Breakage Costs, if any, incurred by the replaced Participant because of the substitution.
7 Items Included in the Property
     (A) Status of Property. All Improvements on the Land from time to time will constitute “Property” covered by this Lease. Further, as provided in the Construction Agreement, to the extent heretofore or hereafter acquired by NAI (in whole or in part) with funds previously advanced by BNPPLC under the Prior Construction Agreement or with any portion of the Initial Advance or with any Construction Advances or with other funds for which NAI has received or receives reimbursement from such funds previously advanced, the Initial Advance or Construction Advances, all furnishings, furniture, chattels, permits, licenses, franchises, certificates and other personal property of whatever nature will be deemed to have been acquired
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on behalf of BNPPLC by NAI and will constitute “Property” covered by this Lease, as will all renewals or replacements of or substitutions for any such Property. Upon request of BNPPLC, but not more often than once in any period of twelve consecutive months, NAI will deliver to BNPPLC an inventory describing all significant items of Personal Property (and, in the case of Tangible Personal Property, showing the make, model, serial number and location thereof) with a certification by NAI that such inventory is true and complete and that all items specified in the inventory are covered by this Lease free and clear of any Lien other than the Permitted Encumbrances or Liens Removable by BNPPLC.
     (B) Changes in the Land Covered by the Ground Lease. Upon any amendment of the definition of the “Land” covered by the Ground Lease, the “Land” as defined in and covered by this Lease and the other Operative Documents will also be so amended.
8 Environmental.
     (A) Environmental Covenants by NAI.
     (1) NAI will not conduct or permit others to conduct Hazardous Substance Activities on the Property, except Permitted Hazardous Substance Use and Remedial Work.
     (2) NAI will not discharge or permit the discharge of anything (including Permitted Hazardous Substances) on or from the Property that would require any permit under applicable Environmental Laws, other than (i) storm water runoff, (ii) waste water discharges through a publicly owned treatment works, (iii) discharges that are a necessary part of any Remedial Work, and (iv) other similar discharges consistent with the definition herein of Permitted Hazardous Substance Use which do not significantly increase the risk of Environmental Losses to BNPPLC, in each case in strict compliance with Environmental Laws.
     (3) Following any discovery that Remedial Work is required by Environmental Laws or is otherwise reasonably believed by BNPPLC to be required, and to the extent not inconsistent with the other provisions of this Lease, NAI must promptly perform and diligently and continuously pursue such Remedial Work.
     (4) If requested by BNPPLC in connection with any Remedial Work required by this subparagraph, NAI must retain environmental consultants reasonably acceptable to BNPPLC 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
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subcontractors and their employees) or to protect the environment. NAI must implement any such additional measures to the extent required with respect to the Property by Environmental Laws or otherwise reasonably believed by BNPPLC to be required.
     (B) Right of BNPPLC to do Remedial Work Not Performed by NAI. If NAI’s failure to perform any Remedial Work required as provided in subparagraph 8(A) continues beyond the Environmental Cure Period (as defined below), BNPPLC 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 BNPPLC pursuant to the preceding sentence (including any removal of Hazardous Substances), the cost thereof will be a demand obligation owing by NAI to BNPPLC. As used in this subparagraph, “Environmental Cure Period” means the period ending on the earliest of: (1) ninety days after NAI is notified of the breach which must be cured within such period or, if during such ninety days NAI initiates the Remedial Work and diligently and continuously pursues it in accordance with a timetable accepted and approved by applicable Governmental Authorities (which may include delays waiting for permits or other authorizations), the date by which such Remedial Work is to be completed according to such timetable, (2) the date that any writ or order is issued for the levy or sale of any property owned by BNPPLC (including the Property) because of such breach, (3) the date that any criminal action is instituted or overtly threatened against BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a net price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     (C) Environmental Inspections and Reviews. BNPPLC reserves the right to retain environmental consultants to review any report prepared by NAI or to conduct BNPPLC’s own investigation to confirm whether NAI is complying with the requirements of this Paragraph 8. NAI grants to BNPPLC and to BNPPLC’s agents, employees, consultants and contractors the right to enter upon the Property during reasonable hours and after reasonable notice to inspect the Property and to perform such tests as BNPPLC deems reasonably necessary or appropriate to review or investigate Hazardous Substances in, on, under or about the Property or any discharge or reasonably suspected discharge of Hazardous Substances into groundwater or surface water from the Property. NAI must promptly reimburse BNPPLC for the fees of its environmental consultants and the costs of any such inspections and tests; provided, however, BNPPLC’s right to reimbursement for the fees of any consultant engaged as provided in this subparagraph or for the costs of any inspections or test undertaken as provided in this subparagraph will be limited to the following circumstances: (1) an Event of Default has occurred and is continuing at the time of such engagement, tests or inspections; (2) NAI has not exercised the Purchase Option and BNPPLC has retained the consultant to establish the condition of the Property prior to any conveyance thereof pursuant to the Purchase Agreement or to the expiration of this Lease; (3)
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BNPPLC has retained the consultant to satisfy any regulatory requirements applicable to BNPPLC or its Affiliates; (4) BNPPLC has retained the consultant because it has reason to believe, and does in good faith believe, that a significant violation of Environmental Laws concerning the Property has occurred; or (5) BNPPLC has retained the consultant because BNPPLC has been notified of a possible violation of Environmental Laws concerning the Property by any Governmental Authority having jurisdiction.
     (D) Communications Regarding Environmental Matters.
     (1) NAI must promptly advise BNPPLC and Participants of (i) any discovery known to NAI of any event or circumstance which would render any of the representations of NAI herein or in any of the other Operative Documents 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, (ii) 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, (iii) any discovery known to NAI of any occurrence or condition on any real property adjoining or in the vicinity of the Property which would or could reasonably be expected to cause the Property or any part thereof to be subject to any ownership, occupancy, transferability or use restrictions under Environmental Laws, or (iv) any investigation or inquiry known to NAI 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 will deliver to BNPPLC within thirty days after BNPPLC’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 BNPPLC may reasonably request.
     (2) NAI will provide BNPPLC and Participants with copies of all material written communications with Governmental Authorities relating to the matters listed in the preceding clause (1). NAI will also provide BNPPLC and Participants 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.
     (3) Prior to NAI’s submission of a communication to any regulatory agency or third party which causes, or potentially could cause (whether by implementation of or
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response to said communication), a material change in the scope, duration, or nature of any Remedial Work, NAI must, to the extent practicable, deliver to BNPPLC and Participants a draft of the proposed submission (together with the proposed date of submission), and in good faith assess and consider any comments of BNPPLC regarding the same. Promptly after BNPPLC’s request, NAI will meet with BNPPLC to discuss the submission, will provide any additional information reasonably requested by BNPPLC and will provide a written explanation to BNPPLC addressing the issues raised by comments (if any) of BNPPLC regarding the submission.
9 Insurance Required and Condemnation.
     (A) Liability Insurance. Throughout the Term NAI must 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 Minimum Insurance Requirements. NAI must deliver and maintain with BNPPLC for each liability insurance policy required by this 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 Minimum Insurance Requirements.
     (B) Property Insurance.
     (1) Throughout the Term NAI must 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 Minimum Insurance Requirements. NAI must deliver and maintain with BNPPLC for each property insurance policy required by this 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 Minimum Insurance Requirements.
     (2) If any of the Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance is required hereunder, (a) BNPPLC may, but will not be obligated to, make proof of loss if not made promptly by NAI after notice from BNPPLC, (b) each insurance company concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC (or, if so instructed by BNPPLC, to NAI) for application as required by Paragraph 10, and (c) BNPPLC will be entitled, in its own name or in the name of NAI or in the name of both, to settle, adjust or compromise any and all claims for loss, damage or destruction under any policy or policies of insurance; except that, if any such claim is for less than $1,000,000, if no 97-10/Meltdown Event has occurred and if no Event of Default has occurred and is continuing, NAI alone will have the right to settle, adjust or compromise
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the claim as NAI deems appropriate; and, except that, during the Term, so long as no Event of Default has occurred and is continuing, BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s intention to settle any such claim before settling it unless NAI has already approved of the settlement by BNPPLC.
     (3) BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any insurance proceeds.
     (4) If any casualty results in damage to or loss or destruction of the Property, NAI must give prompt notice thereof to BNPPLC and Paragraph 10 will 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 Lease, BNPPLC will 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 BNPPLC’s other remedies under the circumstances, BNPPLC may require NAI to reimburse BNPPLC for the cost of such insurance and to pay interest thereon computed at the Default Rate from the date such cost was paid by BNPPLC until the date of reimbursement 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 will promptly notify the other (provided, however, BNPPLC will have no liability for its failure to provide such notice) of the pendency of such proceedings. (As used herein, “condemnation of the Property” or words of like effect will include any indirect condemnation by means of a taking of the Land or the Existing Appurtenant Easements or any part thereof.) NAI must, at its expense, diligently prosecute any such proceedings and must consult with BNPPLC, its attorneys and experts and cooperate with them as reasonably requested in the carrying on or defense of any such proceedings. BNPPLC is hereby authorized, in its own name or in the name of NAI or in the name of both, at any time after a 97-10/Meltdown Event or when an Event of Default has occurred and is continuing, but not otherwise without 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. BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any such proceeds, judgments, decrees or awards.
     Notwithstanding the foregoing provisions of this subparagraph, if condemnation proceeds totaling not more than $1,000,000 are to be recovered as a result of a taking of less than all or substantially all of the Property, NAI may directly receive and hold such proceeds during the Term, so long as no Event of Default has occurred and is continuing and NAI applies such proceeds as required herein.
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     (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 BNPPLC or any other Interested Party to recover Losses for which NAI is compensated by insurance or would be compensated by the insurance contemplated in this 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 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 will govern the application of proceeds received by BNPPLC 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 (e.g.,damage resulting from a third party’s release of Hazardous Materials onto the Property); excluding, however, any funds paid to BNPPLC by BNPPLC’s Parent, by an Affiliate of BNPPLC or by any Participant that is made to compensate BNPPLC for any Losses BNPPLC may suffer or incur in connection with this Lease or the Property. Except as provided in subparagraph 10(D), NAI must promptly pay over to BNPPLC 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 BNPPLC from NAI or third parties, will be applied as follows:
     (1) First, proceeds covered by this Paragraph 10 will be used to reimburse BNPPLC for any reasonable costs and expenses, including Attorneys’ Fees, that BNPPLC incurred to collect the proceeds.
     (2) Second, the proceeds remaining after such reimbursement to BNPPLC (hereinafter, the “Remaining Proceeds”) will be applied, as hereinafter more particularly provided, either as a Qualified Prepayment or to reimburse NAI or BNPPLC for the actual out-of-pocket costs of repairing or restoring the Property. Until, however, any Remaining Proceeds received by BNPPLC are applied by BNPPLC as a Qualified Prepayment or applied by BNPPLC to reimburse costs of repairs to or restoration of the Property pursuant to this Paragraph 10, BNPPLC will hold and maintain such Remaining Proceeds as Escrowed Proceeds in an interest bearing account, and all interest earned on such account will be added to and made a part of such Escrowed Proceeds.
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     (B) Advances of Escrowed Proceeds to NAI. Except as otherwise provided below in this Paragraph 10, BNPPLC will 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 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 BNPPLC to assure the completion of such repair or restoration with available funds. So long as any Lease Balance remains outstanding, however, BNPPLC will not 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 reasonably satisfactory to BNPPLC, it being understood that BNPPLC may retain and, after NAI has completed the applicable repair or restoration and been reimbursed for the out-of-pocket cost thereof, apply any such excess (or so much thereof as is needed to reduce the Lease Balance to zero) as a Qualified Prepayment.
     (C) Application of Escrowed Proceeds as a Qualified Prepayment. During the Term, so long as no Event of Default has occurred and is continuing, BNPPLC will 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 BNPPLC 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 BNPPLC’s actual receipt of the notice, BNPPLC may postpone the date of the Qualified Prepayment to any date not later than five Business Days after BNPPLC’s receipt of the notice. In any event, BNPPLC may deduct Breakage Costs or any Fixed Rate Settlement Amount incurred in connection with any Qualified Prepayment from the Remaining Proceeds or other amounts available for application as the Qualified Prepayment, and NAI must reimburse BNPPLC upon request for any such Breakage Costs or Fixed Rate Settlement Amount that BNPPLC incurs but does not deduct.
     (D) Right of NAI to Receive and Apply Remaining Proceeds Below a Certain Level. If, after the Completion Date, any condemnation of any portion of the Property or any casualty resulting in the diminution, destruction, demolition or damage to any portion of the Property will (in the good faith judgment of BNPPLC) reduce the then current “AS IS” market value by less than $1,000,000 and (in the good faith estimation of BNPPLC) be unlikely to result in Remaining Proceeds of more than $1,000,000, and if no 97-10/Meltdown Event has occurred and no Event of Default has occurred and is continuing, then BNPPLC will, upon NAI’s request, instruct the condemning authority or insurer, as applicable, to pay the Remaining Proceeds resulting therefrom directly to NAI. NAI must apply any such Remaining Proceeds to the repair or restoration of the Property to a safe and secure condition and to a value of no less than the value before taking or casualty.
     (E) Special Provisions Applicable After a 97-10/Meltdown Event or an Event of Default. Notwithstanding the foregoing, after any 97-10/Meltdown Event, and when any Event of
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Default has occurred and is continuing, BNPPLC will 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 BNPPLC in its sole discretion, either (A) to the reimbursement of NAI or BNPPLC for the out-of-pocket cost of repairing or restoring the Property, or (B) as Qualified Prepayments. Further, when any Event of Default has occurred and is continuing, if the Remaining Proceeds paid to BNPPLC with respect to any damage or destruction of the Property are reduced by reason of any insurance deductible or self-insured retention, NAI must pay to BNPPLC upon demand an additional amount equal to the full amount of such deductible or self insured retention, whereupon the additional amount paid will be added to the Remaining Proceeds and applied as such by BNPPLC in accordance with the provisions of this Lease.
     (F) NAI’s Obligation to Restore. Regardless of the adequacy of any Remaining Proceeds available to NAI hereunder, if on or after the Completion 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 either (1) promptly restore or improve the Property or the remainder thereof to a value no less than the Lease Balance and to a reasonably safe and sightly condition, or (2) promptly restore the Property or remainder thereof to a reasonably safe and sightly condition and pay to BNPPLC for application as a Qualified Prepayment the amount (if any), as determined by BNPPLC, needed to reduce the Lease Balance to no more than the then current “AS IS” market value of the Property or remainder thereof.
     (G) Takings of All or Substantially All of the Property on or after the Completion Date. In the event of any taking of all or substantially all of the Property on or after the Completion Date, BNPPLC will be entitled to apply all Remaining Proceeds (or so much thereof as is required to reduce the Lease Balance to zero) as a Qualified Prepayment. Any taking of so much of the Property as, in BNPPLC’s good faith judgment, makes it impracticable to restore or improve the remainder thereof as required by part (1) of the preceding subparagraph will be considered a taking of substantially all the Property for purposes of this Paragraph 10.
     (H) If Remaining Proceeds Exceed the Lease Balance. Notwithstanding the various provisions of this Paragraph 10 authorizing BNPPLC to apply Remaining Proceeds received by it during the Term as a Qualified Prepayment, in the event any such Remaining Proceeds exceed the sum of (i) all payments thereof made to NAI to reimburse it for the costs of repairs and restoration to the Property, (ii) any application thereof to cover costs incurred by BNPPLC for the repair or restoration the Property and (iii) the Lease Balance, such excess will not be applied as a Qualified Prepayment, but rather will constitute Escrowed Proceeds which must, if NAI exercises the Purchase Option pursuant to the Purchase Agreement, be delivered to the purchaser of the Property (be it NAI or an Applicable Purchaser) as provided therein.
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11 Additional Representations, Warranties and Covenants of NAI Concerning the Property. NAI represents, warrants and covenants as follows:
     (A) Operation and Maintenance. NAI must operate and maintain the Property in a good and workmanlike manner and in compliance with Applicable Laws in all material respects and pay or cause to be paid all fees or charges of any kind due 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 complaint or demand for corrective action given by any Governmental Authority to NAI, or to BNPPLC and forwarded by it to NAI, then for purposes of the preceding sentence, NAI will be considered not to have maintained the Property “in compliance with all Applicable Laws in all material respects” whether or not the noncompliance would be material in the absence of the complaint or demand.) NAI will not use or occupy, or allow the use or occupancy of, the Property in any manner which violates any Applicable Laws or which constitutes a public or private nuisance or which makes void, voidable or cancelable any insurance then in force with respect to the Property. To the extent that any of the following would, individually or in the aggregate, materially and adversely affect the value of the Property or the use of the Property for purposes permitted by this Lease, NAI will not, without BNPPLC’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. NAI will 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 will not do anything that could reasonably be expected to significantly reduce the market value of the Property. If NAI receives a notice or claim from any Governmental Authority that the Property is not in compliance with any Applicable Law, or that any action may be taken against BNPPLC because the Property does not comply with any Applicable Law, NAI must promptly furnish a copy of such notice or claim to BNPPLC.
     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 will 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 BNPPLC, 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 must be concluded and the violation of such Applicable Law must be corrected by NAI and any claims asserted against BNPPLC or the Property because of such violation must be paid by NAI, all prior to the earliest of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC or any of its directors, officers or employees because of such violation, (ii) the
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date that any action is taken or overtly threatened by any Governmental Authority against BNPPLC or any property owned by BNPPLC (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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     (B) Debts for Construction, Maintenance, Operation or Development. NAI must cause all debts and liabilities incurred in the construction, maintenance, operation or development of the Property, including invoices for labor, material and equipment and all debts and charges for utilities servicing the Property, to be promptly paid.
     Notwithstanding the foregoing, NAI may in good faith, by appropriate proceedings, contest the validity, applicability or amount of any asserted statutory liens in the nature of contractors’, mechanics’ or materialmens’ liens, and pending such contest NAI will not be deemed in default under this subparagraph because of the contested lien if (1) within thirty days after being asked to do so by BNPPLC, NAI bonds over to BNPPLC’s reasonable satisfaction all such contested liens against the Property alleged to secure an amount in excess of $1,000,000 (individually or in the aggregate), (2) NAI diligently prosecutes such contest to completion in a manner reasonably satisfactory to BNPPLC, 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 must be concluded and the lien, interest and costs must be paid by NAI prior to the earliest of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC 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 BNPPLC has an interest may be seized or sold or any other action is taken or overtly threatened against BNPPLC or any property in which BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     (C) Repair, Maintenance, Alterations and Additions. NAI must keep the Property in good order, operating condition and appearance and must 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 will promptly replace any worn-out fixtures and Tangible Personal Property with fixtures and personal property comparable to the replaced items when new. NAI will not, without the prior consent of BNPPLC, (i) remove from the Property any
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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 following completion of the Work contemplated in the Construction Agreement.
     However, during the Term, so long as no Event of Default has occurred and is continuing, BNPPLC will not unreasonably withhold a consent requested by NAI pursuant to the preceding sentence for the construction or alteration of Improvements. NAI acknowledges, however, that BNPPLC’s refusal or failure to give such consent will be deemed reasonable if BNPPLC believes in good faith that the construction or alteration for which NAI is requesting consent could have a material adverse impact upon the value of the Property (taken as whole), or if NAI has not provided BNPPLC with adequate information to allow BNPPLC to properly evaluate such impact on value.
     Without limiting the foregoing, NAI must notify BNPPLC before making any significant alterations to the Improvements during the Term, regardless of the impact on the value of the Property expected to result from such alterations.
     (D) Permitted Encumbrances. NAI must 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. Without limiting the foregoing, NAI must 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 BNPPLC, NAI will not create any new Permitted Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted Encumbrance that would create or expand or purport to create or expand obligations or restrictions which would encumber BNPPLC’s interest in the Property or be binding upon BNPPLC itself. (Whether BNPPLC must give any such consent requested by NAI during the Term of this Lease will be governed by subparagraph 4(C) of the Closing Certificate.)
     (E) Books and Records Concerning the Property. NAI must keep books and records that are accurate and complete in all material respects for the Property and, subject to Paragraph 22, must 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 BNPPLC during normal business hours. (BNPPLC will not over the objection of NAI inspect or copy such materials more than once in any twelve month period unless BNPPLC believes in good faith that more frequent
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inspection and copying is required to determine whether a Default or an Event of Default has occurred and is continuing or to assess the effect thereof or to properly exercise remedies with respect thereto.) This subparagraph will not be construed as requiring NAI to regularly maintain separate books and records relating exclusively to the Property, but NAI will as reasonably requested from time to time by BNPPLC construct or abstract from its regularly maintained books and records information required by this subparagraph relating to the Property.
12 Assignment and Subletting by NAI.
     (A) BNPPLC’s Consent Required. Without the prior consent of BNPPLC, NAI will not assign, transfer, mortgage, pledge or hypothecate this Lease or any interest of NAI hereunder and will not sublet all or any part of the Property, by operation of law or otherwise, except as follows:
     (1) During the Term, so long as no Event of Default has occurred and is continuing, NAI may sublet (a) to Affiliates of NAI, or (b) no more than thirty-three percent (33%) (computed on the basis of square footage) of the useable space in then existing and completed building Improvements to Persons who are not NAI’s Affiliates, subject to the conditions that (i) any such sublease by NAI must be made expressly subject and subordinate to the terms hereof, (ii) the sublease must have a term equal to or less than the remainder of the then effective Term of this Lease, and (iii) the use permitted by the sublease must be expressly limited to uses consistent with subparagraph 2(A) or other uses approved in advance by BNPPLC as uses that will not present any extraordinary risk of uninsured environmental or other liability.
     (2) During the Term, so long as no Event of Default has occurred and is continuing, NAI may assign all of its rights under this Lease and the other Operative Documents to an Affiliate of NAI, subject to the conditions that (a) the assignment must be in writing and must unconditionally provide that the Affiliate assumes all of NAI’s obligations hereunder and thereunder, and (b) NAI must execute an unconditional guaranty of the obligations assumed by the Affiliate in form satisfactory to BNPPLC, confirming (x) that notwithstanding the assignment NAI will remain primarily liable for all of the obligations undertaken by NAI under the Operative Documents, (y) that such guaranty is a guaranty of payment and performance and not merely of collection, and (z) that NAI waives to the extent permitted by Applicable Law all defenses otherwise available to guarantors or sureties.
     (B) Standard for BNPPLC’s Consent to Assignments and Certain Other Matters. Consents and approvals of BNPPLC which are required by this Paragraph 12 will not be unreasonably withheld, but NAI acknowledges that BNPPLC’s withholding of such consent or approval will be reasonable if BNPPLC determines in good faith that (1) giving the approval may
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increase BNPPLC’s risk of liability for any existing or future environmental problem, (2) giving the approval is likely to substantially increase BNPPLC’s administrative burden of complying with or monitoring NAI’s compliance with the requirements of this Lease, or (3) any transaction for which NAI has requested the consent or approval would negate NAI’s representations in the Operative Documents regarding ERISA or cause any of the Operative Documents (or any exercise of BNPPLC’s rights thereunder) to constitute a violation of any provision of ERISA. Further, NAI acknowledges that BNPPLC may reasonably require, as a condition to giving its consent to any assignment by NAI, that NAI execute an unconditional guaranty providing that NAI will remain primarily liable for all of the tenant’s obligations hereunder and under other Operative Documents. Any such guaranty must be a guaranty of payment and not merely of collection, must provide that NAI waives to the extent permitted by Applicable Law all defenses otherwise available to guarantors or sureties, and must otherwise be in a form satisfactory to BNPPLC.
     (C) Consent Not a Waiver. No consent by BNPPLC to a sale, assignment, transfer, mortgage, pledge or hypothecation of this Lease or NAI’s interest hereunder, and no assignment or subletting of the Property or any part thereof in accordance with this Lease or otherwise with BNPPLC’s consent, will release NAI from liability hereunder; and any such consent will apply only to the specific transaction thereby authorized and will not relieve NAI from any requirement of obtaining the prior consent of BNPPLC to any further sale, assignment, transfer, mortgage, pledge or hypothecation of this Lease or any interest of NAI hereunder.
13 Assignment by BNPPLC.
     (A) Restrictions on Transfers. Except by a Permitted Transfer, BNPPLC will not assign, transfer, mortgage, pledge, encumber or hypothecate this Lease or the other Operative Documents or any interest of BNPPLC 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 payable to BNPPLC hereunder because of BNPPLC’s assignment of this Lease to any citizen of, or any corporation or other entity formed under the laws of, a country other than the United States, NAI will not be required to compensate BNPPLC or any such assignee for the withholding tax.
     (B) Effect of Permitted Transfer or other Assignment by BNPPLC. If by a Permitted Transfer BNPPLC sells or otherwise transfers the Property and assigns to the transferee all of BNPPLC’s rights under this Lease and under the other Operative Documents, and if the transferee expressly assumes all of BNPPLC’s obligations under this Lease and under the other Operative Documents, then BNPPLC will thereby be released from any obligations arising after such assumption under this Lease or under the other Operative Documents (other than any liability for a breach of any continuing obligation to provide Construction Advances under the
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Construction Agreement), and NAI must look solely to each successor in interest of BNPPLC for performance of such obligations.
14 BNPPLC’s Right to Enter and to Perform for NAI .
     (A) Right to Enter. BNPPLC and BNPPLC’s representatives may, subject to subparagraph 14(C), enter the Property for the purpose of making inspections or performing any work BNPPLC is authorized to undertake by the next subparagraph or for the purpose of confirming whether NAI has complied with the requirements of this Lease or the other Operative Documents. During the Term, so long as no Event of Default has occurred and is continuing and no apparent emergency exists which would justify immediate entry, BNPPLC will give NAI at least two Business Days notice before making any such entry over the objection of NAI and will limit any such entry to normal business hours.
     (B) Performance for NAI. If NAI fails to perform any act or to take any action required of it by this Lease or the Closing Certificate, or to pay any money which NAI is required by this Lease or the Closing Certificate to pay, and if such failure or action constitutes an Event of Default or renders BNPPLC or any director, officer, employee or Affiliate of BNPPLC at risk of criminal prosecution or renders BNPPLC’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, BNPPLC may, perform or cause to be performed such act or take such action or pay such money. Any expenses so incurred by BNPPLC, and any money so paid by BNPPLC, will be a demand obligation owing by NAI to BNPPLC. Further, upon making such payment, BNPPLC will be subrogated to all of the rights of the person, corporation or body politic receiving such payment. But nothing herein will imply any duty upon the part of BNPPLC to do any work which under any provision of this Lease NAI may be required to perform, and the performance thereof by BNPPLC will not constitute a waiver of NAI’s default. BNPPLC may during the progress of any such work by BNPPLC keep and store upon the Property all necessary materials, tools, and equipment. BNPPLC will 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 the performance of any such work, or on account of bringing materials, supplies and equipment into or through the Property during the course of such work, and the obligations of NAI under this Lease will not thereby be excused in any manner.
     (C) Building Security. So long as NAI remains in possession of the Property, BNPPLC or BNPPLC’s representative will, before making any inspection or performing any work on the Property authorized by this Lease, do the following
     (1) BNPPLC will give NAI at least 24 hours notice, unless BNPPLC believes in good faith that an emergency may exist or a Default has occurred and is continuing, because of which significant damage to the Property or other significant Losses may be
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sustained if BNPPLC delays entry to the Property; and
     (2) if then requested to do so by NAI in order to maintain NAI’s security, BNPPLC or its representative will: (i) sign in at NAI’s security or information desk if NAI has such a desk on the premises, (ii) wear a visitor’s badge or other reasonable identification, (iii) permit an employee of NAI to observe such inspection or work, and (iv) comply with other similar reasonable nondiscriminatory security requirements of NAI that do not, individually or in the aggregate, significantly interfere with inspections or work of BNPPLC authorized by this Lease.
15 Remedies.
     (A) Traditional Lease Remedies. At any time after an Event of Default and after BNPPLC has given any notice required by subparagraph 15(C), BNPPLC will be entitled at BNPPLC’s option (and without limiting BNPPLC in the exercise of any other right or remedy BNPPLC may have, and without any further demand or notice except as expressly described in this subparagraph 15(A)), to exercise any one or more of the following remedies:
     (1) By notice to NAI, BNPPLC may terminate NAI’s right to possession of the Property. However, only a notice clearly and unequivocally confirming that BNPPLC has elected to terminate NAI’s right of possession will be effective for purposes of this provision.
     (2) Upon termination of NAI’s right to possession as provided in the immediately preceding subsection (1) and without further demand or notice, BNPPLC may re-enter the Property in any manner not prohibited by Applicable Laws and take possession of all improvements, additions, alterations, equipment and fixtures thereon and remove any persons in possession thereof. Any personal property on the Land may be removed and stored in a warehouse or elsewhere, and in such event the cost of any such removal and storage will be at the expense and risk of and for the account of NAI.
     (3) Upon termination of NAI’s right to possession as provided in the immediately preceding subsection (1), this Lease will terminate and BNPPLC may recover from NAI damages which include the following:
     (a) the worth at the time of award of the unpaid Rent which had been earned at the time of termination;
     (b) costs and expenses actually incurred by BNPPLC to repair damage to the Property that NAI was obligated to (but failed to) repair prior to the termination;
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     (c) the sum of the following (“Lease Termination Damages”):
     1) 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;
     2) 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;
     3) any other amount necessary to compensate BNPPLC for all the detriment proximately caused by NAI’s failure to perform NAI’s obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including the costs and expenses of preparing and altering the Property for reletting and all other costs and expenses of reletting (including Attorneys’ Fees, advertising costs and brokers’ commissions), and
     (d) such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California law.
The “worth at the time of award” of the amounts referred to in subparagraph 15(A)(3)(a) and subparagraph 15(A)(3)(c)1) will be computed by allowing interest at the Default Rate. The “worth at the time of award” of the amount referred to in subparagraph 15(A)(3)(c)2) will 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%).
Notwithstanding the foregoing, the total Lease Termination Damages which BNPPLC may recover from NAI will be limited in amount to the extent required, if any, to prevent the sum of recoverable Lease Termination Damages, plus any Supplemental Payment that BNPPLC has received or remains entitled to recover pursuant to the Purchase Agreement, from being more than the Maximum Remarketing Obligation; provided, however, if a Supplemental Payment is owed to BNPPLC according to the Purchase Agreement, but NAI fails to pay it, this limitation upon BNPPLC’s right to recover Lease Termination Damages will be of no effect. For purposes of this provision, “Maximum Remarketing Obligation” is intended to have the meaning assigned to it in the Purchase Agreement and is intended to be computed as of the date any award of Lease Termination Damages to BNPPLC as if such date was the Designated Sale Date.
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     (4) Even after a breach of this Lease or abandonment of the Property by NAI, BNPPLC may continue this Lease in force and recover Rent as it becomes due. Accordingly, despite any breach or abandonment by NAI, this Lease will continue in effect for so long as BNPPLC does not terminate NAI’s right to possession, and BNPPLC may enforce all of BNPPLC’s rights and remedies under this Lease, including the right to recover the Rent as it becomes due under this Lease. NAI’s right to possession will not be deemed to have been terminated by BNPPLC except pursuant to subparagraph 15(A)(1) hereof. The following, in and of themselves, will 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 BNPPLC to protect BNPPLC’s interest under this Lease; or
     (c) Reasonable withholding of consent to an assignment or subletting, or terminating a subletting or assignment by NAI.
     (B) Foreclosure Remedies. At any time when an Event of Default has occurred and is continuing, BNPPLC may notify NAI of BNPPLC’s intent to pursue remedies described in Exhibit B, and at any time thereafter, regardless of whether the Event of Default is continuing, if NAI has not already purchased the Property or caused an Applicable Purchaser to purchase the Property pursuant to the Purchase Agreement, (i) BNPPLC will have the power and authority, to the extent provided by law, after proper notice and lapse of such time as may be required by law, to sell or arrange for a sale to foreclose its lien and security interest granted in Exhibit B, and (ii) BNPPLC, in lieu of or in addition to exercising any power of sale granted in Exhibit B, may proceed by a suit or suits in equity or at law, whether for a foreclosure or sale of the Property, or against NAI for the Lease Balance, or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure or sale of the Property, or for the enforcement of any other appropriate legal or equitable remedy.
     (C) Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement. During the Term, so long as NAI remains in possession of the Property and there has been no termination of the Purchase Option as provided in Paragraph 6(B) of the Purchase Agreement, BNPPLC’s right to exercise remedies provided in subparagraph 15(A) or to complete any foreclosure sale as provided in subparagraph 15(B) will be subject to the condition precedent that BNPPLC has notified NAI, at a time when an Event of Default has occurred and is continuing and no less than thirty days prior to exercising such remedies or completing such a sale, of BNPPLC’s intent to do so. The condition precedent is intended to provide NAI with an opportunity to exercise the Purchase Option before losing possession of the Property because of
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the remedies enumerated in subparagraph 15(A) or because of a sale authorized by subparagraph 15(B). 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, BNPPLC may proceed immediately to exercise remedies provided in subparagraph 15(A) or complete a sale authorized by subparagraph 15(B) at any time after the earliest of (i) thirty days after BNPPLC 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.
     (D) Enforceability. This Paragraph 15 will be enforceable to the maximum extent not prohibited by Applicable Laws, and the unenforceability of any provision in this Paragraph will not render any other provision unenforceable.
     (E) Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy, and each and every such right and remedy will be cumulative and in addition to any other right or remedy given to BNPPLC under this Lease or other Operative Documents or now or hereafter existing in favor of BNPPLC under Applicable Laws, except as otherwise expressly provided in the last provision of subparagraph 15(A)(3) above. In addition to other remedies provided in this Lease, BNPPLC will 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 Lease, or to a decree compelling performance of any of the other covenants, agreements, conditions or provisions of this Lease to be performed by NAI, or to any other remedy allowed to BNPPLC at law or in equity. Nothing contained in this Lease will limit or prejudice the right of BNPPLC to prove for and obtain in proceedings for bankruptcy or insolvency of NAI by reason of the termination of this 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 will modify, limit or impair any of the rights and remedies of BNPPLC under the Purchase Agreement, and BNPPLC will not be required to give the thirty day notice described in subparagraph 15(C) as a condition precedent to any acceleration of the Designated Sale Date or to taking any action to enforce the Purchase Agreement. However, to prevent a double recovery, BNPPLC acknowledges that BNPPLC’s right to recover Lease Termination Damages may be limited by the last provision of subparagraph 15(A)(3) above in the event BNPPLC collects or remains entitled to collect a Supplemental Payment as provided in the Purchase Agreement.
16 Default by BNPPLC. If BNPPLC should default in the performance of any of its obligations under this Lease, BNPPLC will 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
Amended and Restated Lease Agreement (Building 8) – Page 44

 

 

and specifying what action NAI believes is necessary to cure the default.
17 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, BNPPLC will not during the Term disturb NAI’s peaceable and quiet enjoyment of the Property; however, such enjoyment will be subject to the terms and conditions of this Lease, to the Ground Lease, to Permitted Encumbrances and to any other claims not constituting Liens Removable by BNPPLC. If any Lien Removable by BNPPLC is established against the Property, BNPPLC will remove the Lien Removable by BNPPLC promptly. Any breach by BNPPLC of this Paragraph will render BNPPLC liable to NAI for any monetary damages proximately caused thereby, but as more specifically provided in subparagraph 4(B) above, no such breach will entitle NAI to terminate this Lease or excuse NAI from its obligation to pay Rent.
18 Surrender Upon Termination. Unless NAI or an Applicable Purchaser is purchasing or has purchased BNPPLC’s entire interest in the Property pursuant to the terms of the Purchase Agreement, NAI must, upon the termination of NAI’s right to occupancy, surrender to BNPPLC 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 Lease, and (ii) demolition, alterations and additions which are expressly permitted by the terms of this Lease 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 BNPPLC so elects, will be deemed abandoned and become the property of BNPPLC without any payment or offset therefor. If BNPPLC does not so elect, BNPPLC may remove such property from the Property and store it at NAI’s risk and expense. NAI must bear the expense of repairing any damage to the Property caused by such removal by BNPPLC or NAI.
19 Holding Over by NAI. Should NAI not purchase BNPPLC’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 Lease without objection by BNPPLC, whether such termination occurs by lapse of time or otherwise, such holding over will constitute and be construed as a tenancy from day to day only on and subject to all of the terms, provisions, covenants and agreements on the part of NAI hereunder; except that the Base Rent required for each day the holding over continues will be due and payable by NAI to BNPPLC upon demand and will equal the difference computed by subtracting (a) any interest accruing on such day under the Purchase Agreement on any past due Supplemental Payment, from (b) an amount equal to (i) the difference computed by subtracting any Supplemental Payment previously made by NAI to
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BNPPLC from the Lease Balance, times (ii) the per annum Default Rate computed as of such day, divided by (iii) three hundred sixty. No payments of money by NAI to BNPPLC after the termination of this Lease will reinstate, continue or extend the Term of this Lease and no extension of this Lease after the termination thereof will be valid unless and until the same is reduced to writing and signed by both BNPPLC and NAI.
20 Recording Memorandum. Contemporaneously with the execution of this Lease, the parties will execute and record a memorandum of this Lease for purposes of effecting constructive notice to all Persons of NAI’s rights hereunder.
21 Independent Obligations Evidenced by Other Operative Documents. NAI acknowledges and agrees that nothing contained in this Lease will 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. Further, in the event of any inconsistency between the express terms and provisions of the Purchase Agreement and the express terms and provisions of this Lease, the express terms and provisions of the Purchase Agreement will control.
22 Proprietary Information and Confidentiality.
     (A) Proprietary Information. NAI will have no obligation to provide proprietary information (as defined in the next sentence) to BNPPLC, except and to the extent (1) expressly required by other terms and conditions of the Operative Documents, or (2) requested by BNPPLC in connection with any inspection of the Property pursuant to the various provisions hereof and, in BNPPLC’s reasonably determination, required to allow BNPPLC to accomplish the purposes of such inspection. (Before NAI delivers any such proprietary information in connection with any inspection of the Property, NAI may require that BNPPLC confirm and ratify the confidentiality agreements covering such proprietary information set forth herein.) For purposes of this Lease and the other Operative Documents, “proprietary information” means NAI’s intellectual property, trade secrets and other confidential information of value to NAI (including, among other things, information about NAI’s manufacturing processes, products, marketing and corporate strategies) that (1) is received by any representative of BNPPLC at the time of any on-site visit to the Property or (2) otherwise delivered to BNPPLC by or on behalf of NAI and labeled “proprietary” or “confidential” or by some other similar designation to identify it as information which NAI considers to be proprietary or confidential.
     (B) Confidentiality. BNPPLC will endeavor in good faith to use reasonable precautions to keep confidential any proprietary information that BNPPLC may receive from NAI or otherwise discover with respect to NAI or NAI’s business in connection with the administration of this Lease or any investigation by BNPPLC hereunder. This provision will not, however, render BNPPLC liable for any disclosures of proprietary information made by it or its
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employees or representatives, unless the disclosure is intentional and made for no reason other than to damage NAI’s business. Also, this provision will not apply to disclosures: (i) specifically and previously authorized in writing by NAI; (ii) to any assignee of BNPPLC as to any interest in the Property so long as such assignee has agreed in writing to use its reasonable efforts to keep such information confidential in accordance with the terms of this paragraph; (iii) to legal counsel, accountants, auditors, environmental consultants and other professional advisors to BNPPLC so long as BNPPLC informs such persons in writing (if practicable) of the confidential nature of such information and directs them to treat such information confidentially; (iv) to regulatory officials having jurisdiction over BNPPLC or BNPPLC’s Parent (although the disclosing party will request confidential treatment of the disclosed information, if practicable); (v) as required by legal process (although the disclosing party will request confidential treatment of the disclosed information, if practicable); (vi) of information which has previously become publicly available through the actions or inactions of a person other than BNPPLC not, to BNPPLC’s knowledge, in breach of an obligation of confidentiality to NAI; (vii) to any Participant so long as the Participant is bound by and has not repudiated a confidentiality provision concerning NAI’s proprietary information set forth in the Participation Agreement; or (vii) that are reasonably believed by BNPPLC to be necessary or helpful to the determination or enforcement of any contractual or other rights which BNPPLC has or may have against NAI or its Affiliates or which BNPPLC has or may have concerning the Property (provided, that BNPPLC must cooperate with NAI as NAI may reasonably request to mitigate any risk that such disclosures will result in subsequent disclosures of proprietary information which are not necessary or helpful to any such determination or enforcement; such cooperation to include, for example, BNPPLC’s agreement not to oppose a motion by NAI to seal records containing proprietary information in any court proceeding initiated because of a dispute between the parties over the Property or the Operative Documents).
Further, notwithstanding any other contrary provision contained in this Lease or the other Operative Documents, BNPPLC and NAI (and each of their respective employees, representatives or other agents) may disclose, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Lease and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment and tax structure, other than any information for which non-disclosure is reasonably necessary in order to comply with applicable securities laws and other than any information the disclosure of which would waive the attorney-client privilege, the tax advisor privilege under Section 7525 of the Internal Revenue Code, or similar privileges.
23 Amendment and Restatement of the Prior Lease. This Lease amends, restates and replaces entirely the Prior Lease. Without limiting the rights and obligations of NAI under this Lease, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Lease are now made subject to the terms and conditions of this Lease; and all rights and interests of BNPPLC in and to the Land or other Property under the
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Prior Lease are renewed and extended (rather than terminated) by this Lease.
[The signature pages follow.]
Amended and Restated Lease Agreement (Building 8) – Page 48

 

     IN WITNESS WHEREOF, this Amended and Restated Lease Agreement (Building 8) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
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[Continuation of signature pages for Amended and Restated Lease Agreement (Building 8) dated as of November 29, 2007]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Lease Agreement (Building 8) – Signature Page

 

 

Exhibit A
Legal Description
Proposed Parcel 8, and (except to the extent within a different platted Parcel as currently shown in the Map Records of the County of Santa Clara, California) proposed Parcel 12, and the Additional Leased Premises as defined below, (collectively, the “Building 8 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The southern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the southern boundary of Parcel 8 and the northern boundary of Parcel 7, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 8 and Parcel 7, as shown on the Tentative Map. The northern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 8 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
Exhibit A to Amended and Restated Lease Agreement (Building 8) – Page 2

 

 

Exhibit B
California Foreclosure Provisions
Without limiting any of the provisions set forth in the body of this Lease or other attachments to this Lease, the following provisions are included in and made a part of this Lease for all purposes:
GRANT OF LIEN AND SECURITY INTEREST.
     NAI, for and in consideration of the sum of Ten Dollars ($10.00) to NAI in hand paid by Lloyd G. Cox, Trustee, of Dallas County, Texas (in this Exhibit called the “Trustee”), in order to secure the recovery of the Lease Balance by BNPPLC and the payment of all of the other obligations, covenants, agreements and undertakings of NAI under this Lease or other Operative Documents (in this Exhibit called the “Secured Obligations”), does hereby irrevocably GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET OVER to the Trustee, IN TRUST WITH POWER OF SALE, for the benefit of BNPPLC, a leasehold estate in the Land (the terms and conditions of which leasehold estate are as set forth in the Ground Lease), together with (i) all the buildings and other improvements now on or hereafter located thereon; (ii) all materials, equipment, fixtures or other property whatsoever now or hereafter attached or affixed to or installed in said buildings and other improvements, including, but not limited to, all heating, plumbing, lighting, water heating, refrigerating, incinerating, ventilating and air conditioning equipment, utility lines and equipment (whether owned individually or jointly with others), sprinkler systems, fire extinguishing apparatus and equipment, water tanks, engines, machines, elevators, motors, cabinets, shades, blinds, partitions, window screens, screen doors, storm windows, awnings, drapes, and floor coverings, and all fixtures, accessions and appurtenances thereto, and all renewals or replacements of or substitutions for any of the foregoing, all of which are hereby declared to be permanent fixtures and accessions to the freehold and part of the realty conveyed herein as security for the obligations mentioned hereinabove; (iii) all easements and rights of way now and at any time hereafter used in connection with any of the foregoing property or as a means of ingress to or egress from the Land or for utilities to said property; (iv) all interests of NAI in and to any streets, ways, alleys and/or strips of land adjoining said land or any part thereof; (v) all rents, issues, profits, royalties, bonuses, income and other benefits derived from or produced by the Land or Improvements; (vi) all leases or subleases of the Land or Improvements or any part thereof now or hereafter in effect, including all security or other deposits, advance or prepaid rents, and deposits or payments of similar nature; (vii) all options to purchase or lease the Land or Improvements or any part thereof or interest therein, and any greater estate in the Land or Improvements now owned or hereafter acquired by NAI; (viii) all right, title, estate and interest of every kind and nature, at law or in equity, which NAI now has or may hereafter acquire in the Land or Improvements; and (ix) all other claims and demands with respect to the Land or Improvements or the Collateral (as hereinafter defined), including all claims or demands to all proceeds of all insurance now or hereafter in effect with respect to the Land, Improvements or Collateral, all awards made for the taking by condemnation or the power of eminent domain, or by any proceeding or purchase in lieu thereof, of the Land, Improvements or Collateral, or any part thereof, or any damage or injury thereto, all awards resulting from a

 

 

change of grade of streets, and all awards for severance damages; and (vi) all rights, estates, powers and privileges appurtenant or incident to the foregoing.
     TO HAVE AND TO HOLD the foregoing property (in this Exhibit called the “Mortgaged Property”) unto the Trustee, IN TRUST, and his successors or substitutes in this trust and to his or their successors and assigns upon the terms, provisions and conditions herein set forth for the benefit of BNPPLC.
     In order to secure the Secured Obligations, NAI also hereby grants to BNPPLC a security interest in: all components of the Property which constitute personalty, whether owned by NAI now or hereafter, and all fixtures, accessions and appurtenances thereto, and all renewals or replacements of or substitutions for any of the foregoing (including all building materials and equipment now or hereafter delivered to said premises and intended to be installed or in or incorporated as part of the Improvements); all rents and other amounts from and under leases of all or any part of the Property; all issues, profits and proceeds from all or any part of the Property; all proceeds (including premium refunds) of each policy of insurance relating to the Property; all proceeds from the taking of the Property or any part thereof or any interest therein or right or estate appurtenant thereto by eminent domain or by purchase in lieu thereof; all permits, licenses, franchises, certificates, and other rights and privileges obtained in connection with the Property; all plans, specifications, maps, surveys, reports, architectural, engineering and construction contracts, books of account, insurance policies and other documents, of whatever kind or character, relating to the use, construction upon, occupancy, leasing, sale or operation of the Property; all proceeds and other amounts paid or owing to NAI under or pursuant to any and all contracts and bonds relating to the construction, erection or renovation of the Property; and all oil, gas and other hydrocarbons and other minerals produced from or allocated to the Property and all products processed or obtained therefrom, the proceeds thereof, and all accounts and general intangibles under which such proceeds may arise, together with any sums of money that may now or at any time hereafter become due and payable to NAI by virtue of any and all royalties, overriding royalties, bonuses, delay rentals and any other amount of any kind or character arising under any and all present and future oil, gas and mining leases covering the Property or any part thereof (all of the property described in this section are collectively called the “Collateral” in this Exhibit) and all proceeds of the Collateral. (The Mortgaged Property and the Collateral are in this Exhibit sometimes collectively called the “Security”.)
FORECLOSURE BY POWER OF SALE
     Upon the occurrence of any Event of Default, the Trustee, its successor or substitute, and/or BNPPLC is authorized and empowered to execute all written notices then required by law to cause the Security to be sold under power of sale to satisfy the Secured Obligations. Trustee will give and record such notices as the law then requires as a condition precedent to a trustee’s sale. When the minimum period of time required by law after giving all required notices has elapsed, Trustee, without notice to or demand upon NAI except as otherwise required by law,
Exhibit B to Amended and Restated Lease Agreement (Building 8) – Page 2

 

 

will sell the Security at the time and place of sale fixed by it in the notice of sale, at one or several sales, either as a whole or in separate parcels and in such manner and order, all as BNPPLC or Trustee in its sole discretion may determine, at public auction to the highest bidder for cash, in lawful money of the United States, payable at the time of sale (the obligations hereby secured being the equivalent of cash for purposes of said sale). NAI will have no right to direct the order in which the Security is sold or to require that the Security be sold in separate lots or parcels or items. The sale by the Trustee of less than the whole of the Mortgaged Property will not exhaust the power of sale herein granted, and the Trustee is specifically empowered to make successive sale or sales under such power until the whole of the Mortgaged Property is sold; and, if the proceeds of such sale of less than the whole of the Mortgaged Property is less than the aggregate of the indebtedness secured hereby and the expense of executing this trust as provided herein, the rights and remedies of BNPPLC hereunder and the lien hereof will remain in full force and effect as to the unsold portion of the Mortgaged Property just as though no sale or sales had been made; provided, however, that NAI will never have any right to require the sale of less than the whole of the Mortgaged Property but BNPPLC will have the right, at its sole election, to request the Trustee to sell less than the whole of the Mortgaged Property. Subject to requirements and limits imposed by law, including California Civil Code § 2924g, Trustee may postpone sale of all or any portion of the Security by public announcement at such time and place of sale and from time to time may postpone the sale by public announcement at the time and place fixed by the preceding postponement. Any person or entity, including Trustee, NAI or BNPPLC, may purchase at the sale, and NAI hereby covenants to warrant and defend the title of such purchaser or purchasers. Trustee will deliver to the purchaser at such sale a deed conveying the Security or portion thereof so sold, but without any covenant or warranty, express or implied. At any such sale (i) NAI hereby agrees, in its behalf and in behalf of its heirs, executors, administrators, successors, personal representatives and assigns, that any and all recitals made in any deed of conveyance given by Trustee of any matters or facts stated therein, including without limitation, the identity of BNPPLC, the occurrence or existence of any default, the acceleration of the maturity of any of the Secured Obligations, the request to sell, the notice of sale, the giving of notice to all debtors legally entitled thereto, the time, place, terms, and manner of sale, and receipt, distribution and application of the money realized therefrom, and the due and proper appointment of a substitute Trustee and any other act or thing duly done by BNPPLC or by Trustee hereunder, will be taken by all courts of law and equity as prima facie evidence that the statement or recitals state facts and are without further question to be so accepted as conclusive proof of the truthfulness thereof, and NAI hereby ratifies and confirms every act that Trustee or any substitute Trustee hereunder may lawfully do in the premises by virtue hereof; and (ii) the purchaser may disaffirm any easement granted, or rental, lease or other contract made, in violation of any provision of any of the Operative Documents, and may take immediate possession of the Security free from, and despite the terms, of, such grant of easement and rental or lease contract.
BNPPLC may elect to cause the Security or any part thereof to be sold under the power of sale herein granted in any manner permitted by applicable law. In connection with any sale or sales
Exhibit B to Amended and Restated Lease Agreement (Building 8) – Page 3

 

 

hereunder, BNPPLC may elect to treat any portion of the Security which consists of a right in action or which is property that can be severed from the Security without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of the real property. Any sale of any personal property hereunder will be conducted in any manner permitted by the California Uniform Commercial Code (in this Exhibit called the “Code”). Where any portion of the Security consists of real property and personal property or fixtures, whether or not such personal property is located on or within the real property, BNPPLC may elect in its discretion to exercise its rights and remedies against any or all of the real property, personal property and fixtures, in such order and manner as is now or hereafter permitted by applicable law. Without limiting the generality of the foregoing, BNPPLC may, in its sole and absolute discretion and without regard to the adequacy of its security, elect to proceed against any or all of the real property, personal property and fixtures in any manner permitted by the Code; and if BNPPLC elects to sell both personal property and real property together as permitted by the Code, the power of sale herein granted will be exercisable with respect to all or any of the real property, personal property and fixtures covered hereby, as designated by BNPPLC, and Trustee is hereby authorized and empowered to conduct any such sale of any real property, personal property and fixtures in accordance with the procedures applicable to real property. Where any portion of the Security consists of real property and personal property, any reinstatement of the Secured Obligations, following default and an election by BNPPLC to accelerate the maturity of said obligations, which is made by NAI or any other person or entity permitted to exercise the right of reinstatement under § 2924c of the California Civil Code or any successor statute, will, in accordance with the terms of Code, not prohibit BNPPLC or Trustee from conducting a sale or other disposition of any personal property or fixtures or from otherwise proceeding against or continuing to proceed against any personal property or fixtures in any manner permitted by the Code, nor will any such reinstatement invalidate, rescind or otherwise affect any sale, disposition or other proceeding held, conducted or instituted with respect to any personal property or fixtures prior to such reinstatement or pending at the time of such reinstatement. Any sums paid to BNPPLC in effecting any reinstatement pursuant to § 2924c of the California Civil Code will be applied to the indebtedness secured hereby, and to BNPPLC’s reasonable costs and expenses in the manner required by § 2924c. Should BNPPLC elect to sell any portion of the Security which is real property, or which is personal property or fixtures that BNPPLC has elected to sell together with the real property in accordance with the laws governing a sale of real property, BNPPLC or Trustee will give such notice of default and election to sell as may then be required by law, and without the necessity of any demand on NAI, Trustee, at the time(s) and place(s) specified in the notice of sale, will sell said real property, and all estate, right, title, interest, claim and demand therein, and equity and right of redemption thereof, at such times and places as required or permitted by law, upon such terms as BNPPLC or Trustee may fix and specify in the notice of sale or as may be required by law. If the Security consists of several lots, parcels or items of property, BNPPLC may: (i) designate the order in which such lots, parcels or items will be offered for sale or sold, or (ii) elect to sell such lots, parcels or items through a single sale, or through two or more successive sales, or in any other manner BNPPLC deems in its best interest.
Exhibit B to Amended and Restated Lease Agreement (Building 8) – Page 4

 

 

Should BNPPLC desire that more than one sale or other disposition of the Mortgaged Property be conducted, BNPPLC may, at its option, cause the same to be conducted simultaneously, or successively, on the same day, or on such different days or times and in such order as BNPPLC may deem to be in its best interests, and no such sale will exhaust the power of sale herein granted or terminate or otherwise affect the lien granted by NAI herein on, or the security interests of BNPPLC in, any part of the Security not sold, until all of the indebtedness secured hereby has been fully paid and satisfied. In the event BNPPLC elects to dispose of the Security through more than one sale, NAI agrees to pay the costs and expenses of each such sale and of any judicial proceedings wherein the same may be made, including reasonable compensation to BNPPLC and Trustee, their agents and counsel, and to pay all expenses, liabilities and advances made or incurred by BNPPLC and Trustee (or either of them) in connection with such sale or sale, together with interest on all such advances made by BNPPLC and Trustee (or either of them) at the Default Rate..
JUDICIAL FORECLOSURE
     This instrument will be effective as a mortgage as well as a deed of trust and upon the occurrence of an Event of Default may be foreclosed as to any of the Security in any manner permitted by the laws of the State of California or of any other state in which any part of the Security is situated, and any foreclosure suit may be brought by the Trustee or by BNPPLC. In the event a foreclosure hereunder is commenced by the Trustee, or his substitute or successor, BNPPLC may at any time before the sale of the Security direct the said Trustee to abandon the sale, and may then institute suit for the collection of the Secured Obligations and for the judicial foreclosure of this instrument. It is agreed that if BNPPLC should institute a suit for the collection of the Secured Obligations and for the foreclosure of this instrument, BNPPLC may at any time before the entry of a final judgment in said suit dismiss the same, and require the Trustee, his substitute or successor to exercise the power of sale granted herein to sell the Security in accordance with the provisions of this instrument.
BNPPLC AS PURCHASER
     BNPPLC will have the right to become the purchaser at any sale held by any Trustee or substitute or successor or by any receiver or public officer, and any BNPPLC purchasing at any such sale will have the right to credit upon the amount of the bid made therefor, to the extent necessary to satisfy such bid, the outstanding Lease Balance and other Secured Obligations owing to such BNPPLC.
UNIFORM COMMERCIAL CODE REMEDIES
     Upon the occurrence of an Event of Default, BNPPLC may exercise its rights of enforcement with respect to the Collateral under the California Uniform Commercial Code, as
Exhibit B to Amended and Restated Lease Agreement (Building 8) – Page 5

 

 

amended, and in conjunction with, in addition to or in substitution for those rights and remedies:
     (a) BNPPLC may enter upon the Land to take possession of, assemble and collect the Collateral or to render it unusable; and
     (b) BNPPLC may require NAI to assemble the Collateral and make it available at a place BNPPLC designates which is mutually convenient to allow BNPPLC to take possession or dispose of the Collateral; and
     (c) written notice mailed to NAI as provided herein ten (10) days prior to the date of public sale of the Collateral or prior to the date after which private sale of the Collateral will be made shall constitute reasonable notice; and
     (d) any sale made pursuant to the provisions of this section will be deemed to have been a public sale conducted in a commercially reasonable manner if held contemporaneously with the sale of the Mortgaged Property under power of sale as provided herein upon giving the same notice with respect to the sale of the Collateral hereunder as is required for such sale of the Mortgaged Property under power of sale; and
     (e) in the event of a foreclosure sale, whether made by the Trustee exercising the power of sale granted herein, or under judgment of a court, the Collateral and the Mortgaged Property may, at the option of BNPPLC, be sold as a whole; and
     (f) it will not be necessary that BNPPLC take possession of the Collateral or any part thereof prior to the time that any sale pursuant to the provisions of this section is conducted and it will not be necessary that the Collateral or any part thereof be present at the location of such sale; and
     (g) prior to application of proceeds of disposition of the Collateral to the Secured Obligations, such proceeds will be applied to the reasonable expenses of retaking, holding, preparing for sale or lease, selling, leasing and the like and the reasonable attorney’s fees and legal expenses incurred by BNPPLC; and
     (h) any and all statements of fact or other recitals made in any bill of sale or assignment or other instrument evidencing any foreclosure sale hereunder as to nonpayment of the Secured Obligations or as to the occurrence of any Event of Default, or as to BNPPLC having declared any of the Secured Obligations to be due and payable, or as to notice of time, place and terms of sale and of the properties to be sold having been duly given, or as to any other act or thing having been duly done by BNPPLC, will be taken as prima facie evidence of the truth of the facts so stated and recited; and
     (i) BNPPLC may appoint or delegate any one or more persons as agent to
Exhibit B to Amended and Restated Lease Agreement (Building 8) – Page 6

 

 

perform any act or acts necessary or incident to any sale held by BNPPLC, including the sending of notices and the conduct of the sale, but in the name and on behalf of BNPPLC.
APPOINTMENT OF A RECEIVER
     In addition to all other remedies herein provided for, if any Event of Default occurs or continues after the Designated Sale Date, BNPPLC will as a matter of right be entitled to the appointment of a receiver or receivers for all or any part of the Security, whether such receivership be incident to a proposed sale of such property or otherwise, and without regard to the adequacy of the security or the value of the Security or the solvency of any person or persons liable for the payment of the Secured Obligations, and NAI does hereby irrevocably consent to the appointment of such receiver or receivers, waives any and all defenses to such appointment and agrees not to oppose any application therefor by BNPPLC, but nothing herein is to be construed to deprive BNPPLC of any other right, remedy or privilege it may now have under the law to have a receiver appointed. Any such receiver or receivers will have all of the usual powers and duties of receivers in like or similar cases and will continue as such and exercise all such powers until the date of confirmation of sale of the Security unless such receivership is sooner terminated. Any money advanced by BNPPLC in connection with any such receivership will be a demand obligation owing by NAI to BNPPLC and will bear interest from the date of making such advancement by BNPPLC until paid at the Default Rate and will be a part of the Secured Obligations and will be secured by this lien and by any other instrument securing the Secured Obligations.
PROVISIONS CONCERNING THE TRUSTEE
     Trustee accepts this trust when a Short Form Lease or memorandum referencing the provisions of this Exhibit, duly executed and acknowledged, is made a public record as provided by law. The trust hereby created will be irrevocable by NAI.
     In the event the Trustee takes any action pursuant to the provisions of this Exhibit, NAI must pay to Trustee reasonable compensation for services rendered in the administration of this trust, which will be in addition to any required reimbursement for Attorney’s Fees or other expenses.
     BNPPLC may appoint a substitute to replace and act as the Trustee hereunder in any manner now or hereafter provided by law, or in lieu thereof, BNPPLC may from time to time, by an instrument in writing, appoint substitutes as successor or successors to any Trustee named herein or acting hereunder, which instrument, executed and acknowledged by BNPPLC and recorded in the Office of the Recorder of the county in which the Property is located, will be conclusive proof of proper substitution of such successor Trustee or Trustees, who will thereupon and without conveyance from the predecessor Trustee, succeed to all its title, estate, rights,
Exhibit B to Amended and Restated Lease Agreement (Building 8) – Page 7

 

 

powers and duties. Such instrument must contain the name of the original NAI, Trustee and BNPPLC hereunder, the instrument number of this Deed of Trust, and the name and address of the successor Trustee. In the event the Secured Obligations are at any time owned by more than one person or entity, the holder or holders of not less than a majority in the amount of such Secured Obligations will have the right and authority to make the appointment of a successor or substitute trustee provided for in the preceding sentences. Such appointment and designation by BNPPLC or by the holder or holders of not less than a majority of the Secured Obligations will be full evidence of the right and authority to make the same and of all facts therein recited. If BNPPLC is a corporation and such appointment is executed in its behalf by an officer of such corporation, such appointment will be conclusively presumed to be executed with authority and will be valid and sufficient without proof of any action by the board of directors or any superior officer of the corporation. Upon the making of any such appointment and designation, all of the estate and title of the Trustee in the Security will vest in the named successor or substitute trustee and he will thereupon succeed to and will hold, possess and execute all the rights, powers, privileges, immunities and duties herein conferred upon the Trustee; but nevertheless, upon the written request of BNPPLC or of the successor or substitute Trustee, the Trustee ceasing to act must execute and deliver an instrument transferring to such successor or substitute Trustee all of the estate and title in the Security of the Trustee so ceasing to act, together with all the rights, powers, privileges, immunities and duties herein conferred upon the Trustee, and must duly assign, transfer and deliver any of the properties and moneys held by said Trustee hereunder to said successor or substitute Trustee. All references herein to the Trustee will be deemed to refer to the Trustee (including any successor or substitute appointed and designated as herein provided) from time to time acting hereunder. NAI hereby ratifies and confirms any and all acts which the herein named Trustee or his successor or successors, substitute or substitutes, in this trust, do lawfully by virtue hereof.
     THE TRUSTEE WILL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT OR ACT DONE BY THE TRUSTEE IN GOOD FAITH, OR BE OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES WHATSOEVER (INCLUDING THE TRUSTEE’S NEGLIGENCE), EXCEPT FOR THE TRUSTEE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. The Trustee will have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by him hereunder, believed by him in good faith to be genuine. All moneys received by the Trustee will, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law), and the Trustee will be under no liability for interest on any moneys received by him hereunder. NAI WILL REIMBURSE THE TRUSTEE FOR, AND INDEMNIFY AND SAVE HIM HARMLESS AGAINST, ANY AND ALL LIABILITY AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES) WHICH MAY BE INCURRED BY HIM IN THE PERFORMANCE OF HER DUTIES HEREUNDER (INCLUDING ANY LIABILITY AND EXPENSES RESULTING FROM THE TRUSTEE’S OWN NEGLIGENCE). The foregoing indemnity will not terminate upon release, foreclosure or other termination of this
Exhibit B to Amended and Restated Lease Agreement (Building 8) – Page 8

 

 

instrument.
MISCELLANEOUS
     BNPPLC may resort to any security given by this instrument or to any other security now existing or hereafter given to secure the payment of the Secured Obligations, in whole or in part, and in such portions and in such order as may seem best to BNPPLC in its sole and uncontrolled discretion, and any such action will not in anywise be considered as a waiver of any of the rights, benefits, liens or security interests evidenced by this instrument.
     To the full extent NAI may do so, NAI agrees that NAI will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force pertaining to the rights and remedies of sureties or redemption, and NAI, for NAI and NAI’s successors and assigns, and for any and all persons ever claiming any interest in the Security, to the extent permitted by law, hereby waives and releases all rights of redemption, valuation, appraisement, stay of execution, notice of intention to mature or declare due the whole of the Secured Obligations, notice of election to mature or declare due the whole of the Secured Obligations and all rights to a marshaling of the assets of NAI, including the Security, or to a sale in inverse order of alienation in the event of foreclosure of the liens and security interests hereby created. NAI will not have or assert any right under any statute or rule of law pertaining to the marshaling of assets, sale in inverse order of alienation, the exemption of homestead, the administration of estates of decedents or other matters whatever to defeat, reduce or affect the right of BNPPLC under the terms of this instrument to a sale of the Security for the collection of the Secured Obligations without any prior or different resort for collection, or the right of BNPPLC under the terms of this instrument to the payment of the Secured Obligations out of the proceeds of sale of the Security in preference to every other claimant whatever. If any law referred to in this section and now in force, of which NAI or NAI’s successors and assigns and such other persons claiming any interest in the Security might take advantage despite this provision, is hereafter repealed or ceases to be in force, such law shall not thereafter be deemed to preclude the application of this provision.
     In the event there is a foreclosure sale hereunder and at the time of such sale NAI or NAI’s successors or assigns or any other persons claiming any interest in the Security by, through or under NAI are occupying or using the Security, or any part thereof, each and all will immediately become the tenant of the purchaser at such sale. Such tenancy will be a tenancy from day-to-day, terminable at the will of either landlord or tenant, at a reasonable rental per day based upon the value of the property occupied, such rental to be due daily to the purchaser. In the event the tenant fails to surrender possession of said property upon demand, the purchaser will be entitled to institute and maintain an action to obtain possession in any court of competent jurisdiction in California.
     NAI agrees to pay BNPPLC for each statement of BNPPLC (as beneficiary) regarding the
Exhibit B to Amended and Restated Lease Agreement (Building 8) – Page 9

 

 

obligations secured hereby the maximum fee allowed by law or, if there is no maximum fee, such reasonable fee as is then charged by BNPPLC for rendering such statement.
     Notwithstanding any contrary provisions regarding the giving of notices in the Common Definitions or Provisions Agreement or other Operative Documents, any service of a notice required by California Civil Code §2924 will be considered complete when the requirements of that statute are met.
     All rights of action under this Exhibit be enforced by BNPPLC or Trustee without the possession of any instruments secured hereby and without the production thereof or of this Lease or other Operative Documents at any trial or other proceeding relative thereto.
Exhibit B to Amended and Restated Lease Agreement (Building 8) – Page 10

 

exv10w42
Exhibit 10.42
AMENDED AND RESTATED
COMMON DEFINITIONS
AND PROVISIONS AGREEMENT
(BUILDING 8)
between
BNP PARIBAS LEASING CORPORATION
and
NETWORK APPLIANCE, INC.
Dated as of November 29, 2007
 

 

 

TABLE OF CONTENTS
         
    Page  
ARTICLE I — LIST OF DEFINED TERMS
     1  
97-10/Maximum Permitted Prepayment
     1  
97-10/Meltdown Event
     1  
97-10/Prepayment
     1  
97-10/Project Costs
     1  
97-10/Pronouncement
     1  
ABR
     2  
ABR Period Election
     2  
Active Negligence
     2  
Additional Rent
     2  
Administrative Fees
     2  
Advance Date
     2  
Affiliate
     3  
After Tax Basis
     3  
Applicable Laws
     3  
Applicable Purchaser
     3  
Appurtenant Easements
     3  
Arrangement Fee
     3  
Attorneys’ Fees
     3  
Balance of Unpaid Construction Period Losses
     3  
Banking Rules Change
     3  
Base Rent
     4  
Base Rent Commencement Date
     4  
Base Rent Date
     4  
Base Rent Period
     5  
BNPPLC
     5  
BNPPLC’s Parent
     5  
Breakage Costs
     6  
Break Even Price
     6  
Business Day
     6  
Capital Adequacy Charges
     6  
Carrying Costs
     6  
Closing Certificate
     7  
Closing Letter
     7  
Code
     7  
Commitment Fees
     7  
Common Definitions and Provisions Agreement
     7  
Completion Date
     7  
Completion Notice
     7  
Consolidated Debt for Borrowed Money
     7  

 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
Consolidated EBITDA
     7  
Constituent Documents
     7  
Construction Advances
     7  
Construction Advance Request
     7  
Construction Agreement
     7  
Construction Allowance
     8  
Construction Period
     8  
Construction Project
     8  
Covered Construction Period Losses
     8  
Default
     8  
Default Rate
     8  
Defective Work
     8  
Designated Sale Date
     8  
Effective Date
     9  
Effective Rate
     10  
Eligible Financial Institution
     10  
Environmental Cutoff Date
     11  
Environmental Laws
     11  
Environmental Losses
     11  
Environmental Report
     12  
ERISA
     12  
ERISA Affiliate
     12  
ERISA Termination Event
     12  
Escrowed Proceeds
     13  
Established Misconduct
     13  
Eurocurrency Liabilities
     14  
Eurodollar Rate Reserve Percentage
     14  
Event of Default
     14  
Excluded Taxes
     17  
Fed Funds Rate
     18  
Fixed Rate
     18  
Fixed Rate Lock
     18  
Fixed Rate Lock Date
     18  
Fixed Rate Lock Termination
     18  
Fixed Rate Lock Termination Date
     18  
Fixed Rate Lock Notice
     19  
Fixed Rate Loss
     19  
Fixed Rate Settlement Amount
     19  

(ii) 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
Fixed Rate Swap
     19  
Floating Rate Payor
     19  
FOCB Notice
     19  
Force Majeure Event
     19  
Fully Subordinated or Removable
     20  
Funded Construction Allowance
     20  
Funding Advances
     20  
Future Work
     20  
GAAP
     20  
Ground Lease
     21  
Hazardous Substance
     21  
Hazardous Substance Activity
     21  
Improvements
     21  
Increased Commitment
     22  
Increased Funding Commitment
     22  
Increased Time Commitment
     22  
Indebtedness
     22  
Initial Advance
     23  
Initial Lease Balance
     23  
Interested Party
     24  
Interest Rate Swap
     24  
Land
     24  
Lease
     24  
Lease Balance
     24  
Lease Termination Damages
     25  
Liabilities
     25  
LIBOR
     25  
LIBOR Period Election
     26  
Lien
     27  
Liens Removable by BNPPLC
     27  
Local Impositions
     28  
Losses
     28  
Market Quotation
     28  
Maximum Construction Allowance
     29  
Maximum Remarketing Obligation
     29  
Minimum Insurance Requirements
     29  
Multiemployer Plan
     29  
NAI
     29  

(iii) 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
NAI’s Estimate of Force Majeure Excess Costs
     29  
NAI’s Estimate of Force Majeure Delays
     29  
NAI’s Initial Remarketing Right
     29  
Notice of NAI’s Intent to Terminate
     29  
Notice of NAI’s Intent to Terminate Because of a Force Majeure Event
     29  
Notice of Termination by NAI
     29  
Operative Documents
     29  
Outstanding Construction Allowance
     30  
Owner’s Election to Continue Construction
     30  
Participant
     30  
Participation Agreement
     30  
Period
     31  
Permitted Encumbrances
     31  
Permitted Hazardous Substance Use
     31  
Permitted Hazardous Substances
     32  
Permitted Transfer
     32  
Person
     32  
Personal Property
     33  
Plan
     33  
Pre-lease Casualty
     33  
Pre-lease Force Majeure Delays
     33  
Pre-lease Force Majeure Event
     33  
Pre-lease Force Majeure Event Notice
     33  
Pre-lease Force Majeure Excess Costs
     33  
Pre-lease Force Majeure Losses
     33  
Prime Rate
     33  
Prior Closing Certificate and Agreement
     33  
Prior Common Definitions and Provisions Agreement
     34  
Prior Construction Agreement
     34  
Prior Ground Lease
     34  
Prior Lease
     34  
Prior Operative Documents
     34  
Prior Purchase Agreement
     34  
Prior Work
     34  
Projected Cost Overruns
     34  
Property
     34  
Purchase Agreement
     34  
Purchase Option
     34  

(iv) 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
Qualified Affiliate
     34  
Qualified Income Payments
     35  
Qualified Prepayments
     35  
Real Property
     36  
Reimbursable Construction-Period Costs
     36  
Remedial Work
     36  
Rent
     36  
Responsible Financial Officer
     36  
Rolling Four Quarters Period
     36  
Scope Change
     36  
Spread
     36  
Subsidiary
     38  
Supplemental Payment
     38  
Supplemental Payment Obligation
     38  
Tangible Personal Property
     38  
Target Completion Date
     38  
Term
     39  
Termination of NAI’s Work
     39  
Third Party Contract
     39  
Third Party Contract/Termination Fees
     39  
Transaction Expenses
     39  
Unfunded Benefit Liabilities
     39  
Upfront Fees
     39  
Work
     39  
Work/Suspension Event
     39  
Work/Suspension Notice
     39  
Work/Suspension Period
     39  
 
        
ARTICLE II — SHARED PROVISIONS
     39  
1. Notices
     39  
2. Severability
     42  
3. No Merger
     42  
4. No Implied Waiver
     42  
5. Entire and Only Agreements
     43  
6. Binding Effect
     43  
7. Time is of the Essence
     43  
8. Governing Law
     43  

(v) 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
9. Paragraph Headings
     43  
10. Negotiated Documents
     43  
11. Terms Not Expressly Defined in an Operative Document
     43  
12. Other Terms and References
     43  
13. Execution in Counterparts
     44  
14. Not a Partnership, Etc
     45  
15. No Fiduciary Relationship Intended
     45  
16. Amendment and Restatement of Prior Agreement
     45  
Annexes
     
Annex 1
  ABR Period Election Form
 
    
Annex 2
  Fixed Rate Lock Notice Form
 
    
Annex 3
  LIBOR Period Election Form
 
    
Annex 4
  Minimum Insurance Requirements

(vi) 

 

AMENDED AND RESTATED
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(BUILDING 8)
     This AMENDED AND RESTATED COMMON DEFINITIONS AND PROVISIONS AGREEMENT (BUILDING 8) (this “Agreement”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Agreement, NAI and BNPPLC are executing the Closing Certificate (as defined below), the Ground Lease (as defined below), the Lease (as defined below), the Construction Agreement (as defined below) and the Purchase Agreement (as defined below), all of which concern NAI or the Property (as defined below). Each of the Closing Certificate, the Ground Lease, the Lease, the Construction Agreement and the Purchase Agreement (together with this Agreement, the “Operative Documents”) are intended to create separate and independent obligations upon the parties thereto. However, NAI and BNPPLC intend that all of the Operative Documents share certain consistent definitions and other miscellaneous provisions. To that end, the parties are executing this Agreement 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 will have the respective indicated meanings as used herein and in the other Operative Documents:
     “97-10/Maximum Permitted Prepayment” has the meaning indicated in the Construction Agreement .
     “97-10/Meltdown Event” has the meaning indicated in the Construction Agreement.
     “97-10/Prepayment” has the meaning indicated in the Construction Agreement.
     “97-10/Project Costs“has the meaning indicated in the Construction Agreement.
     “97-10/Pronouncement” has the meaning indicated in the Construction Agreement.

 

 

     “ABR” means, for any day, a fluctuating rate of interest per annum (rounded upwards, if necessary, to the next 1/100th of 1%) equal to the higher of (a) the Prime Rate in effect on such day and (b) the Fed Funds Rate in effect one day prior to such day plus 1/4 of 1% per annum. For any period (including any Base Rent Period), “ABR” means the average of the ABR for each day during such period.
     “ABR Period Election” means an election to have the Effective Rate for any Period calculated by reference to the ABR, rather than by reference to LIBOR or a Fixed Rate. NAI may (subject to the limitations and qualifications set forth in this definition) make any Period after the first Construction Period subject to an ABR Period Election by a notice given to BNPPLC in the form attached as Annex 1 at least five Business Days prior to the commencement of such Period. After an ABR Period Election becomes effective, it will remain in effect for all subsequent Periods until the Fixed Rate Lock Date for any Fixed Rate Lock or a different election is made in accordance with the provisions of this definition and the definition of LIBOR Period Election. In no event will changes in any ABR Period Election or LIBOR Period Election become effective except upon the commencement of a new Period. (For purposes of the Operative Documents, an ABR Period Election for any Period will also be considered in effect on the Effective Date, Advance Date, Base Rent Commencement Date or Base Rent Date upon which such Period begins.)
     “Active Negligence” of any Person 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 (other than NAI) in a manner that proximately causes actual bodily injury or property damage for which NAI does not carry (and is not obligated by the Construction Agreement or the Lease to carry) insurance. “Active Negligence” will not include (1) any negligent failure of BNPPLC to act when the duty to act would not have been imposed but for BNPPLC’s status as owner of any interest in the Land, the Improvements or any other Property or as a party to the transactions described in the Lease or the other Operative Documents, (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 BNPPLC or participation or facilitation in any manner, directly or indirectly, of the transactions described in the Lease or other Operative Documents, or (3) the exercise in a lawful manner by BNPPLC (or any party lawfully claiming through or under BNPPLC) of any right or remedy provided in or under the Lease or the other Operative Documents.
     “Additional Rent” has the meaning indicated in subparagraph 3(F) of the Lease.
     “Administrative Fees” means the fees identified as such in subparagraph 3(E) of the Lease and subparagraph 3(A) of the Construction Agreement.
     “Advance Date” means, regardless of whether any Construction Advance is actually
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 2

 

 

made on such date, the first Business Day of every calendar month, beginning with the first Business Day in December, 2007 and continuing regularly thereafter to and including the Base Rent Commencement Date, which will be the last Advance 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.
     “After Tax Basis” has the meaning indicated in subparagraph 5(C)(1) of the Lease.
     “Applicable Laws” means any or all of the following, to the extent applicable to BNPPLC, NAI, the Property or the Operative Documents, after giving effect to the contractual choice of law provisions in the 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 to purchase BNPPLC’s interest in the Property and in any Escrowed Proceeds as provided in the Purchase Agreement.
     “Appurtenant Easements” has the meaning indicated in Exhibit A attached to the Ground Lease.
     “Arrangement Fee” has the meaning indicated in the Construction Agreement.
     “Attorneys’ Fees” means the expenses and reasonable fees of counsel to the parties incurring the same, including costs or expenses of in-house counsel (whether or not accounted for as general overhead or administrative expenses) and 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 will also include all such expenses and reasonable fees 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 Losses” has the meaning indicated in the Purchase Agreement.
     “Banking Rules Change” means either: (1) the introduction of or any change after the
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 3

 

 

Effective Date (other than any change by way of imposition or increase of reserve requirements included in the Eurodollar Rate Reserve Percentage) in any law or regulation applicable to BNPPLC, BNPPLC’s Parent or any 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 BNPPLC, BNPPLC’s Parent or any Participant with any new guideline or new request issued after the Effective Date from any central bank or other governmental authority (whether or not having the force of law).
     “Base Rent” means the rent payable by NAI pursuant to subparagraph 3(A) of the Lease.
     “Base Rent Commencement Date” means the first Business Day of the first calendar month after the Completion Date.
     “Base Rent Date” means a date upon which Base Rent must be paid under the Lease, all of which dates will be the first Business Day of a calendar month. The first Base Rent Date will be determined as follows:
     a) If an ABR Period Election or 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 will be the first Base Rent Date.
     b) If a LIBOR Period Election of three months or six months is in effect on the Base Rent Commencement Date, then the first Business Day of the third calendar month following the Base Rent Commencement Date will be the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date will 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 an ABR Period Election or a LIBOR Period Election of one month is in effect on a Base Rent Date, or if a Fixed Rate Lock commences or continues on a Base Rent Date, then the first Business Day of the first calendar month following such Base Rent Date will be the next following Base Rent Date.
     (2) If a LIBOR Period Election of three months or longer is in effect on a Base Rent Date, then the first Business Day of the third calendar month following such Base Rent Date will be the next following Base Rent Date.
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and Provisions Agreement (Building 8) – Page 4

 

 

Thus, for example, if the Base Rent Commencement Date falls on the first Business Day of September, 2008 and a LIBOR Period Election of three months commences on the Base Rent Commencement Date, then the first Base Rent Date will be the first Business Day of December, 2008.
     “Base Rent Period” means a period for which Base Rent must be paid under the Lease, each of which periods will correspond to the ABR Period Election or LIBOR Period Election for the period (except when a Fixed Rate Lock continues in effect). The first Base Rent Period will begin on and include the Base Rent Commencement Date, and each successive Base Rent Period will begin on and include the Base Rent Date upon which the preceding Base Rent Period ends. Each Base Rent Period, including the first Base Rent Period, will 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 an ABR Period Election or a LIBOR Period Election of one month or three months is in effect for a Base Rent Period, or if a Fixed Rate Lock commences or continues on the first day of the Base Rent Period, then such Base Rent Period will end on but not include the first Base Rent Date after the Base Rent Date upon which such period began.
     (2) If a LIBOR Period Election of six months is in effect for a Base Rent Period, then such Base Rent Period will end on but not include 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, 2009, 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 but not include the first Business Day in April, 2009, the third calendar month after January, 2009.
     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, 2009, 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, 2009.
     “BNPPLC” means BNPPLC Leasing Corporation, a Delaware corporation.
     “BNPPLC’s Parent” means BNP Paribas, a bank organized and existing under the laws of France, and any successors of such bank.
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 5

 

 

     “Breakage Costs” means any and all costs, losses or expenses incurred or sustained by BNPPLC’s Parent (as a Participant or otherwise) or any Participant, for which BNPPLC’s Parent or the Participant requests reimbursement from BNPPLC, because of:
     (1) the resulting liquidation or redeployment of deposits or other funds that were 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) the resulting liquidation or redeployment of deposits or other funds that were reserved to provide a Construction Advance requested by NAI, if and when the Construction Advance is not made as anticipated, either because NAI declined to accept the Construction Advance for any reason or because NAI failed to satisfy any of the conditions to such Construction Advance specified in the Construction Agreement; or
     (3) the resulting liquidation or redeployment of deposits or other funds that were used to make or maintain Funding Advances upon the acceleration of the end of any Construction Period or Base Rent Period because of an acceleration of the Designated Sale Date as described in clauses (2) or (3) of the definition thereof.
Breakage Costs will include, for example, losses on Funding Advances maintained by BNPPLC’s Parent or any Participant which are attributable to any decline in LIBOR as of the effective date of any application described in the clause (1) preceding, as compared to the LIBOR used to determine the Effective Rate then in effect. Each determination of Breakage Costs by BNPPLC’s Parent or by any Participant, as applicable, will be conclusive and binding upon NAI in the absence of clear and demonstrable error.
     “Break Even Price” has the meaning indicated in 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, 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” will mean any day described in clause (1).
     “Capital Adequacy Charges” means any additional amounts BNPPLC’s Parent or any Participant requests BNPPLC to pay as compensation for an increase in required capital as provided in subparagraph 5(B)(2) of the Lease.
     “Carrying Costs” has the meaning indicated in the Construction Agreement.
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 6

 

 

     “Closing Certificate” means the Amended and Restated Closing Certificate and Agreement (Building 8) dated as of the Effective Date executed by NAI and BNPPLC, as such Closing Certificate and Agreement may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
     “Closing Letter” means the letter agreement dated as of the Effective Date between BNPPLC and NAI confirming the amount of the Initial Advance and the Transactions Expenses paid from the Initial Advance.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Commitment Fees” has the meaning indicated in the Construction Agreement.
     “Common Definitions and Provisions Agreement” means this Agreement, which is incorporated by reference into each of the other Operative Documents, as this Agreement may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
     “Completion Date” has the meaning indicated in the Construction Agreement.
     “Completion Notice” has the meaning indicated in the Construction Agreement.
     “Consolidated Debt for Borrowed Money” has the meaning indicated in subparagraph 3(A) of the Closing Certificate.
     “Consolidated EBITDA” has the meaning indicated in subparagraph 3(A) of the Closing Certificate.
     “Constituent Documents” of any entity means the organizational documents pursuant to which such entity was created and is governed, such as the articles of incorporation and bylaws of a corporation, the articles of organization and regulations of a limited liability company or the partnership agreement of a partnership.
     “Construction Advances” has the meaning indicated in the Construction Agreement.
     “Construction Advance Request” has the meaning indicated in the Construction Agreement.
     “Construction Agreement” means the Amended and Restated Construction Agreement (Building 8) dated as of the Effective Date between BNPPLC and NAI, as such Construction Agreement may be extended, supplemented, amended, restated or otherwise modified from time
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 7

 

 

to time in accordance with its terms.
     “Construction Allowance” has the meaning indicated in the Construction 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 will begin on and include the day on which the preceding Construction Period ends and will end on but not include the next following Advance Date, until the last Construction Period, which will 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 purchases BNPPLC’s interest in the Property pursuant to the Purchase Agreement.
     “Construction Project” has the meaning indicated in the Construction Agreement.
     “Covered Construction Period Losses” has the meaning indicated in the Construction Agreement.
     “Default” means any event or circumstance which constitutes, or which would with the passage of time or the giving of notice or both (if not cured within any applicable cure period) constitute, an Event of Default.
     “Default Rate” means, a floating per annum rate equal to two percent (2%) above ABR, except that for purposes of computing interest accruing for any period that commences thirty or more days after the Designated Sale Date on any 97-10/Prepayment, Base Rent or Supplemental Payment that has become due, but remains to be paid to BNPPLC by NAI, the Default Rate will mean a floating per annum rate equal to five percent (5%) above ABR. Notwithstanding the foregoing, in no event will the “Default Rate” at any time exceed the maximum interest rate permitted by Applicable Laws.
     “Defective Work” has the meaning indicated in the Construction Agreement.
     “Designated Sale Date” means the earliest of:
     (1) the date upon which the Term is scheduled to expire as provided in Paragraph 1(A) of the Lease (i.e., December 14, 2013); or
     (2) any Business Day designated as the “Designated Sale Date” for purposes of this Agreement and the other Operative Documents in an irrevocable, unconditional notice given by NAI to BNPPLC before any 97-10/Meltdown Event has occurred; provided, that if the Business Day so designated by NAI as the Designated Sale Date is
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 8

 

 

not at least twenty days after the date of such notice, the notice will be of no effect for purposes of this definition; and provided, further, that to be effective, any such notice must include an irrevocable exercise by NAI of the Purchase Option under subparagraph 2(A)(1) of the Purchase Agreement and thereby obligate NAI to tender payment of the full Break Even Price to BNPPLC on the Business Day so designated; or
     (3) any Business Day designated as the “Designated Sale Date” for purposes of this Agreement and the other Operative Documents in a notice given by BNPPLC to NAI:
•    when an Event of Default has occurred and is continuing and after the Completion Date; or
•    after a 97-10/Meltdown Event or after BNPPLC’s receipt of a Pre-lease Force Majeure Event Notice from NAI; or
•    following any change in the zoning or other Applicable Laws after the Completion Date affecting the permitted use or development of the Property that, in BNPPLC’s judgment, materially reduces the value of the Property; or
•    following any discovery of conditions or circumstances on or about the Property after the Completion Date, such as the presence of an endangered species, which are likely to substantially impede the use or development of the Property and thereby, in BNPPLC’s judgment, materially reduce the value of the Property;
provided, however, that if the Business Day so designated by BNPPLC as the Designated Sale Date is not at least thirty days after the date of such notice, the notice will be of no effect for purposes of this definition; or
     (4) the first Business Day after the commencement of any Event of Default described in clauses (G), (H) or (I) of the definition Event of Default herein that occurs because of any bankruptcy proceeding instituted by or against NAI, as debtor, under Title 11 of the United States Code; or
     (5) any date upon which the Lease terminates pursuant to subparagraph 1(B) or subparagraph 1(C) of the Lease.
     “Effective Date” means November 29, 2007.
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and Provisions Agreement (Building 8) – Page 9

 

 

     “Effective Rate” means, for each Period, a per annum rate determined as follows:
     (1) In the case of any Period subject to a LIBOR Period Election, the Effective Rate will equal the rate per annum determined by dividing (A) LIBOR for such Period, by (B) one hundred percent (100%) minus the Eurodollar Rate Reserve Percentage for such Period.
     (2) In the case of any Period that is not subject to a LIBOR Period Election, the Effective Rate will equal the ABR for such Period.
     (3) Notwithstanding the foregoing, for any Base Rent Period that begins on or after the Fixed Rate Lock Date applicable to a Fixed Rate Lock and that ends before or on the date such Fixed Rate Lock is terminated as provided in subparagraph 3(C) of the Lease, the Effective Rate will equal the Fixed Rate.
So long as any LIBOR Period Election remains in effect, as LIBOR or the Eurodollar Rate Reserve Percentage changes from Period to Period, the Effective Rate will be automatically increased or decreased, as the case may be, without prior notice to NAI. Also, during any period when no LIBOR Period Election or Fixed Rate Lock is in effect, as the ABR changes from Period to Period, the Effective Rate will be automatically increased or decreased, as the case may be, without prior notice to NAI.
If for any reason BNPPLC determines that it is impossible or unreasonably difficult to determine the Effective Rate with respect to a given Period in accordance with the foregoing, then the “Effective Rate” for that Period will equal any published index or per annum interest rate determined in good faith by BNPPLC 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 BNPPLC’s comparison of past eurodollar market rates to past yields on such Treasury obligations.
     “Eligible Financial Institution” means (a) a commercial bank organized under the laws of the United States, or any State thereof or the District of Columbia, and having total assets in excess of $5,000,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (“OECD”) or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having total assets in excess of $5,000,000,000; provided, that such bank is acting through a branch or agency located in the United States; (c) the central bank of any country which is a member of the OECD; and (d) a finance company, insurance company or other financial
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 10

 

 

institution (whether a corporation, partnership or other entity, but excluding any savings and loan association) which is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business, and having total assets in excess of $5,000,000,000; provided, however, that in no event will any bank or other Person qualify as an Eligible Financial Institution at any time when it has outstanding obligations with a credit rating less than investment grade from Standard & Poor’s, a division of the McGraw-Hill Companies, or Moody’s Investors Service, Inc. or another nationally recognized rating service.
     “Environmental Cutoff Date” means the later of the dates upon which (i) the Lease terminates or NAI’s interests in the Property are sold at foreclosure as provided in Exhibit B attached to the Lease, 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 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, 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.
     “Environmental Losses” means Losses suffered or incurred by BNPPLC 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 that occurs or is alleged to have occurred on or prior to the Environmental Cutoff Date; (ii) any violation of any applicable Environmental Laws relating to the Land or the Property or to the ownership, use, occupancy or operation thereof that occurs or is alleged to have occurred in whole or in part on or prior to the Environmental Cutoff Date; (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 in whole or in part 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 Lease, any actual or alleged Hazardous Substance Activity or violation of Environmental Laws relating to the Land or 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
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 11

 

 

Date.
     “Environmental Report” means, collectively, the following reports, which were provided by NAI to BNPPLC prior to the Effective Date:
     (1) Phase I and Screen Level Phase II Environmental Assessment for 495 Java Drive, Sunnyvale, California dated October 1, 1997 provided by McLaren Hart Environmental Engineering Corporation;
     (2) Phase I and Screen Level Phase II Environmental Assessment for 475 Java Drive, Sunnyvale, California dated March 24, 1998 provided by McLaren Hart Environmental Engineering Corporation;
     (3) Phase I Environmental Site Assessment for 1275 Crossman Avenue, Sunnyvale, California dated June 29, 1998 provided by Dames & Moore Group; and
     (4) Phase I Environmental Site Assessment for 1330 & 1350 Geneva Drive and 1345 & 1347 Crossman Avenue, Sunnyvale, California dated November 1, 1999 provided 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.
     “ERISA Termination Event” means (a) the occurrence with respect to any Plan of (1) a reportable event described in Sections 4043(b)(5) or (6) of ERISA or (2) any other reportable event described in Section 4043(b) of ERISA other than a reportable event not subject to the provision for thirty-day notice to the Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation under Section 4043(a) of ERISA, or (b) the withdrawal of NAI or any ERISA Affiliate from a Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of intent to terminate any Plan or the treatment of any Plan amendment as a termination under Section 4041 of ERISA, or (d) the institution of proceedings to terminate any Plan by the Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.
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     “Escrowed Proceeds” means, subject to the exclusions specified in the next sentence, any money that is received by BNPPLC 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 (including any indirect condemnation by means of a taking of any of the Land or appurtenant easements), (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 will be deducted all expenses and costs of every type, kind and nature (including Attorneys’ Fees) incurred by BNPPLC to collect such proceeds. Notwithstanding the foregoing, “Escrowed Proceeds” will not include (A) any payment to BNPPLC by a Participant or an Affiliate of BNPPLC that is made to compensate BNPPLC for the Participant’s or Affiliate’s share of any Losses BNPPLC 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, Fixed Rate Settlement Amount 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, BNPPLC returns or pays to a third party because of BNPPLC’s good faith belief that such return or payment is required by law, (D) any money or proceeds paid by BNPPLC to NAI or offset against any amount owed by NAI, or (E) any money or proceeds used by BNPPLC in accordance with the 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 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, BNPPLC will keep the same deposited in one or more interest bearing accounts, and all interest earned on such account will 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, conduct of such Person that constitutes a breach by it of the express provisions of the Operative Documents or the Participation Agreement, as applicable, and that continues beyond any period for cure provided therein, 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) conduct of such Person or its Affiliates that has been determined to constitute willful 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
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determination.
In no event, however, will Established Misconduct include actions of any Person undertaken in good faith to mitigate Losses that such Person may suffer because of a breach or repudiation by NAI of any of the Operative Documents. Further, negligence other than Active Negligence will not in any event constitute Established Misconduct. For purposes of this definition, “conduct of a Person” will consist of (1) the conduct of any employee of that Person to the extent (and only to the extent) that the employee is acting within the scope of his employment by that Person, 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 (a) acting within the scope of the authority granted to him by such Person, and (b) neither NAI nor acting with the consent or approval of or at the request of or under the direction of NAI or NAI’s Affiliates, employees or agents. Established Misconduct of one Interested Party will not be attributed to a second Interested Party unless the second Interested Party is an Affiliate of the first, and it is understood that BNPPLC has not been authorized, and nothing in the Participation Agreement will be construed as authorizing BNPPLC, to act as an “agent” for any Participant as the term is used in this definition.
     “Eurocurrency Liabilities” has the meaning indicated 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 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 BNPPLC’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” means any of the following:
     (A) NAI fails to pay when due any installment of Base Rent or Administrative Fees required by the Lease, and such failure continues for three Business Days after NAI is notified in writing thereof.
     (B) NAI fails to pay the full amount of any 97-10/Prepayment when due as provided in the Construction Agreement or fails to pay the full amount of any Supplemental Payment as provided in the Purchase Agreement on the Designated Sale Date.
     (C) NAI fails to pay when first due any amount required by the Operative Documents
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(other than Base Rent or Administrative Fees required as provided in the Lease, any 97-10/Prepayment required as provided in the Construction Agreement or any Supplemental Payment required as provided in the Purchase Agreement) and such failure continues for ten Business Days after NAI is notified thereof.
     (D) NAI fails to cause any representation or warranty of NAI contained in any of the Operative Documents 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 definition), or NAI fails to comply with any provision of the Operative Documents (other than as described in the other clauses of this definition), and in either case does not cure such failure prior to the earlier of (A) thirty days after notice thereof is given to NAI or (B) the date any writ or order is issued for the levy or sale of any property owned by BNPPLC (including the Property) or any criminal prosecution is instituted or overtly threatened against BNPPLC 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 will be extended for a further period (not to exceed an additional one hundred twenty days) as is 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 promptly commences to cure such failure and thereafter continuously prosecutes 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 to or beyond the Designated Sale Date.
     (E) NAI abandons any material part of the Property.
     (F) NAI or any Subsidiary of NAI fails to pay any principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event occurs or condition exists under any agreement or instrument relating to any such Indebtedness and continues after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate the maturity of such Indebtedness; or any such Indebtedness is declared by the creditor to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness is required to be made, in each case prior to the stated maturity thereof.
     (G) NAI or any Subsidiary of NAI is generally not paying its debts as such debts become due, or admits in writing its inability to pay its debts generally, or makes a general assignment for the benefit of creditors; or any proceeding is instituted by or against NAI or any
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Subsidiary of NAI seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding remains undismissed or unstayed for a period of sixty consecutive days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) occurs; or NAI or any Subsidiary of NAI takes any corporate action to authorize any of the actions set forth above in this clause.
     (H) Any order, judgment or decree is entered in any proceedings against NAI or any of NAI’s Subsidiaries decreeing its dissolution and such order, judgment or decree remains unstayed and in effect for more than sixty days.
     (I) Any order, judgment or decree is entered in any proceedings against NAI or any of NAI’s Subsidiaries decreeing a divestiture of any of assets that represent a substantial part, or the divestiture of the stock of any of NAI’s Subsidiaries whose assets represent a substantial part, of the total assets of NAI and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) or which requires the divestiture of assets, or stock of any of NAI’s Subsidiaries, which have contributed a substantial part of the net income of NAI and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) for any of the three fiscal years then most recently ended, and such order, judgment or decree remains unstayed and in effect for more than sixty days.
     (J) A judgment or order for the payment of money in an amount (not covered by insurance) which exceeds $25,000,000 is rendered against NAI or any of NAI’s Subsidiaries and either (i) enforcement proceedings is commenced by any creditor upon such judgment, or (ii) within thirty days after the entry thereof, such judgment or order is not discharged or execution thereof stayed pending appeal, or within thirty days after the expiration of any such stay, such judgment is not discharged.
     (K) Any ERISA Termination Event occurs that BNPPLC determines in good faith would constitute grounds for a termination of any Plan or for the appointment by the appropriate United States district court of a trustee to administer any Plan and such ERISA Termination Event is continuing thirty days after notice to such effect is given to NAI by BNPPLC, or any Plan is terminated, or a trustee is appointed by a United States district court to administer any Plan, or the Pension Benefit Guaranty Corporation institutes proceedings to terminate any Plan or to appoint a trustee to administer any Plan.
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     (L) NAI enters into any transaction which would cause any of the Operative Documents or any other document executed in connection herewith (or any exercise of BNPPLC’s rights hereunder or thereunder) to constitute a non-exempt prohibited transaction under ERISA.
     (M) NAI fails to comply with the financial covenants set forth in subparagraph 3(C) of the Closing Certificate.
     (N) Any Change in Control (as defined in subparagraph 3(A) of the Closing Certificate) shall occur.
     “Excluded Taxes” means:
     (A) taxes upon or measured by net income to the extent such taxes are payable in respect of Base Rent or other Qualified Income Payments;
     (B) transfer or change of ownership taxes assessed because of BNPPLC’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 taxes assessed because of any Permitted Transfer under clauses (1), (4) or (5) of the definition of Permitted Transfer in this Agreement);
     (C) federal, state and local income taxes upon any amounts paid as reimbursement for or to satisfy Losses incurred by BNPPLC or any Participant to the extent, but only to the extent, such taxes are offset by a corresponding reduction of BNPPLC’s or the applicable Participant’s income taxes which are not otherwise subject to reimbursement or indemnification by NAI because of BNPPLC’s or such Participant’s deduction of the reimbursed Losses from its taxable income or because of any tax credits attributable thereto;
     (D) income taxes that are (i) payable by BNPPLC in respect of any Qualified Prepayment or any net sales proceeds paid to BNPPLC upon a sale of the Property because of Forced Recharacterization as described in subparagraph 4(C)(3) of the Lease, and (ii) offset in the same taxable period by a reduction in the taxes of BNPPLC which are not otherwise subject to reimbursement or indemnification by NAI resulting from depreciation deductions or other tax benefits available to BNPPLC only because of the refusal of the tax authorities to treat the Lease and other Operative Documents as a financing arrangement;
     (E) any withholding taxes that subparagraph 13(A) of the Lease excuses NAI from paying or requires BNPPLC to pay; and
     (F) any franchise taxes payable by BNPPLC, but only to the extent that such franchise taxes would be payable by BNPPLC even if the transactions contemplated by the Lease and the
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other Operative Documents were characterized for tax purposes as a mere financing arrangement and not as a lease or sale.
It is understood that if tax rates used to calculate income taxes which constitute Excluded Taxes under clause (1) of this definition are increased, the resulting increase will not be subject to reimbursement or indemnification by NAI. If, however, a change in Applicable Laws after the Effective Date, as applied to the transactions contemplated by the Operative Documents on a stand-alone basis, results in an increase in such income 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 (1) of this definition), then for purposes of the Operative Documents, the term “Excluded Taxes” will not include the actual increase in such taxes attributable to the change. Accordingly, BNPPLC or any Participant may recover any such net increase from NAI pursuant to subparagraph 5(B) of the Lease.
It is also understood that nothing in this definition of “Excluded Taxes” will prevent any Original Indemnity Payment (as defined in subparagraph 5(C)(1) of the Lease) from being paid on an After Tax Basis.
     “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 on 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 each day during such period on such transactions received by BNPPLC’s Parent from three Federal funds brokers of recognized standing selected by BNPPLC’s Parent.
     “Fixed Rate” means the fixed rate of interest established by BNPPLC’s execution of an Interest Rate Swap as described in subparagraph 3(B)(4) of the Lease.
     “Fixed Rate Lock” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease.
     “Fixed Rate Lock Date” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease.
     “Fixed Rate Lock Termination” means any termination in whole or in part of the Fixed Rate Swap as described in the first and second sentences of subparagraph 3(C) of the Lease.
     “Fixed Rate Lock Termination Date” means the date upon which a Fixed Rate Lock Termination is effective. In the case of a Fixed Rate Lock Termination that results from
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BNPPLC’s receipt of a Qualified Prepayment, the date such Qualified Prepayment is applied to reduce the Lease Balance will constitute the Fixed Rate Lock Termination Date. In the case of any Fixed Rate Lock Termination resulting from an acceleration of the Designated Sale Date as provided in clauses (2) or (3) the definition thereof in this Agreement, the Fixed Rate Lock Termination Date will constitute the Designated Sale Date.
     “Fixed Rate Lock Notice” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease, which includes a reference to the form attached as Annex 2.
     “Fixed Rate Loss” means an amount reasonably determined in good faith by the Floating Rate Payor to be its total losses and costs in connection with any Fixed Rate Lock Termination. Fixed Rate Loss will include any loss of bargain, cost of funding or, at the election of the Floating Rate Payor but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position. The Floating Rate Payor will be expected to determine the Fixed Rate Loss as of the date of the relevant Fixed Rate Lock Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. The Floating Rate Payor may (but need not) determine its Fixed Rate Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets.
     “Fixed Rate Settlement Amount” means, with respect to any Fixed Rate Lock Termination:
(a) the Market Quotation for such Fixed Rate Lock Termination, if a Market Quotation can be determined and if (in the reasonable belief of the Floating Rate Payor as the party making the determination) determining a Market Quotation would produce a commercially reasonable result; or
(b) the Fixed Rate Loss, if any, for such Fixed Rate Lock Termination if a Market Quotation cannot be determined or would not (in the reasonable belief of the Floating Rate Payor as the party making the determination) produce a commercially reasonable result.
     “Fixed Rate Swap” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease.
     “Floating Rate Payor” means BNP Paribas or any successor or assign of BNP Paribas under an Interest Rate Swap.
     “FOCB Notice” has the meaning indicated in the Construction Agreement.
     “Force Majeure Event” has the meaning indicated in the Construction Agreement.
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     “Fully Subordinated or Removable” means, with respect to any Lien encumbering the Land or any appurtenant easement, that such Lien is, either by operation of Applicable Laws or by the express terms of documents which grant or create such Lien:
     (1) fully subject and subordinate to the Ground Lease and to all rights and property interests of BNPPLC under the Operative Documents; or
     (2) subject to release and removal by BNPPLC or any subsequent owner of the Property at any time after a Designated Sale Date without any requirement that BNPPLC or the subsequent owner compensate the holder of such Lien or make any other significant payment in connection with such release and removal;
provided, however, a Lien will not qualify as Fully Subordinated or Removable under clause (1) preceding if a purchase of the Land by BNPPLC pursuant to the purchase option set forth in the Ground Lease (as such option may be modified from time to time by agreement of lessor and lessee under the Ground Lease) will not, by operation of law or the express agreement of the holder of the Lien, effectively cut off and terminate such Lien insofar as it applies to or affects the Improvements and the Land purchased by BNPPLC; and, provided further, a Lien will not qualify as Fully Subordinated or Removable under clause (2) preceding if it provides or includes a power of sale or other right or remedy in favor of the holder of such Lien which could result in a foreclosure sale or other forfeiture of BNPPLC’s rights or interests under the Ground Lease or in the Property.
     “Funded Construction Allowance” has the meaning indicated in the Construction Agreement.
     “Funding Advances” means all advances made by BNPPLC’s Parent or any Participant to or on behalf of BNPPLC to allow BNPPLC to make the Initial Advance and to provide the Construction Allowance or maintain its investment in the Property.
     “Future Work” has the meaning indicated in the Construction 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 2(A)(4) of the Closing Certificate (except for changes with which NAI’s independent public accountants concur).
     “Governmental Authority” means (1) the United States, the state, the county, the municipality, and any other political subdivision in which the Land is located, and (2) any other nation, state or other political subdivision or agency or instrumentality thereof having or asserting jurisdiction over NAI or the Property.
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     “Ground Lease” means the Amended and Restated Ground Lease (Building 8) dated as of the Effective Date, under which the Land is leased from NAI to BNPPLC, as such Ground Lease may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
     “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 (iv)  any other material that, because of its quantity, concentration or physical or chemical characteristics, is the subject of regulation under Applicable Law or 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 Land or 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 Land or the Property to any remedial obligations under, any Environmental Laws, assuming disclosure to the applicable Governmental Authorities of all relevant facts, conditions and circumstances pertaining to the Property.
     “Improvements” means any and all (1) buildings and other real property improvements previously 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
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or other real property improvements.
     “Increased Commitment” has the meaning indicated in the Construction Agreement.
     “Increased Funding Commitment” has the meaning indicated in the Construction Agreement.
     “Increased Time Commitment” has the meaning indicated in the Construction Agreement.
     “Indebtedness” of any Person means (without duplication of any item) Liabilities of such Person in any of the following categories:
     (A) Liabilities for borrowed money;
     (B) Liabilities constituting an obligation to pay the deferred purchase price of property or services;
     (C) Liabilities evidenced by a bond, debenture, note or similar instrument;
     (D) Liabilities which (1) would under GAAP be shown on such Person’s balance sheet as a liability, and (2) are payable more than one year from the date of creation thereof (other than reserves for taxes and reserves for contingent obligations);
     (E) Liabilities constituting principal under leases capitalized in accordance with GAAP;
     (F) Liabilities arising under conditional sales or other title retention agreements;
     (G) Liabilities owing under direct or indirect guaranties of Liabilities of any other Person or otherwise constituting obligations to purchase or acquire or to otherwise protect or insure a creditor against loss in respect of Liabilities of any other Person (such as obligations under working capital maintenance agreements, agreements to keep-well, or agreements to purchase Liabilities, assets, goods, securities or services), but excluding endorsements in the ordinary course of business of negotiable instruments in the course of collection;
     (H) Liabilities (for example, repurchase agreements, mandatorily redeemable preferred stock and sale/leaseback agreements) consisting of an obligation to purchase or redeem securities or other property, if such Liabilities arises out of or in connection with
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the sale or issuance of the same or similar securities or property;
     (I) Liabilities with respect to letters of credit or applications or reimbursement agreements therefor;
     (J) Liabilities with respect to payments received in consideration of oil, gas, or other commodities yet to be acquired or produced at the time of payment (including obligations under “take-or-pay” contracts to deliver gas in return for payments already received and the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment);
     (K) Liabilities with respect to other obligations to deliver goods or services in consideration of advance payments therefor; or
     (L) Liabilities under any “synthetic” or other lease of property or related documents (including a separate purchase agreement) which obligate such Person or any of its Affiliates (whether by purchasing or causing another Person to purchase any interest in the leased property or otherwise) to guarantee a minimum residual value of the leased property to the lessor.
For purposes of this definition, the amount of Liabilities described in the last clause of the preceding sentence with respect to any lease classified according to GAAP as an “operating lease,” will 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; except that such amount will not exceed the price, as of the date a determination of Indebtedness 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 will be excused from paying rentals or other minimum lease payments that would otherwise accrue after the purchase.
Notwithstanding the foregoing, the “Indebtedness” of any Person will not include Liabilities that were incurred by such Person on ordinary trade terms to vendors, suppliers, or other Persons providing goods and services for use by such Person in the ordinary course of its business, unless and until such Liabilities are outstanding more than 90 days past the original invoice or billing date therefor.
     “Initial Advance” has the meaning indicated in the Construction Agreement.
     “Initial Lease Balance” means $13,782,227.60. Such amount equals the Lease Balance outstanding under and as defined in the Prior Operative Documents immediately before the
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execution of the Operative Documents, which amend and restate the Prior Operative Documents.
     “Interested Party” means each of following Persons and their Affiliates: (1) BNPPLC and its successors and permitted assigns as to the Property or any part thereof or any interest therein, (2) BNPPLC’s Parent, and (3) the Participants and their successors and permitted assigns under the Participation Agreement; provided, however, none of the following Persons will constitute an Interested Party: (a) any Person to whom BNPPLC 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 a transfer by such a Person, (b) NAI and its Affiliates, (c) any Person claiming through or under a conveyance made by NAI after any purchase by NAI of BNPPLC’s interest in the Property pursuant to the Purchase Agreement, or (d) any Applicable Purchaser designated by NAI under the Purchase Agreement who purchases the Property pursuant to a sale arranged by NAI and any Person that cannot lawfully claim an interest in the Property except through or under a conveyance from such an Applicable Purchaser.
     “Interest Rate Swap” means an interest rate exchange transaction, entered into between BNPPLC, as the fixed rate payor, and BNP Paribas, as the swap counterparty and floating rate payor, under the then most recent form of Master Agreement published by the International Swaps and Derivatives Association, Inc., as supplemented by the definitions and such schedules, annexes, exhibits and supplements as are agreed upon by the parties thereto, pursuant to which BNP Paribas agrees to pay monthly to BNPPLC a floating rate of interest equal to LIBOR and BNPPLC agrees to pay monthly to BNP Paribas a fixed rate of interest for a term that commences on the Fixed Rate Lock Date and ends on the last day of the scheduled Term of the Lease. The notional principal amount used for any such interest rate exchange transaction will equal the Lease Balance calculated as of the date such transaction is entered into.
     “Land” means the land described in Exhibit A attached to the Closing Certificate, the Lease, the Ground Lease and the Purchase Agreement.
     “Lease” means the Amended and Restated Lease Agreement (Building 8) dated as of the Effective Date between BNPPLC, as landlord, and NAI, as tenant, pursuant to which NAI has agreed to lease BNPPLC’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.
     “Lease Balance” as of any date means the amount equal to the sum of the Initial Lease Balance, plus the Initial Advance, plus the sum of all Construction Advances, Carrying Costs and other amounts added to the Outstanding Construction Allowance as provided in the Construction Agreement on or prior to such date, minus all funds actually received by BNPPLC and applied as Qualified Prepayments on or prior to such date. Under no circumstances will any payment of
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Base Rent or other Qualified Income Payments reduce the Lease Balance.
     “Lease Termination Damages” has the meaning indicated in subparagraph 15(A)(3)(c) of the Lease.
     “Liabilities” means, as to any Person, all indebtedness, liabilities and obligations of such Person, whether matured or unmatured, liquidated or unliquidated, primary or secondary, direct or indirect, absolute, fixed or contingent, and whether or not required to be considered pursuant to GAAP.
     “LIBOR” means, for purposes of determining the Effective Rate for any Period, the per annum rate equal to:
     (a) the offered rate for deposits in U.S. dollars as of approximately 11:00 a.m., London time, on the day that is two London Banking Days (hereinafter defined) prior to the day upon which such Period begins (the “Reset Date”), as reported:
     (1) on Reuters Screen LIBOR01 page (or any replacement page or pages on which London interbank rates of major banks for U.S. dollars are displayed) by the Reuters service; or
     (2) on Moneyline Telerate Page 3750, British Bankers Association Interest Settlement Rates, or another news page selected by BNPPLC’s Parent if the Reuters Screen LIBOR01 page is removed from the Reuters system or changed such that, in the opinion of BNPPLC’s Parent, the interest rates shown on it no longer represent the same kind of interest rates as when the Operative Documents were executed; or
     (b) if such offered rate is for any reason unavailable, the rate per annum determined by BNPPLC’s Parent on the basis of rates offered for deposits in U.S. dollars by four major banks in the London interbank market selected by BNPPLC’s Parent (“Reference Banks”) at approximately 11:00 a.m., London time, on the day that is two London Banking Days preceding the Reset Date to prime banks in the London interbank market for a period corresponding as nearly as possible to the applicable Period. ( If this clause (b) applies, BNPPLC’s Parent will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two quotations are provided, “LIBOR” will be the arithmetic mean of the quotations. If, however, fewer than two quotations are provided, “LIBOR” will be the arithmetic mean of the rates quoted by major banks in New York selected by BNPPLC’s Parent, at approximately 11:00 a.m., New York time, on the Reset Date for loans in U.S. dollars to leading U.S. banks for a period corresponding as nearly as possible to the applicable Period.)
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As used in this definition, “London Banking Day” means any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London, England.
     “LIBOR Period Election” means an election to have the Effective Rate for any Period calculated by reference to LIBOR, rather than by reference to the ABR or the Fixed Rate, and to have such period extend for approximately one month, three months or six months. The first Construction Period will be subject to a LIBOR Period Election of one month; and, subject to the limitations and qualifications set forth in this definition, NAI may make any subsequent Period subject to a LIBOR Period Election by a notice given to BNPPLC in the form attached as Annex 3 at least five Business Days prior to the commencement of such Period. After a LIBOR Period Election becomes effective, it will remain in effect for all subsequent Periods until a different election is made in accordance with the provisions of this definition and the definition of ABR Period Election above. (For purposes of the Construction Agreement and the Lease a LIBOR Period Election for any Period will also be considered the LIBOR Period Election in effect on the Effective Date, Advance Date, Base Rent Commencement Date or Base Rent Date upon which such Period begins.) Notwithstanding the foregoing:
  •   No LIBOR Period Election for a period of more than one month will be effective prior to the Completion Date.
 
  •   No LIBOR Period Election will be effective that would cause a Base Rent Period to extend beyond the end of the scheduled Term or beyond a Fixed Rate Lock Date.
 
  •   No LIBOR Period Election will commence or continue during any period that begins on or after the Fixed Rate Lock Date applicable to a Fixed Rate Lock and that ends before or on the date such Fixed Rate Lock is terminated as provided in subparagraph 3(C) of the Lease.
 
  •   Changes in any ABR Period Election or LIBOR Period Election will become effective only upon the commencement of a new Period.
 
  •   In the event BNPPLC determines that it would be unlawful (or any central bank or governmental authority asserts that it would be unlawful) for BNPPLC, BNPPLC’s Parent or any Participant to provide or maintain Funding Advances during a Period if the Carrying Costs or Base Rent accrued during such Period at a rate based upon LIBOR, NAI will be deemed to have made such Period subject to an ABR Period Election, not a LIBOR Period Election.
 
  •   If for any reason (including BNPPLC’s receipt of a notice from NAI purporting to
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      make a LIBOR Period Election that is contrary to the foregoing provisions), BNPPLC is unable to determine with certainty whether a particular Period is subject to a specific LIBOR Period Election of one month, three months or six months, or if any Event of Default has occurred and is continuing on the third Business Day preceding the commencement of a particular Period, NAI will be deemed to have made an ABR Period Election for that particular Period.
     “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).
     “Liens Removable by BNPPLC” means, and is limited to, Liens encumbering the Property that are asserted (1) other than as contemplated in the Operative Documents, by BNPPLC itself or by BNPPLC’s Parent, (2) by third parties lawfully claiming through or under BNPPLC (which for purposes of the Operative Documents will include any judgment liens established against the Property because of a judgment rendered against BNPPLC and will also include any liens established against the Property to secure past due Excluded Taxes), or (3) by third parties claiming under a deed or other instrument duly executed by BNPPLC; provided, however, Liens Removable by BNPPLC will not include (A) any Permitted Encumbrances (regardless of whether claimed through or under BNPPLC), (B) the Operative Documents or any other document executed by BNPPLC with the knowledge of (and without objection by) NAI or NAI’s counsel contemporaneously with the execution and delivery of the Operative Documents, (C) Liens which are neither lawfully claimed through or under BNPPLC (as described above) nor claimed under a deed or other instrument duly executed by BNPPLC, (D) Liens claimed by NAI or claimed through or under a conveyance made by NAI other than NAI’s conveyance of the leasehold estate to BNPPLC under the Ground Lease, (E) Liens arising because of BNPPLC’s compliance with Applicable Law, the Operative Documents, Permitted Encumbrances 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) BNPPLC’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 any Applicable Purchaser does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
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     “Local Impositions” means all sales, excise, ad valorem, gross receipts, business, transfer, stamp, occupancy, rental and other taxes (other than taxes on net income and corporate franchise taxes), levies, fees, charges, surcharges, assessments, interest, additions to tax, or penalties imposed by the State of California or any agency or political subdivision thereof upon BNPPLC or any owner of the Property or any part of or interest in the Property because of (i) the Lease or other Operative Documents, (ii) the status of record title to the Property, (iii) the ownership, leasing, occupancy, sale or operation of the Property or any part thereof or interest therein, or (iv) the Permitted Encumbrances; excluding, however, Excluded Taxes. “Local Impositions” will include any real estate taxes imposed because of a change of use or ownership of the Property resulting from, or occurring on or prior to the date of, any sale by BNPPLC pursuant to the Purchase Agreement.
     “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 of settlement and other 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, known and unknown.
     “Market Quotation” means, with respect to any Fixed Rate Lock Termination, an amount determined by the Floating Rate Payor on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid by the Floating Rate Payor in consideration of an agreement between it and the quoting Reference Market-maker to enter into a transaction (the “Replacement Transaction”) that would have the effect of preserving for the Floating Rate Payor the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) that would, but for the occurrence of the relevant Fixed Rate Lock Termination, have been required under the Fixed Rate Swap. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The Floating Rate Payor (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on the effective date of or as soon as reasonably practicable after the relevant Fixed Rate Lock Termination. The date and time as of which those quotations are to be obtained will be selected in good faith by the Floating Rate Payor. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations will be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Fixed Rate Lock Termination cannot be determined.
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     “Material Adverse Effect” means a material adverse effect on (a) the assets, operations, financial condition or businesses of NAI, (b) the ability of NAI to perform any of its obligations under the Operative Documents, (c) the rights of or benefits available to BNPPLC under the Operative Documents, (d) the value, utility or useful life of the Property or (e) the priority, perfection or status of any of BNPPLC’s interests in the Property or in any of the Operative Documents.
     “Maximum Construction Allowance” has the meaning indicated in the Construction Agreement.
     “Maximum Remarketing Obligation” has the meaning indicated in the Purchase Agreement.
     “Minimum Insurance Requirements” means the insurance requirements outlined in Annex 4 attached to this 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 Delaware corporation.
     “NAI’s Estimate of Force Majeure Excess Costs” has the meaning indicated in the Construction Agreement.
     “NAI’s Estimate of Force Majeure Delays” has the meaning indicated in the Construction Agreement.
     “NAI’s Initial Remarketing Right” has the meaning indicated in the Purchase Agreement.
     “Notice of NAI’s Intent to Terminate” has the meaning indicated in the Construction Agreement.
     “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” has the meaning indicated in the Construction Agreement.
     “Notice of Termination by NAI” has the meaning indicated in the Construction Agreement.
     “Operative Documents” means the Closing Letter, the Closing Certificate, the Ground
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Lease, the Lease, the Construction Agreement, the Purchase Agreement and this Common Definitions and Provisions Agreement.
     “Outstanding Construction Allowance” has the meaning indicated in the Construction Agreement.
     “Owner’s Election to Continue Construction” has the meaning indicated in the Construction Agreement.
     “Participant” means any Person other than BNPPLC that from time to time, by executing the Participation Agreement or supplements as contemplated therein, becomes a party to the Participation Agreement and thereby agrees to participate in all or some of the risks and rewards to BNPPLC of the Operative Documents; provided, however, no such Person will qualify as a Participant for purposes of the Operative Documents unless (i) such Person is approved to be a Participant by NAI or (ii) such Person becomes a Participant when an Event of Default has occurred and is continuing. As of the Effective Date, NAI has approved only BANK OF AMERICA, N.A.; GOLDMAN SACHS CREDIT PARTNERS L.P.; JPMORGAN CHASE BANK, NATIONAL ASSOCIATION; KEYBANK NATIONAL ASSOCIATION; MORGAN STANLEY BANK; SUMITOMO MITSUI BANKING CORPORATION; and WELLS FARGO BANK, N.A. (all of which are original parties to the Participation Agreement). BNPPLC may, however, from time to time request NAI’s approval for other prospective Participants. NAI will not unreasonably withhold or delay any approval required for any prospective Participant which is an Eligible Financial Institution. However, as to any prospective Participant that is not already a party to the Participation Agreement or an Eligible Financial Institution, NAI may withhold such approval in its sole discretion. Further, it is understood that if giving such approval will increase NAI’s liability for withholding taxes or other taxes not constituting Excluded Taxes under tax laws or regulations then in effect, NAI may reasonably refuse to give such approval.
     “Participation Agreement” means the Participation Agreement (Building 8) dated as of the Effective Date, pursuant to which BANK OF AMERICA, N.A.; GOLDMAN SACHS CREDIT PARTNERS L.P.; JPMORGAN CHASE BANK, NATIONAL ASSOCIATION; KEYBANK NATIONAL ASSOCIATION; MORGAN STANLEY BANK; SUMITOMO MITSUI BANKING CORPORATION; and WELLS FARGO BANK, N.A. are agreeing with BNPPLC to participate in the risks and rewards to BNPPLC of the 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 will expressly make NAI a third party beneficiary of each Participant’s obligations thereunder to make advances to BNPPLC in connection with Construction Advances under the Construction Agreement, NAI’s consent will be required to any amendment of the Participation Agreement that limits or excuses such obligations.
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     “Period” means a Construction Period or Base Rent Period.
     “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 BNPPLC at the request of or with the consent of NAI, (iii) any Liens securing the payment of Local Impositions which are not delinquent or claimed to be delinquent or which are being contested in accordance with subparagraph 5(A) of the Lease, (iv) statutory liens, if any, in the nature of contractors’, mechanics’ or materialmen’s liens for amounts not past due or claimed to be past due for more than thirty days or which are being contested in accordance with subparagraph 11(B) of the Lease, (v) Liens which are Fully Subordinated or Removable, (vi) any documents or maps which NAI executes and records, with the consent of BNPPLC as provided in subparagraph 4(C) of the Closing Certificate, and (vii) other easements (if any) that (A) have previously been executed by NAI (as owner of the Land) in favor of the City of Sunnyvale or a local utility provider for the use or installation of streets, sidewalks or utilities, (B) do not extend under, over or through any building or other structure constructed or be constructed on the Land, (C) do not and will not have any significant adverse impact on the value of the Property, and (D) do and will not preclude or significantly impede any development or construction contemplated in or permitted by the Operative Documents.
     “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 will not:
     (1) exceed that reasonably required for the construction of the Construction Project in accordance with the Construction Agreement or for the use and operation of the Property for the purposes expressly permitted under subparagraph 2(A) of the 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.
Further, notwithstanding anything to the contrary herein contained, Permitted Hazardous Substance Use will not include any use of the Property (including as a landfill, incinerator or other waste disposal facility) in a manner that requires a treatment, storage or disposal permit
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under 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..
     “Permitted Hazardous Substances” means Hazardous Substances used and reasonably required for the construction of the Construction Project or for the use and operation of the Property by NAI and its permitted subtenants and assigns for the purposes expressly permitted by subparagraph 2(A) of the 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 will include usual and customary office and janitorial products.
     “Permitted Transfer” means any one or more of the following:
     (1) the creation or conveyance by BNPPLC of rights and interests in favor of Participants pursuant to the Participation Agreement;
     (2) any lien, security interest or assignment covering the Property or the Rents which is granted by BNPPLC in favor of Participants or an agent appointed for them to secure their rights under the Participation Agreement, and any subsequent assignment or conveyance made to accomplish a foreclosure of such lien or security interest, provided that such lien, security interest or assignment and any such subsequent assignment or conveyance are all made expressly subject to the rights of NAI under the Operative Documents;
     (3) other than as described in the preceding clauses, any conveyance to BNPPLC’s Parent or to any Qualified Affiliate of BNPPLC of all or any interest in or rights with respect to the Property or any portion thereof, provided that NAI and Participants must be notified before any such conveyance to BNPPLC’s Parent or a Qualified Affiliate which will be recorded in the real property records of the county in which the Land is situated;
     (4) any assignment or conveyance by BNPPLC requested by NAI or required by any Permitted Encumbrance, by the Purchase Agreement or by Applicable Laws; or
     (5) any assignment or conveyance after a Designated Sale Date on which NAI does not purchase or cause an Applicable Purchaser to purchase BNPPLC’s interest in the Property and, if applicable, after the expiration of the thirty day cure period specified in Paragraph 3(A) of the Purchase Agreement.
     “Person” means an individual, a corporation, a partnership, an unincorporated
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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” has the meaning indicated on page 2 of the 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 during the preceding six years and which is covered by Title IV of ERISA, including any Multiemployer Plan.
     “Pre-lease Casualty” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Delays” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Event” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Event Notice” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Excess Costs” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Losses” has the meaning indicated in the Construction Agreement.
     “Prime Rate” means the prime interest rate or equivalent charged by BNPPLC’s Parent in the United States of America as announced or published by BNPPLC’s Parent from time to time, which need not be the lowest interest rate charged by BNPPLC’s Parent. If for any reason BNPPLC’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 BNPPLC will 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 Closing Certificate and Agreement” means the Closing Certificate and Agreement dated as of December 14, 2006 between NAI and BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Closing Certificate.
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     “Prior Common Definitions and Provisions Agreement” means the Common Definitions and Provisions Agreement dated as of December 14, 2006 between NAI and BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by this Agreement.
     “Prior Construction Agreement” means the Construction Management Agreement dated as of December 14, 2006 between NAI and BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Construction Agreement.
     “Prior Ground Lease” means the Ground Lease dated as of December 14, 2006 from NAI to BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Ground Lease.
     “Prior Lease” means the Lease Agreement dated as of December 14, 2006 between NAI (as tenant) and BNPPLC (as landlord), as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Lease.
     “Prior Operative Documents” means the documents defined as “Operative Documents” in the Prior Common Definitions and Provisions Agreement.
     “Prior Purchase Agreement” means the Purchase Agreement dated as of December 14, 2006 between NAI and BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Purchase Agreement.
     “Prior Work” has the meaning indicated in the Construction Agreement.
     “Projected Cost Overruns” has the meaning indicated in the Construction 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, but the leasehold estate conveyed to BNPPLC under the Ground Lease will be included.
     “Purchase Agreement” means the Amended and Restated Purchase Agreement (Building 8) dated as of the Effective Date between BNPPLC 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 Option” has the meaning indicated in the Purchase Agreement.
     “Qualified Affiliate” means any Person that, like BNPPLC, (i) is one hundred percent (100%) owned, directly or indirectly, by BNPPLC’s Parent or any successor of such bank, (ii) can
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make (and has in writing made) the same representations to NAI that BNPPLC has made in subparagraphs 4(A) and 4(B) of the Closing Certificate (except that it need not be incorporated in or qualified to do business in Delaware), and (iii) is an entity organized under the laws of the State of Delaware or another state within the United States of America.
     “Qualified Income Payments” means: (A) Base Rent; (B) payments that are made to BNPPLC only because the following amounts are capitalized (i.e., added to the Lease Balance) as described in subparagraph 3 of the Construction Agreement: the Upfront Fees, the Arrangement Fee, Administrative Fees, Commitment Fees, Increased Cost Charges and Capital Adequacy Charges; (C) payments of the following made to BNPPLC to satisfy the Lease: Administrative Fees, Increased Cost Charges and Capital Adequacy Charges; (D) any interest paid to BNPPLC or any Participant pursuant to subparagraph 3(G) of the Lease; and (E) payments by BNPPLC to Participants required under the Participation Agreements because of BNPPLC’s receipt of payments described in the preceding clauses (A) through (D).
     “Qualified Prepayments” means any payments received by BNPPLC 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 (including any indirect condemnation by means of a taking of any of the Land or appurtenant easements), (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. For the purposes of determining the amount of any Qualified Prepayment and other amounts dependent upon Qualified Prepayments (e.g., the Lease Balance, the Outstanding Construction Allowance and the Break Even Price):
     (i) there will be deducted all expenses and costs of every kind, type and nature (including taxes and Attorneys’ Fees) incurred by BNPPLC with respect to the collection or application of such payments;
     (ii) Qualified Prepayments will not include any payment to BNPPLC by a Participant or an Affiliate of BNPPLC that is made to compensate BNPPLC for the Participant’s or Affiliate’s share of any Losses BNPPLC may incur as a result of any of the events described in the preceding clauses (1) through (4);
     (iii) Qualified Prepayments will not include any payments received by BNPPLC that BNPPLC has paid or is obligated to pay to NAI for the repair, restoration or replacement of the Property or that BNPPLC is holding as Escrowed Proceeds in accordance with the Paragraph 10 of the Lease or other provisions of the Operative Documents;
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     (iv) payments described in the preceding clauses (i) through (iii) will be considered as Escrowed Proceeds, not Qualified Prepayments, until they are actually applied as Qualified Prepayments by BNPPLC as provided in Paragraph 10 of the Lease; and
     (v) in no event will interest that accrues under the Purchase Agreement on a past due Supplemental Payment constitute a Qualified Prepayment.
For purposes of computing the total Qualified Prepayments (and other amounts dependent upon Qualified Prepayments, such as the Lease Balance, the Outstanding Construction Allowance and the Break Even Price) paid to or received by BNPPLC 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 BNPPLC as provided in the Paragraph 10 of the Lease.
     “Real Property” has the meaning indicated on page 2 of the Lease.
     “Reimbursable Construction-Period Costs” has the meaning indicated in the Construction 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.
     “Rent” means the Base Rent and all Additional Rent.
     “Responsible Financial Officer” means the chief financial officer, the controller, the treasurer or the assistant treasurer of NAI.
     “Rolling Four Quarters Period” has the meaning indicated in subparagraph 3(A) of the Closing Certificate.
     “Scope Change” has the meaning indicated in the Construction Agreement.
     “Spread” means, for each Construction Period and for 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 of the date (in this definition, the
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“Spread Test Date”) that is two Business Days prior to such period by reference to the pricing grid below, based upon the ratio calculated by dividing (1) Consolidated EBITDA for the then latest Rolling Four Quarters Period that ended prior to (and for which NAI has reported earnings as necessary to compute Consolidated EBITDA) into (2) the Consolidated Debt for Borrowed Money as of the end of such Rolling Four Quarters Period. In each case, the Spread will be established at the Level in the pricing grid below which corresponds to such ratio; provided, that:
     (a) promptly after earnings are reported by NAI for the latest quarter in any Rolling Four Quarters Period, NAI must notify BNPPLC of any resulting change in the Spread under this definition, and no reduction in the 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 BNPPLC with a written notice setting forth and certifying the calculation under this definition that justifies the reduction;
     (b) if Carrying Costs are understated or Base Rent is underpaid for any Period because of any misstatement, subsequently discovered, of Consolidated EBITDA or Consolidated Debt for Borrowed Money, BNPPLC will be entitled to collect from NAI all additional payments that would have been expected under the Operative Documents but for the misstatement, together with interest on each such additional payment computed at the Default Rate from the date it would have been expected to the date it is actually paid; and
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     (c) notwithstanding anything to the contrary in this definition, on any date when an Event of Default has occurred and is continuing, the Spread will equal the Default Rate less the Effective Rate.
         
    Ratio of Consolidated Debt for    
    Borrowed Money to    
Levels   Consolidated EBITDA   Spread
Level I   less than 0.5   35.0 basis points
Level II   greater than or equal to 0.5, but less than 1.0   45.0 basis points
Level III   greater than or equal to 1.0, but less than 1.5   55.0 basis points
Level IV   greater than or equal to 1.5, but less than 2.0   70.0 basis points
Level IV   greater than or equal to 2.0   85.0 basis points
All determinations of the Spread by BNPPLC will, in the absence of clear and demonstrable error, be binding and conclusive for purposes of the Operative Documents. Further BNPPLC may, but will not be required, to rely on the determination of the Spread set forth in any notice delivered by NAI as described above in clause (a) of this definition.
     “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” has the meaning indicated in the Purchase Agreement.
     “Supplemental Payment Obligation” has the meaning indicated in the Purchase Agreement.
     “Tangible Personal Property” has the meaning indicated on page 2 of the Lease.
     “Target Completion Date” has the meaning indicated in the Construction Agreement.
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 38

 

 

     “Term” has the meaning indicated in subparagraph 1(A) of the Lease.
     “Termination of NAI’s Work” has the meaning indicated in the Construction Agreement.
     “Third Party Contract” has the meaning indicated in the Construction Agreement.
     “Third Party Contract/Termination Fees” has the meaning indicated in the Construction 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, 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 exceeds the market value of all Plan assets allocable to such benefit liabilities, as determined on the most recent valuation date of the Plan and in accordance with the provisions of ERISA for calculating the potential liability of NAI or any ERISA Affiliate under Title IV of ERISA.
     “Upfront Fees” has the meaning indicated in the Construction Agreement.
     “Work” has the meaning indicated in the Construction Agreement.
     “Work/Suspension Event” has the meaning indicated in the Construction Agreement.
     “Work/Suspension Notice” has the meaning indicated in the Construction Agreement.
     “Work/Suspension Period” has the meaning indicated in the Construction Agreement.
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 39

 

 

ARTICLE II — SHARED PROVISIONS
     The following provisions will apply to and govern the construction of this Agreement and the other Operative Documents (including attachments), except to the extent (if any) a clear, contrary intent is expressed herein or therein:
     1. Notices. Any provision of (1) any of the Operative Documents, (2) any other document which references this provision for purposes of establishing notice requirements (in this provision, a “Related Document”), or (3) any Applicable Law, that makes reference to any required payment from NAI or BNPPLC to the other or that makes reference to the sending, mailing or delivery of any notice or demand will be subject to the following provisions (except that any notice given by BNPPLC to satisfy any statutory requirement, including any notice of eviction or foreclosure, will be considered sufficient if it satisfies the statutory requirements applicable to the notice, regardless of whether the notice or payment satisfies the following provisions):
     (i) All Rent and other amounts required to be paid by NAI to BNPPLC must be paid to BNPPLC in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
BNP Paribas — New York Branch
Favor: BNP Paribas Leasing Corporation
ABA 026 007 689
/AC/ 0200-517000-070-78
Reference: Network Appliance, Inc./Building 8 Lease
or at such other place and in such other manner as BNPPLC may designate in a notice to NAI.
     (ii) All advances paid to NAI by BNPPLC under the Construction Agreement or in connection therewith will be paid by wire transfer to:
Wells Fargo Bank
San Francisco, CA
ABA#121000248
Acct#4311-790562
Account of: Network Appliance
Reference: BNP Lease
or at such other place and in such other manner as NAI may reasonably designate from
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 40

 

 

time to time by notice to BNPPLC signed by a Responsible Financial Officer of NAI.
     (iii) All notices, demands, approvals, consents and other communications to be made under any Operative Document or Related Document to or by the parties thereto must, to be effective for purposes thereof, be in writing. Notices, demands and other communications required or permitted under any Operative Document or Related Document must be given by any of the following means: (A) personal service (including local and overnight courier), with proof of delivery or attempted delivery retained; (B) electronic communication, whether by electronic mail 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 will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to clause (C) will be deemed received five days following deposit in the mail. Notices, demands and other communications required or permitted by any Related Document are to be sent to the addresses set forth therein; and notices, demands and other communications required or permitted by under any Operative Document are to be sent to the following addresses (or in the case of communications to Participants, at the addresses set forth in Schedule 1 to the Participation Agreement):
Address of BNPPLC:
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Address of NAI:
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 41

 

 

With a copy to:
Network Appliance, Inc.
495 East Java Drive
Sunnyvale, California 94089
Attention: Mr. Thom Bryant
Telecopy: (408)-822-4463
However, any party to any Operative Document or Related Document may change its address above or in the Related Document, as applicable, by written notice to the other parties to such Operative Document or Related Document given in accordance with this provision.
     2. Severability. If any term or provision of any Operative Document or the application thereof is to any extent 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, will not be affected thereby.
     3. No Merger. There will be no merger of the Lease or of the leasehold estate created by the Lease or of the mortgage and security interest granted in subparagraph 4(C)(1) of the 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 Lease or the leasehold estate created thereby or such mortgage and security interest 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 has occurred. There will 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 rights and options granted by the Purchase Agreement 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 has occurred.
     4. No Implied Waiver. The failure of any party to any Operative Document to insist at any time upon the strict performance of any covenant or agreement therein or to exercise any option, right, power or remedy contained therein will 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 will not prevent a similar subsequent act from constituting a violation. Any express waiver of any provision of any Operative Document will 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 will be deemed to have been made unless expressed in writing and signed by the party to be bound by
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 42

 

 

the waiver. A receipt by any party to any Operative Document of any payment thereunder (including the receipt by BNPPLC of any Rent paid under the Lease) with knowledge of the breach by another party of any covenant or agreement contained in that or any other Operative Document will not be deemed a waiver of such breach.
     5. Entire and Only Agreements. The Operative Documents supersede any prior negotiations and agreements between BNPPLC and NAI concerning the Property, and no amendment or modification of any Operative Document will 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 will 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 created by the Operative Documents and as to all notices expressly required by the Operative Documents.
     8. Governing Law. Each Operative Document will be governed by and construed in accordance with the laws of the State of California without regard to conflict or choice of laws principles that might require the application of the laws of another jurisdiction.
     9. Paragraph Headings. The paragraph and section headings contained in the Operative Documents are for convenience only and will in no way enlarge or limit the scope or meaning of the various and several provisions thereof.
     10. Negotiated Documents. All 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 will 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 Agreement, but is defined in another Operative Document, will 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 will be held and construed to include any other gender, and words in the singular number will be held to include the plural and vice versa, unless the context otherwise requires.
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 43

 

 

References in any Operative Document to Paragraphs, subparagraphs, Sections, subsections or other subdivisions 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 refer to the corresponding Schedule or Exhibit attached to that Operative Document, which are made a part thereof by such reference. All capitalized terms used in each Operative Document which refer to other documents will 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 BNPPLC or NAI is a party or intended beneficiary, without its consent. All accounting terms used but not specifically defined in any Operative Document will 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, and the words “include”, “including” and similar terms will be construed as if followed by “without limitation to”. The rule of ejusdem generis will not be applied to limit the generality of a term in any of the Operative Documents when followed by specific examples. When used to qualify any representation or warranty made by a Person, the phrases “to the knowledge of [such Person]” or “to the best knowledge of [such Person]” are intended to mean only that such Person does not have knowledge of facts or circumstances which make the representation or warranty false or misleading in some material respect; such phrases are not intended to suggest that the Person does indeed know the representation or warranty is true.
     13. Execution in Counterparts. To facilitate execution, each of the Operative Documents may be executed in multiple identical counterparts. It will 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, will collectively constitute a single instrument. But it will not be necessary in making proof of any of the Operative Documents to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties to such document. Any signature page may be detached from one counterpart and then attached to a second counterpart with identical provisions without impairing the legal effect of the signatures on the signature page. Signing and sending a counterpart (or a signature page detached from the counterpart) by facsimile or other electronic means to another party will have the same legal effect as signing and delivering an original counterpart to the other party. A copy (including a copy produced by facsimile or other electronic means) of any signature page that has been signed by or on behalf of a party to any of the Operative Documents will be as effective as the original signature page for the purpose of
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 44

 

 

proving such party’s agreement to be bound.
     14. Not a Partnership, Etc. Nothing in any Operative Document is intended to create any partnership, joint venture, or other joint enterprise between NAI and BNPPLC or any other Interested Party.
     15. No Fiduciary Relationship Intended. Neither the execution of the Operative Documents or other documents referenced in this Agreement nor the administration thereof by BNPPLC will create any fiduciary obligations of BNPPLC (or any other Interested Party) to NAI. Moreover, BNPPLC and NAI disclaim any intent to create any fiduciary or special relationship between themselves (or on the part of any other Interested Party) under or by reason of the Operative Documents or the transactions described therein or any other documents or agreements referenced therein.
     16. Amendment and Restatement of Prior Agreement. This Agreement amends, restates and replaces entirely the Prior Common Definitions and Provisions Agreement.
[The signature pages follow.]
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Page 45

 

 

     IN WITNESS WHEREOF, this Amended and Restated Common Definitions and Provisions Agreement (Building 8) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox  
    Lloyd G. Cox, Managing Director   
       
 
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Common Definitions and Provisions Agreement (Building 8) dated as of November 29, 2007]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Common Definitions
and Provisions Agreement (Building 8) – Signature Page

 

 

Annex 1
Notice of ABR Period Election
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Amended and Restated Common Definitions and Provisions Agreement (Building 8) dated as of November 29, 2007, between you, BNP Paribas Leasing Corporation, and the undersigned, Network Appliance, Inc. This letter constitutes notice of our election to make the first Construction Period or Base Rent Period beginning on or after                    , 20___subject to an ABR Period Election.
     We understand that until a different election becomes effective as provided in definitions of “ABR Period Election” and “LIBOR Period Election” in the Amended and Restated Common Definitions and Provisions Agreement (Building 8), all subsequent Periods will also be subject to an ABR Period Election.
     NOTE: YOU ARE ENTITLED TO DISREGARD THIS NOTICE IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF THE ABR PERIOD ELECTION IS LESS THAN FIVE 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.
             
    NETWORK APPLIANCE, INC., a Delaware
corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
[cc all Participants]

 

 

Annex 2
Fixed Rate Lock Notice
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Amended and Restated Common Definitions and Provisions Agreement (Building 8) dated as of November 29, 2007, between you, BNP Paribas Leasing Corporation, and the undersigned, Network Appliance, Inc.. By this letter, which is given pursuant to subparagraph 3(B)(4) of the Lease, NAI requests that BNPPLC promptly establish a Fixed Rate for a notional amount equal to the Lease Balance as of the date of this letter for use in the calculation of the Effective Rate for all Base Rent Periods commencing on or after the following Fixed Rate Lock Date:                     , 20___.
     As contemplated in the conditions set forth in subparagraph 3(B)(4) of the Lease, such Fixed Rate Lock Date is the first Business Day of a calendar month which falls after the projected Base Rent Commencement Date; such Fixed Rate Lock Date does not fall prior to the end of any Base Rent Period which has commenced or will commence before BNPPLC receives this notice; and NAI expects BNPPLC to receive this notice more than ten days prior to such Fixed Rate Lock Date.
     In an earlier phone conversation today between a representative of NAI and                      at the New York Branch of BNP Paribas, NAI requested an estimate from BNP Paribas of the Fixed Rate that would be established by BNPPLC and BNP Paribas entering into an Interest Rate Swap. The estimate provided by telephone was:                      percent (___%) per annum.
     By this letter, NAI confirms that it will accept such a rate or any lower rate as the Fixed Rate for purposes of the Lease.
NOTE: BNPPLC will be entitled to disregard this notice if the conditions to a Fixed Rate Lock, as specified in subparagraph 3(B)(4) of the Lease, have not been satisfied. However, NAI requests that BNPPLC notify NAI immediately if for any reason BNPPLC believes this notice will not be effective.

 

 

             
    NETWORK APPLIANCE, INC., a Delaware
corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
[cc all Participants]
Annex 2 – Page 2

 

 

Annex 3
Notice of LIBOR Period Election
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Amended and Restated Common Definitions and Provisions Agreement (Building 8) dated as of November 29, 2007, between you, BNP Paribas Leasing Corporation, and the undersigned, Network Appliance, Inc.. This letter constitutes notice of our election to make the first Construction Period or Base Rent Period beginning on or after                    , 20___subject to a LIBOR Period Election of                      month(s).
     We understand that until a different election becomes effective as provided in definitions of “ABR Period Election” and “LIBOR Period Election” in the Amended and Restated Common Definitions and Provisions Agreement (Building 8), all subsequent Periods will also be subject to the same LIBOR Period Election.
NOTE: YOU ARE 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 AMENDED AND RESTATED COMMON DEFINITIONS AND PROVISIONS AGREEMENT (BUILDING 8), OR IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF THE LIBOR PERIOD ELECTION IS LESS THAN FIVE 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.
             
    NETWORK APPLIANCE, INC., a Delaware
corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
[cc all Participants]

 

 

Annex 4
Minimum Insurance Requirements
A. PROVISIONS APPLICABLE BOTH BEFORE AND AFTER THE COMPLETION DATE.
     1. Other Requirements Not Affected: The insurance coverages required by this Annex represent minimum requirements of BNPPLC and other Interested Parties and are not to be construed to modify or limit NAI’s indemnities or other agreements in the Agreement to which this Annex is attached or in any other Operative Document. Such required coverages do not constitute a representation or determination by BNPPLC of the minimum insurance coverages NAI should maintain for its own protection.
     2. Requirements Apply Only to the Property: Further, the insurance coverages required by this Annex apply only to the Property, it being understood that nothing in this Annex is intended to impose minimum insurance requirements upon NAI with respect to other properties owned or leased by NAI.
     3. Failure to Obtain: Failure of BNPPLC to demand certificate or other evidence of full compliance with these insurance requirements, or failure of BNPPLC to identify a deficiency from evidence that is provided, will not be construed as a waiver of NAI’s obligation to maintain required insurance.
     4. Copies of Policies: NAI must provide to BNPPLC, at the offices of NAI, copies of all insurance policies required herein within ten (10) days after receipt of a request for such copies from BNPPLC or as soon as practicable if policies are in the process of being issued by the applicable insurer. Such copies must be certified as complete and correct by an authorized representative of the applicable insurer, subject to availability from the insurance company.
     5. Inconsistent Endorsements. The insurance policies maintained to comply with these requirements will contain no endorsements that restrict, limit, or exclude coverages in any manner that is inconsistent with these express requirements without the prior express written approval of BNPPLC.
     6. Limits of Liability. The limits of liability necessary to satisfy these requirements may be provided by a single policy of insurance or by a combination of primary and umbrella/excess policies, but in no event will the total limits of liability available for any one occurrence or accident be less than the amount required herein.
     7. Additional Insured Status. Additional insured status will be provided in favor
Annex 4 – Page 1

 

 

of BNPPLC and other Interested Parties on all liability insurance required herein except workers’ compensation and employer’s liability. Such additional insured status will be provided on a basis that neither limits coverage to the additional insured by reason of its negligence (sole or otherwise) nor excludes coverage for completed operations with respect to construction of the Improvements.
     8. Primary Liability. The insurance policies maintained to comply with these requirements will be primary to all insurance available to BNPPLC and other Interested Parties, collectively or individually, with BNPPLC and other Interested Parties’ insurance being excess, secondary and non-contributing (except in the case of workers’ compensation and employer’s liability insurance). Where necessary, coverage will be endorsed to provide such primary liability.
B. PROVISIONS APPLICABLE BEFORE THE COMPLETION DATE.
     1. General Terms and Conditions.
A. Definitions: For purposes of this Annex:
“Construction Period Policies” means insurance policies that satisfy the minimum requirements set forth in this Annex and that NAI has obtained or required its Contractors to obtain with respect to the Property prior to the Completion Date.
“Contractor” will include subcontractors of any tier.
“ISO” means Insurance Services Office.
B. Status and Rating of Insurance Company. All insurance coverages required herein prior to the Completion Date will be written through insurance companies admitted to do business in the State of California and rated upon each renewal no less than A-: VII in the then most current edition of A.M. Best’s Key Rating Guide.
C. Waiver of Subrogation. All insurance coverages carried by NAI with respect to the Construction Project, whether required herein or not, will provide a waiver of subrogation in favor of BNPPLC and other Interested Parties.
D. Release and Waiver: Without limiting other waivers or provisions in favor of BNPPLC and other Interested Parties in any of the Operative Documents or other attachments thereto, NAI hereby releases, and agrees to cause all Contractors performing any Work prior to the Completion Date (other than subcontractors providing goods and/or
Annex 4 – Page 2

 

 

services with a value of less than $100,000) to release, BNPPLC and all other Interested Parties from any and all claims or causes of action whatsoever that NAI and/or such Contractors might otherwise now or hereafter have resulting from or in any way connected with any loss covered by insurance, whether required herein or not, or which would have been covered by insurance required herein but for a failure of NAI and/or its Contractors to maintain such insurance.
E. Initial Insurance Representations to BNPPLC and Other Interested Parties: NAI represents, acknowledges and agrees that:
     1. Any Construction Period Policies not previously obtained will be obtained by NAI (or by the primary Contractor engaged by NAI to perform the Work), and the initial premiums for all Construction Period Policies will be paid, before NAI requests Construction Advances that cause the Lease Balance to exceed $2,000,000; and notwithstanding anything to the contrary in the Construction Agreement, BNPPLC may refuse to fund any Construction Advances that would cause the Lease Balance to exceed $2,000,000 prior to such time as BNPPLC is satisfied that NAI has obtained and paid the premiums for the Construction Period Policies. Moreover, in the case of the Builder’s Risk Policy, the premium must be paid or prepaid for the entire period through the projected Completion Date before the Lease Balance exceeds $2,000,000.
     2. The coverages provided by the Construction Period Policies will not be terminated or modified to reduce, limit or qualify coverages in any material respect without BNPPLC’s prior written consent in each case by reason of any act or omission on the part of NAI or anyone acting for or authorized to act for NAI (including any Contractor engaged by NAI to obtain the Construction Period Policies for NAI). Without limiting the foregoing, NAI will not do or authorize any act or omission that could cause the coverage provided with respect to any Improvements by the Builder’s Risk Policy to expire or lapse before the Completion Date.
     3. NAI must notify BNPPLC with reasonable promptness of any possible damage claims known to NAI that NAI believes are, individually or taken together, reasonably likely to a exceed seventy-five percent (75%) of any aggregate limit of the Builder’s Risk Policy required herein.
     4. NAI will endeavor in good faith to cause each certificate of insurance which is provided to BNPPLC by an insurer, or its authorized
Annex 4 – Page 3

 

 

representative, at the request of NAI in regard to any Construction Period Policies to include the following express provision:
This is to certify that the policies of insurance described herein have been issued to the Insured for whom this certificate is executed and are in force at this time. In the event of cancellation or non-renewal of coverage affecting the certificate holder, other than by reason of nonpayment of premium, thirty (30) days prior written notice will be given to the certificate holder by certified mail or registered mail, return receipt requested. In the event of cancellation or non-renewal of coverage affecting the certificate holder by reason of nonpayment of premium, ten (10) days prior written notice will be given to the certificate holder by certified mail or registered mail, return receipt requested.
It is understood, however, that an insurer issuing such a certificate may decline to include the foregoing statement in the certificate, in which case NAI will instead deliver the certificate to BNPPLC with a cover letter from NAI itself which states substantially as follows:
Enclosed is a certificate of insurance, which has been issued by an insurer or its authorized representative, and which we are providing to you to confirm that policies described in the certificate have been issued to NAI or another insured named in the certificate and are in force at this time. NAI also certifies to you that such policies have been issued, and in the event of any cancellation, non-renewal, or reduction in coverage affecting you (BNP Paribas Leasing Corporation) or other Interested Parties, NAI will give you thirty (30) days prior written notice by certified mail or registered mail, return receipt requested.
     5. NAI will also endeavor in good faith to cause each Construction Period Policy to be endorsed to provide, in effect, that (A) in the event of cancellation, non-renewal, or reduction in coverage affecting BNPPLC, other than by reason of nonpayment of premium, thirty (30) days prior written notice will be given by the insurer to BNPPLC by certified mail or registered mail, return receipt requested; and (B) in the event of cancellation, non-renewal, or reduction in coverage affecting BNPPLC by reason of nonpayment of premium, ten (10) days prior written
Annex 4 – Page 4

 

 

notice will be given by the insurer to BNPPLC by certified mail or registered mail, return receipt requested.
     2. Commercial General Liability Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain commercial general liability insurance in accordance with the following requirements:
     A. Coverage: Such insurance will cover liability (as to claims covered by the form of CGL policy specified below, including claims for bodily injury and property damage) arising from any occurrence on or about the Land or from any operations conducted on or about the Land, including but not limited to tort liability assumed under any of the Operative Documents. Defense will be provided as an additional benefit and not included within the limit of liability.
     B. Form: Commercial General Liability Occurrence form (ISO CG 0001, dated 12 04, or an equivalent substitute form providing the same or greater coverage, and in any case written to provide primary coverage to BNPPLC as provided in Part A.8 above).
     C. Amount of Insurance: Coverage will be provided with limits of not less than:
             
 
  i. Each Occurrence Limit   $ 1,000,000  
 
        
 
  ii. General Aggregate Limit   $ 2,000,000  
 
        
 
  iii. Product-Completed Operations Aggregate Limit   $ 2,000,000  
 
        
 
  iv. Personal and Advertising Injury Limit   $ 1,000,000  
     D. Required Endorsements:
         
 
  i. Additional Insured.   as required in Part A.7 above.
 
        
 
  ii. Aggregate Per Location   The aggregate limit will apply separately to each location through use of an Aggregate Limit of Insurance Per Location endorsement (ISO CG 2504 1185 or its equivalent).
Annex 4 – Page 5

 

 

         
 
  iii. Notice of Cancellation, Nonrenewal or Reduction in Coverage:   Consistent with Part B.1.E.5 above.
 
        
 
  iv. Personal Injury Liability:   The personal injury contractual liability exclusion will be deleted.
 
        
 
  v. Primary Liability:   As required in Part A.8 above.
 
        
 
  vi. Waiver of Subrogation:   As required in Part B.1.C above.
E. Deductible or Self Insured Retention Under Liability Policies: If a gap in the liability insurance coverage provided to BNPPLC or another Interested Party under any Construction Period Policy results from any deductible, self-insured retention or other similar arrangement to which NAI agrees, then such gap must be covered by one or more other Construction Period Policies, such that liability insurance protection afforded to BNPPLC and other Interested Parties by all such Construction Period Policies, taken together, is no less than it would be if NAI had not agreed to the deductible, self-insured retention or other similar arrangement.
     3. Workers’ Compensation/Employer’s Liability Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain workers’ compensation and employer’s liability insurance in accordance with the following requirements:
A. Coverage: Such insurance will cover liability arising out of NAI’s employment of workers and anyone for whom NAI may be liable for workers’ compensation claims.
B. Amount of Insurance: Coverage will be provided with a limit of not less than:
         
 
  i. Workers’ Compensation:   Statutory limits.
 
        
 
  ii. Employer’s Liability:    $1,000,000 each accident and each disease.
     C. Required Endorsements:
         
 
  i. Notice of Cancellation,    
 
     Nonrenewal or Reduction
   in Coverage: 		  Consistent with Part B.1.E.5 above.
 
        
 
  ii. Waiver of Subrogation:   As required in Part B.1.C above.
Annex 4 – Page 6

 

 

     4. Umbrella/Excess Liability Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain umbrella/excess liability insurance in accordance with the following requirements:
A. Coverage: Such insurance will be excess over and be no less broad than all coverages described in the preceding subsections 1, 2 and 3 and will include a drop-down provision if commercially available.
B. Form: This policy will have the same inception and expiration dates as the commercial general liability insurance required above or a nonconcurrency endorsement.
C. Amount of Insurance: Coverage will be provided with a limit of not less than $10,000,000 per occurrence and in the aggregate.
     5. Builders Risk Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain or cause to be maintained property insurance (Builders Risk Insurance) in accordance with the following requirements:
A. Insureds: Protection will extend to BNPPLC as a Named Insured or Additional Named Insured as its interest may appear; and the policy will be modified if necessary so that the protection afforded to BNPPLC is not reduced or impaired by acts or omissions of NAI or any other beneficiary or insured. (Such modification of the policy may be by endorsement comparable to a standard mortgagee clause; not limited, however, by its terms to BNPPLC’s rights “as a mortgagee” and not conditioned upon rights of the insurer to be subrogated to BNPPLC’s rights under the Operative Documents in the event of a payment of insurance proceeds to BNPPLC.)
B. Covered Property: Such insurance will cover:
  i.   Improvements and any equipment made or to be made a permanent part of the Property;
 
  ii.   structure(s) under construction;
 
  iii.   property including materials and supplies on site for installation;
 
  iv.   property including materials and supplies at other locations but intended for use at the site;
 
  v.   property including materials and supplies in transit to the site for installation; and
Annex 4 – Page 7

 

 

  vi.   temporary structures (e.g., scaffolding, falsework, and temporary buildings) located at the site.
C. Form: Coverage will be on an “all risk” form, will include theft, flood, earthquake, and earthquake sprinkler leakage, and be written on a completed-value basis with no co-insurance provision. No protective safeguard warranty will be permitted.
D. Amount of Insurance: Real property coverage will be provided in an amount equal at all times to the full replacement value, exclusive of land, foundation, footings, excavations and grading.
E. Deductibles. Deductibles applicable to the Builder’s Risk Policy will not exceed the following:
       
 
i. All Risks of Direct Damage, Per Occurrence, except flood or water damage and earthquake
   $50,000
 
 
    
 
ii. Delayed Opening Waiting Period
   30 Days
 
 
    
 
iii Water Damage (including flood), Per Occurrence
   $50,000; or (in the case of flood) excess of NFIP if in Flood Zone A
 
    
 
iv Earthquake and Earthquake Sprinkler Leakage, Per Occurrence
  5% of total project value at risk at the time of the loss, subject to a minimum of $100,000
F. Termination of Coverage: The termination of coverage provision will be endorsed to permit occupancy of the covered property being constructed. Further, NAI will maintain or cause the insurance to be maintained in effect, unless otherwise provided for the Operative Documents, until the earliest of the following dates:
  i.   the date on which all persons and organizations who are insureds under the policy agree that it is terminated;
 
  ii.   any termination or expiration of the Lease upon the Designated Sale Date, which is the date upon which final payment is expected under the Operative Documents; or
Annex 4 – Page 8

 

 

  iii.   the date on which the insurable interests in the Covered Property of all insureds other than NAI have ceased;
     G. Required Endorsements and Minimum Sublimits:
         
    i. Additional Expenses Due To Delay In Completion Project, including but not limited to financing costs including interest expenses, insurance expenses, professional fees and taxes;   Included with specific sublimits (based on an estimated 12 period of indemnity) as follows:
 
        $1,900,000 —
construction financing interest.

$380,000 — real estate taxes

$204,000 — insurance premiums
         
    ii. Agreed Value;   No coinsurance
         
    iii. Boiler & Machinery on a Comprehensive Basis;   Included without sublimit
         
    iv. Damage Resulting From or Arising From Error, Omission or Deficiency In Design, Specifications, Workmanship or Materials, Including Collapse;   Included without sublimit
         
    v. Debris Removal Additional Limit; Debris Removal   $4,000,000 sublimit
         
    vi. Earthquake including Sprinkler Leakage;   $10,000,000 sublimit
         
    vii. Expediting Expenses;   $50,000 sublimit
         
    viii. Flood — Annual Aggregate including Earthquake Sprinkler Leakage;   $10,000,000 sublimit
Annex 4 – Page 9

 

 

         
    ix. Freezing;   $100,000 sublimit
         
    x. Notice of Cancellation or Reduction;   Consistent with Part B.1.E.5 above
         
    xi. Occupancy Clause;   Consistent with Part B.5.F above
         
    xii. Demolition /Increased Cost of Cost of Construction — Per Occurrence   $1,000,000 sublimit
         
    xiii. Pollutant Clean-Up and Removal, provided that such
       condition ensues following a loss from a covered peril;		   Included in Debris
Removal sublimit
         
    xiv. Preservation of Property;   Included without sublimit
         
    xv. Repair, Replace or Re-erect Valuation Clause;   Included without sublimit
         
    xvi. Testing;   Included without sublimit
         
    xvii. Waiver of Subrogation.   As required in Part B.1.C above
     6. Evidence of Insurance. NAI will provide confirmation of the insurance required prior to the Completion Date in accordance with the following:
A. Provision of Evidence. Evidence of the insurance coverage required to be maintained by NAI, represented by certificates of insurance or policies and endorsements issued by the insurance company or its legal agent, must be furnished to BNPPLC prior to the Effective Date. New certificates of insurance or policies and endorsements will be provided to BNPPLC prior to or concurrent with the termination date of the current certificates of insurance or policies and endorsements.
B. Form:
  i   The Builders Risk Insurance will be evidenced by ACORD form 28, “Evidence of Property Insurance”, completed in a manner satisfactory to BNPPLC to show compliance with the requirements of this Annex. To the extent requested by BNPPLC, copies of endorsements to such insurance must be attached to such form.
Annex 4 – Page 10

 

 

  ii.   All liability insurance required herein will be evidenced by ACORD form 25, “Certificate of Insurance”, in each case completed in a manner satisfactory to BNPPLC to show compliance with the requirements of this Annex. To the extent requested by BNPPLC, copies of endorsements to this insurance must be attached to such form.
C. Specifications: Such certificates of insurance or policies and endorsements will specify:
  i.   BNPPLC as a certificate holder with correct mailing address as provided by BNPPLC.
 
  ii.   Insured’s name, which must match that on the Agreement to which this Annex is attached.
 
  iii.   Insurance companies affording each coverage, policy number of each coverage, policy dates of each coverage, all coverages and limits described herein, and signature of authorized representative of insurance company.
 
  iv.   Producer of the certificate with correct address and phone number listed.
 
  v.   Additional or named insured status of BNPPLC as required by this Annex.
 
  vi.   Aggregate limits per location (except as to the umbrella liability insurance) required by this Annex.
 
  vii.   Amount of any deductibles and/or retentions.
 
  viii.   Cancellation, nonrenewal and reduction in coverage notification consistent with Part B.1.E.5 above. Additionally, NAI will endeavor in good faith to cause any insurer issuing to BNPPLC a certificate on ACORD form 25 to delete the words “endeavor to” and “but failure to mail such notice shall impose no obligation or liability of any kind upon Company, it agents or representatives” from the cancellation provision of such form.
 
  ix.   Primary status as required by this Annex.
 
  x.   Waivers of subrogation as required by this Annex.
D. Required Endorsements. A copy of each required endorsement will, if and as requested by BNPPLC from time to time, also be provided.
Annex 4 – Page 11

 

 

E. Commencement of Construction. Commencement of construction without provision of the required certificate of insurance and/or required policies and endorsements, or without compliance with any other provision of this Annex or the Agreement to which it is attached, will not constitute a waiver by BNPPLC of any rights. BNPPLC will have the right, but not the obligation, of prohibiting NAI or any Contractor from performing any work until such certificate of insurance and/or required policies and endorsements are received by BNPPLC.
     7. Contractor’s Insurance: To the extent, if any, necessary to preserve or provide liability coverage for BNPPLC and other Interested Parties with regard to operations performed on or about the Property prior to the Completion Date, NAI will require Contractors to provide (or will provide the coverage on behalf of Contractors) similar to that required of NAI by the foregoing provisions of this Annex. In the event NAI requires any Contractor to maintain Construction Period Policies necessary to comply with these insurance requirements, NAI will also require such Contractor to provide and maintain certificates of insurance containing provisions as described herein (modified to recognize the Contractor, rather than NAI, as named insured) enumerating, among other things, the waivers of subrogation, additional or named insured status, and primary liability as required herein; and in such event NAI will cause the Contractor to make those insurance certificates available to BNPPLC upon request.
C. PROVISIONS APPLICABLE AFTER THE COMPLETION DATE.
     1. Liability Insurance: After the Completion Date and throughout the Term of the Lease, NAI must maintain commercial general liability insurance against claims for bodily injury, death, advertising injury and property damage occurring in or upon or resulting from any occurrence in or upon the Property under one or more insurance policies, all in such amounts, with such insurance companies and upon such terms and conditions (including self-insurance, whether by deductible, retention, or otherwise) as are consistent with NAI’s normal insurance practices in the United States. In any event, policies under which NAI maintains such liability insurance must provide, by endorsement or otherwise, that BNPPLC and other Interested Parties are also insured thereunder against such claims with coverage that is not limited by any negligence or allegation of negligence on their part and with coverage that is primary, not merely excess over or contributory with the other commercial general liability coverage they may themselves maintain.
     2. Property Insurance: After the Completion Date and throughout the Term of the Lease, NAI must 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, all in such amounts, with such insurance companies and upon such terms and conditions (including self-insurance, whether by deductible, retention, or otherwise) as are consistent with NAI’s normal insurance practices in the United States. In any event, policies under which NAI
Annex 4 – Page 12

 

 

maintains such insurance must:
  i.   show BNPPLC as an additional insured as its interest may appear; and
 
  ii   provide that the protection afforded to BNPPLC thereunder is primary (such that any policies maintained by BNPPLC itself will be excess, secondary and noncontributing) and is not to be reduced or impaired by acts or omissions of NAI or any other beneficiary or insured.
     3. Evidence of Insurance. NAI will provide confirmation of the insurance required after the Completion Date in accordance with the following:
A. Provision of Evidence. Evidence of the insurance coverage required to be maintained by NAI, represented by certificates of insurance, evidence of insurance, and endorsements issued by the insurance company or its legal agent, must be furnished to BNPPLC prior to the Completion Date. New certificates of insurance, evidence of insurance, and endorsements will be provided to BNPPLC prior to or concurrent with the termination date of the current certificates of insurance, evidence of insurance, and endorsements.
B. Form:
  i   The property insurance will be evidenced by ACORD form 28, “Evidence of Property Insurance”, completed in a manner reasonably satisfactory to BNPPLC to show compliance with the requirements of this Annex.
 
  ii.   The liability insurance will be evidenced by ACORD form 25, “Certificate of Insurance”, in each case completed in a manner reasonably satisfactory to BNPPLC to show compliance with the requirements of this Annex. To the extent requested by BNPPLC, copies of endorsements giving additional insured status to BNPPLC and other Interested Parties must be attached to such form.
C. Specifications: Such certificates of insurance or policies and endorsements will specify:
  i.   BNPPLC as a certificate holder with correct mailing address as provided by BNPPLC.
 
  ii.   Insured’s name, which must match that on the Agreement to which this Annex is attached.
Annex 4 – Page 13

 

 

  iii.   Insurance companies affording each coverage, policy number of each coverage, policy dates of each coverage, all coverages and limits described herein, and signature of authorized representative of insurance company.
 
  iv.   Producer of the certificate with correct address and phone number listed.
 
  v.   Additional or named insured status of BNPPLC as required by this Annex.
 
  vi.   Aggregate limits.
 
  vii.   Amount of any deductibles and/or retentions. viii. Primary status as required by this Annex.
 
  viii.   Primary status as required by this Annex.
 
  ix.   Waivers of subrogation as required by this Annex.
Annex 4 – Page 14

 

exv10w43
Exhibit 10.43
AMENDED AND RESTATED
PURCHASE AGREEMENT
(BUILDING 8)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
             
        Page  
1
   Additional Definitions     2  
 
   “97-1/Default (100%)”     2  
 
   “Adjusted Lease Balance”     3  
 
   “Applicable Purchaser”     3  
 
   “Balance of Unpaid Construction Period Losses”     3  
 
   “BNPPLC’s Actual Out of Pocket Costs”     4  
 
   “Break Even Price”     5  
 
   “Committed Price”     5  
 
   “Conditions to NAI’s Initial Remarketing Rights”     5  
 
   “Contingent Losses”     5  
 
   “Decision Not to Sell at a Loss”     5  
 
   “Deemed Sale”     6  
 
   “Extended Remarketing Period”     6  
 
   “Fair Market Value”     6  
 
   “Final Sale Date”     6  
 
   “Initial Remarketing Notice”     6  
 
   “Initial Remarketing Price”     6  
 
   “Lease Balance”     7  
 
   “Make Whole Amount”     7  
 
   “Maximum Remarketing Obligation”     7  
 
   “Must Sell Price”     8  
 
   “NAI’s Extended Remarketing Right”     8  
 
   “NAI’s Initial Remarketing Rights”     8  
 
   “NAI’s Target Price”     8  
 
   “Notice of Sale”     8  
 
   “Proposed Sale”     8  
 
   “Proposed Sale Date”     8  
 
   “Purchase Option”     8  
 
   “Put Option”     8  
 
   “Qualified Sale”     8  
 
   “Sale Closing Documents”     9  
 
   “Supplemental Payment”     9  
 
   “Supplemental Payment Obligation”     9  
 
   “Valuation Procedures”     10  
 
            
2
   NAI’s Options and Obligations on the Designated Sale Date     10  
 
   (A)     Purchase Option; Initial Remarketing Rights; Supplemental Payment Obligation     10  
 
   (B)     Designation of the Purchaser     12  
 
   (C)     Delivery of Property Related Documents If BNPPLC Retains the Property     12  
 
   (D)     Effect of the Purchase Option and NAI’s Initial Remarketing Rights on        

 

 

TABLE OF CONTENTS
(Continued)
             
Subsequent Title Encumbrances     12  
 
  (E)       Security for NAI’s Purchase Option     13  
 
            
3
  NAI’s Rights, Options and Obligations After the Designated Sale Date     13  
 
  (A)      NAI’s Right to Buy During the Thirty Days After the Designated Sale Date     13  
 
  (B)      NAI’s Obligation to Buy if Certain Conditions are Satisfied     13  
 
  (C)      NAI’s Extended Right to Remarket     14  
 
  (D)      Deemed Sale On the Second Anniversary of the Designated Sale Date     15  
 
  (E)      NAI’s Right to Share in Sales Proceeds Received By BNPPLC From any Qualified Sale     15  
 
            
4
  Transfers By BNPPLC After the Designated Sale Date     16  
 
  (A)      BNPPLC’s Right to Sell     16  
 
  (B)      Survival of NAI’s Rights and the Supplemental Payment Obligation     16  
 
  (C)      Easements and Other Transfers in the Ordinary Course of Business     16  
 
            
5
  Terms of Conveyance Upon Purchase     17  
 
  (A)      Tender of Sale Closing Documents     17  
 
  (B)      Delivery of Escrowed Proceeds     17  
 
            
6
  Survival and Termination of the Rights and Obligations of NAI and BNPPLC     17  
 
  (A)      Status of this Agreement Generally     17  
 
  (B)      Election by NAI to Terminate the Supplemental Payment Obligation Prior to the Completion Date     18  
 
  (C)      Automatic Termination of NAI’s Rights     19  
 
  (D)      Payment Only to BNPPLC     19  
 
  (E)      Preferences and Voidable Transfers     19  
 
  (F)      Remedies Under the Other Operative Documents     19  
 
            
7
  Certain Remedies Cumulative     20  
 
            
8
  Attorneys’ Fees and Legal Expenses     20  
 
            
9
  Successors and Assigns     20  
 
            
10
  Amendment and Restatement of Prior Purchase Agreement     20  

(ii)

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
         
Exhibit A
   Legal Description
 
        
Exhibit B
   Valuation Procedures
 
        
Exhibit C
   Requirements Re: Forms to Accomplish Assignment and Conveyance
 
        
     Exhibit C-1
   Agreement Concerning Ground Lease
 
        
     Exhibit C-2
   Form of Assignment of Ground Lease and Improvements
 
        
     Exhibit C-3
   Form of Bill of Sale and Assignment
 
        
     Exhibit C-4
   Form of Acknowledgment of Disclaimer of Representations and Warranties
 
        
Exhibit D
   Secretary’s Certificate
 
        
Exhibit E
   FIRPTA Statement
 
        
Exhibit F
   Notice of Election to Terminate the Supplemental Payment Obligation

(iii)

 

AMENDED AND RESTATED
PURCHASE AGREEMENT
(BUILDING 8)
     This AMENDED AND RESTATED PURCHASE AGREEMENT (BUILDING 8) (this “Agreement”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Agreement, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (Building 8) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Agreement for all purposes. As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     Contemporaneously with this Agreement, BNPPLC is executing and accepting an Amended and Restated Ground Lease (Building 8) dated as of the Effective Date (the “Ground Lease”) from NAI, pursuant to which BNPPLC is acquiring a leasehold estate in the Land described in Exhibit A and any existing Improvements on the Land.
     Also contemporaneously with this Agreement, BNPPLC and NAI are executing an Amended and Restated Construction Agreement (Building 8) dated as of the Effective Date (the“Construction Agreement”) and an Amended and Restated Lease Agreement (Building 8) dated as of the Effective Date (the “Lease”). Pursuant to the Construction Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements. When the term of the Lease commences, the Lease will cover all Improvements on the Land described in Exhibit A. (As used herein, “Property” means (i) all of BNPPLC’s interests, including those created by the Ground Lease, in the Land and in the Improvements and in all other real and personal property from time to time covered or to be covered by the Lease and included within the “Property” as defined therein, and (ii) BNPPLC’s interest in any Escrowed Proceeds yet to be applied as a Qualified Prepayment or to the cost of repairs to the Improvements or other property covered by the Lease; except that, for purposes of this Agreement, the Property will not include any condemnation or insurance proceeds included in Escrowed Proceeds as a result of any Pre-lease Force Majeure Event, nor will it include any right to receive any such condemnation or insurance proceeds in the future, unless NAI itself or one of its Affiliates purchases the Property from BNPPLC as provided in subparagraphs 2(A)(1), 3(A) or 3(B) below.)
     NAI and BNPPLC have agreed on the terms and conditions upon which NAI may

 

 

purchase or arrange for the purchase of the Property, and by this Agreement they desire to confirm all such terms and conditions.
AGREEMENTS
1 Additional Definitions. As used in this Agreement, capitalized terms defined above have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and that are used but not otherwise defined have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms have the following respective meanings:
     “97-1/Default (100%)” means a Default that is or results from any of the following:
     (A) a failure of NAI to make any payment required by any Operative Document, including (i) any 97-10/Prepayment payable as provided in Paragraph 9 of the Construction Agreement, (ii) any other amounts payable under the Construction Agreement because of Covered Construction Period Losses, (iii) any payment of Rent required by the Lease or (iv) any Supplemental Payment required by this Agreement;
     (B) any Hazardous Substance Activities on or about the Land;
     (C) any failure of NAI after the Completion Date to insure, maintain, operate or repair the Property in accordance with all terms and conditions of the Lease;
     (D) any failure of NAI to apply insurance or condemnation proceeds received by NAI as required by the Construction Agreement or the Lease, as applicable;
     (E) any breach by NAI of the Ground Lease;
     (F) any bankruptcy or insolvency proceeding involving NAI or any of its Subsidiaries, as the debtor, or any of the events or circumstances described in clauses (G), (H) or (I) of the definition of Event of Default in the Common Definitions and Provisions Agreement;
     (G) any breach by NAI of the financial covenants in subparagraph 3(C) of the Closing Certificate that occurs or continues after the Completion Date;
     (H) a failure of NAI or any of its Subsidiaries, which occurs or continues after the Completion Date, to pay when due a regularly scheduled payment of the principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000, as described in clause (F) of the definition of Event of Default in
Amended and Restated Purchase Agreement (Building 8) – Page 2

 

 

the Common Definitions and Provisions Agreement;
     (I) a failure of NAI or any of its Subsidiaries, which occurs or continues after the Completion Date, to pay any judgment or order for the payment of money rendered against it in an amount (not covered by insurance) which exceeds $25,000,000, as described in clause (J) of the definition of Event of Default in the Common Definitions and Provisions Agreement;
     (J) any fraud, misapplication of Construction Advances or other funds, illegal acts or willful misconduct on the part of NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI (including any contractor working for NAI) that occurs prior to the Completion Date; or
     (K) subject to the proviso at the end of Exhibit B, any breach by NAI of the provisions set forth in Exhibit B.
Except as provided in subparagraph 3(B), the characterization of any Default as a 97-1/Default (100%) will not affect the rights or remedies available to BNPPLC because of the Default.
“Adjusted Lease Balance” means a dollar amount equal to the following (but not less than zero):
  •   the Lease Balance, less
 
  •   Pre-lease Force Majeure Losses (if any).
“Applicable Purchaser” means (1) the third party designated by NAI to purchase the Property at any sale arranged by NAI as provided in this Agreement, or (2) the third party designated by BNPPLC as the purchaser at any Qualified Sale not arranged by NAI.
“Balance of Unpaid Construction Period Losses” means, subject to the qualifications set forth below in this definition, an amount equal to the sum of:
  (1)   the total Losses (if any), including Contingent Losses, that have been incurred or suffered by BNPPLC or other Interested Parties at any time and from time to time prior to the Completion Date (or, if no Completion Date occurs prior to the Designated Sale Date, then prior to the Designated Sale Date) by reason of, in connection with or arising out of (A) their ownership or alleged ownership of any interest in the Property or the payments required by the Operative Documents, (B) the use or operation of the Property, (C) the negotiation, administration or
Amended and Restated Purchase Agreement (Building 8) – Page 3

 

 

      enforcement of the Operative Documents, (D) the making of Funding Advances, (E) the Construction Project, (F) the breach by NAI of this Agreement or any other Operative Document 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 of BNPPLC under the Ground Lease or the Closing Certificate, 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; plus
  (2)   interest accruing at the Default Rate, compounded annually, on each payment of any such Losses by BNPPLC or any other Interested Party from the date such payment was made to the Designated Sale Date.
    For purposes of computing the Balance of Unpaid Construction Period Losses, Losses as described in clause (1) of this definition will include each reduction (if any) (i) in the Carrying Costs added to the Outstanding Construction Allowance as provided in the Construction Agreement, or (ii) in the Base Rent payable to BNPPLC as provided in the Lease, that results from Pre-lease Force Majeure Losses. In other words, the Losses described in clause (1) will include the additional (if any) Carrying Costs and Base Rent that would have accrued if Pre-lease Force Majeure Losses were set at zero dollars ($0.00) in the formulas set forth in the Construction Agreement and in the Lease for calculating Carrying Costs and Base Rent, respectively.
 
    Notwithstanding the foregoing, however, none of the following will be included in the Balance of Unpaid Construction Period Losses: (i) amounts included in or paid by BNPPLC with the proceeds of the Initial Advance (including Transaction Expenses); (ii) Losses paid or reimbursed from Construction Advances (including Local Impositions, insurance premiums and amounts paid by NAI prior to the Completion Date and reimbursed to it through Construction Advances made pursuant to the Construction Agreement, and also including costs and expenditures incurred or paid by or on behalf of BNPPLC after any Owner’s Election to Continue Construction, to the extent that such costs and expenditures are considered to be Construction Advances as provided in the Construction Agreement); (iii) any other Losses which NAI has paid prior to the Designated Sale Date or for which NAI remains fully obligated to pay pursuant to the other Operative Documents (including Covered Construction Period Losses paid or payable by NAI pursuant to the Construction Agreement); and (iv) any decline in the value of the Property, including any such decline that is attributable solely to a Pre-lease Force Majeure Event and thus constitutes a Pre-lease Force Majeure Loss.
 
    “BNPPLC’s Actual Out of Pocket Costs” means the out-of-pocket costs and expenses,
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    if any, incurred by BNPPLC in connection with a sale of the Property under this Agreement or in connection with the collection of payments due to it under this Agreement (including any Breakage Costs; Attorneys’ Fees; appraisal costs; and income, transfer, withholding or other taxes which do not constitute Excluded Taxes; but not including Excluded Taxes or costs of removing any Lien Removable by BNPPLC).
    “Break Even Price” means an amount equal to:
  •   the Lease Balance, plus
 
  •   BNPPLC’s Actual Out of Pocket Costs, and plus
 
  •   an amount equal to the Balance of Unpaid Construction Period Losses (if any).
    If, however, the Balance of Unpaid Construction Period Losses includes Contingent Losses, then for purposes of computing the Break Even Price applicable to any proposed sale on the Designated Sale Date, NAI may elect to exclude such Contingent Losses from the Break Even Price by providing to BNPPLC, for the benefit of BNPPLC and other Interested Parties, a written agreement to indemnify and defend BNPPLC and other Interested Parties against the excluded Losses. However, to be effective for purposes of reducing 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)(1), (2), (3), (4) and (5) of the Lease and otherwise must be in form and substance reasonably satisfactory to BNPPLC.
 
    “Committed Price” has the meaning indicated in subparagraph 3(C)(4).
 
    “Conditions to NAI’s Initial Remarketing Rights” has the meaning indicated in subparagraph 2(A)(2)(a).
 
    “Contingent Losses” means any Losses that consist of claims asserted against BNPPLC or another Interested Party prior to the Designated Sale Date, but that are not liquidated or paid on or prior to the Designated Sale Date. Any Contingent Losses included in the Unpaid Balance of Construction Period Losses, and thus which are relevant to the computation of the Break Even Price, will equal the sum as reasonably estimated by BNPPLC of (i) all Attorneys’ Fees and other costs that will be incurred to defend against such claims, and (ii) the amount for which BNPPLC or the other Interested Party can settle or satisfy such claims.
    “Decision Not to Sell at a Loss” means a decision by BNPPLC not to sell the Property on the Designated Sale Date to an Applicable Purchaser as provided in
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    subparagraph 2(A)(2), despite NAI’s satisfaction of the Conditions to NAI’s Initial Remarketing Rights.
 
    “Deemed Sale” has the meaning indicated in subparagraph 3(D).
 
    “Extended Remarketing Period” means a period beginning on the Designated Sale Date and ending on the Final Sale Date.
 
    “Fair Market Value” has the meaning indicated in Exhibit B.
 
    “Final Sale Date” means the earliest of:
  •   any date after the Designated Sale Date upon which BNPPLC conveys the Property to consummate a sale of the Property to NAI because of BNPPLC’s exercise of the Put Option as provided in subparagraph 3(B); or
 
  •   any date after the Designated Sale Date upon which BNPPLC conveys the Property to consummate a sale of the Property to NAI or to any Affiliate of NAI, including any such sale resulting from NAI’s exercise of its rights under subparagraph 3(A); or
 
  •   any date after the Designated Sale Date upon which BNPPLC conveys the Property to consummate a Qualified Sale, or would have done so but for a material breach of this Agreement by NAI (including any breach of its obligation to make any Supplemental Payment required in connection with such Qualified Sale); or
 
  •   the second anniversary of the Designated Sale Date, which will be the date of a Deemed Sale as provided in subparagraph 3(D) if no earlier date qualifies as the Final Sale Date and the entire Property is not sold by BNPPLC to NAI or an Applicable Purchaser prior to the second anniversary of the Designated Sale Date.
    “Initial Remarketing Notice” means a notice delivered to BNPPLC by NAI prior to the Designated Sale Date in which NAI confirms NAI’s decision to exercise NAI’s Initial Remarketing Rights and the amount of the Initial Remarketing Price. (Once given, any such notice may not be rescinded or modified without BNPPLC’s consent.)
 
    “Initial Remarketing Price” means the cash price set forth in an Initial Remarketing Notice delivered by NAI to BNPPLC as the price for which NAI has arranged a sale of the Property on the Designated Sale Date to an Applicable Purchaser which is not an Affiliate of NAI. Such price may be any price negotiated by the Applicable Purchaser in
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    good faith and on an arms length basis with NAI.
 
    “Lease Balance” means the Lease Balance (as defined in the Common Definitions and Provisions Agreement) on the Designated Sale Date, but computed without deduction for any Supplemental Payment or other amount paid to BNPPLC pursuant to this Agreement on the Designated Sale Date.
     “Make Whole Amount” means the sum of the following:
     (1) the amount (if any) by which the Lease Balance on the Designated Sale Date exceeds the following, as applicable: (a) all 97-10/Prepayments (if any) which were actually paid to BNPPLC on or before the Designated Sale Date, or (b) any Supplemental Payment which was actually paid to BNPPLC on the Designated Sale Date; together with interest on such excess computed at the Default Rate for the period commencing on the Designated Sale Date and ending on the Final Sale Date; plus
     (2) any unpaid Base Rent or other amounts due to BNPPLC pursuant to the other Operative Documents; plus
     (3) BNPPLC’s Actual Out of Pocket Costs; plus
     (4) an amount equal to the Balance of Unpaid Construction Period Losses (if any), together with interest on thereon computed at the Default Rate for the period commencing on the Designated Sale Date and ending on the Final Sale Date; plus
     (5) the amount, but not less than zero, by which (i) all Local Impositions, insurance premiums and other Losses of every kind suffered or incurred by BNPPLC (whether or not reimbursed in whole or in part by another Interested Party) with respect to the ownership, operation or maintenance of the Property during the Extended Remarketing Period, exceeds (ii) any rents or other sums collected by BNPPLC during such period from third parties as consideration for any lease or other contracts made by BNPPLC that authorize the use and enjoyment of the Property by such parties; together with interest on such excess computed at the Default Rate for each day prior to the Final Sale Date.
    “Maximum Remarketing Obligation” means a dollar amount equal to the following (but not less than zero):
  •   85% of the Adjusted Lease Balance; less
 
  •   any Fixed Rate Settlement Amount that NAI is required to pay pursuant to the
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      Lease because of any acceleration of the Designated Sale Date which causes it to occur prior to the date upon which the Term of the Lease is scheduled to expire (as such date is confirmed in clause (1) of the definition of Designated Sale Date in the Common Definitions and Provisions Agreement).
    “Must Sell Price” means, with respect to any Proposed Sale arranged by NAI pursuant to subparagraph 3(C), a cash price to BNPPLC equal to the Make Whole Amount, computed as of the Proposed Sale Date applicable to such Proposed Sale, plus all reimbursements or payments by BNPPLC to NAI that will be required by clause (4) of subparagraph 3(E) in connection with the Proposed Sale.
 
    “NAI’s Extended Remarketing Right” has the meaning indicated in subparagraph 3(C).
 
    “NAI’s Initial Remarketing Rights” has the meaning indicated in subparagraph 2(A)(2).
 
    “NAI’s Target Price” means the cash purchase price that, according to NAI, should reasonably be expected for the Property during the Extended Remarketing Period if the parties make a reasonable marketing effort to sell the Property, as such price is set forth in a notice given by NAI to BNPPLC after the Designated Sale Date. Once established by any such notice, the amount of NAI’s Target Price will not be increased, although nothing in this definition will be construed to prevent NAI from arranging a sale of the Property pursuant to this Agreement at a price higher than NAI’s Target Price. After providing a notice of NAI’s Target Price to BNPPLC, NAI may later decrease NAI’s Target Price by another notice to BNPPLC, but only if the decrease is justified by a material adverse change in the physical condition of the Property (e.g., significant damage to the Property by fire or other casualty).
 
    “Notice of Sale” has the meaning indicated in subparagraph 3(C)(4).
 
    “Proposed Sale” has the meaning indicated in subparagraph 3(C).
 
    “Proposed Sale Date” has the meaning indicated in subparagraph 3(C)(4).
 
    “Purchase Option” has the meaning indicated in subparagraph 2(A)(1).
 
    “Put Option” has the meaning indicated in subparagraph 3(B).
 
    “Qualified Sale” means any (1) Deemed Sale as described in subparagraph 3(D), or (2) actual sale (prior to any such Deemed Sale) of all or substantially all of the Property to an Applicable Purchaser that occurs after the thirty day period specified in subparagraph 3(A) and that:
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  •   results from NAI’s exercise of NAI’s Extended Remarketing Right as described in subparagraph 3(C); or
 
  •   is approved in advance as a Qualified Sale by NAI; or
 
  •   is to a third party which is not an Affiliate of BNPPLC and, if it is completed by a conveyance from BNPPLC prior to eighteen months after the Designated Sale Date, is for a price not less than the least of the following amounts:
  (a)   the lowest price at which BNPPLC will be obligated, pursuant to clause (4) of subparagraph 3(E), to reimburse to NAI (i) the entire amount of any Supplemental Payment theretofore made by NAI to BNPPLC, or (ii) if no such Supplemental Payment has been made, but NAI has theretofore made one or more 97-1/Prepayments to BNPPLC, all such 97-10/Prepayments; or
 
  (b)   (i) if NAI notified BNPPLC of NAI’s Target Price prior to the date BNPPLC and the third party agreed to a price for the sale, NAI’s Target Price, or (ii) if NAI did not notify BNPPLC of NAI’s Target Price prior to the date BNPPLC and the third party agreed to a price for the sale, any price satisfactory to BNPPLC in its sole good faith business judgment; or
 
  (c)   90% of the Fair Market Value of the Property.
    NAI acknowledges that BNPPLC’s own marketing efforts after the Designated Sale Date will depend upon the minimum price required for a Qualified Sale, and such efforts could be hampered if NAI’s Target Price is too high. Thus, after receipt of any notice of NAI’s Target Price from NAI, BNPPLC may (but will not be obligated to) invoke the Valuation Procedures in order to determine the minimum price permitted under clause (c) preceding.
 
    “Sale Closing Documents” means the following documents, which BNPPLC must tender pursuant to Paragraph 5(A) to consummate any sale of the Property pursuant to this Agreement: (1) documents in the forms required by Exhibit C, including either a termination of or an assignment of the Ground Lease and other rights and interests of BNPPLC in the Property, (2) a Secretary’s Certificate in the form attached as Exhibit D and (3) a certificate concerning tax withholding in the form attached as Exhibit E.
 
    “Supplemental Payment” has the meaning indicated in subparagraph 2(A)(3).
 
    “Supplemental Payment Obligation” has the meaning indicated in
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    subparagraph 2(A)(3).
    “Valuation Procedures” means procedures set forth in Exhibit B, which are to be followed in the event a determination of the Fair Market Value of the Property or any portion thereof is required by this Agreement.
2 NAI’s Options and Obligations on the Designated Sale Date.
     (A) Purchase Option; Initial Remarketing Rights; Supplemental Payment Obligation. Whether or not an Event of Default has occurred and is continuing, but subject to Paragraph 6 below:
     (1) NAI will have the right (the “Purchase Option”) to purchase or cause an Affiliate of NAI, as the Applicable Purchaser, to purchase the Property on the Designated Sale Date for a cash price equal to the Break Even Price.
     (2) If NAI does not exercise the Purchase Option, NAI will have the following rights (collectively, “NAI’s Initial Remarketing Rights”):
     (a) First, NAI will have the right to designate a third party, other than an Affiliate of NAI, as the Applicable Purchaser and to cause such Applicable Purchaser to purchase the Property on the Designated Sale Date for a cash price equal to the Initial Remarketing Price. Such right, however, will be subject to the conditions (the “Conditions to NAI’s Initial Remarketing Rights”) that (i) NAI deliver an Initial Remarketing Notice to BNPPLC within the thirty days prior to the Designated Sale Date, (ii) on the Designated Sale Date the Applicable Purchaser tenders to BNPPLC a payment equal to the Initial Remarketing Price, and (iii) NAI itself tenders to BNPPLC the Supplemental Payment, if any, which will be required by subparagraph 2(A)(3) in the event BNPPLC completes the sale to the Applicable Purchaser. Further, notwithstanding the satisfaction of the Conditions to NAI’s Initial Remarketing Rights on the Designated Sale Date, if the sum of the price to be paid by the Applicable Purchaser for the Property (i.e., the Initial Remarketing Price) and any Supplemental Payment required by subparagraph 2(A)(3) is less than the Break Even Price, then BNPPLC may affirmatively elect not to complete the sale of the Property to the Applicable Purchaser on the Designated Sale Date (and thereby defer the sale of the Property pursuant to this Agreement) by making a Decision Not to Sell at a Loss.
     (b) Second, if BNPPLC completes a sale of the Property to an Applicable Purchaser on the Designated Sale Date pursuant to subparagraph 2(A)(2)(a) and the price paid by the Applicable Purchaser for the
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Property (i.e., the Initial Remarketing Price) is greater than the Break Even Price, then BNPPLC will pay the excess to NAI or as otherwise required by Applicable Law.
     (3) If for any reason whatsoever BNPPLC does not receive a cash price for the Property on the Designated Sale Date equal to or in excess of the Break Even Price in connection with a sale made pursuant to subparagraph 2(A)(1) or subparagraph 2(A)(2)(a), then NAI will have the obligation (the “Supplemental Payment Obligation”) to pay to BNPPLC on the Designated Sale Date a supplemental payment (the “Supplemental Payment”) equal to the lesser of:
     (a) the amount by which the Break Even Price exceeds any such cash price actually received by BNPPLC on the Designated Sale Date; or
     (b) the Maximum Remarketing Obligation.
      Without limiting the generality of the foregoing, NAI must (unless excused by subparagraph 6(B) below) make the Supplemental Payment even if BNPPLC does not sell the Property to NAI or an Applicable Purchaser on the Designated Sale Date because of (A) a Decision Not to Sell at a Loss, or (B) a failure of NAI to exercise, or a decision by NAI not to exercise, the Purchase Option or NAI’s Initial Remarketing Rights, or (C) a failure of NAI or any Applicable Purchaser to tender the price required by the forgoing provisions on the Designated Sale Date following any exercise of or attempt by NAI to exercise the Purchase Option or NAI’s Initial Remarketing Rights.
 
      NAI acknowledges that it is undertaking the Supplemental Payment Obligation in consideration of the rights afforded to it by this Agreement, but that such obligation is not contingent upon any exercise by NAI of such rights or upon any purchase of the Property by NAI or an Applicable Purchaser. If any Supplemental Payment due according to this subparagraph 2(A)(3) is not actually paid to BNPPLC on the Designated Sale Date, then NAI must pay interest on the past due amount computed at the Default Rate. However, NAI will be entitled to a credit against the interest required by the preceding sentence equal to the Base Rent, if any, actually paid by NAI pursuant to the Lease for any period after the Designated Sale Date.
     (4) For the avoidance of doubt, BNPPLC acknowledges that NAI may elect not to exercise the Purchase Option or NAI’s Initial Remarketing Rights and instead pay to BNPPLC a Supplemental Payment equal to the Maximum Remarketing Obligation on the Designated Sale Date in full satisfaction of its obligations under this subparagraph 2(A).
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     (B) Designation of the Purchaser. To give BNPPLC the opportunity before the Designated Sale Date to prepare the Sale Closing Documents, NAI must, by a notice to BNPPLC given at least ten days prior to the Designated Sale Date, specify irrevocably, unequivocally and with particularity any party who will purchase the Property because of NAI’s exercise of its Purchase Option or of NAI’s Initial Remarketing Rights. If NAI fails to do so, BNPPLC may postpone the delivery of the Sale Closing Documents until a date after the Designated Sale Date and not more than ten 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 subparagraph 2(A)(3).
     (C) Delivery of Property Related Documents If BNPPLC Retains the Property. Unless NAI or its Affiliate or another Applicable Purchaser purchases the Property pursuant to subparagraph 2(A), promptly after the Designated Sale Date NAI must deliver and assign to BNPPLC all plans and specifications for the Property previously prepared for NAI or otherwise available to NAI (including those prepared in connection with the construction contemplated by the Construction Agreement), together with all other files, documents and permits of NAI (including any subleases then in force) which may be necessary or useful to any future owner’s or occupant’s use of the Property. Without limiting the foregoing, NAI will transfer or arrange the transfer to BNPPLC of all utility, building, health and other operating permits required by any municipality or other governmental authority having jurisdiction over the Property for uses of the Property permitted by the Lease or for any remaining construction required to complete the Improvements contemplated by the Construction Agreement if neither NAI nor any Affiliate or other Applicable Purchaser purchases the Property pursuant to subparagraph 2(A).
     (D) Effect of the Purchase Option and NAI’s Initial Remarketing Rights on Subsequent Title Encumbrances. Any conveyance made to consummate a sale of the Property to NAI or any Applicable Purchaser pursuant to subparagraph 2(A) will cut off and terminate all interests in the Property claimed by, through or under BNPPLC, including Liens Removable by BNPPLC (including any leasehold estate or other interests conveyed by BNPPLC to third parties, even if conveyed in the ordinary course of BNPPLC’s business, and including any judgment liens established against the Property because of a judgment rendered against BNPPLC), but not personal obligations of NAI to BNPPLC under the Lease or other Operative Documents (including obligations of NAI arising under the indemnities in the Construction Agreement or the Lease, which indemnities will survive any such sale). Anyone accepting or taking any interest in the Property through or under BNPPLC on or after the Effective Date will acquire such interest subject to the Purchase Option.
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     (E) Security for NAI’s Purchase Option. If (contrary to the intent of the parties as expressed in subparagraph 4(C) of the Lease) it is determined that NAI is not, under applicable state law as applied to the Operative Documents, the equitable owner of the Property and the borrower from BNPPLC in a financing arrangement, but rather is a tenant under the Lease with an option to purchase from BNPPLC as provided in subparagraph 2(A)(1), then the parties intend that the Purchase Option be secured by a lien and security interest against the Property. Accordingly, BNPPLC does hereby grant to NAI a lien and security interest against the Property, including all rights, title and interests of BNPPLC from time to time in and to the Land and Improvements, in order to secure (1) BNPPLC’s obligation to convey the Property to NAI or an Affiliate designated by it if NAI exercises the Purchase Option and tenders payment of the Break Even Price to BNPPLC on the Designated Sale Date as provided herein, and (2) NAI’s right to recover any damages from BNPPLC caused by a breach of such obligation, including any such breach caused by a rejection or termination of this Agreement in any bankruptcy or insolvency proceeding instituted by or against BNPPLC, as debtor. NAI may enforce such lien and security interest judicially after any such breach by BNPPLC, but not otherwise.
3 NAI’s Rights, Options and Obligations After the Designated Sale Date.
     (A) NAI’s Right to Buy During the Thirty Days After the Designated Sale Date. Even after a failure to pay any required Supplemental Payment on the Designated Sale Date, NAI may tender (or cause an Applicable Purchaser to tender) to BNPPLC the full Make Whole Amount (including all amounts then due under the other Operative Documents) on any Business Day within thirty days after the Designated Sale Date. If presented with such a tender within thirty days after the Designated Sale Date, BNPPLC must accept it and promptly thereafter deliver to NAI (or the Applicable Purchaser) the Sale Closing Documents and any Escrowed Proceeds then constituting Property held by BNPPLC. Otherwise, BNPPLC will have no further obligation to sell the Property to NAI or to any Affiliate of NAI pursuant to this Agreement, although BNPPLC will continue to have the option to require NAI to buy the Property if the conditions listed in the next subparagraph are satisfied.
     (B) NAI’s Obligation to Buy if Certain Conditions are Satisfied. Regardless of any prior Decision Not to Sell at a Loss, BNPPLC will have the option (the “Put Option”) to require NAI to purchase the Property upon demand at any time after the Designated Sale Date for a cash price equal to the Make Whole Amount if:
     (1) BNPPLC has not already conveyed the Property to consummate a sale of the Property to NAI or an Applicable Purchaser pursuant to other provisions of this Agreement; and
     (2) a 97-1/Default (100%) occurs or is continuing on or after the Designated
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Sale Date; and
     (3) BNPPLC notifies NAI of BNPPLC’s exercise of the Put Option within two years following the Designated Sale Date.
Further, and without limiting the foregoing, if any Event of Default occurs as described in clauses (G), (H) or (I) of the definition Event of Default in the Common Definitions and Provisions Agreement because of any bankruptcy proceeding instituted by or against NAI, as debtor, under Title 11 of the United States Code, then NAI will be obligated (without any further act or notice or demand by BNPPLC) to pay to BNPPLC the Make Whole Amount and purchase the Property, as if (i) BNPPLC had exercised the Put Option, and (ii) the second Business Day after the commencement of such Event of Default was the Final Sale Date.
     (C) NAI’s Extended Right to Remarket. If the Property is not sold to NAI or an Applicable Purchaser on the Designated Sale Date pursuant to this Agreement, NAI will have the right (“NAI’s Extended Remarketing Right”) during the Extended Remarketing Period to arrange a sale of the Property to an Applicable Purchaser, other than an Affiliate of NAI, for a price equal to or in excess of the Must Sell Price (a “Proposed Sale”). NAI’s Extended Remarketing Right will, however, be subject to all of the following conditions:
     (1) BNPPLC has not exercised the Put Option as provided in subparagraph 3(B) or already contracted with another Applicable Purchaser to convey the Property in connection with a Qualified Sale.
     (2) NAI’s Extended Remarketing Right is not terminated pursuant to subparagraph 6(C) because of NAI’s failure to pay any required Supplemental Payment.
     (3) NAI’s Extended Remarketing Right is not terminated pursuant to subparagraph 6(C) because of NAI’s failure to pay any required 97-10 Prepayment .
     (4) NAI must have provided a notice to BNPPLC (a “Notice of Sale”) setting forth (i) the date proposed by NAI as the Final Sale Date (the “Proposed Sale Date”), which must be no sooner than thirty days after BNPPLC’s receipt of the Notice of Sale and no later than the last Business Day of the Extended Remarketing Period, (ii) the full legal name of the Applicable Purchaser and such other information as is needed to prepare the Sale Closing Documents, and (iii) the cash price that will be tendered to BNPPLC for the Property (the “Committed Price”).
     (5) The Committed Price must be no less than the Must Sell Price, computed as of the Proposed Sale Date. Also, if NAI has notified BNPPLC of NAI’s Target Price, the Committed Price must be no less than NAI’s Target Price.
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     (D) Deemed Sale On the Second Anniversary of the Designated Sale Date. If no date prior to the second anniversary of the Designated Sale Date qualifies as the Final Sale Date, then on second anniversary of the Designated Sale Date BNPPLC will, for purposes of the next subparagraph, be deemed to have sold the Property (a “Deemed Sale”) to an Applicable Purchaser at a Qualified Sale for a net cash price equal to its Fair Market Value.
     (E) NAI’s Right to Share in Sales Proceeds Received By BNPPLC From any Qualified Sale. BNPPLC must apply the cash proceeds received by BNPPLC from any Qualified Sale (regardless of whether the sale is arranged by NAI as provided in subparagraph 3(C) or by BNPPLC itself), or deemed to be received in connection with any Deemed Sale, in the following order of priority:
     (1) first, to pay or reimburse to BNPPLC BNPPLC’s Actual Out of Pocket Costs incurred in connection with the Qualified Sale;
     (2) second, to pay or reimburse to BNPPLC the Local Impositions, insurance premiums and other Losses suffered or incurred by BNPPLC with respect to the ownership, operation or maintenance of the Property after the Designated Sale Date, together with interest on such Local Impositions, insurance premiums and other Losses computed at the Default Rate from the date paid or incurred to the date reimbursed from sales proceeds;
     (3) third, to pay to BNPPLC an amount equal to the difference, if any, computed by subtracting (i) the aggregate payments, if any, previously paid by NAI to BNPPLC as a Supplemental Payment or as a 97-10/Prepayment, from (ii) the Adjusted Lease Balance;
     (4) fourth, to reimburse NAI for the aggregate payments, if any, previously made by NAI to BNPPLC as a Supplemental Payment or as 97-10/Prepayments;
     (5) fifth, to pay to BNPPLC an amount that, when added to all payments or reimbursements to BNPPLC described in the preceding clauses (1), (2) and (3), will equal the Make Whole Amount;
     (6) sixth, to pay to BNPPLC any other amounts then due from NAI to BNPPLC under any of the Operative Documents; and
     (7) last, if any such cash proceeds exceed all the payments and reimbursements that are required or may be required as described in the preceding clauses of this subparagraph, BNPPLC may retain the excess.
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If, however, BNPPLC completes any sale and conveyance of the Property after the Extended Remarketing Period expires or is terminated, BNPPLC will not be required by this subparagraph to share any proceeds of the sale or conveyance with NAI or any other party claiming through or under NAI.
4 Transfers By BNPPLC After the Designated Sale Date.
     (A) BNPPLC’s Right to Sell. At any time more than thirty days after the Designated Sale Date, if the Property has not already been sold and conveyed by BNPPLC pursuant to Paragraph 2 or Paragraph 3, BNPPLC will 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 BNPPLC in its sole good faith business judgment.
     (B) Survival of NAI’s Rights and the Supplemental Payment Obligation. If the Property is not sold on the Designated Sale Date, and if BNPPLC completes a sale or other transfer of the Property after the Designated Sale Date, other than a Qualified Sale, the Supplemental Payment Obligation will survive in favor of BNPPLC’s successors and assigns with respect to the Property, and BNPPLC’s successors and assigns will take the Property subject to NAI’s rights under Paragraph 3, all on the same terms and conditions as would have applied to BNPPLC itself if BNPPLC had not transferred or sold the Property. Without limiting the foregoing, any purchaser that acquires the Property from BNPPLC during the Extended Remarketing Period, other than at a Qualified Sale, will be obligated to distribute proceeds of a subsequent Qualified Sale of the Property as described in the subparagraph 3(E) in the same manner and to the same extent that BNPPLC itself would have been obligated if not for the sale by BNPPLC to the purchaser.
     (C) Easements and Other Transfers in the Ordinary Course of Business. No “Permitted Transfer” described in clause (5) (the last clause) of the definition thereof in the Common Definitions and Provisions Agreement will constitute a Qualified Sale if it covers less than all or substantially all of BNPPLC’s then existing interests in the Property. Any such Permitted Transfer of less than all or substantially all of BNPPLC’s then existing interests in the Property will not be prohibited by this Agreement during the Extended Remarketing Period or otherwise; provided, however, any such Permitted Transfer made before the end of one hundred eighty days after the Designated Sale Date, or made to an Affiliate of BNPPLC before the end of the Extended Remarketing Period, or otherwise not made in the ordinary course of business, will be made subject to NAI’s rights under Paragraph 3. Thus, for example, if the Property is not sold by BNPPLC to an Applicable Purchaser on the Designated Sale Date, then at any time more than one hundred eighty days after the Designated Sale Date BNPPLC may in the ordinary course of business convey a utility easement or a lease of space in the Improvements to a Person not an Affiliate of BNPPLC free from NAI’s rights under Paragraph 3, although following such conveyance of the lesser estate, NAI’s rights under Paragraph 3 will continue during the Extended
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Remarketing Period as to BNPPLC’s remaining interest in the Land and the Improvements.
5 Terms of Conveyance Upon Purchase.
     (A) Tender of Sale Closing Documents. As necessary to consummate any sale of the Property to NAI or an Applicable Purchaser pursuant to this Agreement, BNPPLC must, subject to any postponement permitted by subparagraph 2(B), promptly after the tender of the purchase price and any other payments to BNPPLC required pursuant to Paragraph 2 or Paragraph 3, as applicable, convey the Property to NAI or the Applicable Purchaser, as the case may be, by BNPPLC’s execution, acknowledgment (where appropriate) and delivery of the Sale Closing Documents. Such conveyance by BNPPLC will be subject to the Permitted Encumbrances and any other encumbrances that do not constitute Liens Removable by BNPPLC, and such conveyance will not include the rights of BNPPLC 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 Loss incurred by BNPPLC or another Interested Party resulting in whole or in part from events or circumstances occurring or alleged to have occurred before such conveyance. The costs, both foreseen and unforeseen, of any purchase by NAI or an Applicable Purchaser will be the responsibility of the purchaser to the extent (if any) not included in any Break Even Price or Make Whole Amount actually paid to BNPPLC. If for any reason BNPPLC fails to tender the Sale Closing Documents as required by this Paragraph 5(A), BNPPLC will have the right and obligation to cure such failure at any time before thirty days after receipt of a demand for such cure from NAI. Prior to the end of such cure period, NAI may initiate appropriate legal action to specifically enforce BNPPLC’s obligation to deliver the Sale Closing Documents or to foreclose NAI’s liens or security interests against the Property which secure such obligation, but if BNPPLC does cure within such thirty day period, BNPPLC will not be liable for monetary damages because of its prior failure to deliver the Sale Closing Documents.
     (B) Delivery of Escrowed Proceeds. BNPPLC may deliver any Escrowed Proceeds constituting Property directly to NAI or to any Applicable Purchaser purchasing the Property 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; BNPPLC will not be responsible for the proper distribution or application by NAI or any Applicable Purchaser of any such Escrowed Proceeds; and any such payment of Escrowed Proceeds to NAI or an Applicable Purchaser will discharge any obligation of BNPPLC to deliver the same to all Persons claiming an interest therein.
6 Survival and Termination of the Rights and Obligations of NAI and BNPPLC.
     (A) Status of this Agreement Generally. Except as expressly provided in the next
Amended and Restated Purchase Agreement (Building 8) – Page 17

 

 

subparagraph or other provisions of this Agreement, this Agreement will not terminate; nor will NAI have any right to terminate this Agreement; nor will NAI be entitled to any reduction (by setoff or otherwise) of the Break Even Price, the Make Whole Amount or any payment required under this Agreement; nor will any of the obligations of NAI to BNPPLC under Paragraph 2 or Paragraph 3 be excused by reason of (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 BNPPLC under this Agreement or any other Operative Document or any other agreement to which BNPPLC 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 BNPPLC 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) NAI’s prior acquisition or ownership of any interest in the Property, or (ix) 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 under this Agreement (including the obligation to make any Supplemental Payment as provided in Paragraph 2) be separate from and independent of BNPPLC’s obligations under this Agreement or any other agreement between BNPPLC and NAI; however, nothing in this subparagraph will 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 BNPPLC’s failure to remove a Lien Removable by BNPPLC or because of any other default by BNPPLC under this Agreement: (A) the recovery of monetary damages, (B) injunctive relief in case of the violation, or attempted or threatened violation, by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Agreement which are binding upon BNPPLC, or (C) a decree compelling performance by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Agreement which are binding upon BNPPLC.
     (B) Election by NAI to Terminate the Supplemental Payment Obligation Prior to the Completion Date. By delivery of a notice to BNPPLC in the form attached as Exhibit F, NAI may terminate its Supplemental Payment Obligation, but only prior to the Completion Date and only if at the time of such exercise (1) NAI has given (and not rescinded) a Notice of NAI’s Intent to Terminate as provided in the Construction Agreement, or (2) BNPPLC has given any FOCB Notice as provided in the Construction Agreement. (If for any reason BNPPLC does not receive a notice terminating the Supplemental Payment Obligation as described in the preceding sentence prior to the Completion Date, then without any notice or other action by the parties to this Agreement, NAI will cease to have any right to terminate the Supplemental Payment Obligation.) If NAI does send a notice to BNPPLC in the form attached as Exhibit F, such notice will (as
Amended and Restated Purchase Agreement (Building 8) – Page 18

 

 

provided therein) constitute an irrevocable and absolute waiver by NAI of NAI’s rights to purchase the Property or to cause any of its Affiliates to purchase the Property pursuant to this Agreement. However, no such notice will terminate BNPPLC’s right to exercise the Put Option, which BNPPLC may exercise if NAI fails to make a 97-10/Permitted Prepayment required by the Construction Agreement.
     (C) Automatic Termination of NAI’s Rights. If NAI fails to pay the full amount of any Supplemental Payment required by subparagraph 2(A)(3) on the Designated Sale Date, then the Purchase Option, NAI’s Initial Remarketing Rights, NAI’s Extended Remarketing Right and all other rights of NAI under this Agreement, other than its rights under subparagraph 3(A), will terminate automatically. If, however, prior to the Designated Sale Date NAI effectively terminates the Supplemental Payment Obligation pursuant to subparagraph 6(B) by the delivery of a notice to BNPPLC in the form attached as Exhibit F, so that NAI is excused from the obligation to make any Supplemental Payment pursuant to subparagraph 2(A)(3), then NAI’s Extended Remarketing Right will not terminate automatically pursuant to this subparagraph 6(C), but rather will survive except to the extent waived by such notice. No termination of NAI’s rights as described in this subparagraph will limit BNPPLC’s other remedies, including its right to sue NAI for any 97-10/Prepayments, pursuant to any of the Operative Documents or (following a 97-1/Default (100%)) its right to exercise the Put Option.
     (D) Payment Only to BNPPLC. All amounts payable under this Agreement by NAI and, if applicable, by an Applicable Purchaser must be paid directly to BNPPLC. If paid to other parties, such payments will not be effective for purposes of this Agreement.
     (E) Preferences and Voidable Transfers. If any payment to BNPPLC by an Applicable Purchaser is held to constitute a preference or a voidable transfer under Applicable Laws, or must for any other reason be refunded by BNPPLC to the Applicable Purchaser or to another Person, and if such payment to BNPPLC reduced or had the effect of reducing a payment required of NAI by this Agreement (e.g., the Supplemental Payment) or increased or had the effect of increasing any sale proceeds paid over to NAI pursuant to subparagraph 2(A)(2)(b) or pursuant to subparagraph 3(E), then NAI must pay to BNPPLC upon demand an amount equal to the reduction of the payment required of NAI or to the increase of the excess sale proceeds paid to NAI, as applicable, and this Agreement will continue to be effective or will be reinstated as necessary to permit BNPPLC to enforce its right to collect such amount from NAI.
     (F) Remedies Under the Other Operative Documents. No repossession of or re-entering upon the Property or exercise of any other remedies available to BNPPLC under the other Operative Documents will terminate NAI’s rights or obligations under this Agreement, all of which will survive BNPPLC’s exercise of remedies under the other Operative Documents. NAI acknowledges that the consideration for this Agreement is separate from and independent of the consideration for the Construction Agreement, the Lease, the Closing Certificate and other
Amended and Restated Purchase Agreement (Building 8) – Page 19

 

 

agreements executed by the parties, and NAI’s obligations under this Agreement will not be affected or impaired by any event or circumstance that would excuse NAI from performance of its obligations under such other Operative Documents.
7 Certain Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy BNPPLC has with respect to the Property, and each and every right and remedy of BNPPLC will be cumulative and in addition to any other right or remedy given to it under this Agreement or now or hereafter existing in its favor at law or in equity. In addition to other remedies available under this Agreement, either party may obtain a decree compelling specific performance of any of the other party’s agreements hereunder.
8 Attorneys’ Fees and Legal Expenses. If BNPPLC commences any legal action or other proceeding because of any breach of this Agreement by NAI, BNPPLC may recover all Attorneys’ Fees incurred by it in connection therewith from NAI, whether or not such controversy, claim or dispute is prosecuted to a final judgment. Any Attorneys’ Fees incurred by BNPPLC in enforcing a judgment in its favor under this Agreement will 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.
9 Successors and Assigns. The terms, provisions, covenants and conditions hereof will be binding upon NAI and BNPPLC and their respective permitted successors and assigns and will inure to the benefit of NAI and BNPPLC and all permitted transferees, mortgagees, successors and assignees of NAI and BNPPLC with respect to the Property; except that (A) the rights of BNPPLC hereunder will not pass to NAI or any Applicable Purchaser or any subsequent owner claiming through NAI or an Applicable Purchaser, (B) BNPPLC will not assign this Agreement or any rights hereunder except pursuant to a Permitted Transfer, and (C) NAI will not assign this Agreement or any rights hereunder without the prior written consent of BNPPLC.
10 Amendment and Restatement of Prior Purchase Agreement. This Agreement amends, restates and replaces entirely the Prior Purchase Agreement. Without limiting the rights and obligations of NAI under this Agreement, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Purchase Agreement are now made subject to the terms and conditions of this Agreement; and all rights and interests of BNPPLC in and to the Land or other Property under the Prior Purchase Agreement are renewed and extended (rather than terminated) by this Agreement.
[The signature pages follow.]
Amended and Restated Purchase Agreement (Building 8) – Page 20

 

 

     IN WITNESS WHEREOF, this Amended and Restated Purchase Agreement (Building 8) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox  
    Lloyd G. Cox, Managing Director   
       
 
Amended and Restated Purchase Agreement (Building 8) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Purchase Agreement (Building 8) dated as of November 29, 2007.]
         
  NETWORK APPLIANCE, INC., a Delaware
corporation
     
  By:   /s/ Ingemar Lanevi  
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Purchase Agreement (Building 8) – Signature Page

 

 

Exhibit A
Legal Description
Proposed Parcel 8, and (except to the extent within a different platted Parcel as currently shown in the Map Records of the County of Santa Clara, California) proposed Parcel 12, and the Additional Leased Premises as defined below, (collectively, the “Building 8 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The southern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the southern boundary of Parcel 8 and the northern boundary of Parcel 7, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 8 and Parcel 7, as shown on the Tentative Map. The northern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 8 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
Exhibit A to Amended and Restated Purchase Agreement (Building 8) – Page 2

 

 

Exhibit B
Valuation Procedures
     This Exhibit explains the procedures to be used to determine Fair Market Value of the Property if such a determination is required by this Agreement. In such event, either party may invoke the procedures set out herein prior to the date the determination will be needed so as to minimize any postponement of any payment, the amount of which depends upon Fair Market Value. In the event such a payment becomes due before the required determination of Fair Market Value is complete, such payment will be postponed until the determination is complete. But in that event, when the required determination is complete, the payment will be made together with interest thereon, computed at a rate equal to ABR, accruing over the period the payment was postponed.
     If any determination of Fair Market Value is required, NAI and BNPPLC will attempt in good faith to reach a written agreement upon the Fair Market Value without unnecessary delay, and either party may propose such an agreement to the other. If, however, for any reason whatsoever, they do not execute such an agreement within seven days after the first such proposed agreement is offered by one party to the other, then the determination will be made by independent appraisers in accordance with the following procedures:
1. Definitions and Assumptions. For purposes of the determination, Fair Market Value will be defined as follows, and all appraisers or others involved in the determination will be instructed to use the following definition:
     “Fair Market Value” means the most probable net cash price, as of a specified date, for which the Property should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.
In addition, the appraisers or others making the determination will be instructed to assume that ordinary and customary brokerage fees, title insurance costs and other sales expenses will be incurred and deducted in the calculation of such net cash price. Such appraisers or others making the determination will also be instructed to assume that the value of the Property (or applicable portion thereof) is neither enhanced nor reduced by any lease to another tenant that BNPPLC may have executed subsequent to the termination or expiration of the Lease (a “Replacement Lease”). In other words, rather than determine value in light of actual rents generated or to be generated by any such Replacement Lease, the Property (or applicable portion thereof) will be valued in light of the most probable rent that it should bring in a competitive and open market (in this section, a “Fair Market Rental”), taking into account:
     (i) the fact that the Ground Lease exists to permit the continued use and enjoyment of the Property during the term of the

 

 

Ground Lease 1 ; and
     (ii) the actual physical condition of the Property 2 ; and
     (iii) that a reasonable period of time may be required to market the Property (or applicable portion thereof) for lease and make it ready for use or occupancy before it is leased at a Fair Market Rental.
2. Initial Selection of Appraisers; Appraiser’s Agreement as to Value. After having failed to reach a written agreement upon Fair Market Value as described in the second paragraph of this Exhibit, either party may deliver a notice to the other demanding the appointment of appraisers (the “First Appraisal Notice”) pursuant to this Exhibit. In such event:
     (a) Within fifteen days after the First Appraisal Notice is delivered, NAI and BNPPLC must each appoint an independent property appraiser who has experience appraising commercial properties in California and notify the other party of such appointment, including the name of the appointed appraiser (a “Notice of Appointment”).
     (b) If the appraiser appointed by NAI and the appraiser appointed by BNPPLC agree in writing upon the Fair Market Value (an “Appraiser’s Agreement As To Value”), such agreement will be binding upon NAI and BNPPLC. Both NAI and BNPPLC will instruct their respective appraisers to attempt in good faith to quickly reach an Appraiser’s Agreement As To Value. Neither appraiser will be required to produce a formal appraisal prior to reaching an Appraiser’s Agreement As To Value.
3. Selection of a Third Appraiser. If the two appraisers fail to deliver an Appraiser’s Agreement As to Value within thirty days following the later of the dates upon which NAI or BNPPLC delivers its Notice of Appointment, then either party (NAI or BNPPLC) may deliver another notice to the other (a “Third Appraisal Notice”), demanding that the two appraisers appoint a third independent property appraiser to help with the determination of Fair Market Value. Immediately after the Third Appraisal Notice is delivered, each of the first two appraisers
 
1   But for the Ground Lease, the Improvements could not be used and maintained in place. Thus, the parties believe that, but for the Ground Lease, the Improvements would be worth much less. However, it is understood that Property does not include the fee estate in the Land, and the continued use of the Improvements will necessitate the payment of rents as required by the Ground Lease and compliance with the other terms and conditions thereof. Accordingly, the value of the Land itself will not be included in the Fair Market Value of the Property.
 
2   If, however, the use of the Property by BNPPLC or any tenant under any Replacement Lease after NAI vacated the Property has resulted in excess wear and tear, such excess wear and tear will be assumed not to have occurred for purposes of determining Fair Market Value.
Exhibit B to Amended and Restated Purchase Agreement (Building 8) – Page 2

 

 

must act promptly, reasonably and in good faith to try to reach agreement upon the third appraiser. If, however, the two appraisers fail to reach agreement upon a third appraiser within ten days after the Third Appraisal Notice is delivered:
     (a) NAI and BNPPLC will each cause its respective appraiser to deliver, no later than fifteen days after the delivery of the Third Appraisal Notice, an unqualified written promise addressed to both of NAI and BNPPLC: (i) to act promptly, reasonably and in good faith in trying to reach agree upon the third appraiser, and (ii) to propose and consider proposals of persons as the third appraiser on the basis of objectivity and competence, not on the basis of such persons’ relationships with the other appraisers or with NAI or BNPPLC, and not on the basis of preferences expressed by NAI or BNPPLC.
     (b) If, despite the delivery of the promises described in the preceding subsection, the two appraisers fail to reach agreement upon a third appraiser within thirty days after the Third Appraisal Notice is delivered, then each of the first two appraisers must 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 NAI or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within ten days after such choices are submitted to him.
4. Resolution of Issues by the Third Appraiser. If a third appraiser is selected under the procedure set out above:
     (a) No later than thirty days after a third appraiser is selected, each of the first two appraisers must submit (and NAI and BNPPLC will each cause its appointed appraiser to submit) his best estimate of Fair Market Value, together with a written report supporting such estimate. (Such report need not be in the form of a formal appraisal, and may contain any qualifications the submitting appraiser deems necessary under the circumstances. Any such qualifications, however, may be considered by the third appraiser for purposes of the selection required by the next subsection.)
     (b) After receipt of the two estimates required by the preceding subsection, and no later than forty-five days after the third appraiser is selected, he must (i) choose one or the other of the two estimates of Fair Market Value submitted by the first two appraisers as being the more accurate in his opinion, and (ii) notify NAI and BNPPLC of which estimate he chose. The third appraiser will not be asked or allowed to specify an amount as Fair Market Value that is different than an estimate provided by one of the other two appraisers (either by averaging the two estimates or otherwise). The estimate of Fair Market Value thus chosen by the third appraiser as being the more accurate will be binding upon NAI and BNPPLC.
5. Criteria For Selecting Appraisers; Cost of Appraisals. All appraisers selected for the
Exhibit B to Amended and Restated Purchase Agreement (Building 8) – Page 3

 

 

appraisal process set out in this Exhibit will be disinterested, reputable, qualified appraisers with the designation of MAI or equivalent and with at least five years experience in appraising commercial properties comparable to the Property. NAI and BNPPLC will 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 NAI and BNPPLC.
6. Time is of the Essence; Defaults.
     (a) All time periods and deadlines specified in this Exhibit are of the essence.
     (b) Each party must cause the appraiser appointed by it (as set forth in Section 2(a)) to comply in a timely manner with the requirements of this Exhibit applicable to such appraiser. Accordingly, if an appraiser appointed by one of the parties as provided in Section 2(a) fails to comply in a timely manner with any provision of this Exhibit, such failure will be considered a default by the party who appointed such appraiser.
     (c) Any breach of or default under this Exhibit by either party will be construed as a breach of the Amended and Restated Purchase Agreement to which this Exhibit is attached.
     (d) Any such breach or default by NAI will constitute a 97-1/Default (100%); provided, however:
     (1) Before characterizing any such breach or default as a 97-1/Default (100%), BNPPLC must first notify NAI of the breach or default and give NAI the opportunity, during the five days after delivery of such notice, to fully rectify the breach or default.
     (2) Any breach or default by NAI under this Exhibit will be deemed rectified if, within such five day period, NAI offers BNPPLC an unqualified written agreement that all determinations of Fair Market Value required by this Agreement will, if made by the appraiser appointed by BNPPLC as hereinabove provided, be binding upon BNPPLC and NAI. (It is understood that following the delivery of any such agreement by NAI, no further input from NAI’s appraiser or from any official of the California bar association or from a third appraiser will be required for any required determination of Fair Market Value.)
Exhibit B to Amended and Restated Purchase Agreement (Building 8) – Page 4

 

 

Exhibit C
Requirements Re: Forms to Accomplish Assignment and Conveyance
The form of the documents to be used to accomplish any conveyance of BNPPLC’s interest in the Improvements and other Property pursuant to this Agreement will depend upon whether the conveyance is to NAI or an Applicable Purchaser and, in the case of an conveyance by NAI itself, upon whether NAI elects to take an assignment of the Ground Lease or to terminate the Ground Lease.
If NAI is itself acquiring BNPPLC’s interest in the Property, the conveyance of such interest will be accomplished either by (A) the execution of an Agreement Concerning Ground Lease in the form attached as Exhibit C-1, which (among other things) will effectively terminate the Ground Lease with the result that BNPPLC’s interest in all Improvements will revert to NAI by operation of law, or (B) BNPPLC’s execution of assignments in the forms attached as Exhibit C-2 and Exhibit C-3 and NAI’s execution of an Acknowledgment of Disclaimer of Representations and Warranties in the form attached as Exhibit C-4. NAI may choose between the Agreement Concerning Ground Lease or the alternative forms attached as Exhibits C-2, C-3 and C-4; however, if NAI fails to notify BNPPLC at least fifteen days prior to the Designated Sale Date that NAI chooses to receive the assignments in the forms attached as Exhibit C-2 and Exhibit C-3, BNPPLC may assume that NAI has elected instead to have BNPPLC execute the Agreement Concerning Ground Lease in the form attached as Exhibit C-1. If NAI does choose to receive the assignments in the forms attached as Exhibit C-2 and Exhibit C-3, NAI must execute and deliver to BNPPLC the Acknowledgment of Disclaimer of Representations and Warranties in the form attached as Exhibit C-4.
If an Applicable Purchaser is acquiring BNPPLC’s interest in the Improvements and other Property, such interest will be conveyed by BNPPLC’s execution and delivery of assignments in the forms attached as Exhibit C-2 and Exhibit C-3, and the Applicable Purchaser must execute and deliver to BNPPLC an Acknowledgment of Disclaimer of Representations and Warranties in the form attached as Exhibit C-4.

 

 

Exhibit C-1
RECORDING REQUESTED BY AND,
WHEN RECORDED, RETURN TO:
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
AGREEMENT CONCERNING GROUND LEASE
     THIS AGREEMENT CONCERNING GROUND LEASE (this “Agreement”) dated as of                     , 20___ (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
This Agreement is entered into upon, and with respect to, the following facts and intentions:
     A. BNPPLC and NAI have heretofore entered into the following agreements:
     (1) Amended and Restated Ground Lease (Building 8) dated as of November 29, 2007 and recorded (or referenced in a memorandum thereof recorded) in the official records of Santa Clara County, California (the “Official Records”) on or about November 29, 2007 as Instrument Number                      (as the same may have been modified, the “Ground Lease”), whereby NAI, as ground lessor, ground leased to BNPPLC, as ground lessee, that certain land more particularly described in Annex A, attached hereto and incorporated herein by this reference (herein the “Land”); and
     (2) Amended and Restated Lease Agreement (Building 8) dated as of November 29, 2007 (as the same may have been modified, the “Sublease”), which was the subject of that certain Short Form of Sublease, dated as of November 29, 2007, recorded in the Official Records on or about November 29, 2007 as Instrument Number                      (the “Short Form of Sublease”), whereby BNPPLC, as sublessor, leased to NAI, as sublessee, its ground leasehold interest in the Land and all of the improvements located thereon (collectively the “Subleased Premises”); and
     (3) Amended and Restated Purchase Agreement (Building 8) dated as of November 29, 2007 (has the same may have been modified, the “Purchase Agreement”), which was the subject of that certain Memorandum of Purchase Agreement, dated as of November 29, 2007, recorded in the Official Records on or about November 29, 2007 as Instrument Number                     .

 

 

     (4) Amended and Restated Common Definitions and Provisions Agreement (Building 8) dated as of November 29, 2007 Date (as the same may have been modified, the “Common Definitions and Provisions Agreement”). As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     B. BNPPLC and NAI now mutually wish to terminate the Ground Lease on the terms and conditions more particularly herein set forth.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration the adequacy of which is hereby acknowledges, the parties hereto agree as follows:
     1. Termination of Ground Lease. As of the Effective Date, BNPPLC hereby surrenders all of its right title and interest in the Ground Lease unto NAI, subject only to the “Permitted Encumbrances” described in Annex B attached hereto and incorporated herein by this reference, and the Ground Lease is hereby terminated. Notwithstanding anything to the contrary in this Agreement, BNPPLC does, for itself and its successors, covenant, warrant and agree to defend the title to the Land against claims and demands of any person claiming under or through a Lien Removable by BNPPLC. Except as expressly set forth in the preceding sentence, BNPPLC makes no warranty of title, express or implied.
     2. Acknowledgment of Reversion. BNPPLC also acknowledges and agrees that because of the termination of the Ground Lease, all of BNPPLC’s right, title and interest in and to the following property will revert to NAI and BNPPLC does hereby forever relinquish, waive, and quitclaim unto NAI (subject to such Permitted Encumbrances):
  A.   the Sublease;
 
  B.   the Purchase Agreement;
 
  C.   any pending or future award made because of our condemnation affecting the Property or because of any conveyance to be made in lieu thereof, and any unpaid proceeds of insurance or claim or cause of action for damages, loss or injury to the Subleased Premises; and
 
  D.   all other property included within the definition of “Property” as set forth in the Purchase Agreement;
provided, however, that excluded from this conveyance and reserved to BNPPLC are any rights or privileges of BNPPLC under the following are expressly reserved and retained by BNPPLC: (i) the indemnities set forth in the Sublease and the Ground Lease, whether such rights are
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 8) – Page 2

 

 

presently known or unknown, including rights of BNPPLC to be indemnified against environmental claims of third parties, as provided in the Ground Lease which may not presently be known; and (ii) provision in the Sublease that establish the right of BNPPLC to recover any accrued unpaid rent under the Sublease which may be outstanding as of the date hereof; and (iii) agreements between BNPPLC and BNPPLC’s Parent or any Participant, or any modification or extension thereof.
BNPPLC agrees to warrant and defend the title to the Subleased Premises as herein assigned, against claims and demands of any person claiming under or through a Lien Removable by BNPPLC relating to the Subleased Premises.
     3. “As Is” Reversion. Notwithstanding any contrary provisions contained herein, NAI acknowledges that BNPPLC 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 Subleased Premises, and NAI, by acceptance of this agreement, accepts the Subleased Premises “As Is,” “Where Is,” and “With All Faults,” and without any such representation or warranty by BNPPLC as to environmental matters, the physical condition of the Subleased Premises, compliance with subdivision or platting requirements or construction of any improvements. Without limiting the generality of the foregoing, NAI hereby further acknowledges and agrees that warranties of merchantability and fitness for a particular purpose are excluded from the transactions contemplated by this Agreement, as are any warranties arising from a course of dealing or usage of trade. NAI hereby assumes all risk and liability (and agrees that BNPPLC will not be liability 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 Subleased Premises, except for damages proximately caused by (and attributed by any applicable principles of comparative fault to) the “Established Misconduct” of BNPPLC.
     4. Binding Effect. The terms, provisions, covenants, and conditions hereof will be binding upon NAI and BNPPLC and their respective successors and assigns, and any other party claiming through either of them, and will inure to the benefit of NAI and BNPPLC and all transferees, mortgages, successors and assigns.
     5. Miscellaneous. This Agreement and any other agreement relating hereto and executed concurrently herewith represent the entire agreement of the parties hereto with respect to the subject matter hereof and supersede any prior negotiations and agreement between BNPPLC and NAI concerning the subject matter hereof. No amendment or modification of this Agreement will be binding or valid unless express in a writing executed by both parties hereto. This Agreement will be governed by and construed in accordance with the laws of the State of California without regard to conflict or choice of laws. Words in the singular number will be held to include the plural and vice versa, unless the context otherwise requires. This Agreement may be executed in counterparts, each of which will be an original and all of which together will be a single
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 8) – Page 3

 

 

instrument.
[Signature pages follow.]
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 8) – Page 4

 

 

IN WITNESS WHEREOF, BNPPLC and NAI have signed this Agreement Concerning Ground Lease to be effective as of                     , 20___.
                 
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation  
                 
    By:            
             
        Name:        
                 
        Title:        
                 
           
STATE OF                       )      
    )   SS  
COUNTY OF                        )      
On                     , 200___, before me                                          , a Notary Public in and for the County and State aforesaid, personally appeared                                          , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
    
     
 
    
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 8) – Page 5

 

 

[Continuation of signature pages to Agreement Concerning Ground Lease dated to be effective as of                     , 20___.]
                 
    NETWORK APPLIANCE, INC., a Delaware
corporation  
                 
    By:            
             
        Name:        
                 
        Title:        
                 
           
STATE OF                        )      
    )   SS  
COUNTY OF                        )      
On                     , 200___, before me                                          , a Notary Public in and for the County and State aforesaid, personally appeared                                          , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
    
     
 
    
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 8) – Page 6

 

 

Annex A
Legal Description
[DRAFTING NOTE: TO THE EXTENT THAT THE “LAND” COVERED BY THE GROUND LEASE CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPPLC’S CONSENT OR APPROVAL AS PROVIDED IN THE CLOSING CERTIFICATE, 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 ASSIGNMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
Proposed Parcel 8, and (except to the extent within a different platted Parcel as currently shown in the Map Records of the County of Santa Clara, California) proposed Parcel 12, and the Additional Leased Premises as defined below, (collectively, the “Building 8 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The southern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the southern boundary of Parcel 8 and the northern boundary of Parcel 7, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 8 and Parcel 7, as shown on the Tentative Map. The northern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 8 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 8) – Page 7

 

 

(MAP)
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 8) – Page 8

 

 

Annex B
Permitted Encumbrances
[DRAFTING NOTE: BEFORE THIS AGREEMENT IS ACTUALLY EXECUTED AND DELIVERED BY BNPPLC: ALL PERMITTED ENCUMBRANCES LISTED IN EXHIBIT B TO THE CLOSING CERTIFICATE WILL BE SET OUT BELOW, IN ADDITION TO THE ITEMS ALREADY LISTED. ALSO, IF ANY ENCUMBRANCES (OTHER THAN “LIENS REMOVABLE BY BNPPLC”) ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW OR IN EXHIBIT B TO THE CLOSING CERTIFICATE, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW. AFTER SUCH ADJUSTMENTS ARE MADE, THIS “DRAFTING NOTE” WILL BE DELETED. THE ADDITIONAL ENCUMBRANCES TO BE LISTED BELOW WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPPLC AS “PERMITTED ENCUMBRANCES” FROM TIME TO TIME OR BECAUSE OF NAI’s REQUEST FOR BNPPLC’S CONSENT OR APPROVAL TO AN ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a “Lien Removable by BNPPLC” (as defined in the Amended and Restated Common Definitions and Provisions Agreement), including the following matters to the extent the same are still valid and in force:
1. Taxes and assessments for the year 200___and subsequent years, which are not yet due and 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 : Slope Easement
  In favor of : City of Sunnyvale
  Recorded : October 9, 1964 in Book 6695, page 430, Official Records
  Affects : Easterly 18 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
4. EASEMENT for the purposes stated herein and incidents thereto
     
  Purpose : Public utilities easement
  In favor of : City of Sunnyvale
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 8) – Page 9

 

 

  Recorded October 9, 1964 in Book 6695, page 450, Official Records
  Affects : Easterly 7 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
5. Covenants, Conditions and Restrictions in the Declaration of Protective Covenants — Moffett Industrial Park No. 2) recorded December 23, 1971 in Book 9640, page 443, Official Records; which provide that a violation thereof shall not defeat or render invalid the lien of any Mortgage or Deed of Trust made in good faith and for value. Said Covenants, Conditions and Restrictions do not provide for reversion of title in the event of a breach thereof. Restrictions, if any, based upon race, color, religion, sex, handicap, familial status, or national origin are deleted, unless and only to the extent that said covenant (a) is exempt under Chapter 42, Section 3607, of the United States Code, or (b) related to handicap but does not discriminate against handicapped persons.
     ASSIGNMENT AND ASSUMPTION of the rights, powers, duties, obligations, and reservations of Moffett Park Associates, in favor of The Prudential Insurance Company of America, recorded February 8, 1977 in Book C583, page 685, Official Records.
6. EASEMENT for the purposes stated herein and incidents thereto
     
  Purpose : Public utilities
  Granted to : City of Sunnyvale
  Recorded : November 16, 1976 in Book C414, page 105, Official Records
  Affects : Southerly 10 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
7. LIMITATIONS, covenants, restrictions, reservations, exceptions or terms, 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 USC 3604(c), contained in the document recorded February 5, 1980 in Book F122, page 460, Official Records.
Exhibit C-1 to Amended and Restated Purchase Agreement (Building 8) – Page 10

 

 

Exhibit C-2
Form of Assignment of Ground Lease and Improvements
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
             
NAME:   [NAI or the Applicable Purchaser]    
ADDRESS:
            
ATTN:
            
CITY:
            
STATE:
            
Zip:
            
ASSIGNMENT OF GROUND LEASE AND IMPROVEMENTS
(Covering Improvements and Leasehold Estate in Land)
     BNP Paribas Leasing Corporation (“Assignor”), a Delaware corporation, for and in consideration of the sum of Ten Dollars ($10.00) and other valuable consideration paid to Assignor by [NAI or the Applicable Purchaser] (hereinafter called “Assignee”), the receipt and sufficiency of which are hereby acknowledged, does hereby GRANT, SELL, CONVEY, ASSIGN and DELIVER to Assignee (1) the leasehold estate created by an Amended and Restated Ground Lease (Building 8) from NAI to Assignor dated as of November 29, 2007, which covers the land described in Annex A attached hereto and hereby made a part hereof, and (2) all other rights, titles and interests of Assignor in and to (a) such land, (b) the buildings and other improvements situated on such land, (c) any fixtures and other property affixed thereto and (d) the adjacent streets, alleys and rights-of-way (all of the property interests conveyed hereby being hereinafter collectively referred to as the “Property”); however, this conveyance is made by Assignor and accepted by Assignee subject to the terms and conditions of the aforementioned Ground Lease and to all zoning and other ordinances affecting the Property, all general or special assessments due and payable after the date hereof, all encroachments, variations in area or in measurements, boundary line disputes, roadways and other matters not of record which would be disclosed by a current survey and inspection of the Property, and the encumbrances listed in Annex B attached hereto and made a part hereof (collectively, the “Permitted Encumbrances”).
     TO HAVE AND TO HOLD the Property, together with all and singular the rights and appurtenances thereto belonging unto Assignee, its successors and assigns, forever, and Assignor does hereby bind Assignor and Assignor’s successors and assigns to warrant and forever defend all and singular the said premises unto Assignee, its successors and assigns against every person whomsoever lawfully claiming, or to claim the same, or any part thereof by, through or under Assignor, but not otherwise; subject, however, to the Permitted Encumbrances. Except as expressly set forth in the preceding sentence, Assignor makes no warranty of title, express or implied.

 

 

     Assignor 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 Property, and Assignee, by acceptance of this Assignment, accepts the Property “AS IS,” “WHERE IS,” “WITH ALL FAULTS” and without any such representation or warranty by Assignor as to environmental matters, the physical condition of the Property, compliance with subdivision or platting requirements or construction of any improvements. Without limiting the generality of the foregoing, by acceptance of this Assignment, Assignee hereby further acknowledges and agrees that warranties of merchantability and fitness for a particular purpose are excluded from the transaction contemplated by this Assignment, as are any warranties arising from a course of dealing or usage of trade.
     Assignee hereby assumes the obligations (including any personal obligations) of Assignor, 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 Assignment.
[Signature pages follow.]
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 8) – Page 2

 

 

IN WITNESS WHEREOF, Assignor and Assignee have signed this Assignment to be effective as of                     , 20___.
                 
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation  
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
                 
STATE OF                     
    )          
 
    )     SS    
COUNTY OF                     
    )          
On                     , 200___, before me                                          , a Notary Public in and for the County and State aforesaid, personally appeared                                          , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
   
 
    
 
    
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 8) – Page 3

 

 

[Continuation of signature pages to Assignment of Ground Lease and Improvements dated to be effective as of                     , 20___.]
[NAI or the Applicable Purchaser]
         
By:
        
 
 
 
    
Name:
        
 
 
 
    
Title:
        
 
 
 
    
                 
STATE OF                     
    )          
 
    )     SS    
COUNTY OF                     
    )          
On                     , 200___, before me                                          , a Notary Public in and for the County and State aforesaid, personally appeared                                          , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
   
 
    
 
    
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 8) – Page 4

 

 

Annex A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE “LAND” COVERED BY THE GROUND LEASE CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPPLC’S CONSENT OR APPROVAL AS PROVIDED IN THE CLOSING CERTIFICATE, 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 ASSIGNMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
Proposed Parcel 8, and (except to the extent within a different platted Parcel as currently shown in the Map Records of the County of Santa Clara, California) proposed Parcel 12, and the Additional Leased Premises as defined below, (collectively, the “Building 8 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The southern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the southern boundary of Parcel 8 and the northern boundary of Parcel 7, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 8 and Parcel 7, as shown on the Tentative Map. The northern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 8 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 8) – Page 5

 

 

(MAP)
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 8) – Page 6

 

 

Annex B
Permitted Encumbrances
[DRAFTING NOTE: BEFORE THIS ASSIGNMENT IS ACTUALLY EXECUTED AND DELIVERED BY BNPPLC: ALL PERMITTED ENCUMBRANCES LISTED IN EXHIBIT B TO THE CLOSING CERTIFICATE WILL BE SET OUT BELOW, IN ADDITION TO THE ITEMS ALREADY LISTED. ALSO, IF ANY ENCUMBRANCES (OTHER THAN “LIENS REMOVABLE BY BNPPLC”) ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW OR IN EXHIBIT B TO THE CLOSING CERTIFICATE, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW. AFTER SUCH ADJUSTMENTS ARE MADE, THIS “DRAFTING NOTE” WILL BE DELETED. THE ADDITIONAL ENCUMBRANCES TO BE LISTED BELOW WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPPLC AS “PERMITTED ENCUMBRANCES” FROM TIME TO TIME OR BECAUSE OF NAI’s REQUEST FOR BNPPLC’S CONSENT OR APPROVAL TO AN ADJUSTMENT.]
     This conveyance is subject to all encumbrances not constituting a “Lien Removable by BNPPLC” (as defined in the Amended and Restated Common Definitions and Provisions Agreement (Building 8) incorporated by reference into the Amended and Restated Lease Agreement (Building 8) 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 and assessments for the year 200___ and subsequent years, which are not yet due and 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
   : Slope Easement
 
In favor of
   : City of Sunnyvale
 
Recorded
   : October 9, 1964 in Book 6695, page 430, Official Records
 
Affects
   : Easterly 18 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for : Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
4. EASEMENT for the purposes stated herein and incidents thereto
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 8) – Page 7

 

 

       
 
Purpose
   : Public utilities easement
 
In favor of
   : City of Sunnyvale
 
Recorded
   : October 9, 1964 in Book 6695, page 450, Official Records
 
Affects
   : Easterly 7 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for : Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
5. Covenants, Conditions and Restrictions in the Declaration of Protective Covenants — Moffett Industrial Park No. 2) recorded December 23, 1971 in Book 9640, page 443, Official Records; which provide that a violation thereof shall not defeat or render invalid the lien of any Mortgage or Deed of Trust made in good faith and for value. Said Covenants, Conditions and Restrictions do not provide for reversion of title in the event of a breach thereof. Restrictions, if any, based upon race, color, religion, sex, handicap, familial status, or national origin are deleted, unless and only to the extent that said covenant (a) is exempt under Chapter 42, Section 3607, of the United States Code, or (b) related to handicap but does not discriminate against handicapped persons.
     ASSIGNMENT AND ASSUMPTION of the rights, powers, duties, obligations, and reservations of Moffett Park Associates, in favor of The Prudential Insurance Company of America, recorded February 8, 1977 in Book C583, page 685, Official Records.
6. EASEMENT for the purposes stated herein and incidents thereto
       
 
Purpose
   : Public utilities
 
In favor of
   : City of Sunnyvale
 
Recorded
   : November 16, 1976 in Book C414, page 105, Official Records
 
Affects
   : Southerly 10 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for : Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
7. LIMITATIONS, covenants, restrictions, reservations, exceptions or terms, 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 USC 3604(c), contained in the document recorded February 5, 1980 in Book F122, page 460, Official Records.
Exhibit C-2 to Amended and Restated Purchase Agreement (Building 8) – Page 8

 

 

Exhibit C-3
BILL OF SALE AND ASSIGNMENT
     Reference is made to: (1) that certain Amended and Restated Purchase Agreement (Building 8) dated as of November 29, 2007, (the “Purchase Agreement”) between BNP Paribas Leasing Corporation (“Assignor”), a Delaware corporation, and Network Appliance, Inc. , a Delaware corporation, and (2) that certain Amended and Restated Lease Agreement dated as of November 29, 2007 (the “Lease”) between Assignor, as landlord, and Network Appliance, Inc. , a Delaware corporation, as tenant. (Capitalized terms used and not otherwise defined in this document are intended to have the meanings assigned to them in the Amended and Restated Common Definitions and Provisions Agreement (Building 8) incorporated by reference into both the Purchase Agreement and Lease.)
     As contemplated by the Purchase Agreement, Assignor hereby sells, transfers and assigns unto [NAI or the Applicable Purchaser], 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 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 personal or intangible 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 6 of the Lease or otherwise acquired by Assignor, at the time of the execution and delivery of the 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 Lease and Purchase Agreement or thereafter arising, under Permitted Encumbrances; and (iii) any general intangibles, 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 interest of Assignor in and to the Property instead of Assignor.
Provided, however, excluded from this conveyance and reserved to Assignor are any rights or privileges of Assignor under the following: (1) the indemnities set forth in the Construction Agreement, the Lease and the Ground 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 Construction Agreement and the Lease which may not presently be known, all of which indemnities will survive the deliver of this Bill of Sale and Assignment and other documents required by the Purchase Agreement, (2) provisions in the Lease that establish the right of Assignor to recover any accrued unpaid rent under the Lease which may be outstanding as of the date hereof, (3) agreements between Assignor and Assignor’s Parent or any Participant, or (4) any other instrument being delivered to Assignor contemporaneously herewith pursuant to the Purchase Agreement. [Drafting Note: The following sentence will be included unless the Property is being sold to NAI or an Affiliate pursuant to subparagraph 2(A)(1), 3(A) or 3(B) of the Purchase Agreement: Also excluded from this conveyance and reserved to Assignor are (i) the right to retain Escrowed Proceeds, if any, that consist of condemnation or insurance proceeds resulting from a Pre-completion Force Majeure Event, and (ii) any right to receive future payments of any such condemnation or insurance proceeds.]
     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 Assignor, but not otherwise.
     Assignee hereby assumes and agrees to keep, perform and fulfill Assignor’s obligations, if any, relating to any permits or contracts (including the Lease), under which Assignor has rights being assigned herein.
[Signature pages follow.]
Exhibit C-3 to Amended and Restated Purchase Agreement (Building 8) – Page 2

 

 

     IN WITNESS WHEREOF, Assignor and Assignee have signed this Bill of Sale and Assignment to be effective as of                     , 20___.
                 
    BNP PARIBAS LEASING CORPORATION,
a Delaware corporation  
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
                 
STATE OF                     
    )          
 
    )     SS    
COUNTY OF                     
    )          
On                     , 200___, before me                                          , a Notary Public in and for the County and State aforesaid, personally appeared                                          , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
    
 
    
 
    
Exhibit C-3 to Amended and Restated Purchase Agreement (Building 8) – Page 3

 

 

[Continuation of signature pages to Bill of Sale and Assignment dated to be effective as of                     , 20___.]
[NAI or the Applicable Purchaser]
         
By:
        
 
 
 
    
Name:
        
 
 
 
    
Title:
        
 
 
 
    
                 
STATE OF                     
    )          
 
    )     SS    
COUNTY OF                     
    )          
On                       , 200___, before me                                            , a Notary Public in and for the County and State aforesaid, personally appeared                                          , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
   
 
    
 
    
Exhibit C-3 to Amended and Restated Purchase Agreement (Building 8) – Page 4

 

 

Exhibit C-4
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], a                                          (“Assignee”).
     Contemporaneously with the execution of this Certificate, BNP Paribas Leasing Corporation (“Assignor”), a Delaware corporation, is executing and delivering to Assignee (1) an Assignment of Ground Lease and Improvements, 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, Assignee acknowledges that Assignor 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 Assignee, 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, Assignee 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. Assignee hereby assumes all risk and liability (and agrees that Assignor will 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 Assignor. As used in the preceding sentence, “Established Misconduct” is intended to have, and be limited to, the meaning given to it in the Amended and Restated Common Definitions and Provisions Agreement (Building 8) incorporated by reference into the Amended and Restated Purchase Agreement (Building 8) dated as of November 29, 2007 between Assignor and Network Appliance, Inc., pursuant to which Amended and Restated Purchase Agreement Assignor is delivering the Conveyancing Documents.
     The provisions of this Certificate will be binding on Assignee, its successors and assigns and any other party claiming through Assignee. Assignee hereby acknowledges that Assignor is entitled to rely and is relying on this Certificate.
[Signature page follows.]

 

 

Exhibit C-4 to Amended and Restated Purchase Agreement (Building 8) – Page 2

 

 

IN WITNESS WHERE OF, Assignor and Assignee have signed this Bill of Sale and Assignment to be effective as of                     , 20___.
[NAI or the Applicable Purchaser]
         
By:
        
Name:
        
Title:
        
                 
STATE OF                     
    )          
 
    )     SS    
COUNTY OF                     
    )          
On                       , 200___, before me                                             , a Notary Public in and for the County and State aforesaid, personally appeared                                          , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
   
 
    
 
    
Exhibit C-4 to Amended and Restated Purchase Agreement (Building 8) – Page 3

 

 

Exhibit D
SECRETARY’S CERTIFICATE
     The undersigned, [Secretary or Assistant Secretary] of BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware 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 BNPPLC 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 Sale Closing Documents on behalf of BNPPLC.]
         
Name
  Title   Signature
 
        
 
       
 
        
 
       
     3. That the resolutions attached hereto and made a part hereof were duly adopted by the Board of Directors of BNPPLC in accordance with BNPPLC’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                                         , 20         .
 
[signature and title]

 

 

CORPORATE RESOLUTIONS OF
BNP PARIBAS LEASING CORPORATION
[DRAFTING NOTE: INSERT HERE COPIES OF RESOLUTIONS ADOPTED BY THE BOARD OF DIRECTORS OF BNPPLC SUFFICIENT TO AUTHORIZE THE DELIVERY OF SALE CLOSING DOCUMENTS. SUCH RESOLUTIONS MAY BE AS FOLLOWS:
     WHEREAS, pursuant to that certain Amended and Restated Purchase Agreement (Building 8) (herein called the “Purchase Agreement”) dated as of November 29, 2007, by and between BNP Paribas Leasing Corporation (“BNPPLC”) and Network Appliance, Inc. (“NAI”) , BNPPLC 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 Santa Clara County, California, more particularly described therein.
     NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of BNPPLC, in its best business judgment, deems it in the best interest of BNPPLC and its shareholders that BNPPLC convey the Property to NAI or the Applicable Purchaser pursuant to and in accordance with the terms of the Purchase Agreement.
     RESOLVED FURTHER, that the proper officers of BNPPLC, and each of them, are hereby authorized and directed in the name and on behalf of BNPPLC to cause BNPPLC to fulfill its obligations under the Purchase Agreement.
     RESOLVED FURTHER, that the proper officers of BNPPLC, 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, assignments and other documents, instruments and agreements that are 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 D to Amended and Restated Purchase Agreement (Building 8) – Page 2

 

 

Exhibit E
CERTIFICATION OF NON-FOREIGN STATUS
          Section 1445 of the Internal Revenue Code 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] (“Transferee”) that withholding of tax is not required upon the disposition of a U.S. real property interest by BNP PARIBAS LEASING CORPORATION (“Transferor”), a Delaware corporation, the undersigned hereby certifies the following on behalf of Transferor:
1. Transferor 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. Transferor is not a disregarded entity (as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax Regulations);
3. Transferor’s U.S. employer identification number is 75-2252918; and
4. Transferor’s office address is:
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Transferor understands that this Certification of Non-Foreign Status may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this Certification of Non-Foreign Status 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 Transferor.
     Dated:                     , 20___.
             
         
 
  Name:        
 
     
 
    
 
  Title:        
 
     
 
    

 

 

Exhibit F
Notice of Election to Terminate the Supplemental Payment Obligation
and Irrevocable Release and Waiver of the Right to Purchase
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Purchase Agreement (Building 8) dated as of November 29, 2007 (the “Purchase Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Purchase Agreement referenced above. This letter will constitute a notice given pursuant to subparagraph 6(B) of the Purchase Agreement. As provided in that subparagraph, NAI irrevocably elects to terminate the Supplemental Payment Obligation effective immediately, subject only to the conditions described below. In addition, NAI irrevocably waives and releases its rights to purchase or cause an Affiliate of NAI to purchase the Property granted to it by the Purchase Agreement. Because of (but without limiting) such waiver and release, the Purchase Option is terminated and so are all rights of NAI under subparagraphs 2(A) and 3(A) of the Purchase Agreement.
     NAI acknowledges that this notice will not be effective to terminate the Supplemental Payment Obligation if it is not received by BNPPLC prior to the Completion Date.
     NAI also acknowledges that even if no prior 97-10/Meltdown Event has occurred, the delivery of this notice is in and of itself a 97-10/Meltdown Event under and as defined in the Construction Agreement. Therefore, after receipt of this notice BNPPLC will be entitled to demand and receive a 97-10/Prepayment, if BNPPLC has not already done so, on and subject to the terms and conditions of Paragraph 9 of the Construction Agreement. Further, if NAI fails to make a 97-10/Permitted Prepayment required by the Construction Agreement, BNPPLC may exercise the Put Option as provided in subparagraph 3(B) of the Purchase Agreement.
     NAI also acknowledges that its right to terminate the Supplemental Payment Obligation is subject to the condition precedent that: (1) NAI must have given (and not rescinded) a Notice of NAI’s Intent to Terminate as provided in the Construction Agreement, or (2) BNPPLC must

 

 

have given any FOCB Notice as provided in the Construction Agreement. Accordingly, if neither of the notices described in the preceding sentence have been given, the Supplemental Payment Obligation will not terminate by reason of this notice.
     Finally, NAI acknowledges that because the delivery of this notice constitutes a 97-10/Meltdown Event, BNPPLC will have the right at any time for any reason or no reason to terminate the Lease by notice to NAI.
                 
    NETWORK APPLIANCE, INC., a Delaware
corporation  
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
[cc all Participants]
Exhibit F to Amended and Restated Purchase Agreement (Building 8) – Page 2

 

exv10w44
Exhibit 10.44
AMENDED AND RESTATED
GROUND LEASE
(BUILDING 8)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
         
    Page  
       
RECITALS
     1  
GRANTING CLAUSES
     1  
GENERAL TERMS AND CONDITIONS
     3  
 
        
1 Additional Definitions
     3  
“Contingent Purchase Option”
     3  
“Fair Rental Value”
     3  
“Ground Lease Default”
     3  
“Ground Lease Rent”
     3  
“Ground Lease Term”
     3  
“Leasehold Mortgage”
     3  
“Leasehold Mortgagee”
     4  
“Turnover Date”
     4  
 
        
2 Ground Lease Term and Early Termination
     4  
 
        
3 Ground Lease Rent
     4  
 
        
4 Receipt and Application of Insurance and Condemnation Proceeds
     5  
 
        
5 No Lease Termination
     5  
 
        
6 The Lease and Other Operative Documents
     5  
 
        
7 Use of Leased Property
     5  
 
        
8 Assignment and Subletting; Pass Through of BNPPLC’s Liability Insurance and Indemnity Rights
    6  
 
        
9 Estoppel Certificate
     6  
 
        
10 Leasehold Mortgages
     7  
 
        
11 Other Representations, Warranties and Covenants of NAI
     9  
(A) Condition of the Property
     9  
(B) Environmental Representations
    10  
(C) Current Status of Title to the Land
     10  
(D) Intentionally Deleted
     10  
(E) Title to Improvements
     10  
(F) Defense of Adverse Title Claims
     11  
(G) Prohibition Against Consensual Liens on the Leased Property
     12  
(H) Compliance With Permitted Encumbrances
     12  

 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
       
(I) Compliance With Laws
     12  
(J) Modification of Permitted Encumbrances
     12  
(K) Performance and Preservation of the Permitted Encumbrances for the Benefit of BNPPLC
     13  
(L) Cooperation by NAI and its Affiliates
     13  
(M) Intentionally Deleted
     14  
(N) Omissions
    14  
(O) Insurance and Casualty
     14  
(P) Condemnation
    14  
(Q) Further Assurances
     15  
         
12 Ground Lease Defaults
     15  
(A) Definition of Ground Lease Default
     15  
(B) Remedy
     16  
         
13 Quiet Enjoyment
     16  
         
14 Option to Purchase
     16  
         
15 Miscellaneous
     16  
(A) No Merger
     16  
(B) Recording; Memorandum of Lease
     17  
         
16 Certain Remedies Cumulative
     17  
         
17 Attorney’s Fees and Legal Expenses
     17  
         
18 Successors and Assigns
     17  
         
19 Amendment and Restatement of Prior ground Lease
     17  

(ii) 

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
         
Exhibit A   Legal Description
     
Exhibit B   Permitted Encumbrances List
     
Exhibit C   Contingent Purchase Option
     
Exhibit D   Determination of Fair Value

(iii) 

 

AMENDED AND RESTATED
GROUND LEASE
(BUILDING 8)
     This AMENDED AND RESTATED GROUND LEASE (BUILDING 8) (this “Ground Lease”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Ground Lease, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (Building 8) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Ground Lease for all purposes. As used in this Ground Lease, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Ground Lease are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     At the request of NAI, and to facilitate the transactions contemplated in the other Operative Documents, BNPPLC is executing this Ground Lease to acquire from NAI a leasehold estate of 99 years in the Land described in Exhibit A attached hereto (the “Land”) and any existing Improvements on the Land.
     Also contemporaneously with this Ground Lease, BNPPLC and NAI are executing an Amended and Restated Construction Agreement (Building 8) (the“Construction Agreement”) and an Amended and Restated Lease Agreement (Building 8) (the “Lease”). Pursuant to the Construction Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements. When the term of the Lease commences, the Lease will cover all Improvements on the Land.
     Pursuant to an Amended and Restated Purchase Agreement (Building 8) dated as of the Effective Date (the “Purchase Agreement”) between BNPPLC and NAI, NAI will have the right to purchase, among other things, BNPPLC’s leasehold estate under this Ground Lease on and subject to the terms and conditions set forth therein.
GRANTING CLAUSES
     In consideration of the rent to be paid and the covenants and agreements to be performed by BNPPLC, as hereinafter set forth, NAI does hereby LEASE, DEMISE and LET unto BNPPLC for the term hereinafter set forth the Land, together with:

 

 

     (A) all easements and rights-of-way now owned or hereafter acquired by NAI for use in connection with the Land or any Improvements constructed thereon or as a means of access thereto and any and all easements and rights appurtenant to the Land; and
     (B) all right, title and interest of NAI, 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 abutting land not owned by NAI.
The Land and all of the property described in items (1) and (2) above 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 NAI as the owner of any interest in the Real Property, NAI also hereby grants and assigns to BNPPLC for the term of this Ground Lease the right to use and enjoy (and, in the case of contract rights, to enforce) such rights or interests of NAI:
     (A) the Permitted Encumbrances; and
     (B) any general intangibles, permits, licenses, franchises, certificates, and other rights and privileges related to the Real Property that BNPPLC (rather than NAI) would have acquired if BNPPLC had itself acquired the fee estate in the Real Property (excluding, however, the rights and privileges of NAI under this Ground Lease, the Construction Agreement, the Lease, the Purchase Agreement and any other Operative Documents).
Such rights and interests of NAI, 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 “Leased Property.” The Leased Property and all Improvements on the Land now or in the future (whether such Improvements are owned by BNPPLC or NAI) are hereinafter sometimes called the “Improved Property”.
     However, the leasehold estate conveyed hereby and BNPPLC’s rights hereunder are expressly made subject and subordinate to the Permitted Encumbrances listed on Exhibit B.
     Further, so long as any of the other Operative Documents remain in force, the rights and obligations of NAI and BNPPLC hereunder will be subject to any contrary provisions therein, including provisions in the Construction Agreement and the Lease that govern the collection and application of condemnation and
Amended and Restated Ground Lease (Building 8) – Page 2

 

 

insurance proceeds in the event of any taking of or damage to the Improved Property.
GENERAL TERMS AND CONDITIONS
     The Leased Property is leased by NAI to BNPPLC and is accepted and is to be used and possessed by BNPPLC upon and subject to the following terms, provisions, covenants, agreements and conditions:
1 Additional Definitions. As used in this Ground Lease, capitalized terms defined above have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and that are used but not otherwise defined have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms have the following respective meanings:
     “Contingent Purchase Option” means the option granted BNPPLC by NAI as provided in Exhibit C attached to this Ground Lease.
     “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 Exhibit D, 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 (including appurtenances) 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 this Ground Lease 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.
     “Ground Lease Default” has the meaning assigned to it in subparagraph 13(A) below.
     “Ground Lease Rent” means the rent payable by BNPPLC pursuant to Paragraph 3 below.
     “Ground Lease Term” has the meaning assigned to it in Paragraph 2 below.
     “Leasehold Mortgage” means any mortgage, deed of trust (with or without a private
Amended and Restated Ground Lease (Building 8) – Page 3

 

 

power of sale), security agreement or assignment executed by BNPPLC to secure an obligation to repay borrowed money or other voluntary obligations, which covers BNPPLC’s leasehold estate hereunder or any part thereof or any rents or other charges to be paid to BNPPLC pursuant to any sublease.
     “Leasehold Mortgagee” means any lender or other beneficiary of a Leasehold Mortgage that has notified NAI of the existence such Leasehold Mortgage and of its address to which notices should be delivered.
     “Turnover Date” means the day which is thirty days after any Designated Sale Date upon which, for any reason whatsoever, NAI does not purchase the Improved Property from BNPPLC pursuant to the Purchase Agreement.
2 Ground Lease Term and Early Termination. The term of this Ground Lease (herein called the “Ground Lease Term”) will commence on and include the Effective Date and end on the last Business Day prior to the ninety-ninth (99th) anniversary of the Effective Date. However, subject to the prior approval of any Leasehold Mortgagee, BNPPLC will have the right to terminate this Ground Lease by giving a notice to NAI stating that BNPPLC 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.
3 Ground Lease Rent. The rent required by this Ground Lease (herein called “Ground Lease Rent”) will equal the Fair Rental Value, determined as provided in Exhibit D, and be paid as follows:
     Prior to the Completion Date, BNPPLC must pay Ground Lease Rent to NAI on the first Business Day of every calendar month for the preceding month. Consistent with the agreement of the parties in Exhibit D that the initial Fair Rental Value is $600,000 per annum, and each such required monthly payment prior to the Completion Date is $50,000. (Notwithstanding the forgoing, as was agreed by the parties for administrative convenience at the time of the execution of the Prior Ground Lease, BNPPLC has already prepaid all of the Ground Lease Rent expected to accrue prior to the Completion Date, rather than pay it monthly on the first Business Day of each month.)
     After the Completion Date, Ground Lease Rent will be paid annually in arrears on each anniversary of the Effective Date. So long as the Lease continues, each such payment by BNPPLC may be offset against the reimbursement for such payment required of NAI by the Lease. After the Lease expires or terminates, however, BNPPLC’s obligation for the payment of Ground Lease will continue so long as this Ground Lease continues, on and subject to the terms and conditions set forth herein.
Amended and Restated Ground Lease (Building 8) – Page 4

 

 

4 Receipt and Application of Insurance and Condemnation Proceeds. All insurance and condemnation proceeds payable with respect to any damage to or taking of the Leased Property will be payable to and become the property of BNPPLC; provided, however, NAI will be entitled to receive condemnation proceeds awarded for the value of NAI’s remainder interest in the Land exclusive of the Improvements. BNPPLC is authorized to take all action necessary on behalf of both BNPPLC and NAI (as lessor under this Ground Lease) to collect insurance and condemnation proceeds.
5 No Lease Termination. Except as expressly provided herein, this Ground Lease will not terminate, nor will NAI have any right to terminate this Ground Lease nor will the obligations of NAI under this Ground Lease be excused, for any reason whatsoever, including without limitation any of the following: (i) any damage to or the destruction of all or any part of the Leased Property from whatever cause, (ii) the taking of the Leased Property or any portion thereof by eminent domain or otherwise for any reason, (iii) any default on the part of BNPPLC under this Ground Lease or under any other agreement to which NAI and BNPPLC are parties, or (iv) any other cause whether similar or dissimilar to the foregoing, any existing or future law to the contrary notwithstanding. Notwithstanding the foregoing, after any purchase by NAI of BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement and payment to BNPPLC of the purchase price required by the Purchase Agreement and all other sums dues under any of the other Operative Documents, NAI (as the holder of both the lessor’s and lessee’s interests hereunder) may elect to terminate this Ground Lease; and after a purchase by BNPPLC of the Land because of BNPPLC exercise of the Contingent Purchase Option, BNPPLC (as the holder of both the lessor’s and lessee’s interests hereunder) may elect to terminate this Ground Lease. It is the intention of the parties hereto that the obligations of NAI hereunder will be separate and independent of the covenants and agreements of BNPPLC. However, nothing in this Paragraph will be construed as a waiver by NAI of any right NAI may have at law or in equity to recover monetary damages for any default under this Ground Lease by BNPPLC.
6 The Lease and Other Operative Documents. Nothing contained in this Ground Lease will limit, modify or otherwise affect any of NAI’s or BNPPLC’s respective rights and obligations under the other Operative Documents, which rights and obligations are intended to be separate, independent and in addition to, and not in lieu of, the obligations established by this Ground Lease. In the event of any inconsistency between the terms and provisions of the other Operative Documents and the terms and provisions of this Ground Lease, the terms and provisions of the other Operative Documents will control.
7 Use of Leased Property. Subject to the Permitted Encumbrances and the terms hereof, BNPPLC may use and occupy the Leased Property for any purpose permitted by Applicable Laws and may construct, modify, renovate, replace and remove any Improvements on the Land from time to time, subject only to the constraints that Applicable Laws would impose
Amended and Restated Ground Lease (Building 8) – Page 5

 

 

upon the owner of the Land if the owner were constructing, modifying, renovating, replacing or removing Improvements. To provide NAI an opportunity to file any applicable statutory notice of nonresponsibility, BNPPLC will, before commencing the construction any major Improvements upon the Land after the Turnover Date, endeavor to notify NAI that BNPPLC intends to commence such construction; provided, however, BNPPLC will have no liability for its failure to provide such a notice.
8 Assignment and Subletting; Pass Through of BNPPLC’s Liability Insurance and Indemnity Rights. BNPPLC may sublet or assign this Ground Lease without the consent of NAI or any of its Affiliates, subject only to limitations set forth in the Lease for the benefit of NAI so long as those limitations remain in force.
     To the extent that BNPPLC may from time to time after the Turnover Date require any subtenant to agree to maintain liability insurance against claims of third parties and agree to make BNPPLC an additional or named insured under such insurance, BNPPLC will also require the subtenant to agree to make NAI an additional or named insured. However, BNPPLC will have no liability to NAI for a breach by the subtenant of any such agreements, and to the extent that BNPPLC’s rights as an additional or named insured are subject to exceptions or limitations concerning BNPPLC’s own acts or omissions or the acts or omissions of anyone other than the subtenant, so too may NAI’s rights as an additional or named insured be subject to exceptions or limitations concerning NAI’s own acts or omissions or the acts or omissions of anyone other than the subtenant.
     To the extent that BNPPLC may itself from time to time after the Turnover Date 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 Leased Property, BNPPLC will cause NAI to be an additional or named insured under such insurance, provided NAI pays or reimburses BNPPLC for any additional insurance premium required to have NAI made an insured.
     To the extent that BNPPLC may from time to time after the Turnover Date require any subtenant to agree to indemnify BNPPLC against Environmental Losses or other Losses concerning the Leased Property, BNPPLC will also require the subtenant to agree to indemnify NAI. However, BNPPLC will have no liability to NAI for a breach by the subtenant of any such agreement, and to the extent that BNPPLC’s rights as an indemnitee of the subtenant are subject to exceptions or limitations concerning BNPPLC’s own acts or omissions or the acts or omissions of anyone other than the subtenant, so too may NAI’s rights as an indemnitee be subject to exceptions or limitations concerning NAI’s own acts or omissions or the acts or omissions of anyone other than the subtenant.
9 Estoppel Certificate. NAI and BNPPLC will from time to time, within ten days after receipt of request by the other party hereto, deliver a statement in writing to such other party
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or other Person(s) designated by such party 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 the party providing such certificate, the other party 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 the party so certifying is able to provide;
     (C) the term of this Ground Lease and the Ground Lease Rent then in effect and any additional charges;
     (D) that to the knowledge of the party providing such certificate, the other party is not in default under any provision of this Ground Lease (or if in default, the nature thereof in detail) and, in any certificate provided by NAI, a statement as to any outstanding obligations on the part of NAI or BNPPLC; and
     (E) in any certificate provided by NAI, such other factual matters concerning the Leased Property or BNPPLC’s rights and obligations under this Ground Lease as are requested by BNPPLC.
NAI’s failure to deliver such statement within such time will constitute an admission by NAI (i) that this Ground Lease is in full force and effect, without modification except as may be represented by BNPPLC, and (ii) that there are no uncured defaults in BNPPLC’s performance hereunder.
10 Leasehold Mortgages.
     (A) By Leasehold Mortgage BNPPLC may encumber BNPPLC’s leasehold estate in the Leased Property created by this Ground Lease and BNPPLC’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 BNPPLC from the Leased Property. However, prior to the Turnover Date, a Leasehold Mortgage will be permitted hereunder only if it constitutes a Permitted Transfer and only if it is made expressly subject to the rights of NAI under the other Operative Documents.
     (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 BNPPLC’s rights and interests in the improvements, equipment, fixtures and other property assigned as additional security pursuant to a Leasehold Mortgage, by foreclosure of a
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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 NAI.
     (C) NAI must serve notice of any default by BNPPLC hereunder upon any Leasehold Mortgagee for which NAI has received written notification from BNPPLC of the Leasehold Mortgagee’s address for such notice. No notice of a default by BNPPLC will be deemed effective until it is so served. Any Leasehold Mortgagee will 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 BNPPLC under this Ground Lease to correct or cure defaults, plus an additional period of thirty days thereafter. NAI will accept performance by any Leasehold Mortgagee of any covenant, condition or agreement on BNPPLC’s part to be performed hereunder with the same force and effect as though performed by BNPPLC.
     (D) If this Ground Lease should terminate by reason of a disaffirmance or rejection of this Ground Lease by BNPPLC or any receiver, liquidator or trustee for the property of BNPPLC, or by any governmental authority which had taken possession of the business or property of BNPPLC by reason of the insolvency or alleged insolvency of BNPPLC, then:
     (1) NAI must give notice thereof to each Leasehold Mortgagee for which NAI has received written notification from BNPPLC of the Leasehold Mortgagee’s address for such notice; and upon request of any Leasehold Mortgagee made within sixty days after NAI has given such notice, NAI must enter into a new ground lease of the Leased 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 (including subparagraph 11(E)) as are contained in this Ground Lease (a “New Ground Lease”).
     (2) The estate of the Leasehold Mortgagee, as lessee under the New Ground Lease, will have priority equal to the estate of BNPPLC hereunder. That is, there will be no charge, lien or burden upon the Leased Property prior to or superior to the estate granted by such New Ground Lease which was not prior to or superior to the estate of BNPPLC under this Ground Lease as of the date immediately preceding the termination of this Ground Lease. To the extent, however, that the other Operative Documents are in effect at the time of execution of such New Ground Lease, the New Ground Lease will be made expressly subject to the other Operative Documents.
     (3) Notwithstanding the foregoing, if NAI receives requests to enter into a New Ground Lease from more than one Leasehold Mortgagee because of the expiration or termination of this Ground Lease, NAI will be required to enter into only one New
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Ground Lease, and the New Ground Lease will be to the requesting Leasehold Mortgagee who holds the highest priority lien or interest in BNPPLC’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 will name all such Leasehold Mortgagees as co-tenants thereunder.
     (E) If BNPPLC 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 BNPPLC, and if NAI has been notified in writing of such agreement, such consent will be required for such Leasehold Mortgagee to be bound by any such modification or early termination of this Ground Lease.
     (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 Leased Property, unless and until the Leasehold Mortgagee acquires BNPPLC’s leasehold estate in the Leased 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, NAI agrees to include, in addition to the items specified in Paragraph 9, confirmation of the foregoing with respect to any Leasehold Mortgagee or prospective Leasehold Mortgagee in any statement delivered to such Leasehold Mortgagee which is provided to a pursuant to Paragraph 9.
11 Other Representations, Warranties and Covenants of NAI. NAI represents, warrants and covenants as follows:
     (A) Condition of the Property. The Land described in Exhibit A is the same as the land described in the Title Policy and as shown on the plat included as part of the survey prepared by December 2, 1999, prepared by Kier & Wright, Job No. 97208-16 (the “Survey”), which survey was delivered to BNPPLC at the request of NAI. All material improvements on the Land as of the Effective Date are as shown on the Survey, and except as shown on the Survey there are no easements or encroachments encumbering or affecting the Improved Property. No part of the Land is within a flood plain as designated by any governmental authority. Existing Improvements, if any, are free from latent or patent defects or deficiencies that, either individually or in the aggregate, could materially and adversely affect the use or occupancy of the Improved Property as permitted by the Lease or could reasonably be anticipated to cause injury or death to any person. When the construction contemplated by the Construction Agreement is complete in accordance with plans approved as described therein, the Improved Property and use thereof permitted by the Lease will comply in all material respects with all Applicable Laws,
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including laws regarding access and use by disabled persons and local zoning ordinances. Adequate provision has been made (or can be made at a cost that is reasonable in connection with future development of the Land) for the Land 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 Improved Property for the construction contemplated by the Construction Agreement or uses permitted by the Lease have been completed and are serviceable or will be completed and made serviceable as part of the construction contemplated by the Construction Agreement. No extraordinary circumstances (including any use of the Land as a habitat for endangered species) exist that would materially and adversely affect such construction or uses of the Improved Property. The Improvements, when constructed as contemplated in the Construction Agreement, will be useable for their intended purpose without the need to obtain any additional easements, rights-of-way or concessions from any third party or parties.
     (B) Environmental Representations. Except as otherwise disclosed in the Environmental Report, to the knowledge of NAI: (i) no Hazardous Substances Activity has occurred prior to the Effective Date; (ii) no owner or operator of the Improved Property has reported or been required to report any release of any Hazardous Substances on or from the Leased Property pursuant to any Environmental Law; and (iii) no owner or operator of the Leased 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 Leased Property or regarding a suspected or known violation of Environmental Laws concerning the Leased Property. Further, NAI represents, to its knowledge, that the Environmental Report taken as a whole is not misleading or inaccurate in any material respect.
     (C) Current Status of Title to the Land. NAI holds good and indefeasible title to the Land, free and clear of all liens and encumbrances, other than the Permitted Encumbrances and any Liens Removable by BNPPLC.
     (D) Intentionally Deleted.
     (E) Title to Improvements. The leasehold estate created in favor of BNPPLC by this Ground Lease will extend to and include the rights to use and enjoy any and all Improvements of whatever nature at any time and from time to time located on the Land. Thus, throughout the term of this Ground Lease, BNPPLC and its sublessees, assignees, licensees and concessionaires will be entitled to use and enjoy such Improvements — to the exclusion of NAI as the lessor hereunder, but subject to NAI’s rights under the Operative Documents (including the Lease) so long as they remain in effect — as if the lessee hereunder was the owner of the Improvements. Further, although any Improvements which remain on the Land when this Ground Lease expires or is terminated will revert to NAI, it is also understood and agreed that the lessee hereunder may
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at any time and from time to time — after NAI ceases to have possession of the Leased Property pursuant to the Construction Agreement or 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 NAI and without any obligation to NAI or its Affiliates to provide compensation or to construct other Improvements on or about the Land. Any Improvements removed as provided in the preceding sentence will be considered severed from the Land and thereupon become personal property of the lessee hereunder.
     (F) Defense of Adverse Title Claims. If any encumbrance or title defect whatsoever affecting the Improved Property, other than Permitted Encumbrances or Liens Removable by BNPPLC, is claimed or discovered (including Liens against any part of or interest in the Improved Property which are not Fully Subordinated or Removable) or if any legal proceedings are instituted with respect to any such claimed or discovered encumbrance or title defect, NAI must give prompt notice thereof to BNPPLC and at NAI’s own cost and expense will promptly remove any such encumbrance and cure any such defect and will take all necessary and proper steps for the defense of any such legal proceedings, including the employment of counsel, the prosecution or defense of litigation and the release or discharge of all adverse claims. If NAI fails to promptly remove any encumbrance or cure any title defect as required by the preceding sentence, BNPPLC (whether or not named as a party to legal proceedings with respect thereto) may take such additional steps as in its judgment may be necessary or proper to remove such encumbrance or cure such defect or for the defense of any such attack or legal proceedings or the protection of BNPPLC’s leasehold or other interest in the Improved Property, including the employment of counsel, the prosecution or defense of litigation, the compromise or discharge of any adverse claims made with respect to the Improved Property, the removal of prior liens or security interests, and all expenses (including Attorneys’ Fees) so incurred of every kind and character will be a demand obligation owing by NAI.
     For purposes of this subparagraph 11(B), NAI will be deemed to be acting promptly to remove any encumbrance or to cure any title defect, other than a Lien which NAI or any of its Affiliates has granted or authorized, so long as NAI is in good faith by appropriate proceedings contesting the validity and applicability of the encumbrance or defect, and pending such contest NAI will not be deemed in default under this subparagraph because of the encumbrance or defect, provided that NAI must satisfy the following conditions and requirements:
     (1) NAI must diligently prosecute the contest to completion in a manner reasonably satisfactory to BNPPLC.
     (2) NAI must immediately remove the encumbrance or cure the defect upon a final determination by a court of competent jurisdiction that it is valid and applicable to the Improved Property.
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     (3) NAI must in any event conclude the contest and remove the encumbrance or cure the defect and pay any claims asserted against BNPPLC or the Improved Property because of such encumbrance or defect, all prior to (i) the date any criminal charges may be brought against BNPPLC or any of its directors, officers or employees because of such encumbrance or defect or (ii) the date any action is taken or threatened against BNPPLC or any property owned by BNPPLC (including BNPPLC’s leasehold estate under this Ground Lease) by any governmental authority or any other Person who has or claims rights superior to BNPPLC because of the encumbrance or defect. Also, with respect to a contest of any encumbrance or defect discovered or claimed before the Designated Sale Date, NAI must conclude the contest and remove the encumbrance or cure the defect and pay any claims asserted against BNPPLC or the Improved Property because of such encumbrance or defect, all prior to the Designated Sale Date, unless on the Designated Sale Date NAI or an Affiliate of NAI or any Applicable Purchaser purchases the Improved Property pursuant to the Purchase Agreement for a net price to BNPPLC (when taken together with any additional payments made by NAI pursuant to Paragraph 1(a)(ii) of the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Lease Balance.
     (G) Prohibition Against Consensual Liens on the Leased Property. NAI will not, without the prior consent of BNPPLC, 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 Land or Improvements or any part thereof (other than Permitted Encumbrances and Liens Removable by BNPPLC). It is understood and agreed, however, that any Liens which are Fully Subordinated or Removable will constitute Permitted Encumbrances and thus will not be prohibited by this provision.
     (H) Compliance With Permitted Encumbrances. NAI must comply with and cause to be performed all of the covenants, agreements and obligations imposed upon NAI or the owner of the Leased Property by the Permitted Encumbrances.
     (I) Compliance With Laws. Without limiting the foregoing, the use of the Improved Property permitted by the Lease complies, or will comply after readily available permits are obtained, in all material respects with all Applicable Laws.
     (J) Modification of Permitted Encumbrances. NAI will not enter create any new Permitted Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted Encumbrance that would create or expand or purport to create or expand obligations or restrictions which would encumber the Leased Property or any Improvements constructed thereon without the prior consent of BNPPLC; provided, this provision will not limit any right of the NAI Parties to modify any Lien that is Fully Subordinated or Removable and will remain Fully Subordinated or Removable after the modification. Whether BNPPLC must give any such
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consent requested by NAI prior to the Designated Sale Date will be governed by subparagraph 4(C) of the Closing Certificate.
     (K) Performance and Preservation of the Permitted Encumbrances for the Benefit of BNPPLC. Not only prior to the expiration or termination of other Operative Documents, but thereafter throughout the term of this Ground Lease, NAI must comply with and perform the obligations imposed by the Permitted Encumbrances upon NAI or upon any owner of the Land and do whatever is required to preserve the rights and benefits conferred or intended to be conferred by the Permitted Encumbrances, as necessary to prevent any claim against or forfeiture of any of the Improved Property and to facilitate the construction and use of any Improvements on the Land after the Turnover Date by BNPPLC and its successors, assigns and subtenants under this Ground Lease. Further, NAI hereby agrees for itself and its Affiliates, as the owner of the Land and any other land now owned or hereafter acquired by NAI or its Affiliates, which is encumbered or benefitted by the Permitted Encumbrances, to assume liability for and to indemnify BNPPLC and other Interested Parties and to defend and hold them harmless from and against all Losses (including Losses caused by any decline in the value of the Leased Property or of the Improvements) that they would not have incurred or suffered but for:
     (1) any breach by NAI of its obligations under the preceding sentence,
     (2) any termination of any benefit to the owner, users or occupants of the Land or Improvements conferred by the Permitted Encumbrances if NAI agreed to the termination or the termination resulted from a breach of any Permitted Encumbrance by NAI or its Affiliates, or
     (3) any restrictions imposed by or asserted under any Permitted Encumbrance upon any transfer after (but only after) the Turnover Date by BNPPLC of any interests it may then have in the Leased Property or in any Improvements.
NAI’s obligations under this subparagraph 11(K) will be binding upon any successor or assign of NAI or its Affiliates with respect to the Land and other properties encumbered or benefitted by the Permitted Encumbrances, and such obligations will survive any sale of NAI’s interest in the Leased Property to BNPPLC because of BNPPLC’s exercise of the Contingent Purchase Option.
     (L) Cooperation by NAI and its Affiliates.
     (1) After the Turnover Date, if neither NAI nor an Applicable Purchaser has purchased BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement, and if a use of the Improved Property by BNPPLC or any new Improvements or any removal or modification of Improvements proposed by BNPPLC would violate any Permitted Encumbrance or Applicable Law unless NAI or any of its Affiliates, as an
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owner of adjacent land or otherwise, gave its consent or approval thereto or agreed to join in a modification of a Permitted Encumbrance, then NAI must give and cause its Affiliates to give such consent or approval or join in such modification.
     (2) After the Turnover Date, if neither NAI nor an Applicable Purchaser has purchased BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement, and if any Permitted Encumbrance or Applicable Law requires the consent or approval of NAI or any of its Affiliates or of the city or county in which the Improved Property is located or of any other Person to an assignment of any interest in the Improved Property by BNPPLC or by any of 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 BNPPLC to assist BNPPLC to obtain such consent or approval from the city, county or other Person.
     (3) NAI’s obligations under this subparagraph 11(L) will be binding upon any successor or assign of NAI or its Affiliates with respect to the Land and other properties encumbered or benefitted by the Permitted Encumbrances, and such obligations will survive (a) any sale of the Improved Property by BNPPLC, other than to NAI or an Applicable Purchaser under the Purchase Agreement, for the benefit of BNPPLC’s assignees, and (b) any sale of NAI’s interest in the Leased Property to BNPPLC because of BNPPLC’s exercise of the Contingent Purchase Option.
     (M) Intentionally Deleted.
     (N) Omissions. None of NAI’s representations or warranties contained in this Ground Lease or in any other document, certificate or written statement furnished to BNPPLC 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.
     (O) Insurance and Casualty. In the event any of the Leased Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance is maintained or required hereunder, (i) BNPPLC may make proof of loss, (ii) each insurance company concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC for application as required by Paragraph 4, and (iii) BNPPLC’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.
     (P) Condemnation. All proceeds of condemnation awards or proceeds of sale in lieu of condemnation with respect to the Leased Property and all judgments, decrees and awards for injury or damage to the Leased Property will be paid to BNPPLC and applied as provided in
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Paragraph 4 above. BNPPLC is hereby authorized, in the name of NAI, to execute and deliver valid acquittances for, and to appeal from, any such judgment, decree or award concerning condemnation of any of the Leased Property. BNPPLC will 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.
     (Q) Further Assurances. NAI must, on request of BNPPLC, (i) promptly correct any defect, error or omission which may be discovered in the contents of this Ground Lease or in any other instrument executed in connection herewith or in the execution or acknowledgment thereof; (ii) 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 Ground Lease and to subject to this Ground Lease any property intended by the terms hereof to be covered hereby including specifically, but without limitation, any renewals, additions, substitutions, replacements or appurtenances to the Leased Property; (iii) execute, acknowledge, deliver, procure and record or file any document or instrument deemed advisable by BNPPLC to protect BNPPLC’s rights in and to the Leased Property against the rights or interests of third persons; and (iv) 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 BNPPLC to enable BNPPLC or any Leasehold Mortgagee to comply with the requirements or requests of any agency or authority having jurisdiction over them.
12 Ground Lease Defaults.
     (A) Definition of Ground Lease Default. Each of the following events will be deemed to be a “Ground Lease Default” by BNPPLC under this Ground Lease:
     (1) A failure by BNPPLC to pay when due any installment of Ground Lease Rent due hereunder if such failure continues for sixty days after BNPPLC receives notice thereof.
     (2) A failure by BNPPLC to comply with any term, provision or covenant of this Ground Lease (other than as described in the other clauses of this subparagraph 13(A)) if such failure is not cured prior to the earlier of (A) ninety days after notice thereof is sent to BNPPLC, or (B) the date any writ or order is issued for the levy or sale of any property owned by NAI or its Affiliates (including the leasehold created by this Ground Lease) because of such failure or any criminal action is instituted against BNPPLC 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 BNPPLC has promptly commenced to cure the same and thereafter prosecutes the curing thereof with reasonable
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diligence, the period within which such failure may be cured will be extended for such further period as is necessary to complete the cure.
     (B) Remedy. Upon the occurrence of a Ground Lease Default which is not cured within any applicable period expressly permitted by subparagraph 13(A), NAI’s sole and exclusive remedies will be to sue BNPPLC for the collection of any amount due under this Ground Lease, to sue for the specific enforcement of BNPPLC’s obligations hereunder, or to enjoin the continuation of the Ground Lease Default, provided, however, no limitation of NAI’s remedies contained herein will prevent NAI from exercising rights expressly provided in other Operative Documents or from recovering any reasonable costs NAI may incur to mitigate its damages by curing a Ground Lease Default that BNPPLC has failed to cure itself (so long as the cure by NAI is pursued in a lawful manner and the costs NAI seeks to recover do not exceed the actual damages to be mitigated). NAI may not terminate this Ground Lease or BNPPLC’s right to possession under this Ground Lease, except as expressly provided in the Operative Documents. Any judgment which NAI may obtain against BNPPLC for amounts due under this Ground Lease may be collected only through resort of a judgement lien against BNPPLC’s interest in the Leased Property and any Improvements. BNPPLC will have no personal liability for the payment amounts due under this or for the performance of any obligations of BNPPLC under this Ground Lease.
13 Quiet Enjoyment. NAI warrants that neither it nor any third party lawfully claiming any right or interest in the Leased Property will, during the Ground Lease Term, disturb BNPPLC’s peaceable and quiet enjoyment of the Leased Property; however, such enjoyment will be subject to the terms, provisions, covenants, agreements and conditions of this Ground Lease and those Permitted Encumbrances which are listed on Exhibit B.
14 Option to Purchase. Subject to the terms and conditions set forth in Exhibit C, BNPPLC (and any assignee of BNPPLC’s entire interest in the Leased Property, but not any subtenant or assignee of a lesser interest) will have the option, and NAI hereby grants to BNPPLC such option, to purchase NAI’s interest in the Leased Property.
15 Miscellaneous.
     (A) No Merger. There will be no merger of this Ground Lease or of the leasehold estate hereby created with the fee or any other estate in the Leased Property or any part thereof by reason of the fact that the same person may acquire or hold, directly or indirectly, this Ground Lease or the leasehold estate hereby created or any interest in this Ground Lease or in such leasehold estate as well as the fee or any other estate in the Leased Property or any interest in such fee or other estate, unless all parties with an interest in the Leased Property that would be adversely affected by any such merger specifically agree in writing that such a merger has occurred.
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     (B) Recording; Memorandum of Lease. Either party may record this Ground Lease in the real property records of Santa Clara County, California. If NAI and BNPPLC decide not to record this Ground Lease, they will execute a memorandum of this Ground Lease in recordable form which will be filed in the real property records of Santa Clara County, California.
16 Certain Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy BNPPLC has with respect to the Improved Property, and each and every right and remedy of BNPPLC will be cumulative and in addition to any other right or remedy given to it under this Ground Lease or now or hereafter existing in its favor at law or in equity. In addition to other remedies available under this Ground Lease, either party will be entitled, to the extent permitted by applicable law, to a decree compelling performance of any of the other party’s agreements hereunder.
17 Attorney’s Fees and Legal Expenses. If BNPPLC commences any legal action or other proceeding because of any breach of this Ground Lease by NAI, BNPPLC may recover all Attorneys’ Fees incurred by it in connection therewith from NAI, whether or not such controversy, claim or dispute is prosecuted to a final judgment. Any Attorneys’ Fees incurred by BNPPLC in enforcing a judgment in its favor under this Ground Lease will be recoverable separately from such judgment, and the obligation for such Attorneys’ Fees is intended to be severable from other provisions of this Ground Lease and not to be merged into any such judgment.
18 Successors and Assigns. The terms, provisions, covenants and conditions of this Ground Lease will be binding upon NAI and BNPPLC and their respective permitted successors and assigns and will inure to the benefit of NAI and BNPPLC and all permitted transferees, mortgagees, successors and assignees of NAI and BNPPLC with respect to the Leased Property; except that (A) BNPPLC will not assign this Ground Lease or any rights hereunder except pursuant to a Permitted Transfer, and (C) NAI will not assign this Ground Lease or any rights hereunder prior to the Turnover Date without the prior written consent of BNPPLC.
19 Amendment and Restatement of Prior ground Lease. This Lease amends, restates and replaces entirely the Ground Lease dated as of December 14, 2006, between NAI (as lessor) and BNPPLC (as lessee) (as previously amended, the “Prior Ground Lease”). Without limiting the rights and obligations of the parties under this Ground Lease, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Ground Lease are now made subject to the terms and conditions of this Ground Lease; and all rights and interests of BNPPLC in and to the Land or other Property under the Prior Ground Lease are renewed and extended (rather than terminated) by this Ground Lease.
[The signature pages follow.]
Amended and Restated Ground Lease (Building 8) – Page 17

 

 

     IN WITNESS WHEREOF, this Amended and Restated Ground Lease (Building 8) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox   
    Lloyd G. Cox, Managing Director   
       
 
             
STATE OF TEXAS     )      
      )     SS
COUNTY OF DALLAS     )      
On November 27, 2007, before me Kathryn Hackett, a Notary Public in and for the County and State aforesaid, personally appeared Lloyd G. Cox, Managing Director of BNP Paribas Leasing Corporation, who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
WITNESS, my hand and official seal.
     
/s/ Kathryn Hackett
 
   NOTARY PUBLIC
STATE OF TEXAS
KATHRYN HACKETT
MY COMMISSION EXPIRES
June 21, 2011
Amended and Restated Ground Lease (Building 8) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Ground Lease (Building 8) dated as of November 29, 2007.]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi   
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
             
STATE OF NORTH CAROLINA
     )      
 
     )     SS
COUNTY OF WAKE
     )      
On November 27th, 2007, before me Donna M. Marcotte, a Notary Public in and for the County and State aforesaid, personally appeared Ingemar Lanevi, Vice President and Corporate Treasurer of Network Appliance, Inc., who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
WITNESS, my hand and official seal.
         
/s/ Donna M. Marcotte    
Amended and Restated Ground Lease (Building 8) – Signature Page

 

 

Exhibit A
Legal Description
Proposed Parcel 8, and (except to the extent within a different platted Parcel as currently shown in the Map Records of the County of Santa Clara, California) proposed Parcel 12, and the Additional Leased Premises as defined below, (collectively, the “Building 8 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The southern boundary of the Additional Leased Premises is a line that runs North 75 degrees, 07 minutes, 58 seconds equidistant from the southern boundary of Parcel 8 and the northern boundary of Parcel 7, both as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as the western boundary of Parcel 8 and Parcel 7, as shown on the Tentative Map. The northern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 8 Ground Lease Premises (the “Appurtenant Easements”) under, over and across adjacent parcels (“Adjacent Parcels”) which are owned by NAI for the purposes described below and on and subject to the express terms and conditions set forth below:
The Appurtenant Easements will be for the following purposes:
     1. The use, maintenance, repair, replacement expansion of utility lines under, over and across the Adjacent Parcels and related equipment (including lines or equipment for water, sanitary sewer, electricity, phone and gas) (collectively, the “Utility Lines”) to serve improvements constructed from time to time on the Building 8 Ground Lease Premises.
     2. Access and parking over and in paved driveways and parking lots or garages now or hereafter located on the Adjacent Parcels (“Driveways and Parking Areas”).
     3. The encroachment, support, maintenance, repair and replacement of any buildings constructed on Parcel 8 as shown on the Tentative Map during the period that BNPPLC owns or leases Parcel 8.

 

 

     The Appurtenant Easements will be subject to the following terms and conditions:
     A. The Appurtenant Easements for Utility Lines will be limited to:
     (1) those Utility Lines, if any, existing on the first date upon which any instrument is recorded which gives notice of the Appurtenant Easements;
     (2) those Utility Lines, if any, constructed by or at the request of NAI itself;
     (3) any other Utility Lines reasonably necessary for the use of improvements constructed by NAI (whether constructed for BNPPLC or otherwise) on the Building 8 Ground Lease Premises (and in the case of Utility Lines permitted only because of this clause (3), such Utility Lines must be installed in a location that does not run through or under any then existing building or structured garage on the Adjacent Parcels); and
     (4) replacements (including replacements that may increase utility capacity) for any Utility Lines permitted under the preceding clauses (1) through (3).
     B. Any Utility Line on any Adjacent Parcel may be relocated to another location on the same Adjacent Parcel by the owner of such parcel and at its sole cost and expense, so long as the relocation is done in a good and workmanlike manner that does not and will not impose any significant or unexpected interruption of utility services or additional costs upon the owner or occupants of the Building 8 Ground Lease Premises.
     C. The use of Driveways and Parking Areas by the owner of the Building 8 Ground Lease Premises and its tenants and other invitees will not exceed that reasonably required to provide buildings constructed on the Building 8 Ground Lease Premises with parking that both (i) meets local zoning and other legal requirements, and (ii) when taken together with any permanent, concrete parking spaces from time to time constructed on the Building 8 Ground Lease Premises, provides at least the minimum number of parking spaces for buildings on the Building 8 Ground Lease Premises necessary to cause the parking ratio for buildings on the Building 8 Ground Lease Premises to be not less than 1 parking space per 333 square feet of interior building floor area (the “Minimum Parking Requirements”). However, for purposes of computing the Minimum Parking Requirements, parking spaces from time to time constructed on the Building 8 Ground Lease Premises which are made available for parking by owners or occupants of any Adjacent Parcel pursuant to any easement which encumbers the Building 8 Ground Lease Premises (or any leasehold estate therein) will be treated as if they did not exist. In other words, any such parking spaces available to owners or occupants of Adjacent Parcels will
Exhibit A to Amended and Restated Ground Lease (Building 8) – Page 2

 

 

not be included in the numbers of parking spaces considered as available to owners or occupants of the Building 8 Ground Lease Premises to satisfy the Minimum Parking Requirements.
     D. NAI and its successors and assigns as the owners of Adjacent Parcels will always maintain a number of parking spaces on the Adjacent Parcels which is no less than the sum of (1) the spaces required to meet Minimum Parking Requirements for buildings on the Building 8 Ground Lease Premises, and (2) the spaces required to satisfy zoning or other parking requirements for other buildings on or served by parking on the Adjacent Parcels.
     E. The Appurtenant Easement for parking on Adjacent Parcels will be subject to the following condition subsequent: If a sufficient number of permanent, concrete parking spaces in parking lots or structured garages are constructed on the Building 8 Ground Lease Premises to satisfy Minimum Parking Requirements (computed as described above) without the need for additional parking spaces on Adjacent Parcels, then the owners of Adjacent Parcels may terminate such parking easement by notice to the owner of the Building 8 Ground Lease Premises and by recording a copy of such notice in the real property deed records. (This provision will not, however, be construed to require the construction of such lots or garages on the Building 8 Ground Lease Premises.)
     F. Notwithstanding the foregoing, at any time when BNPPLC or any successor of BNPPLC owns or leases (i) all or any part of the land shown on the Tentative Map as Parcel 7 and adjacent parking lots, driveways and other areas within Common Lot A (collectively, the “Building 7 Ground Lease Premises”) or (ii) all or any part of the land shown on the Tentative Map as Parcel 9 and adjacent parking lots, driveways and other areas within Common Lot A (collectively, the “Building 9 Ground Lease Premises”), BNPPLC may, at its sole option and at any time or from time to time, cause all or any portion of the Building 7 Ground Lease Premises and/or the Building 9 Ground Lease Premises to be released from all or any of the Appurtenant Easements. Notwithstanding any such release, the Appurtenant Easements will continue as to Adjacent Parcels other than the released portions of the Building 7 Ground Lease Premises and/or the Building 9 Ground Lease Premises, as applicable. BNPPLC may exercise such option by written notice recorded in the real property records of Santa Clara County, California.
Exhibit A to Amended and Restated Ground Lease (Building 8) – Page 3

 

 

(MAP)
Exhibit A to Amended and Restated Ground Lease (Building 8) – Page 4

 

 

Exhibit B
Permitted Encumbrances
     The leasehold and other interests in the Land hereby conveyed by NAI are conveyed subject to the following matters to the extent the same are still valid and in force:
1. TAXES for the fiscal year 2006-2007, 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   : Slope Easement
 
  In favor of   : City of Sunnyvale
 
  Recorded   : October 9, 1964 in Book 6695, page 430, Official Records
 
  Affects   : Easterly 18 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
4. EASEMENT for the purposes stated herein and incidents thereto
         
 
  Purpose   : Public utilities easement
 
  In favor of   : City of Sunnyvale
 
  Recorded   : October 9, 1964 in Book 6695, page 450, Official Records
 
  Affects   : Easterly 7 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
5. Covenants, Conditions and Restrictions in the Declaration of Protective Covenants — Moffett Industrial Park No. 2) recorded December 23, 1971 in Book 9640, page 443, Official Records; which provide that a violation thereof shall not defeat or render invalid the lien of any Mortgage or Deed of Trust made in good faith and for value. Said Covenants, Conditions and Restrictions do not provide for reversion of title in the event of a breach thereof. Restrictions, if any, based upon race, color, religion, sex, handicap, familial status, or national origin are deleted, unless and only to the extent that said covenant (a) is exempt under Chapter 42, Section 3607, of the United States Code, or (b) related to handicap but does not discriminate against handicapped persons.
     ASSIGNMENT AND ASSUMPTION of the rights, powers, duties, obligations, and reservations of Moffett Park Associates, in favor of The Prudential Insurance Company of

 

 

America, recorded February 8, 1977 in Book C583, page 685, Official Records.
6. EASEMENT for the purposes stated herein and incidents thereto
         
 
  Purpose   : Public utilities
 
  Granted to   : City of Sunnyvale
 
  Recorded   : November 16, 1976 in Book C414, page 105, Official Records
 
  Affects   : Southerly 10 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
7. LIMITATIONS, covenants, restrictions, reservations, exceptions or terms, 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 USC 3604(c), contained in the document recorded February 5, 1980 in Book F122, page 460, Official Records.
Exhibit B to Amended and Restated Ground Lease (Building 8) – Page 2

 

 

Exhibit C
CONTINGENT PURCHASE OPTION
     Subject to the terms of this Exhibit, BNPPLC shall have an option (the “Option”) to buy NAI’ fee interest in the Leased Property at any time during the term of this Ground Lease after (but only after) any breach by NAI under the Purchase Agreement, provided NAI does not cure the breach within any time permitted for cure by the express provisions of the Purchase Agreement, for a purchase price (the “Option Price”) to NAI equal to fair market value.
     For the purposes of this Exhibit, “fair market value” 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 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 of BNPPLC’s exercise of the Option 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 the exercise of the Option.
     If BNPPLC exercises the Option, which BNPPLC may do by notifying NAI that BNPPLC has elected to buy NAI’ interest in the Leased Property as provided herein, then:
     (1) To the extent, if any, required as a condition imposed by law to the conveyance of the fee interest in the Leased Property to BNPPLC, NAI shall promptly at its expense do whatever is necessary and possible (including, without limitation, cooperating with BNPPLC in seeking any zoning variances requested by BNPPLC) to obtain approvals of a new recorded plat or lot line adjustments. Should it be determined that it is not possible to satisfy any such condition imposed by law, neither NAI nor BNPPLC shall be required to consummate any purchase pursuant to this Exhibit, and this Ground Lease will continue as if BNPPLC had not exercised the Option.
     (2) Upon BNPPLC’s tender of the Option Price to NAI, NAI will convey good and indefeasible title to the fee estate in the Land and its interest in all other Leased Property to BNPPLC by general warranty deed and assignment subject only to the Permitted Encumbrances, to any claims of BNPPLC or Liens Removable by BNPPLC, and (to the extent still in force) to the Lease and the Purchase Agreement.
     (3) BNPPLC’s obligation to close the purchase shall be subject to the following terms and conditions, all of which are for the benefit of BNPPLC: (a) BNPPLC shall have been furnished with evidence satisfactory to BNPPLC that NAI can convey title as required by the preceding subparagraph; (b) nothing shall have occurred or been discovered after BNPPLC exercised the Option that could significantly and adversely affect title to the Leased Property or BNPPLC’s use thereof, (c) all of the representations of NAI 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 NAI or any of NAI’ representatives, would continue to be true on the date of the closing if all relevant facts and circumstances were known to NAI and such representatives, and (d) BNPPLC shall have been tendered the deed and other documents which are described in this Exhibit as documents to be delivered to BNPPLC at the closing of BNPPLC’s purchase.
     (4) 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 Exhibit and after any approvals described in subparagraph (1) above are obtained, and prior to closing BNPPLC’s occupancy of the Leased Property shall continue to be subject to the terms and conditions of this Ground Lease, including the terms setting forth BNPPLC’s obligation to pay rent. Closing shall take place at the offices of any title insurance company reasonably selected by BNPPLC to insure title under the title insurance policy described below.
     (5) Any transfer taxes or notices or registrations required by law in connection with the sale contemplated by this Exhibit will be the responsibility of NAI.
     (6) NAI will deliver a certificate of nonforeign status to BNPPLC at closing as needed to comply with the provisions of the U.S. Foreign Investors Real Property Tax Act (FIRPTA) or any comparable federal, state or local law in effect at the time.
     (7) NAI will also pay for and deliver to BNPPLC 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 BNPPLC (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 BNPPLC and to Permitted Encumbrances.
     (8) NAI shall also deliver at the closing all other documents or things reasonably required to be delivered to BNPPLC or by the title insurance company to evidence NAI’ ability to transfer the Leased Property to BNPPLC.
     If NAI and BNPPLC do not otherwise agree upon the amount of the Option Price within twenty days after BNPPLC exercises the Option, the Option Price shall be determined in accordance with the following procedure:
     (a) NAI and BNPPLC 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
Exhibit C to Amended and Restated Ground Lease (Building 8) – Page 2

 

 

described in this Exhibit has been invoked. The agreement of the two appraisers as to the Option Price will be binding upon NAI and BNPPLC. 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 third appraiser as the closest to the prevailing monthly fair market value will be binding upon NAI and BNPPLC. Notification in writing of the Option Price shall be made to NAI and BNPPLC within fifteen days following the selection of the third appraiser.
     (b) If appraisers must be selected under the procedure set out above and either BNPPLC or NAI 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 Exhibit 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.
     (c) 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 NAI and BNPPLC may require the first two appraisers to immediately submit its top choice for the third appraiser to the then highest ranking officer of the Dallas, Texas Bar Association who will agree to help and who has no attorney/client or other significant relationship to either NAI or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within ten days after such choices are submitted to him.
     (d) Either NAI or BNPPLC 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
Exhibit C to Amended and Restated Ground Lease (Building 8) – Page 3

 

 

by the other appraiser (i.e., the notifying party’s appraiser) will be binding upon NAI and BNPPLC.
     (e) NAI and BNPPLC shall each bear the expense of the appraiser appointed by it, and the expense of the third appraiser and of any officer of the Dallas, Texas Bar Association who participates in the appraisal process described above will be shared equally by NAI and BNPPLC.
Exhibit C to Amended and Restated Ground Lease (Building 8) – Page 4

 

 

Exhibit D
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 Exhibit, “Rental Determination Date” means the (1) the Effective Date, (2) the earliest anniversary of the Effective Date to follow the Turnover Date by more than thirty days, and (3) after the second Rental Determination Date described in clause (2), each fifth anniversary of the preceding Rental Determination Date.
     As of the Effective Date (i.e., the first Rental Determination Date), the parties have agreed that Fair Rental Value is the dollar amount set forth in Paragraph 3 of this Ground Lease.
     If NAI and BNPPLC have not agreed upon Fair Rental Value as of any subsequent Rental Determination Date within one hundred eighty days after the such date, then Fair Rental Value will be determined as follows:
     (a) NAI and BNPPLC 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 Exhibit has been invoked. The agreement of the two appraisers as to Fair Rental Value will be binding upon NAI and BNPPLC. 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 NAI and BNPPLC. Notification in writing of this estimate shall be made to NAI and BNPPLC within fifteen days following the selection of the third appraiser.
     (b) If appraisers must be selected under the procedure set out above and either BNPPLC or NAI 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 Exhibit 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.
     (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 NAI and BNPPLC may require the first two appraisers to immediately submit its top choice for the third appraiser to the then highest ranking officer of the Dallas, Texas Bar Association who will agree to help and who has no attorney/client or other significant relationship to either NAI or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within twenty days after such choices are submitted to him.
     (d) Either NAI or BNPPLC 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 NAI and BNPPLC.
     (e) NAI and BNPPLC shall each bear the expense of the appraiser appointed by it, and the expense of the third appraiser and of any officer of the Dallas, Texas Bar Association who participates in the appraisal process described above will be shared equally by NAI and BNPPLC.
Exhibit D to Amended and Restated Ground Lease (Building 8) – Page 2

 

exv10w45
Exhibit 10.45
FIRST MODIFICATION AGREEMENT
(BUILDING 8)
     This FIRST MODIFICATION AGREEMENT (BUILDING 8) (this “Amendment”), dated as of April 9, 2008 (the “Amendment Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETAPP, INC. (“NAI”), a Delaware corporation which is a successor by merger to Network Appliance, Inc.
RECITALS
     BNPPLC and Network Appliance, Inc. executed an Amended and Restated Common Definitions and Provisions Agreement (Building 8) dated as of November 29, 2007 (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Amendment for all purposes. As used in this Amendment, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Amendment are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     BNPPLC and Network Appliance, Inc. also executed other Operative Documents, including an Amended and Restated Closing Certificate and Agreement (Building 8) dated as of November 29, 2007 (the “Closing Certificate”), pursuant to which (among other things) NAI is currently bound by certain financial covenants set forth therein.
     Bank of America, N.A.; Goldman Sachs Credit Partners L.P.; JPMorgan Chase Bank, National Association; Keybank National Association; Morgan Stanley Bank; Sumitomo Mitsui Banking Corporation; and Wells Fargo Bank, N.A., as “Participants” (herein so called), and BNPPLC have all previously become parties to a Participation Agreement (Building 8) dated as of November 29, 2007 (the “Participation Agreement”), in which the Participants have agreed with BNPPLC to participate in the risks and rewards to BNPPLC of the Operative Documents.
     BNPPLC and NAI now desire to amend the Common Definitions and Provisions Agreement and the Closing Certificate as more particularly provided below in this Amendment.
AGREEMENTS
     In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1 Amendments to the Operative Documents.
     (A) Amendments to the Closing Certificate. Effective as of the Amendment Date, but subject to the satisfaction of the condition precedent set forth in Section 9 below, the Closing Certificate is hereby amended as follows:

 

 

     (1) The definition of “Consolidated EBITDA” in Subparagraph 3(A) of the Closing Certificate is hereby amended and restated in its entirety as follows:
“Consolidated EBITDA” means, with reference to any period, the sum of the following: (a) Consolidated Net Income for such period, plus (b) without duplication and to the extent deducted from revenues in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii) expense for taxes paid or accrued during such period, (iii) all amounts attributable to depreciation, (iv) amortization during such period, (v) extraordinary non-cash charges incurred other than in the ordinary course of business during such period, (vi) nonrecurring extraordinary non-cash restructuring charges, (vii) share-based non-cash compensation expense, and (viii) any non-cash charge with respect to the amortization of the value or cost of any derivative instrument that is excluded from the definition of “Swap Agreement” below by reason of clause (b) or clause (c) of the proviso at the end of that definition, minus without duplication and to the extent included in determining such Consolidated Net Income, (c) interest income, (d) extraordinary non-cash gains realized other than in the ordinary course of business and (e) any cash payments made during such period in respect of the item described in clause (vii) above subsequent to the fiscal quarter in which the relevant share-based non-cash compensation expense was incurred, all calculated for NAI and its Subsidiaries in accordance with GAAP on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period NAI or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period NAI or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by NAI and its Subsidiaries in excess of $50,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to NAI or any of its Subsidiaries in excess of $50,000,000.
First Modification Agreement (Building 8) – Page 2

 

 

     (2) The definition of “Swap Agreement” in Subparagraph 3(A) of the Closing Certificate is hereby amended and restated in its entirety as follows:
“Swap Agreement” means any agreement entered into for the primary purpose of hedging or mitigating risk or speculation with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that the following shall be excluded from this definition: (a) any of the foregoing involving, or settled by reference to, Equity Interests of NAI and entered into or issued in connection with compensatory arrangements for directors, officers, employees or consultants of NAI or any of the Subsidiaries, (b) any of the foregoing that is, or at the election of the issuer may be, settled (after payment of any premium for any option or any prepayment under any forward contract) through the issuance of Equity Interests of NAI, and (c) any of the foregoing to the extent it constitutes a derivative embedded in a convertible security issued by NAI that involves, or is settled by reference to, Equity Interests of NAI (including, for avoidance of doubt, “net share settled” convertible securities).
     (B) Amendment to the Common Definitions and Provisions Agreement. Effective as of the Amendment Date, but subject to the satisfaction of the condition precedent set forth in Section 9 below, clause (F) of the definition of “Event of Default” in Article 1 of the Common Definitions and Provisions Agreement is hereby amended and restated in its entirety as follows:
(F) NAI or any Subsidiary of NAI fails to pay any principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event occurs or condition exists under any agreement or instrument relating to any such Indebtedness and continues after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate the maturity of such Indebtedness (other than by conversion of any convertible debt instrument pursuant to its terms); or any such Indebtedness is declared by the creditor to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness is required to be made, in each case prior to the stated maturity thereof (other than, in each case, by conversion of any convertible debt instrument pursuant to its terms).
First Modification Agreement (Building 8) – Page 3

 

 

2 Confirmation of Operative Documents by NAI. NAI confirms that it is, as successor by merger to Network Appliance, Inc., a party to and bound by the Operative Documents as was Network Appliance, Inc. Further, NAI ratifies and confirms all terms and conditions of the Operative Documents, as hereby amended, including the representations made by Network Appliance, Inc. concerning the Property in the Ground Lease. NAI also confirms that (a) all such representations which concern the Property would continue to be accurate and complete in all material respects if made as of the Amendment Date, and (b) NAI is not currently aware of any Default or Event of Default which has occurred and is continuing or of any defense, counterclaim, set-off, right of recoupment, abatement or other claim which NAI may now have against BNPPLC under the Operative Documents.
3 Other Representations and Covenants of NAI. NAI also represents and covenants to BNPPLC as follows:
     (A) Concerning NAI and this Amendment.
     (1) Authority. The Constituent Documents of NAI permit the execution, delivery and performance of this Amendment by NAI, and all actions and approvals necessary to bind NAI under this Amendment have been taken and obtained. Without limiting the foregoing, this Amendment will be binding upon NAI when signed on behalf of NAI by Ingemar Lanevi, Vice President and Corporate Treasurer of NAI.
     (2) Truth of Information. Any reports, financial statements or other data furnished by NAI to BNPPLC in connection with the agreements set forth in this Amendment are true and correct in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading. No material adverse change has occurred since the dates of such reports, statements and other data in the financial condition of NAI.
     (3) No Default or Violation. The execution and performance by NAI of this Amendment do not and will not contravene or result in a breach of or default under any other agreement to which NAI is a party or by which NAI is bound or which affects any assets of NAI. Such execution and performance by NAI do not contravene any law, order, decree, rule or regulation to which NAI is subject. Further, such execution 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, any property of NAI pursuant to the provisions of any such other agreement.
     (4) Enforceability. This Amendment constitutes the legal, valid and binding obligations of NAI enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
First Modification Agreement (Building 8) – Page 4

 

 

     (B) Further Assurances. NAI will, upon the reasonable request of BNPPLC, (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 Amendment and to subject to this Amendment any property intended to be covered hereby, 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 BNPPLC 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 BNPPLC to enable BNPPLC to comply with the requirements or requests of any agency or authority having jurisdiction over it.
     (C) Reimbursement of Costs. NAI will pay or reimburse BNPPLC, upon demand, for all reasonable out-of-pocket costs and expenses (including the reasonable fees, charges and disbursements of counsel) incurred by BNPPLC in connection with the preparation, negotiation, execution and delivery of this Amendment.
4 Reservation of Rights. The execution and delivery by BNPPLC of this Amendment will not be deemed to create a course of dealing or otherwise obligate BNPPLC to enter into amendments under the same, similar, or any other circumstances in the future. NAI is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon BNPPLC or Participants or any other Person. Except as expressly provided above, this Amendment will not limit, modify or otherwise affect any of NAI’s obligations under any of the Operative Documents, as heretofore amended.
5 No Implied Representations or Promises by BNPPLC. NAI acknowledges and agrees that neither BNPPLC nor its representatives or agents have made any representations or promises with respect to the subject matter of this Amendment except as expressly set forth herein.
6 Provisions Incorporated by Reference from the Common Definitions and Provisions Agreement. All terms and conditions set forth in Article II of the Common Definitions and Provisions Agreement will apply to this Amendment as if this Amendment was one of the Operative Documents referenced therein.
7 References to Operative Documents. From and after the Amendment Date, all references to any of the Operative Documents in the Operative Documents or in other documents related to the transactions contemplated therein are intended to mean the Operative Documents, as modified by this Amendment, unless the context shall otherwise require.
First Modification Agreement (Building 8) – Page 5

 

 

8 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 and successors and, to the extent assignment is permitted under the Operative Documents, their respective assigns.
9 Condition Precedent — Consents of Participants. The Participation Agreement requires that BNPPLC obtain approval of a Majority (as defined in the Participation Agreement) before it becomes bound by one or more amendments set forth in Section 1 above. The Participation Agreement defines “Majority” by reference to the Percentages (as defined therein) of the parties thereto. More specifically, the Participation Agreement defines “Majority” as parties to the Participation Agreement (i.e., Participants or BNPPLC and Participants), the aggregate Percentages of which equal or exceed sixty-seven percent (67%) of the Percentages of BNPPLC and of all the Participants then entitled to vote on certain matters specified in the Participation Agreement. For purposes of such voting, the Percentages of BNPPLC and the Participants under the Participation Agreement are currently as follows:
         
BNP PARIBAS LEASING CORPORATION:
     23.1124807397 %
BANK OF AMERICA, N.A.:
     4.6224961479 %
GOLDMAN SACHS CREDIT PARTNERS L.P.
     3.0816640986 %
JPMORGAN CHASE BANK
     9.2449922958 %
KEYBANK NATIONAL ASSOCIATION
     22.1879815100 %
MORGAN STANLEY BANK
     8.4745762712 %
SUMITOMO MITSUI BANKING CORPORATION
     6.1633281972 %
WELLS FARGO BANK, N.A.
     23.1124807396 %
In order to comply with the requirements of the Participation Agreement, BNPPLC and NAI agree that the amendments set forth in Section 1 above shall not become effective until Participants with aggregate Percentages of at least 43.888% (i.e., 67% less the Percentage of BNPPLC itself) have executed this Amendment in the spaces provided below to evidence their consents. However, so long as Participants with aggregate percentages of at least 43.888% do sign this Amendment to evidence their consents, then the amendments in Section 1 above will become effective even if other Participants fail or refuse to sign this Amendment or give their consents.
[The signature pages follow.]
First Modification Agreement (Building 8) – Page 6

 

 

     IN WITNESS WHEREOF, this First Modification Agreement (Building 8) is executed to be effective as of April 9, 2008.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
First Modification Agreement (Building 8) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 8) dated as of April 9, 2008]
         
  NETAPP, INC., a Delaware corporation, which is the
successor by merger to Network Appliance, Inc.
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
First Modification Agreement (Building 8) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 8) dated as of April 9, 2008]
Consent of Participant
The undersigned, BANK OF AMERICA, N.A., joins in the execution of this First Modification Agreement (Building 8) as a Participant solely to evidence its consent to this First Modification Agreement (Building 8).
         
  BANK OF AMERICA, N.A.
 		  
  By:   /s/ FRED L. THORNE   
    Name:   FRED L. THORNE   
    Title:   Managing Director   
 
First Modification Agreement (Building 8) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 8) dated as of April 9, 2008]
Consent of Participant
The undersigned, GOLDMAN SACHS CREDIT PARTNERS L.P., joins in the execution of this First Modification Agreement (Building 8) as a Participant solely to evidence its consent to this First Modification Agreement (Building 8).
         
  GOLDMAN SACHS CREDIT PARTNERS L.P.
 		  
  By:   /s/ Andrew Caditz   
    Name:   Andrew Caditz   
    Title:   Authorized Signatory   
 
First Modification Agreement (Building 8) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 8) dated as of April 9, 2008]
Consent of Participant
The undersigned, JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, joins in the execution of this First Modification Agreement (Building 8) as a Participant solely to evidence its consent to this First Modification Agreement (Building 8).
         
  JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
 		  
  By:   /s/ Anthony Galea    
    Name:   Anthony Galea   
    Title:   Vice President   
 
First Modification Agreement (Building 8) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 8) dated as of April 9, 2008]
Consent of Participant
The undersigned, KEYBANK NATIONAL ASSOCIATION, joins in the execution of this First Modification Agreement (Building 8) as a Participant solely to evidence its consent to this First Modification Agreement (Building 8).
         
  KEYBANK NATIONAL ASSOCIATION
 		  
  By:   /s/ Raed Y. Alfayoumi    
    Name:   Raed Y. Alfayoumi   
    Title:   Vice President   
 
First Modification Agreement (Building 8) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 8) dated as of April 9, 2008]
Consent of Participant
The undersigned, MORGAN STANLEY BANK, joins in the execution of this First Modification Agreement (Building 8) as a Participant solely to evidence its consent to this First Modification Agreement (Building 8).
         
  MORGAN STANLEY BANK
 		  
  By:   /s/ Elizabeth Hendricks    
    Name:   Elizabeth Hendricks   
    Title:   Authorized Signatory   
 
First Modification Agreement (Building 8) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 8) dated as of April 9, 2008]
Consent of Participant
The undersigned, SUMITOMO MITSUI BANKING CORPORATION, joins in the execution of this First Modification Agreement (Building 8) as a Participant solely to evidence its consent to this First Modification Agreement (Building 8).
         
  SUMITOMO MITSUI BANKING CORPORATION
 		  
  By:   /s/ Leo E. Pagarigan    
    Name:   Leo E. Pagarigan   
    Title:   General Manager   
 
First Modification Agreement (Building 8) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 8) dated as of April 9, 2008]
Consent of Participant
The undersigned, WELLS FARGO BANK, N.A., joins in the execution of this First Modification Agreement (Building 8) as a Participant solely to evidence its consent to this First Modification Agreement (Building 8).
         
  WELLS FARGO BANK, N.A.
 		  
  By:   /s/ Alicia Kachmarik    
    Name:   Alicia Kachmarik   
    Title:   Assistant Vice President   
 
First Modification Agreement (Building 8) – Signature Page

 

exv10w50
Exhibit 10.50
AMENDED AND RESTATED
CLOSING CERTIFICATE
AND AGREEMENT
(RTP DATA CENTER)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
         
    Page  
       
1 Representations, Covenants and Acknowledgments of NAI Concerning the Property
     2  
(A) Prior Inspections and Investigations Concerning the Property
     2  
(B) Title
     2  
(C) Compliance with Covenants and Laws
     2  
 
        
2 Representations and Covenants by NAI
     2  
(A) Concerning NAI and the Operative Documents
     2  
(1) Entity Status
     2  
(2) Authority
     3  
(3) Solvency
     3  
(4) Financial Reports
     3  
(5) Pending Legal Proceedings
     3  
(6) No Default or Violation
     4  
(7) Use of Proceeds
     4  
(8) Enforceability
     4  
(9) Pari Passu
     4  
(10) Conduct of Business and Maintenance of Existence
     4  
(11) Investment Company Act, etc
     4  
(12) Not a Foreign Person
     5  
(13) ERISA
     5  
(14) Compliance With Laws
     5  
(15) Payment of Taxes Generally
     5  
(16) Maintenance of Insurance Generally
     6  
(17) Franchises, Licenses, etc
     6  
(18) Patents, Trademarks, etc
     6  
(19) Labor
     6  
(20) Title to Properties Generally
     7  
(21) Books and Records
     7  
(B) Further Assurances
     7  
(C) Syndication
     7  
(D) Financial Statements; Required Notices; Certificates
     7  
(F) OFAC
     10  
 
        
3 Financial Covenants and Negative Covenants of NAI
     10  
(B) Negative Covenants
    19  
(1) Subsidiary Indebtedness
     20  
(2) Liens
     21  
(3) Fundamental Changes and Asset Sales
     23  
(4) Speculative Swap Agreements
     24  
(5) Transactions with Affiliates
     24  
(6) Restrictive Agreements
     24  

 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
       
(C) Financial Covenants
     25  
(1) Maximum Leverage Ratio
     25  
(2) Minimum Liquidity
     25  
 
        
4 Limited Representations and Covenants of BNPPLC
     25  
(A) Concerning Accounting Matters
     25  
(B) Other Limited Representations
     27  
(1) Entity Status
     27  
(2) Authority
     27  
(3) Solvency
     28  
(4) Pending Legal Proceedings
     28  
(5) No Default or Violation
     28  
(6) Enforceability
     28  
(7) Conduct of Business and Maintenance of Existence
     29  
(8) Not a Foreign Person
     29  
(C) Further Assurances
     29  
(D) Actions Permitted by NAI Without BNPPLC’s Consent
     32  
(E) Waiver of Landlord’s Liens
     33  
(F) Estoppel Letters
     34  
(G) No Implied Representations or Promises by BNPPLC
     34  
 
        
5 Usury Savings Provision
     34  
 
        
6 Obligations of NAI Under Other Operative Documents Not Limited by this Certificate
     35  
 
        
7 Obligations of NAI Hereunder Not Limited by Other Operative Documents
     35  
 
        
8 Waiver of Jury Trial
     35  
 
        
9 Amendment and Restatement of Prior Certificate
     36  

(ii) 

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
         
Exhibit A   Legal Description
     
Exhibit B   Quarterly Certificate
     
Exhibit C   Form of Disclosure Letter
     
Exhibit D   Certificate to be Provided by BNPPLC Re: Accounting

(iii) 

 

AMENDED AND RESTATED
CLOSING CERTIFICATE AND AGREEMENT
(RTP DATA CENTER)
     This AMENDED AND RESTATED CLOSING CERTIFICATE AND AGREEMENT (RTP DATA CENTER) (this “Certificate”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Certificate, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Certificate for all purposes. As used in this Certificate, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Certificate are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     Also contemporaneously with this Certificate, BNPPLC is executing and accepting an Amended and Restated Ground Lease (RTP Data Center) from NAI (the “Ground Lease”), pursuant to which BNPPLC is acquiring a leasehold estate in the Land described in Exhibit A and any existing Improvements on the Land.
     Also contemporaneously with this Certificate, BNPPLC and NAI are executing an Amended and Restated Construction Agreement (RTP Data Center) (the“Construction Agreement”) and an Amended and Restated Lease Agreement (RTP Data Center) (the “Lease”). Pursuant to the Construction Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements. When the term of the Lease commences, the Lease will cover all Improvements on the Land described in Exhibit A.
     Also contemporaneously with this Certificate, BNPPLC and NAI are executing an Amended and Restated Purchase Agreement (RTP Data Center) (the “Purchase Agreement”), pursuant to which NAI may purchase or arrange for the purchase of the Property and BNPPLC may collect a Supplemental Payment from NAI sufficient to cover all or a substantial portion of the Lease Balance not otherwise repaid to BNPPLC from the proceeds of any sale of the Property.
     As a condition to BNPPLC’s execution of the other Operative Documents, BNPPLC requires the representations and covenants of NAI set out below.
AGREEMENTS

 

 

     In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1 Representations, Covenants and Acknowledgments of NAI Concerning the Property. To induce BNPPLC to enter into the Ground Lease, and to enter into this Certificate and the other Operative Documents, NAI represents, covenants and acknowledges as follows:
     (A) Prior Inspections and Investigations Concerning the Property. NAI has thoroughly inspected, investigated and evaluated the condition of and title to the Property and Applicable Laws which will govern the construction, use and operation of the Property required or permitted by the Operative Documents, as necessary to make the representations concerning the Property set forth in this Certificate and other Operative Documents.
     (B) Title. Good and indefeasible title to the Land and any existing Improvements thereon is currently vested in NAI, subject only to the rights of BNPPLC under the Ground Lease, the Permitted Encumbrances and any Liens Removable by BNPPLC. Neither the construction contemplated by the Construction Agreement, nor the lease of property contemplated by the Ground Lease or by the Lease, nor any assignment or transfer contemplated by the Purchase Agreement, will violate any Permitted Encumbrance or invoke any purchase option, right of first refusal or other preferential purchase right contained in any Permitted Encumbrance. So long as NAI has any rights under the Construction Agreement, the Lease or the Purchase Agreement, NAI will not permit any Person to acquire rights of the landlord under the Ground Lease other than NAI itself or a corporation that controls, is controlled by or under common control with NAI.
     (C) Compliance with Covenants and Laws. The construction contemplated by the Construction Agreement and use of the Property permitted by the Lease comply, or will comply after NAI obtains readily available permits (either as the construction manager under the Construction Agreement or as the tenant under the Lease), in all material respects with all Applicable Laws. NAI has obtained or can and will promptly obtain all utility, building, health and operating permits required by any governmental authority or municipality having jurisdiction over the Property for the construction contemplated in the Construction Agreement and the use of the Property permitted by the Lease.
2 Representations and Covenants by NAI. NAI also represents and covenants to BNPPLC as follows:
     (A) Concerning NAI and the Operative Documents.
     (1) Entity Status. NAI is a corporation duly incorporated and validly existing
Amended and Restated Closing Certificate and Agreement (RTP Data Center) – Page 2

 

 

in the State of Delaware and is authorized to do business in and is in good standing under the laws of North Carolina.
     (2) Authority. The Constituent Documents of NAI permit the execution, delivery and performance of the Operative Documents by NAI, and all actions and approvals necessary to bind NAI under the Operative Documents have been taken and obtained. Without limiting the foregoing, the Operative Documents will be binding upon NAI when signed on behalf of NAI by Ingemar Lanevi, Vice President and Corporate Treasurer of NAI. NAI has all requisite power and all governmental certificates of authority, licenses, permits and qualifications to carry on its business as now conducted and contemplated to be conducted and to perform the Operative Documents.
     (3) Solvency. NAI is not “insolvent” on the Effective Date (that is, the sum of NAI’s absolute and contingent liabilities — including the obligations of NAI under the Operative Documents — does not exceed the fair market value of NAI’s assets), and NAI 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 by the Operative Documents 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. No petition or answer has been filed by or, to NAI’s knowledge, against NAI in bankruptcy or other legal proceedings that seeks 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, a reorganization, arrangement, rearrangement, composition, extension, liquidation or dissolution of NAI or similar relief under the federal Bankruptcy Code or any state law.
     (4) Financial Reports. All reports, financial statements and other data furnished by NAI to BNPPLC in connection with the agreements set forth in the Operative Documents are true and correct in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading. No material adverse change has occurred since the dates of such reports, statements and other data in the financial condition of NAI.
     (5) Pending Legal Proceedings. No judicial or administrative investigations, actions, suits or proceedings are pending or, to the knowledge of NAI, threatened against or affecting NAI by or before any court or other Governmental Authority that have or could reasonably be expected to have a Material Adverse Effect. NAI is not in default with respect to any order, writ, injunction, decree or demand of any court or other Governmental Authority in a manner that has or could reasonably be expected to have a Material Adverse Effect.
Amended and Restated Closing Certificate and Agreement (RTP Data Center) – Page 3

 

 

     (6) No Default or Violation. The execution and performance by NAI of the Operative Documents do not and will not contravene or result in a breach of or default under any other agreement to which NAI is a party or by which NAI is bound or which affects any assets of NAI. Such execution and performance by NAI do not contravene any law, order, decree, rule or regulation to which NAI is subject. Further, such execution 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, any property of NAI pursuant to the provisions of any such other agreement.
     (7) Use of Proceeds. In no event will the funds from any Funding Advance 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 in Regulation U 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 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.
     (8) Enforceability. The Operative Documents constitute the legal, valid and binding obligations of NAI enforceable in accordance with their terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
     (9) Pari Passu. The claims of BNPPLC against NAI under the Operative Documents rank at least pari passu with the claims of all its other unsecured creditors, except those whose claims are preferred solely by any laws of general application having effect in relation to bankruptcy, insolvency, liquidation or other similar events.
     (10) Conduct of Business and Maintenance of Existence. So long as any obligations of NAI under the Operative Documents remain outstanding, NAI will continue to engage in business of the same general type as now conducted by it and will preserve, renew and keep in full force and effect its corporate existence and its rights, privileges and franchises necessary or desirable in the normal conduct of business.
     (11) Investment Company Act, etc. NAI is not and will not become, by reason of the Operative Documents or any business or transactions in which it participates voluntarily, (a) an “investment company” or a company “controlled” by an “investment company” (as each of the quoted terms is defined or used in the Investment Company Act of 1940, as amended), or (b) subject to regulation under the Federal Power Act, or any foreign, federal or local statute or regulation limiting NAI’s ability to incur or guarantee
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indebtedness or obligations, or to pledge its assets to secure indebtedness or obligations, as contemplated by any of the Operative Documents.
     (12) 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).
     (13) 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. No ERISA Termination Event has occurred with respect to any Plan, and NAI and its Subsidiaries are in compliance with ERISA. Neither NAI nor its Subsidiaries are required to contribute to, or has any other absolute or contingent liability in respect of, any Multiemployer Plan. As of the Effective Date no “accumulated funding deficiency” (as defined in Section 412(a) of the Code) exists with respect to any Plan, whether or not waived by the Secretary of the Treasury or his delegate, and there are no Unfunded Benefit Liabilities with respect to any Plan.
     (14) Compliance With Laws. NAI and its Subsidiaries comply and will comply with all Applicable Laws (including environmental laws and ERISA and the rules and regulations thereunder), except when the necessity of compliance is contested in good faith by appropriate proceedings which do not have and could not reasonably be expected to have a Material Adverse Effect. Neither NAI nor its Subsidiaries have received any notice asserting or describing a material failure on the part of NAI or any Subsidiary to comply with Applicable Laws, other than failures that have been fully rectified by NAI or the Subsidiary, as the case may be, in a manner approved or accepted by Governmental Authorities responsible for the enforcement of the Applicable Laws.
     (15) Payment of Taxes Generally. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect (taking into account any appropriate contest of taxes), NAI and its Subsidiaries have filed and will file all tax declarations, reports and returns which are required by (and in the form required by) Applicable Laws and have paid and will pay all taxes or other charges shown to be due and payable on such declarations, reports and returns and all assessments made against it or its assets by any Governmental Authority; and no liens have been filed or established by any Governmental Authority against NAI or its assets or against any Subsidiary or its assets to secure the payment of taxes or assessments that are past due or
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claimed to be past due.
     (16) Maintenance of Insurance Generally. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have maintained and will maintain insurance with respect to its properties and businesses, with financially sound and reputable insurers, having coverages against losses or damages of the kinds customarily insured against by reputable companies in the same or similar businesses, such insurance being the types, and in amounts no less than the amounts, which are customary for such companies under similar circumstances.
     (17) Franchises, Licenses, etc. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and comply with, and will have and will comply with, all franchises, certificates, licenses, permits and other authorizations from Governmental Authorities that are necessary for the ownership, maintenance and operation of its properties and assets.
     (18) Patents, Trademarks, etc. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and will have and maintain in full force and effect all patents, trademarks, service marks, trade names, copyrights, licenses and other such rights, free from burdensome restrictions, which are necessary for the operation of its businesses. Without limiting the foregoing, to the knowledge of NAI, no product, process, method, service or other item presently sold by or employed by NAI or any Subsidiary in connection with its business as presently conducted infringes any patents, trademark, service mark, trade name, copyright, license or other right owned by any other Person. No claim or litigation is presently pending, or to the knowledge of NAI, threatened against or affecting NAI or any Subsidiary that contests its right to sell or use any such product, process, method, substance or other item and that has or could reasonably be expected to have a Material Adverse Effect.
     (19) Labor. Neither NAI nor any of its Subsidiaries has experienced strikes, labor disputes, slow downs or work stoppages due to labor disagreements that currently have or could reasonably be expected to have a Material Adverse Effect, and to the knowledge of NAI there are no such strikes, disputes, slow downs or work stoppages threatened against it or against any Subsidiary. The hours worked and payment made to employees of NAI and its Subsidiaries have not been in violation in any material respect of the Fair Labor Standards Act or any other Applicable Laws dealing with such matters. All material payments due on account of wages or employee health and welfare insurance and other benefits from NAI or from any Subsidiary have been paid or accrued as
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liabilities on its books.
     (20) Title to Properties Generally. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and will have and maintain good and indefeasible fee simple title to or valid leasehold interests in all of its real property and good title to or a valid leasehold interest in all of its other material assets, as such properties and assets are reflected in the most recent financial statements delivered to BNPPLC, other than properties or assets disposed of in the ordinary course of business since such date; subject, however, in the case of the Property, to Permitted Encumbrances and Liens created by the Operative Documents. NAI enjoys peaceful and undisturbed possession under all of its leases.
     (21) Books and Records. NAI will keep proper books of record and account, containing complete and accurate entries of all its financial and business transactions.
     (B) Further Assurances. NAI will, upon the reasonable request of BNPPLC, (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 the Operative Documents and to subject to any of the Operative Documents any property intended by the terms thereof to be covered 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 BNPPLC 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 BNPPLC to enable BNPPLC to comply with the requirements or requests of any agency or authority having jurisdiction over it.
     (C) Syndication. Without limiting the foregoing, NAI will cooperate with BNPPLC as reasonably required to allow BNPPLC to induce banks not affiliated with BNPPLC to become Participants. Such cooperation will include the execution of any modification proposed by BNPPLC to any of the Operative Documents at the request of a prospective Participant; subject, however, to the conditions that (i) in no event will NAI be required to approve or accept an increase in the Spread or other modifications that change the economics of the transactions contemplated by the Operative Documents to NAI, and (ii) in other respects the form and substance of any such modification agreement must not be reasonably objectionable to NAI.
     (D) Financial Statements; Required Notices; Certificates. Prior to the Completion Date and throughout the Term of the Lease, NAI will deliver to BNPPLC and to each Participant of which NAI has been notified:
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     (1) as soon as available and in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of NAI, the unaudited consolidated balance sheet of NAI and its Subsidiaries as of the end of such quarter and consolidated unaudited statements of income, stockholders’ equity and cash flow of NAI and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in comparative form figures for the corresponding period in the preceding fiscal year, in the case of such statements of income, stockholders’ equity and cash flow, and figures for the preceding fiscal year in the case of such balance sheet, all in reasonable detail, in accordance with GAAP, and certified in a manner acceptable to BNPPLC by a Responsible Financial Officer of NAI (subject to normal year-end adjustments); provided, that so long as NAI is a company subject to the periodic reporting requirements of Section 12 of the Securities Exchange Act of 1934, as amended, NAI will be deemed to have satisfied its obligations under this clause (1) if NAI delivers to BNPPLC the same quarterly reports, certified by a Responsible Financial Officer of NAI (subject to year-end adjustments), that NAI delivers to its shareholders;
     (2) as soon as available and in any event within ninety days after the end of each fiscal year of NAI, the consolidated balance sheet of NAI and its Subsidiaries as of the end of such fiscal year and consolidated statements of income, stockholders’ equity and cash flow of NAI and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such fiscal year, setting forth in comparative form figures for the preceding fiscal year, all in reasonable detail, in accordance with GAAP, and certified in a manner acceptable to BNPPLC by independent public accountants of recognized national standing reasonably acceptable to BNPPLC; provided, that so long as NAI is a company subject to the periodic reporting requirements of Section 12 of the Securities Exchange Act of 1934, as amended, NAI will be deemed to have satisfied its obligations under this clause (ii) if NAI delivers to BNPPLC the same annual report and report and opinion of accountants that NAI delivers to its shareholders;
     (3) in each case if requested in writing by BNPPLC, together with the financial statements furnished in accordance with subparagraph 2(D)(1) and 2(D)(2), a certificate of a Responsible Financial Officer of NAI in the form of certificate attached hereto as Exhibit B (a) representing that no Event of Default or material Default by NAI has occurred (or, if an Event of Default or material Default by NAI has occurred, stating the nature thereof and the action which NAI has taken or proposes to take to rectify it), (b) stating that the representations and warranties by NAI contained herein are true and complete in all material respects on and as of the date of such certificate as though made on and as of such date, and (c) setting forth calculations which show whether NAI is complying with financial covenants set forth in subparagraph 3(C);
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     (4) as soon as possible and in any event within five days after the occurrence of each Event of Default or material Default known to a Responsible Financial Officer of NAI, a statement of NAI setting forth details of such Event of Default or material Default and the action which NAI has taken and proposes to take with respect thereto;
     (5) promptly after the sending or filing thereof, copies of all such financial statements, proxy statements, notices and reports which NAI or any Subsidiary sends to its public stockholders, and copies of all reports and registration statements (without exhibits) which NAI or any Subsidiary files with the Securities and Exchange Commission (or any governmental body or agency succeeding to the functions of the Securities and Exchange Commission) or any national securities exchange;
     (6) as soon as practicable and in any event within thirty days after a Responsible Financial Officer of NAI knows or has reason to know that any ERISA Termination Event with respect to any Plan has occurred, a statement of a Responsible Financial Officer of NAI describing such ERISA Termination Event and the action, if any, which NAI proposes to take with respect thereto;
     (7) upon request by BNPPLC, 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 either stating that no Default exists under the Operative Documents or specifying each such Default; it being intended that any such statement by NAI may be relied upon by any prospective purchaser or mortgagee of the Property or any prospective Participant; and
     (8) such other information respecting the condition or operations, financial or otherwise, of NAI, of its Subsidiaries or of the Property as BNPPLC or BNPPLC’s Parent or any Participant through BNPPLC may from time to time reasonably request.
Reports and financial statements required to be delivered pursuant to paragraphs (1), (2) and (5) of this subparagraph 2(D) shall be deemed to have been delivered on the date on which such reports, or reports containing such financial statements, are posted for downloading (in a “PDF” or other readily available format) on one of NAI’s internet websites at www.netapp.com or www.investors.netapp.com or on the SEC’s internet website at www.sec.gov; provided, however, that after being posted they remain available for downloading at the applicable website for at least 90 days.
BNPPLC is hereby authorized to deliver a copy of any information or certificate delivered to it pursuant to this subparagraph 2(D) to any Participant and to any regulatory body having
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jurisdiction over BNPPLC, BNPPLC’s Parent or any Participant that requires or requests it.
     (E) Omissions. None of NAI’s representations in the Operative Documents or in any other document, certificate or written statement furnished to BNPPLC 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.
     (F) OFAC. None of NAI or any subsidiary or affiliate of NAI: (i) is a person named on the list of Specially Designated Nationals or Blocked Persons maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise published from time to time; or (ii) is (A) an agency of the government of a country, (B) an organization controlled by a country, or (C) a person resident in a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise published from time to time, as such program may be applicable to such agency, organization or person; or (iii) derives more than 15% of its assets or operating income from investments in or transactions with any such country, agency, organization or person. Further, none of the proceeds from the Initial Advance or any Construction Advance will be used to finance any operations, investments or activities in, or make any payments to, any such country, agency, organization, or person.
     (G) U.S. Patriot Act. NAI acknowledges that BNPPLC, BNPPLC’s Parent and Participants may be required, pursuant to the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), to obtain, verify, record and disclose to law enforcement authorities information that identifies the NAI, including the name and address of NAI. NAI will provide to BNPPLC and Participants any such information they may request pursuant to the Patriot Act, and NAI agrees that any of BNPPLC, BNPPLC’s Parent and Participants may disclose such information to law enforcement authorities if the authorities make a request or demand for disclosure pursuant to the Patriot Act. NAI also acknowledges that, in such event, none of BNPPLC, BNPPLC’s Parent or Participants may be required or even permitted by the Patriot Act to notify NAI of the request or demand for disclosure.
3 Financial Covenants and Negative Covenants of NAI. NAI represents and covenants as follows:
     (A) Definitions Applicable in this Paragraph. As used in (and only for purposes of) this Paragraph 3:
     “Accepted Contest Requirements” means, with respect to any Tax or other payment due or claimed to be due from NAI or any Subsidiary or any demand for payment made upon NAI or any Subsidiary, that (a) NAI or such Subsidiary must contest
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the validity or amount thereof in good faith by appropriate proceedings, (b) NAI or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment thereof pending such contest could not reasonably be expected to result in a Material Adverse Effect.
     “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
     “Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of Equity Interests representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of NAI; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of NAI by Persons who were neither (i) nominated by the board of directors of NAI nor (ii) appointed by directors so nominated; or (c) NAI ceasing to own, directly or indirectly, 100% of the issued and outstanding Equity Interests of each Material Domestic Subsidiary except in accordance with subparagraph 3(B)(3) below.
     “Consolidated Debt for Borrowed Money” means at any time (1) the sum, without duplication, of (a) items that, in accordance with GAAP, would be classified as indebtedness on the consolidated balance sheet of NAI and its Subsidiaries and (b) the capitalized portion of any synthetic leases, minus (2) the then aggregate outstanding principal amount of Indebtedness under NAI’s Secured Revolver and under that certain Loan Agreement dated as of March 31, 2006 by and among Network Appliance Global Ltd. and JPMorgan Chase Bank, National Association as initial lender and as administrative agent. (In clause (b) of this definition, “capitalized portion” means, with respect to any synthetic lease, the price for which the lessee can purchase the leased property or could purchase it if the synthetic lease expired on the date of the applicable calculation of the Consolidated Debt for Borrowed Money. Thus, for example, the “capitalized portion” of the transactions governed by the Operative Documents will equal the Lease Balance.)
     “Consolidated EBITDA” means, with reference to any period, the sum of the following: (a) Consolidated Net Income for such period, plus (b) without duplication and to the extent deducted from revenues in determining such Consolidated Net Income, the
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sum of (i) Consolidated Interest Expense for such period, (ii) expense for taxes paid or accrued during such period, (iii) all amounts attributable to depreciation, (iv) amortization during such period, (v) extraordinary non-cash charges incurred other than in the ordinary course of business during such period, (vi) nonrecurring extraordinary non-cash restructuring charges, and (vii) share-based non-cash compensation expense minus without duplication and to the extent included in determining such Consolidated Net Income, (c) interest income, (d) extraordinary non-cash gains realized other than in the ordinary course of business and (e) any cash payments made during such period in respect of the item described in clause (vii) above subsequent to the fiscal quarter in which the relevant share-based non-cash compensation expense was incurred, all calculated for NAI and its Subsidiaries in accordance with GAAP on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period NAI or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period NAI or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by NAI and its Subsidiaries in excess of $50,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to NAI or any of its Subsidiaries in excess of $50,000,000.
     “Consolidated Interest Expense” means, with reference to any period, the interest expense (including without limitation interest expense under Capital Lease Obligations that is treated as interest in accordance with GAAP) of NAI and its Subsidiaries calculated on a consolidated basis for such period with respect to (a) all outstanding Indebtedness of NAI and its Subsidiaries allocable to such period in accordance with GAAP and (b) Swap Agreements (including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers acceptance financing and net costs under interest rate Swap Agreements to the extent such net costs are allocable to such period in accordance with GAAP). In addition, for purposes of calculating the Leverage Ratio only, rents payable for any period pursuant to NAI’s synthetic leases shall be included in Consolidated Interest Expense for
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such period; excluding, however, any amounts (whether on not designated as rents) paid or to be paid as compensation for or reimbursement of any Losses, and also excluding any payments which reduce or will reduce the outstanding lease balance of any synthetic lease. For example, Base Rents payable under the Lease will be included in Consolidated Interest Expense, but not Additional Rents.
     “Consolidated Net Income” means, with reference to any period, the net income (or loss) of NAI and its Subsidiaries calculated in accordance with GAAP on a consolidated basis (without duplication) for such period.
     “Consolidated Total Assets” means, as of the date of any determination thereof, total assets of NAI and its Subsidiaries calculated in accordance with GAAP on a consolidated basis as of such date.
     “Disclosure Letter” means the disclosure letter (the form of which is attached to this Certificate as Exhibit C) given by NAI to Chase Bank, National Association, as Administrative Agent, in connection with NAI’s recently executed Credit Agreement dated as of November 2, 2007, as amended or supplemented from time to time by NAI with the written consent of BNPPLC.
     “Domestic Subsidiary” means any Subsidiary that is incorporated or organized under the laws of the United States of America, any state thereof or in the District of Columbia.
     “Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.
     “Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
     “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to
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advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.
     “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are paid or payable, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (k) the Net Mark-to Market Exposure of all Swap Obligations of such Person, and (l) any other Off-Balance Sheet Liability. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
     “Leverage Ratio” means the ratio, determined as of the end of each fiscal quarter of NAI, of Consolidated Debt for Borrowed Money as of the end of such fiscal quarter to Consolidated EBITDA for the period of 4 consecutive fiscal quarters ending with the end of such fiscal quarter.
     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or other security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
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     “Liquidity” means, with respect to NAI and its Subsidiaries as of any date of determination, the sum of all unrestricted cash and unrestricted Permitted Investments which are not subject to any Lien (other than Liens permitted under subparagraph 3(B)(2)(e)) and which would be included on the consolidated balance sheet of NAI and such Subsidiaries in accordance with GAAP as of such date of determination.
     “Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations or condition, financial or otherwise, of NAI and its Subsidiaries taken as a whole, or (b) the ability of NAI or any Material Domestic Subsidiary to perform any of its obligations under any of the Operative Documents or (c) the rights of or benefits available to BNPPLC under any of the Operative Documents.
     “Material Domestic Subsidiary” means each Material Subsidiary that is a Domestic Subsidiary. The Material Domestic Subsidiaries on the Effective Date are identified as such in Schedule 3.01 to the Disclosure Letter.
     “Material Subsidiary” means each Subsidiary (a) which, as of the most recent fiscal quarter of NAI, for the period covering the then most recently ended fiscal year and the portion of the then current fiscal year ending at the end of such fiscal quarter, for which financial statements have been delivered pursuant to subparagraph 2(D), contributed greater than five percent (5%) of NAI’s Consolidated EBITDA for such period or (b) which contributed greater than five percent (5%) of NAI’s Consolidated Total Assets as of such date.
     “Moody’s” means Moody’s Investors Service, Inc.
     “NAI’s Secured Revolver” means the Secured Credit Agreement dated as of October 5, 2007 by and among NAI, certain lenders and JPMorgan Chase Bank, National Association, as administrative agent, as it exists and is in force on the Effective Date.
     “Net Mark-to-Market Exposure” of a Person means, as of any date of determination, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from each Swap Agreement transaction. “Unrealized losses” means the fair market value of the cost to such Person of replacing such transaction as of the date of determination (assuming such transaction were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such transaction as of the date of determination (assuming such transaction was to be terminated as of that date).
     “Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person
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that is related to retained credit risk, or (b) any indebtedness, liability or obligation under any so-called “synthetic lease” transaction entered into by such Person.
     “Permitted Liens or Encumbrances” means:
     (a) Liens imposed by law for Taxes or other governmental charges that are not yet due or are being contested in accordance with Accepted Contest Requirements;
     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than sixty (60) days or are being contested in accordance with Accepted Contest Requirements;
     (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;
     (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;
     (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (J) of the definition thereof in the Common Definitions and Provisions Agreement;
     (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere in any material respect with the ordinary conduct of business of NAI or any Subsidiary;
     (g) leases or subleases granted to other Persons and not interfering in any material respect with the business of the lessor or sublessor;
     (h) Liens arising from precautionary Uniform Commercial Code filings or similar filings relating to operating leases;
     (i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection within the importation of goods;
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     (j) Liens on insurance proceeds securing the premium of financed insurance proceeds;
     (k) Liens incurred in the ordinary course of business on cash collateral to secure letters of credit, bank guarantees and banker’s acceptances and Swap Agreements;
     (l) licenses of intellectual property in the ordinary course of business;
     (m) any interest or title of a lessor or sublessor under any lease of real property or personal property; and
     (n) other Liens on assets securing Indebtedness or other obligations not prohibited under provisions of the Operative Documents other than this Paragraph 3 in an aggregate amount not to exceed $50,000,000 at any time outstanding;
provided that the term “Permitted Liens or Encumbrances” shall not include any Lien securing Indebtedness.
     “Permitted Investments” means:
     (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;
     (b) investments in commercial paper maturing within 365 days from the date of acquisition thereof and having, at such date of acquisition, a rating of “A-2” (or better) from S&P or “P-2” (or better) from Moody’s;
     (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof or any other country which has a combined capital and surplus and undivided profits of not less than $500,000,000;
     (d) fully collateralized repurchase agreements with a term of not more
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than thirty (30) days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above;
     (e) money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, as amended, to the extent such money market fund is governed thereby, (ii) are rated AA by S&P and Aa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000;
     (f) investments made pursuant to a cash management investment policy approved by the board of directors of the Person making such investment and as in effect on the Effective Date, as such policy may be amended or otherwise modified from time to time with the written consent of BNPPLC; and
     (g) investments described in the following table:
     
Type of Security   Remaining Maturity/ S&P/ Moody’s Rating
JPMorgan Certificates of Deposit
    
 
    
US Treasury Treasuries
    
 
    
US Agency Securities
   Less than 30 years
 
    
USD Commercial Paper
   A1/P1 Less than or equal to 270 days
 
    
Money Market Funds (Must be through JPMorgan)
   US Gov’t
Treasury Plus
Cash Management
100% US Treasury
Federal Money Market
 
    
Medium Term Notes, Corporate Bonds, Corporate Debentures, Floating Rate Notes, and Auction Rate Securities
   A or better
     “S&P” means Standard & Poor’s, a division of the McGraw-Hill Companies.
     “Sale and Leaseback Transaction” means any sale or other transfer of assets or property by any Person with the intent to lease any such asset or property as lessee.
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     “Subordinated Indebtedness” means any Indebtedness of NAI or any Subsidiary the payment of which is subordinated to payment of the obligations under the Operative Documents to the written satisfaction of BNPPLC.
     “subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.
     “Subsidiary” means any subsidiary of NAI.
     “Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of NAI or the Subsidiaries shall be a Swap Agreement.
     “Swap Obligations” of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any such Swap Agreement transaction.
     “Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.
     (B) Negative Covenants. Prior to the Designated Sale Date and so long thereafter as any amount shall continue to be due and payable by NAI to BNPPLC pursuant to any of the Operative Documents, NAI covenants and agrees as follows:
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     (1) Subsidiary Indebtedness. NAI will not permit any Subsidiary to create, incur, assume or permit to exist any Indebtedness, except:
     (a) by Guarantee or assumption of any obligations evidenced or created by (x) any of the Operative Documents, (y) or other comparable agreements between BNPPLC and NAI covering other properties, or (z) the Credit Agreement referenced on the first page of the Disclosure Letter;
     (b) Indebtedness existing on the date hereof and set forth in Schedule 6.01 to the Disclosure Letter and extensions, renewals and replacements of any such Indebtedness that do not increase the then outstanding principal amount thereof;
     (c) Indebtedness of (i) any Subsidiary to any Material Domestic Subsidiary and (ii) any Subsidiary that is not a Material Domestic Subsidiary to any other Subsidiary that is not a Material Domestic Subsidiary;
     (d) Guarantees by any Subsidiary of Indebtedness of NAI or any other Subsidiary;
     (e) Indebtedness of any Subsidiary incurred to finance the acquisition, construction or improvements of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets (and additions, accessions, parts, improvement and attachments thereto and the proceeds thereof) prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the then outstanding principal amount thereof; provided that such Indebtedness is incurred prior to or within 120 days after such acquisition or the completion of such construction or improvement; and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof;
     (f) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof;
     (g) Indebtedness of any Subsidiary as an account party in respect of letters of credit, bank guarantees and bankers’ acceptances;
     (h) Indebtedness in respect of Swap Agreements permitted under
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subparagraph 3(B)(4);
     (i) Indebtedness of Subsidiaries which are not Material Domestic Subsidiaries in an aggregate principal amount not exceeding 5% of Consolidated Total Assets at any time outstanding; and
     (j) other Indebtedness of any Subsidiary which is a Material Domestic Subsidiary so long as, at the time of the incurrence thereof and after giving effect thereto (on a pro forma basis), NAI is in pro forma compliance with the maximum Leverage Ratio permitted under subparagraph 3(C)(1).
     (2) Liens. NAI will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it (and for purposes hereof, any capital stock issued by NAI which is held by NAI as treasury stock shall not be deemed to be property or an asset of NAI and shall not be subject to this subparagraph 3(B)(2)), or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except that the following shall be permitted so long as they do not encumber any interest in the Property in violation of other provisions of the Operative Documents:
     (a) Permitted Liens or Encumbrances;
     (b) any Lien on any property or asset of NAI or any Subsidiary existing on the date hereof and set forth in Schedule 6.02 to the Disclosure Letter; provided that (i) such Lien shall not apply to any other property or asset of NAI or any Subsidiary and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;
     (c) any Lien existing on any property or asset prior to the acquisition thereof by NAI or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of NAI or any Subsidiary and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be, and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;
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     (d) Liens on fixed or capital assets (and additions, accessions, parts, improvements and attachments thereto and the proceeds thereof) acquired, constructed or improved by NAI or any Subsidiary; provided that:
     (i) such security interests secure Indebtedness not otherwise prohibited under the Operative Documents;
     (ii) such security interests and the Indebtedness secured thereby are either (A) incurred prior to or within one hundred twenty (120) days after such acquisition or the completion of such construction or improvement, or (B) granted and incurred to extend, renew or replace any security interest and Indebtedness secured thereby that are permitted by this clause (d) and do not increase the outstanding principal amount thereof by more than 5%;
     (iii) the Indebtedness secured thereby does not exceed 105% of the cost of acquiring, constructing or improving such fixed or capital assets; and
     (iv) such security interests shall not apply to any other property or assets of NAI or any Subsidiary;
     (e) customary bankers’ Liens and rights of setoff arising by operation of law or contract and incurred on deposits made in the ordinary course of business;
     (f) assignments of the right to receive income effected (i) as a part of the sale of a Subsidiary or a business unit or (ii) for factoring in the ordinary course of business;
     (g) Liens on any cash earnest money deposit made by NAI or any Subsidiary in connection with any letter of intent or acquisition agreement that is not prohibited by the Operative Documents;
     (h) customary Liens granted in favor a trustee to secure fees and other amounts owing to such trustee under an indenture or other agreement pursuant to Indebtedness not otherwise prohibited under the Operative Documents; and
     (i) Liens granted as provided in and securing Indebtedness under NAI’s Secured Revolver, provided such Liens do not at any time secure an outstanding principal balance of more than $500,000,000.
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     (3) Fundamental Changes and Asset Sales.
     (a) NAI will not, and will not permit any Subsidiary to, merge into, consolidate with, or otherwise be acquired by, any other Person, or sell, transfer, lease or otherwise dispose (including pursuant to a Sale and Leaseback Transaction) of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or here-after acquired, and for purposes hereof, any capital stock issued by NAI which is held by NAI as treasury stock shall not be deemed to be property or an asset of NAI and shall not be subject to this subparagraph 3(B)(3), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Subsidiary may merge into a Material Domestic Subsidiary in a transaction in which the surviving entity is such Material Domestic Subsidiary, (ii) any wholly owned Subsidiary may merge into or consolidate with any wholly owned Subsidiary in a transaction in which the surviving entity is a wholly owned Subsidiary and no Person other than NAI or a wholly owned Subsidiary receives any consideration, provided that if any such merger described in this clause (ii) shall involve a Material Domestic Subsidiary, the surviving entity of such merger shall be a Material Domestic Subsidiary, (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to a Material Domestic Subsidiary or any wholly owned Subsidiary pursuant to a transaction not otherwise prohibited under the Operative Documents, (iv) any Subsidiary may liquidate or dissolve if NAI determines in good faith that such liquidation or dissolution is in the best interests of NAI, (v) NAI may merge with any other Person so long as NAI is the surviving entity, (vi) any Subsidiary may merge with any other Person so long as the surviving entity is, in the case of a Subsidiary Guarantor, the Subsidiary Guarantor, and in all other cases, a wholly owned Subsidiary and (vii) any Subsidiary other than a Subsidiary Guarantor may merge into, and NAI or any Subsidiary may dispose of assets to, any other Person so long as NAI delivers a certificate to BNPPLC demonstrating pro forma compliance with subparagraph 3(C) after giving effect to such transaction.
     (b) NAI will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by NAI and its Subsidiaries on the date of execution of the Operative Documents and businesses reasonably related thereto.
     (c) NAI will not, and will not permit any of its Subsidiaries to, change its fiscal year to end on a day other than as such fiscal year end is currently
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determined or change NAI’s method of determining fiscal quarters.
     (4) Speculative Swap Agreements. NAI will not, and will not permit any of its Subsidiaries to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which NAI or any Subsidiary has actual exposure (other than those in respect of Equity Interests or Subordinated Indebtedness of NAI or any of its Subsidiaries), and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of NAI or any Subsidiary.
     (5) Transactions with Affiliates. NAI will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to NAI or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among NAI and its wholly owned Subsidiaries not involving any other Affiliate, (c) to enter into indemnification arrangements with or to pay customary fees and reimburse out-of-pocket expenses of directors or (d) as set forth on the Disclosure Letter.
     (6) Restrictive Agreements. NAI will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of NAI or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to NAI or any other Subsidiary or to Guarantee Indebtedness of NAI or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law, by any Operative Document, by any document relating to NAI’s unsecured syndicated revolving credit facility from certain lenders and JPMorgan Chase Bank, National Association as administrative agent, by NAI’s Secured Revolver, or by any document relating to NAI’s synthetic lease facilities, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.06 to the Disclosure Letter (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of assets or of a Subsidiary pending such sale, provided such restrictions and conditions apply only to such assets or such Subsidiary that are to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by the
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Operative Documents if such restrictions or conditions apply only to the property or assets securing such Indebtedness, and (v) clause (a) of the foregoing shall not apply to customary provisions in leases, licenses, joint venture agreements and other agreements entered into in the ordinary course of business restricting the assignment thereof.
     (C) Financial Covenants. Prior to the Designated Sale Date and so long thereafter as any amount shall continue to be due and payable by NAI to BNPPLC pursuant to any of the Operative Documents:
     (1) Maximum Leverage Ratio. NAI will not permit the Leverage Ratio to be greater than 3.0 to 1.0.
     (2) Minimum Liquidity. NAI and its Subsidiaries on a consolidated basis shall maintain, at all times, Liquidity of not less than $300,000,000.
4 Limited Representations and Covenants of BNPPLC
     (A) Concerning Accounting Matters.
     (1) To permit NAI to determine the appropriate accounting for NAI’s relationship with BNPPLC under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN 46”), BNPPLC represents that to the knowledge of BNPPLC the fair value of the Property and of other properties, if any, leased to NAI by BNPPLC (collectively, whether one or more, the “Properties Leased to NAI”) are, as of the Effective Date, less than half of the total of the fair values of all assets of BNPPLC, excluding any assets of BNPPLC held within a silo. Further, none of the Properties Leased to NAI are, as of the Effective Date, held within a silo. Consistent with the directions of NAI (based upon the current interpretation of FIN 46 by NAI and its auditors), and for purposes of this representation only:
  ·   “held within a silo” means, with respect to any asset or group of assets leased by BNPPLC to a single lessee or group of affiliated lessees, that BNPPLC has obtained funds equal to or in excess of 95% of the fair value of the leased asset or group of assets to acquire or maintain its investment in such asset or group of assets through non-recourse financing or other contractual arrangements (such as targeted equity or bank participations), the effect of which is to leave such asset or group of assets (or proceeds thereof) as the only significant asset or assets of BNPPLC at risk for the repayment of such funds;
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  ·   “fair value” means, with respect to any asset, the amount for which the asset could be bought or sold in a current transaction negotiated at arms length between willing parties (that is, other than in a forced or liquidation sale);
 
  ·   with respect to the Properties Leased to NAI (regardless of how BNPPLC accounts for the leases of the Properties Leased to NAI), and with respect to other assets that are subject to leases accounted for by BNPPLC as operating leases pursuant to Financial Accounting Standards Board Statement 13 (“FAS 13”), fair value is determined without regard to residual value guarantees, remarketing agreements, non-recourse financings, purchase options or other contractual arrangements, whether made by BNPPLC with NAI or with other parties, that might otherwise impact the fair value of such assets;
 
  ·   with respect to assets, other than Properties Leased to NAI, that are subject to leases accounted for by BNPPLC as leveraged leases pursuant to FAS 13, fair value is determined on a gross basis prior to the application of leveraged lease accounting, recognizing that equity investments made by BNPPLC in its assets subject to leveraged lease accounting should be grossed up in applying this test (however, equity investments made by BNPPLC through another legal entity should not be so grossed up in applying this test);
 
  ·   with respect to assets, other than Properties Leased to NAI, that are subject to leases accounted for by BNPPLC as direct financing leases pursuant to FAS 13, fair value is determined as the sum of the fair values (considering current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities) of the corresponding finance lease receivables and related unguaranteed residual values.
     (2) BNPPLC also represents that BNPPLC’s Parent is, as of the Effective Date, including BNPPLC as a consolidated subsidiary in the audited financial statements issued by BNPPLC’s Parent.
     (3) BNPPLC covenants that, as reasonably requested by NAI from time to time with respect to any accounting period during which the Lease is or was in effect, BNPPLC will provide to NAI confirmation of facts concerning BNPPLC and its assets as
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necessary to permit NAI to determine the proper accounting for the Lease (including updates of the facts set forth in clauses (1) and (2) above); except that BNPPLC will not be required by this provision to (w) provide any information that is not in the possession or control of BNPPLC or its Affiliates, (x) disclose the specific terms and conditions of its leases or other transactions with other parties or the names of such parties, (y) make disclosures prohibited by any law applicable to BNPPLC or BNPPLC’s Parent, or (z) disclose any other information that is protected from disclosure by confidentiality provisions in favor of such other parties or would be protected if their agreements with BNPPLC contained confidentiality provisions similar in scope and substance to any confidentiality provisions set forth in the Operative Documents for the benefit of NAI or its Affiliates. BNPPLC will represent that information provided by it pursuant to this clause is true and complete in all material respects, but only to the knowledge of BNPPLC as of the date it is provided, utilizing the form of the certificate attached hereto as Exhibit D (signed by an officer of BNPPLC), which certificate will be provided periodically by BNPPLC within five business days of reasonable written request therefor by NAI as provided above, or such longer period of time as may be reasonably necessary under the circumstances in order for BNPPLC to confirm such information.
     (4) Although the representations required of BNPPLC by this subparagraph are intended to cover facts, it is understood and agreed (consistent with subparagraph 4(C) of the Lease) that BNPPLC has not made and will not make any representation or warranty as to the proper accounting by NAI or its Affiliates of the Lease or as to other accounting conclusions.
     (B) Other Limited Representations. BNPPLC represents that:
     (1) Entity Status. BNPPLC is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware.
     (2) Authority. The Constituent Documents of BNPPLC permit the execution, delivery and performance of the Operative Documents by BNPPLC, and all actions and approvals necessary to bind BNPPLC under the Operative Documents have been taken and obtained. Without limiting the foregoing, the Operative Documents will be binding upon BNPPLC when signed on behalf of BNPPLC by Lloyd G. Cox, Managing Director of BNPPLC. BNPPLC has all requisite power and all governmental certificates of authority, licenses, permits and qualifications to carry on its business as now conducted and contemplated to be conducted and to perform the Operative Documents, except that BNPPLC makes no representation as to whether it has obtained governmental certificates of authority, licenses, permits, qualifications or other documentation required by state or local Applicable Laws. With regard to any such state or local requirements, NAI may require that BNPPLC obtain a specific governmental certificates of authority, licenses,
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permits, qualifications or other documentation pursuant to subparagraph 4(C), subject to the conditions set forth in that subparagraph.
     (3) Solvency. BNPPLC is not “insolvent” on the Effective Date (that is, the sum of BNPPLC’s absolute and contingent liabilities — including the obligations of BNPPLC under the Operative Documents — does not exceed the fair market value of BNPPLC’s assets), and BNPPLC has no outstanding liens, suits, garnishments or court actions which could render BNPPLC insolvent or bankrupt. BNPPLC’s capital is adequate for the businesses in which BNPPLC is engaged and intends to be engaged. BNPPLC has not incurred (whether by the Operative Documents or otherwise), nor does BNPPLC intend to incur or believe that it will incur, debts which will be beyond its ability to pay as such debts mature. No petition or answer has been filed by or, to BNPPLC’s knowledge, against BNPPLC in bankruptcy or other legal proceedings that seeks an assignment for the benefit of creditors, the appointment of a receiver, trustee, custodian or liquidator with respect to BNPPLC or any significant portion of BNPPLC’s property, a reorganization, arrangement, rearrangement, composition, extension, liquidation or dissolution of BNPPLC or similar relief under the federal Bankruptcy Code or any state law. (As used in the Operative Documents, “BNPPLC’s knowledge” and words of like effect mean the present actual knowledge of Lloyd G. Cox and Barry Mendelsohn, the current officers of BNPPLC having primary responsibility for the negotiation of the Operative Documents.)
     (4) Pending Legal Proceedings. No judicial or administrative investigations, actions, suits or proceedings are pending or, to the knowledge of BNPPLC, threatened against or affecting BNPPLC by or before any court or other Governmental Authority. BNPPLC is not in default with respect to any order, writ, injunction, decree or demand of any court or other Governmental Authority in a manner that has or could reasonably be expected to have a a material adverse effect on BNPPLC or its ability to perform its obligations under the Operative Documents.
     (5) No Default or Violation. The execution and performance by BNPPLC of the Operative Documents do not and will not contravene or result in a breach of or default under any other agreement to which BNPPLC is a party or by which BNPPLC is bound or which affects any assets of BNPPLC. Such execution and performance by BNPPLC do not contravene any law, order, decree, rule or regulation to which BNPPLC is subject. Further, such execution and performance by BNPPLC 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, any property of BNPPLC pursuant to the provisions of any such other agreement.
     (6) Enforceability. The Operative Documents constitute the legal, valid and
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binding obligations of BNPPLC enforceable in accordance with their terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
     (7) Conduct of Business and Maintenance of Existence. So long as any of the Operative Documents remains in force, BNPPLC will continue to engage in business of the same general type as now conducted by it and will preserve, renew and keep in full force and effect its corporate existence and its rights, privileges and franchises necessary or desirable in the normal conduct of business.
     (8) Not a Foreign Person. BNPPLC is not a “foreign person” within the meaning of Sections 1445 and 7701 of the Code (i.e. BNPPLC 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).
Notwithstanding the foregoing, however or any other provision herein or in other Operative Documents to the contrary, it is understood that NAI is not relying upon BNPPLC for any evaluation of North Carolina or local Applicable Laws upon the transactions contemplated in the Operative Documents, and BNPPLC makes no representation and will not make any representation 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.
     (C) Further Assurances. Prior to the Completion Date and during the Term of the Lease BNPPLC will take any action reasonably requested by NAI to facilitate the construction contemplated by the Construction Agreement or the use of the Property permitted by the Lease or to modify the commercial condominium regime created by the Condominium Declaration (the “Condominium Regime”) to facilitate a sale or financing of any of the units designated therein as Unit 1, Unit 2 or Unit 3 (the “Other Units”); subject, however, to the following terms and conditions:
     (1) This subparagraph 4(C) will not impose upon BNPPLC the obligation to take any action that can be taken by NAI, NAI’s Affiliates or anyone else other than BNPPLC as the lessee under the Ground Lease or the owner of the Property.
     (2) BNPPLC will not be required by this subparagraph 4(C) to incur any expense or make any payment to another Person unless (a) BNPPLC has received funds from NAI, in excess of any other amounts due from NAI under any of the Operative Documents, sufficient to cover the expense or make the payment or (b) the request by NAI which will result in such expense or payment is made before the Completion Date and BNPPLC can include such expense or payment in the Outstanding Construction Allowance for purposes of the Construction Agreement.
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     (3) BNPPLC will have no obligations whatsoever under this subparagraph 4(C) at any time after a 97-10/Meltdown Event or when a Default or an Event of Default has occurred and is continuing.
     (4) NAI must request any action to be taken by BNPPLC pursuant to this subparagraph 4(C), and such request must be specific and in writing, if required by BNPPLC at the time the request is made.
     (5) No action may be required of BNPPLC pursuant to this subparagraph 4(C) that could constitute a violation of any Applicable Laws or compromise or constitute a waiver of BNPPLC’s rights under other provisions of this Certificate or any of the other Operative Documents or that for any other reason is reasonably objectionable to BNPPLC.
     The actions BNPPLC will take pursuant to this subparagraph 4(C) 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, relocation 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 (which will, in the case of agreements made with NAI or its Affiliates, remain subject to subparagraphs (J), (K) and (L) of Paragraph 11 of the Ground Lease or comparable provisions included in amendments to the Operative Documents) 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”, (VII) modifications of Permitted Encumbrances, (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) amendments to the Condominium Declaration or other documents which establish the Condominium Regime as required to permit a sale of financing of the Other Units. However, the determination of whether any such action is reasonably requested or reasonably objectionable to BNPPLC may depend in whole or in part upon the extent to which the requested action may result in a lien to secure payment or performance obligations against BNPPLC’s interest in the Property, may cause the value of the Property to be less than the Lease Balance after any Qualified Prepayments that may result from such action are taken into account, or may impose upon BNPPLC any present or
Amended and Restated Closing Certificate and Agreement (RTP Data Center) – Page 30

 

 

future obligations greater than the obligations BNPPLC is willing to accept, taking into consideration the indemnifications provided by NAI under the Construction Agreement or the Lease, as applicable.
     In addition, with respect to any request made by NAI to facilitate a relocation of any easements or a substitution of new easements for those described in Exhibit A, the following will be relevant to the determination of whether the request is reasonable:
     (i) whether material encroachments will result from the relocation or replacement, and whether title to the land over or under which any such easement is to be relocated or replaced is encumbered by Liens other than those which are Fully Subordinated or Removable or which otherwise constitute Permitted Encumbrances;
     (ii) whether the relocation or replacement will result in any interruption of access or services provided to the Property which is likely to extend beyond the Designated Sale Date (it being understood, however, that any such interruption which is not likely to extend beyond the Designated Sale Date will not be a reason for BNPPLC to decline the request); and
     (iii) whether the relocation or replacement is to be accomplished in a manner that will not, when the relocation or replacement is complete, result in a material adverse change in the access to or services provided to the Improvements or the Land.
     With respect to any request made by NAI to amend the Condominium Regime, the following will be relevant to the determination of whether the request is reasonable:
     (1) whether the Condominium Regime, as amended, will continue to provide that all significant building Improvements constructed or to be constructed by NAI for BNPPLC pursuant to the Construction Agreement, and only such Improvements, comprise one or more distinct condominium units (whether one or more, the “Applicable Units”) which are included in the Property;
     (2) whether NAI is willing to amend the Operative Documents by amendments in form and substance acceptable to BNPPLC (the “Anticipated Amendments”) as necessary to ensure that:
     (A) the Property will include of the Applicable Units, together with all appurtenant access, parking and other rights and easements (whether exclusive or nonexclusive) comparable to those existing or created as of the Effective Date as rights and easements appurtenant to Unit 4 pursuant to the Ground Lease or the Condominium Declaration (“Appurtenant Condo Rights”);
Amended and Restated Closing Certificate and Agreement (RTP Data Center) – Page 31

 

 

     (B) the land leased to BNPPLC pursuant to the Ground Lease will include the land over which exclusive possession and control must reasonably be vested in the owner of the Applicable Units to preserve the value and utility of the Applicable Units to such owner, taking into account Appurtenant Condo Rights; and
     (C) in the event discretionary approvals or consents are required from any “declarant” or “operator” or “owner’s association” by the Condominium Regime over the design, construction or alteration of Improvements or over the sale, use, leasing or financing of the Property, then (i) the “declarant” or “operator” or “owner’s association” will be NAI or controlled by it or another party acceptable to BNPPLC and will be bound by and remain bound by subparagraphs (J), (K), (L) and (M) of Paragraph 11 of the Ground Lease or comparable provisions in the Anticipated Amendments with respect to such discretionary approvals or consents;
     (3) whether the request itself (if granted) or the proposed Condominium Regime (as amended) is likely to have any material adverse impact on the value or utility of the Property, taken as a whole, after giving effect to the Anticipated Amendments and taking into account Appurtenant Condo Rights; and
     (4) whether the request itself (if granted) or the Condominium Regime (as amended) will materially limit, or give NAI or its Affiliates discretionary control over, the rights of BNPPLC and its successors and assigns to use or lease, sell or otherwise transfer the Applicable Units in the event NAI declines for any reason to purchase the Property on the Designated Sale Date pursuant to the Purchase Agreement, but taking into account any superior rights BNPPLC has or may reserve under or by reference to subparagraphs (J), (K), (L) and (M) of Paragraph 11 of the Ground Lease or comparable provisions in the Anticipated Amendments.
     Any and all Losses incurred by BNPPLC because of any action taken after the Completion Date pursuant to this subparagraph 4(C) will be covered by the indemnifications of BNPPLC set forth in Construction Agreement or in the Lease. Further, for purposes of such indemnification, any such action taken by BNPPLC 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 Lease or the other Operative Documents.
     (D) Actions Permitted by NAI Without BNPPLC’s Consent. No refusal by BNPPLC to execute or join in the execution of any agreement, application or other document requested by NAI pursuant to the preceding subparagraph 4(C) will prevent NAI from itself executing such
Amended and Restated Closing Certificate and Agreement (RTP Data Center) – Page 32

 

 

agreement, application or other document, so long as NAI is not purporting to act for BNPPLC and does not thereby create or expand any obligations or restrictions that encumber BNPPLC’s title to the Property. Further, subject to the other terms and conditions of the Lease and other Operative Documents, NAI may do any of the following in NAI’s own name and to the exclusion of BNPPLC before and during the Term of the Lease, so long as no 97-10/Meltdown Event has occurred and no Default or Event of Default has occurred and is continuing, and provided NAI is not purporting to act for BNPPLC and does not thereby create or expand any obligations or restrictions that encumber BNPPLC’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 Permitted Encumbrances;
     (2) perform obligations arising under and exercise and enforce the rights of NAI or the owner of the Property with respect to any other contracts or documents (such as building permits) included within the Personal Property; and
     (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 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 BNPPLC and NAI under the other Operative Documents with respect to the collection and application of such monetary damages will be the same as for condemnation proceeds payable because of a taking of all or any part of the Property.
     (E) Waiver of Landlord’s Liens. BNPPLC waives any security interest, statutory landlord’s lien or other interest BNPPLC 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; however, BNPPLC 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 Lease. Although computer equipment or other tangible personal property may be “bolted down” or otherwise firmly affixed to Improvements, it will 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 Lease.
     Without limiting the foregoing, BNPPLC acknowledges that NAI may obtain financing from other parties for inventory, furnishings, equipment, machinery and other personal property that is located in or about the Improvements, but that is not included in or integral to the Property, and to secure such financing NAI may grant a security interest under the North Carolina Uniform Commercial Code in such inventory, furnishings, equipment, machinery and
Amended and Restated Closing Certificate and Agreement (RTP Data Center) – Page 33

 

 

other personal property. Further, BNPPLC acknowledges that the lenders providing such financing may require confirmation from BNPPLC of its agreements concerning landlord’s liens and other matters set forth in this subparagraph 4(E), and NAI may obtain such confirmation in any statement required of BNPPLC by the next subparagraph.
     (F) Estoppel Letters. Upon thirty days written request by NAI at any time and from time to time prior to the Designated Sale Date, BNPPLC must 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 Base Rent payable by NAI under the Lease has been paid, stating whether BNPPLC is aware of any Default by NAI that may exist under the Operative Documents and confirming BNPPLC’s agreements concerning landlord’s liens and other matters set forth in subparagraph 4(E). Any such statement by BNPPLC 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.
     (G) No Implied Representations or Promises by BNPPLC. NAI acknowledges and agrees that neither BNPPLC nor its representatives or agents have made any representations or promises with respect to the Property or the transactions contemplated in the Operative Documents except as expressly set forth in the Operative Documents, and no rights, easements or licenses are being acquired by NAI from BNPPLC by implication or otherwise, except as expressly set forth in the other Operative Documents.
5 Usury Savings Provision. Notwithstanding anything to the contrary in any of the Operative Documents, BNPPLC does not intend to contract for, charge or collect any amount of money from NAI that constitutes interest in excess of the maximum nonusurious rate of interest, if any, allowed by applicable usury laws (the “Maximum Rate”). BNPPLC and NAI agree that it is their intent in the execution of the Lease, the Purchase Agreement and other Operative Documents to contract in strict compliance with applicable usury laws, if any. In furtherance thereof, BNPPLC and NAI stipulate and agree that none of the provisions of the Lease, the Purchase Agreement or the other Operative Documents shall ever be construed to create a contract requiring compensation for the use, forbearance or detention of money at a rate in excess of the Maximum Rate, and the provisions of this paragraph shall control over all other provisions of this Certificate or other Operative Documents which may be in apparent conflict herewith. All interest paid or agreed to be paid by NAI to BNPPLC shall, to the extent permitted by applicable usury laws, be amortized, prorated, allocated, and spread throughout the period that any principal upon which such interest accrues is expected to be outstanding (including without limitation any renewal or extension of the term of the Lease) so that the amount of interest included in such payments does not exceed the maximum nonusurious amount permitted by applicable usury laws. If the Designated Sale Date is accelerated and as a result thereof amounts paid by NAI to
Amended and Restated Closing Certificate and Agreement (RTP Data Center) – Page 34

 

 

BNPPLC as interest are determined to exceed the interest that would have accrued at the Maximum Rate for the period prior to the Designated Sale Date, then BNPPLC shall, at its option, either refund to NAI the amount of such excess or credit such excess as a Qualified Prepayment (and thus reduce the Lease Balance and other amounts, the determination of which depend upon Qualified Prepayments credited to NAI) and thereby shall render inapplicable any and all penalties of any kind provided by applicable usury laws as a result of such excess interest. If BNPPLC receives money (or anything else) that is determined to constitute interest and that would, but for this provision, increase the effective interest rate received by BNPPLC under or in connection with the Operative Documents to a rate in excess of the Maximum Rate, then the amount determined to constitute interest in excess of the maximum nonusurious interest shall, immediately following such determination, be returned to NAI or be credited as a Qualified Prepayment, in which event any and all penalties of any kind under applicable usury law shall be inapplicable. If BNPPLC does not actually receive, but shall contract for, request or demand, a payment of money (or anything else) which is determined to constitute interest and to increase the effective interest rate contracted for or charged to a rate in excess of the Maximum Rate, BNPPLC shall be entitled, following such determination, to waive or rescind the contractual claim, request or demand for the amount determined to exceed the Maximum Rate, in which event any and all penalties of any kind under applicable usury law shall be inapplicable. If at any time NAI should have reason to believe that the transactions evidenced by the Operative Documents are in fact usurious, NAI shall promptly give BNPPLC notice of such condition, after which BNPPLC shall have ninety days in which to make appropriate refund or other adjustment in order to correct such condition if it in fact exists.
6 Obligations of NAI Under Other Operative Documents Not Limited by this Certificate. Except as provided above in Paragraph 5, nothing contained in this Certificate will limit, modify or otherwise affect any of NAI’s obligations under the other Operative Documents. Subject to Paragraph 5, those obligations are intended to be separate, independent and in addition to, and not in lieu of, those established by this Certificate.
7 Obligations of NAI Hereunder Not Limited by Other Operative Documents. Recognizing that but for this Certificate (including the representations of NAI set forth in Paragraph 1) BNPPLC would not acquire the Property or enter into the other Operative Documents, NAI agrees that BNPPLC’s rights for any breach of this Certificate (including a breach of such representations) will not be limited by any provision of the other Operative Documents that would limit NAI’s liability thereunder.
8 Waiver of Jury Trial. By its execution of this Certificate, each of NAI and BNPPLC hereby waives (to the extent permitted by Applicable Law) its respective rights to a jury trial of any claim or cause of action based upon or arising out of the Operative Documents or any of them or any other document or dealings between them relating to the Property. The scope of this waiver is
Amended and Restated Closing Certificate and Agreement (RTP Data Center) – Page 35

 

 

intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. This waiver is a material inducement to each of BNPPLC and NAI as they enter into a business relationship; each has already relied on the waiver in entering into the Operative Documents; and each will continue to rely on the waiver in their related future dealings. NAI and BNPPLC, each having reviewed this waiver with its legal counsel, knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. This waiver is irrevocable, meaning that it may not be modified either orally or in writing, and the waiver will apply to any subsequent amendments, renewals, supplements or modifications to each of the Operative Documents or to any other documents or agreements relating to the Property. In the event of litigation, this Certificate may be filed as a written consent to a trial by the court.
9 Amendment and Restatement of Prior Certificate. This Certificate amends, restates and replaces entirely the Prior Closing Certificate and Agreement. Without limiting the rights and obligations of NAI under this Certificate, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Closing Certificate and Agreement are now made subject to the terms and conditions of this Certificate; and all rights and interests of BNPPLC in and to the Land or other Property under the Prior Closing Certificate and Agreement are renewed and extended (rather than terminated) by this Certificate.
[The signature pages follow.]
Amended and Restated Closing Certificate and Agreement (RTP Data Center) – Page 36

 

 

     IN WITNESS WHEREOF, this Amended and Restated Closing Certificate and Agreement (RTP Data Center) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
Amended and Restated Closing Certificate and Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Closing Certificate and Agreement (RTP Data Center) dated as of November 29, 2007.]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Closing Certificate and Agreement (RTP Data Center) – Signature Page

 

 

Exhibit A
Legal Description
BEING a portion of Site 12 as shown on the map entitled “Exempt Subdivision Map of Site 12”, prepared by Barbara H. Mulkey Engineering, Inc., on May 30, 2000 as recorded in the Book of Maps 2000, Page 1300, Wake County, North Carolina Registry, such portion being described as follows:
Unit 4 and the Additional Leased Premises, both as defined below (collectively, the “Ground Lease Premises”).
As used in this Exhibit:
     (1) “Additional Leased Premises” means the land surrounding and adjacent to Unit 4, depicted on the site plan attached to and made a part of this Exhibit as the area shaded in gray, which includes parking lots, driveways and other areas within the larger area designated as Common Elements in the Condominium Declaration. The outer boundaries of the Additional Leased Premises are described by metes and bounds on the last page attached to and made a part of this Exhibit. All land within those outer boundaries, other than Unit 4, is included in the Additional Leased Premises.
     (2) “Condominium Declaration” means the Declaration of Condominium for NetApp RTP Phase I Condominium recorded in Book 012647, Page 01310, Wake County, North Carolina Registry.
     (3) “Condominium Map” means the plat provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached to and made a part of this Exhibit. (The Condominium Map has also been filed in the Book of Maps CM2007, Page 444A1, Wake County, North Carolina Registry.)
     (4) “Unit 4” means the land designated and described in the Condominium Declaration as Unit 4 and is shown on the Condominium Map and site plan attached to and made a part of this Exhibit.
TOGETHER WITH, easements appurtenant to the Amended and Restated Ground Lease Premises as described in Exhibit A attached to the Ground Lease dated as of November 29, 2007 between BNPPLC, as lessee, and NAI, as lessor (the “Ground Lease”);
SUBJECT, HOWEVER, to an easement reserved over the Additional Leased Premises (but not any part of Unit 4) in favor of the Association as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
Exhibit A to Amended and Restated
Closing Certificate and Agreement (RTP Data Center) – Page 2

 

 

(MAP)
Exhibit A to Amended and Restated
Closing Certificate and Agreement (RTP Data Center) – Page 3

 

 

Attachment to Exhibit A — Metes and Bounds
Description of “Additional Leased Premises”
     The following is a metes and bounds description of the outer boundaries of the Additional Leased Premise:
BEGINNING at NCGS Monument “Hopson”, said monument having NC Grid Coordinates of N=773,72l.48 and E=2,034,907.39 (NAD 83). traveling thence South 11º 44' 59" West 6154.66 feet to a right-of-way monument on the southern margin of Louis Stephens Drive (a 100 foot public right-of-way), thence North 72º 48' 35" East 164.29 feet to a right-of-way monument on the southern margin of Kit Creek Road (a 150 foot public right-of-way); thence with the southern margin of said Kit Creek Road the following two (2) courses and distances:
     (1) South 68º 46' 54 East 4l2.64 feet to a right-of-way monument; and
     (2) with a curve to the right having a radius of 924.83 feet, an arc length of 475.96, and a chord bearing and distance of South 54º 02' 59"
           East 470.72 feet to a computed point;
said computed being the POINT AND PLACE OF BEGINNING; thence from said point of beginning and continuing with the southern margin of Kit Creek Road South 39º 18' 29" East 571.64 feet to a computed point, thence cornering and leaving said right-of-way and with the common line of property now or formerly owned by Research Triangle Foundation of NC (DB 1670 PG 239) the following two (2) courses and distances:
     (1) South 50º 41' 31" West 100.00 feet to an iron pipe found; and
     (2) South 83º 31' 01" West 483.47 feet to an iron pipe found;
thence cornering and along three (3) new lines within the bounds of property owned by Network Appliance. Inc. (DB 10941 Pg 2054) as follows:
     (1) North 12º 44' 00" West 279.97 feet
     (2) North 48º 55' 31" West 50.30 feet; and
     (3) North 32º 57' 24" East 401.61 feet to a point along the southern margin of said Kit Creek Road;
thence with the southern margin of Kit Creek Road along a curve to the right having a radius of 925.04 feet, an arc length of 113.05 feet and a chord bearing and distance of South 42º 48' 33" East 112.98 feet to the POINT AND PLACE OF BEGINNING, containing 5.36 acres (233,621 square feet), more or less, said area shown on the rendering attached hereto.
Exhibit A to Amended and Restated
Closing Certificate and Agreement (RTP Data Center) – Page 4

 

 

Exhibit B
Quarterly Certificate
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Gentlemen:
     This Certificate is furnished pursuant to subparagraph 2(D)(3) of the Amended and Restated Closing Certificate and Agreement (RTP Data Center) dated as of November 29, 2007 between Network Appliance, Inc. and BNP Paribas Leasing Corporation(as amended, the “Closing Certificate”). Terms defined in the Closing Certificate and used but not otherwise defined in this Certificate are intended to have the respective meanings ascribed to them in the Closing Certificate.
     The undersigned, being a Responsible Financial Officer of Network Appliance, Inc., represents and certifies the following to BNP Paribas Leasing Corporation:
     (a) No Event of Default or material Default by NAI has occurred except as follows:
[If an Event of Default or material Default by NAI has occurred, insert a description of the nature thereof and the action which NAI has taken or proposes to take to rectify it; otherwise, insert the word “none”.]
     (b) The representations and warranties by NAI in the Closing Certificate are true and complete in all material respects on and as of the date of this Certificate as though made on and as of such date.
     (c) the calculations set forth in the attachment to this Certificate, which show whether NAI is complying with financial covenants set forth in subparagraph 3(C) of the Closing Certificate based upon the most recent information available, are true and complete.

 

 

     Executed this                      day of                                          , 20    .
[INSERT SIGNATURE BLOCK FOR A  
RESPONSIBLE FINANCIAL OFFICER]
Exhibit B to Amended and Restated
Closing Certificate and Agreement (RTP Data Center) – Page 2

 

 

Exhibit C
Form of Disclosure Letter
 
NETWORK APPLIANCE, INC.
DISCLOSURE LETTER
To:    JPMorgan Chase Bank, National Association, as Administrative Agent (“Agent”), under that certain Credit Agreement dated as of November                     , 2007 (as such agreement may be amended, restated or otherwise modified in writing from time to time, the “Credit Agreement”) among Network Appliance, Inc. (the “Borrower”), the lenders from time to time party thereto, BNP Paribas, as syndication agent, and Agent.
This Disclosure Letter is delivered to you pursuant to the Credit Agreement. The items set forth in the attached Schedules represent exceptions, qualifications, permitted items and disclosures that are listed herein pursuant to the terms of the Credit Agreement. Capitalized terms used herein (or in the attached schedules) and defined in the Credit Agreement shall have the meanings ascribed in the Credit Agreement, unless the context otherwise requires.
IN WITNESS WHEREOF, the undersigned has executed this Disclosure Letter as of November                     , 2007.
         
  NETWORK APPLIANCE, INC.
 		  
  By:      
    Name:  Ingemar Lanevi   
    Title:  Treasurer   
 

 

 

Schedule 3.01
Subsidiaries
                 
    Material Domestic           Percentage
Subsidiary   Subsidiary (Y/N)   Jurisdiction   Shareholder   Interest
Network Appliance Global Ltd.
   N   Bermuda   Network Appliance Inc.   100%
 
                
Network Appliance Holdings Ltd.
   N   Cyprus   Network Appliance Global Ltd.   100%
 
                
Network Appliance Holding & Manufacturing BV
   N   Netherlands   Network Appliance Holdings Ltd.   100%
 
                
Network Appliance BV
   N   Netherlands   Network Appliance Holding & Mfg BV   100%
 
                
Network Appliance ApS
   N   Denmark   Network Appliance Holdings Ltd.   100%
 
                
Network Appliance Ltd
   N   UK   Network Appliance BV   100%
 
                
Network Appliance SAS
   N   France   Network Appliance BV   100%
 
                
Network Appliance GmbH
   N   Germany   Network Appliance BV   100%
 
                
Network Appliance Srl.
   N   Italy   Network Appliance BV   100%
Exhibit C to Closing Amended and Restated
Certificate and Agreement (RTP Data Center) – Page 2

 

 

                 
    Material Domestic           Percentage
Subsidiary   Subsidiary (Y/N)   Jurisdiction   Shareholder   Interest
Network Appliance GmbH
   N   Switzerland   Network Appliance BV   100%
 
                
Network Appliance (Sales) Limited
   N   Ireland   Network Appliance BV   100%
 
                
Network Appliance GesmbH
   N   Austria   Network Appliance BV   100%
 
                
Network Appliance SL
   N   Spain   Network Appliance BV   100%
 
                
Network Appliance BVBA
   N   Belgium   Network Appliance BV   100%
 
                
Network Appliance Israel Ltd.
   N   Israel   Network Appliance BV   100%
 
                
Network Appliance Israel R&D, Ltd.
   N   Israel   Network Appliance Inc.   100%
 
                
Network Appliance Poland Sp. z.o.o.
   N   Poland   Network Appliance BV   100%
 
                
Network Appliance Sweden AB
   N   Sweden   Network Appliance BV   100%
 
                
Network Appliance South Africa (Pty) Ltd.
   N   South Africa   Network Appliance BV   100%
 
                
Network Appliance Finland Oy
   N   Finland   Network Appliance BV   100%
Exhibit C to Closing Amended and Restated
Certificate and Agreement (RTP Data Center) – Page 3

 

 

                 
    Material Domestic           Percentage
Subsidiary   Subsidiary (Y/N)   Jurisdiction   Shareholder   Interest
Network Appliance Norway AS
   N   Norway   Network Appliance BV   100%
 
                
Network Appliance BV (Representative Office)
   N   UAE   Network Appliance BV   100%
 
                
Network Appliance BV (Representative Office)
   N   Turkey   Network Appliance BV   100%
 
                
Network Appliance BV (Representative Office)
   N   Russia   Network Appliance BV   100%
 
                
Network Appliance Luxembourg S.a.r.l.
   N   Luxembourg   Network Appliance BV   100%
 
                
Network Appliance BV (Representative Office)
   N   Indonesia   Network Appliance BV   100%
 
                
Network Appliance BV (Representative Office)
   N   Philippines   Network Appliance BV   100%
 
                
Network Appliance KK
   N   Japan   Network Appliance Inc.   100%
 
                
Network Appliance Pty. Ltd.
   N   Australia   Network Appliance Global Ltd.   100%
 
                
Network Appliance Mexico S. de R.L. de C.V.
  N   Mexico   Network Appliance Inc.   100%
 
                
Network Appliance Singapore Private Ltd.
   N   Singapore   Network Appliance Inc.   100%
Exhibit C to Closing Amended and Restated
Certificate and Agreement (RTP Data Center) – Page 4

 

 

                 
    Material Domestic           Percentage
Subsidiary   Subsidiary (Y/N)   Jurisdiction   Shareholder   Interest
Network Appliance Sdn Bhd
   N   Malaysia   Network Appliance Inc.   100%
 
                
Network Appliance Systems Private Ltd.
   N   India   Network Appliance Inc.   100%
 
                
Network Appliance Argentina Srl
   N   Argentina   Network Appliance Inc.   100%
 
                
Network Appliance Ltd.
   N   Brazil   Network Appliance Inc.   100%
 
                
Network Appliance Canada Ltd.
   N   Canada   Network Appliance Inc.   100%
 
                
Network Appliance (Shanghai) Commercial Co., Ltd.
   N   China   Network Appliance BV   100%
 
                
Network Appliance (Hong Kong) Limited
   N   Hong Kong   Network Appliance BV   100%
 
                
Network Appliance, Inc. (Representative Office)
   N   China, Beijing   Network Appliance Inc.   100%
 
                
Network Appliance, Inc. (Representative Office)
   N   China, Shanghai   Network Appliance   100%
 
                
Network Appliance, Inc. (Representative Office)
   N   China, Guangzhou   Network Appliance Inc.   100%
 
                
Network Appliance, Inc. (Representative Office)
   N   Korea   Network Appliance Inc.   100%
Exhibit C to Closing Amended and Restated
Certificate and Agreement (RTP Data Center) – Page 5

 

 

                 
    Material Domestic           Percentage
Subsidiary   Subsidiary (Y/N)   Jurisdiction   Shareholder   Interest
Network Appliance, Inc. (Representative Office)
   N   Taiwan   Network Appliance Inc.   100%
 
                
Network Appliance, Inc. (Representative Office)
   N   Hong Kong   Network Appliance Inc.   100%
 
                
Network Appliance Federal Systems, Inc.
   N   California   Network Appliance Inc.   100%
 
                
Network Appliance Financial Solutions, Inc.
   N   Delaware   Network Appliance Inc.   100%
 
                
Spinnaker Networks, Inc.
   N   Delaware   Network Appliance Inc.   100%
 
                
Spinnaker Networks, LLC
   N   Delaware   Network Appliance Inc.   100%
 
                
Alacritus, Inc.
   N   Delaware   Network Appliance Inc.   100%
 
                
Decru, Inc.
   N   Delaware   Network Appliance Inc.   100%
 
                
Decru BV
   N   Netherlands   Network Appliance Holding & Mfg BV   100%
 
                
Network Appliance Limited
   N   Thailand   Network Appliance Inc.   100%
 
                
Network Appliance Saudi Arabia LLFC
   N   Saudi Arabia   Network Appliance BV   100%
 
                
Decru Ltd.
   N   U.K.   Decru Inc.   100%
 
                
Exhibit C to Closing Amended and Restated
Certificate and Agreement (RTP Data Center) – Page 6

 

 

                 
    Material Domestic           Percentage
Subsidiary   Subsidiary (Y/N)   Jurisdiction   Shareholder   Interest
Topio, Inc.
   N   Delaware   Network Appliance Inc.   100%
Commitments or Obligations of Borrower or any Subsidiary to issue capital or other equity interests:
     None.
Options, warrants or other rights to acquire capital or other equity interests of Borrower or any Subsidiary:
     None.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (RTP Data Center) – Page 7

 

 

Schedule 3.06
Disclosed Matters
None.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (RTP Data Center) – Page 8

 

 

Schedule 6.01
Existing Indebtedness
Secured Credit Agreement, dated as of October 5, 2007, by and among Network Appliance, Inc., the lenders party thereto and JPMorgan Chase Bank, National Association, as administrative agent.
Loan Agreement, dated as of March 31, 2006, by and among Network Appliance Global, Ltd., as the borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. See attached schedule of existing letters of credit and bank guarantees.
Lease Agreements, dated as of December 15, 2005, December 16, 2006, and July 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc., and those certain Closing Certificates executed in connection with such Lease Agreements, dated as of December 15, 2005, December 16, 2006, and July 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (RTP Data Center) – Page 9

 

 

Schedule 6.02
Existing Liens
Liens in connection with items disclosed on Schedule 6.01.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (RTP Data Center) – Page 10

 

 

Schedule 6.05
Existing Affiliate Transactions
Transaction arising in connection with commissionaire agreements between Network Appliance B. V. and each of its subsidiaries and related arrangements with respect to payment of value added taxes.
Transactions arising in connection that certain Technology License Agreement, effective as of May 1, 2000, by and between Network Appliance Global Ltd. and Network Appliance B.V.
Transactions arising in connection that certain Technology License Agreement, effective as of May 1, 2000, by and between Network Appliance Global Ltd. and Network Appliance Inc.
Transactions arising in connection with that certain Technology License Agreement, entered into as of April 27, 2002, by and between Network Appliance, Inc. and Network Appliance Global Ltd.
Transactions arising in connection with that certain Technology License Agreement, entered into as of May 1, 2004, by and between Network Appliance Global Ltd. and Spinnaker Networks Inc.
Transactions arising in connection with that certain Technology License Agreement, entered into as of May 3, 2005, by and between Network Appliance Inc. and Alacritus Inc.
Transactions arising in connection with that certain Technology License Agreement, entered into as of April 29, 2006, by and between Network Appliance Global Ltd. and Decru Inc.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (RTP Data Center) – Page 11

 

 

Schedule 6.06
Existing Restrictive Agreements
Secured Credit Agreement, dated as of October 5, 2007, by and among Network Appliance, Inc., the lenders party thereto and JPMorgan Chase Bank, National Association, as administrative agent.
Loan Agreement dated as of March 31, 2006, by and among Network Appliance Global, Ltd., as the borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
Lease Agreements, dated as of December 15, 2005, December 16, 2006, and June 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc., and those certain
Closing Certificates executed in connection with such Lease Agreements, dated as of December 15, 2005, December 16, 2006, and June 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc.
Letter Agreement between Wells Fargo Bank, National Association, and Borrower, dated as of December 1, 2006, providing Borrower with a revolving line of credit for the issuance of letters of credit in an aggregate principal amount not to exceed $5,000,000.
Exhibit C to Closing Amended and Restated
Certificate and Agreement (RTP Data Center) – Page 12

 

 

Exhibit D
Certificate of BNPPLC Re: Accounting
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Gentlemen:
     This certificate is furnished pursuant to subparagraph 4(A) of the Amended and Restated Closing Certificate and Agreement (RTP Data Center) dated as of November 29, 2007 between BNP Paribas Leasing Corporation and Network Appliance, Inc. (as amended, the “Closing Certificate”). Terms defined in the Closing Certificate and used but not otherwise defined in this certificate are intended to have the respective meanings ascribed to them in the Closing Certificate.
     BNP Paribas Leasing Corporation (“ BNPPLC”) certifies that the following are true and complete in all material respects, but only to the knowledge of BNPPLC as of the date hereof:
     (A) The facts disclosed in any financial statements or other documents listed in the Annex attached to this certificate were (as of their respective dates) true and complete in all material respects. Copies of such statements or other documents were provided by or behalf of BNPPLC to NAI prior to the date hereof to permit NAI to determine the appropriate accounting for NAI’s relationship with BNPPLC under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN 46”).
     (B The fair value of the Property and of other properties, if any, leased to NAI by BNPPLC (collectively, whether one or more, the “Properties Leased to NAI”) are, as of the date hereof, less than half of the total of the fair values of all assets of BNPPLC, excluding any assets of BNPPLC which are held within a silo. Further, none of the Properties Leased to NAI are, as of the date hereof, held within a silo.
     Although the representations required of BNPPLC by this certificate are intended to cover facts, it is understood and agreed (consistent with subparagraph 4(C) of the Lease) that BNPPLC has not made and will not make any representation or warranty as to the proper accounting by NAI or its Affiliates of the Lease or other Operative Documents or as to other accounting conclusions.

 

 

     Executed this                      day of                                          , 20    .
                 
    BNP PARIBAS LEASING CORPORATION, a Delaware corporation    
                 
    By:            
             
        Name:        
        Title:  
 
    
                 
Exhibit D to Closing Amended and Restated
Certificate and Agreement (RTP Data Center) – Page 2

 

exv10w51
Exhibit 10.51
AMENDED AND RESTATED
CONSTRUCTION AGREEMENT
(RTP DATA CENTER)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

TABLE OF CONTENTS
         
    Page  
ENGAGEMENT AND AUTHORIZATION     1  
 
        
GENERAL TERMS AND CONDITIONS     2  
 
        
1   Additional definitions
     2  
“97-10/Maximum Permitted Prepayment”
     2  
“97-10/Meltdown Event”
     2  
“97-10/Prepayment”
     3  
“97-10/Project Costs”
     3  
“97-10/Pronouncement”
     4  
“NAI’s Estimate of Force Majeure Delays”
     4  
“NAI’s Estimate of Force Majeure Excess Costs”
     4  
“Accrued Construction Period Interest Expense”
     4  
“Administrative Fee”
     5  
“Affiliate’s Contract”
     5  
“Arrangement Fee”
     5  
“Capital Adequacy Charges”
     5  
“Carrying Costs”
     5  
“Commitment Fee Rate”
     5  
“Commitment Fees”
     6  
“Complete Taking”
     7  
“Completion Date”
     7  
“Completion Notice”
     7  
“Construction Advances”
     7  
“Construction Advance Request”
     7  
“Construction Allowance”
     7  
“Construction Budget”
     7  
“Construction Project”
     7  
“Covered Construction Period Losses”
     8  
“Defective Work”
     8  
“FOCB Notice”
     8  
“Force Majeure Event”
     8  
“Funded Construction Allowance”
     8  
“Future Work”
     9  
“Ground Lease Rents”
     9  
“Increased Cost Charges”
     9  
“Increased Commitment”
     9  
“Increased Funding Commitment”
     9  
“Increased Time Commitment”
     9  
“Initial Advance”
     9  

 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
       
“Maximum Construction Allowance”
     9  
“Notice of NAI’s Intent to Terminate”
     9  
“Notice of NAI’s Intent to Terminate Because of a Force Majeure Event”
     9  
“Notice of Termination by NAI”
     9  
“Outstanding Construction Allowance”
     9  
“Owner’s Election to Continue Construction”
     9  
“Pre-lease Casualty”
     9  
“Pre-lease Force Majeure Delays”
     10  
“Pre-lease Force Majeure Event”
     10  
“Pre-lease Force Majeure Event Notice”
     10  
“Pre-lease Force Majeure Excess Costs”
     10  
“Pre-lease Force Majeure Losses”
     10  
“Prior Work”
     11  
“Projected Cost Overruns”
     11  
“Reimbursable Construction Period Costs”
     11  
“Remaining Proceeds”
     12  
“Scope Change”
     12  
“Target Completion Date”
     12  
“Termination of NAI’s Work”
     12  
“Third Party Contract”
     12  
“Third Party Contract/Termination Fees”
     12  
“Timing or Budget Shortfall”
     12  
“Upfront Fees”
     13  
“Work”
     13  
“Work/Suspension Event”
     13  
“Work/Suspension Notice”
     14  
“Work/Suspension Period”
     14  
 
        
2 Construction and Management of the Property by NAI
     14  
(A) The Construction Project
     14  
(1) Construction Approvals by BNPPLC
     14  
(a) Preconstruction Approvals by BNPPLC
     14  
(b) Approval of Scope Changes
     14  
(2) NAI’s Right to Possession and to Control Construction
     15  
(a) Performance of the Work
     15  
(b) Third Party Contracts
     16  
(c) Adequacy of Drawings, Specifications and Budgets
     16  
(d) Existing Condition of the Land and Improvements
     16  

(ii)

 

TABLE OF CONTENTS
(Continued)
         
    Page  
       
(e) Correction of Defective Work
     16  
(f) Clean Up
     17  
(g) No Damage for Delays
     17  
(h) No Fee For Construction Management
     17  
(3) Quality of Work
     17  
(B) Completion Notice
     17  
(C) Status of Property Acquired With BNPPLC’s Funds
     18  
(D) Insurance
     18  
(1) Liability Insurance
     18  
(2) Property Insurance
     19  
(3) Failure of NAI to Obtain Insurance
     19  
(4) Waiver of Subrogation
     19  
(E) Condemnation
     20  
(F) Additional Representations, Warranties and Covenants of NAI Concerning the Property
     20  
(1) Payment of Local Impositions
     20  
(2) Operation and Maintenance
     21  
(3) Debts for Construction, Maintenance, Operation or Development
     22  
(4) Permitted Encumbrances and the Ground Lease
     22  
(5) Books and Records Concerning the Property
     22  
(G) BNPPLC’s Right of Access
     23  
(1) Access Generally
     23  
(2) Failure of NAI to Perform
     23  
 
        
3 Amounts to be Added to the Lease Balance (in Addition to Construction Advances)
     24  
(A) Initial Advance
     24  
(B) Carrying Costs
     25  
(C) Commitment Fees
     25  
(D) Future Administrative Fees and Out-of-Pocket Costs
     26  
(E) Increased Cost Charges and Capital Adequacy Charges
     26  
(F) Ground Lease Payments
     27  
 
        
4 Construction Advances
     27  
(A) Costs Subject to Reimbursement Through Construction Advances
     27  
(B) Exclusions From Reimbursable Construction Period Costs
     29  
(C) Conditions to NAI’s Right to Receive Construction Advances
     29  
(1) Construction Advance Requests
     29  
(2) Amount of the Advances
     30  
(a) The Maximum Construction Allowance
     30  

(iii)

 

TABLE OF CONTENTS
(Continued)
         
    Page  
       
(b) Costs Previously Incurred by NAI
     30  
(c) Limits During any Work/Suspension Period
     31  
(d) Restrictions Imposed for Administrative Convenience
     31  
(3) No Advances After Certain Dates
     31  
(D) Breakage Costs for Construction Advances Requested But Not Taken
     31  
(E) No Third Party Beneficiaries
     32  
(F) No Waiver
     32  
 
        
5 Application of Insurance and Condemnation Proceeds
     32  
(A) Collection and Application Generally
     32  
(B) Advances of Escrowed Proceeds to NAI
     33  
(C) Status of Escrowed Proceeds After Commencement of the Term of the Lease
     33  
(D) Special Provisions Applicable After a 97-10/Meltdown Event or Event of Default
     33  
(E) NAI’s Obligation to Restore
     33  
(F) Special Provisions Concerning a Complete Taking
     34  
 
        
6 Notice of Cost Overruns and Pre-lease Force Majeure Events
     34  
(A) Notice of Projected Cost Overruns
     34  
(B) Pre-lease Force Majeure Event Events and Notices
     34  
 
        
7 Suspension and Termination of NAI’s Work
     34  
(A) Rights and Obligations During a Work/Suspension Period
     34  
(B) NAI’s Election to Terminate NAI’s Work
     34  
(C) BNPPLC’s Election to Terminate NAI’s Work
     38  
(D) Surviving Rights and Obligations
     38  
(E) Cooperation After a Termination of NAI’s Work
     38  
 
        
8 Continuation of Construction by BNPPLC
     40  
(A) Owner’s Election to Continue Construction
     40  
(1) Take Control of the Property
     40  
(2) Continuation of Construction
     40  
(3) Arrange for Turnkey Construction
     41  
(4) Suspension or Termination of Construction by BNPPLC
     41  
(B) Powers Coupled With an Interest
     42  
 
        
9 NAI’s Obligation for 97-10/Prepayments
     42  
 
        
10 Indemnity for Covered Construction Period Losses
     43  

(iv)

 

TABLE OF CONTENTS
(Continued)
         
    Page  
       
(A) Covenant to Indemnify Against Covered Construction Period Losses
     43  
(B) Certain Losses Included or Excluded
     44  
(1) Back to Back Claims by Participants Against BNPPLC
     44  
(2) Environmental
     45  
(3) Failure to Maintain a Safe Work Site
     45  
(4) Failure to Complete Construction
     46  
(5) Fraud
     46  
(6) Excluded Taxes and Established Misconduct
     46  
(C) Express Negligence Protection
     46  
(D) Survival of Indemnity
     47  
(E) Due Date for Indemnity Payments
     47  
(F) Order of Application of Payments
     47  
(G) Defense of BNPPLC
     47  
(1) Assumption of Defense
     47  
(2) Indemnity Not Contingent
     47  
(H) Notice of Claims
     48  
(I)  Withholding of Consent to Settlements Proposed by NAI
     48  
(J)  Settlements Without the Prior Consent of NAI
     48  
(1) Election to Pay Reasonable Settlement Costs in Lieu of Actual
     48  
(2) Conditions to Election
     49  
(3) Indemnity Survives Settlement
     49  
(K) No Authority to Admit Wrongdoing on the Part of NAI
     49  
(L) Refunds of Covered Construction Period Losses Paid by NAI
     50  
(1) Payment by BNPPLC After Refund
     50  
(2) Meaning of Refund
     50  
(3) Conditions to Payment
     51  
 
        
11 Characterization of Operative Documents; Remedies
     51  
(A) Characterization of Operative Documents
     51  
(1) Confirmation of Lien and Security Interest Granted in the Lease
     51  
(2) Foreclosure Remedies
     51  
(B) Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement
     52  
(C) Remedies Cumulative
     52  
(D) Third Party Estoppels
     53  
 
        
12 Amendment and Restatement of Prior Construction Agreement
     53  

(v)

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
     
Exhibit A
  Legal Description
 
    
Exhibit B
  Description of the Construction Project and Budget
 
    
Exhibit C
  Construction Advance Request Form
 
    
Exhibit D
  Pre-lease Force Majeure Event Notice
 
    
Exhibit E
  Notice of Termination by NAI’s Work
 
    
Exhibit F
  Notice of NAI’s Intent to Terminate
 
    
Exhibit G
  Notice of Increased Funding Commitment by BNPPLC
 
    
Exhibit H
  Notice of Increased Time Commitment by BNPPLC
 
    
Exhibit I
  Notice of Rescission of NAI’s Intent to Terminate
 
    
Exhibit J
  Form of Contractor Estoppel
 
    
Exhibit K
  Form of Design Professional Estoppel

(vi)

 

AMENDED AND RESTATED
CONSTRUCTION AGREEMENT
(RTP DATA CENTER)
     This AMENDED AND RESTATED CONSTRUCTION AGREEMENT (RTP DATA CENTER) (this “Agreement”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Agreement, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Agreement for all purposes. As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     At the request of NAI and to facilitate the transaction contemplated in the other Operative Documents, contemporaneously with this Agreement BNPPLC is executing and accepting an Amended and Restated Ground Lease (RTP Data Center) from NAI (the “Ground Lease”), pursuant to which BNPPLC is acquiring a leasehold estate in the Land described in Exhibit A and any existing Improvements on such Land.
     Also contemporaneously with this Agreement, BNPPLC and NAI are executing an Amended and Restated Lease Agreement (RTP Data Center) (the “Lease”), pursuant to which the parties expect that NAI will lease the Improvements on the Land described in Exhibit A from BNPPLC for a lease term that will commence on the Completion Date (as defined below).
     In anticipation of the construction of new or additional Improvements for NAI’s use pursuant to the Lease, BNPPLC and NAI have agreed upon the terms and conditions upon which BNPPLC is willing to authorize NAI to arrange and manage such construction and upon which BNPPLC is willing to provide funds for such construction, and by this Agreement BNPPLC and NAI desire to evidence such agreement.
ENGAGEMENT AND AUTHORIZATION
     Subject to the terms and conditions set forth in this Agreement, BNPPLC does hereby engage and authorize NAI — and NAI does hereby accept such engagement and authorization, as an independent contractor for BNPPLC — to construct the Construction Project on the Land and to manage such construction for BNPPLC. As more particularly provided in subparagraph 2(A)(2)

 

 

below, NAI will take possession and control of the Land and all Improvements on the Land to accomplish such construction. However, the rights and authority granted to NAI by this Agreement are expressly made subject and subordinate to the terms and condition hereinafter set forth and to the Ground Lease, to the Permitted Encumbrances and to any other claims or encumbrances affecting the Land or the Property that may be asserted by third parties other than Liens Removable by BNPPLC.
GENERAL TERMS AND CONDITIONS
1 Additional definitions. As used in this Agreement, capitalized terms defined above will have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and that are used but not defined herein will have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms will have the following respective meanings:
“97-10/Maximum Permitted Prepayment” as of any date means the amount equal to eighty-nine and nine-tenths of one percent (89.9%) of the aggregate of all 97-10/Project Costs paid or incurred on or prior to such date.
“97-10/Meltdown Event” means any of the following:
     (a) NAI gives a Notice of NAI’s Intent to Terminate and thereafter (i) fails to rescind the same as described in subparagraph 7(B)(7) within ten days after BNPPLC responds with any Increased Commitment, or (ii) gives a Notice of Termination by NAI as provided in subparagraph 7(B)(1); or
     (b) NAI gives a notice to terminate its Supplemental Payment Obligation under the Purchase Agreement as described in subparagraph 6(B) of the Purchase Agreement; or
     (c) BNPPLC gives notice to NAI as described in subparagraph 7(C) to cause a Termination of NAI’s Work; or
     (d) NAI fails for any reason whatsoever to substantially complete the Construction Project and give a Completion Notice to BNPPLC prior to the Target Completion Date; or
     (e) for any reason whatsoever (including the accrual of
Amended and Restated Construction Agreement (RTP Data Center) – Page 2

 

 

     Carrying Costs), the Funded Construction Allowance exceeds the Maximum Construction Allowance.
“97-10/Prepayment” means any payment to BNPPLC required by Paragraph 9, which in each case will equal (A) the 97-10/Maximum Permitted Prepayment, computed as of the date on which the payment becomes due, less (B) the sum of (1) the accreted value of any prior payments actually received by BNPPLC from NAI constituting 97-10/Prepayments, and (2) amounts (if any) then owed by BNPPLC to NAI pursuant to this Agreement as reimbursements for Reimbursable Construction Period Costs paid by NAI and not theretofore reimbursed. For purposes of the preceding sentence, “accreted value” of a payment means 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 plus the Spread.
“97-10/Project Costs” means the following:
     (a) costs incurred for 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 any Permitted Encumbrance,
 
  •   site preparation costs, and
 
  •   costs of offsite and other public improvements required as conditions of governmental approvals for the Construction Project or required by any Permitted Encumbrances;
     (b) costs incurred to maintain insurance required by (and consistent with the requirements of) this Agreement prior to the Completion Date;
     (c) Local Impositions that have accrued or become due prior to the Completion Date;
     (d) Accrued Construction Period Interest Expense; and
     (e) any costs in addition to those described in clauses (a) through (d) preceding that GAAP (as it exists on the Effective Date) would allow BNPPLC to capitalize as part of the cost of the Property or that the 97-10/Pronouncement would allow
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BNPPLC to characterize as project costs, including: (1) cancellation or termination fees or other compensation payable by NAI or BNPPLC pursuant to any contract concerning the Construction Project made by NAI or BNPPLC with any general contractor, architect, engineer or other third party because of any election by NAI or BNPPLC to cancel or terminate such contract, and (2) any costs that BNPPLC incurs and is allowed to capitalize to continue or complete the Construction Project after any Owner’s Election to Continue Construction as provided in subparagraph 8(A).
However, notwithstanding the foregoing, 97-10/Project Costs will not include Pre-lease Force Majeure Losses, Administrative Fees, the Arrangement Fee or any legal fees which are included in Transaction Expenses.
It is understood that 97-10/Project Costs will include all amounts paid, reimbursed or accrued prior to the Effective Date and included in the Initial Lease Balance that would qualify as 97-10/Project Costs under and as defined in the Prior Construction Agreement. However, it is also understood that 97-10/Project Costs will not include any costs that were paid, reimbursed or accrued prior to the Effective Date, but excluded from 97-10/Project Costs according to the definition thereof in the Prior Construction Agreement. For example, 97-10/Project Costs will not include the fee described and defined as an Arrangement Fee in the Prior Construction Agreement.
“97-10/Pronouncement” means the pronouncement issued by the Emerging Issues Task Force of the Financial Accounting Standards Board in 1998 titled “EITF 97-10: The Effect of Lessee Involvement in Asset Construction”, which provides that certain kinds of involvement by a lessee in pre-lease commencement construction will cause the lessee to be considered as the owner of the leased property during the construction period and then will require application of the appropriate sale and leaseback accounting rules.
“NAI’s Estimate of Force Majeure Delays” has the meaning indicated in subparagraph 7(B)(4).
“NAI’s Estimate of Force Majeure Excess Costs” has the meaning indicated in subparagraph 7(B)(3).
“Accrued Construction Period Interest Expense” means interest that has accrued and that BNPPLC has paid or is obligated to pay on Funding Advances for any period prior to the Completion Date. Such interest will include a percentage, equal to the aggregate Percentages of all Participants (under and as defined in the Participation Agreement), of Carrying Costs and Commitment Fees that accrue after the execution of any Participation Agreement and that are added to the Outstanding Construction Allowance as provided in this Agreement, it being understood that the additional amounts BNPPLC must pay to the
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Participants under the Participation Agreement because of the accrual of Carrying Costs and Commitment Fees effectively constitute construction period interest on advances the Participants make to BNPPLC under the Participation Agreement. Accrued Construction Period Interest Expense will also include any interest and other finance charges that accrue prior to the Completion Date because of Funding Advances provided to BNPPLC by BNPPLC’s Parent in the form of loans, regardless of whether BNPPLC’s obligation in respect of such loans is limited to BNPPLC’s interest in the Property. However, any such interest and other finance charges accruing on Funding Advances provided by BNPPLC’s Parent and included in Accrued Construction Period Interest Expense will not exceed the Carrying Costs attributable to the portion of the Lease Balance funded or maintained by such Funding Advances. Further, Accrued Construction Period Interest will not include any portion of Carrying Costs included in Pre-lease Force Majeure Losses (as set forth in the definition thereof below) or interest or finance charges that BNPPLC must pay to the Participants under the Participation Agreement because of the accrual of such portion of Carrying Costs.
“Administrative Fee” has the meanings indicated in subparagraph 3(A) and subparagraph 3(D).
“Affiliate’s Contract” has the meaning indicated in subparagraph 2(A)(2)(b)2).
“Arrangement Fee” has the meaning indicated in subparagraph 3(A).
“Capital Adequacy Charges” has the meaning indicated in subparagraph 3(E)(1).
“Carrying Costs” has the meaning indicated in subparagraph 3(B).
“Commitment Fee Rate” means, for each Construction Period, the amount established as of the date (in this definition, the “CFR Test Date”) that is two Business Days prior to such period by reference to the pricing grid below, based upon the ratio calculated by dividing (1) Consolidated EBITDA for the then latest Rolling Four Quarters Period that ended prior to (and for which NAI has reported earnings as necessary to compute Consolidated EBITDA) into (2) the Consolidated Debt for Borrowed Money as of the end of such Rolling Four Quarters Period. In each case, the Commitment Fee Rate will be established at the Level in the pricing grid below which corresponds to such ratio; provided, that:
     (a) promptly after earnings are reported by NAI for the latest quarter in any Rolling Four Quarters Period, NAI must notify BNPPLC 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
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of this Agreement unless, prior to the CFR Test Date for the next period, NAI shall have provided BNPPLC with a written notice setting forth and certifying the calculation under this definition that justifies the reduction; and
     (b) if Commitment Fees are understated during any Construction Period because of any misstatement, subsequently discovered, of Consolidated EBITDA or Consolidated Debt for Borrowed Money, BNPPLC will be entitled to add to the Outstanding Construction Allowance or (after the Completion Date) collect from NAI all additional amounts that would have been added to the Outstanding Construction Allowance hereunder or expected to be paid under the other Operative Documents but for the misstatement, together with interest on each such additional amount computed at the Default Rate from the date it would have been included in the Outstanding Construction Allowance or expected to be paid to the date it is actually added or paid.
         
    Ratio of Consolidated Debt for    
    Borrowed Money to    
Levels   Consolidated EBITDA   Spread
Level I
  less than 0.5   6.0 basis points
 
        
Level II
  greater than or equal to 0.5, but less than 1.0   7.0 basis points
 
        
Level III
  greater than or equal to 1.0, but less than 1.5   8.0 basis points
 
        
Level IV
  greater than or equal to 1.5, but less than 2.0   10.0 basis point
 
        
Level V
  greater than or equal to 2.0   15.0 basis points
All determinations of the Commitment Fee Rate by BNPPLC will, in the absence of clear and demonstrable error, be binding and conclusive for purposes of this Agreement. Further BNPPLC may, but will 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 (a) of this definition.
“Commitment Fees” has the meaning indicated in subparagraph 3(C).
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“Complete Taking” means a taking by eminent domain prior to the Completion Date over NAI’s objection of all of the Land or the Property, or so much thereof as to make it impossible to complete the Construction Project for its intended uses on the Land regardless of any Scope Changes BNPPLC may be willing to approve or any Increased Commitment that BNPPLC may be willing to provide.
“Completion Date” means the date upon which NAI gives the notice to BNPPLC which is required by subparagraph 2(B), after having substantially completed the Construction Project and having obtained any certificate of occupancy or other permit (temporary or permanent) required for the commencement of NAI’s use of the Improvements.
“Completion Notice” means the notice required by subparagraph 2(B) from NAI to BNPPLC, advising BNPPLC that NAI has substantially completed construction of the Construction Project and has obtained any certificate of occupancy or other permit (temporary or permanent) required for the commencement of NAI’s use of the Improvements.
“Construction Advances” means (1) actual advances of funds made by or on behalf of BNPPLC to or on behalf of NAI as provided in Paragraph 4, which sets forth NAI’s rights to receive advances for Reimbursable Construction Period Costs, and (2) other amounts paid or incurred by BNPPLC that subparagraph 8(A) or other provisions of this Agreement allow BNPPLC to characterize as Construction Advances. The term “Construction Advances” will not, however, include advances of insurance proceeds, condemnation proceeds or other Escrowed Proceeds to pay or reimburse costs of repairs or restoration.
“Construction Advance Request” has the meaning indicated in subparagraph 4(C)(1).
“Construction Allowance” means the allowance to be provided by BNPPLC for the design and construction of the Construction Project, against which and from which Carrying Costs, Construction Advances and other amounts will be or may be charged and paid as provided in various provisions of this Agreement (including Paragraphs 3, 4 and 8).
“Construction Budget” means the budget for the Construction Project set forth in Exhibit B.
“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.
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“Covered Construction Period Losses” has the meaning indicated in subparagraph 10(A).
“Defective Work” has the meaning indicated in subparagraph 2(A)(2)(e).
“FOCB Notice” means a notice from BNPPLC to NAI advising NAI of any of the following events or circumstances, and also advising NAI that because of any of the following events or circumstances BNPPLC will be entitled to make the election described in subparagraph 7(C), which will constitute a Termination of NAI’s Work and a 97-10/Meltdown Event:
     (1) NAI has taken action to cancel or terminate or reduce the coverage available to BNPPLC under the builder’s risk insurance obtained for the Construction Project as required by this Agreement, or NAI has otherwise failed to maintain any insurance or to provide insurance certificates to BNPPLC as required by this Agreement and not cured such failure within ten days after receiving notice thereof, or
     (2) NAI has given any Pre-lease Force Majeure Event Notice to BNPPLC, or
     (3) an Event of Default has occurred and is continuing; or
     (4) a Work/Suspension Event has occurred and continued for more than thirty consecutive days after NAI’s receipt of a Work/Suspension Notice advising NAI of such Work/Suspension Event, and subsequent to such thirty day period the Work/Suspension Event has not been rectified by NAI.
“Force Majeure Event” means (A) any taking of any part of the Property by eminent domain prior to the Completion Date, and (B) any damage to the Improvements or disruption of the Work that occurs prior to the Completion Date and that is caused by fire or acts of God (such as flood, lightning, earthquake or hurricane), war, strikes and other labor disputes, or riot or similar civil disturbance, but only to the extent such damage or disruption (i) is beyond the control of and not caused in whole or in part by negligence, illegal acts or willful misconduct on the part of NAI or of its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI, and (ii) could not have been avoided or overcome by the exercise of due diligence or reasonable foresight on the part of NAI or of any other such party.
“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
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Outstanding Construction Allowance.
“Future Work” has the meaning indicated in subparagraph 4(C)(2)(b).
“Ground Lease Rents” has the meaning indicated in subparagraph 3(F).
“Increased Cost Charges” has the meaning indicated in subparagraph 3(E)(1).
“Increased Commitment” has the meaning indicated in subparagraph 7(B)(6).
“Increased Funding Commitment” has the meaning indicated in subparagraph 7(B)(6)(a).
“Increased Time Commitment” has the meaning indicated in subparagraph 7(B)(6)(b).
“Initial Advance” has the meaning indicated in subparagraph 3(A).
“Maximum Construction Allowance” means an amount equal to the difference computed by subtracting both the Initial Lease Balance and the Initial Advance from $61,000,000, as such amount may be increased from time to time by any Increased Funding Commitment made by BNPPLC as provided in subparagraph 7(B)(6).
“Notice of NAI’s Intent to Terminate” has the meaning indicated in subparagraph 7(B)(2).
“Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” has the meaning indicated in subparagraph 7(B)(5).
“Notice of Termination by NAI” has the meaning indicated in subparagraph 7(B)(1).
“Outstanding Construction Allowance” means, as of any date, the difference (but not less than zero) of (A) the total Construction Advances made by or on behalf of BNPPLC on or prior to such date in question, plus (B) all Carrying Costs, Commitment Fees, Administrative Fees, Increased Cost Charges and Capital Adequacy Charges added on or prior to the date as provided in Paragraph 3, less (C) any funds received and applied as Qualified Prepayments on or prior to such date.
“Owner’s Election to Continue Construction” has the meaning indicated in subparagraph 8(A).
“Pre-lease Casualty” has the meaning indicated in subparagraph 2(A)(2)(a).
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“Pre-lease Force Majeure Delays” means delays in the completion of the Work to the extent (but only to the extent) caused solely by a Pre-lease Force Majeure Event.
“Pre-lease Force Majeure Event” means a Force Majeure Event that occurs prior to the Completion Date; provided, however, that if NAI does not notify BNPPLC of any such Force Majeure Event by the delivery of a Pre-lease Force Majeure Event Notice within thirty days after the Force Majeure Event first occurs or commences, then such Force Majeure Event will not qualify as a “Pre-lease Force Majeure Event” for purposes of this Agreement or the other Operative Documents.
“Pre-lease Force Majeure Event Notice” has the meaning indicated in subparagraph 6(B).
“Pre-lease Force Majeure Excess Costs” means the amount (if any) by which the increases in the costs of the Work resulting directly and solely from a Pre-lease Force Majeure Event (such as, for example, the costs of repairing damage to the Improvements caused by a Pre-lease Force Majeure Event) exceed the amounts available to pay or reimburse NAI for such increased costs. Amounts available to pay or reimburse such increased costs will include (a) insurance proceeds or any recovery from a third party (including any Escrowed Proceeds held by BNPPLC), and (b) any part of the Construction Allowance (including any unused contingency amount in the Construction Budget) not used or needed to cover other Reimbursable Construction Period Costs.
“Pre-lease Force Majeure Losses” means any of the following Losses that BNPPLC suffers by reason of any taking or damage to the Improvements which constitutes a Pre-lease Force Majeure Event:
     (a) the costs of repairing any such damage to the extent that such costs have, as of the date of any required determination of Pre-lease Force Majeure Losses, been paid or reimbursed from a Construction Advance (and thus are included in the Lease Balance as of that date), to be distinguished from costs of repairs paid or reimbursed from insurance proceeds or from any recovery from a third party;
     (b) any diminution in the value of the Improvements resulting from any such taking or resulting from any such damage that has not, as of the date of the required determination of Pre-lease Force Majeure Losses, been repaired;
     (c) any increase in the total amount of Carrying Costs, Commitment Fees, Administrative Fees, Increased Cost Charges, Capital Adequacy Charges and Ground Lease Rents (and any other amounts) added to the Lease Balance as
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provided in Paragraph 3 solely by reason of Pre-lease Force Majeure Delays; and
     (d) to the extent not already included in the increase described in the preceding clause, all increases in Carrying Costs that are attributable to the amounts included in Pre-lease Force Majeure Losses pursuant to the preceding clause (a);
but in each case such amounts will constitute Pre-lease Force Majeure Losses only to the extent, if any, that they are not offset by condemnation or insurance proceeds which are (1) paid by reason of such Pre-lease Force Majeure Event (including insurance proceeds paid to compensate BNPPLC or NAI for increased financing costs, the lost time value of BNPPLC’s investment in the Project or business interruption) and (2) applied as a Qualified Prepayment to reduce the Lease Balance.
Also, for purposes of this definition, the diminution in the value of the Improvements, as described in the preceding clause (b), because of any damage that constitutes a Pre-lease Force Majeure Event will not exceed the amount thereof estimated in good faith by any independent appraiser or insurance adjuster engaged by BNPPLC to determine such amount after BNPPLC has received a Pre-lease Force Majeure Event Notice as provided in subparagraph 6(B), nor will it exceed the cost of repairing the damage as estimated in good faith by any such independent insurance adjuster or as indicated by any bona fide written bid to make the repairs that BNPPLC obtains from a reputable contractor capable of making the repairs.
“Prior Work” has the meaning indicated in subparagraph 4(C)(2)(b).
“Projected Cost Overruns” means 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 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, plus (ii) any Escrowed Proceeds then available or expected to be available to cover costs of repairs and restoration that NAI will perform as part of the Work after a casualty or condemnation, less (iii) all projected future Carrying Costs, Commitment Fees, Administrative Fees and other amounts to be added to the Outstanding Construction Allowance as provided in Paragraph 3.
“Reimbursable Construction Period Costs” has the meaning indicated in subparagraph 4(A).
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“Remaining Proceeds” has the meaning indicated in subparagraph 5(A).
“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 the site plan or 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 BNPPLC by NAI. As used in this definition, a “material difference” means a difference that could reasonably be expected to (a) cause the Lease Balance to exceed the fair market value of the Property when the Construction Project is completed and all Construction Advances required in connection therewith have been funded, or significantly increase any such excess, (b) change the general character of the Improvements from that needed to accommodate the uses to be permitted by subparagraph 2(A) of the Lease, or (c) cause or exacerbate Projected Cost Overruns.
“Target Completion Date” means January 31, 2009, as such date may be extended from time to time by any Increased Time Commitment made by BNPPLC as provided in subparagraph 7(B)(6)(b).
“Termination of NAI’s Work” means a termination of NAI’s rights and obligations to continue the Work because of an election to terminate made by NAI pursuant to subparagraph 7(B) or because of an election by BNPPLC made pursuant to subparagraph 7(C).
“Third Party Contract” has the meaning indicated in subparagraph 2(A)(2)(b)1).
“Third Party Contract/Termination Fees” means any amounts, 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 only by reason of Prior Work as of the date of any such termination will not be characterized as Third Party Contract/Termination Fees. If NAI reserves an absolute express right in a Third Party Contract to terminate such contract at any time, without cause, for a specified U.S. dollar amount, such amount will constitute a Third Party Contract/Termination Fee. If no such right is reserved in a Third Party Contract, the amount of damages that NAI is required to pay (in addition to payments required for Prior Work) upon a repudiation of the Third Party Contract by NAI will qualify as a “Third Party Contract/Termination Fee” applicable to such contract for purposes of this Agreement.
“Timing or Budget Shortfall” means that, as of any time prior to the Completion Date, (i) the remaining available Construction Allowance will not be sufficient to cover
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Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances (x) because the cost of the Work exceeds budgeted expectations (resulting in Projected Cost Overruns) through no fault of NAI or its employees or any other party acting under NAI’s control or with the approval or authorization of NAI, (y) because of any Pre-lease Force Majeure Event or (z) because NAI can no longer satisfy conditions to BNPPLC’s obligation to provide further Construction Advances, or (ii) the Work will not be substantially completed prior to the Target Completion Date through no fault of NAI or its employees or any other party acting under NAI’s control or with the approval or authorization of NAI. As used in this definition with respect to any party, the term “fault” will not include inadequate estimation of time or dollars unless shown to be caused by the negligence or wilful misconduct of that party.
“Upfront Fees” has the meaning indicated in subparagraph 3(A).
“Work” has the meaning indicated in subparagraph 2(A)(2)(a), and it includes all work and services, labor and materials provided by or on behalf of the Prior Construction Agreement.
“Work/Suspension Event” means any of the following:
     (1) Projected Cost Overruns have become more likely than not, in BNPPLC’s good faith judgment (taking into account any notices or Construction Draw Requests from NAI indicating that a Pre-lease Force Majeure Event may result in Projected Cost Overruns), and BNPPLC has notified NAI of such judgement and the reasons therefor.
     (2) Delays in the Work (including any delays resulting from damage to the Property by fire or other casualty or from any taking of any part of the Property by condemnation) have made it substantially unlikely, in BNPPLC’s good faith judgment, that NAI will be able to complete the Construction Project in accordance with the requirements of this Agreement prior to the Target Completion Date using only the funds available to NAI under this Agreement, and BNPPLC has notified NAI of such judgement and the reasons therefor.
     (3) BNPPLC has requested with respect to any Construction Advance, but NAI has failed to provide within thirty days after receipt of the request: (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 or other evidence reasonably establishing that all prior Construction Advances paid to NAI have been used by NAI to pay the Reimbursable Construction Period Costs for which the prior advances were requested and made.
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“Work/Suspension Notice” means a notice from BNPPLC to NAI advising NAI of any event or circumstances that constitute a Work/Suspension Event and advising NAI that (1) before the Work/Suspension Event is rectified BNPPLC may limit Construction Advances to NAI as permitted by this Agreement, and (2) unless NAI does rectify the Work/Suspension Event within thirty days after NAI’s receipt of such notice, BNPPLC may elect to send an FOCB Notice in anticipation of a Termination of NAI’s Work.
“Work/Suspension Period” means any period (1) beginning with the date of any Work/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 Work/Suspension Events are continuing, (ii) all previous FOCB Notices and Notices of NAI’s Intent to Terminate (if any) have been rescinded, and (iii) no 97-10/Meltdown Events have occurred, or (b) the effective date of any Termination of NAI’s Work as described in subparagraph 7(B) or subparagraph 7(C).
2 Construction and Management of the Property by NAI.
(A) The Construction Project.
(1) Construction Approvals by BNPPLC.
     (a) Preconstruction Approvals by BNPPLC. NAI has submitted and obtained BNPPLC’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 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, must not be inconsistent in any material respect with the plans or other items referenced in Exhibit B, except to the extent otherwise provided by any Scope Change approved by BNPPLC and except as otherwise provided in subparagraph 8(A) if BNPPLC should make an Owner’s Election to Continue Construction after any Termination of NAI’s Work.
     (b) Approval of Scope Changes. Before making a Scope Change, NAI must provide to BNPPLC a reasonably detailed written description of the Scope Change, a revised Construction Budget 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 BNPPLC before the Scope Change is implemented. After receiving such items, BNPPLC
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will endeavor in good faith to respond promptly (and in any event no later than thirty days after such receipt) to any request by NAI for approval of the Scope Change. BNPPLC will not, however, be liable for any failure to provide a prompt response. Further, BNPPLC’s approval will not in any event constitute a waiver of subparagraph 2(A)(3) or of any other provision of this Agreement or other Operative Documents.
     (2) NAI’s Right to Possession and to Control Construction. Subject to the terms and conditions set forth in this Agreement, and prior to any Termination of NAI’s Work as provided in subparagraphs 7(B) and 7(C), NAI will have possession of the Land and all Improvements on the Land to the exclusion of BNPPLC and will 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 vest in BNPPLC (as more particularly provided in subparagraph 2(C)), BNPPLC’s obligation with respect to the Construction Project will be limited to the making of advances under and subject to the conditions set forth in this Agreement. Without limiting the foregoing, NAI acknowledges and agrees that:
     (a) Performance of the Work. Except as provided in subparagraphs 7(A) and 7(D), NAI must, using its best skill and judgment and in an expeditious and economical manner not inconsistent with the interests of BNPPLC, perform or cause to be performed all work required, and must provide or cause to be provided all supplies and materials required, to design and complete construction of the Construction Project (collectively, the “Work”) no later than the Target Completion Date. 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, or required in connection with the use and occupancy thereof (e.g., 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 Completion Date (a “Pre-lease Casualty”); provided, however, the cost of any such repairs or restoration will be subject to reimbursement not only through Construction Advances made to NAI on and subject to the terms and conditions of this Agreement, but also through the application of Escrowed Proceeds as provided in Paragraph 5; and, provided further, like other Work, any such repairs and restoration to be provided by NAI will be subject to subparagraphs 7(A) and 7(B), which establish certain rights of NAI to suspend or discontinue any Work. 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.
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     (b) Third Party Contracts.
     1) NAI will 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 BNPPLC or otherwise purport to bind BNPPLC 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 must reserve the right to terminate such contract at any time, without cause, and without subjecting NAI to liability for any Third Party Contract/Termination Fee. Further, NAI must 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.
     (c) Adequacy of Drawings, Specifications and Budgets. BNPPLC has not made and will not make any representations as to the adequacy of the Construction Budget or any other budget or any 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.
     (d) Existing Condition of the Land and Improvements. NAI is familiar with the conditions of the Land and any existing Improvements on the Land. NAI will have no claim for damages against BNPPLC or for an increase in the Construction Allowance or for an extension of the deadline specified in subparagraph 2(A)(2)(a) for completing the Work by reason of any condition (concealed or otherwise) of or affecting the Land or Improvements.
     (e) Correction of Defective Work. NAI will promptly correct all Work performed prior to any Termination of NAI’s Work that does not comply with the requirements of this Agreement for any reason other than a Pre-lease Casualty (“Defective Work”). If NAI fails to correct any Defective Work or fails to carry out Work in accordance with this Agreement, BNPPLC may (but will not be required to) order NAI to stop all Work until the cause for such failure has been eliminated.
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     (f) 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.
     (g) No Damage for Delays. NAI will have no claim for damages against BNPPLC or for an increase in the Construction Allowance by reason of any delay in the performance of any Work. Nor will NAI have any claim for an extension of the deadline specified in subparagraph 2(A)(2)(a) for completing the Work because of any such period of delay, except that (i) in the case of any Pre-lease Force Majeure Delays, NAI will have certain rights as set forth in subparagraph 7(B) and other provisions of this Agreement, and (ii) in the event of intentional interference with the Work by BNPPLC itself for which NAI provides written notice to cease, NAI will be entitled to an extension of the deadline specified in subparagraph 2(A)(2)(a) as needed because of any delays resulting from such intentional interference. It is also understood that any such intentional interference by BNPPLC will constitute a Force Majeure Event. In no event, however, will BNPPLC’s exercise of its rights and remedies permitted under this Agreement or the other Operative Documents be construed as intentional interference with NAI’s performance of any Work; and thus neither BNPPLC’s exercise of its right to withhold Construction Advances at any time when NAI has failed to satisfy all conditions herein to such advances, nor BNPPLC’s exercise of its right to terminate Work by NAI as provided in subparagraph 7(C), be considered as intentional interference with the Work or a Pre-lease Force Majeure Event.
     (h) No Fee For Construction Management. NAI will have no claim under this Agreement for any fee or other compensation or for any reimbursement of internal administrative or overhead expenses (other than the out-of-pocket overhead expenses properly included in the Construction Budget, if any), it being understood that NAI is executing this Agreement in consideration of the rights expressly granted to it herein and in the other Operative Documents.
     (3) Quality of Work. NAI will 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, and (c) in compliance with the provisions of this Agreement and the material provisions of the Permitted Encumbrances.
     (B) Completion Notice. Within fifteen Business Days after NAI substantially completes construction of the Construction Project and obtains any certificate of occupancy or
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other permit (temporary or permanent) required by Applicable Laws for the commencement of NAI’s use and occupancy of the Improvements, NAI must provide a notice (a “Completion Notice”) to BNPPLC, advising BNPPLC thereof, and thereby establish the Completion Date. For purposes of this Agreement and the other Operative Documents, BNPPLC will be entitled to rely without investigation upon any such notice given by NAI as evidence that NAI has, in fact, substantially completed the Construction Project and has obtained any certificate of occupancy or other permit (temporary or permanent) required for the commencement of NAI’s use of the Improvements, and after giving any such notice NAI will be estopped from later claiming that the Completion Date has not occurred.
     (C) Status of Property Acquired With BNPPLC’s Funds. All Improvements constructed on the Land as provided in this Agreement or the Prior Construction Agreement will constitute “Property” for purposes of the Lease and other Operative Documents. Further, to the extent heretofore or hereafter acquired (in whole or in part) with funds previously advanced by BNPPLC under the Prior Construction Agreement or with any portion of the Initial Advance or with any Construction Advances or with other funds for which NAI receives reimbursement from such funds previously advanced, the Initial Advance or Construction Advances, all furnishings, furniture, chattels, permits, licenses, franchises, certificates and other personal property of whatever nature will be considered as having been acquired on behalf of BNPPLC by NAI and will constitute “Property” for purposes of the Lease and other Operative Documents, as will all renewals or replacements of or substitutions for any such Property. The parties intend that title to the Improvements and to any other such Property will vest in BNPPLC without passing through NAI or NAI’s Affiliates before it is transferred to BNPPLC from contractors, suppliers, vendors or other third Persons, but with the understanding that all such Property will be accepted by BNPPLC subject to the terms and conditions of the other Operative Documents, including subparagraph 4(C)(1) of the Lease (concerning the characterization of the Lease and other Operative Documents for tax and certain other purposes). Although nothing herein constitutes authorization of NAI by BNPPLC to bind BNPPLC to any construction contract or other agreement with a third Person, any construction contract or other agreement executed by NAI for the acquisition or construction of Improvements or other components of the Property may, as NAI deems appropriate, provide for the direct transfer of title to BNPPLC as described in the preceding sentence.
     (D) Insurance.
     (1) Liability Insurance. Throughout the period prior to any Termination of NAI’s Work, NAI must 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 Minimum Insurance Requirements, which are set forth in an exhibit to the Common Definitions and Provisions Agreement. NAI must deliver and maintain with
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BNPPLC for each liability insurance policy required by this Agreement 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 Minimum Insurance Requirements.
     (2) Property Insurance. Throughout the period prior to any Termination of NAI’s Work, NAI must also 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 Minimum Insurance Requirements. NAI must deliver and maintain with BNPPLC for each property insurance policy required by this Agreement 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 Minimum Insurance Requirements. If any of the Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance has been required hereunder, (i) BNPPLC may, but will not be obligated to, make proof of loss if not made promptly by NAI after notice from BNPPLC, (ii) each insurance company concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC for application as required by Paragraph 5, and (iii) BNPPLC may settle, adjust or compromise any and all claims for loss, damage or destruction under any policy or policies of insurance (provided, that so long as no 97-10/Meltdown Event has occurred and no Event of Default has occurred and is continuing, BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s intention to settle any such claim before settling it unless NAI has already approved of the settlement by BNPPLC). BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any insurance proceeds. If any casualty results in damage to or loss or destruction of the Property, NAI must give prompt notice thereof to BNPPLC and Paragraph 5 will apply.
     (3) Failure of NAI to Obtain Insurance. If NAI fails to obtain any insurance or to provide confirmation of any insurance as required by this Agreement, BNPPLC will 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 BNPPLC’s other remedies under the circumstances, BNPPLC may charge the cost of such insurance against the Construction Allowance as if it were a Construction Advance paid to NAI as hereinafter provided.
     (4) 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 BNPPLC or any other Interested Party for any and all Losses, to the extent that NAI is compensated by
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insurance or would be compensated by the insurance policies contemplated in this Agreement, 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 Agreement. 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.
     (E) 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 must promptly notify the other (provided, however, BNPPLC will have no liability for its failure to provide such notice) of the pendency of such proceedings. Prior to any Termination of NAI’s Work, NAI must, if requested by BNPPLC, diligently prosecute any such proceedings and consult with BNPPLC, its attorneys and experts and cooperate with them as reasonably 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 will be paid to BNPPLC as Escrowed Proceeds, and all such proceeds will be applied as provided in Paragraph 5. BNPPLC is hereby authorized, in its own name or in the name of NAI or in the name of both, to settle and deliver valid acquittances for, or to challenge and to appeal from, any such judgment, decree or award concerning condemnation of any of the Property (provided, that so long as no 97-10/Meltdown Event has occurred and no Event of Default has occurred and is continuing, BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s intention to settle any such claim before settling it unless NAI has already approved of the settlement by BNPPLC). BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any such proceeds, judgments, decrees or awards.
     (F) Additional Representations, Warranties and Covenants of NAI Concerning the Property. Without limiting the rights granted to NAI by other provisions of this Agreement to be reimbursed from Construction Advances for the cost of complying with the following, NAI represents, warrants and covenants as follows:
     (1) Payment of Local Impositions. Throughout the period prior to any Termination of NAI’s Work, NAI must pay or cause to be paid prior to delinquency all ad valorem taxes assessed against the Property and other Local Impositions. If requested by BNPPLC from time to time, NAI will furnish BNPPLC with receipts or other appropriate evidence showing payment of all Local Impositions prior to the applicable delinquency date therefor.
     Notwithstanding the foregoing, NAI may in good faith, by appropriate proceedings,
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contest the validity, applicability or amount of any asserted Local Imposition, and pending such contest NAI will not be deemed in default under any of the provisions of this Agreement because of the Local Imposition if (1) NAI diligently prosecutes such contest to completion in a manner reasonably satisfactory to BNPPLC, 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 must be concluded and the contested Local Impositions must be paid by NAI prior to the earlier of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC 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 BNPPLC (including the Property) may be seized or sold or any other action is taken or overtly threatened against BNPPLC or against any property owned or leased by BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     (2) Operation and Maintenance. Throughout the period prior to any Termination of NAI’s Work, NAI must operate and maintain the Property in a good and workmanlike manner and in compliance with Applicable Laws in all material respects and 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 complaint or demand for corrective action given by any Governmental Authority to NAI, or to BNPPLC and forwarded by it to NAI, then for purposes of the preceding sentence, NAI will be considered not to have maintained the Property “in compliance with all Applicable Laws in all material respects” whether or not the noncompliance would be material in the absence of the complaint or demand.) NAI must 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. Without limiting the generality of the foregoing, NAI must not conduct or permit others to conduct Hazardous Substance Activities on the Property, except Permitted
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Hazardous Substance Use and Remedial Work; and NAI must not discharge or permit the discharge of anything (including Permitted Hazardous Substances) on or from the Property that would require any permit under applicable Environmental Laws, other than (1) storm water runoff, (2) fume hood emissions, (3) waste water discharges through a publicly owned treatment works, (4) discharges that are a necessary part of any Remedial Work, and (5) other similar discharges consistent with the definition of Permitted Hazardous Substance Use which do not significantly increase the risk of Environmental Losses to BNPPLC, in each case in strict compliance with Environmental Laws. To the extent that any of the following would, individually or in the aggregate, increase the likelihood of a 97-10/Meltdown Event or materially and adversely affect the value of the Property or the use of the Property for purposes permitted by this Agreement, NAI must not, without BNPPLC’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. NAI will 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 must not do anything that could reasonably be expected to significantly reduce the market value of the Property. If NAI receives a notice or claim from any federal, state or other governmental authority that the Property is not in compliance with any Applicable Law, or that any action may be taken against BNPPLC because the Property does not comply with any Applicable Law, NAI must promptly furnish a copy of such notice or claim to BNPPLC.
     (3) Debts for Construction, Maintenance, Operation or Development. NAI must promptly pay or cause to be paid all debts and liabilities incurred by it or its contractors or subcontractors in the construction, maintenance, operation or development of the Property. Such debts and liabilities will include those incurred for labor, material and equipment and all debts and charges for utilities servicing the Property.
     (4) Permitted Encumbrances and the Ground Lease. NAI must 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 or the Ground Lease throughout the period prior to any Termination of NAI’s Work. NAI must not, without the prior consent of BNPPLC, create any new Permitted Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted Encumbrance that would create or expand or purport to create or expand obligations or restrictions encumbering BNPPLC’s interest in the Property. (Whether BNPPLC must give any such consent requested by NAI prior to the Completion Date will be governed by subparagraph 4(C) of the Closing Certificate.)
     (5) Books and Records Concerning the Property. NAI must keep books and records that are accurate and complete in all material respects for NAI’s construction and management of the Property as contemplated in this Agreement and must 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
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be inspected and copied by BNPPLC.
     (G) BNPPLC’s Right of Access.
     (1) Access Generally. BNPPLC and BNPPLC’s representatives may enter the Property at any time for the purpose of making inspections or performing any work BNPPLC is authorized to undertake by the next subparagraph or for the purpose confirming whether NAI has complied with the requirements of this Agreement or the other Operative Documents. However, prior to any Termination of NAI’s Work, BNPPLC or BNPPLC’s representative will, before making any entry upon the Property or performing any work on the Property authorized by this Agreement, do the following
     (a) BNPPLC will give NAI at least 24 hours notice, unless BNPPLC believes in good faith that an emergency may exist or a Default has occurred and is continuing, because of which significant damage to the Property or other significant Losses may be sustained if BNPPLC delays entry to the Property; and
     (b) if then requested to do so by NAI in order to maintain NAI’s security, BNPPLC or its representative will: (i) sign in at NAI’s security or information desk if NAI has such a desk on the premises, (ii) wear a visitor’s badge or other reasonable identification, (iii) permit an employee of NAI to observe such inspection or work, and (iv) comply with other similar reasonable nondiscriminatory security requirements of NAI that do not, individually or in the aggregate, significantly interfere with inspections or work of BNPPLC authorized by this Agreement.
     (2) Failure of NAI to Perform. If NAI fails to perform any act or to take any action required of it by this Agreement or other Operative Documents, or to pay any money which NAI is required by this Agreement or other Operative Documents to pay, and if such failure or action constitutes an Event of Default or renders BNPPLC or any director, officer, employee or Affiliate of BNPPLC at risk of criminal prosecution or renders BNPPLC’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, BNPPLC may, perform or cause to be performed such act or take such action or pay such money. (To the extent that expenses so incurred by BNPPLC, or money so paid by BNPPLC, qualify as a Covered Construction Period Losses, NAI must pay the same to BNPPLC upon demand. If any such expenses incurred or money paid do not qualify as Covered Construction Period Losses, but do constitute 97-10/Project Costs, BNPPLC may treat them as Construction Advances hereunder. To the extent that any such expenses incurred or money paid do not qualify as Covered Construction Period Losses and do constitute 97-10/Project Costs, they will be included — with interest — in the
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Balance of Unpaid Covered Construction Period Losses under and as defined in the Purchase Agreement.) Further, BNPPLC, upon making such payment, will be subrogated to all of the rights of the person, corporation or body politic receiving such payment. But nothing herein will imply any duty upon the part of BNPPLC to do any work which, under any provision of this Agreement or otherwise, NAI may be required to perform, and the performance thereof by BNPPLC will not constitute a waiver of NAI’s default. BNPPLC may during the progress of any such work permitted by BNPPLC hereunder on or in the Property keep and store upon the Property all necessary materials, tools, and equipment. BNPPLC will 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 BNPPLC’s performance of any such work, or on account of bringing materials, supplies and equipment into or through the Property during the course of such work, and the obligations of NAI under this Agreement and the other Operative Documents will not thereby be excused in any manner.
3 Amounts to be Added to the Lease Balance (in Addition to Construction Advances).
     (A) Initial Advance. Upon execution and delivery of this Agreement by BNPPLC, an advance (the “Initial Advance”) will be made by BNPPLC to cover the cost of certain Transaction Expenses and other amounts described in this subparagraph. The amount of the Initial Advance, which will be included in the Lease Balance, may be confirmed by a separate closing certificate executed by NAI as of the Effective Date. An arrangement fee (the “Arrangement Fee”), an initial administrative agency fee (an “Administrative Fee”) and upfront fees (the “Upfront Fees”) will all be paid from the Initial Advance (and thus be included in the Lease Balance) in the amounts provided in the Closing Letter. To the extent that BNPPLC does not itself use the entire the Initial Advance to pay such fees and Transaction Expenses incurred by BNPPLC, the remainder thereof will be advanced to NAI, with the understanding that NAI will use any such amount advanced for one or more of the following purposes: (1) the payment or reimbursement of Transaction Expenses incurred by NAI and all “soft costs” incurred by NAI in connection with the planning, design, engineering, construction and permitting of the Construction Project; (2) the maintenance of the Property; or (3) the payment of other amounts due pursuant to the Operative Documents. (Before executing the separate closing certificate to confirm the Initial Advance, NAI will make a reasonable effort to determine all prior expenses incurred by it as described in clause (1) of the preceding sentence and to request an Initial Advance sufficient in amount to cover all such expenses in addition to the Arrangement Fee, the initial Administrative Fee, the Upfront Fees and all Transaction Expenses incurred by BNPPLC. However, no failure by NAI to identify and include all such expenses in the amount of the requested Initial Advance will preclude NAI from requesting reimbursement for the same through a subsequent Construction Advance as provided in Paragraph 4. Reimbursable
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Construction Period Costs to be paid or reimbursed pursuant to Paragraph 4 will not be limited to those incurred after the Effective Date.)
     (B) Carrying Costs. For each Construction Period certain charges (“Carrying Costs”) will accrue and be added to 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). If, however, for any reason the Lease Balance (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 will 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. Carrying Costs accruing for any Construction Period will be equal to:
  •   the amount equal on the first day of such Construction Period to the Lease Balance, times
 
  •   the sum of the Effective Rate and the Spread for such Construction Period, times
 
  •   a fraction, the numerator of which is the number of days in such Construction Period and the denominator of which is three hundred sixty.
     (C) Commitment Fees. For each Construction Period additional charges (“Commitment Fees”) will accrue and be added to 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). If, however, for any reason the Lease Balance (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 will include not only Commitment Fees added on or before the immediately preceding Advance Date computed as described below, but also Commitment Fees accruing on and after such preceding Advance Date to but not including the date in question. Commitment Fees for each Construction Period will be computed as follows:
  •   the Commitment Fee Rate for such Construction Period, times an amount equal to:
  (1)   the Maximum Construction Allowance, less
 
  (2)   the Funded Construction Allowance on the first day of such Construction Period; times
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  •   the number of days in such Construction Period; divided by
 
  •   three hundred sixty.
     (D) Future Administrative Fees and Out-of-Pocket Costs. If the Completion Date does not occur prior to the first anniversary of the Effective Date, then on each anniversary of the Effective Date prior to the Completion Date, an administrative agency fee (also, an “Administrative Fee”) will be added to the Outstanding Construction Allowance by BNPPLC in the amount provided in the Closing Letter. Also, to the extent that BNPPLC incurs any out-of-pocket costs prior to the Completion Date with respect to the administration of or performance of its obligations under this Agreement or other Operative Documents (e.g., any rents required by the Ground Lease and any Attorneys’ Fees or other costs incurred to evaluate lien releases and other information submitted by NAI with requests for Construction Advances), BNPPLC may add such costs to the Outstanding Construction Allowance from time to time.
     (E) Increased Cost Charges and Capital Adequacy Charges.
     (1) If after the Effective Date there is any increase in the cost to BNPPLC’s Parent or any Participant agreeing to make or making, funding or maintaining advances to BNPPLC in connection with the Property because of any Banking Rules Change, then BNPPLC may agree or become obligated to pay to BNPPLC’s Parent or such Participant, as the case may be, additional amounts (“Increased Cost Charges”) sufficient to compensate BNPPLC’s Parent or the Participant for such increased costs. Any Increased Cost Charges paid by BNPPLC or for which BNPPLC becomes obligated to pay, prior to the Completion Date, will be added to the Outstanding Construction Allowance by BNPPLC.
     (2) BNPPLC’s Parent or any Participant may demand additional payments (“Capital Adequacy Charges”) if BNPPLC’s Parent or the 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 BNPPLC to permit BNPPLC to maintain BNPPLC’s investment in the Property or to make Construction Advances. To the extent that BNPPLC’s Parent or a Participant demands Capital Adequacy Charges as compensation for the additional capital requirements reasonably allocable to such investment or advances, and BNPPLC pays or becomes obligated to pay to BNPPLC’s Parent or the Participant the amount so demanded prior to the Completion Date, such amount will also be added to the Outstanding Construction Allowance by BNPPLC.
     (3) Notwithstanding the foregoing provisions of this subparagraph 3(E), the Outstanding Construction Allowance will not be increased by Increased Cost Charges or
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Capital Adequacy Charges that arise or accrue (a) as a result of any change in the rating assigned to BNPPLC by rating agencies or bank regulators in regard to BNPPLC’s creditworthiness, record keeping or failure to comply with Applicable Laws (including U.S. banking regulations applicable to subsidiaries of a bank holding company), or (b) more than nine months prior to the date NAI is notified of the intent of BNPPLC’s Parent or a Participant to make a claim for such charges; provided, that if the Banking Rules Change which results in a claim for compensation is retroactive, then the nine month period will be extended to include the period of the retroactive effect of such Banking Rules Change. Further, BNPPLC will cause BNPPLC’s Parent and any Participant that is an Affiliate of BNPPLC to use commercially reasonable efforts to reduce or eliminate any claim for compensation pursuant to this subparagraph 3(E), including a change in the office of BNPPLC’s Parent or such Participant through which it provides and maintains Funding Advances if such change will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of BNPPLC’s Parent or such Participant, be otherwise disadvantageous to it. It is understood that NAI may also request similar commercial reasonable efforts on the part of any Participant that is not an Affiliate of BNPPLC, but if a claim for additional compensation by any such Participant is not eliminated or waived, then NAI may request that BNPPLC replace such Participant under the Participation Agreement.
     (F) Ground Lease Payments. All rentals payable by BNPPLC under the Ground Lease prior to the Completion Date (“Ground Lease Rents”) will be added to the Outstanding Construction Allowance by BNPPLC on the date paid.
4 Construction Advances.
     (A) Costs Subject to Reimbursement Through Construction Advances. Subject to the terms and conditions set forth herein, NAI will be entitled to a Construction Allowance, from which BNPPLC 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 have not yet been paid or reimbursed from advances by BNPPLC under the Prior Construction Agreement and are not already included in Transaction Expenses paid by BNPPLC from the Initial 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) 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:
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  •   soft costs payable to third parties (whether or not incurred prior to the Effective Date), such as legal fees, architectural fees, engineering fees, construction management fees, transaction management fees and fees and costs paid in connection with obtaining project permits and approvals required by governmental authorities or any of the Permitted Encumbrances,
 
  •   site preparation costs,
 
  •   costs of offsite and other public improvements required as conditions of governmental approvals for the Construction Project, and
 
  •   to the extent that funds from the Construction Allowance can be used for such costs without causing Projected Cost Overruns, the costs of constructing parking lots, driveways and other improvements on the land subject to the Appurtenant Easements;
     (3) the cost of title insurance in favor of BNPPLC and of maintaining other insurance required by (and consistent with the requirements of) this Agreement prior to the Completion Date, and costs of repairing any damage to the Improvements caused by a Pre-lease Casualty to the extent such costs are not covered by Escrowed Proceeds made available to NAI as provided herein prior to the Completion Date;
     (4) Local Impositions that accrue or become due prior to the Completion Date;
     (5) reasonable and ordinary out-of-pocket costs of operating and maintaining the Property prior to the Completion Date in accordance with the requirements of this Agreement;
     (6) Third Party Contract/Termination Fees, not to exceed in the aggregate ten percent (10%) of the Maximum Construction Allowance, 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 Work/Suspension Period; and
     (7) furniture, trade fixtures and equipment and other tenant improvements to support NAI’s use and occupancy of the Property for the permitted uses described in subparagraph 2(A) of the Lease, but that are not integral to or affixed in such a manner as to become part of the Improvements, the aggregate cost of which does not exceed ten percent (10%) of the Maximum Construction Allowance; provided, that no Construction Advance for furniture and other items described in this clause will be required of
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BNPPLC or requested by NAI before the Construction Project is substantially complete and substantially all other Reimbursable Construction Period Costs have been paid or reimbursed from Construction Advances.
     (B) Exclusions From Reimbursable Construction Period Costs. Notwithstanding anything herein to the contrary, BNPPLC will not be required to make any Construction Advance to pay or to reimburse or compensate NAI for Covered Construction Period Losses paid by NAI as provided in subparagraph 10(A) or for any of the following Losses which may be incurred by NAI or any other party:
     (1) Environmental Losses;
     (2) Losses that would not have been incurred but for any affirmative act taken by NAI or by any of NAI’s contractors or subcontractors, which act is contrary to the other terms and conditions of this Agreement or to the terms and conditions of the other Operative Documents (e.g., undertaking a Scope Change without prior authorization of BNPPLC);
     (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 NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI; and
     (4) Losses that would not have been incurred but for any bankruptcy proceeding involving NAI as the debtor.
     (C) Conditions to NAI’s Right to Receive Construction Advances. BNPPLC’s obligation to provide Construction Advances to NAI from time to time under this Agreement will be subject to the following terms and conditions, all of which terms and conditions are intended for the sole benefit of BNPPLC, and none of which will limit in any way the right of BNPPLC to treat costs or expenditures incurred or paid by or on behalf of BNPPLC as Construction Advances pursuant to subparagraph 8(A):
     (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 C. NAI will not submit more than one Construction Advance Request in any calendar month.
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     (2) Amount of the Advances.
     (a) The Maximum Construction Allowance. NAI will not be entitled to require any Construction Advance that would cause the Funded Construction Allowance to exceed the Maximum Construction Allowance or that would increase the amount of any such excess.
     (b) Costs Previously Incurred by NAI. NAI will not be entitled to require any Construction Advance 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 BNPPLC, substantiated as having been paid or incurred by NAI other than for Work (e.g., Local Impositions), plus
     (ii) the Reimbursable Construction Period Costs that NAI has, to the reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred for Prior Work as of the date of the Construction Advance Request in which NAI requests 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, as part of the Work in accordance with this Agreement prior to the date in question, and “Future Work” means labor and services performed or to be performed, and materials delivered or to be delivered, as part of the Work on or after the date in question. For purposes of this Agreement, NAI and BNPPLC 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 parties not affiliated with NAI (e.g., a construction contractor engaged by NAI); 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, BNPPLC will 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 BNPPLC’s right to challenge or verify allocations required with respect to future
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Construction Advances, rely without investigation upon the accuracy of NAI’s own Construction Advance Requests.
     (c) Limits During any Work/Suspension Period. Without limiting the other terms and conditions imposed by this Agreement for the benefit of BNPPLC with respect all Construction Advances, BNPPLC will have no obligation to make any Construction Advance during any Work/Suspension Period 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 BNPPLC, substantiated as having been paid or incurred by NAI other than for Work (e.g., Local Impositions), plus
     (ii) the Reimbursable Construction Period Costs that NAI has, to the reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred for Prior Work as of the date the Work/Suspension Period commenced.
For purposes of computing the limits described in this subparagraph 4(C)(2)(c), Reimbursable Construction Period Costs “other than for Work” will include Third Party Contract/Termination Fees that qualify as Reimbursable Construction Period Costs pursuant to subparagraph 4(A)(6). However, as provided in subparagraph 4(A)(6), the amount of such Third Party Contract/Termination Fees subject to reimbursement will not in any event exceed ten percent (10%) of the Maximum Construction Allowance. If NAI fails to manage and administer Third Party Contracts as necessary to ensure that NAI can (at any point in time) terminate all such contracts without becoming liable for Third Party Contract/Termination Fees in excess of ten percent (10%) of the Maximum Construction Allowance, then the excess will be the responsibility of NAI.
     (d) Restrictions Imposed for Administrative Convenience. NAI will not request any Construction Advance (other than the final Construction Advance NAI intends to request) for an amount less than $1,000,000.
     (3) No Advances After Certain Dates. BNPPLC will have no obligation to make any Construction Advance (x) after the last Advance Date, (y) on or after the Designated Sale Date, or (z) on or after the effective date of any Termination of NAI’s Work pursuant to subparagraph 7(B) or subparagraph 7(C).
     (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
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Construction Advance that it is not permitted to take because of its failure to satisfy any of the conditions specified in subparagraph 4(C), BNPPLC will be entitled to add any resulting Breakage Costs to the Outstanding Construction Allowance and the Lease Balance.
     (E) No Third Party Beneficiaries. No contractor or other third party will be entitled to require BNPPLC to make advances as a third party beneficiary of this Agreement, and nothing contained herein or in any of the other Operative Documents will be construed as an agreement obligating BNPPLC to make advances to anyone other than NAI itself.
     (F) No Waiver. No funding of Construction Advances and no failure of BNPPLC to object to any Work proposed or performed by or for NAI will constitute a waiver by BNPPLC of the requirements contained in this Agreement.
5 Application of Insurance and Condemnation Proceeds.
     (A) Collection and Application Generally. This Paragraph 5 will govern the application of proceeds received by BNPPLC or NAI from any third party prior to the commencement of the Term of the Lease (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 (e.g., damage resulting from a third party’s release of Hazardous Materials onto the Property); excluding, however, any funds paid to BNPPLC by BNPPLC’s Parent, by an Affiliate of BNPPLC or by any Participant that is made to compensate BNPPLC for any Losses BNPPLC may suffer or incur in connection with this Agreement or the Property. NAI will promptly pay over to BNPPLC any insurance, condemnation or other proceeds covered by this Paragraph 5 which NAI may receive from any insurer, condemning authority or other third party. All proceeds covered by this Paragraph 5, including those received by BNPPLC from NAI or third parties, will be applied as follows:
     (1) First, proceeds covered by this Paragraph 5 will be used to reimburse BNPPLC for any reasonable costs and expenses, including Attorneys’ Fees, that BNPPLC incurred to collect the proceeds.
     (2) Second, the proceeds remaining after such reimbursement to BNPPLC (the “Remaining Proceeds”) will be applied, as hereinafter more particularly provided, either as a Qualified Prepayment or to pay or reimburse NAI or BNPPLC for the actual out-of-pocket costs of repairing or restoring the Property. Until any Remaining Proceeds received by BNPPLC are applied by BNPPLC as a Qualified Prepayment or applied by
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BNPPLC to reimburse costs of repairs to or restoration of the Property pursuant to this Paragraph 5, BNPPLC will hold and maintain such Remaining Proceeds as Escrowed Proceeds in an interest bearing account, and all interest earned on such account will 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 5, BNPPLC will hold all such Escrowed Proceeds until they are advanced 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 Agreement. BNPPLC will so advance the Escrowed Proceeds as the applicable repair or restoration progresses and upon compliance by NAI with such conditions and requirements as may be reasonably imposed by BNPPLC, including conditions and requirements similar to those that set forth herein for the payment of Construction Advances. In no event, however, will BNPPLC be required to pay Escrowed Proceeds to NAI in excess of the actual out-of-pocket cost to NAI of the applicable repair, restoration or replacement, as evidenced by invoices or other documentation reasonably satisfactory to BNPPLC.
     (C) Status of Escrowed Proceeds After Commencement of the Term of the Lease. Any Remaining Proceeds governed by this Paragraph 5 which BNPPLC is continuing to hold as Escrowed Proceeds when the Term of the Lease commences will be applied in accordance with the terms and conditions of the Lease as if received by BNPPLC immediately after the Term commenced.
     (D) Special Provisions Applicable After a 97-10/Meltdown Event or Event of Default. Notwithstanding the foregoing, after any 97-10/Meltdown Event and when any Event of Default has occurred and is continuing, BNPPLC will be entitled to receive and collect all insurance, condemnation or other proceeds governed by this Paragraph 5 and to apply all Remaining Proceeds, when and in such order and to such extent deemed appropriate by BNPPLC in its sole discretion, either (A) to the reimbursement of NAI or BNPPLC 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, if the Property is damaged by fire or other casualty or any part of the Property is taken by condemnation, NAI must to the maximum extent possible, as part of the Work, 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 this Agreement; provided, however, like other Work, any such restoration and continuation of construction by NAI will be subject to subparagraphs 7(A) and 7(B), which establish certain rights of NAI to suspend or discontinue any Work; and, provided further, any additional costs required to complete the Construction Project resulting from such a casualty or taking prior to the Completion Date will, to the extent not covered by Remaining Proceeds paid to NAI as provided
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herein, be subject to reimbursement by BNPPLC as Reimbursable Construction Period Costs on the same terms and conditions that apply to reimbursements of other costs of the Work hereunder.
     (F) Special Provisions Concerning a Complete Taking. NAI may react to any threat of a Complete Taking from a governmental authority by exercising NAI’s right to accelerate the Designated Sale Date (as provided in the definition thereof) and by exercising the Purchase Option under the Purchase Agreement. By so doing, NAI will put itself in a position to control condemnation proceedings and to receive all proceeds of the Complete Taking. If, however, NAI does not buy the Property pursuant to the Purchase Agreement prior to any Complete Taking, then BNPPLC will be entitled to receive and retain all amounts paid for the Property in connection with the Complete Taking, notwithstanding any contrary provision herein or in the other Operative Documents and notwithstanding that such proceeds may exceed the Lease Balance.
6 Notice of Cost Overruns and Pre-lease Force Majeure Events.
     (A) Notice of Projected Cost Overruns. If, at the time NAI submits any Construction Advance Request, NAI believes 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) that Projected Cost Overruns are more likely than not, NAI must 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.
     (B) Pre-lease Force Majeure Event Events and Notices. NAI may from time to time provide a notice to BNPPLC in the form attached as Exhibit D (a “Pre-lease Force Majeure Event Notice”), describing any Pre-lease Force Majeure Event that has occurred or commenced within the 30 days prior to such notice and setting forth NAI’s preliminary good faith estimate of any Pre-lease Force Majeure Delays, Pre-lease Force Majeure Losses and Pre-lease Force Majeure Excess Costs that are likely to result from such event. BNPPLC will have the option to respond to any Pre-lease Force Majeure Event Notice with an FOCB Notice or, alternatively and if applicable, with an Increased Commitment as provided in subparagraph 7(B)(6).
7 Suspension and Termination of NAI’s Work.
     (A) Rights and Obligations During a Work/Suspension Period. During any Work/Suspension Period, NAI will have the right to suspend the Work; however, the obligations of NAI which are to survive any Termination of NAI’s Work as provided in subparagraph 7(D) will continue and survive during any Work/Suspension Period.
     (B) NAI’s Election to Terminate NAI’s Work. NAI may elect to terminate its rights
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and obligations to continue Work at any time prior to the Completion Date if at such time NAI believes in good faith that a Timing or Budget Shortfall exists. To be effective, however, any such election by NAI must be made in accordance with the following provisions:
     (1) Any such election by NAI to terminate its rights and obligations to continue the Work must be made by notice to BNPPLC in the form of Exhibit E (a “Notice of Termination by NAI”).
     (2) At least forty-five days before giving any such Notice of Termination by NAI, NAI must give a notice of NAI’s intent to terminate to BNPPLC in the form of Exhibit F (a “Notice of NAI’s Intent to Terminate”), and the Notice of NAI’s Intent to Terminate must state the reasons, in NAI’s good faith determination, for the Timing or Budget Shortfall.
     (3) Without limiting the forgoing, prior to giving any Notice of Termination by NAI predicated upon NAI’s belief that the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of a Pre-lease Force Majeure Event, NAI must — after having notified BNPPLC of the such event by the delivery of a Pre-lease Force Majeure Event Notice in accordance with subparagraph 6(B) — expressly set forth such belief in the Notice of NAI’s Intent to Terminate as indicated in Exhibit F. In any such Notice of NAI’s Intent to Terminate, NAI must also specify its good faith estimate of the Pre-lease Force Majeure Excess Costs likely to be incurred (“NAI’s Estimate of Force Majeure Excess Costs”).
     (4) Similarly, prior to giving any Notice of Termination by NAI predicated upon NAI’s belief that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays resulting from a Pre-lease Force Majeure Event, NAI must — after having notified BNPPLC of such event by the delivery of a Pre-lease Force Majeure Event Notice in accordance with subparagraph 6(B) — expressly set forth such belief in the Notice of NAI’s Intent to Terminate as indicated in Exhibit F. In any such Notice of NAI’s Intent to Terminate, NAI must also specify its good faith estimate of the Pre-lease Force Majeure Delays likely to occur (“NAI’s Estimate of Force Majeure Delays”).
     (5) As used herein, a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” means any Notice of NAI’s Intent to Terminate that sets forth NAI’s belief, by the optional provisions contemplated in Exhibit F, that either or both: (a) the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of a Pre-lease Force Majeure Event, or (b) the Work will not be substantially complete before the Target
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Completion Date only because of Pre-lease Force Majeure Delays resulting from a Pre-lease Force Majeure Event. Should any Termination of NAI’s Work occur before NAI sends a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event (in accordance with this subparagraph and in the form attached as Exhibit F), such Termination of NAI’s Work will, for purposes of determining whether any 97-10/Prepayment may be required pursuant to Paragraph 9, be conclusively presumed to have occurred for reasons other than a Pre-lease Force Majeure Event.
     (6) After receipt of any Notice of NAI’s Intent to Terminate and before receipt of a Notice of Termination by NAI, BNPPLC may, but will not be obligated to, respond to NAI with certain commitments as follows (such a response being hereinafter called an “Increased Commitment”):
     (a) In the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses NAI’s belief that the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs, BNPPLC may respond with a written commitment to increase the Construction Allowance (an “Increased Funding Commitment”) by an amount at least equal to NAI’s Estimate of Force Majeure Excess Costs as set forth in such Notice of NAI’s Intent to Terminate. Any such Increased Funding Commitment may be in the form of Exhibit G.
     (b) In the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses NAI’s belief that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays, BNPPLC may respond with a written commitment to extend the Target Completion Date (an “Increased Time Commitment”) by at least the number of days included in NAI’s Estimate of Force Majeure Delays as set forth in such Notice of NAI’s Intent to Terminate. Any such Increased Time Commitment may be in the form of Exhibit H.
     (c) In the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses NAI’s belief that both (i) the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs and (ii) the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays, BNPPLC may respond with both an Increased Funding Commitment and an Increased Time Commitment as provided in the preceding subparagraphs (a) and (b).
     (d) In the case of a Notice of Intent to Terminate which is not a Notice
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of Intent to Terminate Because of a Force Majeure Event (and thus not covered by any of the preceding subparagraphs (a) through (c)), BNPPLC may require NAI to promptly provide a good faith estimate of the minimum Increased Funding Commitment or Increased Time Commitment (or both) reasonably required to eliminate the reasons for NAI’s delivery of the Notice of Intent to Terminate. After receipt of NAI’s good faith estimate, BNPPLC may respond with an Increased Funding Commitment or Increased Time Commitment (or both) consistent with such estimate.
     (7) If BNPPLC does respond to a Notice of NAI’s Intent to Terminate with an Increased Commitment, NAI will be entitled to, and will not unreasonably refuse to, rescind such Notice of NAI’s Intent to Terminate within ten days after receipt of such Increased Commitment. To be effective, any such rescission must be by notice to BNPPLC in the form of Exhibit I. In any event, except as provided in the next subparagraph, the failure of NAI to so rescind any Notice of NAI’s Intent to Terminate within ten days after receipt of the Increased Commitment will, for purposes of determining whether any 97-10/Prepayment may be required pursuant to Paragraph 9, create a conclusive presumption that any Termination of NAI’s Work after the date of such response was made for reasons other than a Pre-lease Force Majeure Event.
     (8) For the avoidance of doubt, BNPPLC acknowledges that NAI’s rescission of any Notice of NAI’s Intent to Terminate (including any Notice of NAI’s Intent to Terminate Because of a Force Majeure Event) after receipt of an Increased Commitment as described in the preceding subsection will not preclude NAI from subsequently exercising its rights under this subparagraph 7(B) in the event NAI subsequently believes in good faith that a Timing or Budget Shortfall exists.
Thus, for example, if NAI rescinds a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event after receiving an Increased Commitment from BNPPLC, but subsequently determines that such Increased Commitment is insufficient (through no fault of NAI or its employees or any other party acting under NAI’s control or with the approval or authorization of NAI) to rectify the Timing or Budget Shortfall which caused NAI to send such notice, then NAI may deliver a second Notice of NAI’s Intent to Terminate Because of a Force Majeure Event, and in response thereto BNPPLC may elect to provide yet another Increased Commitment. Moreover, such process may be repeated any number of times, in each case without causing NAI to lose its right to subsequently invoke this subparagraph 7(B) and send yet another Notice of NAI’s Intent to Terminate (including another Notice of NAI’s Intent to Terminate Because of a Force Majeure Event).
     (9) Notwithstanding the foregoing, in the event of a Complete Taking, NAI
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may deliver a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event that explains the futility of continuing with the Construction Project on the Land regardless of any willingness of BNPPLC to approve or consider Scope Changes or an Increased Commitment, and no offer by BNPPLC of an Increased Commitment after a Complete Taking will preclude a “Termination of NAI’s Work Because of a Pre-lease Force Majeure Event” for the purposes of determining whether NAI must pay a 97-10/Prepayment pursuant to Paragraph 9.
     (C) BNPPLC’s Election to Terminate NAI’s Work. By notice to NAI BNPPLC may elect to terminate NAI’s rights and obligations to continue the Work at any time (i) more than thirty days after BNPPLC has given an FOCB Notice to NAI, or (ii) after BNPPLC’s receipt of a Notice of NAI’s Intent to Terminate and before an election by NAI to rescind the same as described in subparagraph 7(B)(7).
     (D) Surviving Rights and Obligations. Following any Termination of NAI’s Work as provided in subparagraph 7(B) or in 7(C), NAI will have no obligation to continue or complete any Work; however, no such Termination of NAI’s Work will reduce or excuse the following rights and obligations of the parties, it being intended that all such rights and obligations will survive and continue after any Termination of NAI’s Work:
     (1) NAI’s obligations described in the next subparagraph 7(E);
     (2) the rights and obligations of NAI and BNPPLC under the Ground Lease;
     (3) the rights and obligations of NAI and BNPPLC under the Purchase Agreement, other than NAI’s Supplemental Payment Obligation if it has been terminated as provided in subparagraph 6(B) of the Purchase Agreement;
     (4) any obligations of NAI under the other Operative Documents by reason of any misrepresentation or other act or omission of NAI that occurred prior to the Termination of NAI’s Work or during any subsequent period in which NAI remains in possession or control of the Construction Project; and
     (5) NAI’s obligations to indemnify BNPPLC as set forth in subparagraph 10(A).
     (E) Cooperation After a Termination of NAI’s Work. After any Termination of NAI’s Work as provided in subparagraph 7(B) or subparagraph 7(C), NAI must comply with the following terms and conditions, all of which will survive notwithstanding any such termination:
     (1) NAI must promptly deliver copies to BNPPLC of all Third Party Contracts
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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 must 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 BNPPLC made with respect to any Third Party Contract, NAI must deliver a letter confirming: (i) whether NAI has performed any act or executed any other instrument which invalidates or modifies such contract in whole or in part (and, if so, the nature thereof); (ii) the extent to which such contract is valid and subsisting and in full force and effect; (iii) that, to NAI’s knowledge, 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 or potential default, the nature of such default in detail); (iv) whether the services and construction contemplated by such contract are proceeding in a satisfactory manner in all material respects (and 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) NAI’s good faith estimate of the 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 BNPPLC may reasonably request to allow it to decide what steps it should take concerning the contract within BNPPLC’s rights under this Agreement and the other Operative Documents.
     (3) As and to the extent requested by BNPPLC, NAI will make every reasonable effort (but without any obligation to incur any expense or liability to do so, unless BNPPLC agrees to reimburse the same with reasonable promptness) to secure any required consents or approvals for an assignment of any then existing Third Party Contract to BNPPLC or its designee, upon terms satisfactory to BNPPLC. To the extent assignable, any then existing Third Party Contract will be assigned by NAI to BNPPLC upon request, without charge by NAI.
     (4) If NAI has canceled any Third Party Contract before and in anticipation of a Termination of NAI’s Work, then as and to the extent requested by BNPPLC, NAI must make every reasonable effort (but without any obligation to incur any expense or liability to do so, unless BNPPLC agrees to reimburse the same with reasonable promptness) to secure a reinstatement of such Third Party Contract in favor of BNPPLC and upon terms
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satisfactory to BNPPLC.
     (5) For a period not to exceed thirty days after the Termination of NAI’s Work, NAI must 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. Without regard to the conditions applicable to other payments required of BNPPLC by this Agreement, BNPPLC must with reasonable promptness reimburse any reasonable out-of-pocket expenses incurred by NAI to comply with this subparagraph (5); however, BNPPLC may at any time or from time to time by notice to NAI limit or terminate such reimbursements as to expenses incurred after NAI’s receipt of such notice, and thereafter NAI will be excused from any obligation to incur expenses that BNPPLC may decline to reimburse.
8 Continuation of Construction by BNPPLC.
    (A) Owner’s Election to Continue Construction. Without limiting BNPPLC’s other rights and remedies under this Agreement or the other Operative Documents, and without terminating NAI’s surviving obligations under this Agreement or NAI’s obligations under the other Operative Documents, after any Termination of NAI’s Work as provided in subparagraph 7(B) or subparagraph 7(C), BNPPLC will 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 not substantially inconsistent (to the extent practicable under Applicable Laws) with the general description of the Construction Project set forth in Exhibit B. (As used herein, “Owner’s Election to Continue Construction” means any election by BNPPLC to continue or complete the Construction Project pursuant to the preceding sentence.) After any Owner’s Election to Continue Construction, BNPPLC may do any one or more of the following pursuant to this subparagraph without further notice and regardless of whether any breach of this Agreement by NAI is then continuing:
     (1) Take Control of the Property. BNPPLC may cause NAI and any contractors or other parties on the Property to vacate the Property until the Construction Project is complete or BNPPLC elects not to continue work on the Construction Project.
     (2) Continuation of Construction. BNPPLC 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 BNPPLC is not substantially inconsistent (to the extent practicable under Applicable Laws) with the general description of the Construction Project set forth in Exhibit B and the permitted use of the Property set forth in the Lease, BNPPLC will have complete discretion to:
     (a) proceed with construction according to such plans and
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specifications as BNPPLC may from time to time approve;
     (b) establish and extend construction deadlines as BNPPLC from time to time deems appropriate, without obligation to adhere to any deadlines for construction by NAI set forth in this Agreement;
     (c) hire, fire and replace architects, engineers, contractors, construction managers and other consultants as BNPPLC 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 BNPPLC 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 BNPPLC from time to time reasonably deems appropriate;
     (e) pay, settle or compromise existing or future bills and claims which are or may be liens against the Property or as BNPPLC reasonably 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 BNPPLC from time to time deems appropriate; and
     (h) generally do anything that NAI itself might have done if NAI had satisfied or obtained BNPPLC’s waiver of the conditions specified therein.
     (3) Arrange for Turnkey Construction. Without limiting the generality of the foregoing, BNPPLC may engage any contractor or real estate developer BNPPLC believes to be reputable to take over and complete construction of the Construction Project on a “turnkey” basis.
     (4) Suspension or Termination of Construction by BNPPLC. Notwithstanding
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any Owner’s Election to Continue Construction, BNPPLC may subsequently elect at any time to suspend or terminate further construction without obligation to NAI.
For purposes of the Operative Documents (including the determination of the Outstanding Construction Allowance, the Lease Balance and the Break Even Price), after any Owner’s Election to Continue Construction, all costs and expenditures incurred or paid by or on behalf of BNPPLC to complete or continue construction as provided in this subparagraph 8(A) will be considered Construction Advances, 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 BNPPLC will include costs that BNPPLC has become obligated to pay to any third party that is not an Affiliate of BNPPLC (including any construction contractor), even if the payments for which BNPPLC has become so obligated constitute prepayments for work or services to be rendered after payment and notwithstanding that BNPPLC’s obligations for the payments may be conditioned upon matters beyond BNPPLC’s control. For example, even if a construction contract between BNPPLC and a contractor excuses BNPPLC from making further progress payments to the contractor upon NAI’s failure to make any required 97-10/Prepayment under this Agreement, the obligation to make a progress payment would nonetheless be “incurred” by BNPPLC, for purposes of determining whether BNPPLC has incurred costs considered to be 97-10/Project Costs and Construction Advances, when BNPPLC’s obligation to pay it became subject only to NAI’s payment of a 97-10/Prepayment or other conditions beyond BNPPLC’s control.
     (B) Powers Coupled With an Interest. BNPPLC’s rights under subparagraph 8(A) are intended to constitute powers coupled with an interest which cannot be revoked.
9 NAI’s Obligation for 97-10/Prepayments. After any 97-10/Meltdown Event NAI must make a 97-10/Prepayment to BNPPLC within three Business Days after receipt from BNPPLC of any demand for such a payment. BNPPLC may demand 97-10/Prepayments pursuant to this Paragraph at any time and from time to time (as 97-10/Project Costs increase) after a 97-10/Meltdown Event. NAI acknowledges that it is undertaking the obligation to make 97-10/Prepayments as provided in this Paragraph in consideration of the rights afforded to it by this Agreement, but that such obligation is not contingent upon any exercise by NAI of such rights or upon its rights under any other Operative Documents. If a 97-10/Meltdown Event does occur, NAI’s obligation to make 97-10/Prepayments as provided in this Paragraph will survive any Termination of NAI’s Work.
Notwithstanding the foregoing provisions of this Paragraph 9, if (as provided in subparagraph 7(B)) NAI effectively makes the election for a Termination of NAI’s Work because of a Pre-lease Force Majeure Event that resulted in Pre-lease Force Majeure Excess Costs or Pre-lease Force Majeure Delays, then NAI will be excused from the obligation to make 97-10/Prepayments until such time (if ever) that BNPPLC itself completes the Construction
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Project or causes it to be completed as BNPPLC is authorized to do by subparagraph 8(A).
10 Indemnity for Covered Construction Period Losses.
     (A) Covenant to Indemnify Against Covered Construction Period Losses. Subject to the qualifications in subparagraph 10(B), as directed by BNPPLC, NAI must indemnify and defend BNPPLC from and against all of the following Losses (“Covered Construction Period Losses”):
     (1) Losses suffered or incurred by BNPPLC, directly or indirectly, relating to or arising out of, based on or as a result of any of the following which occurs or is alleged to have occurred prior to any Termination of NAI’s Work: (i) any Hazardous Substance Activity; (ii) any violation of any applicable Environmental Laws relating to the Land or 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; or (iv) any claim, demand, cause of action or investigation, or any action or other proceeding, whether meritorious or not, brought or asserted against BNPPLC 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 provision or any allegation of any such matters;
     (2) Losses incurred or suffered by BNPPLC that BNPPLC 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 prior to any Termination of NAI’s Work (as provided in subparagraphs 7(B) and 7(C)) or during any other period that NAI remains in possession or control of the Construction Project (including any failure by NAI to obtain or maintain insurance as required by this Agreement during such periods; but excluding, however, as described below, certain Losses consisting of claims related to any failure of NAI to complete the Construction Project);
     (3) Losses incurred or suffered by BNPPLC 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 NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI; and
     (4) Losses incurred or suffered by BNPPLC that would not have been incurred but for any bankruptcy proceeding involving NAI as the debtor.
NAI’s obligations under this indemnity will apply whether or not BNPPLC is also indemnified as to the applicable Covered Construction Period Loss by any third party (including another
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Interested Party) and whether or not the Covered Construction Period Loss arises or accrues prior to the Effective Date. Further, in the event, for income tax purposes, BNPPLC must include in its taxable income any payment or reimbursement from NAI which is required by this indemnity (in this provision, the “Original Indemnity Payment”), and yet BNPPLC is not entitled during the same taxable year to a corresponding and equal deduction from its taxable income for the Covered Construction Period Loss paid or reimbursed by such Original Indemnity Payment (in this provision, the “Corresponding Loss”), then NAI must also pay to BNPPLC on demand the additional amount (in this provision, the “Additional Indemnity Payment”) needed to gross up the Original Indemnity Payment for any and all resulting additional income taxes. That is, NAI must pay an Additional Indemnity Payment as is needed so that the Corresponding Loss (computed net of the reduction, if any, of BNPPLC’s income taxes because of credits or deductions that are attributable to the BNPPLC’s payment or deemed payment of the Corresponding Loss and that are recognized for tax purposes in the same taxable year during which BNPPLC must recognize the Original Indemnity Payment as income) will not exceed the difference computed by subtracting (i) all income taxes (determined for this purpose based on the highest marginal income tax rates charged to corporations by federal, state and local tax authorities, as applicable, for the relevant period or periods) imposed because of the receipt or constructive receipt of the Original Indemnity Payment and the Additional Indemnity Payment, from (ii) the sum of the Original Indemnity Payment and the Additional Indemnity Payment. (With regard to any payment or reimbursement of an Original Indemnity Payment, “After Tax Basis” means that such payment or reimbursement is or will be made together with the additional amount needed to gross up such Original Indemnity Payment as described in this provision.)
     (B) Certain Losses Included or Excluded.
     (1) Back to Back Claims by Participants Against BNPPLC. Losses for which BNPPLC is entitled to be indemnified as described in subparagraph 10(A) will include claims made against BNPPLC by any Participant, and amounts (if any) reimbursed by BNPPLC to any Participant, because of the following:
     (a) Losses suffered or incurred by such Participant, directly or indirectly, relating to or arising out of any of the following which occurs or is alleged to have occurred prior to any Termination of NAI’s Work: (i) any Hazardous Substance Activity; (ii) any violation of any applicable Environmental Laws relating to the Land or 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; or (iv) any claim, demand, cause of action or investigation, or any action or other proceeding, whether meritorious or not, brought or asserted against such Participant which directly or indirectly relates to, arises from, is based on, or results from any of the
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matters described in clauses (i), (ii), or (iii) of this provision or any allegation of any such matters;
     (b) Losses incurred or suffered by such Participant that such Participant 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 prior to any Termination of NAI’s Work (as provided in subparagraphs 7(B) and 7(C)) or during any other period that NAI remains in possession or control of the Construction Project (including any failure by NAI to obtain or maintain insurance as required by this Agreement during such periods; but excluding, however, as described below, certain Losses consisting of claims related to any failure of NAI to complete the Construction Project);
     (c) Losses incurred or suffered by such Participant 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 NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI; and
     (d) Losses incurred or suffered by such Participant that would not have been incurred but for any bankruptcy proceeding involving NAI as the debtor.
     (2) Environmental. As used in clause (1) of the preceding subparagraph 10(A) and clause (a) of the preceding subparagraph 10(B)(1), “Losses” will not include costs properly incurred in connection with the Work to prevent the occurrence of a violation of Environmental Laws that did not previously exist. (For example, Environmental Losses will not include the increase in costs resulting from NAI’s installation of fire proofing materials other than asbestos because of Environmental Laws that prohibit the use of asbestos.) However, any costs to correct or answer for any violation of Environmental Laws that occurred on or prior to the Effective Date or that NAI causes or permits to occur after the Effective Date in connection with the Work or the Property will constitute Environmental Losses. (Thus, for instance, if NAI releases Hazardous Materials from the Property in a manner that contaminates ground water in violation of Environmental Laws, the costs of correcting the contamination and any applicable fines or penalties will constitute Environmental Losses for which NAI must indemnify and defend BNPPLC pursuant to subparagraph 10(A).)
     (3) Failure to Maintain a Safe Work Site. If a third party asserts a claim for damages against BNPPLC because of injuries the third party sustained while on the Land as a result of NAI’s breach of its obligations under this Agreement to keep the Land and the Improvements thereon in a reasonably safe condition as Work progresses under NAI’s
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direction and control, then any such claim and other Losses resulting from such claim will constitute Covered Construction Period Losses under clause (2) of subparagraph 10(A). Also, if the third party asserts a claim for damages against any Participant because of such injuries, and if the Participant requires BNPPLC to reimburse the Participant’s Losses attributable to such claim, then such reimbursement will constitute Covered Construction Period Losses under clause (2) of subparagraph 10(A), consistent with understanding confirmed by clause (b) of subparagraph 10(B)(1).
     (4) Failure to Complete Construction. Additional costs of construction may result from NAI’s failure to complete the Construction Project if a Termination of NAI’s Work occurs pursuant to subparagraphs 7(B) and 7(C). Nevertheless, it is understood that a failure of NAI to complete the Construction Project following any such Termination of NAI’s Work will not necessarily constitute a breach of this Agreement, and clause (2) of subparagraph 10(A) will not include any such additional costs of performing the Work or the cost to BNPPLC of completing the Construction Project after the Termination of NAI’s Work. (To the extent, however, that such costs qualify as 97-10/Project Costs, they may increase the 97-10/Maximum Permitted Prepayment.)
     (5) Fraud. As used in clause (3) of subparagraph 10(A) and clause (c) of subparagraph 10(B)(1), “fraud” or “willful misconduct” will include (i) any deliberate decision by NAI to make a Scope Change without BNPPLC’s prior written approval, (ii) any fraud or intentional misrepresentation by NAI, or its vendors, contractors or subcontractors regarding NAI’s ongoing compliance with the requirements of this Agreement, and (iii) the performance by NAI or its vendors, contractors or subcontractors of Defective Work, with NAI’s knowledge that it constitutes Defective Work, prior to any Termination of NAI’s Work as provided in subparagraphs 7(B) and 7(C).
     (6) Excluded Taxes and Established Misconduct. Nothing in this Paragraph 10 or other provisions of this Agreement will be construed to require NAI to reimburse or pay Excluded Taxes or Losses incurred or suffered by BNPPLC that are proximately caused by (and attributed by any applicable principles of comparative fault to) the Established Misconduct of BNPPLC.
     (C) Express Negligence Protection. Every release provided in this Agreement for BNPPLC or any other Interested Party, and the indemnity provided for the benefit of BNPPLC in the preceding subparagraph 10(A), will apply even if and when the subject matters thereof are alleged to be caused by or to arise out of the negligence or strict liability of BNPPLC or another Interested Party. Further, all such releases and the indemnity will apply even if insurance obtained by NAI or required of NAI by this Agreement is not adequate to cover Losses against or for which the releases and the indemnity are provided (although NAI’s liability for any failure to
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obtain insurance required by this Agreement will not be limited to Losses against which indemnity is provided, it being understood that the parties have agreed upon insurance requirements for reasons that extend beyond providing a source of payment for Losses against which BNPPLC may be indemnified by NAI).
     (D) Survival of Indemnity. NAI’s obligations under this Paragraph 10 will survive the termination or expiration of this Agreement and any Termination of NAI’s Work with respect to Losses suffered by BNPPLC resulting or arising from events or circumstances which existed or occurred or are alleged to have existed or occurred prior to the Termination of NAI’s Work or during any subsequent period in which NAI remains in possession or control of the Construction Project, whether such Losses are asserted, suffered or paid before or after the Termination of NAI’s Work.
     (E) Due Date for Indemnity Payments. Any amount to be paid by NAI under this Paragraph 10 will be due fifteen days after a notice requesting such payment is received by NAI. Any such amount not paid by NAI when first due will bear interest at the Default Rate in effect from time to time from the date it first became 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.
     (F) Order of Application of Payments. BNPPLC will be entitled to apply any payments by or on behalf of NAI against NAI’s obligations under this Paragraph 10 or against other amounts owing by NAI and then past due under any of the other Operative Documents in the order the same became due or in such other order as BNPPLC may elect.
     (G) Defense of BNPPLC.
     (1) Assumption of Defense. By notice to NAI BNPPLC may direct NAI to assume on behalf of BNPPLC and to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation included in or concerning any Covered Construction Period Loss. NAI must promptly comply with any such direction using counsel selected by NAI and reasonably satisfactory to BNPPLC to represent BNPPLC. In the event NAI fails to promptly comply with any such direction from BNPPLC, BNPPLC may contest or settle the claim, proceeding or investigation using counsel of its own selection at NAI’s expense, subject only to subparagraph 10(I) if that subparagraph is applicable.
     (2) Indemnity Not Contingent. Also, although subparagraphs 10(I) and 10(J) will apply to tort claims asserted against BNPPLC related to the Property, the right of BNPPLC to be indemnified pursuant to subparagraph 10(A) for payments made to satisfy governmental requirements (“Government Mandated Payments”) (e.g., fines payable
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because of any release of Hazardous Materials from the Property) will not be conditioned in any way upon NAI having consented to or approved of, or having been provided with an opportunity to defend against or contest, such Government Mandated Payments. In all cases, however, including those which may involve Government Mandated Payments, the rights of BNPPLC to be indemnified will be subject to subparagraph 10(K).
     (H) Notice of Claims. If BNPPLC receives a written notice of a claim for taxes or a claim alleging a tort or other unlawful conduct that BNPPLC believes is covered by the indemnity in subparagraph 10(A), then BNPPLC will be expected to promptly furnish a copy of such notice to NAI. The failure to so provide a copy of the notice will not excuse NAI from its obligations under subparagraph 10(A); except that if such failure continues for more than fifteen days after the notice is received by BNPPLC and NAI is unaware of the matters described in the notice, with the result that NAI is unable to assert defenses or to take other actions which could minimize its obligations, then NAI will be excused from its obligation to indemnify BNPPLC against the Covered Construction Period Losses, if any, which would not have been incurred or suffered but for such failure. For example, if BNPPLC fails to provide NAI with a copy of a notice of an overdue tax obligation covered by the indemnity set out in subparagraph 10(A) and NAI is not otherwise already aware of such obligation, and if as a result of such failure BNPPLC 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 BNPPLC (or any Affiliate of BNPPLC) to pay the excess.
     (I) Withholding of Consent to Settlements Proposed by NAI. With regard to any tort claim against BNPPLC for which NAI undertakes to defend BNPPLC as provided in subparagraph 10(G)(1), if BNPPLC unreasonably refuses to consent to a settlement of the claim which is proposed by NAI and which will meet the conditions listed in the next sentence, NAI’s liability for the cost of continuing the defense and for any other amounts payable in respect of the claim will be limited to the total cost for which the settlement proposed by NAI would have been accomplished but for the unreasonable refusal to consent. Any such settlement proposed by NAI must meet the following conditions: (A) at the time of the settlement by NAI, NAI must pay all amounts required to release BNPPLC and other affected Interested Parties (if any) and their property interests from any further obligation for or liens securing the applicable claim and from any interest, penalties and other related liabilities, and (B) the settlement or compromise must not involve an admission of fraud or criminal wrongdoing or result in some other material adverse consequence to BNPPLC or any other Interested Party.
     (J) Settlements Without the Prior Consent of NAI.
     (1) Election to Pay Reasonable Settlement Costs in Lieu of Actual. Except as otherwise provided in subparagraph 10(J)(2), if BNPPLC settles any tort claim for which
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it is entitled to be indemnified by NAI without NAI’s consent, then NAI may, by notice given to BNPPLC no later than ten days after NAI is notified of the settlement, elect to pay Reasonable Settlement Costs to BNPPLC in lieu of a payment or reimbursement of actual settlement costs. (With respect to any tort claim asserted against BNPPLC, “Reasonable Settlement Costs” means the maximum amount that a prudent Person in the position of BNPPLC, but able to pay any amount, might reasonably agree to pay to settle the tort claim, taking into account the nature and amount of the claim, the relevant facts and circumstances known to BNPPLC at the time of settlement and the additional Attorneys Fees’ and other costs of defending the claim which could be anticipated but for the settlement.) After making an election to pay Reasonable Settlement Costs with regard to a particular tort claim, NAI will have no right to rescind or revoke the election, despite any subsequent determination that Reasonable Settlement Costs exceed actual settlement costs. It is understood that Reasonable Settlement Costs may be more or less than actual settlement costs and that a final determination of Reasonable Settlement Costs may not be possible until after NAI must decide between paying Reasonable Settlement Costs or paying actual settlement costs.
     (2) Conditions to Election. Notwithstanding the foregoing, NAI will have no right to elect to pay Reasonable Settlement Costs in lieu of actual settlement costs if BNPPLC settles claims without NAI’s consent at any time when an Event of Default has occurred and is continuing or after a failure by NAI to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation as provided in subparagraph 10(G)(1).
     (3) Indemnity Survives Settlement. Except as provided in this subparagraph 10(J), no settlement by BNPPLC of any claim made against it will excuse NAI from any obligation to indemnify BNPPLC against the settlement costs or other Covered Construction Period Losses suffered by reason of, in connection with, arising out of, or in any way related to such claim.
     (K) No Authority to Admit Wrongdoing on the Part of NAI. BNPPLC will not under any circumstances have any authority to bind NAI to an admission of wrongdoing or responsibility to any third party claimant with regard to matters for which BNPPLC claims a right to indemnification from NAI under this Agreement.
Further, nothing herein contained, including the foregoing provisions concerning settlements by BNPPLC of indemnified Losses, will be construed as authorizing BNPPLC to bind NAI to do or refrain from doing anything to satisfy a third party claimant. If, for example, a claim is made by a Governmental Authority that NAI must refrain from some particular conduct on or about the Land in order to comply with Applicable Laws, BNPPLC cannot bind NAI (and will not purport to bind NAI) to any agreement to refrain from such conduct or otherwise prevent NAI from
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continuing to contest the claim by reason of any provision set forth herein.
Moreover, so long as this Agreement or the Lease continues, BNPPLC’s right to settle any claim involving the Property will not include the right to bind NAI to any agreement (including any consent decree proposed by any Governmental Authority) which purports to prohibit, limit or impose conditions upon any use of the Property by NAI without the prior written consent of NAI. In the case of any proposed settlement of a claim asserted by a Governmental Authority against BNPPLC, NAI will not unreasonably withhold such consent. However, for purposes of determining whether it is reasonable for NAI to withhold such consent, any diligent ongoing undertaking by NAI to contest such the claim on behalf of BNPPLC will be relevant.
Subject to the foregoing provisions in this subparagraph 10(K), BNPPLC may agree for itself (and only for itself) to act or refrain from doing anything as demanded or requested by a third party claimant; provided, however, in no event will such an agreement impede NAI from continuing to exercise its rights to operate its business on the Property or elsewhere in any lawful manner deemed appropriate by NAI, nor will any such agreement limit or impede NAI’s right to contest claims raised by any third party claimants (including Governmental Authorities) that NAI is not complying or has not complied with Applicable Laws.
     (L) Refunds of Covered Construction Period Losses Paid by NAI.
     (1) Payment by BNPPLC After Refund. If BNPPLC receives a refund of any Covered Construction Period Losses paid, reimbursed or advanced by NAI pursuant to subparagraph 10(A), BNPPLC will promptly pay to NAI the amount of such refund, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of such refund and such payment to NAI; provided, that the amount payable to NAI will not exceed the amount of the indemnity payment in respect of such refunded Covered Construction Period Losses that was made by NAI. If it is subsequently determined that BNPPLC was not entitled to such refund, the portion of such refund that is repaid or recaptured will be treated as a Covered Construction Period Loss for which NAI must indemnify BNPPLC pursuant to subparagraph 10(A) without regard to subparagraph 10(B)(6). If, in connection any such refund, BNPPLC also receives an amount representing interest on such refund, BNPPLC will promptly pay to NAI the amount of such interest, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of the receipt or accrual of such interest and as a result of the such payment to NAI; provided, that BNPPLC will not be required to make any such payment in respect of the interest (if any) that is fairly attributable to a period before NAI paid, reimbursed or advanced the Covered Construction Period Losses refunded to BNPPLC.
     (2) Meaning of Refund. With respect to Covered Construction Period Losses incurred or suffered by BNPPLC and paid or reimbursed by NAI on an After Tax Basis, if
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taxes of BNPPLC which are not subject to indemnification by NAI are reduced because of such Losses (whether by reason of a deduction, credit or otherwise) and such reduction was not taken into account in the calculation of the required reimbursement or payment by NAI, then for purposes of this subparagraph 10(L) such reduction will be considered a “refund”.
     (3) Conditions to Payment. Notwithstanding the foregoing, in no event will BNPPLC be required to make any payment to NAI pursuant to this subparagraph 10(L) after any 97-10/Meltdown Event or when any Event of Default has occurred and is continuing.
11 Characterization of Operative Documents; Remedies.
     (A) Characterization of Operative Documents.
     (1) Confirmation of Lien and Security Interest Granted in the Lease. Reference is made to subparagraph 4(C) of the Lease, in which NAI and BNPPLC have confirmed their intent that (A) for the purposes of determining the proper accounting for the Lease by NAI, BNPPLC will be treated as the owner and landlord of the Property and NAI will be treated as the tenant of the Property, and (B) for income tax purposes and commercial law (including real estate and bankruptcy law) and regulatory purposes, (1) the Lease and the other Operative Documents (including this Agreement) will be treated as a financing arrangement, (2) BNPPLC will be deemed a lender making loans to NAI in the principal amount equal to the Lease Balance, which loans are secured by the Property, and (3) NAI will be treated as the owner of the Property and will be entitled to all tax benefits available to the owner of the Property. Consistent with such intent, by the provisions set forth in Exhibit B to the Lease, NAI is granting to BNPPLC a lien upon and mortgaging and warranting title to the leasehold estate in the Land created by the Ground Lease and the Improvements and all rights, titles and interests of NAI in and to other Property, WITH POWER OF SALE, to secure all obligations (monetary or otherwise) of NAI arising under or in connection with any of the Operative Documents (including this Agreement). NAI further confirms and agrees that (i) its grant of a lien and security interest as set forth in Exhibit B of the Lease is made as of the Effective Date, even though the Term of the Lease will not commence before the Completion Date, and (ii) the security interest granted in Exhibit B of the Lease will extend to and cover all Third Party Contracts, now existing or made in the future.
     (2) Foreclosure Remedies. Even before the Completion Date, at any time when an Event of Default has occurred and is continuing, BNPPLC may notify NAI of BNPPLC’s intent to pursue remedies described in Exhibit B to the Lease, and at any time thereafter, regardless of whether the Event of Default is continuing, if NAI has not
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already purchased the Property or caused an Applicable Purchaser to purchase the Property pursuant to the Purchase Agreement, (i) BNPPLC will have the power and authority, to the extent provided by law, after proper notice and lapse of such time as may be required by law, to sell or arrange for a sale to foreclose its lien and security interest granted in Exhibit B to the Lease, and (ii) BNPPLC, in lieu of or in addition to exercising any power of sale granted in Exhibit B to the Lease, may proceed by a suit or suits in equity or at law for a foreclosure or sale of the Property or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure or sale of the Property, or for the enforcement of any other legal or equitable remedy permitted by law.
     (B) Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement. Prior to the Designated Sale Date, so long as NAI remains in possession of the Property and there has been no termination of the Purchase Option as provided in Paragraph 6(B) of the Purchase Agreement, BNPPLC’s right to complete any foreclosure sale as provided in subparagraph 11(A)(2) will be subject to the condition precedent that BNPPLC has notified NAI, at a time when an Event of Default has occurred and is continuing and no less than thirty days prior to completing such a sale, of BNPPLC’s intent to do so. The condition precedent is intended to provide NAI with an opportunity to exercise the Purchase Option before losing possession of the Property because of a sale authorized by subparagraph 11(A)(2). 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, BNPPLC may proceed immediately to complete a sale authorized by subparagraph 11(A)(2) at any time after the earliest of (i) thirty days after BNPPLC 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.
     (C) Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy, and each and every such right and remedy will be cumulative and in addition to any other right or remedy given to BNPPLC under other Operative Documents (including the right to accelerate the Designated Sale Date, as provided in the definition thereof in the Common Definitions and Provisions Agreement, and the right, when applicable, to exercise the Put Option as provided in subparagraph 3(B) of the Purchase Agreement) or now or hereafter existing in favor of BNPPLC under Applicable Laws. In addition to other remedies provided in this Agreement, BNPPLC will 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 Agreement. Nothing contained in this Agreement will limit or prejudice the right of BNPPLC to prove for and obtain in proceedings for bankruptcy or insolvency of NAI by reason of the termination of this Agreement, 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
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to be proved, whether or not the amount be greater, equal to, or less than the amount BNPPLC might recover under this Agreement. Without limiting the generality of the foregoing, nothing contained herein will modify, limit or impair any of the rights and remedies of BNPPLC under the Purchase Agreement, including its right to exercise the Put Option provided in subparagraph 3(B) of the Purchase Agreement if the conditions listed in subparagraph 3(B) of the Purchase Agreement are satisfied; and BNPPLC will not be required to give the thirty day notice described in subparagraph 11(B) as a condition precedent to any acceleration of the Designated Sale Date or to taking any action to enforce the Purchase Agreement
     (D) Third Party Estoppels. If requested by BNPPLC with respect to any material 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 BNPPLC an estoppel letter substantially in the form of Exhibit J. Similarly, if requested by BNPPLC 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 BNPPLC an estoppel letter substantially in the form of Exhibit K.
12 Amendment and Restatement of Prior Construction Agreement. This Agreement amends, restates and replaces entirely the Prior Construction Agreement. Without limiting the rights and obligations of NAI under this Agreement, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Construction Agreement are now made subject to the terms and conditions of this Agreement; and all rights and interests of BNPPLC in and to the Land or other Property under the Prior Construction Agreement are renewed and extended (rather than terminated) by this Agreement.
[The signature pages follow.]
Amended and Restated Construction Agreement (RTP Data Center) – Page 53

 

 

     IN WITNESS WHEREOF, this Amended and Restated Construction Agreement (RTP Data Center) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
Amended and Restated Construction Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Construction Agreement (RTP Data Center) dated as of November 29, 2007.]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Construction Agreement (RTP Data Center) – Signature Page

 

 

Exhibit A
Legal Description
BEING a portion of Site 12 as shown on the map entitled “Exempt Subdivision Map of Site 12”, prepared by Barbara H. Mulkey Engineering, Inc., on May 30, 2000 as recorded in the Book of Maps 2000, Page 1300, Wake County, North Carolina Registry, such portion being described as follows:
Unit 4 and the Additional Leased Premises, both as defined below (collectively, the “Ground Lease Premises”).
As used in this Exhibit:
     (1) “Additional Leased Premises” means the land surrounding and adjacent to Unit 4, depicted on the site plan attached to and made a part of this Exhibit as the area shaded in gray, which includes parking lots, driveways and other areas within the larger area designated as Common Elements in the Condominium Declaration. The outer boundaries of the Additional Leased Premises are described by metes and bounds on the last page attached to and made a part of this Exhibit. All land within those outer boundaries, other than Unit 4, is included in the Additional Leased Premises.
     (2) “Condominium Declaration” means the Declaration of Condominium for NetApp RTP Phase I Condominium recorded in Book 012647, Page 01310, Wake County, North Carolina Registry.
     (3) “Condominium Map” means the plat provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached to and made a part of this Exhibit. (The Condominium Map has also been filed in the Book of Maps CM2007, Page 444A1, Wake County, North Carolina Registry.)
     (4) “Unit 4” means the land designated and described in the Condominium Declaration as Unit 4 and is shown on the Condominium Map and site plan attached to and made a part of this Exhibit.
TOGETHER WITH, easements appurtenant to the Amended and Restated Ground Lease Premises as described in Exhibit A attached to the Ground Lease dated as of November 29, 2007 between BNPPLC, as lessee, and NAI, as lessor (the “Ground Lease”);
SUBJECT, HOWEVER, to an easement reserved over the Additional Leased Premises (but not any part of Unit 4) in favor of the Association as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
Exhibit A to Amended and Restated Construction Agreement (RTP Data Center) – Page 2

 

 

(MAP)
Exhibit A to Amended and Restated Construction Agreement (RTP Data Center) – Page 3

 

 

Attachment to Exhibit A — Metes and Bounds
Description of “Additional Leased Premises”
     The following is a metes and bounds description of the outer boundaries of the Additional Leased Premise:
BEGINNING at NCGS Monument “Hopson”, said monument having NC Grid Coordinates of N=773,721.48 and E=2,034,907.39 (NAD 83), traveling thence South 11° 44' 59" West 6154.66 feet to a right-of-way monument on the southern margin of Louis Stephens Drive (a 100 foot public right-of-way), thence North 72° 48' 35" East 164.29 feet to a right-of-way monument on the southern margin of Kit Creek Road (a 150 foot public right-of-way); thence with the southern margin of said Kit Creek Road the following two (2) courses and distances:
     (1) South 68° 46' 54 East 412.64 feet to a right-of-way monument; and
     (2) with a curve to the right having a radius of 924.83 feet, an arc length of 475.96. and a chord bearing and distance of South 54° 02' 59" East 470.72 feet to a computed point;
said computed being the POINT AND PLACE OF BEGINNING; thence from said point of beginning and continuing with the southern margin of Kit Creek Road South 39° 18' 29" East 571.64 feet to a computed point, thence cornering and leaving said right-of-way and with the common line of property now or formerly owned by Research Triangle Foundation of NC (DB 1670 PG 239) the following two (2) courses and distances:
     (1) South 50° 41' 31" West 100.00 feet to an iron pipe found; and
     (2) South 83° 31' 01" West 483.47 feet to an iron pipe found;
thence cornering and along three (3) new lines within the bounds of property owned by Network Appliance, Inc. (DB 10941 Pg 2054) as follows:
     (1) North 12° 44' 00" West 279.97 feet;
     (2) North 48° 55' 31" West 50.30 feet; and
     (3) North 32° 57' 24" East 401.61 feet to a point along the southern margin of said Kit Creek Road;
thence with the southern margin of Kit Creek Road along a curve to the right having a radius of 925.04 feet, an arc length of 113.05 feet and a chord bearing and distance of South 42° 48' 33" East 112.98 feet to the POINT AND PLACE OF BEGINNING, containing 5.36 acres (233,621 square feet), more or less, said area shown on the rendering attached hereto.
Exhibit A to Amended and Restated Construction Agreement (RTP Data Center) – Page 4

 

 

Exhibit B
Description of the Construction Project and Construction Budget
     Subject to future Scope Changes, the Construction Project will be substantially consistent with the following general description and with any site plan, elevations or renderings attached to this Exhibit:
The project will include a data center that will be used as a research lab. The data center is expected to be approximately 129,063 square feet. The building will be two stories above ground and a basement area. The basement area will house the utility space. The first floor will contain the server area. The second floor will contain the HVAC and electrical equipment.
The data center is considered a state of the art Tier IV level data center with a very high electric power level per square foot, and considerable redundancies in terms of cooling. However, it will not be built with a UPS system or back-up generators.
     All of the buildings will be suitable for uses contemplated in the Lease and of a quality, when complete to be considered first class facilities for such uses. Also included in the Construction Project will be the construction of appurtenant parking areas, driveways and other facilities on the Land of suitable quality for such buildings.
     The budget for the Construction Project is as shown on the attached pages.

 

 

(MAP)
Exhibit B to Amended and Restated Construction Agreement (RTP Data Center) – Page 2

 

 

(MAP)
Exhibit B to Amended and Restated Construction Agreement (RTP Data Center) – Page 3

 

 

(MAP)
Exhibit B to Amended and Restated Construction Agreement (RTP Data Center) – Page 4

 

 

(MAP)
Exhibit B to Amended and Restated Construction Agreement (RTP Data Center) – Page 5

 

 

Date: May 22, 2007
         
Project:
Proj. No:
Location:
City
State
  Network Appliance RTP Lab Bldg. 4

7301 Kit Creek Road
Research Triangle Park
North Carolina 		  (CHOATE LOGO)
             
    DIVISION ESTIMATE    
Phase Code                                 Description   TOTAL   COMMENTS
Financing & Construction Loan Costs
   $ 3,000,000     Owner Budget
Design & Construction Soft Costs
   $ 2,800,000     Owner Budget
Division 1 -General Conditions
   $ 989,005      
Division 2 - Sitework
   $ 1,057,340      
Unsuitable Soils Allowance
   $ 154,910      
Division 3 -Concrete
   $ 2,637,245      
Division 4 - Masonry
   $ 144,583      
Division 5 - Metals
   $ 2,417,208      
Division 6 -Carpentry
   $ 119,851      
Division 7 - Thermal& Moisture Protection
   $ 561,463      
Division 8 - Doors & Windows - Interior
   $ 190,018      
Division 8 - Door & Windows - Exterior
   $ 1,302,609      
Division 9 - Finishes
   $ 1,467,290      
Division 9 - Special Finishes
   $ 102,612      
Division 10,11 & 12 - Specialties & furnishings
   $ 37,223      
Division 13 - Rack Equipment
   $ 7,400,000     Owner Budget
Division 14 - Conveying Systems
   $ 307,755      
Division 15 - Mechanical
            
Fire Protection
   $ 569,295      
Plumbing
   $ 368,804      
HVAC
   $ 11,114,282      
Division 16 - Electrical
   $ 14,503,582      
Division 16 - Rack Power Distribution
   $ 2,300,000     Owner Budget
Division 16 -Low Voltage
            
Tele - Data Cabling
   $ 6,300,000     Owner Budget
Security/Access Control
   $ 154,910      
Controls, Metering and Monitoring
   $ 1,000,000     Owner Budget
 
Total -Choate Budgeted Work
   $ 36,200,000     Subtotal - Choate Budgeted Items
Total -Owner Budgeted Items
   $ 22,800,000     Subtotal - Owner Budgeted Items
Grand Total - Project
   $ 61,000,000      
Exhibit B to Amended and Restated Constrution Agreement (RTP Data Center) – Page 6

 

Exhibit C
Construction Advance Request Form
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (RTP Data Center) dated as of November 29, 2007 (the “Construction Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”)
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement. This letter constitutes a Construction Advance Request, requesting a Construction Advance of:
$                                        ,
on the Advance Date that will occur on:
                                , 20         .
     To induce BNPPLC to make such Construction Advance, NAI represents and warrants as follows:
I. Calculation of limit imposed by Subparagraph 4(C)(2)(b) of the Construction 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
   $ _______  
 
        
(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
   $ _______  
 
        

 

 

         
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 $                    .]
III. Construction Advances Covering Pre-lease Force Majeure Losses:
Neither the Construction Advance requested by this letter nor prior Construction Advances (if any) have been used or will be used to cover any costs of repairs that constitute Pre-lease Force Majeure Losses, except as follows: (if there are no exceptions, insert “No Exceptions”)
         
 
 
 
    
 
 
 
    
 
 
 
    
 
 
 
    
IV. Absence of Certain Work/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 and with the requirements of the Construction 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”)
         
 
 
 
    
 
 
 
    
 
 
 
    
 
 
 
    
Exhibit C to Amended and Restated Construction Agreement (RTP Data Center) – Page 2

 

 

             
  NETWORK APPLIANCE, INC., a Delaware
corporation		    
 
            
 
By:           
 
  Name:        
 
  Title:        
Exhibit C to Amended and Restated Construction Agreement (RTP Data Center) – Page 3

 

 

Exhibit D
Pre-lease Force Majeure Event Notice
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (RTP Data Center) dated as of November 29, 2007 (the “Construction Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Agreement and other Operative Documents.
     This letter constitutes a Pre-lease Force Majeure Event Notice, given as provided in subparagraph 6(B) of the Construction Agreement to preserve the right of NAI to assert the occurrence of a Pre-lease Force Majeure Event.
     NAI certifies to BNPPLC that the following Pre-lease Force Majeure Event occurred or commenced on                     , 20                    :
[INSERT DESCRIPTION OF EVENT HERE]
     NAI’s preliminary good faith estimate of the Pre-lease Force Majeure Delays, of the Pre-lease Force Majeure Losses and of the Pre-lease Force Majeure Excess Costs likely to result from such event are                      days, $                     and $                    , respectively. Such amounts, however, are only estimates.
     NAI acknowledges that after NAI gives this notice, BNPPLC may at any time deliver an FOCB Notice to NAI as described in the Construction Agreement.

 

 

             
  NETWORK APPLIANCE, INC., a Delaware
corporation		    
 
            
 
By:           
 
  Name:        
 
  Title:        
Exhibit D to Amended and Restated Construction Agreement (RTP Data Center) – Page 2

 

 

Exhibit E
Notice of Termination of NAI’s Work
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (RTP Data Center) dated as of November 29, 2007 (the “Construction Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Agreement and other Operative Documents.
     NAI has determined that the Construction Allowance to be provided to it under the Construction Agreement will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances for the reason or reasons set forth in the Notice of NAI’s Intent to Terminate dated                     , 200___, previously delivered to you as provided in subparagraph 7(B) of the Construction Agreement. That Notice of NAI’s Intent to Terminate has not been rescinded by NAI.
     NAI hereby irrevocably and unconditionally elects to terminate its rights and obligations to continue the Work under Construction Agreement effective as of the date of this letter (which, as required by subparagraph 7(B) of the Construction Agreement, is a date not less than forty-five days after the date the aforementioned Notice of NAI’s Intent to Terminate). This notice constitutes a “Notice of Termination by NAI” as described in subparagraph 7(B) of the Construction Agreement.
     NAI also acknowledges that a 97-10/Meltdown Event has occurred under and as defined in the Construction Agreement, and that BNPPLC is thus entitled to demand and receive 97-10/Prepayments under and as provided in Paragraph 9 of the Construction Agreement, unless the last sentence of Paragraph 9 excuses NAI from paying the same.

 

 

                 
    NETWORK APPLIANCE, INC., a Delaware
corporation		    
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
Exhibit E to Amended and Restated Construction Agreement (RTP Data Center) – Page 2

 

 

Exhibit F
Notice of NAI’s Intent to Terminate
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (RTP Data Center) dated as of November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Agreement and other Operative Documents.
 
[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth below as being required after a Complete Taking in any “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event,” this letter must contain the following paragraph and inserts following such paragraph as indicated:
     NAI has determined that the Construction Allowance to be provided to it under the Construction Agreement will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances, because:
[INSERT ANY ONE OR MORE OF THE FOLLOWING REASONS THAT APPLY: (1) THE COST OF THE WORK EXCEEDS BUDGETED EXPECTATIONS (RESULTING IN PROJECTED COST OVERRUNS), (2) A PRE-LEASE FORCE MAJEURE EVENT HAS OCCURRED, OR (3) NAI CAN NO LONGER SATISFY CONDITIONS TO BNPPLC’S OBLIGATION TO PROVIDE CONSTRUCTION

 

 

ADVANCES IN THE CONSTRUCTION AGREEMENT.]
 
     The purpose of this letter is to give notice to BNPPLC and Participants of NAI’s intent to terminate NAI’s rights and obligations to perform Work under the Construction Agreement. This letter constitutes a “Notice of NAI’s Intent to Terminate” given pursuant to subparagraph 7(B) of the Construction Agreement. As provided in that subparagraph, as a condition to any effective Termination of NAI’s Work, NAI must deliver a subsequent notice of termination to BNPPLC and Participants, no less than forty-five days after the date BNPPLC receives this letter.
[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth below as being required for any “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event,” this letter must contain the following paragraph:
 
     The period running from the date of BNPPLC’s receipt of this letter to the effective date of any actual Termination of NAI’s Work by NAI or BNPPLC will constitute a Work/Suspension Period under the Construction Agreement. During such period BNPPLC’s funding obligations will be limited and NAI may suspend the Work to the extent so provided in the Construction Agreement. Moreover, NAI acknowledges that the delivery of this Notice of Intent to Terminate is a 97-10/Meltdown Event. Therefore, after receipt of this notice BNPPLC will have the rights to demand and receive 97-10/Prepayments from NAI as provided in Paragraph 9 of the Construction Agreement.]
[DRAFTING NOTE: This letter will qualify as a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” only if NAI includes one of the following alternative sets of provisions, as applicable.]
[ALTERNATIVE #1 (Applies only if there has been a Complete Taking):
     This letter constitutes a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement. A Complete Taking has occurred. Thus, regardless of any Scope Changes BNPPLC may be willing to approve or consider, and regardless of any Increased Commitment BNPPLC may be willing to provide, it would be futile to continue the Construction Project on the Land.
     NAI acknowledges and agrees that BNPPLC is entitled to all proceeds of the taking of the Property and all such proceeds must be paid to BNPPLC. NAI has no right and will not assert
Exhibit F to Amended and Restated Construction Agreement (RTP Data Center) – Page 2

 

 

any right to share in such proceeds. NAI agrees to cooperate with BNPPLC as BNPPLC may from time to time request in order to maximize BNPPLC’s recovery of such proceeds.]
[ALTERNATIVE #2 (applies in the event of a Pre-lease Force Majeure Event other than a Complete Taking): Include the next (single sentence) paragraph, together with one or both (as applicable) of the two paragraphs following the next (single sentence) paragraph, and together with the remaining paragraphs after those two paragraphs, all with blanks filled in appropriately:
     This letter constitutes a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement.
     NAI now believes that the remaining available Construction Allowance will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of one or more Pre-lease Force Majeure Events. BNPPLC has previously been notified of such Pre-lease Force Majeure Event(s) by notice(s) dated                     , which NAI delivered to BNPPLC in accordance with subparagraph 6(B) of the Construction Agreement. NAI’s current good faith estimate of the Pre-lease Force Majeure Excess Costs that are most likely to be incurred because of such Pre-lease Force Majeure Event(s) is $                    .
     NAI now believes that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays resulting from one or more Pre-lease Force Majeure Events. BNPPLC has previously been notified of such Pre-lease Force Majeure Event(s) by notice(s) dated                     , which NAI delivered to BNPPLC in accordance with subparagraph 6(B) of the Construction Agreement. NAI’s current good faith estimate of the Pre-lease Force Majeure Delays that are most likely to occur because of such Pre-lease Force Majeure Event(s) is                      days.
     Also be advised that, as provided in subparagraph 7(B) of the Construction Agreement, BNPPLC is entitled to (but not obligated to) respond to this notice with an Increased Commitment. Responding with an Increased Commitment will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of NAI under the Purchase Agreement) that any Termination of NAI’s Work is for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified.
     In the event BNPPLC fails to respond with an Increased Commitment, the failure may excuse NAI from the obligation to make a 97-10/Prepayment under Paragraph 9 of the Construction Agreement notwithstanding any Termination of NAI’s Work, which would constitute a very material adverse consequence to BNPPLC. Moreover, the Construction Agreement grants to NAI a right to cause a Termination of NAI’s Work at any time more than
Exhibit F to Amended and Restated Construction Agreement (RTP Data Center) – Page 3

 

 

forty-five days after giving this notice, provided that NAI continues to believe that a Timing or Budget Shortfall exists at that time. Thus, if BNPPLC intends to respond with an Increased Commitment, BNPPLC would be well advised to do so before the expiration of such forty-five day period.]
                 
    NETWORK APPLIANCE, INC., a Delaware
corporation		    
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
Exhibit F to Amended and Restated Construction Agreement (RTP Data Center) – Page 4

 

 

Exhibit G
Notice of Increased Funding Commitment by BNPPLC
[Date]
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
     Re: Amended and Restated Construction Agreement (RTP Data Center) dated as of November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     NAI has delivered a notice to BNPPLC dated                     , 20___, which by its terms expressed NAI’s intent that it constitute a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement. In such notice, NAI advised BNPPLC of NAI’s intent to terminate the Construction Agreement because of NAI’s belief that the Construction Allowance to be provided to it under the Construction Agreement will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances. Such notice also suggested NAI’s belief that, but for the cost of repairing damage to the Improvements caused by a Pre-lease Force Majeure Event, the remaining available Construction Allowance would be sufficient. In addition, such notice set forth the amount of $                     as NAI’s estimate of the Pre-lease Force Majeure Excess Costs most likely to be incurred because of such Pre-lease Force Majeure Event.
     This response to such notice constitutes an Increased Funding Commitment. BNPPLC hereby commits to increase the amount of the Construction Allowance by $                     (the estimate given by NAI as described above). Such commitment is made on and subject to all of the same terms and conditions set forth in the Construction Agreement and other Operative Documents as being applicable to the original Construction Allowance and to Construction Advances required thereunder.
     Please note that, according to the Construction Agreement, NAI will have ten days after the date of any Increased Commitment (which may be comprised of this Increased Funding Commitment and any separate Increased Time Commitment given contemporaneously herewith)

 

 

within which NAI may rescind the aforementioned Notice of NAI’s Intent to Terminate Because of a Force Majeure Event by a notice given in the form prescribed by the Construction Agreement. Any failure of NAI to so rescind the notice will constitute a 97-10/Meltdown Event under and as defined in the Construction Agreement and will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of NAI) that any Termination of NAI’s Work occurred for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified.
                 
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation		    
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
Exhibit G to Amended and Restated Construction Agreement (RTP Data Center) – Page 2

 

 

Exhibit H
Notice of Increased Time Commitment by BNPPLC
[Date]
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
     Re: Amended and Restated Construction Agreement (RTP Data Center) dated as of November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     NAI has delivered a notice to BNPPLC dated                     , 20___, which by its terms expressed NAI’s intent that it constitute a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement. In such notice, NAI advised BNPPLC of NAI’s intent to elect a Termination of NAI’s Work because of NAI’s belief that the Work will not be substantially complete prior to the Target Completion Date only because of Pre-lease Force Majeure Delays. Such notice also expressed NAI’s belief that Pre-lease Force Majeure Delays are likely to be                      days in the aggregate.
     This response to such notice constitutes an Increased Time Commitment. BNPPLC hereby commits to extend the Target Completion Date by                      days (the estimate given by NAI as described above).
     Please note that, according to the Construction Agreement, NAI will have ten days after the date of any Increased Commitment (which may be comprised of this Increased Time Commitment and any separate Increased Funding Commitment given contemporaneously herewith) within which NAI may rescind the aforementioned Notice of NAI’s Intent to Terminate Because of a Force Majeure Event by a notice given in the form prescribed by the Construction Agreement. Any failure of NAI to so rescind the notice will constitute a 97-10/Meltdown Event under and as defined in the Construction Agreement and will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of NAI) that any Termination of NAI’s Work occurred for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified.

 

 

                 
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation		    
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
Exhibit H to Amended and Restated Construction Agreement (RTP Data Center) – Page 2

 

 

Exhibit I
Rescission of Notice of NAI’s Intent to Terminate
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Construction Agreement (RTP Data Center) dated as of November 29, 2007 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
     NAI has delivered to BNPPLC a Notice of NAI’s Intent to Terminate dated                     , 200___, and BNPPLC has responded with an Increased Commitment as of                     , 200___. NAI hereby accepts the Increased Commitment and, as provided in subparagraph 7(B) of the Construction Agreement, rescinds such Notice of NAI’s Intent to Terminate.
     NAI acknowledges that, because of such rescission, NAI must, as a condition precedent to any exercise of its remaining rights to terminate the Construction Agreement pursuant to subparagraph 7(B) thereof, deliver another Notice of NAI’s Intent to Terminate at least forty five days prior to the effective date of the Termination of NAI’s Work.
                 
    NETWORK APPLIANCE, INC., a Delaware
corporation		    
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               

 

 

Exhibit J
Estoppel From Contractor
_________, 200___
BNP Paribas 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 Paribas Leasing Corporation, a Delaware corporation (“BNPPLC”), and covenants with BNPPLC 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 RTP Data Center 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 an Amended and Restated Lease Agreement (RTP Data Center) and an Amended and Restated Construction Agreement (RTP Data Center), both dated as of November 29, 2007 (collectively, the “RTP Data Center Documents”), BNPPLC is leasing the Project to NAI and has agreed, subject to the terms and conditions of the RTP Data Center Documents, to provide a construction allowance for the design and construction of the Improvements. The undersigned has also been advised that the RTP Data Center Documents expressly provide that third parties (including the undersigned) are not intended as beneficiaries of the RTP Data Center Documents and, thus, will have no standing to enforce any obligations of NAI or BNPPLC under the RTP Data Center Documents, including any such obligation that BNPPLC may have to provide the construction allowance. The undersigned understands that the RTP Data Center 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 BNPPLC or to otherwise bind BNPPLC 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

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 2
letter.
     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 BNPPLC, not to NAI. BNPPLC shall not, however, be liable for, and the undersigned shall not assert, any claims, demands or liabilities against BNPPLC 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 BNPPLC under the Construction Contract if BNPPLC 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 BNPPLC 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 BNPPLC 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 RTP Data Center Documents, including any eviction of NAI resulting from an Event of Default (as defined in the RTP Data Center Documents), BNPPLC 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 BNPPLC that NAI’s right to possession has been terminated, the undersigned shall send to BNPPLC 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
Exhibit J to Amended and Restated Construction Agreement (RTP Data Center) – Page 2

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 3
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 BNPPLC may request to allow it to decide whether to assume the Construction Contract. BNPPLC shall have seven days from receipt of such written certificate containing all such requested information to decide whether to assume the Construction Contract. If BNPPLC fails to assume the Construction Contract within such time, the undersigned agrees that BNPPLC shall not be liable (and the undersigned shall not assert or bring any action against BNPPLC, 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 BNPPLC notifies the undersigned that BNPPLC 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 RTP Data Center Documents, the undersigned shall immediately discontinue the work under the Construction Contract and remove its personnel from the Project, and BNPPLC shall be entitled to take exclusive possession of the Project. The undersigned shall also, upon request by BNPPLC, deliver and assign to BNPPLC 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 BNPPLC 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 BNPPLC that BNPPLC 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 BNPPLC’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 BNPPLC is given the
Exhibit J to Amended and Restated Construction Agreement (RTP Data Center) – Page 3

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 4
opportunity to elect whether or not to assume the Construction Contract as provided herein, BNPPLC 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 RTP Data Center 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 BNPPLC, for the additional costs incurred by the undersigned attributable to the disruption; and, provided further, that if BNPPLC does assume the Construction Contract, BNPPLC 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).
     e) No action taken by BNPPLC or the undersigned with respect to the Construction Contract shall prejudice any other rights or remedies of BNPPLC or the undersigned provided by law, by the RTP Data Center Documents, by the Construction Contract or otherwise against NAI.
     f) The undersigned agrees promptly to notify BNPPLC 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 BNPPLC prominently marked “URGENT - NOTICE OF NAI’S DEFAULT UNDER CONSTRUCTION AGREEMENT WITH NETWORK APPLIANCE, INC. — WAKE COUNTY, NORTH CAROLINA” at the address specified for notice below (or at such other addresses as BNPPLC 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 BNPPLC 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 BNPPLC will include the time necessary to terminate NAI’s right to possession of the Project and evict NAI, provided that BNPPLC commences the steps required to exercise such right within sixty days after it is entitled to do so under the terms of the RTP Data Center 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
Exhibit J to Amended and Restated Construction Agreement (RTP Data Center) – Page 4

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 5
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 BNPPLC:
  BNP Paribas 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:
         
Address of NAI:
  Network Appliance, Inc.    
 
  7301 Kit Creek Road    
 
  Research Triangle Park, NC 27709    
 
  Attention: Ingemar Lanevi    
 
  Telecopy: (919) 476-5750    
 
        
With a copy to:
  Network Appliance, Inc.    
 
  495 East Java Drive    
 
  Sunnyvale, California 94089    
 
  Attention: Mr. Thom Bryant    
 
  Telecopy: (408)-822-4463    
Exhibit J to Amended and Restated Construction Agreement (RTP Data Center) – Page 5

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 6
     h) The undersigned acknowledges that it has all requisite authority to execute this letter. The undersigned further acknowledges that BNPPLC has requested this letter, and is relying on the truth and accuracy of the representations made herein, in connection with BNPPLC’s decision to advance funds for construction under the RTP Data Center 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, BNPPLC to assume the Construction Contract in the event NAI is evicted from the Project.
                 
    Network Appliance, Inc.    
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
Exhibit J to Amended and Restated Construction Agreement (RTP Data Center) – Page 6

 

 

Exhibit K
Estoppel From Design Professionals
                    , 200___
BNP Paribas 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 Paribas Leasing Corporation, a Delaware corporation (“BNPPLC”), and covenants with BNPPLC 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 RTP Data Center 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 an Amended and Restated Lease Agreement (RTP Data Center) and an Amended and Restated Construction Agreement (RTP Data Center), both dated as of November 29, 2007 (collectively, the “RTP Data Center Documents”), BNPPLC is leasing the Project to NAI and has agreed, subject to the terms and conditions of the RTP Data Center Documents, to provide a construction allowance for the design and construction of the Improvements. The undersigned has also been advised that the RTP Data Center Documents expressly provide that third parties (including the undersigned) are not intended as beneficiaries of the RTP Data Center Documents and, thus, will have no standing to enforce any obligations of NAI or BNPPLC under the RTP Data Center Documents, including any such obligation that BNPPLC may have to provide the construction allowance. The undersigned understands that the RTP Data Center Documents expressly provide that NAI is not authorized to enter into any Agreement or other agreement with any third party in the name of BNPPLC or to otherwise bind BNPPLC 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.

 

 

BNP Paribas 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 Agreement, 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 Agreement.
     The undersigned acknowledges and agrees that:
     a) BNPPLC shall not be liable for, and the undersigned shall not assert, any claims, demands or liabilities against BNPPLC 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 BNPPLC under the Agreement if BNPPLC 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 BNPPLC 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 BNPPLC 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 RTP Data Center Documents, including any eviction of NAI resulting from an Event of Default (as defined in the RTP Data Center Documents), BNPPLC 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 BNPPLC that NAI’s right to possession has been terminated, the undersigned shall send to BNPPLC 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
Exhibit K to Amended and Restated Construction Agreement (RTP Data Center) – Page 2

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 3
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 BNPPLC may request to allow it to decide whether to assume the Agreement. BNPPLC shall have seven days from receipt of such written certificate containing all such requested information to decide whether to assume the Agreement. If BNPPLC fails to assume the Agreement within such time, the undersigned agrees that BNPPLC shall not be liable (and the undersigned shall not assert or bring any action against BNPPLC or, 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 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 BNPPLC notifies the undersigned that BNPPLC shall not assume the Agreement pursuant to the preceding paragraph following the termination of NAI’s right to possession of the Project under the RTP Data Center Documents, the undersigned shall immediately deliver and assign to BNPPLC 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 BNPPLC that BNPPLC 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 BNPPLC’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 BNPPLC is given the opportunity to elect whether or not to assume the Agreement as provided herein, BNPPLC 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 RTP Data Center 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
Exhibit K to Amended and Restated Construction Agreement (RTP Data Center) – Page 3

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 4
equitable adjustment to the price of the Agreement, following any assumption thereof by BNPPLC, for the additional costs incurred by the undersigned attributable to the disruption; and, provided further, that if BNPPLC does assume the Agreement, BNPPLC 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 BNPPLC or the undersigned with respect to the Agreement shall prejudice any other rights or remedies of BNPPLC or the undersigned provided by law, by the RTP Data Center Documents, by the Agreement or otherwise against NAI.
     f) The undersigned agrees promptly to notify BNPPLC 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 BNPPLC prominently marked “URGENT — NOTICE OF NAI’S DEFAULT UNDER DESIGN AGREEMENT WITH NETWORK APPLIANCE, INC. — WAKE COUNTY, NORTH CAROLINA” at the address specified for notice below (or at such other addresses as BNPPLC 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 BNPPLC 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: (___) ___-___    
Exhibit K to Amended and Restated Construction Agreement (RTP Data Center) – Page 4

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 5
         
To BNPPLC:
  BNP Paribas 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:
         
Address of NAI:
  Network Appliance, Inc.    
 
  7301 Kit Creek Road    
 
  Research Triangle Park, NC 27709    
 
  Attention: Ingemar Lanevi    
 
  Telecopy: (919) 476-5750    
 
        
With a copy to:
  Network Appliance, Inc.    
 
  495 East Java Drive    
 
  Sunnyvale, California 94089    
 
  Attention: Mr. Thom Bryant    
 
  Telecopy: (408)-822-4463    
     h) The undersigned acknowledges that it has all requisite authority to execute this letter. The undersigned further acknowledges that BNPPLC has requested this letter, and is relying on the truth and accuracy of the representations made herein, in connection with BNPPLC’s decision to advance funds for design services under the RTP Data Center Documents with NAI.
                 
    Very truly yours,    
 
                
         
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
Exhibit K to Amended and Restated Construction Agreement (RTP Data Center) – Page 5

 

 

BNP Paribas Leasing Corporation
                    , 200___
Page 6
     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, BNPPLC to assume the Agreement in the event NAI is evicted from the Project.
                 
    Network Appliance, Inc.    
 
                
 
  By:            
             
 
      Name:        
 
               
 
      Title:        
 
               
Exhibit K to Amended and Restated Construction Agreement (RTP Data Center) – Page 6

 

exv10w52
Exhibit 10.52
AMENDED AND RESTATED
LEASE AGREEMENT
(RTP DATA CENTER)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
         
    Page  
1 Term; Lease Obligations Deferred Until Completion of Initial Improvements; Termination Prior to Lease Commencement
     3  
(A) Scheduled Term; Deferral of Obligations
     3  
(B) Option of BNPPLC to Terminate
     3  
(C) Automatic Termination
     3  
(D) Extension of the Term
     3  
 
        
2 Use and Condition of the Property
     4  
(A) Use
     4  
(B) Condition of the Property
     5  
(C) Consideration for and Scope of Waiver
     5  
 
        
3 Rent
     6  
(A) Base Rent Generally
     6  
(B) Calculation of and Due Dates for Base Rent
     6  
(1) Determination of Payment Due Dates Generally
     6  
(2) Special Adjustments to Base Rent Payment Dates and Periods
     6  
(3) Base Rent Formula
     7  
(4) Fixed Rate Lock
     7  
(C) Early Termination of Fixed Rate Lock
     8  
(D) Additional Rent
     9  
(E) Administrative Fees
     9  
(F) No Demand or Setoff
     9  
(G) Default Interest and Order of Application
     9  
(H) Calculations by BNPPLC Are Conclusive
     9  
 
        
4 Nature of this Agreement
     9  
(A) “Net” Lease Generally
     9  
(B) No Termination
     10  
(C) Characterization of this Lease
     11  
 
        
5 Payment of Executory Costs and Losses Related to the Property
     13  
(A) Local Impositions
     13  
(B) Increased Costs; Capital Adequacy Charges
     13  
(C) NAI’s Payment of Other Losses; General Indemnification
     15  
(D) Exceptions and Qualifications to Indemnities
     19  
(E) Refunds and Credits Related to Losses Paid by NAI
     23  
(F) Reimbursement of Excluded Taxes Paid by NAI
     25  
(G) Collection on Behalf of Participants
     25  
 
        
6 Replacement of Participants
     25  

 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
(A) NAI’s Right to Substitute Participants
     25  
(B) Conditions to Replacement of Participants
     25  
 
        
7 Items Included in the Property
     26  
(A) Status of Property
     26  
(B) Changes in the Land Covered by the Ground Lease
     27  
 
        
8 Environmental
     27  
(A) Environmental Covenants by NAI
     27  
(B) Right of BNPPLC to do Remedial Work Not Performed by NAI
     28  
(C) Environmental Inspections and Reviews
     28  
(D) Communications Regarding Environmental Matters
     29  
 
        
9 Insurance Required and Condemnation
     30  
(A) Liability Insurance
     30  
(B) Property Insurance
     30  
(C) Failure to Obtain Insurance
     31  
(D) Condemnation
     31  
(E) Waiver of Subrogation
     32  
 
        
10 Application of Insurance and Condemnation Proceeds
     32  
(A) Collection and Application of Insurance and Condemnation Proceeds Generally
     32  
(B) Advances of Escrowed Proceeds to NAI
     33  
(C) Application of Escrowed Proceeds as a Qualified Prepayment
     33  
(D) Right of NAI to Receive and Apply Remaining Proceeds Below a Certain Level
     33  
(E) Special Provisions Applicable After a 97-10/Meltdown Event or an Event of Default
     33  
(F) NAI’s Obligation to Restore
     34  
(G) Takings of All or Substantially All of the Property on or after the Completion Date
     34  
(H) If Remaining Proceeds Exceed the Lease Balance
     34  
 
        
11 Additional Representations, Warranties and Covenants of NAI Concerning the Property
     35  
(A) Operation and Maintenance
     35  
(B) Debts for Construction, Maintenance, Operation or Development
     36  

(ii) 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
(C) Repair, Maintenance, Alterations and Additions
     36  
(D) Permitted Encumbrances
     37  
(E) Books and Records Concerning the Property
     37  
 
        
12 Assignment and Subletting by NAI
     38  
(A) BNPPLC’s Consent Required
     38  
(B) Standard for BNPPLC’s Consent to Assignments and Certain Other Matters
     38  
(C) Consent Not a Waiver
     39  
 
        
13 Assignment by BNPPLC
     39  
(A) Restrictions on Transfers
     39  
(B) Effect of Permitted Transfer or other Assignment by BNPPLC
     39  
 
        
14 BNPPLC’s Right to Enter and to Perform for NAI
    40  
(A) Right to Enter
     40  
(B) Performance for NAI
     40  
(C) Building Security
     40  
 
        
15 Remedies
     41  
(A) Traditional Lease Remedies
     41  
(B) Foreclosure Remedies
     43  
(C) Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement
     43  
(D) Enforceability
     44  
(E) Remedies Cumulative
     44  
 
        
16 Default by BNPPLC
     44  
 
        
17 Quiet Enjoyment
     45  
 
        
18 Surrender Upon Termination
     45  
 
        
19 Holding Over by NAI
     45  
 
        
20 Recording Memorandum
     46  
 
        
21 Independent Obligations Evidenced by Other Operative Documents
     46  

(iii) 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
22 Proprietary Information and Confidentiality
     46  
(A) Proprietary Information
     46  
(B) Confidentiality
     46  
 
        
23 Amendment and Restatement of the Prior Lease
     47  
Exhibits and Schedules
     
Exhibit A   Legal Description
Exhibit B   North Carolina Lien and Foreclosure Provisions

(iv) 

 

AMENDED AND RESTATED
LEASE AGREEMENT
(RTP DATA CENTER)
     This AMENDED AND RESTATED LEASE AGREEMENT (RTP DATA CENTER) (this “Lease”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Lease, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Lease for all purposes. As used in this Lease, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Lease are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     At the request of NAI and to facilitate the transactions contemplated in the other Operative Documents, BNPPLC is entering into the Ground Lease, pursuant to which BNPPLC will have a leasehold estate in the Land described in Exhibit A and any existing improvements on the Land from NAI contemporaneously with the execution of this Lease.
     NAI is already in possession and control of the Land pursuant to the Prior Lease or the Prior Construction Agreement.
     In anticipation of BNPPLC’s acquisition of the leasehold estate under the Ground Lease and other property described below, BNPPLC and NAI have reached agreement as to the terms and conditions upon which BNPPLC is willing to sublease the Land to NAI and to lease to NAI any existing Improvements and the Improvements to be constructed on the Land as hereinafter provided, and by this Lease BNPPLC and NAI desire to evidence such agreement and to amend and restate the Prior Lease.
GRANTING CLAUSES
     BNPPLC does hereby LEASE, DEMISE and LET unto NAI for the Term (as hereinafter defined) all right, title and interest of BNPPLC, now owned or hereafter acquired, in and to:
     (1) the Land, including the leasehold estate in the Land acquired by BNPPLC under the Ground Lease;
     (2) any and all Improvements;

 

 

     (3) all easements and other rights appurtenant to the leasehold estate created by the Ground Lease or to the Improvements; and
     (4) (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 abutting land.
BNPPLC’s interest in all property described in clauses (1) through (4) above is 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 BNPPLC under the Ground Lease or as described in subparagraph 7(A) below, BNPPLC also hereby grants and assigns to NAI for the term of this Lease the right to use and enjoy (and, in the case of contract rights, to enforce) such rights or interests of BNPPLC:
     (a) any goods, equipment, furnishings, furniture and other tangible personal property of whatever nature that are located on the Real Property and all renewals or replacements of or substitutions for any of the foregoing (collectively, the “Tangible Personal Property”);
     (b) the benefits, if any, conferred upon the owner of the Real Property by the Permitted Encumbrances; and
     (c) any permits, licenses, franchises, certificates, and other rights and privileges against third parties related to the Real Property or Tangible Personal Property, including warranties, if any, given by vendors from whom any Tangible Personal Property was or may be acquired.
Such rights and interests of BNPPLC, 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 by this Lease and NAI’s rights hereunder are expressly made subject and subordinate to the terms and conditions of this Lease and the Ground Lease, to the matters listed in Exhibit B to the Closing Certificate and all other Permitted Encumbrances, and to any other claims or encumbrances not constituting Liens Removable by BNPPLC.
GENERAL TERMS AND CONDITIONS
Amended and Restated Lease Agreement (RTP Data Center) – Page 2

 

 

     The Property is leased by BNPPLC 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; Lease Obligations Deferred Until Completion of Initial Improvements; Termination Prior to Lease Commencement.
     (A) Scheduled Term; Deferral of Obligations. The term of this Lease (the “Term”) will not commence until a Completion Date occurs because of a Completion Notice given by NAI to BNPPLC, as required by subparagraph 2(B) of the Construction Agreement after NAI substantially completes the Construction Project. The Term will begin on and include any such Completion Date and will end on the first Business Day of August, 2014, unless the Term is extended as provided in subparagraph 1(D) or sooner terminated as expressly provided in other provisions of this Lease.
     BNPPLC and NAI intend to be legally bound by this Lease when it is executed by them. They also intend, however, that this Lease will not impose any payment obligations upon either of them prior to the Completion Date. Accordingly, neither NAI nor BNPPLC will have any obligation to make any payments under this Lease until the Completion Date, and if this Lease terminates before the Completion Date pursuant to subparagraph 1(B) or subparagraph 1(C), the Term will never commence and neither party will have any obligation for payments by reason of this Lease following the termination.
     Nothing in this subparagraph 1(A) nor any other provision of this Lease will defer or terminate the rights and obligations of the parties under the other Operative Documents. Unlike this Lease, the other Operative Documents will, when executed, immediately impose payment obligations upon BNPPLC and NAI.
     (B) Option of BNPPLC to Terminate. BNPPLC will have the option to terminate this Lease, which BNPPLC may exercise by notice to NAI, at any time after any 97-10/Meltdown Event or after BNPPLC’s receipt of a Pre-lease Force Majeure Notice. Such option may be exercised by BNPPLC as it deems appropriate in its sole and absolute discretion.
     (C) Automatic Termination. If NAI elects to accelerate the Designated Sale Date (as provided in the definition thereof in the Common Definitions and Provisions Agreement) prior to the Completion Date, or if a Termination of NAI’s Work occurs under and as provided in the Construction Agreement before the Completion Date, then this Lease will terminate automatically before the Term begins.
     (D) Extension of the Term. The Term may be extended at the option of NAI for up to two successive periods of five years each; provided, however, that prior to each such extension the following conditions must have been satisfied: (A) NAI must have delivered a notice of its
Amended and Restated Lease Agreement (RTP Data Center) – Page 3

 

 

election to exercise the option at least one hundred eighty days prior to the end of the Term, and prior to the commencement of any such extension BNPPLC and NAI must have agreed in writing upon, and received the written consent and approval of BNPPLC’s Parent and all Participants (other than Participants being replaced at the request of NAI as provided in Paragraph 6) to, (1) a corresponding extension of the date specified in clause (1) of the definition of Designated Sale Date in the Common Definitions and Provisions Agreement and of the term of the Ground Lease, and (2) an adjustment to the Rent that NAI will be required to pay during the extension, it being expected that the Rent for the extension may be different than the Rent required for the original Term or any prior extension, and it being understood that the Rent for any extension must in all events be satisfactory to both BNPPLC and NAI, each in its sole and absolute discretion; (B) at the time of NAI’s exercise of its option to extend, no Event of Default has occurred and is continuing, and no Event of Default will result from the extension; (C) immediately prior to any such extension, this Lease must then remain in effect; and (D) if this Lease has been assigned by NAI, then NAI must have executed a guaranty (or confirmed an existing guaranty, if applicable), guaranteeing NAI’s assignee’s obligations under the Operative Documents throughout such extended Term. With respect to the condition that BNPPLC and NAI must have agreed upon the Rent required for any extension of the Term, neither NAI nor BNPPLC is willing to submit itself to a risk of liability or loss of rights hereunder for being judged unreasonable. Similarly, neither BNPPLC’s Parent nor any Participant is expected to submit itself to a risk of liability or loss of rights for being judged to have unreasonably withheld consent or approval to any extension of the Term. Accordingly, NAI, BNPPLC, BNPPLC’s Parent and Participants will each have sole and absolute discretion in making its determination, and both NAI and BNPPLC 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 and satisfaction of the other conditions listed in this subparagraph, if NAI exercises its option to extend the Term as provided in this subparagraph, this Lease will continue in full force and effect, and the leasehold estate hereby granted to NAI will 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 Effective Date and before the extension.
2 Use and Condition of the Property.
     (A) Use. Subject to the Permitted Encumbrances, NAI may use and occupy the Property during the Term, but only for the following purposes and other lawful purposes incidental thereto:
     (1) construction and development of the Construction Project;
     (2) administrative and office space;
     (3) activities related to NAI’s research and development or production of products
Amended and Restated Lease Agreement (RTP Data Center) – Page 4

 

 

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;
     (4) cafeteria and other support facilities that NAI may provide to its employees; and
     (5) 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 BNPPLC, which approval will not be unreasonably withheld after completion of the Construction Project (but NAI acknowledges that BNPPLC’s withholding of such approval shall be reasonable if BNPPLC determines in good faith that (1) giving the approval may materially increase BNPPLC’s risk of liability for any existing or future environmental problem, or (2) giving the approval is likely to substantially increase BNPPLC’s administrative burden of complying with or monitoring NAI’s compliance with the requirements of this Lease or other Operative Documents).
     (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 BNPPLC or other Interested Parties regarding the title thereto or the rights of any parties in possession of any part thereof, except as expressly set forth in Paragraph 17. BNPPLC will not be responsible for any latent or other defect or change of condition in the Land, Improvements or other Property or for any violations with respect thereto of Applicable Laws. Further, BNPPLC will not be required to furnish to NAI any facilities or services of any kind, including water, phone, sewer, steam, heat, gas, air conditioning, electricity, light or power.
     (C) Consideration for and Scope of Waiver. The provisions of subparagraph 2(B) have been negotiated by BNPPLC and NAI as being consistent with the Rent payable under this Lease, and such provisions are intended to be a complete exclusion and negation of any representations or warranties of BNPPLC or other Interested Parties, 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.
Amended and Restated Lease Agreement (RTP Data Center) – Page 5

 

 

     However, such exclusion of representations and warranties by BNPPLC is not intended to impair any representations or warranties made by other parties, including any architects, engineers or contractors engaged to work on the Construction Project, 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 must pay BNPPLC rent (“Base Rent”), calculated as provided below . Each payment of Base Rent must be received by BNPPLC no later than 1:00 p.m. (Eastern time) on the date it becomes due; if received after 1:00 p.m. (Eastern time) it will be considered for purposes of this 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 becomes due, BNPPLC will notify NAI in writing of the amount of each installment, calculated as provided below. Any failure by BNPPLC to so notify NAI, however, will not constitute a waiver of BNPPLC’s right to payment, but absent such notice NAI will 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 BNPPLC of the underpayment.
     (B) Calculation of and Due Dates for Base Rent. Payments of Base Rent will be calculated and become due as follows:
     (1) Determination of Payment Due Dates Generally. For Base Rent Periods subject to a LIBOR Period Election of six months, Base Rent will 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. For all other Base Rent Periods, Base Rent will be due in one installment on the Base Rent Date upon which the Base Rent Period ends.
     (2) Special Adjustments to Base Rent Payment Dates and Periods. Notwithstanding the foregoing, if NAI or any Applicable Purchaser purchases BNPPLC’s interest in the Property pursuant to the Purchase Agreement, any accrued unpaid Base Rent and all outstanding Additional Rent will be due on the date of purchase in addition to the purchase price and other sums due to BNPPLC under the Purchase Agreement.
Amended and Restated Lease Agreement (RTP Data Center) – Page 6

 

 

     (3) Base Rent Formula. Each installment of Base Rent payable for any Base Rent Period will equal:
  •   the Lease Balance on the first day of such Base Rent Period, less Losses (if any) that BNPPLC suffered or incurred prior to the Term and that qualify as Pre-lease Force Majeure Losses (as defined in the Construction Agreement), times
 
  •   the sum of the Effective Rate and the Spread, 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.
     Only for the purpose of illustration, assume the following for a hypothetical Base Rent Period: that prior to the first day of such Base Rent Period the Construction Allowance has been fully funded, and no Pre-lease Force Majeure Losses have occurred, but Qualified Prepayments have been received by BNPPLC, leaving a Lease Balance of $30,000,000; that the Effective Rate for the Base Rent Period is 6%; that the Spread is one hundred fifty basis points (150/100 of 1%); and that such Base Rent Period contains exactly thirty days. Under such assumptions, Base Rent for the hypothetical Base Rent Period will equal:
$30,000,000 x [6% + 1.50%] x 30/360 = $187,500.
     (4) Fixed Rate Lock. At any time during the Term, NAI may deliver a notice in the form attached to the Common Definitions and Provisions Agreement as Annex 2 (a “Fixed Rate Lock Notice”), requesting that BNPPLC establish a fixed rate for use in the calculation of the Effective Rate hereunder (a “Fixed Rate Lock”) for all Base Rent Periods commencing on or after a date specified in such notice, which date must be the first Business Day of a calendar month (the “Fixed Rate Lock Date”). Promptly after receiving a Fixed Rate Lock Notice, BNPPLC will enter into an Interest Rate Swap with BNP Paribas (the “Fixed Rate Swap”); except that BNPPLC may decline to enter into the Fixed Rate Swap and to establish a Fixed Rate Lock if:
     (a) NAI does not deliver the Fixed Rate Lock Notice to BNPPLC at least ten Business days prior to the Fixed Rate Lock Date specified therein;
     (b) NAI specifies a Fixed Rate Lock Date in the Fixed Rate Lock Notice that is prior to the end of any Base Rent Period which commenced before
Amended and Restated Lease Agreement (RTP Data Center) – Page 7

 

 

BNPPLC receives the Fixed Rate Lock Notice;
     (c) any notice has been given to accelerate the Designated Sale Date as provided in the definition thereof in the Common Definitions and Provisions Agreement;
     (d) the estimate of the Fixed Rate (hereinafter defined) specified by NAI in the Fixed Rate Lock Notice is for any reason less than the fixed rate available to BNPPLC under any Interest Rate Swap proposed by BNP Paribas;
     (e) at the time the Fixed Rate Lock Notice is given, the Interest Rate Swap requested thereby is contrary to any Applicable Laws or any interpretation thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency (including, without limitation, any such requirement imposed by the Board of Governors of the United States Federal Reserve System); or
     (f) any event has occurred or circumstance exists that constitutes a Default or a 97-10/Meltdown Event.
The notional principal amount of the Fixed Rate Swap will equal the Lease Balance on the date such notice is given. The fixed rate used to calculate payments required of BNPPLC under the Fixed Rate Swap, as the counterparty designated the fixed rate payor, will constitute the “Fixed Rate” for purposes of this Lease.
     (C) Early Termination of Fixed Rate Lock. After a Fixed Rate Lock is established, BNPPLC may cause or suffer a termination in whole or in part of the Fixed Rate Swap in the event that (i) NAI fails to make any payment of Base Rent required hereunder on the Base Rent Date when it first becomes due, (ii) the Designated Sale Date occurs before the date specified in clause (1) of the definition thereof in the Common Definitions and Provisions Agreement, (iii) for any reason a Qualified Prepayment is applied to reduce the Lease Balance, (iv) the Lease Balance on the Fixed Rate Lock Date is less than the notional amount of the Fixed Rate Swap for any reason. NAI must reimburse to BNPPLC any Fixed Rate Settlement Amount charged to BNPPLC in connection with such a termination, and if the termination is a complete, rather than a partial, termination of the Fixed Rate Swap then in effect, it will for purposes of this Lease constitute a termination of the Fixed Rate Lock itself. Further, if BNPPLC is charged penalties or interest because of its failure to make a timely payment required under the Fixed Rate Swap, and if BNPPLC’s failure to make the timely payment was caused by NAI’s failure to make a timely payment of Base Rent or other amounts due hereunder or under other Operative
Amended and Restated Lease Agreement (RTP Data Center) – Page 8

 

 

Documents, then such penalties or interest will constitute Losses against which BNPPLC is entitled to be indemnified pursuant to subparagraph 5(C). If a Fixed Rate Lock is terminated as provided in this subparagraph, NAI shall have no right to require BNPPLC to enter into another Interest Rate Swap in order to establish a new fixed rate.
     (D) Additional Rent. All amounts which NAI is required to pay to or on behalf of BNPPLC pursuant to this Lease, together with every charge, premium, interest and cost set forth herein which may be added for nonpayment or late payment thereof, will constitute rent (all such amounts, other than Base Rent, are herein called “Additional Rent”; and, collectively, Base Rent and Additional Rent are herein sometimes called “Rent”).
     (E) Administrative Fees. In addition to other amounts payable by NAI hereunder, on or before each anniversary of the Effective Date after the Completion Date and prior to the Designated Sale Date, NAI must pay BNPPLC an annual administrative agency fee (an “Administrative Fee”) as provided in the Closing Letter. Each payment of an Administrative Fee will represent Additional Rent for the first Base Rent Period during which it first becomes due.
     (F) No Demand or Setoff. Except as expressly provided herein, NAI must pay all Rent without notice or demand and without counterclaim, deduction, setoff or defense.
     (G) Default Interest and Order of Application. All Rent will 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. BNPPLC may 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 BNPPLC elects.
     (H) Calculations by BNPPLC Are Conclusive. All calculations by BNPPLC of Base Rent, Additional Rent or any amount needed to calculate Base Rent (including the Effective Rate for any Base Rent Period and the Lease Balance) or Additional Rent will, in the absence of clear and demonstrable error, be conclusive and binding upon NAI.
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 BNPPLC and NAI that Base Rent and other payments herein specified will be absolutely net to BNPPLC and that NAI must pay all costs, expenses and obligations of every kind relating to the Property or this Lease which may arise or become due. Further, it is understood that all amounts payable by NAI to BNPPLC under this Lease and the other Operative Documents are expressed as minimum payments to be made net of any deduction
Amended and Restated Lease Agreement (RTP Data Center) – Page 9

 

 

or withholding required under any Applicable Laws.
     (B) No Termination. Except as expressly provided in this Lease itself, this Lease will not terminate, nor will NAI have any right to terminate this Lease, nor will NAI be entitled to any abatement of or setoff against the Rent, nor will the obligations of NAI under this 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 BNPPLC under this Lease or any of the other Operative Documents or any other agreement to which BNPPLC 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 BNPPLC 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) NAI’s ownership of any interest in the Property, or (ix) 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 hereunder be separate and independent of the covenants and agreements of BNPPLC, that Base Rent and all other sums payable by NAI hereunder continue to be payable in all events and that the obligations of NAI hereunder continue unaffected, unless the requirement to pay or perform the same have been terminated or limited pursuant to an express provision of this 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 “warranty of suitability” or other warranties implied as a matter of law) (i) to quit, terminate or surrender this 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) will 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 BNPPLC’s failure to remove a Lien Removable by BNPPLC or because of any other default by BNPPLC under this Lease: (i) the recovery of monetary damages in the case of any default that continues beyond the period for cure provided in Paragraph 16, (ii) injunctive relief in case of the violation, or attempted or threatened violation, by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Lease which are binding upon BNPPLC (including the confidentiality provisions set forth in subparagraph 22(B) below), or (iii) a decree compelling performance by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Lease which are binding upon BNPPLC.
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     (C) Characterization of this Lease.
     (1) Both NAI and BNPPLC intend that (A) for the purposes of determining the proper accounting for this Lease by NAI, BNPPLC will be treated as the owner and landlord of the Property and NAI will be treated as the tenant of the Property, and (B) for income tax purposes and commercial law (including real estate and bankruptcy law) and regulatory purposes, (1) this Lease and the other Operative Documents will be treated as a financing arrangement, (2) BNPPLC will be deemed a lender making loans to NAI in the principal amount equal to the Lease Balance, which loans are secured by the Property, and (3) NAI will be treated as the owner of the Property and will be entitled to all tax benefits available to the owner of the Property. Consistent with such intent, by the provisions set forth in Exhibit B, NAI is granting to BNPPLC a lien upon and mortgaging and warranting title to a leasehold estate in the Land (the terms and conditions of which leasehold estate are as set forth in the Ground Lease) and the Improvements and all rights, titles and interests of NAI in and to other Property, WITH POWER OF SALE, to secure all obligations (monetary or otherwise) of NAI arising under or in connection with any of the Operative Documents. Without limiting the generality of the foregoing, NAI and BNPPLC desire that their intent as set forth in this subparagraph be given effect both in the context of any bankruptcy, insolvency or receivership proceedings concerning NAI or BNPPLC and in other contexts. Accordingly, NAI and BNPPLC expect that in the event of any bankruptcy, insolvency or receivership proceedings affecting NAI or BNPPLC or any enforcement or collection actions arising out of such proceedings, the transactions evidenced by this Lease and the other Operative Documents will be characterized and treated as loans made to NAI by BNPPLC, as an unrelated third party lender to NAI, secured by the Property.
     (2) Notwithstanding the foregoing, NAI acknowledges and agrees that none of BNPPLC or the other Interested Parties has made, or will be deemed to have made, in the Operative Documents or otherwise, any representations or warranties concerning how this Lease and the other Operative Documents will be characterized or treated under applicable accounting rules, income tax, regulatory, commercial or real estate law, bankruptcy, insolvency or receivership law or any other rules or requirements concerning the tax, accounting or legal characteristics of the Operative Documents. NAI further acknowledges and agrees that it is sophisticated and knowledgeable regarding all such matters and that it has, as it deemed appropriate, obtained from and relied upon its own professional accountants, counsel and other advisors for such tax, accounting and legal advice concerning the Operative Documents.
     (3) In any event, NAI will be required by subparagraph 5(C) below to indemnify and hold harmless BNPPLC from and against all additional taxes that may arise or become due because of any refusal of taxing authorities to recognize and give
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effect to the intention of the parties as set forth in subparagraph 4(C)(1) (“Unexpected Recharacterization Taxes”), including any additional income or capital gain tax that may become due because of payments to BNPPLC of the purchase price upon any sale under the Purchase Agreement resulting from any insistence of such taxing authorities that BNPPLC be treated as the “true owner” of the Property for tax purposes (a “Forced Recharacterization”); provided, however, NAI will not be required to pay or reimburse Unexpected Recharacterization Taxes to the extent that they are, in any given tax year, eliminated or offset by actual savings to BNPPLC because of additional depreciation deductions or other tax benefits available to BNPPLC in the same year only by reason of the Forced Recharacterization (“Unexpected Tax Savings”). To the extent Unexpected Recharacterization Taxes are eliminated or offset by Unexpected Tax Savings in a given tax year, including the tax year in which any sale under the Purchase Agreement occurs (the “Year of Sale”), such Unexpected Recharacterization Taxes will constitute Excluded Taxes as provided in clause (D) of the definition thereof in the Common Definitions and Provisions Agreement. Also, for purposes of this provision, it is understood that any depreciation deductions first available to BNPPLC in tax years prior to the Year of Sale and resulting from a Forced Recharacterization (“Prior Year Depreciation Deductions”) will be considered “available to BNPPLC” in the Year of Sale (and thus will eliminate or offset any Unexpected Recharacterization Taxes resulting from the recapture of such Prior Year Depreciation Deductions upon a sale under the Purchase Agreement) to the extent that (A) such Prior Year Depreciation Deductions are not otherwise used to generate Unexpected Tax Savings or Unexpected Net Tax Benefits (as defined below), and (B) the tax laws and regulations applicable in the Year of Sale effectively permit BNPPLC to carry over the Prior Year Depreciation Deductions to the Year of Sale by allowing BNPPLC to carry over net operating losses from the years in which the Prior Year Depreciation Deductions were first available to BNPPLC to the Year of Sale.
     (4) After any Forced Recharacterization, BNPPLC will make a reasonable effort to determine whether Unexpected Tax Savings exceed Unexpected Recharacterization Taxes in any given tax year (any such excess being hereinafter called an “Unexpected Net Tax Benefit”); and if BNPPLC does determine that an Unexpected Net Tax Benefit has been realized and the amount thereof, BNPPLC will notify NAI of the same and either credit the amount thereof against payments otherwise then due or to become due from NAI under this Lease or the other Operative Documents or pay the amount of such Unexpected Net Tax Benefit to NAI. It is understood, however, that the tax position of BNPPLC (and the consolidated tax group of which it is a part) may, in any given tax year, be such that no Unexpected Net Tax Benefit exists or can be determined with a reasonable effort on the part of BNPPLC. Therefore, BNPPLC makes no representation that NAI will receive any credits or payments pursuant to this provision after any Forced Recharacterization. Also, the determination by BNPPLC of the amount of any Unexpected Net Tax Benefit will be conclusive absent clear and manifest error, as
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will any determination by BNPPLC that the amount of any Unexpected Net Tax Benefit in a given tax year cannot be calculated with a reasonable effort. If NAI is dissatisfied with any such determination by BNPPLC prior to the Designated Sale Date, NAI will be entitled to accelerate the Designated Sale Date (as provided in clause (2) of the definition thereof), after which NAI may purchase or cause an Applicable Purchaser to purchase the Property on the accelerated Designated Sale Date pursuant to the Purchase Agreement.
5 Payment of Executory Costs and Losses Related to the Property.
     (A) Local Impositions. Subject only to the exceptions listed in subparagraph 5(D) below, NAI must pay or cause to be paid prior to delinquency all Local Impositions. If requested by BNPPLC from time to time, NAI must furnish BNPPLC with receipts or other appropriate evidence showing payment of all Local Impositions at least ten days 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 Local Imposition, and pending such contest NAI will not be deemed in default under any of the provisions of this Lease because of the Local Imposition if (1) NAI diligently prosecutes such contest to completion in a manner reasonably satisfactory to BNPPLC, 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 must be concluded and the contested Local Impositions must be paid by NAI prior to the earliest of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC 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 BNPPLC (including the Property) may be seized or sold or any other action is taken or overtly threatened against BNPPLC or against any property owned or leased by BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price (when taken together with any Supplemental Payment paid by NAI pursuant to 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:
     (1) If there is any increase in the cost to BNPPLC’s Parent or any Participant of agreeing to make or making, funding or maintaining advances to BNPPLC in connection with the Property because of any Banking Rules Change, then NAI must from time to time (after receipt of a request from BNPPLC’s Parent or such Participant as
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provided below) pay to BNPPLC for the account of BNPPLC’s Parent or such Participant, as the case may be, additional amounts sufficient to compensate BNPPLC’s Parent or the Participant for such increased cost. A certificate as to the amount of such increased cost, submitted to BNPPLC and NAI by BNPPLC’s Parent or the Participant, will be conclusive and binding upon NAI, absent clear and demonstrable error.
     (2) BNPPLC’s Parent or any Participant may demand additional payments (“Capital Adequacy Charges”) if BNPPLC’s Parent or the 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 or for BNPPLC to permit BNPPLC to maintain BNPPLC’s investment in the Property. To the extent that BNPPLC’s Parent or any Participant demands Capital Adequacy Charges as compensation for the additional capital requirements reasonably allocable to such investment or advances, NAI must pay to BNPPLC for the account of BNPPLC’s Parent or the Participant, as the case may be, the amount so demanded.
     (3) Notwithstanding the foregoing provisions of this subparagraph 5(B), NAI will not be obligated to pay any claim for compensation pursuant to this subparagraph 5(B) that arises or accrues (a) in the case of BNPPLC’s Parent, as a result of any change in the rating assigned to BNPPLC by rating agencies or bank regulators in regard to BNPPLC’s creditworthiness, record keeping or failure to comply with Applicable Laws (including U.S. banking regulations applicable to subsidiaries of a bank holding company), or (b) in the case of BNPPLC’s Parent or any Participant, more than nine months prior to the date NAI is notified of the intent of BNPPLC’s Parent or such Participant to make a claim for such charges; provided, that if the Banking Rules Change which results in a claim for compensation is retroactive, then the nine month period will be extended to include the period of the retroactive effect of such Banking Rules Change. Further, BNPPLC will cause BNPPLC’s Parent and any Participant that is an Affiliate of BNPPLC to use commercially reasonable efforts to reduce or eliminate any claim for compensation pursuant to this subparagraph 5(B), including a change in the office of BNPPLC’s Parent or such Participant through which it provides and maintains Funding Advances if such change will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of BNPPLC’s Parent or such Participant, be otherwise disadvantageous to it. It is understood that NAI may also request similar commercial reasonable efforts on the part of any Participant that is not an Affiliate of BNPPLC, but if a claim for additional compensation by any such Participant is not eliminated or waived, then NAI may request that BNPPLC replace such Participant as provided in Paragraph 6. Nothing in this subparagraph will be construed to require BNPPLC’s Parent or any Participant to create any new office through which to make or maintain Funding Advances.
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     (4) Any amount required to be paid by NAI under this subparagraph 5(B) will be due ten days after a notice requesting such payment is received by NAI from BNPPLC’s Parent or the applicable Participant.
     (C) NAI’s Payment of Other Losses; General Indemnification. Subject only to the exceptions listed in subparagraph 5(D) below:
     (1) Agreement to Indemnify. As directed by BNPPLC, NAI must pay, reimburse, indemnify, defend, protect and hold harmless BNPPLC and all other Interested Parties from and against all Losses (including Environmental Losses) asserted against or incurred or suffered by any of them at any time and from time to time by reason of, in connection with, arising out of, or in any way related to the following:
  •   the ownership or alleged ownership of any interest in the Property or the Rents;
 
  •   the purchase, design, construction, preparation, installation, inspection, delivery, non-delivery, acceptance, rejection, possession, use, operation, maintenance, management, rental, lease, sublease, repossession, condition (including defects, whether or not discoverable), destruction, repair, alteration, modification, restoration, addition or substitution, storage, transfer of title, redelivery, return, sale or other disposition of all or any part of or interest in the Property;
 
  •   the imposition of any Lien (or incurring of any liability to refund or pay over any amount as a result of any Lien) against all or any part of or interest in the Property;
 
  •   any failure of the Property or NAI itself to comply with Applicable Laws;
 
  •   Permitted Encumbrances or any violation thereof;
 
  •   Hazardous Substance Activities, including those occurring prior to the Term;
 
  •   the negotiation, administration or enforcement of the Operative Documents or the Participation Agreement;
 
  •   the making or maintenance of Funding Advances;
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  •   any Interest Rate Swap that BNPPLC enters into as described in subparagraph 3(B)(4) of this Lease;
 
  •   the breach by NAI of this Lease, any other Operative Document or any other document executed by NAI pursuant to or in connection with any Operative Document;
 
  •   any obligations of BNPPLC under the Closing Certificate or the Ground Lease; or
 
  •   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.
NAI’s obligations under this indemnity will apply whether or not any Interested Party is also indemnified as to the applicable Loss by another Interested Party and whether or not the Loss arises or accrues because of any condition of the Property or other circumstance concerning the Property prior to the Effective Date.
Further, in the event, for income tax purposes, an Interested Party must include in its taxable income any payment or reimbursement from NAI which is required by this indemnity (in this provision, the “Original Indemnity Payment”), and yet the Interested Party is not entitled during the same taxable year to a corresponding and equal deduction from its taxable income for the Loss paid or reimbursed by such Original Indemnity Payment (in this provision, the “Corresponding Loss”), then NAI must also pay to such Interested Party on demand the additional amount (in this provision, the “Additional Indemnity Payment”) needed to gross up the Original Indemnity Payment for any and all resulting additional income taxes. That is, NAI must pay an Additional Indemnity Payment as is needed so that the Corresponding Loss (computed net of the reduction, if any, of the Interested Party’s income taxes because of credits or deductions that are attributable to the Interested Party’s payment or deemed payment of the Corresponding Loss and that are recognized for tax purposes in the same taxable year during which the Interested Party must recognize the Original Indemnity Payment as income) will not exceed the difference computed by subtracting (i) all income taxes (determined for this purpose based on the highest marginal income tax rates charged to corporations by federal, state and local tax authorities, as applicable, for the relevant period or periods) imposed because of the receipt or constructive receipt of the Original Indemnity Payment and the Additional Indemnity Payment, from (ii) the sum of the Original Indemnity Payment and the Additional Indemnity Payment. (With regard to any payment or reimbursement of an Original Indemnity Payment, “After Tax Basis” means that such payment or reimbursement is or will be made together with the additional amount needed
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to gross up such Original Indemnity Payment as described in this provision.)
     (2) Scope of Indemnities and Releases. Every indemnity and release provided in this Lease and the other Operative Documents for the benefit of BNPPLC or other Interested Parties, including the indemnity set forth in
subparagraph 5(C)(1), will apply even if and when the subject matter of the indemnity or release arises out of or results from the negligence or strict liability of BNPPLC or any other Interested Party. Further, all such indemnities and releases will apply even if insurance obtained by NAI or required of NAI by this Lease or the other Operative Documents is not adequate to cover Losses against or for which the indemnities and releases are provided. (However, NAI’s liability for any failure to obtain insurance required by this Lease or the other Operative Documents will not be limited to Losses against which indemnities are provided, it being understood that the parties have agreed upon insurance requirements for reasons that extend beyond providing a source of payment for Losses against which BNPPLC and other Interested Parties may be indemnified by NAI.)
     (3) Nonexclusive List of Costs Covered by Indemnity. Costs and expenses for which NAI is responsible on an After Tax Basis pursuant to this subparagraph 5(C) will include all of the following, except to the extent that the following are included in the Initial Advance or in the calculation of any Break Even Price or Make Whole Amount paid to BNPPLC pursuant to the Purchase Agreement:
  •   appraisal fees;
 
  •   Uniform Commercial Code search fees;
 
  •   filing and recording fees;
 
  •   inspection fees and expenses;
 
  •   brokerage fees and commissions;
 
  •   survey fees;
 
  •   title policy premiums and escrow fees;
 
  •   any Breakage Costs or Fixed Rate Settlement Amount;
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  •   Attorneys’ Fees incurred by BNPPLC with respect to the drafting, negotiation, administration or enforcement of this Lease or the other Operative Documents; and
 
  •   all taxes (except Excluded Taxes) related to the Property or to the transactions contemplated in the Operative Documents.
Such costs and expenses will also include all rent or other payments required of BNPPLC under the Ground Lease, so long as this Lease remains in force or NAI remains in possession of the Property or is entitled to possession by this Lease. (It is understood, however, that with respect to payments which are required by the Ground Lease from BNPPLC to NAI and for which NAI is required to reimburse BNPPLC, such payments and the corresponding reimbursements will be offset and deemed paid by offsetting book entries rather than by an actual transfer of funds back and forth between the parties.)
     (4) Defense and Settlement of Indemnified Claims.
     (a) By notice to NAI BNPPLC may direct NAI to assume on behalf of BNPPLC or any other Interested Party and to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation included in or concerning any Loss for which NAI is responsible pursuant to subparagraph 5(C)(1). NAI must promptly comply with any such direction using counsel selected by NAI and reasonably satisfactory to BNPPLC or the other Interested Party, as applicable, to represent BNPPLC or the other Interested Party, as applicable. In the event NAI fails to promptly comply with any such direction from BNPPLC, BNPPLC or any other affected Interested Party may contest or settle the claim, proceeding or investigation using counsel of its own selection at NAI’s expense, subject to subparagraph 5(D)(3) if that subparagraph is applicable.
     (b) Also, although subparagraphs 5(D)(3) and 5(D)(4) will apply to tort claims asserted against any Interested Party related to the Property, the right of an Interested Party to be indemnified pursuant to this subparagraph 5(C) for taxes or other payments made to satisfy governmental requirements (“Government Mandated Payments”) will not be conditioned in any way upon NAI having consented to or approved of, or having been provided with an opportunity to defend against or contest, such Government Mandated Payments. In all cases, however, including those which may involve Government Mandated Payments, the rights of each Interested Party to be indemnified will be subject to subparagraph 5(D)(5).
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     (5) Payments Due. Any amount to be paid by NAI under this subparagraph 5(C) will be due ten days after a notice requesting such payment is given to NAI, subject to any applicable contest rights expressly granted to NAI by other provisions of this Lease.
     (6) Survival. NAI’s obligations under this subparagraph 5(C) will survive the termination or expiration of this Lease with respect to Losses suffered by any Interested Party on or prior to, or by reason of any actual or alleged occurrence or circumstances on or prior to, the later of the dates upon which (a) this Lease terminates or expires, or (b) NAI surrenders possession and control of the Property.
     (D) Exceptions and Qualifications to Indemnities.
     (1) Exceptions. BNPPLC acknowledges and agrees that nothing in Paragraph 4 or the preceding subparagraphs of this Paragraph 5 will be construed to require NAI to pay or reimburse:
     • Excluded Taxes; or
     • Losses incurred or suffered by any Interested Party to the extent proximately caused by (and attributed by any applicable principles of comparative fault to) the Established Misconduct of that Interested Party; or
     • Losses that result from any Liens Removable by BNPPLC; or
     • transaction expenses (including Attorneys’ Fees) incurred by any of the Participants in connection with the drafting, negotiation or execution of the Participation Agreement (or supplements making them parties thereto) or in connection with any due diligence Participants may undertake before entering into the Participation Agreement; or
     • Local Impositions or other Losses contested, if and so long as they are contested, by NAI in accordance with any of the provisions of this Lease or other Operative Documents which expressly authorize such contests; or
     • transaction expenses or other Losses caused by or necessary to accomplish any conveyance by BNPPLC to BNPPLC’s Parent or a Qualified Affiliate which constitutes a Permitted Transfer only by reason of clause (3) of the definition of Permitted Transfer in the Common Definitions and Provisions Agreement; or
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     • any amount which may from time to time be payable by BNPPLC to any Participant representing the excess of “Base Rent” as defined in the Participation Agreement over Base Rent as defined in and calculated pursuant to this Lease and the Common Definitions and Provisions Agreement; or
     • any decline in the value of the Property solely by reason of decline in general market conditions and not because of any breach of this Lease or other Operative Documents by NAI.
Further, without limiting BNPPLC’s rights (as provided in other provisions of this Lease and other Operative Documents) to include the following in the calculation of the Lease Balance, the Break Even Price and the Make Whole Amount (as applicable) or to collect Base Rent, a Supplemental Payment and other amounts, the calculation of which depends upon the Lease Balance, BNPPLC acknowledges and agrees that nothing in Paragraph 4 or the preceding subparagraphs of this Paragraph 5 will be construed to require NAI to pay or reimburse an Interested Party for costs paid by BNPPLC with the proceeds of the Initial Advance as part of the Transaction Expenses or with Construction Advances.
     (2) Notice of Claims. If an Interested Party receives a written notice of a claim for taxes or a claim alleging a tort or other unlawful conduct that the Interested Party believes is covered by the indemnity in subparagraph 5(C)(1), 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 will not excuse NAI from its obligations under subparagraph 5(C)(1); except that if such failure continues for more than fifteen days after the notice is received by such Interested Party and NAI is unaware of the matters described in the notice, with the result that NAI is unable to assert defenses or to take other actions which could minimize its obligations, then NAI will be excused from its obligation to indemnify such Interested Party (and any Affiliate of such Interested Party) against Losses, if any, which would not have been incurred or suffered but for such failure. For example, if BNPPLC fails to provide NAI with a copy of a notice of an overdue tax obligation covered by the indemnity set out in subparagraph 5(C)(1) and NAI is not otherwise already aware of such obligation, and if as a result of such failure BNPPLC 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 BNPPLC (or any Affiliate of BNPPLC) to pay the excess.
     (3) Withholding of Consent to Settlements Proposed by NAI. With regard to any tort claim against an Interested Party for which NAI undertakes to defend the Interested Party as provided in subparagraph 5(C)(4)(a), if the Interested Party unreasonably refuses to consent to a settlement of the claim which is proposed by NAI
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and which will meet the conditions listed in the next sentence, NAI’s liability for the cost of continuing the defense and for any other amounts payable in respect of the claim will be limited to the total cost for which the settlement proposed by NAI would have been accomplished but for the unreasonable refusal to consent. Any such settlement proposed by NAI must meet the following conditions: (A) at the time of the settlement by NAI, NAI must pay all amounts required to release the Interested Party and its property interests from any further obligation for or liens securing the applicable claim and from any interest, penalties and other related liabilities, and (B) the settlement or compromise must not involve an admission of fraud or criminal wrongdoing or result in some other material adverse consequence to the Interested Party.
     (4) Settlements Without the Prior Consent of NAI.
     (a) Except as otherwise provided in subparagraph 5(D)(4)(b), if any Interested Party settles any tort claim for which it is entitled to be indemnified by NAI without NAI’s consent, then NAI may, by notice given to the Interested Party no later than ten days after NAI is notified of the settlement, elect to pay Reasonable Settlement Costs to the Interested Party in lieu of a payment or reimbursement of actual settlement costs. (With respect to any tort claim asserted against an Interested Party, “Reasonable Settlement Costs” means the maximum amount that a prudent Person in the position of the Interested Party, but able to pay any amount, might reasonably agree to pay to settle the tort claim, taking into account the nature and amount of the claim, the relevant facts and circumstances known to such Interested Party at the time of settlement and the additional Attorneys Fees’ and other costs of defending the claim which could be anticipated but for the settlement.) After making an election to pay Reasonable Settlement Costs with regard to a particular tort claim and a particular Interested Party, NAI will have no right to rescind or revoke the election, despite any subsequent determination that Reasonable Settlement Costs exceed actual settlement costs. It is understood that Reasonable Settlement Costs may be more or less than actual settlement costs and that a final determination of Reasonable Settlement Costs may not be possible until after NAI must decide between paying Reasonable Settlement Costs or paying actual settlement costs.
     (b) Notwithstanding the foregoing, NAI will have no right to elect to pay Reasonable Settlement Costs in lieu of actual settlement costs if an Interested Party settles claims without NAI’s consent at any time when an Event of Default has occurred and is continuing or after a failure by NAI to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation as provided in subparagraph 5(C)(4)(a).
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     (c) Except as provided in this subparagraph 5(D)(4), no settlement by any Interested Party of any claim made against it will excuse NAI from any obligation to indemnify the Interested Party against the settlement costs or other Losses suffered by reason of, in connection with, arising out of, or in any way related to such claim.
     (5) No Authority to Admit Wrongdoing by NAI or to Bind NAI to any Settlement. No Interested Party will under any circumstances have any authority to bind NAI to an admission of wrongdoing or responsibility to any third party claimant with regard to matters for which such Interested Party claims a right to indemnification from NAI under this Lease.
Further, nothing herein contained, including the foregoing provisions concerning settlements by Interested Parties of indemnified Losses, will be construed as authorizing any Interested Party to bind NAI to do or refrain from doing anything to satisfy a third party claimant. If, for example, a claim is made by a Governmental Authority that NAI must refrain from some particular conduct on or about the Land in order to comply with Applicable Laws, BNPPLC cannot bind NAI (and will not purport to bind NAI) to any agreement to refrain from such conduct or otherwise prevent NAI from continuing to contest the claim by reason of any provision set forth herein.
Moreover, so long as this Lease continues, no Interested Party may settle any claim involving the Property by executing any agreement (including any consent decree proposed by any Governmental Authority) which purports to prohibit, limit or impose conditions upon any use of the Property by NAI without the prior written consent of NAI. In the case of any proposed settlement of a claim asserted by a Governmental Authority against BNPPLC, NAI will not unreasonably withhold such consent. However, for purposes of determining whether it is reasonable for NAI to withhold such consent, any diligent ongoing undertaking by NAI to contest such the claim on behalf of BNPPLC will be relevant.
Subject to the foregoing provisions in this subparagraph 5(D)(5), any Interested Party may agree for itself (and only for itself) to act or refrain from doing anything as demanded or requested by a third party claimant; provided, however, in no event will such an agreement impede NAI from continuing to exercise its rights to operate its business on the Property or elsewhere in any lawful manner deemed appropriate by NAI, nor will any such agreement limit or impede NAI’s right to contest claims raised by any third party claimants (including Governmental Authorities) that NAI is not complying or has not complied with Applicable Laws.
     (6) Defense of Tax Claims. This Lease does not grant to NAI any right to
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control the defense of or contest any tax claim for which an Interested Party may have a right to indemnity under subparagraph 5(C), other than the right to contest Local Impositions as provided in subparagraph 5(A), nor does this Lease grant to NAI the right to inspect the income tax returns, books or records of any Interested Party. Nevertheless, if a tax claim is asserted against BNPPLC for which it is entitled to be indemnified pursuant to subparagraph 5(C), BNPPLC will consider in good faith any defenses and strategies proposed by NAI with regard to such claim. Further, if any such tax claim is asserted against BNPPLC which involves assertions that apply not only to the transactions contemplated by this Lease, but also to other similar transactions in which BNPPLC has participated, then BNPPLC will not settle the claim on a basis that results in a disproportionately greater tax burden with respect to the transactions contemplated herein than with respect to such other similar transactions. For example, if taxing authorities assert that both this Lease and other comparable lease agreements made by BNPPLC are not financing arrangements as intended by the parties thereto, and on the basis of such assertions the taxing authorities claim that BNPPLC owes income taxes which are not Excluded Taxes, then BNPPLC will not settle the claim in a manner that would cause NAI’s liability under subparagraph 5(C) to be disproportionately greater than the indemnity obligation of another similarly situated tenant of BNPPLC under another lease agreement with an indemnity provision comparable to subparagraph 5(C). Also, BNPPLC will not grant to another tenant the right to dictate to BNPPLC the tax position BNPPLC must take in regard to the Property or the Operative Documents, except that BNPPLC may include provisions comparable to the foregoing in other leases to assure other tenants against a disproportionately greater burden than NAI will bear in regard to any settlement of a tax claim by BNPPLC.
     (7) Indemnified Parties Other than Landlord. As a condition to making any indemnity payment for Losses directly to any Interested Party other than BNPPLC itself, NAI may require the Interested Party to confirm and agree in writing that it will be obligated to make the payments to NAI as provided in subparagraph 5(E)(2) in the event the Interested Party subsequently receives a refund of the Losses covered by such indemnity payment.
     (E) Refunds and Credits Related to Losses Paid by NAI.
     (1) If BNPPLC receives a refund of any Losses paid, reimbursed or advanced by NAI pursuant to this Paragraph 5 that has not already been accounted for in the After Tax Basis calculation described in subparagraph 5(C)(1), BNPPLC will promptly pay to NAI the amount of such refund, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of the refund and such payment to NAI; provided, that the amount payable to NAI will not exceed the amount of the indemnity payment in respect of such refunded Losses that was made by NAI. If it is subsequently determined that BNPPLC
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was not entitled to the refund, the portion of the refund that is repaid or recaptured will be treated as a Loss for which NAI must indemnify BNPPLC pursuant to this Paragraph 5 without regard to subparagraph 5(D). If, in connection with any such refund, BNPPLC also receives an amount representing interest on such refund, BNPPLC will promptly pay to NAI the amount of such interest, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of the receipt or accrual of the interest and as a result of such payment to NAI; provided, that BNPPLC will not be required to make any such payment in respect of the interest (if any) that is fairly attributable to a period for which NAI had not yet paid, reimbursed or advanced the Losses refunded to BNPPLC.
     (2) If any Interested Party (other than BNPPLC itself) receives a refund of any Loss paid, reimbursed or advanced by NAI pursuant to this Paragraph 5 that has not already been accounted for in the After Tax Basis calculation described in subparagraph 5(C)(1), NAI may demand (and enforce the demand pursuant to any agreement previously delivered by the Interested Party as provided in
subparagraph 5(D)(7)) that such Interested Party promptly pay to NAI the amount of such refund, plus or minus any net tax benefits or detriments realized by such Interested Party as a result of the refund and such payment to NAI; provided, that the amount payable to NAI will not exceed the amount of the indemnity payment in respect of such refunded Losses that was made by NAI. If it is subsequently determined that such Interested Party was not entitled to the refund, the portion of the refund that is repaid or recaptured will be treated as a Loss for which NAI must indemnify such Interested Party pursuant to this Paragraph 5 without regard to subparagraph 5(D). If, in connection with any such refund, such Interested Party also receives an amount representing interest on such refund, NAI may demand that such Interested Party promptly pay to NAI the amount of such interest, plus or minus any net tax benefits or detriments realized by such Interested Party as a result of the receipt or accrual of the interest and as a result of such payment to NAI; provided, that such Interested Party will not be required to make any such payment in respect of the interest (if any) which is fairly attributable to a period before NAI paid, reimbursed or advanced the Losses refunded to such Interested Party.
     (3) With respect to Losses incurred or suffered by an Interested Party and paid or reimbursed by NAI on an After Tax Basis, if taxes of such Interested Party which are not subject to indemnification by NAI are reduced because of such Losses (whether by reason of a deduction, credit or otherwise) and such reduction was not taken into account in the calculation of the required reimbursement or payment by NAI, then for purposes of this subparagraph 5(E) such reduction will be considered a “refund”.
     (4) Notwithstanding the foregoing, in no event will BNPPLC or any other Interested Party be required to make any payment to NAI pursuant to this subparagraph 5(E) when an Event of Default has occurred and is continuing.
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     (F) Reimbursement of Excluded Taxes Paid by NAI. If NAI is ever required (by laws imposing withholding tax obligations or otherwise) to pay Excluded Taxes that any Interested Party should have paid, but failed to pay when due, in connection with this Lease, such Interested Party must reimburse NAI for such Excluded Taxes (together with any additional amount required to preserve for NAI the full amount of such reimbursement after related taxes are considered, calculated in the same manner that an Additional Indemnity Payment would be calculated under subparagraph 5(C)(1) in the case of a reimbursement owed by NAI to an Interested Party) within 30 days after such Interested Party’s receipt of a written demand for such reimbursement by NAI.
     (G) Collection on Behalf of Participants. BNPPLC may, on behalf of any Participant or its Affiliates, collect any amount that becomes due from NAI to such Participant or its Affiliates pursuant to subparagraph 5(B) or 5(C), in which case BNPPLC will be obligated to such Participant in respect of the collected amount as provided in the Participation Agreement. Alternatively, as provided in the Participation Agreement, BNPPLC may assign the right to collect any such amount to such Participant, in which case the Participant will be entitled to collect the same directly from NAI.
6 Replacement of Participants.
     (A) NAI’s Right to Substitute Participants. During the Term, so long as no Event of Default exists and subject to the terms and conditions set forth in subparagraph 6(B), if any Participant which is not an Affiliate of BNPPLC (in this Paragraph, the “Unrelated Participant”) (1) declines to approve the Rent for an extension of this Lease under subparagraph 1(D), or (2) makes a demand for compensation under subparagraph 5(B), NAI may request that BNPPLC execute Participation Agreement Supplements (as defined in the Participation Agreement) as needed to transfer the rights of the Unrelated Participant thereunder to one or more new Participants (in this subparagraph, whether one or more, the “New Participants”) designated by NAI who are willing and able to accept such interests and to make Funding Advances as necessary to terminate the Unrelated Participant’s right to payments in respect of Base Rent and the Lease Balance under the Operative Documents. BNPPLC will execute such Participation Agreement Supplements within ten Business Days of the later to occur of such request by NAI and satisfaction of all conditions set forth in subparagraph 6(B).
     (B) Conditions to Replacement of Participants. NAI and BNPPLC, working together, will endeavor in good faith to identify New Participants that are willing to replace any Unrelated Participant described in the preceding subparagraph and that are acceptable to both NAI and BNPPLC. (The term New Participants may include new parties to the Participation Agreement and it may include existing Participants that increase their Funding Advances as needed to replace the Unrelated Participant.) However, nothing contained herein will be construed to require BNPPLC itself to increase its Percentage (as defined in the Participation Agreement) to
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replace an Unrelated Participant, and nothing herein contained will be construed to require BNPPLC itself to provide or to obtain from its Affiliates Funding Advances to replace the Funding Advances that an Unrelated Participant has provided or agreed to provide. Also, New Participants will be subject to the approval of BNPPLC; provided, that BNPPLC must not unreasonably withhold its approval for the substitution of any New Participant proposed by NAI for any Unrelated Participant so long as (i) no Event of Default has occurred and is continuing, (ii) BNPPLC determines it can give such approval without violating Applicable Laws, without breaching its obligations under the Participation Agreement, and without waiving rights or remedies it has under this Lease or the other Operative Documents, (iii) BNPPLC or BNPPLC’s Parent is not involved in any material litigation adverse to the New Participant in any pending lawsuit or other legal proceeding, and (iv) all of the conditions listed in the next sentence are satisfied. Any substitution of New Participants for an Unrelated Participant as provided in this Paragraph will be subject to the following conditions:
     (1) the proposed substitution does not include a waiver of rights by BNPPLC against any Unrelated Participant or require BNPPLC to pay any amounts out-of-pocket that are not reimbursed concurrently by NAI or the New Participants;
     (2) the New Participants must become parties to the Participation Agreement (by executing supplements to that agreement as provided therein) and must provide all funds due to the Unrelated Participant being replaced because of the termination of the Unrelated Participant’s rights to receive payments in respect of Net Cash Flow and Net Sales Proceeds (both as defined in the Participation Agreement); and
     (3) the obligations of BNPPLC to the New Participants must not exceed the obligations that BNPPLC would have had to the Unrelated Participant if there had been no substitution, other than those for which NAI is liable.
Upon consummation of any such substitution NAI must pay to the replaced Participant Breakage Costs, if any, incurred by the replaced Participant because of the substitution.
7 Items Included in the Property
     (A) Status of Property. All Improvements on the Land from time to time will constitute “Property” covered by this Lease. Further, as provided in the Construction Agreement, to the extent heretofore or hereafter acquired by NAI (in whole or in part) with funds previously advanced by BNPPLC under the Prior Construction Agreement or with any portion of the Initial Advance or with any Construction Advances or with other funds for which NAI has received or receives reimbursement from such funds previously advanced, the Initial Advance or Construction Advances, all furnishings, furniture, chattels, permits, licenses, franchises, certificates and other personal property of whatever nature will be deemed to have been acquired
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on behalf of BNPPLC by NAI and will constitute “Property” covered by this Lease, as will all renewals or replacements of or substitutions for any such Property. Upon request of BNPPLC, but not more often than once in any period of twelve consecutive months, NAI will deliver to BNPPLC an inventory describing all significant items of Personal Property (and, in the case of Tangible Personal Property, showing the make, model, serial number and location thereof) with a certification by NAI that such inventory is true and complete and that all items specified in the inventory are covered by this Lease free and clear of any Lien other than the Permitted Encumbrances or Liens Removable by BNPPLC.
     (B) Changes in the Land Covered by the Ground Lease. Upon any amendment of the definition of the “Land” covered by the Ground Lease, the “Land” as defined in and covered by this Lease and the other Operative Documents will also be so amended.
8 Environmental.
     (A) Environmental Covenants by NAI.
          (1) NAI will not conduct or permit others to conduct Hazardous Substance Activities on the Property, except Permitted Hazardous Substance Use and Remedial Work.
          (2) NAI will not discharge or permit the discharge of anything (including Permitted Hazardous Substances) on or from the Property that would require any permit under applicable Environmental Laws, other than (i) storm water runoff, (ii) waste water discharges through a publicly owned treatment works, (iii) discharges that are a necessary part of any Remedial Work, and (iv) other similar discharges consistent with the definition herein of Permitted Hazardous Substance Use which do not significantly increase the risk of Environmental Losses to BNPPLC, in each case in strict compliance with Environmental Laws.
          (3) Following any discovery that Remedial Work is required by Environmental Laws or is otherwise reasonably believed by BNPPLC to be required, and to the extent not inconsistent with the other provisions of this Lease, NAI must promptly perform and diligently and continuously pursue such Remedial Work.
          (4) If requested by BNPPLC in connection with any Remedial Work required by this subparagraph, NAI must retain environmental consultants reasonably acceptable to BNPPLC 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
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subcontractors and their employees) or to protect the environment. NAI must implement any such additional measures to the extent required with respect to the Property by Environmental Laws or otherwise reasonably believed by BNPPLC to be required.
     (B) Right of BNPPLC to do Remedial Work Not Performed by NAI. If NAI’s failure to perform any Remedial Work required as provided in subparagraph 8(A) continues beyond the Environmental Cure Period (as defined below), BNPPLC 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 BNPPLC pursuant to the preceding sentence (including any removal of Hazardous Substances), the cost thereof will be a demand obligation owing by NAI to BNPPLC. As used in this subparagraph, “Environmental Cure Period” means the period ending on the earliest of: (1) ninety days after NAI is notified of the breach which must be cured within such period or, if during such ninety days NAI initiates the Remedial Work and diligently and continuously pursues it in accordance with a timetable accepted and approved by applicable Governmental Authorities (which may include delays waiting for permits or other authorizations), the date by which such Remedial Work is to be completed according to such timetable, (2) the date that any writ or order is issued for the levy or sale of any property owned by BNPPLC (including the Property) because of such breach, (3) the date that any criminal action is instituted or overtly threatened against BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a net price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     (C) Environmental Inspections and Reviews. BNPPLC reserves the right to retain environmental consultants to review any report prepared by NAI or to conduct BNPPLC’s own investigation to confirm whether NAI is complying with the requirements of this Paragraph 8. NAI grants to BNPPLC and to BNPPLC’s agents, employees, consultants and contractors the right to enter upon the Property during reasonable hours and after reasonable notice to inspect the Property and to perform such tests as BNPPLC deems reasonably necessary or appropriate to review or investigate Hazardous Substances in, on, under or about the Property or any discharge or reasonably suspected discharge of Hazardous Substances into groundwater or surface water from the Property. NAI must promptly reimburse BNPPLC for the fees of its environmental consultants and the costs of any such inspections and tests; provided, however, BNPPLC’s right to reimbursement for the fees of any consultant engaged as provided in this subparagraph or for the costs of any inspections or test undertaken as provided in this subparagraph will be limited to the following circumstances: (1) an Event of Default has occurred and is continuing at the time of such engagement, tests or inspections; (2) NAI has not exercised the Purchase Option and BNPPLC has retained the consultant to establish the condition of the Property prior to any conveyance thereof pursuant to the Purchase Agreement or to the expiration of this Lease;
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(3) BNPPLC has retained the consultant to satisfy any regulatory requirements applicable to BNPPLC or its Affiliates; (4) BNPPLC has retained the consultant because it has reason to believe, and does in good faith believe, that a significant violation of Environmental Laws concerning the Property has occurred; or (5) BNPPLC has retained the consultant because BNPPLC has been notified of a possible violation of Environmental Laws concerning the Property by any Governmental Authority having jurisdiction.
     (D) Communications Regarding Environmental Matters.
     (1) NAI must promptly advise BNPPLC and Participants of (i) any discovery known to NAI of any event or circumstance which would render any of the representations of NAI herein or in any of the other Operative Documents 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, (ii) 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, (iii) any discovery known to NAI of any occurrence or condition on any real property adjoining or in the vicinity of the Property which would or could reasonably be expected to cause the Property or any part thereof to be subject to any ownership, occupancy, transferability or use restrictions under Environmental Laws, or (iv) any investigation or inquiry known to NAI 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 will deliver to BNPPLC within thirty days after BNPPLC’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 BNPPLC may reasonably request.
     (2) NAI will provide BNPPLC and Participants with copies of all material written communications with Governmental Authorities relating to the matters listed in the preceding clause (1). NAI will also provide BNPPLC and Participants 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.
     (3) Prior to NAI’s submission of a communication to any regulatory agency or third party which causes, or potentially could cause (whether by implementation of or
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response to said communication), a material change in the scope, duration, or nature of any Remedial Work, NAI must, to the extent practicable, deliver to BNPPLC and Participants a draft of the proposed submission (together with the proposed date of submission), and in good faith assess and consider any comments of BNPPLC regarding the same. Promptly after BNPPLC’s request, NAI will meet with BNPPLC to discuss the submission, will provide any additional information reasonably requested by BNPPLC and will provide a written explanation to BNPPLC addressing the issues raised by comments (if any) of BNPPLC regarding the submission.
9 Insurance Required and Condemnation.
     (A) Liability Insurance. Throughout the Term NAI must 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 Minimum Insurance Requirements. NAI must deliver and maintain with BNPPLC for each liability insurance policy required by this 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 Minimum Insurance Requirements.
     (B) Property Insurance.
     (1) Throughout the Term NAI must 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 Minimum Insurance Requirements. NAI must deliver and maintain with BNPPLC for each property insurance policy required by this 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 Minimum Insurance Requirements.
     (2) If any of the Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance is required hereunder, (a) BNPPLC may, but will not be obligated to, make proof of loss if not made promptly by NAI after notice from BNPPLC, (b) each insurance company concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC (or, if so instructed by BNPPLC, to NAI) for application as required by Paragraph 10, and (c) BNPPLC will be entitled, in its own name or in the name of NAI or in the name of both, to settle, adjust or compromise any and all claims for loss, damage or destruction under any policy or policies of insurance; except that, if any such claim is for less than $1,000,000, if no 97-10/Meltdown Event has occurred and if no Event of Default has occurred and is continuing, NAI alone will have the right to settle, adjust or compromise
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the claim as NAI deems appropriate; and, except that, during the Term, so long as no Event of Default has occurred and is continuing, BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s intention to settle any such claim before settling it unless NAI has already approved of the settlement by BNPPLC.
     (3) BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any insurance proceeds.
     (4) If any casualty results in damage to or loss or destruction of the Property, NAI must give prompt notice thereof to BNPPLC and Paragraph 10 will 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 Lease, BNPPLC will 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 BNPPLC’s other remedies under the circumstances, BNPPLC may require NAI to reimburse BNPPLC for the cost of such insurance and to pay interest thereon computed at the Default Rate from the date such cost was paid by BNPPLC until the date of reimbursement 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 will promptly notify the other (provided, however, BNPPLC will have no liability for its failure to provide such notice) of the pendency of such proceedings. (As used herein, “condemnation of the Property” or words of like effect will include any indirect condemnation by means of a taking of the Land or the Existing Appurtenant Easements or any part thereof.) NAI must, at its expense, diligently prosecute any such proceedings and must consult with BNPPLC, its attorneys and experts and cooperate with them as reasonably requested in the carrying on or defense of any such proceedings. BNPPLC is hereby authorized, in its own name or in the name of NAI or in the name of both, at any time after a 97-10/Meltdown Event or when an Event of Default has occurred and is continuing, but not otherwise without 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. BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any such proceeds, judgments, decrees or awards.
     Notwithstanding the foregoing provisions of this subparagraph, if condemnation proceeds totaling not more than $1,000,000 are to be recovered as a result of a taking of less than all or substantially all of the Property, NAI may directly receive and hold such proceeds during the Term, so long as no Event of Default has occurred and is continuing and NAI applies such proceeds as required herein.
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     (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 BNPPLC or any other Interested Party to recover Losses for which NAI is compensated by insurance or would be compensated by the insurance contemplated in this 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 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 will govern the application of proceeds received by BNPPLC 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 (e.g.,damage resulting from a third party’s release of Hazardous Materials onto the Property); excluding, however, any funds paid to BNPPLC by BNPPLC’s Parent, by an Affiliate of BNPPLC or by any Participant that is made to compensate BNPPLC for any Losses BNPPLC may suffer or incur in connection with this Lease or the Property. Except as provided in subparagraph 10(D), NAI must promptly pay over to BNPPLC 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 BNPPLC from NAI or third parties, will be applied as follows:
     (1) First, proceeds covered by this Paragraph 10 will be used to reimburse BNPPLC for any reasonable costs and expenses, including Attorneys’ Fees, that BNPPLC incurred to collect the proceeds.
     (2) Second, the proceeds remaining after such reimbursement to BNPPLC (hereinafter, the “Remaining Proceeds”) will be applied, as hereinafter more particularly provided, either as a Qualified Prepayment or to reimburse NAI or BNPPLC for the actual out-of-pocket costs of repairing or restoring the Property. Until, however, any Remaining Proceeds received by BNPPLC are applied by BNPPLC as a Qualified Prepayment or applied by BNPPLC to reimburse costs of repairs to or restoration of the Property pursuant to this Paragraph 10, BNPPLC will hold and maintain such Remaining Proceeds as Escrowed Proceeds in an interest bearing account, and all interest earned on such account will be added to and made a part of such Escrowed Proceeds.
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     (B) Advances of Escrowed Proceeds to NAI. Except as otherwise provided below in this Paragraph 10, BNPPLC will 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 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 BNPPLC to assure the completion of such repair or restoration with available funds. So long as any Lease Balance remains outstanding, however, BNPPLC will not 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 reasonably satisfactory to BNPPLC, it being understood that BNPPLC may retain and, after NAI has completed the applicable repair or restoration and been reimbursed for the out-of-pocket cost thereof, apply any such excess (or so much thereof as is needed to reduce the Lease Balance to zero) as a Qualified Prepayment.
     (C) Application of Escrowed Proceeds as a Qualified Prepayment. During the Term, so long as no Event of Default has occurred and is continuing, BNPPLC will 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 BNPPLC 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 BNPPLC’s actual receipt of the notice, BNPPLC may postpone the date of the Qualified Prepayment to any date not later than five Business Days after BNPPLC’s receipt of the notice. In any event, BNPPLC may deduct Breakage Costs or any Fixed Rate Settlement Amount incurred in connection with any Qualified Prepayment from the Remaining Proceeds or other amounts available for application as the Qualified Prepayment, and NAI must reimburse BNPPLC upon request for any such Breakage Costs or Fixed Rate Settlement Amount that BNPPLC incurs but does not deduct.
     (D) Right of NAI to Receive and Apply Remaining Proceeds Below a Certain Level. If, after the Completion Date, any condemnation of any portion of the Property or any casualty resulting in the diminution, destruction, demolition or damage to any portion of the Property will (in the good faith judgment of BNPPLC) reduce the then current “AS IS” market value by less than $1,000,000 and (in the good faith estimation of BNPPLC) be unlikely to result in Remaining Proceeds of more than $1,000,000, and if no 97-10/Meltdown Event has occurred and no Event of Default has occurred and is continuing, then BNPPLC will, upon NAI’s request, instruct the condemning authority or insurer, as applicable, to pay the Remaining Proceeds resulting therefrom directly to NAI. NAI must apply any such Remaining Proceeds to the repair or restoration of the Property to a safe and secure condition and to a value of no less than the value before taking or casualty.
     (E) Special Provisions Applicable After a 97-10/Meltdown Event or an Event of Default. Notwithstanding the foregoing, after any 97-10/Meltdown Event, and when any Event of
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Default has occurred and is continuing, BNPPLC will 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 BNPPLC in its sole discretion, either (A) to the reimbursement of NAI or BNPPLC for the out-of-pocket cost of repairing or restoring the Property, or (B) as Qualified Prepayments. Further, when any Event of Default has occurred and is continuing, if the Remaining Proceeds paid to BNPPLC with respect to any damage or destruction of the Property are reduced by reason of any insurance deductible or self-insured retention, NAI must pay to BNPPLC upon demand an additional amount equal to the full amount of such deductible or self insured retention, whereupon the additional amount paid will be added to the Remaining Proceeds and applied as such by BNPPLC in accordance with the provisions of this Lease.
     (F) NAI’s Obligation to Restore. Regardless of the adequacy of any Remaining Proceeds available to NAI hereunder, if on or after the Completion 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 either (1) promptly restore or improve the Property or the remainder thereof to a value no less than the Lease Balance and to a reasonably safe and sightly condition, or (2) promptly restore the Property or remainder thereof to a reasonably safe and sightly condition and pay to BNPPLC for application as a Qualified Prepayment the amount (if any), as determined by BNPPLC, needed to reduce the Lease Balance to no more than the then current “AS IS” market value of the Property or remainder thereof.
     (G) Takings of All or Substantially All of the Property on or after the Completion Date. In the event of any taking of all or substantially all of the Property on or after the Completion Date, BNPPLC will be entitled to apply all Remaining Proceeds (or so much thereof as is required to reduce the Lease Balance to zero) as a Qualified Prepayment. Any taking of so much of the Property as, in BNPPLC’s good faith judgment, makes it impracticable to restore or improve the remainder thereof as required by part (1) of the preceding subparagraph will be considered a taking of substantially all the Property for purposes of this Paragraph 10.
     (H) If Remaining Proceeds Exceed the Lease Balance. Notwithstanding the various provisions of this Paragraph 10 authorizing BNPPLC to apply Remaining Proceeds received by it during the Term as a Qualified Prepayment, in the event any such Remaining Proceeds exceed the sum of (i) all payments thereof made to NAI to reimburse it for the costs of repairs and restoration to the Property, (ii) any application thereof to cover costs incurred by BNPPLC for the repair or restoration the Property and (iii) the Lease Balance, such excess will not be applied as a Qualified Prepayment, but rather will constitute Escrowed Proceeds which must, if NAI exercises the Purchase Option pursuant to the Purchase Agreement, be delivered to the purchaser of the Property (be it NAI or an Applicable Purchaser) as provided therein.
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11 Additional Representations, Warranties and Covenants of NAI Concerning the Property. NAI represents, warrants and covenants as follows:
     (A) Operation and Maintenance. NAI must operate and maintain the Property in a good and workmanlike manner and in compliance with Applicable Laws in all material respects and pay or cause to be paid all fees or charges of any kind due 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 complaint or demand for corrective action given by any Governmental Authority to NAI, or to BNPPLC and forwarded by it to NAI, then for purposes of the preceding sentence, NAI will be considered not to have maintained the Property “in compliance with all Applicable Laws in all material respects” whether or not the noncompliance would be material in the absence of the complaint or demand.) NAI will not use or occupy, or allow the use or occupancy of, the Property in any manner which violates any Applicable Laws or which constitutes a public or private nuisance or which makes void, voidable or cancelable any insurance then in force with respect to the Property. To the extent that any of the following would, individually or in the aggregate, materially and adversely affect the value of the Property or the use of the Property for purposes permitted by this Lease, NAI will not, without BNPPLC’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. NAI will 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 will not do anything that could reasonably be expected to significantly reduce the market value of the Property. If NAI receives a notice or claim from any Governmental Authority that the Property is not in compliance with any Applicable Law, or that any action may be taken against BNPPLC because the Property does not comply with any Applicable Law, NAI must promptly furnish a copy of such notice or claim to BNPPLC.
     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 will 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 BNPPLC, 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 must be concluded and the violation of such Applicable Law must be corrected by NAI and any claims asserted against BNPPLC or the Property because of such violation must be paid by NAI, all prior to the earliest of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC or any of its directors, officers or employees because of such violation, (ii) the
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date that any action is taken or overtly threatened by any Governmental Authority against BNPPLC or any property owned by BNPPLC (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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     (B) Debts for Construction, Maintenance, Operation or Development. NAI must cause all debts and liabilities incurred in the construction, maintenance, operation or development of the Property, including invoices for labor, material and equipment and all debts and charges for utilities servicing the Property, to be promptly paid.
     Notwithstanding the foregoing, NAI may in good faith, by appropriate proceedings, contest the validity, applicability or amount of any asserted statutory liens in the nature of contractors’, mechanics’ or materialmens’ liens, and pending such contest NAI will not be deemed in default under this subparagraph because of the contested lien if (1) within thirty days after being asked to do so by BNPPLC, NAI bonds over to BNPPLC’s reasonable satisfaction all such contested liens against the Property alleged to secure an amount in excess of $1,000,000 (individually or in the aggregate), (2) NAI diligently prosecutes such contest to completion in a manner reasonably satisfactory to BNPPLC, 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 must be concluded and the lien, interest and costs must be paid by NAI prior to the earliest of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC 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 BNPPLC has an interest may be seized or sold or any other action is taken or overtly threatened against BNPPLC or any property in which BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     (C) Repair, Maintenance, Alterations and Additions. NAI must keep the Property in good order, operating condition and appearance and must 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 will promptly replace any worn-out fixtures and Tangible Personal Property with fixtures and personal property comparable to the replaced items when new. NAI will not, without the prior consent of BNPPLC, (i) remove from the Property any
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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 following completion of the Work contemplated in the Construction Agreement.
     However, during the Term, so long as no Event of Default has occurred and is continuing, BNPPLC will not unreasonably withhold a consent requested by NAI pursuant to the preceding sentence for the construction or alteration of Improvements. NAI acknowledges, however, that BNPPLC’s refusal or failure to give such consent will be deemed reasonable if BNPPLC believes in good faith that the construction or alteration for which NAI is requesting consent could have a material adverse impact upon the value of the Property (taken as whole), or if NAI has not provided BNPPLC with adequate information to allow BNPPLC to properly evaluate such impact on value.
     Without limiting the foregoing, NAI must notify BNPPLC before making any significant alterations to the Improvements during the Term, regardless of the impact on the value of the Property expected to result from such alterations.
     (D) Permitted Encumbrances. NAI must 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. Without limiting the foregoing, NAI must 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 BNPPLC, NAI will not create any new Permitted Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted Encumbrance that would create or expand or purport to create or expand obligations or restrictions which would encumber BNPPLC’s interest in the Property or be binding upon BNPPLC itself. (Whether BNPPLC must give any such consent requested by NAI during the Term of this Lease will be governed by subparagraph 4(C) of the Closing Certificate.)
     (E) Books and Records Concerning the Property. NAI must keep books and records that are accurate and complete in all material respects for the Property and, subject to Paragraph 22, must 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 BNPPLC during normal business hours. (BNPPLC will not over the objection of NAI inspect or copy such materials more than once in any twelve month period unless BNPPLC believes in good faith that more frequent
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inspection and copying is required to determine whether a Default or an Event of Default has occurred and is continuing or to assess the effect thereof or to properly exercise remedies with respect thereto.) This subparagraph will not be construed as requiring NAI to regularly maintain separate books and records relating exclusively to the Property, but NAI will as reasonably requested from time to time by BNPPLC construct or abstract from its regularly maintained books and records information required by this subparagraph relating to the Property.
12 Assignment and Subletting by NAI.
     (A) BNPPLC’s Consent Required. Without the prior consent of BNPPLC, NAI will not assign, transfer, mortgage, pledge or hypothecate this Lease or any interest of NAI hereunder and will not sublet all or any part of the Property, by operation of law or otherwise, except as follows:
     (1) During the Term, so long as no Event of Default has occurred and is continuing, NAI may sublet (a) to Affiliates of NAI, or (b) no more than thirty-three percent (33%) (computed on the basis of square footage) of the useable space in then existing and completed building Improvements to Persons who are not NAI’s Affiliates, subject to the conditions that (i) any such sublease by NAI must be made expressly subject and subordinate to the terms hereof, (ii) the sublease must have a term equal to or less than the remainder of the then effective Term of this Lease, and (iii) the use permitted by the sublease must be expressly limited to uses consistent with subparagraph 2(A) or other uses approved in advance by BNPPLC as uses that will not present any extraordinary risk of uninsured environmental or other liability.
     (2) During the Term, so long as no Event of Default has occurred and is continuing, NAI may assign all of its rights under this Lease and the other Operative Documents to an Affiliate of NAI, subject to the conditions that (a) the assignment must be in writing and must unconditionally provide that the Affiliate assumes all of NAI’s obligations hereunder and thereunder, and (b) NAI must execute an unconditional guaranty of the obligations assumed by the Affiliate in form satisfactory to BNPPLC, confirming (x) that notwithstanding the assignment NAI will remain primarily liable for all of the obligations undertaken by NAI under the Operative Documents, (y) that such guaranty is a guaranty of payment and performance and not merely of collection, and (z) that NAI waives to the extent permitted by Applicable Law all defenses otherwise available to guarantors or sureties.
     (B) Standard for BNPPLC’s Consent to Assignments and Certain Other Matters. Consents and approvals of BNPPLC which are required by this Paragraph 12 will not be unreasonably withheld, but NAI acknowledges that BNPPLC’s withholding of such consent or approval will be reasonable if BNPPLC determines in good faith that (1) giving the approval may
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increase BNPPLC’s risk of liability for any existing or future environmental problem, (2) giving the approval is likely to substantially increase BNPPLC’s administrative burden of complying with or monitoring NAI’s compliance with the requirements of this Lease, or (3) any transaction for which NAI has requested the consent or approval would negate NAI’s representations in the Operative Documents regarding ERISA or cause any of the Operative Documents (or any exercise of BNPPLC’s rights thereunder) to constitute a violation of any provision of ERISA. Further, NAI acknowledges that BNPPLC may reasonably require, as a condition to giving its consent to any assignment by NAI, that NAI execute an unconditional guaranty providing that NAI will remain primarily liable for all of the tenant’s obligations hereunder and under other Operative Documents. Any such guaranty must be a guaranty of payment and not merely of collection, must provide that NAI waives to the extent permitted by Applicable Law all defenses otherwise available to guarantors or sureties, and must otherwise be in a form satisfactory to BNPPLC.
     (C) Consent Not a Waiver. No consent by BNPPLC to a sale, assignment, transfer, mortgage, pledge or hypothecation of this Lease or NAI’s interest hereunder, and no assignment or subletting of the Property or any part thereof in accordance with this Lease or otherwise with BNPPLC’s consent, will release NAI from liability hereunder; and any such consent will apply only to the specific transaction thereby authorized and will not relieve NAI from any requirement of obtaining the prior consent of BNPPLC to any further sale, assignment, transfer, mortgage, pledge or hypothecation of this Lease or any interest of NAI hereunder.
13 Assignment by BNPPLC.
     (A) Restrictions on Transfers. Except by a Permitted Transfer, BNPPLC will not assign, transfer, mortgage, pledge, encumber or hypothecate this Lease or the other Operative Documents or any interest of BNPPLC 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 payable to BNPPLC hereunder because of BNPPLC’s assignment of this Lease to any citizen of, or any corporation or other entity formed under the laws of, a country other than the United States, NAI will not be required to compensate BNPPLC or any such assignee for the withholding tax.
     (B) Effect of Permitted Transfer or other Assignment by BNPPLC. If by a Permitted Transfer BNPPLC sells or otherwise transfers the Property and assigns to the transferee all of BNPPLC’s rights under this Lease and under the other Operative Documents, and if the transferee expressly assumes all of BNPPLC’s obligations under this Lease and under the other Operative Documents, then BNPPLC will thereby be released from any obligations arising after such assumption under this Lease or under the other Operative Documents (other than any liability for a breach of any continuing obligation to provide Construction Advances under the
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Construction Agreement), and NAI must look solely to each successor in interest of BNPPLC for performance of such obligations.
14 BNPPLC’s Right to Enter and to Perform for NAI .
     (A) Right to Enter. BNPPLC and BNPPLC’s representatives may, subject to subparagraph 14(C), enter the Property for the purpose of making inspections or performing any work BNPPLC is authorized to undertake by the next subparagraph or for the purpose of confirming whether NAI has complied with the requirements of this Lease or the other Operative Documents. During the Term, so long as no Event of Default has occurred and is continuing and no apparent emergency exists which would justify immediate entry, BNPPLC will give NAI at least two Business Days notice before making any such entry over the objection of NAI and will limit any such entry to normal business hours.
     (B) Performance for NAI. If NAI fails to perform any act or to take any action required of it by this Lease or the Closing Certificate, or to pay any money which NAI is required by this Lease or the Closing Certificate to pay, and if such failure or action constitutes an Event of Default or renders BNPPLC or any director, officer, employee or Affiliate of BNPPLC at risk of criminal prosecution or renders BNPPLC’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, BNPPLC may, perform or cause to be performed such act or take such action or pay such money. Any expenses so incurred by BNPPLC, and any money so paid by BNPPLC, will be a demand obligation owing by NAI to BNPPLC. Further, upon making such payment, BNPPLC will be subrogated to all of the rights of the person, corporation or body politic receiving such payment. But nothing herein will imply any duty upon the part of BNPPLC to do any work which under any provision of this Lease NAI may be required to perform, and the performance thereof by BNPPLC will not constitute a waiver of NAI’s default. BNPPLC may during the progress of any such work by BNPPLC keep and store upon the Property all necessary materials, tools, and equipment. BNPPLC will 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 the performance of any such work, or on account of bringing materials, supplies and equipment into or through the Property during the course of such work, and the obligations of NAI under this Lease will not thereby be excused in any manner.
     (C) Building Security. So long as NAI remains in possession of the Property, BNPPLC or BNPPLC’s representative will, before making any inspection or performing any work on the Property authorized by this Lease, do the following
     (1) BNPPLC will give NAI at least 24 hours notice, unless BNPPLC believes in good faith that an emergency may exist or a Default has occurred and is continuing, because of which significant damage to the Property or other significant Losses may be
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sustained if BNPPLC delays entry to the Property; and
     (2) if then requested to do so by NAI in order to maintain NAI’s security, BNPPLC or its representative will: (i) sign in at NAI’s security or information desk if NAI has such a desk on the premises, (ii) wear a visitor’s badge or other reasonable identification, (iii) permit an employee of NAI to observe such inspection or work, and (iv) comply with other similar reasonable nondiscriminatory security requirements of NAI that do not, individually or in the aggregate, significantly interfere with inspections or work of BNPPLC authorized by this Lease.
15 Remedies.
     (A) Traditional Lease Remedies. At any time after an Event of Default and after BNPPLC has given any notice required by subparagraph 15(C), BNPPLC will be entitled at BNPPLC’s option (and without limiting BNPPLC in the exercise of any other right or remedy BNPPLC may have, and without any further demand or notice except as expressly described in this subparagraph 15(A)), to exercise any one or more of the following remedies:
     (1) By notice to NAI, BNPPLC may terminate NAI’s right to possession of the Property. However, only a notice clearly and unequivocally confirming that BNPPLC has elected to terminate NAI’s right of possession will be effective for purposes of this provision.
     (2) Upon termination of NAI’s right to possession as provided in the immediately preceding subsection (1) and without further demand or notice, BNPPLC may re-enter the Property in any manner not prohibited by Applicable Laws and take possession of all improvements, additions, alterations, equipment and fixtures thereon and remove any persons in possession thereof. Any personal property on the Land may be removed and stored in a warehouse or elsewhere, and in such event the cost of any such removal and storage will be at the expense and risk of and for the account of NAI.
     (3) Upon termination of NAI’s right to possession as provided in the immediately preceding subsection (1), this Lease will terminate and BNPPLC may recover from NAI damages which include the following:
     (a) the worth at the time of award of the unpaid Rent which had been earned at the time of termination;
     (b) costs and expenses actually incurred by BNPPLC to repair damage to the Property that NAI was obligated to (but failed to) repair prior to the termination;
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     (c) the sum of the following (“Lease Termination Damages”):
     1) 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;
     2) 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;
     3) any other amount necessary to compensate BNPPLC for all the detriment proximately caused by NAI’s failure to perform NAI’s obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including the costs and expenses of preparing and altering the Property for reletting and all other costs and expenses of reletting (including Attorneys’ Fees, advertising costs and brokers’ commissions), and
     (d) such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable North Carolina law.
The “worth at the time of award” of the amounts referred to in subparagraph 15(A)(3)(a) and subparagraph 15(A)(3)(c)1) will be computed by allowing interest at the Default Rate. The “worth at the time of award” of the amount referred to in subparagraph 15(A)(3)(c)2) will 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%).
Notwithstanding the foregoing, the total Lease Termination Damages which BNPPLC may recover from NAI will be limited in amount to the extent required, if any, to prevent the sum of recoverable Lease Termination Damages, plus any Supplemental Payment that BNPPLC has received or remains entitled to recover pursuant to the Purchase Agreement, from being more than the Maximum Remarketing Obligation; provided, however, if a Supplemental Payment is owed to BNPPLC according to the Purchase Agreement, but NAI fails to pay it, this limitation upon BNPPLC’s right to recover Lease Termination Damages will be of no effect. For purposes of this provision, “Maximum Remarketing Obligation” is intended to have the meaning assigned to it in the Purchase Agreement and is intended to be computed as of the date any award of Lease Termination Damages to BNPPLC as if such date was the Designated Sale Date.
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     (4) Even after a breach of this Lease or abandonment of the Property by NAI, BNPPLC may continue this Lease in force and recover Rent as it becomes due. Accordingly, despite any breach or abandonment by NAI, this Lease will continue in effect for so long as BNPPLC does not terminate NAI’s right to possession, and BNPPLC may enforce all of BNPPLC’s rights and remedies under this Lease, including the right to recover the Rent as it becomes due under this Lease. NAI’s right to possession will not be deemed to have been terminated by BNPPLC except pursuant to subparagraph 15(A)(1) hereof. The following, in and of themselves, will 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 BNPPLC to protect BNPPLC’s interest under this Lease; or
     (c) Reasonable withholding of consent to an assignment or subletting, or terminating a subletting or assignment by NAI.
     (B) Foreclosure Remedies. At any time when an Event of Default has occurred and is continuing, BNPPLC may notify NAI of BNPPLC’s intent to pursue remedies described in Exhibit B, and at any time thereafter, regardless of whether the Event of Default is continuing, if NAI has not already purchased the Property or caused an Applicable Purchaser to purchase the Property pursuant to the Purchase Agreement, (i) BNPPLC will have the power and authority, to the extent provided by law, after proper notice and lapse of such time as may be required by law, to sell or arrange for a sale to foreclose its lien and security interest granted in Exhibit B, and (ii) BNPPLC, in lieu of or in addition to exercising any power of sale granted in Exhibit B, may proceed by a suit or suits in equity or at law, whether for a foreclosure or sale of the Property, or against NAI for the Lease Balance, or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure or sale of the Property, or for the enforcement of any other appropriate legal or equitable remedy.
     (C) Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement. During the Term, so long as NAI remains in possession of the Property and there has been no termination of the Purchase Option as provided in Paragraph 6(B) of the Purchase Agreement, BNPPLC’s right to exercise remedies provided in subparagraph 15(A) or to complete any foreclosure sale as provided in subparagraph 15(B) will be subject to the condition precedent that BNPPLC has notified NAI, at a time when an Event of Default has occurred and is continuing and no less than thirty days prior to exercising such remedies or completing such a sale, of BNPPLC’s intent to do so. The condition precedent is intended to provide NAI with an opportunity to exercise the Purchase Option before losing possession of the Property because of
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the remedies enumerated in subparagraph 15(A) or because of a sale authorized by subparagraph 15(B). 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, BNPPLC may proceed immediately to exercise remedies provided in subparagraph 15(A) or complete a sale authorized by subparagraph 15(B) at any time after the earliest of (i) thirty days after BNPPLC 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.
     (D) Enforceability. This Paragraph 15 will be enforceable to the maximum extent not prohibited by Applicable Laws, and the unenforceability of any provision in this Paragraph will not render any other provision unenforceable.
     (E) Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy, and each and every such right and remedy will be cumulative and in addition to any other right or remedy given to BNPPLC under this Lease or other Operative Documents or now or hereafter existing in favor of BNPPLC under Applicable Laws, except as otherwise expressly provided in the last provision of subparagraph 15(A)(3) above. In addition to other remedies provided in this Lease, BNPPLC will 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 Lease, or to a decree compelling performance of any of the other covenants, agreements, conditions or provisions of this Lease to be performed by NAI, or to any other remedy allowed to BNPPLC at law or in equity. Nothing contained in this Lease will limit or prejudice the right of BNPPLC to prove for and obtain in proceedings for bankruptcy or insolvency of NAI by reason of the termination of this 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 will modify, limit or impair any of the rights and remedies of BNPPLC under the Purchase Agreement, and BNPPLC will not be required to give the thirty day notice described in subparagraph 15(C) as a condition precedent to any acceleration of the Designated Sale Date or to taking any action to enforce the Purchase Agreement. However, to prevent a double recovery, BNPPLC acknowledges that BNPPLC’s right to recover Lease Termination Damages may be limited by the last provision of subparagraph 15(A)(3) above in the event BNPPLC collects or remains entitled to collect a Supplemental Payment as provided in the Purchase Agreement.
16 Default by BNPPLC. If BNPPLC should default in the performance of any of its obligations under this Lease, BNPPLC will 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
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and specifying what action NAI believes is necessary to cure the default.
17 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, BNPPLC will not during the Term disturb NAI’s peaceable and quiet enjoyment of the Property; however, such enjoyment will be subject to the terms and conditions of this Lease, to the Ground Lease, to Permitted Encumbrances and to any other claims not constituting Liens Removable by BNPPLC. If any Lien Removable by BNPPLC is established against the Property, BNPPLC will remove the Lien Removable by BNPPLC promptly. Any breach by BNPPLC of this Paragraph will render BNPPLC liable to NAI for any monetary damages proximately caused thereby, but as more specifically provided in subparagraph 4(B) above, no such breach will entitle NAI to terminate this Lease or excuse NAI from its obligation to pay Rent.
18 Surrender Upon Termination. Unless NAI or an Applicable Purchaser is purchasing or has purchased BNPPLC’s entire interest in the Property pursuant to the terms of the Purchase Agreement, NAI must, upon the termination of NAI’s right to occupancy, surrender to BNPPLC 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 Lease, and (ii) demolition, alterations and additions which are expressly permitted by the terms of this Lease 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 BNPPLC so elects, will be deemed abandoned and become the property of BNPPLC without any payment or offset therefor. If BNPPLC does not so elect, BNPPLC may remove such property from the Property and store it at NAI’s risk and expense. NAI must bear the expense of repairing any damage to the Property caused by such removal by BNPPLC or NAI.
19 Holding Over by NAI. Should NAI not purchase BNPPLC’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 Lease without objection by BNPPLC, whether such termination occurs by lapse of time or otherwise, such holding over will constitute and be construed as a tenancy from day to day only on and subject to all of the terms, provisions, covenants and agreements on the part of NAI hereunder; except that the Base Rent required for each day the holding over continues will be due and payable by NAI to BNPPLC upon demand and will equal the difference computed by subtracting (a) any interest accruing on such day under the Purchase Agreement on any past due Supplemental Payment, from (b) an amount equal to (i) the difference computed by subtracting any Supplemental Payment previously made by NAI to
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BNPPLC from the Lease Balance, times (ii) the per annum Default Rate computed as of such day, divided by (iii) three hundred sixty. No payments of money by NAI to BNPPLC after the termination of this Lease will reinstate, continue or extend the Term of this Lease and no extension of this Lease after the termination thereof will be valid unless and until the same is reduced to writing and signed by both BNPPLC and NAI.
20 Recording Memorandum. Contemporaneously with the execution of this Lease, the parties will execute and record a memorandum of this Lease for purposes of effecting constructive notice to all Persons of NAI’s rights hereunder.
21 Independent Obligations Evidenced by Other Operative Documents. NAI acknowledges and agrees that nothing contained in this Lease will 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. Further, in the event of any inconsistency between the express terms and provisions of the Purchase Agreement and the express terms and provisions of this Lease, the express terms and provisions of the Purchase Agreement will control.
22 Proprietary Information and Confidentiality.
     (A) Proprietary Information. NAI will have no obligation to provide proprietary information (as defined in the next sentence) to BNPPLC, except and to the extent (1) expressly required by other terms and conditions of the Operative Documents, or (2) requested by BNPPLC in connection with any inspection of the Property pursuant to the various provisions hereof and, in BNPPLC’s reasonably determination, required to allow BNPPLC to accomplish the purposes of such inspection. (Before NAI delivers any such proprietary information in connection with any inspection of the Property, NAI may require that BNPPLC confirm and ratify the confidentiality agreements covering such proprietary information set forth herein.) For purposes of this Lease and the other Operative Documents, “proprietary information” means NAI’s intellectual property, trade secrets and other confidential information of value to NAI (including, among other things, information about NAI’s manufacturing processes, products, marketing and corporate strategies) that (1) is received by any representative of BNPPLC at the time of any on-site visit to the Property or (2) otherwise delivered to BNPPLC by or on behalf of NAI and labeled “proprietary” or “confidential” or by some other similar designation to identify it as information which NAI considers to be proprietary or confidential.
     (B) Confidentiality. BNPPLC will endeavor in good faith to use reasonable precautions to keep confidential any proprietary information that BNPPLC may receive from NAI or otherwise discover with respect to NAI or NAI’s business in connection with the administration of this Lease or any investigation by BNPPLC hereunder. This provision will not, however, render BNPPLC liable for any disclosures of proprietary information made by it or its
Amended and Restated Lease Agreement (RTP Data Center) – Page 46

 

 

employees or representatives, unless the disclosure is intentional and made for no reason other than to damage NAI’s business. Also, this provision will not apply to disclosures: (i) specifically and previously authorized in writing by NAI; (ii) to any assignee of BNPPLC as to any interest in the Property so long as such assignee has agreed in writing to use its reasonable efforts to keep such information confidential in accordance with the terms of this paragraph; (iii) to legal counsel, accountants, auditors, environmental consultants and other professional advisors to BNPPLC so long as BNPPLC informs such persons in writing (if practicable) of the confidential nature of such information and directs them to treat such information confidentially; (iv) to regulatory officials having jurisdiction over BNPPLC or BNPPLC’s Parent (although the disclosing party will request confidential treatment of the disclosed information, if practicable); (v) as required by legal process (although the disclosing party will request confidential treatment of the disclosed information, if practicable); (vi) of information which has previously become publicly available through the actions or inactions of a person other than BNPPLC not, to BNPPLC’s knowledge, in breach of an obligation of confidentiality to NAI; (vii) to any Participant so long as the Participant is bound by and has not repudiated a confidentiality provision concerning NAI’s proprietary information set forth in the Participation Agreement; or (vii) that are reasonably believed by BNPPLC to be necessary or helpful to the determination or enforcement of any contractual or other rights which BNPPLC has or may have against NAI or its Affiliates or which BNPPLC has or may have concerning the Property (provided, that BNPPLC must cooperate with NAI as NAI may reasonably request to mitigate any risk that such disclosures will result in subsequent disclosures of proprietary information which are not necessary or helpful to any such determination or enforcement; such cooperation to include, for example, BNPPLC’s agreement not to oppose a motion by NAI to seal records containing proprietary information in any court proceeding initiated because of a dispute between the parties over the Property or the Operative Documents).
Further, notwithstanding any other contrary provision contained in this Lease or the other Operative Documents, BNPPLC and NAI (and each of their respective employees, representatives or other agents) may disclose, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Lease and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment and tax structure, other than any information for which non-disclosure is reasonably necessary in order to comply with applicable securities laws and other than any information the disclosure of which would waive the attorney-client privilege, the tax advisor privilege under Section 7525 of the Internal Revenue Code, or similar privileges.
23 Amendment and Restatement of the Prior Lease. This Lease amends, restates and replaces entirely the Prior Lease. Without limiting the rights and obligations of NAI under this Lease, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Lease are now made subject to the terms and conditions of this Lease; and all rights and interests of BNPPLC in and to the Land or other Property under the
Amended and Restated Lease Agreement (RTP Data Center) – Page 47

 

 

Prior Lease are renewed and extended (rather than terminated) by this Lease.
[The signature pages follow.]
Amended and Restated Lease Agreement (RTP Data Center) – Page 48

 

 

     IN WITNESS WHEREOF, this Amended and Restated Lease Agreement (RTP Data Center) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
Amended and Restated Lease Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Lease Agreement (RTP Data Center) dated as of November 29, 2007]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Lease Agreement (RTP Data Center) – Signature Page

 

 

Exhibit A
Legal Description
BEING a portion of Site 12 as shown on the map entitled “Exempt Subdivision Map of Site 12”, prepared by Barbara H. Mulkey Engineering, Inc., on May 30, 2000 as recorded in the Book of Maps 2000, Page 1300, Wake County, North Carolina Registry, such portion being described as follows:
Unit 4 and the Additional Leased Premises, both as defined below (collectively, the “Ground Lease Premises”).
As used in this Exhibit:
     (1) “Additional Leased Premises” means the land surrounding and adjacent to Unit 4, depicted on the site plan attached to and made a part of this Exhibit as the area shaded in gray, which includes parking lots, driveways and other areas within the larger area designated as Common Elements in the Condominium Declaration. The outer boundaries of the Additional Leased Premises are described by metes and bounds on the last page attached to and made a part of this Exhibit. All land within those outer boundaries, other than Unit 4, is included in the Additional Leased Premises.
     (2) “Condominium Declaration” means the Declaration of Condominium for NetApp RTP Phase I Condominium recorded in Book 012647, Page 01310, Wake County, North Carolina Registry.
     (3) “Condominium Map” means the plat provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached to and made a part of this Exhibit. (The Condominium Map has also been filed in the Book of Maps CM2007, Page 444A1, Wake County, North Carolina Registry.)
     (4) “Unit 4” means the land designated and described in the Condominium Declaration as Unit 4 and is shown on the Condominium Map and site plan attached to and made a part of this Exhibit.
TOGETHER WITH, easements appurtenant to the Amended and Restated Ground Lease Premises as described in Exhibit A attached to the Ground Lease dated as of November 29, 2007 between BNPPLC, as lessee, and NAI, as lessor (the “Ground Lease”);
SUBJECT, HOWEVER, to an easement reserved over the Additional Leased Premises (but not any part of Unit 4) in favor of the Association as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
Exhibit A to Amended and Restated Lease Agreement (RTP Data Center) – Page 2

 

 

(MAP)
Exhibit A to Amended and Restated Lease Agreement (RTP Data Center) – Page 3

 

 

Attachment to Exhibit A — Metes and Bounds
Description of “Additional Leased Premises”
          The following is a metes and bounds description of the outer boundaries of the Additional Leased Premise:
BEGINNING at NCGS Monument “Hopson”, said monument having NC Grid Coordinates of N=773,721.48 and E=2,034,907.39 (NAD 83), traveling thence South 11° 44' 59" West 6154.66 feet to a right-of-way monument on the southern margin of Louis Stephens Drive (a 100 foot public right-of-way), thence North 72° 48' 35" East 164.29 feet to a right-of-way monument on the southern margin of Kit Creek Road (a 150 foot public right-of-way); thence with the southern margin of said Kit Creek Road the following two (2) courses and distances:
  (1)   South 68° 46' 54 East 412.64 feet to a right-of-way monument; and
 
  (2)   with a curve to the right having a radius of 924.83 feet, an arc length of 475.96, and a chord bearing and distance of South 54° 02' 59" East 470.72 feet to a computed point;
said computed being the POINT AND PLACE OF BEGINNING; thence from said point of beginning and continuing with the southern margin of Kit Creek Road South 39° 18' 29" East 571.64 feet to a computed point, thence cornering and leaving said right-of-way and with the common line of property now or formerly owned by Research Triangle Foundation of NC (DB 1670 PG 239) the following two (2) courses and distances:
  (1)   South 50° 41' 31" West 100.00 feet to an iron pipe found; and
 
  (2)   South 83° 31' 01" West 483.47 feet to an iron pipe found;
thence cornering and along three (3) new lines within the bounds of property owned by Network Appliance, Inc. (DB 10941 Pg 2054) as follows:
  (1)   North 12° 44' 00" West 279.97 feet;
 
  (2)   North 48° 55' 31" West 50.30 feet; and
 
  (3)   North 32° 57' 24" East 401.61 feet to a point along the southern margin of said Kit Creek Road;
thence with the southern margin of Kit Creek Road along a curve to the right having a radius of 925.04 feet, an arc length of 113.05 feet and a chord bearing and distance of South 42° 48' 33" East 112.98 feet to the POINT AND PLACE OF BEGINNING, containing 5.36 acres (233,621 square feet), more or less, said area shown on the rendering attached hereto.
Exhibit A to Amended and Restated Lease Agreement (RTP Data Center) – Page 4

 

 

Exhibit B
North Carolina Foreclosure Provisions
Without limiting any of the provisions set forth in the body of this Lease or other attachments to this Lease, the following provisions are included in and made a part of this Lease for all purposes:
GRANT OF LIEN AND SECURITY INTEREST.
     NAI, for and in consideration of the sum of Ten Dollars ($10.00) to NAI in hand paid by Lloyd G. Cox, Trustee, of Dallas County, Texas (hereinafter called the “Trustee”), in order to secure the recovery of the Lease Balance by BNPPLC and the payment of all of the other obligations, covenants, agreements and undertakings of NAI under this Lease or the other Operative Documents (hereinafter called the “Secured Obligations”), does hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET OVER to the Trustee, as trustee, in trust, with THE POWER OF SALE and right of entry and possession for the benefit of BNPPLC, a leasehold estate in the Land (the terms and conditions of which leasehold estate are as set forth in the Ground Lease), together with (i) all the buildings and other improvements now on or hereafter located thereon; (ii) all materials, equipment, fixtures or other property whatsoever now or hereafter attached or affixed to or installed in said buildings and other improvements, including, but not limited to, all heating, plumbing, lighting, water heating, refrigerating, incinerating, ventilating and air conditioning equipment, utility lines and equipment (whether owned individually or jointly with others), sprinkler systems, fire extinguishing apparatus and equipment, water tanks, engines, machines, elevators, motors, cabinets, shades, blinds, partitions, window screens, screen doors, storm windows, awnings, drapes, and floor coverings, and all fixtures, accessions and appurtenances thereto, and all renewals or replacements of or substitutions for any of the foregoing, all of which are hereby declared to be permanent fixtures and accessions to the freehold and part of the realty conveyed herein as security for the obligations mentioned hereinabove; (iii) all easements and rights of way now and at any time hereafter used in connection with any of the foregoing property or as a means of ingress to or egress from the Land or for utilities to said property; (iv) all interests of NAI in and to any streets, ways, alleys and/or strips of land adjoining said land or any part thereof; and (v) all rights, estates, powers and privileges appurtenant or incident to the foregoing.
     TO HAVE AND TO HOLD the foregoing property (in this Exhibit called the “Mortgaged Property”) unto the Trustee and his successors or substitutes in this trust and to his or their successors and assigns, IN TRUST, however, upon the terms, provisions and conditions herein set forth for the benefit of BNPPLC. ( No part of the Mortgaged Property constitutes all or any part of the homestead of NAI.)
     In order to secure the Secured Obligations, NAI also hereby grants to BNPPLC a security interest in: all components of the Property which constitute personalty, whether owned by NAI now or hereafter, and all fixtures, accessions and appurtenances thereto, and all renewals or

 

 

replacements of or substitutions for any of the foregoing (including all building materials and equipment now or hereafter delivered to said premises and intended to be installed or in or incorporated as part of the Improvements); all rents and other amounts from and under leases of all or any part of the Property; all issues, profits and proceeds from all or any part of the Property; all proceeds (including premium refunds) of each policy of insurance relating to the Property; all proceeds from the taking of the Property or any part thereof or any interest therein or right or estate appurtenant thereto by eminent domain or by purchase in lieu thereof; all permits, licenses, franchises, certificates, and other rights and privileges obtained in connection with the Property; all plans, specifications, maps, surveys, reports, architectural, engineering and construction contracts, books of account, insurance policies and other documents, of whatever kind or character, relating to the use, construction upon, occupancy, leasing, sale or operation of the Property; all proceeds and other amounts paid or owing to NAI under or pursuant to any and all contracts and bonds relating to the construction, erection or renovation of the Property; and all oil, gas and other hydrocarbons and other minerals produced from or allocated to the Property and all products processed or obtained therefrom, the proceeds thereof, and all accounts and general intangibles under which such proceeds may arise, together with any sums of money that may now or at any time hereafter become due and payable to NAI by virtue of any and all royalties, overriding royalties, bonuses, delay rentals and any other amount of any kind or character arising under any and all present and future oil, gas and mining leases covering the Property or any part thereof (all of the property described in this section hereinafter collectively called the “Collateral” in this Exhibit) and all proceeds of the Collateral. (The Mortgaged Property and the Collateral are in this Exhibit sometimes collectively called the “Security”.)
FORECLOSURE
     Upon the occurrence of any Event of Default, the Trustee, his successor or substitute, is authorized and empowered and it will be his special duty at the request of BNPPLC to foreclose the interest of NAI in the Mortgaged Property or any part thereof by nonjudicial notice and sale, and BNPPLC shall have the right to foreclose by judicial foreclosure, in either case in accordance with applicable law.
     Any sale made by the Trustee hereunder may be as an entirety or in such parcels as BNPPLC may request, and any sale may be adjourned by announcement at the time and place appointed for such sale without further notice except as may be required by law. The sale by the Trustee of less than the whole of the Mortgaged Property will not exhaust the power of sale herein granted, and the Trustee is specifically empowered to make successive sale or sales under such power until the whole of the Mortgaged Property is sold; and, if the proceeds of such sale of less than the whole of the Mortgaged Property are less than the aggregate of the Secured Obligations then outstanding and the expense of executing this trust as provided herein, this instrument and the lien hereof will remain in full force and effect as to the unsold portion of the Mortgaged Property just as though no sale had been made; provided, however, that NAI will never have any right to require the sale of less than the whole of the Mortgaged Property but
Exhibit B to Amended and Restated Lease Agreement (RTP Data Center) – Page 2

 

 

BNPPLC will have the right, at its sole election, to request the Trustee to sell less than the whole of the Mortgaged Property. The Trustee may sell the Mortgaged Property in parcels or as a whole and in any order the Trustee may elect. After each sale, the Trustee will make to the purchaser or purchasers at such sale good and sufficient conveyances in the name of NAI, conveying the property so sold to the purchaser or purchasers without warranty of title by the Trustee, and will receive the proceeds of said sale or sales and apply the same as herein provided. Payment of the purchase price to the Trustee will satisfy the obligation of purchaser at such sale therefor, and such purchaser will not be responsible for the application thereof. The power of sale granted herein will not be exhausted by any sale held hereunder by the Trustee or his substitute or successor, and such power of sale may be exercised from time to time and as many times as BNPPLC may deem necessary until all of the Mortgaged Property has been duly sold and all Secured Obligations have been fully paid and satisfied. In the event any sale hereunder is not completed or is defective in the opinion of BNPPLC, such sale will not exhaust the power of sale hereunder and BNPPLC will have the right to cause a subsequent sale or sales to be made hereunder. Any and all statements of fact or other recitals made in any deed or deeds given by the Trustee or any successor or substitute appointed hereunder as to nonpayment of any Secured Obligations, or as to the occurrence of any Event of Default, or as to BNPPLC having declared all or any part of the Secured Obligations to be due and payable, or as to the request to sell, or as to notice of time, place and terms of sale and of the properties to be sold having been duly given, or as to the refusal, failure or inability to act of the Trustee or any substitute or successor, or as to the appointment of any substitute or successor trustee, or as to any other act or thing having been duly done by BNPPLC or by such Trustee, substitute or successor, will be taken as prima facie evidence of the truth of the facts so stated and recited. The Trustee, his successor or substitute, may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by the Trustee, including the posting of notices and the conduct of sale, but in the name and on behalf of the Trustee, his successor or substitute.
JUDICIAL FORECLOSURE
     This instrument will be effective as a mortgage as well as a deed of trust and upon the occurrence of an Event of Default may be foreclosed as to any of the Security in any manner permitted by the laws of the State of North Carolina or of any other state in which any part of the Security is situated, and any foreclosure suit may be brought by the Trustee or by BNPPLC. In the event a foreclosure hereunder is commenced by the Trustee, or his substitute or successor, BNPPLC may at any time before the sale of the Security direct the said Trustee to abandon the sale, and may then institute suit for the collection of the Secured Obligations and for the judicial foreclosure of this instrument. It is agreed that if BNPPLC should institute a suit for the collection of the Secured Obligations and for the foreclosure of this instrument, BNPPLC may at any time before the entry of a final judgment in said suit dismiss the same, and require the Trustee, his substitute or successor to exercise the power of sale granted herein to sell the Security in accordance with the provisions of this instrument.
Exhibit B to Amended and Restated Lease Agreement (RTP Data Center) – Page 3

 

 

BNPPLC AS PURCHASER
     BNPPLC will have the right to become the purchaser at any sale held by any Trustee or substitute or successor or by any receiver or public officer, and any BNPPLC purchasing at any such sale will have the right to credit upon the amount of the bid made therefor, to the extent necessary to satisfy such bid, the outstanding Lease Balance and other Secured Obligations owing to such BNPPLC.
UNIFORM COMMERCIAL CODE REMEDIES
     Upon the occurrence of an Event of Default, BNPPLC may exercise its rights of enforcement with respect to the Collateral under the North Carolina Uniform Commercial Code, as amended, and in conjunction with, in addition to or in substitution for those rights and remedies:
     (a) BNPPLC may enter upon the Land to take possession of, assemble and collect the Collateral or to render it unusable; and
     (b) BNPPLC may require NAI to assemble the Collateral and make it available at a place BNPPLC designates which is mutually convenient to allow BNPPLC to take possession or dispose of the Collateral; and
     (c) written notice mailed to NAI as provided herein ten (10) days prior to the date of public sale of the Collateral or prior to the date after which private sale of the Collateral will be made will constitute reasonable notice; and
     (d) any sale made pursuant to the provisions of this section will be deemed to have been a public sale conducted in a commercially reasonable manner if held contemporaneously with the sale of the Mortgaged Property under power of sale as provided herein upon giving the same notice with respect to the sale of the Collateral hereunder as is required for such sale of the Mortgaged Property under power of sale; and
     (e) in the event of a foreclosure sale, whether made by the Trustee under the terms hereof, or under judgment of a court, the Collateral and the Mortgaged Property may, at the option of BNPPLC, be sold as a whole; and
     (f) it will not be necessary that BNPPLC take possession of the Collateral or any part thereof prior to the time that any sale pursuant to the provisions of this section is conducted and it will not be necessary that the Collateral or any part thereof be present at the location of such sale; and
     (g) prior to application of proceeds of disposition of the Collateral to the
Exhibit B to Amended and Restated Lease Agreement (RTP Data Center) – Page 4

 

 

Secured Obligations, such proceeds will be applied to the reasonable expenses of retaking, holding, preparing for sale or lease, selling, leasing and the like and the reasonable attorney’s fees and legal expenses incurred by BNPPLC; and
     (h) any and all statements of fact or other recitals made in any bill of sale or assignment or other instrument evidencing any foreclosure sale hereunder as to nonpayment of the Secured Obligations or as to the occurrence of any Event of Default, or as to BNPPLC having declared any of the Secured Obligations to be due and payable, or as to notice of time, place and terms of sale and of the properties to be sold having been duly given, or as to any other act or thing having been duly done by BNPPLC, will be taken as prima facie evidence of the truth of the facts so stated and recited; and
     (i) BNPPLC may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by BNPPLC, including the sending of notices and the conduct of the sale, but in the name and on behalf of BNPPLC.
PARTIAL FORECLOSURE
     In the event of an Event of Default in the payment of any part of the Secured Obligations, BNPPLC will have the right to proceed with foreclosure of the liens and security interests evidenced hereby without declaring the entire Secured Obligations due, and in such event any such foreclosure sale may be made subject to the unmatured part of the Secured Obligations; and any such sale will not in any manner affect the unmatured part of the Secured Obligations, but as to such unmatured part this instrument will remain in full force and effect just as though no sale had been made. Several sales may be made hereunder without exhausting the right of sale for any unmatured part of the Secured Obligations.
PROVISIONS CONCERNING THE TRUSTEE
     The Trustee may resign by an instrument in writing addressed to BNPPLC, or the Trustee may be removed at any time with or without cause by an instrument in writing executed by BNPPLC. In case of the death, resignation, removal or disqualification of the Trustee or if for any reason BNPPLC deems it desirable to appoint a substitute or successor trustee to act instead of the herein named trustee or any substitute or successor trustee, then BNPPLC will have the right and is hereby authorized and empowered to appoint a successor trustee, or a substitute trustee, without other formality than appointment and designation in writing executed by BNPPLC and the authority hereby conferred will extend to the appointment of other successor and substitute trustees successively until the Secured Obligations has been paid in full or until the Security is sold hereunder. In the event the Secured Obligations are at any time owned by more than one person or entity, the holder or holders of not less than a majority in the amount of such Secured Obligations will have the right and authority to make the appointment of a successor or substitute trustee provided for in the preceding sentence. Such appointment and designation by
Exhibit B to Amended and Restated Lease Agreement (RTP Data Center) – Page 5

 

 

BNPPLC or by the holder or holders of not less than a majority of the Secured Obligations will be full evidence of the right and authority to make the same and of all facts therein recited. If BNPPLC is a corporation and such appointment is executed in its behalf by an officer of such corporation, such appointment will be conclusively presumed to be executed with authority and will be valid and sufficient without proof of any action by the board of directors or any superior officer of the corporation. Upon the making of any such appointment and designation, all of the estate and title of the Trustee in the Security will vest in the named successor or substitute trustee and he will thereupon succeed to and hold, possess and execute all the rights, powers, privileges, immunities and duties herein conferred upon the Trustee; but nevertheless, upon the written request of BNPPLC or of the successor or substitute Trustee, the Trustee ceasing to act will execute and deliver an instrument transferring to such successor or substitute Trustee all of the estate and title in the Security of the Trustee so ceasing to act, together with all the rights, powers, privileges, immunities and duties herein conferred upon the Trustee, and will duly assign, transfer and deliver any of the properties and moneys held by said Trustee hereunder to said successor or substitute Trustee. All references herein to the Trustee will be deemed to refer to the Trustee (including any successor or substitute appointed and designated as herein provided) from time to time acting hereunder. NAI hereby ratifies and confirms any and all acts which the herein named Trustee or his successor or successors, substitute or substitutes, in this trust, does lawfully by virtue hereof.
     THE TRUSTEE WILL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT OR ACT DONE BY THE TRUSTEE IN GOOD FAITH, OR BE OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES WHATSOEVER (INCLUDING THE TRUSTEE’S NEGLIGENCE), EXCEPT FOR THE TRUSTEE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. The Trustee will have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by him hereunder, believed by him in good faith to be genuine. All moneys received by the Trustee will, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law), and the Trustee will be under no liability for interest on any moneys received by him hereunder. NAI WILL REIMBURSE THE TRUSTEE FOR, AND INDEMNIFY AND SAVE HIM HARMLESS AGAINST, ANY AND ALL LIABILITY AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES) WHICH MAY BE INCURRED BY HIM IN THE PERFORMANCE OF HER DUTIES HEREUNDER (INCLUDING ANY LIABILITY AND EXPENSES RESULTING FROM THE TRUSTEE’S OWN NEGLIGENCE). The foregoing indemnity will not terminate upon release, foreclosure or other termination of this instrument.
MISCELLANEOUS
     BNPPLC may resort to any security given by this instrument or to any other security now existing or hereafter given to secure the payment of the Secured Obligations, in whole or in part,
Exhibit B to Amended and Restated Lease Agreement (RTP Data Center) – Page 6

 

 

and in such portions and in such order as may seem best to BNPPLC in its sole and uncontrolled discretion, and any such action will not in anywise be considered as a waiver of any of the rights, benefits, liens or security interests evidenced by this instrument.
     To the full extent NAI may do so, NAI agrees that NAI will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force pertaining to the rights and remedies of sureties or redemption, and NAI, for NAI and NAI’s successors and assigns, and for any and all persons ever claiming any interest in the Security, to the extent permitted by law, hereby waives and releases all rights of redemption, valuation, appraisement, stay of execution, notice of intention to mature or declare due the whole of the Secured Obligations, notice of election to mature or declare due the whole of the Secured Obligations and all rights to a marshaling of the assets of NAI, including the Security, or to a sale in inverse order of alienation in the event of foreclosure of the liens and security interests hereby created. NAI will not have or assert any right under any statute or rule of law pertaining to the marshaling of assets, sale in inverse order of alienation, the exemption of homestead, the administration of estates of decedents or other matters whatever to defeat, reduce or affect the right of BNPPLC under the terms of this instrument to a sale of the Security for the collection of the Secured Obligations without any prior or different resort for collection, or the right of BNPPLC under the terms of this instrument to the payment of the Secured Obligations out of the proceeds of sale of the Security in preference to every other claimant whatever. If any law referred to in this section and now in force, of which NAI or NAI’s successors and assigns and such other persons claiming any interest in the Security might take advantage despite this provision, is hereafter repealed or ceases to be in force, such law will not thereafter be deemed to preclude the application of this provision.
     In the event there is a foreclosure sale hereunder and at the time of such sale NAI or NAI’s successors or assigns or any other persons claiming any interest in the Security by, through or under NAI are occupying or using the Security, or any part thereof, each and all will immediately become the tenant of the purchaser at such sale. Such tenancy will be a tenancy from day-to-day, terminable at the will of either landlord or tenant, at a reasonable rental per day based upon the value of the property occupied, such rental to be due daily to the purchaser. In the event the tenant fails to surrender possession of said property upon demand, the purchaser will be entitled to institute and maintain a summary action for possession of the property (such as an action for forcible detainer) in the court having jurisdiction.
Exhibit B to Amended and Restated Lease Agreement (RTP Data Center) – Page 7

 

exv10w53
Exhibit 10.53
AMENDED AND RESTATED
COMMON DEFINITIONS
AND PROVISIONS AGREEMENT
(RTP DATA CENTER)
between
BNP PARIBAS LEASING CORPORATION
and
NETWORK APPLIANCE, INC.
Dated as of November 29, 2007
 

 

 

TABLE OF CONTENTS
         
    Page  
ARTICLE I — LIST OF DEFINED TERMS
     1  
97-10/Maximum Permitted Prepayment
     1  
97-10/Meltdown Event
     1  
97-10/Prepayment
     1  
97-10/Project Costs
     1  
97-10/Pronouncement
     1  
ABR
     2  
ABR Period Election
     2  
Active Negligence
     2  
Additional Rent
     2  
Administrative Fees
     2  
Advance Date
     2  
Affiliate
     3  
After Tax Basis
     3  
Applicable Laws
     3  
Applicable Purchaser
     3  
Appurtenant Easements
     3  
Arrangement Fee
     3  
Attorneys’ Fees
     3  
Balance of Unpaid Construction Period Losses
     3  
Banking Rules Change
     3  
Base Rent
     4  
Base Rent Commencement Date
     4  
Base Rent Date
     4  
Base Rent Period
     5  
BNPPLC
     5  
BNPPLC’s Parent
     5  
Breakage Costs
     6  
Break Even Price
     6  
Business Day
     6  
Capital Adequacy Charges
     6  
Carrying Costs
     6  
Closing Certificate
     7  
Closing Letter
     7  
Code
     7  
Commitment Fees
     7  
Common Definitions and Provisions Agreement
     7  
Completion Date
     7  
Completion Notice
     7  
Consolidated Debt for Borrowed Money
     7  

 

 

TABLE OF CONTENTS
(Continued)
         
    Page  
Consolidated EBITDA
     7  
Constituent Documents
     7  
Construction Advances
     7  
Construction Advance Request
     7  
Construction Agreement
     7  
Construction Allowance
     8  
Construction Period
     8  
Construction Project
     8  
Covered Construction Period Losses
     8  
Default
     8  
Default Rate
     8  
Defective Work
     8  
Designated Sale Date
     8  
Effective Date
     9  
Effective Rate
     10  
Eligible Financial Institution
     10  
Environmental Cutoff Date
     11  
Environmental Laws
     11  
Environmental Losses
     11  
Environmental Report
     12  
ERISA
     12  
ERISA Affiliate
     12  
ERISA Termination Event
     12  
Escrowed Proceeds
     12  
Established Misconduct
     13  
Eurocurrency Liabilities
     14  
Eurodollar Rate Reserve Percentage
     14  
Event of Default
     14  
Excluded Taxes
     16  
Fed Funds Rate
     18  
Fixed Rate
     18  
Fixed Rate Lock
     18  
Fixed Rate Lock Date
     18  
Fixed Rate Lock Termination
     18  
Fixed Rate Lock Termination Date
     18  
Fixed Rate Lock Notice
     18  
Fixed Rate Loss
     18  
Fixed Rate Settlement Amount
     19  

(ii)

 

TABLE OF CONTENTS
(Continued)
         
    Page  
Fixed Rate Swap
     19  
Floating Rate Payor
     19  
FOCB Notice
     19  
Force Majeure Event
     19  
Fully Subordinated or Removable
     19  
Funded Construction Allowance
     20  
Funding Advances
     20  
Future Work
     20  
GAAP
     20  
Ground Lease
     20  
Hazardous Substance
     20  
Hazardous Substance Activity
     21  
Improvements
     21  
Increased Commitment
     21  
Increased Funding Commitment
     21  
Increased Time Commitment
     21  
Indebtedness
     21  
Initial Advance
     23  
Initial Lease Balance
     23  
Interested Party
     23  
Interest Rate Swap
     24  
Land
     24  
Lease
     24  
Lease Balance
     24  
Lease Termination Damages
     24  
Liabilities
     24  
LIBOR
     24  
LIBOR Period Election
     25  
Lien
     26  
Liens Removable by BNPPLC
     26  
Local Impositions
     27  
Losses
     27  
Market Quotation
     28  
Maximum Construction Allowance
     28  
Maximum Remarketing Obligation
     28  
Minimum Insurance Requirements
     28  
Multiemployer Plan
     29  
NAI
     29  

(iii)

 

TABLE OF CONTENTS
(Continued)
         
    Page  
NAI’s Estimate of Force Majeure Excess Costs
     29  
NAI’s Estimate of Force Majeure Delays
     29  
NAI’s Initial Remarketing Right
     29  
Notice of NAI’s Intent to Terminate
     29  
Notice of NAI’s Intent to Terminate Because of a Force Majeure Event
     29  
Notice of Termination by NAI
     29  
Operative Documents
     29  
Outstanding Construction Allowance
     29  
Owner’s Election to Continue Construction
     29  
Participant
     29  
Participation Agreement
     30  
Period
     30  
Permitted Encumbrances
     30  
Permitted Hazardous Substance Use
     30  
Permitted Hazardous Substances
     31  
Permitted Transfer
     31  
Person
     32  
Personal Property
     32  
Plan
     32  
Pre-lease Casualty
     32  
Pre-lease Force Majeure Delays
     32  
Pre-lease Force Majeure Event
     32  
Pre-lease Force Majeure Event Notice
     32  
Pre-lease Force Majeure Excess Costs
     33  
Pre-lease Force Majeure Losses
     33  
Prime Rate
     33  
Prior Closing Certificate and Agreement
     33  
Prior Common Definitions and Provisions Agreement
     33  
Prior Construction Agreement
     33  
Prior Ground Lease
     33  
Prior Lease
     33  
Prior Operative Documents
     33  
Prior Purchase Agreement
     34  
Prior Work
     34  
Projected Cost Overruns
     34  
Property
     34  
Purchase Agreement
     34  
Purchase Option
     34  

(iv)

 

TABLE OF CONTENTS
(Continued)
         
    Page  
Qualified Affiliate
     34  
Qualified Income Payments
     34  
Qualified Prepayments
     34  
Real Property
     35  
Reimbursable Construction-Period Costs
     35  
Remedial Work
     36  
Rent
     36  
Responsible Financial Officer
     36  
Rolling Four Quarters Period
     36  
Scope Change
     36  
Spread
     36  
Subsidiary
     37  
Supplemental Payment
     37  
Supplemental Payment Obligation
     37  
Tangible Personal Property
     37  
Target Completion Date
     38  
Term
     38  
Termination of NAI’s Work
     38  
Third Party Contract
     38  
Third Party Contract/Termination Fees
     38  
Transaction Expenses
     38  
Unfunded Benefit Liabilities
     38  
Upfront Fees
     38  
Work
     38  
Work/Suspension Event
     38  
Work/Suspension Notice
     38  
Work/Suspension Period
     38  
 
        
ARTICLE II — SHARED PROVISIONS
     38  
1. Notices
     39  
2. Severability
     41  
3. No Merger
     41  
4. No Implied Waiver
     41  
5. Entire and Only Agreements
     42  
6. Binding Effect
     42  
7. Time is of the Essence
     42  
8. Governing Law
     42  

(v)

 

TABLE OF CONTENTS
(Continued)
         
    Page  
9. Paragraph Headings
     42  
10. Negotiated Documents
     42  
11. Terms Not Expressly Defined in an Operative Document
     42  
12. Other Terms and References
     42  
13. Execution in Counterparts
     43  
14. Not a Partnership, Etc
     44  
15. No Fiduciary Relationship Intended
     44  
16. Amendment and Restatement of Prior Agreement
     44  
Annexes
         
 
        
Annex 1
   ABR Period Election Form
 
        
Annex 2
   Fixed Rate Lock Notice Form
 
        
Annex 3
   LIBOR Period Election Form
 
        
Annex 4
   Minimum Insurance Requirements

(vi)

 

AMENDED AND RESTATED
COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(RTP DATA CENTER)
     This AMENDED AND RESTATED COMMON DEFINITIONS AND PROVISIONS AGREEMENT (RTP DATA CENTER) (this “Agreement”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Agreement, NAI and BNPPLC are executing the Closing Certificate (as defined below), the Ground Lease (as defined below), the Lease (as defined below), the Construction Agreement (as defined below) and the Purchase Agreement (as defined below), all of which concern NAI or the Property (as defined below). Each of the Closing Certificate, the Ground Lease, the Lease, the Construction Agreement and the Purchase Agreement (together with this Agreement, the “Operative Documents”) are intended to create separate and independent obligations upon the parties thereto. However, NAI and BNPPLC intend that all of the Operative Documents share certain consistent definitions and other miscellaneous provisions. To that end, the parties are executing this Agreement 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 will have the respective indicated meanings as used herein and in the other Operative Documents:
     “97-10/Maximum Permitted Prepayment” has the meaning indicated in the Construction Agreement.
     “97-10/Meltdown Event” has the meaning indicated in the Construction Agreement.
     “97-10/Prepayment” has the meaning indicated in the Construction Agreement.
     “97-10/Project Costs“has the meaning indicated in the Construction Agreement.
     “97-10/Pronouncement” has the meaning indicated in the Construction Agreement.

 

 

     “ABR” means, for any day, a fluctuating rate of interest per annum (rounded upwards, if necessary, to the next 1/100th of 1%) equal to the higher of (a) the Prime Rate in effect on such day and (b) the Fed Funds Rate in effect one day prior to such day plus 1/4 of 1% per annum. For any period (including any Base Rent Period), “ABR” means the average of the ABR for each day during such period.
     “ABR Period Election” means an election to have the Effective Rate for any Period calculated by reference to the ABR, rather than by reference to LIBOR or a Fixed Rate. NAI may (subject to the limitations and qualifications set forth in this definition) make any Period after the first Construction Period subject to an ABR Period Election by a notice given to BNPPLC in the form attached as Annex 1 at least five Business Days prior to the commencement of such Period. After an ABR Period Election becomes effective, it will remain in effect for all subsequent Periods until the Fixed Rate Lock Date for any Fixed Rate Lock or a different election is made in accordance with the provisions of this definition and the definition of LIBOR Period Election. In no event will changes in any ABR Period Election or LIBOR Period Election become effective except upon the commencement of a new Period. (For purposes of the Operative Documents, an ABR Period Election for any Period will also be considered in effect on the Effective Date, Advance Date, Base Rent Commencement Date or Base Rent Date upon which such Period begins.)
     “Active Negligence” of any Person 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 (other than NAI) in a manner that proximately causes actual bodily injury or property damage for which NAI does not carry (and is not obligated by the Construction Agreement or the Lease to carry) insurance. “Active Negligence” will not include (1) any negligent failure of BNPPLC to act when the duty to act would not have been imposed but for BNPPLC’s status as owner of any interest in the Land, the Improvements or any other Property or as a party to the transactions described in the Lease or the other Operative Documents, (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 BNPPLC or participation or facilitation in any manner, directly or indirectly, of the transactions described in the Lease or other Operative Documents, or (3) the exercise in a lawful manner by BNPPLC (or any party lawfully claiming through or under BNPPLC) of any right or remedy provided in or under the Lease or the other Operative Documents.
     “Additional Rent” has the meaning indicated in subparagraph 3(F) of the Lease.
     “Administrative Fees” means the fees identified as such in subparagraph 3(E) of the Lease and subparagraph 3(A) of the Construction Agreement.
     “Advance Date” means, regardless of whether any Construction Advance is actually
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 2

 

 

made on such date, the first Business Day of every calendar month, beginning with the first Business Day in December, 2007 and continuing regularly thereafter to and including the Base Rent Commencement Date, which will be the last Advance 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.
     “After Tax Basis” has the meaning indicated in subparagraph 5(C)(1) of the Lease.
     “Applicable Laws” means any or all of the following, to the extent applicable to BNPPLC, NAI, the Property or the Operative Documents, after giving effect to the contractual choice of law provisions in the 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 to purchase BNPPLC’s interest in the Property and in any Escrowed Proceeds as provided in the Purchase Agreement.
     “Appurtenant Easements” has the meaning indicated in Exhibit A attached to the Ground Lease.
     “Arrangement Fee” has the meaning indicated in the Construction Agreement.
     “Attorneys’ Fees” means the expenses and reasonable fees of counsel to the parties incurring the same, including costs or expenses of in-house counsel (whether or not accounted for as general overhead or administrative expenses) and 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 will also include all such expenses and reasonable fees 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 Losses” has the meaning indicated in the Purchase Agreement.
     “Banking Rules Change” means either: (1) the introduction of or any change after the
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 3

 

 

Effective Date (other than any change by way of imposition or increase of reserve requirements included in the Eurodollar Rate Reserve Percentage) in any law or regulation applicable to BNPPLC, BNPPLC’s Parent or any 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 BNPPLC, BNPPLC’s Parent or any Participant with any new guideline or new request issued after the Effective Date from any central bank or other governmental authority (whether or not having the force of law).
     “Base Rent” means the rent payable by NAI pursuant to subparagraph 3(A) of the Lease.
     “Base Rent Commencement Date” means the first Business Day of the first calendar month after the Completion Date.
     “Base Rent Date” means a date upon which Base Rent must be paid under the Lease, all of which dates will be the first Business Day of a calendar month. The first Base Rent Date will be determined as follows:
     a) If an ABR Period Election or 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 will be the first Base Rent Date.
     b) If a LIBOR Period Election of three months or six months is in effect on the Base Rent Commencement Date, then the first Business Day of the third calendar month following the Base Rent Commencement Date will be the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date will 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 an ABR Period Election or a LIBOR Period Election of one month is in effect on a Base Rent Date, or if a Fixed Rate Lock commences or continues on a Base Rent Date, then the first Business Day of the first calendar month following such Base Rent Date will be the next following Base Rent Date.
     (2) If a LIBOR Period Election of three months or longer is in effect on a Base Rent Date, then the first Business Day of the third calendar month following such Base Rent Date will be the next following Base Rent Date.
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 4

 

 

Thus, for example, if the Base Rent Commencement Date falls on the first Business Day of September, 2008 and a LIBOR Period Election of three months commences on the Base Rent Commencement Date, then the first Base Rent Date will be the first Business Day of December, 2008.
     “Base Rent Period” means a period for which Base Rent must be paid under the Lease, each of which periods will correspond to the ABR Period Election or LIBOR Period Election for the period (except when a Fixed Rate Lock continues in effect). The first Base Rent Period will begin on and include the Base Rent Commencement Date, and each successive Base Rent Period will begin on and include the Base Rent Date upon which the preceding Base Rent Period ends. Each Base Rent Period, including the first Base Rent Period, will 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 an ABR Period Election or a LIBOR Period Election of one month or three months is in effect for a Base Rent Period, or if a Fixed Rate Lock commences or continues on the first day of the Base Rent Period, then such Base Rent Period will end on but not include the first Base Rent Date after the Base Rent Date upon which such period began.
     (2) If a LIBOR Period Election of six months is in effect for a Base Rent Period, then such Base Rent Period will end on but not include 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, 2009, 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 but not include the first Business Day in April, 2009, the third calendar month after January, 2009.
     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, 2009, 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, 2009.
     “BNPPLC” means BNPPLC Leasing Corporation, a Delaware corporation.
     “BNPPLC’s Parent” means BNP Paribas, a bank organized and existing under the laws of France, and any successors of such bank.
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 5

 

 

     “Breakage Costs” means any and all costs, losses or expenses incurred or sustained by BNPPLC’s Parent (as a Participant or otherwise) or any Participant, for which BNPPLC’s Parent or the Participant requests reimbursement from BNPPLC, because of:
     (1) the resulting liquidation or redeployment of deposits or other funds that were 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) the resulting liquidation or redeployment of deposits or other funds that were reserved to provide a Construction Advance requested by NAI, if and when the Construction Advance is not made as anticipated, either because NAI declined to accept the Construction Advance for any reason or because NAI failed to satisfy any of the conditions to such Construction Advance specified in the Construction Agreement; or
     (3) the resulting liquidation or redeployment of deposits or other funds that were used to make or maintain Funding Advances upon the acceleration of the end of any Construction Period or Base Rent Period because of an acceleration of the Designated Sale Date as described in clauses (2) or (3) of the definition thereof.
Breakage Costs will include, for example, losses on Funding Advances maintained by BNPPLC’s Parent or any Participant which are attributable to any decline in LIBOR as of the effective date of any application described in the clause (1) preceding, as compared to the LIBOR used to determine the Effective Rate then in effect. Each determination of Breakage Costs by BNPPLC’s Parent or by any Participant, as applicable, will be conclusive and binding upon NAI in the absence of clear and demonstrable error.
     “Break Even Price” has the meaning indicated in 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, 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” will mean any day described in clause (1).
     “Capital Adequacy Charges” means any additional amounts BNPPLC’s Parent or any Participant requests BNPPLC to pay as compensation for an increase in required capital as provided in subparagraph 5(B)(2) of the Lease.
     “Carrying Costs” has the meaning indicated in the Construction Agreement.
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 6

 

 

     “Closing Certificate” means the Amended and Restated Closing Certificate and Agreement (RTP Data Center) dated as of the Effective Date executed by NAI and BNPPLC, as such Closing Certificate and Agreement may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
     “Closing Letter” means the letter agreement dated as of the Effective Date between BNPPLC and NAI confirming the amount of the Initial Advance and the Transactions Expenses paid from the Initial Advance.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Commitment Fees” has the meaning indicated in the Construction Agreement.
     “Common Definitions and Provisions Agreement” means this Agreement, which is incorporated by reference into each of the other Operative Documents, as this Agreement may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
     “Completion Date” has the meaning indicated in the Construction Agreement.
     “Completion Notice” has the meaning indicated in the Construction Agreement.
     “Consolidated Debt for Borrowed Money” has the meaning indicated in subparagraph 3(A) of the Closing Certificate.
     “Consolidated EBITDA” has the meaning indicated in subparagraph 3(A) of the Closing Certificate.
     “Constituent Documents” of any entity means the organizational documents pursuant to which such entity was created and is governed, such as the articles of incorporation and bylaws of a corporation, the articles of organization and regulations of a limited liability company or the partnership agreement of a partnership.
     “Construction Advances” has the meaning indicated in the Construction Agreement.
     “Construction Advance Request” has the meaning indicated in the Construction Agreement.
     “Construction Agreement” means the Amended and Restated Construction Agreement (RTP Data Center) dated as of the Effective Date between BNPPLC and NAI, as such Construction Agreement may be extended, supplemented, amended, restated or otherwise
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 7

 

 

modified from time to time in accordance with its terms.
     “Construction Allowance” has the meaning indicated in the Construction 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 will begin on and include the day on which the preceding Construction Period ends and will end on but not include the next following Advance Date, until the last Construction Period, which will 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 purchases BNPPLC’s interest in the Property pursuant to the Purchase Agreement.
     “Construction Project” has the meaning indicated in the Construction Agreement.
     “Covered Construction Period Losses” has the meaning indicated in the Construction Agreement.
     “Default” means any event or circumstance which constitutes, or which would with the passage of time or the giving of notice or both (if not cured within any applicable cure period) constitute, an Event of Default.
     “Default Rate” means, a floating per annum rate equal to two percent (2%) above ABR, except that for purposes of computing interest accruing for any period that commences thirty or more days after the Designated Sale Date on any 97-10/Prepayment, Base Rent or Supplemental Payment that has become due, but remains to be paid to BNPPLC by NAI, the Default Rate will mean a floating per annum rate equal to five percent (5%) above ABR. Notwithstanding the foregoing, in no event will the “Default Rate” at any time exceed the maximum interest rate permitted by Applicable Laws.
     “Defective Work” has the meaning indicated in the Construction Agreement.
     “Designated Sale Date” means the earliest of:
     (1) the date upon which the Term is scheduled to expire as provided in Paragraph 1(A) of the Lease (i.e., the first Business Day of August, 2014); or
     (2) any Business Day designated as the “Designated Sale Date” for purposes of this Agreement and the other Operative Documents in an irrevocable, unconditional notice given by NAI to BNPPLC before any 97-10/Meltdown Event has occurred; provided, that if the Business Day so designated by NAI as the Designated Sale Date is
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 8

 

 

not at least twenty days after the date of such notice, the notice will be of no effect for purposes of this definition; and provided, further, that to be effective, any such notice must include an irrevocable exercise by NAI of the Purchase Option under subparagraph 2(A)(1) of the Purchase Agreement and thereby obligate NAI to tender payment of the full Break Even Price to BNPPLC on the Business Day so designated; or
     (3) any Business Day designated as the “Designated Sale Date” for purposes of this Agreement and the other Operative Documents in a notice given by BNPPLC to NAI:
•    when an Event of Default has occurred and is continuing and after the Completion Date; or
•    after a 97-10/Meltdown Event or after BNPPLC’s receipt of a Pre-lease Force Majeure Event Notice from NAI; or
•    following any change in the zoning or other Applicable Laws after the Completion Date affecting the permitted use or development of the Property that, in BNPPLC’s judgment, materially reduces the value of the Property; or
•    following any discovery of conditions or circumstances on or about the Property after the Completion Date, such as the presence of an endangered species, which are likely to substantially impede the use or development of the Property and thereby, in BNPPLC’s judgment, materially reduce the value of the Property;
provided, however, that if the Business Day so designated by BNPPLC as the Designated Sale Date is not at least thirty days after the date of such notice, the notice will be of no effect for purposes of this definition; or
     (4) the first Business Day after the commencement of any Event of Default described in clauses (G), (H) or (I) of the definition Event of Default herein that occurs because of any bankruptcy proceeding instituted by or against NAI, as debtor, under Title 11 of the United States Code; or
     (5) any date upon which the Lease terminates pursuant to subparagraph 1(B) or subparagraph 1(C) of the Lease.
     “Effective Date” means November 29, 2007.
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 9

 

 

     “Effective Rate” means, for each Period, a per annum rate determined as follows:
     (1) In the case of any Period subject to a LIBOR Period Election, the Effective Rate will equal the rate per annum determined by dividing (A) LIBOR for such Period, by (B) one hundred percent (100%) minus the Eurodollar Rate Reserve Percentage for such Period.
     (2) In the case of any Period that is not subject to a LIBOR Period Election, the Effective Rate will equal the ABR for such Period.
     (3) Notwithstanding the foregoing, for any Base Rent Period that begins on or after the Fixed Rate Lock Date applicable to a Fixed Rate Lock and that ends before or on the date such Fixed Rate Lock is terminated as provided in subparagraph 3(C) of the Lease, the Effective Rate will equal the Fixed Rate.
So long as any LIBOR Period Election remains in effect, as LIBOR or the Eurodollar Rate Reserve Percentage changes from Period to Period, the Effective Rate will be automatically increased or decreased, as the case may be, without prior notice to NAI. Also, during any period when no LIBOR Period Election or Fixed Rate Lock is in effect, as the ABR changes from Period to Period, the Effective Rate will be automatically increased or decreased, as the case may be, without prior notice to NAI.
If for any reason BNPPLC determines that it is impossible or unreasonably difficult to determine the Effective Rate with respect to a given Period in accordance with the foregoing, then the “Effective Rate” for that Period will equal any published index or per annum interest rate determined in good faith by BNPPLC 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 BNPPLC’s comparison of past eurodollar market rates to past yields on such Treasury obligations.
     “Eligible Financial Institution” means (a) a commercial bank organized under the laws of the United States, or any State thereof or the District of Columbia, and having total assets in excess of $5,000,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (“OECD”) or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having total assets in excess of $5,000,000,000; provided, that such bank is acting through a branch or agency located in the United States; (c) the central bank of any country which is a member of the OECD; and (d) a finance company, insurance company or other financial
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institution (whether a corporation, partnership or other entity, but excluding any savings and loan association) which is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business, and having total assets in excess of $5,000,000,000; provided, however, that in no event will any bank or other Person qualify as an Eligible Financial Institution at any time when it has outstanding obligations with a credit rating less than investment grade from Standard & Poor’s, a division of the McGraw-Hill Companies, or Moody’s Investors Service, Inc. or another nationally recognized rating service.
     “Environmental Cutoff Date” means the later of the dates upon which (i) the Lease terminates or NAI’s interests in the Property are sold at foreclosure as provided in Exhibit B attached to the Lease, 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 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, 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.
     “Environmental Losses” means Losses suffered or incurred by BNPPLC 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 that occurs or is alleged to have occurred on or prior to the Environmental Cutoff Date; (ii) any violation of any applicable Environmental Laws relating to the Land or the Property or to the ownership, use, occupancy or operation thereof that occurs or is alleged to have occurred in whole or in part on or prior to the Environmental Cutoff Date; (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 in whole or in part 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 Lease, any actual or alleged Hazardous Substance Activity or violation of Environmental Laws relating to the Land or 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.
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     “Environmental Report” means the May 2007 Phase I Environmental Assessment by WSP Environmental Strategies, LLC of 7301 Kit Creek Road, Research Triangle Park, NC.
     “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.
     “ERISA Termination Event” means (a) the occurrence with respect to any Plan of (1) a reportable event described in Sections 4043(b)(5) or (6) of ERISA or (2) any other reportable event described in Section 4043(b) of ERISA other than a reportable event not subject to the provision for thirty-day notice to the Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation under Section 4043(a) of ERISA, or (b) the withdrawal of NAI or any ERISA Affiliate from a Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of intent to terminate any Plan or the treatment of any Plan amendment as a termination under Section 4041 of ERISA, or (d) the institution of proceedings to terminate any Plan by the Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.
     “Escrowed Proceeds” means, subject to the exclusions specified in the next sentence, any money that is received by BNPPLC 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 (including any indirect condemnation by means of a taking of any of the Land or appurtenant easements), (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 will be deducted all expenses and costs of every type, kind and nature (including Attorneys’ Fees) incurred by BNPPLC to collect such proceeds. Notwithstanding the foregoing, “Escrowed Proceeds” will not include (A) any payment to BNPPLC by a Participant or an Affiliate of BNPPLC that is made to compensate BNPPLC for the Participant’s or Affiliate’s share of any Losses BNPPLC 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
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been applied as a Qualified Prepayment or to pay any Breakage Costs, Fixed Rate Settlement Amount 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, BNPPLC returns or pays to a third party because of BNPPLC’s good faith belief that such return or payment is required by law, (D) any money or proceeds paid by BNPPLC to NAI or offset against any amount owed by NAI, or (E) any money or proceeds used by BNPPLC in accordance with the 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 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, BNPPLC will keep the same deposited in one or more interest bearing accounts, and all interest earned on such account will 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, conduct of such Person that constitutes a breach by it of the express provisions of the Operative Documents or the Participation Agreement, as applicable, and that continues beyond any period for cure provided therein, 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) conduct of such Person or its Affiliates that has been determined to constitute willful 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.
In no event, however, will Established Misconduct include actions of any Person undertaken in good faith to mitigate Losses that such Person may suffer because of a breach or repudiation by NAI of any of the Operative Documents. Further, negligence other than Active Negligence will not in any event constitute Established Misconduct. For purposes of this definition, “conduct of a Person” will consist of (1) the conduct of any employee of that Person to the extent (and only to the extent) that the employee is acting within the scope of his employment by that Person, 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 (a) acting within the scope of the authority granted to him by such Person, and (b) neither NAI nor acting with the consent or approval of or at the request of or under the direction of NAI or NAI’s Affiliates, employees or agents. Established Misconduct of one Interested Party will not be attributed to a second Interested Party unless the second Interested Party is an Affiliate of the first, and it is understood that BNPPLC has not been authorized, and nothing in the Participation Agreement will be construed as
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authorizing BNPPLC, to act as an “agent” for any Participant as the term is used in this definition.
     “Eurocurrency Liabilities” has the meaning indicated 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 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 BNPPLC’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” means any of the following:
     (A) NAI fails to pay when due any installment of Base Rent or Administrative Fees required by the Lease, and such failure continues for three Business Days after NAI is notified in writing thereof.
     (B) NAI fails to pay the full amount of any 97-10/Prepayment when due as provided in the Construction Agreement or fails to pay the full amount of any Supplemental Payment as provided in the Purchase Agreement on the Designated Sale Date.
     (C) NAI fails to pay when first due any amount required by the Operative Documents (other than Base Rent or Administrative Fees required as provided in the Lease, any 97-10/Prepayment required as provided in the Construction Agreement or any Supplemental Payment required as provided in the Purchase Agreement) and such failure continues for ten Business Days after NAI is notified thereof.
     (D) NAI fails to cause any representation or warranty of NAI contained in any of the Operative Documents 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 definition), or NAI fails to comply with any provision of the Operative Documents (other than as described in the other clauses of this definition), and in either case does not cure such failure prior to the earlier of (A) thirty days after notice thereof is given to NAI or (B) the date any writ or order is issued for the levy or sale of any property owned by BNPPLC (including the Property) or any criminal prosecution is instituted or overtly threatened against BNPPLC 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
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which such failure may be cured by NAI will be extended for a further period (not to exceed an additional one hundred twenty days) as is 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 promptly commences to cure such failure and thereafter continuously prosecutes 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 to or beyond the Designated Sale Date.
     (E) NAI abandons any material part of the Property.
     (F) NAI or any Subsidiary of NAI fails to pay any principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event occurs or condition exists under any agreement or instrument relating to any such Indebtedness and continues after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate the maturity of such Indebtedness; or any such Indebtedness is declared by the creditor to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness is required to be made, in each case prior to the stated maturity thereof.
     (G) NAI or any Subsidiary of NAI is generally not paying its debts as such debts become due, or admits in writing its inability to pay its debts generally, or makes a general assignment for the benefit of creditors; or any proceeding is instituted by or against NAI or any Subsidiary of NAI seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding remains undismissed or unstayed for a period of sixty consecutive days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) occurs; or NAI or any Subsidiary of NAI takes any corporate action to authorize any of the actions set forth above in this clause.
     (H) Any order, judgment or decree is entered in any proceedings against NAI or any of NAI’s Subsidiaries decreeing its dissolution and such order, judgment or decree remains unstayed and in effect for more than sixty days.
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     (I) Any order, judgment or decree is entered in any proceedings against NAI or any of NAI’s Subsidiaries decreeing a divestiture of any of assets that represent a substantial part, or the divestiture of the stock of any of NAI’s Subsidiaries whose assets represent a substantial part, of the total assets of NAI and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) or which requires the divestiture of assets, or stock of any of NAI’s Subsidiaries, which have contributed a substantial part of the net income of NAI and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) for any of the three fiscal years then most recently ended, and such order, judgment or decree remains unstayed and in effect for more than sixty days.
     (J) A judgment or order for the payment of money in an amount (not covered by insurance) which exceeds $25,000,000 is rendered against NAI or any of NAI’s Subsidiaries and either (i) enforcement proceedings is commenced by any creditor upon such judgment, or (ii) within thirty days after the entry thereof, such judgment or order is not discharged or execution thereof stayed pending appeal, or within thirty days after the expiration of any such stay, such judgment is not discharged.
     (K) Any ERISA Termination Event occurs that BNPPLC determines in good faith would constitute grounds for a termination of any Plan or for the appointment by the appropriate United States district court of a trustee to administer any Plan and such ERISA Termination Event is continuing thirty days after notice to such effect is given to NAI by BNPPLC, or any Plan is terminated, or a trustee is appointed by a United States district court to administer any Plan, or the Pension Benefit Guaranty Corporation institutes proceedings to terminate any Plan or to appoint a trustee to administer any Plan.
     (L) NAI enters into any transaction which would cause any of the Operative Documents or any other document executed in connection herewith (or any exercise of BNPPLC’s rights hereunder or thereunder) to constitute a non-exempt prohibited transaction under ERISA.
     (M) NAI fails to comply with the financial covenants set forth in subparagraph 3(C) of the Closing Certificate.
     (N) Any Change in Control (as defined in subparagraph 3(A) of the Closing Certificate) shall occur.
     “Excluded Taxes” means:
     (A) taxes upon or measured by net income to the extent such taxes are payable in respect of Base Rent or other Qualified Income Payments;
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     (B) transfer or change of ownership taxes assessed because of BNPPLC’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 taxes assessed because of any Permitted Transfer under clauses (1), (4) or (5) of the definition of Permitted Transfer in this Agreement);
     (C) federal, state and local income taxes upon any amounts paid as reimbursement for or to satisfy Losses incurred by BNPPLC or any Participant to the extent, but only to the extent, such taxes are offset by a corresponding reduction of BNPPLC’s or the applicable Participant’s income taxes which are not otherwise subject to reimbursement or indemnification by NAI because of BNPPLC’s or such Participant’s deduction of the reimbursed Losses from its taxable income or because of any tax credits attributable thereto;
     (D) income taxes that are (i) payable by BNPPLC in respect of any Qualified Prepayment or any net sales proceeds paid to BNPPLC upon a sale of the Property because of Forced Recharacterization as described in subparagraph 4(C)(3) of the Lease, and (ii) offset in the same taxable period by a reduction in the taxes of BNPPLC which are not otherwise subject to reimbursement or indemnification by NAI resulting from depreciation deductions or other tax benefits available to BNPPLC only because of the refusal of the tax authorities to treat the Lease and other Operative Documents as a financing arrangement;
     (E) any withholding taxes that subparagraph 13(A) of the Lease excuses NAI from paying or requires BNPPLC to pay; and
     (F) any franchise taxes payable by BNPPLC, but only to the extent that such franchise taxes would be payable by BNPPLC even if the transactions contemplated by the Lease and the other Operative Documents were characterized for tax purposes as a mere financing arrangement and not as a lease or sale.
It is understood that if tax rates used to calculate income taxes which constitute Excluded Taxes under clause (1) of this definition are increased, the resulting increase will not be subject to reimbursement or indemnification by NAI. If, however, a change in Applicable Laws after the Effective Date, as applied to the transactions contemplated by the Operative Documents on a stand-alone basis, results in an increase in such income 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 (1) of this definition), then for purposes of the Operative Documents, the term “Excluded Taxes” will not include the actual increase in such taxes attributable to the change. Accordingly, BNPPLC or any Participant may recover any such net increase from NAI pursuant to subparagraph 5(B) of the Lease.
It is also understood that nothing in this definition of “Excluded Taxes” will prevent any Original Indemnity Payment (as defined in subparagraph 5(C)(1) of the Lease) from being paid on an
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After Tax Basis.
     “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 on 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 each day during such period on such transactions received by BNPPLC’s Parent from three Federal funds brokers of recognized standing selected by BNPPLC’s Parent.
     “Fixed Rate” means the fixed rate of interest established by BNPPLC’s execution of an Interest Rate Swap as described in subparagraph 3(B)(4) of the Lease.
     “Fixed Rate Lock” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease.
     “Fixed Rate Lock Date” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease.
     “Fixed Rate Lock Termination” means any termination in whole or in part of the Fixed Rate Swap as described in the first and second sentences of subparagraph 3(C) of the Lease.
     “Fixed Rate Lock Termination Date” means the date upon which a Fixed Rate Lock Termination is effective. In the case of a Fixed Rate Lock Termination that results from BNPPLC’s receipt of a Qualified Prepayment, the date such Qualified Prepayment is applied to reduce the Lease Balance will constitute the Fixed Rate Lock Termination Date. In the case of any Fixed Rate Lock Termination resulting from an acceleration of the Designated Sale Date as provided in clauses (2) or (3) the definition thereof in this Agreement, the Fixed Rate Lock Termination Date will constitute the Designated Sale Date.
     “Fixed Rate Lock Notice” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease, which includes a reference to the form attached as Annex 2.
     “Fixed Rate Loss” means an amount reasonably determined in good faith by the Floating Rate Payor to be its total losses and costs in connection with any Fixed Rate Lock Termination. Fixed Rate Loss will include any loss of bargain, cost of funding or, at the election of the Floating Rate Payor but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position. The Floating Rate Payor will be expected to determine the Fixed Rate Loss as of the date of the relevant Fixed Rate Lock Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter
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as is reasonably practicable. The Floating Rate Payor may (but need not) determine its Fixed Rate Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets.
     “Fixed Rate Settlement Amount” means, with respect to any Fixed Rate Lock Termination:
(a) the Market Quotation for such Fixed Rate Lock Termination, if a Market Quotation can be determined and if (in the reasonable belief of the Floating Rate Payor as the party making the determination) determining a Market Quotation would produce a commercially reasonable result; or
(b) the Fixed Rate Loss, if any, for such Fixed Rate Lock Termination if a Market Quotation cannot be determined or would not (in the reasonable belief of the Floating Rate Payor as the party making the determination) produce a commercially reasonable result.
     “Fixed Rate Swap” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease.
     “Floating Rate Payor” means BNP Paribas or any successor or assign of BNP Paribas under an Interest Rate Swap.
     “FOCB Notice” has the meaning indicated in the Construction Agreement.
     “Force Majeure Event” has the meaning indicated in the Construction Agreement.
     “Fully Subordinated or Removable” means, with respect to any Lien encumbering the Land or any appurtenant easement, that such Lien is, either by operation of Applicable Laws or by the express terms of documents which grant or create such Lien:
     (1) fully subject and subordinate to the Ground Lease and to all rights and property interests of BNPPLC under the Operative Documents; or
     (2) subject to release and removal by BNPPLC or any subsequent owner of the Property at any time after a Designated Sale Date without any requirement that BNPPLC or the subsequent owner compensate the holder of such Lien or make any other significant payment in connection with such release and removal;
provided, however, a Lien will not qualify as Fully Subordinated or Removable under clause (1) preceding if a purchase of the Land by BNPPLC pursuant to the purchase option set forth in the Ground Lease (as such option may be modified from time to time by agreement of lessor and
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lessee under the Ground Lease) will not, by operation of law or the express agreement of the holder of the Lien, effectively cut off and terminate such Lien insofar as it applies to or affects the Improvements and the Land purchased by BNPPLC; and, provided further, a Lien will not qualify as Fully Subordinated or Removable under clause (2) preceding if it provides or includes a power of sale or other right or remedy in favor of the holder of such Lien which could result in a foreclosure sale or other forfeiture of BNPPLC’s rights or interests under the Ground Lease or in the Property.
     “Funded Construction Allowance” has the meaning indicated in the Construction Agreement.
     “Funding Advances” means all advances made by BNPPLC’s Parent or any Participant to or on behalf of BNPPLC to allow BNPPLC to make the Initial Advance and to provide the Construction Allowance or maintain its investment in the Property.
     “Future Work” has the meaning indicated in the Construction 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 2(A)(4) of the Closing Certificate (except for changes with which NAI’s independent public accountants concur).
     “Governmental Authority” means (1) the United States, the state, the county, the municipality, and any other political subdivision in which the Land is located, and (2) any other nation, state or other political subdivision or agency or instrumentality thereof having or asserting jurisdiction over NAI or the Property.
     “Ground Lease” means the Amended and Restated Ground Lease (RTP Data Center) dated as of the Effective Date, under which the Land is leased from NAI to BNPPLC, as such Ground Lease may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
     “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
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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 (iv) any other material that, because of its quantity, concentration or physical or chemical characteristics, is the subject of regulation under Applicable Law or 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 Land or 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 Land or the Property to any remedial obligations under, any Environmental Laws, assuming disclosure to the applicable Governmental Authorities of all relevant facts, conditions and circumstances pertaining to the Property.
     “Improvements” means any and all (1) buildings and other real property improvements previously 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.
     “Increased Commitment” has the meaning indicated in the Construction Agreement.
     “Increased Funding Commitment” has the meaning indicated in the Construction Agreement.
     “Increased Time Commitment” has the meaning indicated in the Construction Agreement.
     “Indebtedness” of any Person means (without duplication of any item) Liabilities of such Person in any of the following categories:
     (A) Liabilities for borrowed money;
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     (B) Liabilities constituting an obligation to pay the deferred purchase price of property or services;
     (C) Liabilities evidenced by a bond, debenture, note or similar instrument;
     (D) Liabilities which (1) would under GAAP be shown on such Person’s balance sheet as a liability, and (2) are payable more than one year from the date of creation thereof (other than reserves for taxes and reserves for contingent obligations);
     (E) Liabilities constituting principal under leases capitalized in accordance with GAAP;
     (F) Liabilities arising under conditional sales or other title retention agreements;
     (G) Liabilities owing under direct or indirect guaranties of Liabilities of any other Person or otherwise constituting obligations to purchase or acquire or to otherwise protect or insure a creditor against loss in respect of Liabilities of any other Person (such as obligations under working capital maintenance agreements, agreements to keep-well, or agreements to purchase Liabilities, assets, goods, securities or services), but excluding endorsements in the ordinary course of business of negotiable instruments in the course of collection;
     (H) Liabilities (for example, repurchase agreements, mandatorily redeemable preferred stock and sale/leaseback agreements) consisting of an obligation to purchase or redeem securities or other property, if such Liabilities arises out of or in connection with the sale or issuance of the same or similar securities or property;
     (I) Liabilities with respect to letters of credit or applications or reimbursement agreements therefor;
     (J) Liabilities with respect to payments received in consideration of oil, gas, or other commodities yet to be acquired or produced at the time of payment (including obligations under “take-or-pay” contracts to deliver gas in return for payments already received and the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment);
     (K) Liabilities with respect to other obligations to deliver goods or services in consideration of advance payments therefor; or
     (L) Liabilities under any “synthetic” or other lease of property or related
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documents (including a separate purchase agreement) which obligate such Person or any of its Affiliates (whether by purchasing or causing another Person to purchase any interest in the leased property or otherwise) to guarantee a minimum residual value of the leased property to the lessor.
For purposes of this definition, the amount of Liabilities described in the last clause of the preceding sentence with respect to any lease classified according to GAAP as an “operating lease,” will 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; except that such amount will not exceed the price, as of the date a determination of Indebtedness 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 will be excused from paying rentals or other minimum lease payments that would otherwise accrue after the purchase.
Notwithstanding the foregoing, the “Indebtedness” of any Person will not include Liabilities that were incurred by such Person on ordinary trade terms to vendors, suppliers, or other Persons providing goods and services for use by such Person in the ordinary course of its business, unless and until such Liabilities are outstanding more than 90 days past the original invoice or billing date therefor.
     “Initial Advance” has the meaning indicated in the Construction Agreement.
     “Initial Lease Balance” means $2,168,974.39. Such amount equals the Lease Balance outstanding under and as defined in the Prior Operative Documents immediately before the execution of the Operative Documents, which amend and restate the Prior Operative Documents.
     “Interested Party” means each of following Persons and their Affiliates: (1) BNPPLC and its successors and permitted assigns as to the Property or any part thereof or any interest therein, (2) BNPPLC’s Parent, and (3) the Participants and their successors and permitted assigns under the Participation Agreement; provided, however, none of the following Persons will constitute an Interested Party: (a) any Person to whom BNPPLC 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 a transfer by such a Person, (b) NAI and its Affiliates, (c) any Person claiming through or under a conveyance made by NAI after any purchase by NAI of BNPPLC’s interest in the Property pursuant to the Purchase Agreement, or (d) any Applicable Purchaser designated by NAI under the Purchase Agreement who purchases the Property pursuant to a sale arranged by NAI and any Person that cannot lawfully claim an interest in the Property except through or under a conveyance from such an Applicable Purchaser.
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     “Interest Rate Swap” means an interest rate exchange transaction, entered into between BNPPLC, as the fixed rate payor, and BNP Paribas, as the swap counterparty and floating rate payor, under the then most recent form of Master Agreement published by the International Swaps and Derivatives Association, Inc., as supplemented by the definitions and such schedules, annexes, exhibits and supplements as are agreed upon by the parties thereto, pursuant to which BNP Paribas agrees to pay monthly to BNPPLC a floating rate of interest equal to LIBOR and BNPPLC agrees to pay monthly to BNP Paribas a fixed rate of interest for a term that commences on the Fixed Rate Lock Date and ends on the last day of the scheduled Term of the Lease. The notional principal amount used for any such interest rate exchange transaction will equal the Lease Balance calculated as of the date such transaction is entered into.
     “Land” means the land described in Exhibit A attached to the Closing Certificate, the Lease, the Ground Lease and the Purchase Agreement.
     “Lease” means the Amended and Restated Lease Agreement (RTP Data Center) dated as of the Effective Date between BNPPLC, as landlord, and NAI, as tenant, pursuant to which NAI has agreed to lease BNPPLC’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.
     “Lease Balance” as of any date means the amount equal to the sum of the Initial Lease Balance, plus the Initial Advance, plus the sum of all Construction Advances, Carrying Costs and other amounts added to the Outstanding Construction Allowance as provided in the Construction Agreement on or prior to such date, minus all funds actually received by BNPPLC and applied as Qualified Prepayments on or prior to such date. Under no circumstances will any payment of Base Rent or other Qualified Income Payments reduce the Lease Balance.
     “Lease Termination Damages” has the meaning indicated in subparagraph 15(A)(3)(c) of the Lease.
     “Liabilities” means, as to any Person, all indebtedness, liabilities and obligations of such Person, whether matured or unmatured, liquidated or unliquidated, primary or secondary, direct or indirect, absolute, fixed or contingent, and whether or not required to be considered pursuant to GAAP.
     “LIBOR” means, for purposes of determining the Effective Rate for any Period, the per annum rate equal to:
     (a) the offered rate for deposits in U.S. dollars as of approximately 11:00 a.m., London time, on the day that is two London Banking Days (hereinafter defined) prior to the day upon which such Period begins (the “Reset Date”), as reported:
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     (1) on Reuters Screen LIBOR01 page (or any replacement page or pages on which London interbank rates of major banks for U.S. dollars are displayed) by the Reuters service; or
     (2) on Moneyline Telerate Page 3750, British Bankers Association Interest Settlement Rates, or another news page selected by BNPPLC’s Parent if the Reuters Screen LIBOR01 page is removed from the Reuters system or changed such that, in the opinion of BNPPLC’s Parent, the interest rates shown on it no longer represent the same kind of interest rates as when the Operative Documents were executed; or
     (b) if such offered rate is for any reason unavailable, the rate per annum determined by BNPPLC’s Parent on the basis of rates offered for deposits in U.S. dollars by four major banks in the London interbank market selected by BNPPLC’s Parent (“Reference Banks”) at approximately 11:00 a.m., London time, on the day that is two London Banking Days preceding the Reset Date to prime banks in the London interbank market for a period corresponding as nearly as possible to the applicable Period. ( If this clause (b) applies, BNPPLC’s Parent will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two quotations are provided, “LIBOR” will be the arithmetic mean of the quotations. If, however, fewer than two quotations are provided, “LIBOR” will be the arithmetic mean of the rates quoted by major banks in New York selected by BNPPLC’s Parent, at approximately 11:00 a.m., New York time, on the Reset Date for loans in U.S. dollars to leading U.S. banks for a period corresponding as nearly as possible to the applicable Period.)
As used in this definition, “London Banking Day” means any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London, England.
     “LIBOR Period Election” means an election to have the Effective Rate for any Period calculated by reference to LIBOR, rather than by reference to the ABR or the Fixed Rate, and to have such period extend for approximately one month, three months or six months. The first Construction Period will be subject to a LIBOR Period Election of one month; and, subject to the limitations and qualifications set forth in this definition, NAI may make any subsequent Period subject to a LIBOR Period Election by a notice given to BNPPLC in the form attached as Annex 3 at least five Business Days prior to the commencement of such Period. After a LIBOR Period Election becomes effective, it will remain in effect for all subsequent Periods until a different election is made in accordance with the provisions of this definition and the definition of ABR Period Election above. (For purposes of the Construction Agreement and the Lease a LIBOR Period Election for any Period will also be considered the LIBOR Period Election in effect on the Effective Date, Advance Date, Base Rent Commencement Date or Base Rent Date
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upon which such Period begins.) Notwithstanding the foregoing:
  •   No LIBOR Period Election for a period of more than one month will be effective prior to the Completion Date.
 
  •   No LIBOR Period Election will be effective that would cause a Base Rent Period to extend beyond the end of the scheduled Term or beyond a Fixed Rate Lock Date.
 
  •   No LIBOR Period Election will commence or continue during any period that begins on or after the Fixed Rate Lock Date applicable to a Fixed Rate Lock and that ends before or on the date such Fixed Rate Lock is terminated as provided in subparagraph 3(C) of the Lease.
 
  •   Changes in any ABR Period Election or LIBOR Period Election will become effective only upon the commencement of a new Period.
 
  •   In the event BNPPLC determines that it would be unlawful (or any central bank or governmental authority asserts that it would be unlawful) for BNPPLC, BNPPLC’s Parent or any Participant to provide or maintain Funding Advances during a Period if the Carrying Costs or Base Rent accrued during such Period at a rate based upon LIBOR, NAI will be deemed to have made such Period subject to an ABR Period Election, not a LIBOR Period Election.
 
  •   If for any reason (including BNPPLC’s receipt of a notice from NAI purporting to make a LIBOR Period Election that is contrary to the foregoing provisions), BNPPLC is unable to determine with certainty whether a particular Period is subject to a specific LIBOR Period Election of one month, three months or six months, or if any Event of Default has occurred and is continuing on the third Business Day preceding the commencement of a particular Period, NAI will be deemed to have made an ABR Period Election for that particular Period.
     “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).
     “Liens Removable by BNPPLC” means, and is limited to, Liens encumbering the Property that are asserted (1) other than as contemplated in the Operative Documents, by BNPPLC itself or by BNPPLC’s Parent, (2) by third parties lawfully claiming through or under
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BNPPLC (which for purposes of the Operative Documents will include any judgment liens established against the Property because of a judgment rendered against BNPPLC and will also include any liens established against the Property to secure past due Excluded Taxes), or (3) by third parties claiming under a deed or other instrument duly executed by BNPPLC; provided, however, Liens Removable by BNPPLC will not include (A) any Permitted Encumbrances (regardless of whether claimed through or under BNPPLC), (B) the Operative Documents or any other document executed by BNPPLC with the knowledge of (and without objection by) NAI or NAI’s counsel contemporaneously with the execution and delivery of the Operative Documents, (C) Liens which are neither lawfully claimed through or under BNPPLC (as described above) nor claimed under a deed or other instrument duly executed by BNPPLC, (D) Liens claimed by NAI or claimed through or under a conveyance made by NAI other than NAI’s conveyance of the leasehold estate to BNPPLC under the Ground Lease, (E) Liens arising because of BNPPLC’s compliance with Applicable Law, the Operative Documents, Permitted Encumbrances 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) BNPPLC’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 any Applicable Purchaser does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
     “Local Impositions” means all sales, excise, ad valorem, gross receipts, business, transfer, stamp, occupancy, rental and other taxes (other than taxes on net income and corporate franchise taxes), levies, fees, charges, surcharges, assessments, interest, additions to tax, or penalties imposed by the State of North Carolina or any agency or political subdivision thereof upon BNPPLC or any owner of the Property or any part of or interest in the Property because of (i) the Lease or other Operative Documents, (ii) the status of record title to the Property, (iii) the ownership, leasing, occupancy, sale or operation of the Property or any part thereof or interest therein, or (iv) the Permitted Encumbrances; excluding, however, Excluded Taxes. “Local Impositions” will include any real estate taxes imposed because of a change of use or ownership of the Property resulting from, or occurring on or prior to the date of, any sale by BNPPLC pursuant to the Purchase Agreement.
     “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 of settlement and other costs and expenses (including Attorneys’ Fees and the fees of outside
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accountants and environmental consultants), of any and every kind or character, foreseeable and unforeseeable, liquidated and contingent, proximate and remote, known and unknown.
     “Market Quotation” means, with respect to any Fixed Rate Lock Termination, an amount determined by the Floating Rate Payor on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid by the Floating Rate Payor in consideration of an agreement between it and the quoting Reference Market-maker to enter into a transaction (the “Replacement Transaction”) that would have the effect of preserving for the Floating Rate Payor the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) that would, but for the occurrence of the relevant Fixed Rate Lock Termination, have been required under the Fixed Rate Swap. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The Floating Rate Payor (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on the effective date of or as soon as reasonably practicable after the relevant Fixed Rate Lock Termination. The date and time as of which those quotations are to be obtained will be selected in good faith by the Floating Rate Payor. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations will be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Fixed Rate Lock Termination cannot be determined.
     “Material Adverse Effect” means a material adverse effect on (a) the assets, operations, financial condition or businesses of NAI, (b) the ability of NAI to perform any of its obligations under the Operative Documents, (c) the rights of or benefits available to BNPPLC under the Operative Documents, (d) the value, utility or useful life of the Property or (e) the priority, perfection or status of any of BNPPLC’s interests in the Property or in any of the Operative Documents.
     “Maximum Construction Allowance” has the meaning indicated in the Construction Agreement.
     “Maximum Remarketing Obligation” has the meaning indicated in the Purchase Agreement.
     “Minimum Insurance Requirements” means the insurance requirements outlined in Annex 4 attached to this Agreement.
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     “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 Delaware corporation.
     “NAI’s Estimate of Force Majeure Excess Costs” has the meaning indicated in the Construction Agreement.
     “NAI’s Estimate of Force Majeure Delays” has the meaning indicated in the Construction Agreement.
     “NAI’s Initial Remarketing Right” has the meaning indicated in the Purchase Agreement.
     “Notice of NAI’s Intent to Terminate” has the meaning indicated in the Construction Agreement.
     “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” has the meaning indicated in the Construction Agreement.
     “Notice of Termination by NAI” has the meaning indicated in the Construction Agreement.
     “Operative Documents” means the Closing Letter, the Closing Certificate, the Ground Lease, the Lease, the Construction Agreement, the Purchase Agreement and this Common Definitions and Provisions Agreement.
     “Outstanding Construction Allowance” has the meaning indicated in the Construction Agreement.
     “Owner’s Election to Continue Construction” has the meaning indicated in the Construction Agreement.
     “Participant” means any Person other than BNPPLC that from time to time, by executing the Participation Agreement or supplements as contemplated therein, becomes a party to the Participation Agreement and thereby agrees to participate in all or some of the risks and rewards to BNPPLC of the Operative Documents; provided, however, no such Person will qualify as a Participant for purposes of the Operative Documents unless (i) such Person is approved to be a Participant by NAI or (ii) such Person becomes a Participant when an Event of Default has occurred and is continuing. As of the Effective Date, NAI has approved only BANK OF
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AMERICA, N.A.; GOLDMAN SACHS CREDIT PARTNERS L.P.; JPMORGAN CHASE BANK, NATIONAL ASSOCIATION; KEYBANK NATIONAL ASSOCIATION; MORGAN STANLEY BANK; SUMITOMO MITSUI BANKING CORPORATION; and WELLS FARGO BANK, N.A. (all of which are original parties to the Participation Agreement). BNPPLC may, however, from time to time request NAI’s approval for other prospective Participants. NAI will not unreasonably withhold or delay any approval required for any prospective Participant which is an Eligible Financial Institution. However, as to any prospective Participant that is not already a party to the Participation Agreement or an Eligible Financial Institution, NAI may withhold such approval in its sole discretion. Further, it is understood that if giving such approval will increase NAI’s liability for withholding taxes or other taxes not constituting Excluded Taxes under tax laws or regulations then in effect, NAI may reasonably refuse to give such approval.
     “Participation Agreement” means the Participation Agreement (RTP Data Center) dated as of the Effective Date, pursuant to which BANK OF AMERICA, N.A.; GOLDMAN SACHS CREDIT PARTNERS L.P.; JPMORGAN CHASE BANK, NATIONAL ASSOCIATION; KEYBANK NATIONAL ASSOCIATION; MORGAN STANLEY BANK; SUMITOMO MITSUI BANKING CORPORATION; and WELLS FARGO BANK, N.A. are agreeing with BNPPLC to participate in the risks and rewards to BNPPLC of the 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 will expressly make NAI a third party beneficiary of each Participant’s obligations thereunder to make advances to BNPPLC in connection with Construction Advances under the Construction Agreement, NAI’s consent will be required to any amendment of the Participation Agreement that limits or excuses such obligations.
     “Period” means a Construction Period or Base Rent Period.
     “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 BNPPLC at the request of or with the consent of NAI, (iii) any Liens securing the payment of Local Impositions which are not delinquent or claimed to be delinquent or which are being contested in accordance with subparagraph 5(A) of the Lease, (iv) statutory liens, if any, in the nature of contractors’, mechanics’ or materialmen’s liens for amounts not past due or claimed to be past due for more than thirty days or which are being contested in accordance with subparagraph 11(B) of the Lease, (v) Liens which are Fully Subordinated or Removable, and (vi) any documents or maps which NAI executes and records, with the consent of BNPPLC as provided in subparagraph 4(C) of the Closing Certificate, to establish a condominium regime that covers the Property and other adjacent properties.
     “Permitted Hazardous Substance Use” means the use, generation, storage and offsite
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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 will not:
     (1) exceed that reasonably required for the construction of the Construction Project in accordance with the Construction Agreement or for the use and operation of the Property for the purposes expressly permitted under subparagraph 2(A) of the 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.
Further, notwithstanding anything to the contrary herein contained, Permitted Hazardous Substance Use will not include any use of the Property (including as a landfill, incinerator or other waste disposal facility) in a manner that requires a treatment, storage or disposal permit under 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..
     “Permitted Hazardous Substances” means Hazardous Substances used and reasonably required for the construction of the Construction Project or for the use and operation of the Property by NAI and its permitted subtenants and assigns for the purposes expressly permitted by subparagraph 2(A) of the 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 will include usual and customary office and janitorial products.
     “Permitted Transfer” means any one or more of the following:
     (1) the creation or conveyance by BNPPLC of rights and interests in favor of Participants pursuant to the Participation Agreement;
     (2) any lien, security interest or assignment covering the Property or the Rents which is granted by BNPPLC in favor of Participants or an agent appointed for them to secure their rights under the Participation Agreement, and any subsequent assignment or conveyance made to accomplish a foreclosure of such lien or security interest, provided
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that such lien, security interest or assignment and any such subsequent assignment or conveyance are all made expressly subject to the rights of NAI under the Operative Documents;
     (3) other than as described in the preceding clauses, any conveyance to BNPPLC’s Parent or to any Qualified Affiliate of BNPPLC of all or any interest in or rights with respect to the Property or any portion thereof, provided that NAI and Participants must be notified before any such conveyance to BNPPLC’s Parent or a Qualified Affiliate which will be recorded in the real property records of the county in which the Land is situated;
     (4) any assignment or conveyance by BNPPLC requested by NAI or required by any Permitted Encumbrance, by the Purchase Agreement or by Applicable Laws; or
     (5) any assignment or conveyance after a Designated Sale Date on which NAI does not purchase or cause an Applicable Purchaser to purchase BNPPLC’s interest in the Property and, if applicable, after the expiration of the thirty day cure period specified in Paragraph 3(A) 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” has the meaning indicated on page 2 of the 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 during the preceding six years and which is covered by Title IV of ERISA, including any Multiemployer Plan.
     “Pre-lease Casualty” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Delays” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Event” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Event Notice” has the meaning indicated in the Construction Agreement.
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     “Pre-lease Force Majeure Excess Costs” has the meaning indicated in the Construction Agreement.
     “Pre-lease Force Majeure Losses” has the meaning indicated in the Construction Agreement.
     “Prime Rate” means the prime interest rate or equivalent charged by BNPPLC’s Parent in the United States of America as announced or published by BNPPLC’s Parent from time to time, which need not be the lowest interest rate charged by BNPPLC’s Parent. If for any reason BNPPLC’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 BNPPLC will 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 Closing Certificate and Agreement” means the Closing Certificate and Agreement dated as of July 17, 2007 between NAI and BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Closing Certificate.
     “Prior Common Definitions and Provisions Agreement” means the Common Definitions and Provisions Agreement dated as of July 17, 2007 between NAI and BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by this Agreement.
     “Prior Construction Agreement” means the Construction Management Agreement dated as of July 17, 2007 between NAI and BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Construction Agreement.
     “Prior Ground Lease” means the Ground Lease dated as of July 17, 2007 from NAI to BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Ground Lease.
     “Prior Lease” means the Lease Agreement dated as of July 17, 2007 between NAI (as tenant) and BNPPLC (as landlord), as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Lease.
     “Prior Operative Documents” means the documents defined as “Operative Documents” in the Prior Common Definitions and Provisions Agreement.
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     “Prior Purchase Agreement” means the Purchase Agreement dated as of July 17, 2007 between NAI and BNPPLC, as amended prior to the Effective Date, which is being amended, restated and replaced entirely by the Purchase Agreement.
     “Prior Work” has the meaning indicated in the Construction Agreement.
     “Projected Cost Overruns” has the meaning indicated in the Construction 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, but the leasehold estate conveyed to BNPPLC under the Ground Lease will be included.
     “Purchase Agreement” means the Amended and Restated Purchase Agreement (RTP Data Center) dated as of the Effective Date between BNPPLC 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 Option” has the meaning indicated in the Purchase Agreement.
     “Qualified Affiliate” means any Person that, like BNPPLC, (i) is one hundred percent (100%) owned, directly or indirectly, by BNPPLC’s Parent or any successor of such bank, (ii) can make (and has in writing made) the same representations to NAI that BNPPLC has made in subparagraphs 4(A) and 4(B) of the Closing Certificate (except that it need not be incorporated in or qualified to do business in Delaware), and (iii) is an entity organized under the laws of the State of Delaware or another state within the United States of America.
     “Qualified Income Payments” means: (A) Base Rent; (B) payments that are made to BNPPLC only because the following amounts are capitalized (i.e., added to the Lease Balance) as described in subparagraph 3 of the Construction Agreement: the Upfront Fees, the Arrangement Fee, Administrative Fees, Commitment Fees, Increased Cost Charges and Capital Adequacy Charges; (C) payments of the following made to BNPPLC to satisfy the Lease: Administrative Fees, Increased Cost Charges and Capital Adequacy Charges; (D) any interest paid to BNPPLC or any Participant pursuant to subparagraph 3(G) of the Lease; and (E) payments by BNPPLC to Participants required under the Participation Agreements because of BNPPLC’s receipt of payments described in the preceding clauses (A) through (D).
     “Qualified Prepayments” means any payments received by BNPPLC 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 (including any indirect condemnation by means of a taking of any of the Land or appurtenant easements), (3) because of any judgment,
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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. For the purposes of determining the amount of any Qualified Prepayment and other amounts dependent upon Qualified Prepayments (e.g., the Lease Balance, the Outstanding Construction Allowance and the Break Even Price):
     (i) there will be deducted all expenses and costs of every kind, type and nature (including taxes and Attorneys’ Fees) incurred by BNPPLC with respect to the collection or application of such payments;
     (ii) Qualified Prepayments will not include any payment to BNPPLC by a Participant or an Affiliate of BNPPLC that is made to compensate BNPPLC for the Participant’s or Affiliate’s share of any Losses BNPPLC may incur as a result of any of the events described in the preceding clauses (1) through (4);
     (iii) Qualified Prepayments will not include any payments received by BNPPLC that BNPPLC has paid or is obligated to pay to NAI for the repair, restoration or replacement of the Property or that BNPPLC is holding as Escrowed Proceeds in accordance with the Paragraph 10 of the Lease or other provisions of the Operative Documents;
     (iv) payments described in the preceding clauses (i) through (iii) will be considered as Escrowed Proceeds, not Qualified Prepayments, until they are actually applied as Qualified Prepayments by BNPPLC as provided in Paragraph 10 of the Lease; and
     (v) in no event will interest that accrues under the Purchase Agreement on a past due Supplemental Payment constitute a Qualified Prepayment.
For purposes of computing the total Qualified Prepayments (and other amounts dependent upon Qualified Prepayments, such as the Lease Balance, the Outstanding Construction Allowance and the Break Even Price) paid to or received by BNPPLC 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 BNPPLC as provided in the Paragraph 10 of the Lease.
     “Real Property” has the meaning indicated on page 2 of the Lease.
     “Reimbursable Construction-Period Costs” has the meaning indicated in the Construction Agreement.
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 35

 

 

     “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.
     “Rent” means the Base Rent and all Additional Rent.
     “Responsible Financial Officer” means the chief financial officer, the controller, the treasurer or the assistant treasurer of NAI.
     “Rolling Four Quarters Period” has the meaning indicated in subparagraph 3(A) of the Closing Certificate.
     “Scope Change” has the meaning indicated in the Construction Agreement.
     “Spread” means, for each Construction Period and for 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 of the date (in this definition, the “Spread Test Date”) that is two Business Days prior to such period by reference to the pricing grid below, based upon the ratio calculated by dividing (1) Consolidated EBITDA for the then latest Rolling Four Quarters Period that ended prior to (and for which NAI has reported earnings as necessary to compute Consolidated EBITDA) into (2) the Consolidated Debt for Borrowed Money as of the end of such Rolling Four Quarters Period. In each case, the Spread will be established at the Level in the pricing grid below which corresponds to such ratio; provided, that:
     (a) promptly after earnings are reported by NAI for the latest quarter in any Rolling Four Quarters Period, NAI must notify BNPPLC of any resulting change in the Spread under this definition, and no reduction in the 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 BNPPLC with a written notice setting forth and certifying the calculation under this definition that justifies the reduction;
     (b) if Carrying Costs are understated or Base Rent is underpaid for any Period because of any misstatement, subsequently discovered, of Consolidated EBITDA or Consolidated Debt for Borrowed Money, BNPPLC will be entitled to collect from NAI all additional payments that would have been expected under the Operative Documents but for the misstatement, together with interest on each such additional payment computed at the Default Rate from the date it would have been expected to the date it is
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 36

 

 

actually paid; and
     (c) notwithstanding anything to the contrary in this definition, on any date when an Event of Default has occurred and is continuing, the Spread will equal the Default Rate less the Effective Rate.
         
    Ratio of Consolidated Debt for    
    Borrowed Money to    
Levels   Consolidated EBITDA   Spread
Level I
   less than 0.5   35.0 basis points
Level II
   greater than or equal to 0.5, but less than 1.0   45.0 basis points
Level III
   greater than or equal to 1.0, but less than 1.5   55.0 basis points
Level IV
   greater than or equal to 1.5, but less than 2.0   70.0 basis points
Level IV
   greater than or equal to 2.0   85.0 basis points
All determinations of the Spread by BNPPLC will, in the absence of clear and demonstrable error, be binding and conclusive for purposes of the Operative Documents. Further BNPPLC may, but will not be required, to rely on the determination of the Spread set forth in any notice delivered by NAI as described above in clause (a) of this definition.
     “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” has the meaning indicated in the Purchase Agreement.
     “Supplemental Payment Obligation” has the meaning indicated in the Purchase Agreement.
     “Tangible Personal Property” has the meaning indicated on page 2 of the Lease.
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 37

 

 

     “Target Completion Date” has the meaning indicated in the Construction Agreement.
     “Term” has the meaning indicated in subparagraph 1(A) of the Lease.
     “Termination of NAI’s Work” has the meaning indicated in the Construction Agreement.
     “Third Party Contract” has the meaning indicated in the Construction Agreement.
     “Third Party Contract/Termination Fees” has the meaning indicated in the Construction 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, 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 exceeds the market value of all Plan assets allocable to such benefit liabilities, as determined on the most recent valuation date of the Plan and in accordance with the provisions of ERISA for calculating the potential liability of NAI or any ERISA Affiliate under Title IV of ERISA.
     “Upfront Fees” has the meaning indicated in the Construction Agreement.
     “Work” has the meaning indicated in the Construction Agreement.
     “Work/Suspension Event” has the meaning indicated in the Construction Agreement.
     “Work/Suspension Notice” has the meaning indicated in the Construction Agreement.
     “Work/Suspension Period” has the meaning indicated in the Construction Agreement.
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 38

 

 

ARTICLE II — SHARED PROVISIONS
     The following provisions will apply to and govern the construction of this Agreement and the other Operative Documents (including attachments), except to the extent (if any) a clear, contrary intent is expressed herein or therein:
     1) Notices. Any provision of (1) any of the Operative Documents, (2) any other document which references this provision for purposes of establishing notice requirements (in this provision, a “Related Document”), or (3) any Applicable Law, that makes reference to any required payment from NAI or BNPPLC to the other or that makes reference to the sending, mailing or delivery of any notice or demand will be subject to the following provisions (except that any notice given by BNPPLC to satisfy any statutory requirement, including any notice of eviction or foreclosure, will be considered sufficient if it satisfies the statutory requirements applicable to the notice, regardless of whether the notice or payment satisfies the following provisions):
     (i) All Rent and other amounts required to be paid by NAI to BNPPLC must be paid to BNPPLC in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
BNP Paribas — New York Branch
Favor: BNP Paribas Leasing Corporation
ABA 026 007 689
/AC/ 0200-517000-070-78
Reference: Network Appliance, Inc./RTP Data Center Lease
or at such other place and in such other manner as BNPPLC may designate in a notice to NAI.
     (ii) All advances paid to NAI by BNPPLC under the Construction Agreement or in connection therewith will be paid by wire transfer to:
Wells Fargo Bank
San Francisco, CA
ABA#121000248
Acct#4311-790562
Account of: Network Appliance
Reference: BNP Lease
or at such other place and in such other manner as NAI may reasonably designate from
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 39

 

 

time to time by notice to BNPPLC signed by a Responsible Financial Officer of NAI.
     (iii) All notices, demands, approvals, consents and other communications to be made under any Operative Document or Related Document to or by the parties thereto must, to be effective for purposes thereof, be in writing. Notices, demands and other communications required or permitted under any Operative Document or Related Document must be given by any of the following means: (A) personal service (including local and overnight courier), with proof of delivery or attempted delivery retained; (B) electronic communication, whether by electronic mail 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 will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to clause (C) will be deemed received five days following deposit in the mail. Notices, demands and other communications required or permitted by any Related Document are to be sent to the addresses set forth therein; and notices, demands and other communications required or permitted by under any Operative Document are to be sent to the following addresses (or in the case of communications to Participants, at the addresses set forth in Schedule 1 to the Participation Agreement):
Address of BNPPLC:
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Address of NAI:
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 40

 

 

With a copy to:
Network Appliance, Inc.
495 East Java Drive
Sunnyvale, California 94089
Attention: Mr. Thom Bryant
Telecopy: (408)-822-4463
However, any party to any Operative Document or Related Document may change its address above or in the Related Document, as applicable, by written notice to the other parties to such Operative Document or Related Document given in accordance with this provision.
     2. Severability. If any term or provision of any Operative Document or the application thereof is to any extent 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, will not be affected thereby.
     3. No Merger. There will be no merger of the Lease or of the leasehold estate created by the Lease or of the mortgage and security interest granted in subparagraph 4(C)(1) of the 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 Lease or the leasehold estate created thereby or such mortgage and security interest 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 has occurred. There will 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 rights and options granted by the Purchase Agreement 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 has occurred.
     4. No Implied Waiver. The failure of any party to any Operative Document to insist at any time upon the strict performance of any covenant or agreement therein or to exercise any option, right, power or remedy contained therein will 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 will not prevent a similar subsequent act from constituting a violation. Any express waiver of any provision of any Operative Document will 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 will be deemed to have been made unless expressed in writing and signed by the party to be bound by
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 41

 

 

the waiver. A receipt by any party to any Operative Document of any payment thereunder (including the receipt by BNPPLC of any Rent paid under the Lease) with knowledge of the breach by another party of any covenant or agreement contained in that or any other Operative Document will not be deemed a waiver of such breach.
     5. Entire and Only Agreements. The Operative Documents supersede any prior negotiations and agreements between BNPPLC and NAI concerning the Property, and no amendment or modification of any Operative Document will 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 will 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 created by the Operative Documents and as to all notices expressly required by the Operative Documents.
     8. Governing Law. Each Operative Document will be governed by and construed in accordance with the laws of the State of North Carolina without regard to conflict or choice of laws principles that might require the application of the laws of another jurisdiction.
     9. Paragraph Headings. The paragraph and section headings contained in the Operative Documents are for convenience only and will in no way enlarge or limit the scope or meaning of the various and several provisions thereof.
     10. Negotiated Documents. All 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 will 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 Agreement, but is defined in another Operative Document, will 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 will be held and construed to include any other gender, and words in the singular number will be held to include the plural and vice versa, unless the context otherwise requires.
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 42

 

 

References in any Operative Document to Paragraphs, subparagraphs, Sections, subsections or other subdivisions 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 refer to the corresponding Schedule or Exhibit attached to that Operative Document, which are made a part thereof by such reference. All capitalized terms used in each Operative Document which refer to other documents will 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 BNPPLC or NAI is a party or intended beneficiary, without its consent. All accounting terms used but not specifically defined in any Operative Document will 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, and the words “include”, “including” and similar terms will be construed as if followed by “without limitation to”. The rule of ejusdem generis will not be applied to limit the generality of a term in any of the Operative Documents when followed by specific examples. When used to qualify any representation or warranty made by a Person, the phrases “to the knowledge of [such Person]” or “to the best knowledge of [such Person]” are intended to mean only that such Person does not have knowledge of facts or circumstances which make the representation or warranty false or misleading in some material respect; such phrases are not intended to suggest that the Person does indeed know the representation or warranty is true.
     13. Execution in Counterparts. To facilitate execution, each of the Operative Documents may be executed in multiple identical counterparts. It will 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, will collectively constitute a single instrument. But it will not be necessary in making proof of any of the Operative Documents to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties to such document. Any signature page may be detached from one counterpart and then attached to a second counterpart with identical provisions without impairing the legal effect of the signatures on the signature page. Signing and sending a counterpart (or a signature page detached from the counterpart) by facsimile or other electronic means to another party will have the same legal effect as signing and delivering an original counterpart to the other party. A copy (including a copy produced by facsimile or other electronic means) of any signature page that has been signed by or on behalf of a party to any of the Operative Documents will be as effective as the original signature page for the purpose of
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 43

 

 

proving such party’s agreement to be bound.
     14. Not a Partnership, Etc. Nothing in any Operative Document is intended to create any partnership, joint venture, or other joint enterprise between NAI and BNPPLC or any other Interested Party.
     15. No Fiduciary Relationship Intended. Neither the execution of the Operative Documents or other documents referenced in this Agreement nor the administration thereof by BNPPLC will create any fiduciary obligations of BNPPLC (or any other Interested Party) to NAI. Moreover, BNPPLC and NAI disclaim any intent to create any fiduciary or special relationship between themselves (or on the part of any other Interested Party) under or by reason of the Operative Documents or the transactions described therein or any other documents or agreements referenced therein.
     16. Amendment and Restatement of Prior Agreement. This Agreement amends, restates and replaces entirely the Prior Common Definitions and Provisions Agreement.
[The signature pages follow.]
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Page 44

 

 

     IN WITNESS WHEREOF, this Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) dated as of November 29, 2007]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Common Definitions
and Provisions Agreement (RTP Data Center) – Signature Page

 

 

Annex 1
Notice of ABR Period Election
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) dated as of November 29, 2007, between you, BNP Paribas Leasing Corporation, and the undersigned, Network Appliance, Inc. This letter constitutes notice of our election to make the first Construction Period or Base Rent Period beginning on or after                     , 20___ subject to an ABR Period Election.
     We understand that until a different election becomes effective as provided in definitions of “ABR Period Election” and “LIBOR Period Election” in the Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center), all subsequent Periods will also be subject to an ABR Period Election.
NOTE: YOU ARE ENTITLED TO DISREGARD THIS NOTICE IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF THE ABR PERIOD ELECTION IS LESS THAN FIVE 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.
                 
 
                
    NETWORK APPLIANCE, INC., a Delaware corporation    
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
[cc all Participants]

 

 

Annex 2
Fixed Rate Lock Notice
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) dated as of November 29, 2007, between you, BNP Paribas Leasing Corporation, and the undersigned, Network Appliance, Inc.. By this letter, which is given pursuant to subparagraph 3(B)(4) of the Lease, NAI requests that BNPPLC promptly establish a Fixed Rate for a notional amount equal to the Lease Balance as of the date of this letter for use in the calculation of the Effective Rate for all Base Rent Periods commencing on or after the following Fixed Rate Lock Date:                     , 20___.
     As contemplated in the conditions set forth in subparagraph 3(B)(4) of the Lease, such Fixed Rate Lock Date is the first Business Day of a calendar month which falls after the projected Base Rent Commencement Date; such Fixed Rate Lock Date does not fall prior to the end of any Base Rent Period which has commenced or will commence before BNPPLC receives this notice; and NAI expects BNPPLC to receive this notice more than ten days prior to such Fixed Rate Lock Date.
     In an earlier phone conversation today between a representative of NAI and                      at the New York Branch of BNP Paribas, NAI requested an estimate from BNP Paribas of the Fixed Rate that would be established by BNPPLC and BNP Paribas entering into an Interest Rate Swap. The estimate provided by telephone was:                      percent (___%) per annum.
     By this letter, NAI confirms that it will accept such a rate or any lower rate as the Fixed Rate for purposes of the Lease.
NOTE: BNPPLC will be entitled to disregard this notice if the conditions to a Fixed Rate Lock, as specified in subparagraph 3(B)(4) of the Lease, have not been satisfied. However, NAI requests that BNPPLC notify NAI immediately if for any reason BNPPLC believes this notice will not be effective.

 

 

                 
 
                
    NETWORK APPLIANCE, INC., a Delaware corporation    
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
[cc all Participants]
Annex 2 – Page 2

 

 

Annex 3
Notice of LIBOR Period Election
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) dated as of November 29, 2007, between you, BNP Paribas Leasing Corporation, and the undersigned, Network Appliance, Inc.. This letter constitutes notice of our election to make the first Construction Period or Base Rent Period beginning on or after                     , 20___ subject to a LIBOR Period Election of                      month(s).
     We understand that until a different election becomes effective as provided in definitions of “ABR Period Election” and “LIBOR Period Election” in the Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center), all subsequent Periods will also be subject to the same LIBOR Period Election.
NOTE: YOU ARE 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 AMENDED AND RESTATED COMMON DEFINITIONS AND PROVISIONS AGREEMENT (RTP DATA CENTER), OR IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF THE LIBOR PERIOD ELECTION IS LESS THAN FIVE 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.
                 
 
                
    NETWORK APPLIANCE, INC., a Delaware corporation    
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
[cc all Participants]

 

 

Annex 4
Minimum Insurance Requirements
A. PROVISIONS APPLICABLE BOTH BEFORE AND AFTER THE COMPLETION DATE.
     1. Other Requirements Not Affected: The insurance coverages required by this Annex represent minimum requirements of BNPPLC and other Interested Parties and are not to be construed to modify or limit NAI’s indemnities or other agreements in the Agreement to which this Annex is attached or in any other Operative Document. Such required coverages do not constitute a representation or determination by BNPPLC of the minimum insurance coverages NAI should maintain for its own protection.
     2. Requirements Apply Only to the Property: Further, the insurance coverages required by this Annex apply only to the Property, it being understood that nothing in this Annex is intended to impose minimum insurance requirements upon NAI with respect to other properties owned or leased by NAI.
     3. Failure to Obtain: Failure of BNPPLC to demand certificate or other evidence of full compliance with these insurance requirements, or failure of BNPPLC to identify a deficiency from evidence that is provided, will not be construed as a waiver of NAI’s obligation to maintain required insurance.
     4. Copies of Policies: NAI must provide to BNPPLC, at the offices of NAI, copies of all insurance policies required herein within ten (10) days after receipt of a request for such copies from BNPPLC or as soon as practicable if policies are in the process of being issued by the applicable insurer. Such copies must be certified as complete and correct by an authorized representative of the applicable insurer, subject to availability from the insurance company.
     5. Inconsistent Endorsements. The insurance policies maintained to comply with these requirements will contain no endorsements that restrict, limit, or exclude coverages in any manner that is inconsistent with these express requirements without the prior express written approval of BNPPLC.
     6. Limits of Liability. The limits of liability necessary to satisfy these requirements may be provided by a single policy of insurance or by a combination of primary and umbrella/excess policies, but in no event will the total limits of liability available for any one occurrence or accident be less than the amount required herein.
     7. Additional Insured Status. Additional insured status will be provided in favor
Annex 4 – Page 1

 

 

of BNPPLC and other Interested Parties on all liability insurance required herein except workers’ compensation and employer’s liability. Such additional insured status will be provided on a basis that neither limits coverage to the additional insured by reason of its negligence (sole or otherwise) nor excludes coverage for completed operations with respect to construction of the Improvements.
     8. Primary Liability. The insurance policies maintained to comply with these requirements will be primary to all insurance available to BNPPLC and other Interested Parties, collectively or individually, with BNPPLC and other Interested Parties’ insurance being excess, secondary and non-contributing (except in the case of workers’ compensation and employer’s liability insurance). Where necessary, coverage will be endorsed to provide such primary liability.
B. PROVISIONS APPLICABLE BEFORE THE COMPLETION DATE.
     1. General Terms and Conditions.
A. Definitions: For purposes of this Annex:
“Construction Period Policies” means insurance policies that satisfy the minimum requirements set forth in this Annex and that NAI has obtained or required its Contractors to obtain with respect to the Property prior to the Completion Date.
“Contractor” will include subcontractors of any tier.
“ISO” means Insurance Services Office.
B. Status and Rating of Insurance Company. All insurance coverages required herein prior to the Completion Date will be written through insurance companies admitted to do business in the State of North Carolina and rated upon each renewal no less than A-: VII in the then most current edition of A.M. Best’s Key Rating Guide.
C. Waiver of Subrogation. All insurance coverages carried by NAI with respect to the Construction Project, whether required herein or not, will provide a waiver of subrogation in favor of BNPPLC and other Interested Parties.
D. Release and Waiver: Without limiting other waivers or provisions in favor of BNPPLC and other Interested Parties in any of the Operative Documents or other attachments thereto, NAI hereby releases, and agrees to cause all Contractors performing any Work prior to the Completion Date (other than subcontractors providing goods and/or
Annex 4 – Page 2

 

 

services with a value of less than $100,000) to release, BNPPLC and all other Interested Parties from any and all claims or causes of action whatsoever that NAI and/or such Contractors might otherwise now or hereafter have resulting from or in any way connected with any loss covered by insurance, whether required herein or not, or which would have been covered by insurance required herein but for a failure of NAI and/or its Contractors to maintain such insurance.
E. Initial Insurance Representations to BNPPLC and Other Interested Parties: NAI represents, acknowledges and agrees that:
     1. Any Construction Period Policies not previously obtained will be obtained by NAI (or by the primary Contractor engaged by NAI to perform the Work), and the initial premiums for all Construction Period Policies will be paid, before NAI requests Construction Advances that cause the Lease Balance to exceed $2,000,000; and notwithstanding anything to the contrary in the Construction Agreement, BNPPLC may refuse to fund any Construction Advances that would cause the Lease Balance to exceed $2,000,000 prior to such time as BNPPLC is satisfied that NAI has obtained and paid the premiums for the Construction Period Policies. Moreover, in the case of the Builder’s Risk Policy, the premium must be paid or prepaid for the entire period through the projected Completion Date before the Lease Balance exceeds $2,000,000.
     2. The coverages provided by the Construction Period Policies will not be terminated or modified to reduce, limit or qualify coverages in any material respect without BNPPLC’s prior written consent in each case by reason of any act or omission on the part of NAI or anyone acting for or authorized to act for NAI (including any Contractor engaged by NAI to obtain the Construction Period Policies for NAI). Without limiting the foregoing, NAI will not do or authorize any act or omission that could cause the coverage provided with respect to any Improvements by the Builder’s Risk Policy to expire or lapse before the Completion Date.
     3. NAI must notify BNPPLC with reasonable promptness of any possible damage claims known to NAI that NAI believes are, individually or taken together, reasonably likely to a exceed seventy-five percent (75%) of any aggregate limit of the Builder’s Risk Policy required herein.
     4. NAI will endeavor in good faith to cause each certificate of insurance which is provided to BNPPLC by an insurer, or its authorized
Annex 4 – Page 3

 

 

representative, at the request of NAI in regard to any Construction Period Policies to include the following express provision:
This is to certify that the policies of insurance described herein have been issued to the Insured for whom this certificate is executed and are in force at this time. In the event of cancellation or non-renewal of coverage affecting the certificate holder, other than by reason of nonpayment of premium, thirty (30) days prior written notice will be given to the certificate holder by certified mail or registered mail, return receipt requested. In the event of cancellation or non-renewal of coverage affecting the certificate holder by reason of nonpayment of premium, ten (10) days prior written notice will be given to the certificate holder by certified mail or registered mail, return receipt requested.
It is understood, however, that an insurer issuing such a certificate may decline to include the foregoing statement in the certificate, in which case NAI will instead deliver the certificate to BNPPLC with a cover letter from NAI itself which states substantially as follows:
Enclosed is a certificate of insurance, which has been issued by an insurer or its authorized representative, and which we are providing to you to confirm that policies described in the certificate have been issued to NAI or another insured named in the certificate and are in force at this time. NAI also certifies to you that such policies have been issued, and in the event of any cancellation, non-renewal, or reduction in coverage affecting you (BNP Paribas Leasing Corporation) or other Interested Parties, NAI will give you thirty (30) days prior written notice by certified mail or registered mail, return receipt requested.
     5. NAI will also endeavor in good faith to cause each Construction Period Policy to be endorsed to provide, in effect, that (A) in the event of cancellation, non-renewal, or reduction in coverage affecting BNPPLC, other than by reason of nonpayment of premium, thirty (30) days prior written notice will be given by the insurer to BNPPLC by certified mail or registered mail, return receipt requested; and (B) in the event of cancellation, non-renewal, or reduction in coverage affecting BNPPLC by reason of nonpayment of premium, ten (10) days prior written
Annex 4 – Page 4

 

 

notice will be given by the insurer to BNPPLC by certified mail or registered mail, return receipt requested.
     2. Commercial General Liability Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain commercial general liability insurance in accordance with the following requirements:
A. Coverage: Such insurance will cover liability (as to claims covered by the form of CGL policy specified below, including claims for bodily injury and property damage) arising from any occurrence on or about the Land or from any operations conducted on or about the Land, including but not limited to tort liability assumed under any of the Operative Documents. Defense will be provided as an additional benefit and not included within the limit of liability.
B. Form: Commercial General Liability Occurrence form (ISO CG 0001, dated 12 04, or an equivalent substitute form providing the same or greater coverage, and in any case written to provide primary coverage to BNPPLC as provided in Part A.8 above).
C. Amount of Insurance: Coverage will be provided with limits of not less than:
                 
 
   i.   Each Occurrence Limit   $ 1,000,000  
 
                
 
   ii.   General Aggregate Limit   $ 2,000,000  
 
                
 
   iii.   Product-Completed Operations Aggregate Limit   $ 2,000,000  
 
                
 
   iv.   Personal and Advertising Injury Limit   $ 1,000,000  
D. Required Endorsements:
             
 
  i.   Additional Insured.   as required in Part A.7 above.
 
            
 
  ii.   Aggregate Per Location   The aggregate limit will apply separately to each location through use of an Aggregate Limit of Insurance Per Location endorsement (ISO CG 2504 1185 or its equivalent).
Annex 4 – Page 5

 

 

             
 
  iii.   Notice of Cancellation, Nonrenewal or Reduction in Coverage:   Consistent with Part B.1.E.5 above.
 
            
 
  iv.   Personal Injury Liability:   The personal injury contractual liability exclusion will be deleted.
 
            
 
  v.   Primary Liability:   As required in Part A.8 above.
 
            
 
  vi.   Waiver of Subrogation:   As required in Part B.1.C above.
E. Deductible or Self Insured Retention Under Liability Policies: If a gap in the liability insurance coverage provided to BNPPLC or another Interested Party under any Construction Period Policy results from any deductible, self-insured retention or other similar arrangement to which NAI agrees, then such gap must be covered by one or more other Construction Period Policies, such that liability insurance protection afforded to BNPPLC and other Interested Parties by all such Construction Period Policies, taken together, is no less than it would be if NAI had not agreed to the deductible, self-insured retention or other similar arrangement.
     3. Workers’ Compensation/Employer’s Liability Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain workers’ compensation and employer’s liability insurance in accordance with the following requirements:
A. Coverage: Such insurance will cover liability arising out of NAI’s employment of workers and anyone for whom NAI may be liable for workers’ compensation claims.
B. Amount of Insurance: Coverage will be provided with a limit of not less than:
             
 
  i.   Workers’ Compensation:   Statutory limits.
 
            
 
  ii.   Employer’s Liability:   $1,000,000 each accident and each disease.
C. Required Endorsements:
             
 
  i.   Notice of Cancellation, Nonrenewal or Reduction in Coverage:   Consistent with Part B.1.E.5 above.
 
            
 
  ii.   Waiver of Subrogation:   As required in Part B.1.C above.
Annex 4 – Page 6

 

 

     4. Umbrella/Excess Liability Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain umbrella/excess liability insurance in accordance with the following requirements:
A. Coverage: Such insurance will be excess over and be no less broad than all coverages described in the preceding subsections 1, 2 and 3 and will include a drop-down provision if commercially available.
B. Form: This policy will have the same inception and expiration dates as the commercial general liability insurance required above or a nonconcurrency endorsement.
C. Amount of Insurance: Coverage will be provided with a limit of not less than $10,000,000 per occurrence and in the aggregate.
     5. Builders Risk Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain or cause to be maintained property insurance (Builders Risk Insurance) in accordance with the following requirements:
A. Insureds: Protection will extend to BNPPLC as a Named Insured or Additional Named Insured as its interest may appear; and the policy will be modified if necessary so that the protection afforded to BNPPLC is not reduced or impaired by acts or omissions of NAI or any other beneficiary or insured. (Such modification of the policy may be by endorsement comparable to a standard mortgagee clause; not limited, however, by its terms to BNPPLC’s rights “as a mortgagee” and not conditioned upon rights of the insurer to be subrogated to BNPPLC’s rights under the Operative Documents in the event of a payment of insurance proceeds to BNPPLC.)
B. Covered Property: Such insurance will cover:
  i.   Improvements and any equipment made or to be made a permanent part of the Property;
 
  ii.   structure(s) under construction;
 
  iii.   property including materials and supplies on site for installation;
 
  iv.   property including materials and supplies at other locations but intended for use at the site;
 
  v.   property including materials and supplies in transit to the site for installation; and
Annex 4 – Page 7

 

 

  vi.   temporary structures (e.g., scaffolding, falsework, and temporary buildings) located at the site.
C. Form: Coverage will be on an “all risk” form, will include theft and flood and be written on a completed-value basis with no co-insurance provision. No protective safeguard warranty will be permitted.
D. Amount of Insurance: Real property coverage will be provided in an amount equal at all times to the full replacement value, exclusive of land, foundation, footings, excavations and grading.
E. Deductibles. Deductibles applicable to the Builder’s Risk Policy will not exceed the following:
             
 
   i.   All Risks of Direct Damage, Per Occurrence, except flood or water damage   $50,000
 
            
 
   ii.   Delayed Opening Waiting Period   30 Days
 
            
 
   iii   Water Damage (including flood), Per Occurrence   $100,000; or (in the case of flood) excess of NFIP if in Flood Zone A
F. Termination of Coverage: The termination of coverage provision will be endorsed to permit occupancy of the covered property being constructed. Further, NAI will maintain or cause the insurance to be maintained in effect, unless otherwise provided for the Operative Documents, until the earliest of the following dates:
  i.   the date on which all persons and organizations who are insureds under the policy agree that it is terminated;
 
  ii.   any termination or expiration of the Lease upon the Designated Sale Date, which is the date upon which final payment is expected under the Operative Documents; or
 
  iii.   the date on which the insurable interests in the Covered Property of all insureds other than NAI have ceased;
G. Required Endorsements and Minimum Sublimits:
Annex 4 – Page 8

 

 

         
i.
  Additional Expenses Due To Delay In Completion Project, including but not limited to financing costs including interest expenses, insurance expenses, professional fees and taxes;   Included with specific sublimits (based on an estimated 12 period of indemnity) as follows:

$1,900,000 — construction financing interest.
 
        
 
      $380,000 — real estate taxes
 
        
 
      $204,000 — insurance premiums
 
        
ii.
  Agreed Value;   No coinsurance
 
        
iii.
  Boiler & Machinery on a Comprehensive Basis;   Included without sublimit
 
        
iv.
  Damage Resulting From or Arising From Error, Omission or Deficiency In Design, Specifications, Workmanship or Materials, Including Collapse;   Included without sublimit
 
        
v.
  Debris Removal Additional Limit; Debris Removal   $4,000,000 sublimit
 
        
vi.
  [intentionally deleted]    
 
        
vii.
  Expediting Expenses;   $50,000 sublimit
 
        
viii.
  Flood or other Water Damage — Annual Aggregate   $10,000,000 sublimit
 
        
ix.
  Freezing;   $100,000 sublimit
 
        
x.
  Notice of Cancellation or Reduction;   Consistent with Part B.1.E.5 above
 
        
xi.
  Occupancy Clause;   Consistent with Part B.5.F
Annex 4 – Page 9

 

 

           
 
      above
 
 
xii.
  Demolition /Increased Cost of Cost of Construction — Per Occurrence   $1,000,000 sublimit
 
 
        
 
xiii.
  Pollutant Clean-Up and Removal, provided that such condition ensues following a loss from a covered peril;   Included in Debris Removal sublimit
 
 
        
 
xiv.
  Preservation of Property;   Included without sublimit
 
 
        
 
xv.
  Repair, Replace or Re-erect Valuation Clause;   Included without sublimit
 
 
        
 
xvi.
  Testing;   Included without sublimit
 
 
        
 
xvii.
  Waiver of Subrogation.   As required in Part B.1.C above
     6. Evidence of Insurance. NAI will provide confirmation of the insurance required prior to the Completion Date in accordance with the following:
A. Provision of Evidence. Evidence of the insurance coverage required to be maintained by NAI, represented by certificates of insurance or policies and endorsements issued by the insurance company or its legal agent, must be furnished to BNPPLC prior to the Effective Date. New certificates of insurance or policies and endorsements will be provided to BNPPLC prior to or concurrent with the termination date of the current certificates of insurance or policies and endorsements.
B. Form:
  i.   The Builders Risk Insurance will be evidenced by ACORD form 28, “Evidence of Property Insurance”, completed in a manner satisfactory to BNPPLC to show compliance with the requirements of this Annex. To the extent requested by BNPPLC, copies of endorsements to such insurance must be attached to such form.
 
  ii.   All liability insurance required herein will be evidenced by ACORD form 25, “Certificate of Insurance”, in each case completed in a manner satisfactory to BNPPLC to show compliance with the requirements of this Annex. To the extent requested by BNPPLC, copies of endorsements to this insurance must be attached to such form.
Annex 4 – Page 10

 

 

C. Specifications: Such certificates of insurance or policies and endorsements will specify:
  i.   BNPPLC as a certificate holder with correct mailing address as provided by BNPPLC.
 
  ii.   Insured’s name, which must match that on the Agreement to which this Annex is attached.
 
  iii.   Insurance companies affording each coverage, policy number of each coverage, policy dates of each coverage, all coverages and limits described herein, and signature of authorized representative of insurance company.
 
  iv.   Producer of the certificate with correct address and phone number listed.
 
  v.   Additional or named insured status of BNPPLC as required by this Annex.
 
  vi.   Aggregate limits per location (except as to the umbrella liability insurance) required by this Annex.
 
  vii.   Amount of any deductibles and/or retentions.
 
  viii.   Cancellation, nonrenewal and reduction in coverage notification consistent with Part B.1.E.5 above. Additionally, NAI will endeavor in good faith to cause any insurer issuing to BNPPLC a certificate on ACORD form 25 to delete the words “endeavor to” and “but failure to mail such notice shall impose no obligation or liability of any kind upon Company, it agents or representatives” from the cancellation provision of such form.
 
  ix.   Primary status as required by this Annex.
 
  x.   Waivers of subrogation as required by this Annex.
D. Required Endorsements. A copy of each required endorsement will, if and as requested by BNPPLC from time to time, also be provided.
E. Commencement of Construction. Commencement of construction without provision of the required certificate of insurance and/or required policies and endorsements, or without compliance with any other provision of this Annex or the Agreement to which it is attached, will not constitute a waiver by BNPPLC of any rights. BNPPLC will have the right, but not the obligation, of prohibiting NAI or any Contractor
Annex 4 – Page 11

 

 

from performing any work until such certificate of insurance and/or required policies and endorsements are received by BNPPLC.
     7. Contractor’s Insurance: To the extent, if any, necessary to preserve or provide liability coverage for BNPPLC and other Interested Parties with regard to operations performed on or about the Property prior to the Completion Date, NAI will require Contractors to provide (or will provide the coverage on behalf of Contractors) similar to that required of NAI by the foregoing provisions of this Annex. In the event NAI requires any Contractor to maintain Construction Period Policies necessary to comply with these insurance requirements, NAI will also require such Contractor to provide and maintain certificates of insurance containing provisions as described herein (modified to recognize the Contractor, rather than NAI, as named insured) enumerating, among other things, the waivers of subrogation, additional or named insured status, and primary liability as required herein; and in such event NAI will cause the Contractor to make those insurance certificates available to BNPPLC upon request.
C. PROVISIONS APPLICABLE AFTER THE COMPLETION DATE.
     1. Liability Insurance: After the Completion Date and throughout the Term of the Lease, NAI must maintain commercial general liability insurance against claims for bodily injury, death, advertising injury and property damage occurring in or upon or resulting from any occurrence in or upon the Property under one or more insurance policies, all in such amounts, with such insurance companies and upon such terms and conditions (including self-insurance, whether by deductible, retention, or otherwise) as are consistent with NAI’s normal insurance practices in the United States. In any event, policies under which NAI maintains such liability insurance must provide, by endorsement or otherwise, that BNPPLC and other Interested Parties are also insured thereunder against such claims with coverage that is not limited by any negligence or allegation of negligence on their part and with coverage that is primary, not merely excess over or contributory with the other commercial general liability coverage they may themselves maintain.
     2. Property Insurance: After the Completion Date and throughout the Term of the Lease, NAI must 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, all in such amounts, with such insurance companies and upon such terms and conditions (including self-insurance, whether by deductible, retention, or otherwise) as are consistent with NAI’s normal insurance practices in the United States. In any event, policies under which NAI maintains such insurance must:
  i.   show BNPPLC as an additional insured as its interest may appear; and
 
  ii.   provide that the protection afforded to BNPPLC thereunder is primary (such that
Annex 4 – Page 12

 

 

      any policies maintained by BNPPLC itself will be excess, secondary and noncontributing) and is not to be reduced or impaired by acts or omissions of NAI or any other beneficiary or insured.
     3. Evidence of Insurance. NAI will provide confirmation of the insurance required after the Completion Date in accordance with the following:
A. Provision of Evidence. Evidence of the insurance coverage required to be maintained by NAI, represented by certificates of insurance, evidence of insurance, and endorsements issued by the insurance company or its legal agent, must be furnished to BNPPLC prior to the Completion Date. New certificates of insurance, evidence of insurance, and endorsements will be provided to BNPPLC prior to or concurrent with the termination date of the current certificates of insurance, evidence of insurance, and endorsements.
B. Form:
  i.   The property insurance will be evidenced by ACORD form 28, “Evidence of Property Insurance”, completed in a manner reasonably satisfactory to BNPPLC to show compliance with the requirements of this Annex.
 
  ii.   The liability insurance will be evidenced by ACORD form 25, “Certificate of Insurance”, in each case completed in a manner reasonably satisfactory to BNPPLC to show compliance with the requirements of this Annex. To the extent requested by BNPPLC, copies of endorsements giving additional insured status to BNPPLC and other Interested Parties must be attached to such form.
C. Specifications: Such certificates of insurance or policies and endorsements will specify:
  i.   BNPPLC as a certificate holder with correct mailing address as provided by BNPPLC.
 
  ii.   Insured’s name, which must match that on the Agreement to which this Annex is attached.
 
  iii.   Insurance companies affording each coverage, policy number of each coverage, policy dates of each coverage, all coverages and limits described herein, and signature of authorized representative of insurance company.
Annex 4 – Page 13

 

 

  iv.   Producer of the certificate with correct address and phone number listed.
 
  v.   Additional or named insured status of BNPPLC as required by this Annex.
 
  vi.   Aggregate limits.
 
  vii.   Amount of any deductibles and/or retentions.
 
  viii.   Primary status as required by this Annex.
 
  ix.   Waivers of subrogation as required by this Annex.
Annex 4 – Page 14

 

exv10w54
Exhibit 10.54
AMENDED AND RESTATED
PURCHASE AGREEMENT
(RTP DATA CENTER)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
                 
            Page  
1   Additional Definitions     2  
    “97-1/Default (100%)”     2  
    “Adjusted Lease Balance”     3  
    “Applicable Purchaser”     3  
    “Balance of Unpaid Construction Period Losses”     3  
    “BNPPLC’s Actual Out of Pocket Costs”     4  
    “Break Even Price”     5  
    “Committed Price”     5  
    “Conditions to NAI’s Initial Remarketing Rights”     5  
    “Contingent Losses”     5  
    “Decision Not to Sell at a Loss”     5  
    “Deemed Sale”     6  
    “Extended Remarketing Period”     6  
    “Fair Market Value”     6  
    “Final Sale Date”     6  
    “Initial Remarketing Notice”     6  
    “Initial Remarketing Price”     6  
    “Lease Balance”     7  
    “Make Whole Amount”     7  
    “Maximum Remarketing Obligation”     7  
    “Must Sell Price”     8  
    “NAI’s Extended Remarketing Right”     8  
    “NAI’s Initial Remarketing Rights”     8  
    “NAI’s Target Price”     8  
    “Notice of Sale”     8  
    “Proposed Sale”     8  
    “Proposed Sale Date”     8  
    “Purchase Option”     8  
    “Put Option”     8  
    “Qualified Sale”     8  
    “Sale Closing Documents”     9  
    “Supplemental Payment”     9  
    “Supplemental Payment Obligation”     9  
    “Valuation Procedures”     10  
 
                
2   NAI’s Options and Obligations on the Designated Sale Date     10  
 
  (A)   Purchase Option; Initial Remarketing Rights; Supplemental Payment Obligation     10  
 
  (B)   Designation of the Purchaser     12  
 
  (C)   Delivery of Property Related Documents If BNPPLC Retains the Property     12  
 
   (D)   Effect of the Purchase Option and NAI’s Initial Remarketing Rights on        

 

 

TABLE OF CONTENTS
(Continued)
                 
            Page  
        Subsequent Title Encumbrances     12  
 
  (E)   Security for NAI’s Purchase Option     13  
 
                
3   NAI’s Rights, Options and Obligations After the Designated Sale Date     13  
 
  (A)   NAI’s Right to Buy During the Thirty Days After the Designated Sale Date     13  
 
  (B)   NAI’s Obligation to Buy if Certain Conditions are Satisfied     13  
 
  (C)   NAI’s Extended Right to Remarket     14  
 
  (D)   Deemed Sale On the Second Anniversary of the Designated Sale Date     15  
 
  (E)   NAI’s Right to Share in Sales Proceeds Received By BNPPLC From any Qualified Sale     15  
 
                
4   Transfers By BNPPLC After the Designated Sale Date     16  
 
  (A)   BNPPLC’s Right to Sell     16  
 
  (B)   Survival of NAI’s Rights and the Supplemental Payment Obligation     16  
 
  (C)   Easements and Other Transfers in the Ordinary Course of Business     16  
 
                
5   Terms of Conveyance Upon Purchase     17  
 
  (A)   Tender of Sale Closing Documents     17  
 
  (B)   Delivery of Escrowed Proceeds     17  
 
                
6   Survival and Termination of the Rights and Obligations of NAI and BNPPLC     17  
 
  (A)   Status of this Agreement Generally     17  
 
  (B)   Election by NAI to Terminate the Supplemental Payment Obligation Prior to the Completion Date     18  
 
  (C)   Automatic Termination of NAI’s Rights     19  
 
  (D)   Payment Only to BNPPLC     19  
 
  (E)   Preferences and Voidable Transfers     19  
 
  (F)   Remedies Under the Other Operative Documents     19  
 
                
7   Certain Remedies Cumulative     20  
 
                
8   Attorneys’ Fees and Legal Expenses     20  
 
                
9   Successors and Assigns     20  
 
                
10   Amendment and Restatement of Prior Purchase Agreement     20  

(ii)

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
         
Exhibit A
   Legal Description
 
        
Exhibit B
   Valuation Procedures
 
        
Exhibit C
   Requirements Re: Forms to Accomplish Assignment and Conveyance
 
        
Exhibit C-1
   Agreement Concerning Ground Lease
 
        
Exhibit C-2
   Form of Assignment of Ground Lease and Improvements
 
        
Exhibit C-3
   Form of Bill of Sale and Assignment
 
        
Exhibit C-4
   Form of Acknowledgment of Disclaimer of Representations and Warranties
 
        
Exhibit D
   Secretary’s Certificate
 
        
Exhibit E
   FIRPTA Statement
 
        
Exhibit F
   Notice of Election to Terminate the Supplemental Payment Obligation

(iii)

 

AMENDED AND RESTATED
PURCHASE AGREEMENT
(RTP DATA CENTER)
     This AMENDED AND RESTATED PURCHASE AGREEMENT (RTP DATA CENTER) (this “Agreement”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Agreement, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Agreement for all purposes. As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     Contemporaneously with this Agreement, BNPPLC is executing and accepting an Amended and Restated Ground Lease (RTP Data Center) dated as of the Effective Date (the “Ground Lease”) from NAI, pursuant to which BNPPLC is acquiring a leasehold estate in the Land described in Exhibit A and any existing Improvements on the Land.
     Also contemporaneously with this Agreement, BNPPLC and NAI are executing an Amended and Restated Construction Agreement (RTP Data Center) dated as of the Effective Date (the“Construction Agreement”) and an Amended and Restated Lease Agreement (RTP Data Center) dated as of the Effective Date (the “Lease”). Pursuant to the Construction Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements. When the term of the Lease commences, the Lease will cover all Improvements on the Land described in Exhibit A. (As used herein, “Property” means (i) all of BNPPLC’s interests, including those created by the Ground Lease, in the Land and in the Improvements and in all other real and personal property from time to time covered or to be covered by the Lease and included within the “Property” as defined therein, and (ii) BNPPLC’s interest in any Escrowed Proceeds yet to be applied as a Qualified Prepayment or to the cost of repairs to the Improvements or other property covered by the Lease; except that, for purposes of this Agreement, the Property will not include any condemnation or insurance proceeds included in Escrowed Proceeds as a result of any Pre-lease Force Majeure Event, nor will it include any right to receive any such condemnation or insurance proceeds in the future, unless NAI itself or one of its Affiliates purchases the Property from BNPPLC as provided in subparagraphs 2(A)(1), 3(A) or 3(B) below.)
     NAI and BNPPLC have agreed on the terms and conditions upon which NAI may

 

 

purchase or arrange for the purchase of the Property, and by this Agreement they desire to confirm all such terms and conditions.
AGREEMENTS
1 Additional Definitions. As used in this Agreement, capitalized terms defined above have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and that are used but not otherwise defined have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms have the following respective meanings:
     “97-1/Default (100%)” means a Default that is or results from any of the following:
     (A) a failure of NAI to make any payment required by any Operative Document, including (i) any 97-10/Prepayment payable as provided in Paragraph 9 of the Construction Agreement, (ii) any other amounts payable under the Construction Agreement because of Covered Construction Period Losses, (iii) any payment of Rent required by the Lease or (iv) any Supplemental Payment required by this Agreement;
     (B) any Hazardous Substance Activities on or about the Land;
     (C) any failure of NAI after the Completion Date to insure, maintain, operate or repair the Property in accordance with all terms and conditions of the Lease;
     (D) any failure of NAI to apply insurance or condemnation proceeds received by NAI as required by the Construction Agreement or the Lease, as applicable;
     (E) any breach by NAI of the Ground Lease;
     (F) any bankruptcy or insolvency proceeding involving NAI or any of its Subsidiaries, as the debtor, or any of the events or circumstances described in clauses (G), (H) or (I) of the definition of Event of Default in the Common Definitions and Provisions Agreement;
     (G) any breach by NAI of the financial covenants in subparagraph 3(C) of the Closing Certificate that occurs or continues after the Completion Date;
     (H) a failure of NAI or any of its Subsidiaries, which occurs or continues after the Completion Date, to pay when due a regularly scheduled payment of the principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000, as described in clause (F) of the definition of Event of Default in
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the Common Definitions and Provisions Agreement;
     (I) a failure of NAI or any of its Subsidiaries, which occurs or continues after the Completion Date, to pay any judgment or order for the payment of money rendered against it in an amount (not covered by insurance) which exceeds $25,000,000, as described in clause (J) of the definition of Event of Default in the Common Definitions and Provisions Agreement;
     (J) any fraud, misapplication of Construction Advances or other funds, illegal acts or willful misconduct on the part of NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI (including any contractor working for NAI) that occurs prior to the Completion Date; or
     (K) subject to the proviso at the end of Exhibit B, any breach by NAI of the provisions set forth in Exhibit B.
Except as provided in subparagraph 3(B), the characterization of any Default as a 97-1/Default (100%) will not affect the rights or remedies available to BNPPLC because of the Default.
“Adjusted Lease Balance” means a dollar amount equal to the following (but not less than zero):
  ·   the Lease Balance, less
 
  ·   Pre-lease Force Majeure Losses (if any).
“Applicable Purchaser” means (1) the third party designated by NAI to purchase the Property at any sale arranged by NAI as provided in this Agreement, or (2) the third party designated by BNPPLC as the purchaser at any Qualified Sale not arranged by NAI.
“Balance of Unpaid Construction Period Losses” means, subject to the qualifications set forth below in this definition, an amount equal to the sum of:
  (1)   the total Losses (if any), including Contingent Losses, that have been incurred or suffered by BNPPLC or other Interested Parties at any time and from time to time prior to the Completion Date (or, if no Completion Date occurs prior to the Designated Sale Date, then prior to the Designated Sale Date) by reason of, in connection with or arising out of (A) their ownership or alleged ownership of any interest in the Property or the payments required by the Operative Documents, (B) the use or operation of the Property, (C) the negotiation, administration or
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      enforcement of the Operative Documents, (D) the making of Funding Advances, (E) the Construction Project, (F) the breach by NAI of this Agreement or any other Operative Document 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 of BNPPLC under the Ground Lease or the Closing Certificate, 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; plus
 
  (2)   interest accruing at the Default Rate, compounded annually, on each payment of any such Losses by BNPPLC or any other Interested Party from the date such payment was made to the Designated Sale Date.
For purposes of computing the Balance of Unpaid Construction Period Losses, Losses as described in clause (1) of this definition will include each reduction (if any) (i) in the Carrying Costs added to the Outstanding Construction Allowance as provided in the Construction Agreement, or (ii) in the Base Rent payable to BNPPLC as provided in the Lease, that results from Pre-lease Force Majeure Losses. In other words, the Losses described in clause (1) will include the additional (if any) Carrying Costs and Base Rent that would have accrued if Pre-lease Force Majeure Losses were set at zero dollars ($0.00) in the formulas set forth in the Construction Agreement and in the Lease for calculating Carrying Costs and Base Rent, respectively.
Notwithstanding the foregoing, however, none of the following will be included in the Balance of Unpaid Construction Period Losses: (i) amounts included in or paid by BNPPLC with the proceeds of the Initial Advance (including Transaction Expenses); (ii) Losses paid or reimbursed from Construction Advances (including Local Impositions, insurance premiums and amounts paid by NAI prior to the Completion Date and reimbursed to it through Construction Advances made pursuant to the Construction Agreement, and also including costs and expenditures incurred or paid by or on behalf of BNPPLC after any Owner’s Election to Continue Construction, to the extent that such costs and expenditures are considered to be Construction Advances as provided in the Construction Agreement); (iii) any other Losses which NAI has paid prior to the Designated Sale Date or for which NAI remains fully obligated to pay pursuant to the other Operative Documents (including Covered Construction Period Losses paid or payable by NAI pursuant to the Construction Agreement); and (iv) any decline in the value of the Property, including any such decline that is attributable solely to a Pre-lease Force Majeure Event and thus constitutes a Pre-lease Force Majeure Loss.
“BNPPLC’s Actual Out of Pocket Costs” means the out-of-pocket costs and expenses,
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if any, incurred by BNPPLC in connection with a sale of the Property under this Agreement or in connection with the collection of payments due to it under this Agreement (including any Breakage Costs; Attorneys’ Fees; appraisal costs; and income, transfer, withholding or other taxes which do not constitute Excluded Taxes; but not including Excluded Taxes or costs of removing any Lien Removable by BNPPLC).
“Break Even Price” means an amount equal to:
  ·   the Lease Balance, plus
 
  ·   BNPPLC’s Actual Out of Pocket Costs, and plus
 
  ·   an amount equal to the Balance of Unpaid Construction Period Losses (if any).
If, however, the Balance of Unpaid Construction Period Losses includes Contingent Losses, then for purposes of computing the Break Even Price applicable to any proposed sale on the Designated Sale Date, NAI may elect to exclude such Contingent Losses from the Break Even Price by providing to BNPPLC, for the benefit of BNPPLC and other Interested Parties, a written agreement to indemnify and defend BNPPLC and other Interested Parties against the excluded Losses. However, to be effective for purposes of reducing 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)(1), (2), (3), (4) and (5) of the Lease and otherwise must be in form and substance reasonably satisfactory to BNPPLC.
“Committed Price” has the meaning indicated in subparagraph 3(C)(4).
“Conditions to NAI’s Initial Remarketing Rights” has the meaning indicated in subparagraph 2(A)(2)(a).
“Contingent Losses” means any Losses that consist of claims asserted against BNPPLC or another Interested Party prior to the Designated Sale Date, but that are not liquidated or paid on or prior to the Designated Sale Date. Any Contingent Losses included in the Unpaid Balance of Construction Period Losses, and thus which are relevant to the computation of the Break Even Price, will equal the sum as reasonably estimated by BNPPLC of (i) all Attorneys’ Fees and other costs that will be incurred to defend against such claims, and (ii) the amount for which BNPPLC or the other Interested Party can settle or satisfy such claims.
“Decision Not to Sell at a Loss” means a decision by BNPPLC not to sell the Property on the Designated Sale Date to an Applicable Purchaser as provided in
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subparagraph 2(A)(2), despite NAI’s satisfaction of the Conditions to NAI’s Initial Remarketing Rights.
“Deemed Sale” has the meaning indicated in subparagraph 3(D).
“Extended Remarketing Period” means a period beginning on the Designated Sale Date and ending on the Final Sale Date.
“Fair Market Value” has the meaning indicated in Exhibit B.
“Final Sale Date” means the earliest of:
  ·   any date after the Designated Sale Date upon which BNPPLC conveys the Property to consummate a sale of the Property to NAI because of BNPPLC’s exercise of the Put Option as provided in subparagraph 3(B); or
 
  ·   any date after the Designated Sale Date upon which BNPPLC conveys the Property to consummate a sale of the Property to NAI or to any Affiliate of NAI, including any such sale resulting from NAI’s exercise of its rights under subparagraph 3(A); or
 
  ·   any date after the Designated Sale Date upon which BNPPLC conveys the Property to consummate a Qualified Sale, or would have done so but for a material breach of this Agreement by NAI (including any breach of its obligation to make any Supplemental Payment required in connection with such Qualified Sale); or
 
  ·   the second anniversary of the Designated Sale Date, which will be the date of a Deemed Sale as provided in subparagraph 3(D) if no earlier date qualifies as the Final Sale Date and the entire Property is not sold by BNPPLC to NAI or an Applicable Purchaser prior to the second anniversary of the Designated Sale Date.
“Initial Remarketing Notice” means a notice delivered to BNPPLC by NAI prior to the Designated Sale Date in which NAI confirms NAI’s decision to exercise NAI’s Initial Remarketing Rights and the amount of the Initial Remarketing Price. (Once given, any such notice may not be rescinded or modified without BNPPLC’s consent.)
“Initial Remarketing Price” means the cash price set forth in an Initial Remarketing Notice delivered by NAI to BNPPLC as the price for which NAI has arranged a sale of the Property on the Designated Sale Date to an Applicable Purchaser which is not an Affiliate of NAI. Such price may be any price negotiated by the Applicable Purchaser in
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good faith and on an arms length basis with NAI.
“Lease Balance” means the Lease Balance (as defined in the Common Definitions and Provisions Agreement) on the Designated Sale Date, but computed without deduction for any Supplemental Payment or other amount paid to BNPPLC pursuant to this Agreement on the Designated Sale Date.
“Make Whole Amount” means the sum of the following:
          (1) the amount (if any) by which the Lease Balance on the Designated Sale Date exceeds the following, as applicable: (a) all 97-10/Prepayments (if any) which were actually paid to BNPPLC on or before the Designated Sale Date, or (b) any Supplemental Payment which was actually paid to BNPPLC on the Designated Sale Date; together with interest on such excess computed at the Default Rate for the period commencing on the Designated Sale Date and ending on the Final Sale Date; plus
          (2) any unpaid Base Rent or other amounts due to BNPPLC pursuant to the other Operative Documents; plus
          (3) BNPPLC’s Actual Out of Pocket Costs; plus
          (4) an amount equal to the Balance of Unpaid Construction Period Losses (if any), together with interest on thereon computed at the Default Rate for the period commencing on the Designated Sale Date and ending on the Final Sale Date; plus
          (5) the amount, but not less than zero, by which (i) all Local Impositions, insurance premiums and other Losses of every kind suffered or incurred by BNPPLC (whether or not reimbursed in whole or in part by another Interested Party) with respect to the ownership, operation or maintenance of the Property during the Extended Remarketing Period, exceeds (ii) any rents or other sums collected by BNPPLC during such period from third parties as consideration for any lease or other contracts made by BNPPLC that authorize the use and enjoyment of the Property by such parties; together with interest on such excess computed at the Default Rate for each day prior to the Final Sale Date.
“Maximum Remarketing Obligation” means a dollar amount equal to the following (but not less than zero):
  ·   85% of the Adjusted Lease Balance; less
 
  ·   any Fixed Rate Settlement Amount that NAI is required to pay pursuant to the
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Lease because of any acceleration of the Designated Sale Date which causes it to occur prior to the date upon which the Term of the Lease is scheduled to expire (as such date is confirmed in clause (1) of the definition of Designated Sale Date in the Common Definitions and Provisions Agreement).
“Must Sell Price” means, with respect to any Proposed Sale arranged by NAI pursuant to subparagraph 3(C), a cash price to BNPPLC equal to the Make Whole Amount, computed as of the Proposed Sale Date applicable to such Proposed Sale, plus all reimbursements or payments by BNPPLC to NAI that will be required by clause (4) of subparagraph 3(E) in connection with the Proposed Sale.
“NAI’s Extended Remarketing Right” has the meaning indicated in subparagraph 3(C).
“NAI’s Initial Remarketing Rights” has the meaning indicated in subparagraph 2(A)(2).
“NAI’s Target Price” means the cash purchase price that, according to NAI, should reasonably be expected for the Property during the Extended Remarketing Period if the parties make a reasonable marketing effort to sell the Property, as such price is set forth in a notice given by NAI to BNPPLC after the Designated Sale Date. Once established by any such notice, the amount of NAI’s Target Price will not be increased, although nothing in this definition will be construed to prevent NAI from arranging a sale of the Property pursuant to this Agreement at a price higher than NAI’s Target Price. After providing a notice of NAI’s Target Price to BNPPLC, NAI may later decrease NAI’s Target Price by another notice to BNPPLC, but only if the decrease is justified by a material adverse change in the physical condition of the Property (e.g., significant damage to the Property by fire or other casualty).
“Notice of Sale” has the meaning indicated in subparagraph 3(C)(4).
“Proposed Sale” has the meaning indicated in subparagraph 3(C).
“Proposed Sale Date” has the meaning indicated in subparagraph 3(C)(4).
“Purchase Option” has the meaning indicated in subparagraph 2(A)(1).
“Put Option” has the meaning indicated in subparagraph 3(B).
“Qualified Sale” means any (1) Deemed Sale as described in subparagraph 3(D), or (2) actual sale (prior to any such Deemed Sale) of all or substantially all of the Property to an Applicable Purchaser that occurs after the thirty day period specified in subparagraph 3(A) and that:
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·   results from NAI’s exercise of NAI’s Extended Remarketing Right as described in subparagraph 3(C); or
·   is approved in advance as a Qualified Sale by NAI; or
·   is to a third party which is not an Affiliate of BNPPLC and, if it is completed by a conveyance from BNPPLC prior to eighteen months after the Designated Sale Date, is for a price not less than the least of the following amounts:
  (a)   the lowest price at which BNPPLC will be obligated, pursuant to clause (4) of subparagraph 3(E), to reimburse to NAI (i) the entire amount of any Supplemental Payment theretofore made by NAI to BNPPLC, or (ii) if no such Supplemental Payment has been made, but NAI has theretofore made one or more 97-1/Prepayments to BNPPLC, all such 97-10/Prepayments; or
 
  (b)   (i) if NAI notified BNPPLC of NAI’s Target Price prior to the date BNPPLC and the third party agreed to a price for the sale, NAI’s Target Price, or (ii) if NAI did not notify BNPPLC of NAI’s Target Price prior to the date BNPPLC and the third party agreed to a price for the sale, any price satisfactory to BNPPLC in its sole good faith business judgment; or
 
  (c)   90% of the Fair Market Value of the Property.
NAI acknowledges that BNPPLC’s own marketing efforts after the Designated Sale Date will depend upon the minimum price required for a Qualified Sale, and such efforts could be hampered if NAI’s Target Price is too high. Thus, after receipt of any notice of NAI’s Target Price from NAI, BNPPLC may (but will not be obligated to) invoke the Valuation Procedures in order to determine the minimum price permitted under clause (c) preceding.
     “Sale Closing Documents” means the following documents, which BNPPLC must tender pursuant to Paragraph 5(A) to consummate any sale of the Property pursuant to this Agreement: (1) documents in the forms required by Exhibit C, including either a termination of or an assignment of the Ground Lease and other rights and interests of BNPPLC in the Property, (2) a Secretary’s Certificate in the form attached as Exhibit D and (3) a certificate concerning tax withholding in the form attached as Exhibit E.
     “Supplemental Payment” has the meaning indicated in subparagraph 2(A)(3).
     “Supplemental Payment Obligation” has the meaning indicated in
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subparagraph 2(A)(3).
“Valuation Procedures” means procedures set forth in Exhibit B, which are to be followed in the event a determination of the Fair Market Value of the Property or any portion thereof is required by this Agreement.
2 NAI’s Options and Obligations on the Designated Sale Date.
     (A) Purchase Option; Initial Remarketing Rights; Supplemental Payment Obligation. Whether or not an Event of Default has occurred and is continuing, but subject to Paragraph 6 below:
     (1) NAI will have the right (the “Purchase Option”) to purchase or cause an Affiliate of NAI, as the Applicable Purchaser, to purchase the Property on the Designated Sale Date for a cash price equal to the Break Even Price.
     (2) If NAI does not exercise the Purchase Option, NAI will have the following rights (collectively, “NAI’s Initial Remarketing Rights”):
          (a) First, NAI will have the right to designate a third party, other than an Affiliate of NAI, as the Applicable Purchaser and to cause such Applicable Purchaser to purchase the Property on the Designated Sale Date for a cash price equal to the Initial Remarketing Price. Such right, however, will be subject to the conditions (the “Conditions to NAI’s Initial Remarketing Rights”) that (i) NAI deliver an Initial Remarketing Notice to BNPPLC within the thirty days prior to the Designated Sale Date, (ii) on the Designated Sale Date the Applicable Purchaser tenders to BNPPLC a payment equal to the Initial Remarketing Price, and (iii) NAI itself tenders to BNPPLC the Supplemental Payment, if any, which will be required by subparagraph 2(A)(3) in the event BNPPLC completes the sale to the Applicable Purchaser. Further, notwithstanding the satisfaction of the Conditions to NAI’s Initial Remarketing Rights on the Designated Sale Date, if the sum of the price to be paid by the Applicable Purchaser for the Property (i.e., the Initial Remarketing Price) and any Supplemental Payment required by subparagraph 2(A)(3) is less than the Break Even Price, then BNPPLC may affirmatively elect not to complete the sale of the Property to the Applicable Purchaser on the Designated Sale Date (and thereby defer the sale of the Property pursuant to this Agreement) by making a Decision Not to Sell at a Loss.
          (b) Second, if BNPPLC completes a sale of the Property to an Applicable Purchaser on the Designated Sale Date pursuant to subparagraph 2(A)(2)(a) and the price paid by the Applicable Purchaser for the
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Property (i.e., the Initial Remarketing Price) is greater than the Break Even Price, then BNPPLC will pay the excess to NAI or as otherwise required by Applicable Law.
     (3) If for any reason whatsoever BNPPLC does not receive a cash price for the Property on the Designated Sale Date equal to or in excess of the Break Even Price in connection with a sale made pursuant to subparagraph 2(A)(1) or subparagraph 2(A)(2)(a), then NAI will have the obligation (the “Supplemental Payment Obligation”) to pay to BNPPLC on the Designated Sale Date a supplemental payment (the “Supplemental Payment”) equal to the lesser of:
          (a) the amount by which the Break Even Price exceeds any such cash price actually received by BNPPLC on the Designated Sale Date; or
          (b) the Maximum Remarketing Obligation.
Without limiting the generality of the foregoing, NAI must (unless excused by subparagraph 6(B) below) make the Supplemental Payment even if BNPPLC does not sell the Property to NAI or an Applicable Purchaser on the Designated Sale Date because of (A) a Decision Not to Sell at a Loss, or (B) a failure of NAI to exercise, or a decision by NAI not to exercise, the Purchase Option or NAI’s Initial Remarketing Rights, or (C) a failure of NAI or any Applicable Purchaser to tender the price required by the forgoing provisions on the Designated Sale Date following any exercise of or attempt by NAI to exercise the Purchase Option or NAI’s Initial Remarketing Rights.
NAI acknowledges that it is undertaking the Supplemental Payment Obligation in consideration of the rights afforded to it by this Agreement, but that such obligation is not contingent upon any exercise by NAI of such rights or upon any purchase of the Property by NAI or an Applicable Purchaser. If any Supplemental Payment due according to this subparagraph 2(A)(3) is not actually paid to BNPPLC on the Designated Sale Date, then NAI must pay interest on the past due amount computed at the Default Rate. However, NAI will be entitled to a credit against the interest required by the preceding sentence equal to the Base Rent, if any, actually paid by NAI pursuant to the Lease for any period after the Designated Sale Date.
     (4) For the avoidance of doubt, BNPPLC acknowledges that NAI may elect not to exercise the Purchase Option or NAI’s Initial Remarketing Rights and instead pay to BNPPLC a Supplemental Payment equal to the Maximum Remarketing Obligation on the Designated Sale Date in full satisfaction of its obligations under this subparagraph 2(A).
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     (B) Designation of the Purchaser. To give BNPPLC the opportunity before the Designated Sale Date to prepare the Sale Closing Documents, NAI must, by a notice to BNPPLC given at least ten days prior to the Designated Sale Date, specify irrevocably, unequivocally and with particularity any party who will purchase the Property because of NAI’s exercise of its Purchase Option or of NAI’s Initial Remarketing Rights. If NAI fails to do so, BNPPLC may postpone the delivery of the Sale Closing Documents until a date after the Designated Sale Date and not more than ten 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 subparagraph 2(A)(3).
     (C) Delivery of Property Related Documents If BNPPLC Retains the Property. Unless NAI or its Affiliate or another Applicable Purchaser purchases the Property pursuant to subparagraph 2(A), promptly after the Designated Sale Date NAI must deliver and assign to BNPPLC all plans and specifications for the Property previously prepared for NAI or otherwise available to NAI (including those prepared in connection with the construction contemplated by the Construction Agreement), together with all other files, documents and permits of NAI (including any subleases then in force) which may be necessary or useful to any future owner’s or occupant’s use of the Property. Without limiting the foregoing, NAI will transfer or arrange the transfer to BNPPLC of all utility, building, health and other operating permits required by any municipality or other governmental authority having jurisdiction over the Property for uses of the Property permitted by the Lease or for any remaining construction required to complete the Improvements contemplated by the Construction Agreement if neither NAI nor any Affiliate or other Applicable Purchaser purchases the Property pursuant to subparagraph 2(A).
     (D) Effect of the Purchase Option and NAI’s Initial Remarketing Rights on Subsequent Title Encumbrances. Any conveyance made to consummate a sale of the Property to NAI or any Applicable Purchaser pursuant to subparagraph 2(A) will cut off and terminate all interests in the Property claimed by, through or under BNPPLC, including Liens Removable by BNPPLC (including any leasehold estate or other interests conveyed by BNPPLC to third parties, even if conveyed in the ordinary course of BNPPLC’s business, and including any judgment liens established against the Property because of a judgment rendered against BNPPLC), but not personal obligations of NAI to BNPPLC under the Lease or other Operative Documents (including obligations of NAI arising under the indemnities in the Construction Agreement or the Lease, which indemnities will survive any such sale). Anyone accepting or taking any interest in the Property through or under BNPPLC on or after the Effective Date will acquire such interest subject to the Purchase Option.
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     (E) Security for NAI’s Purchase Option. If (contrary to the intent of the parties as expressed in subparagraph 4(C) of the Lease) it is determined that NAI is not, under applicable state law as applied to the Operative Documents, the equitable owner of the Property and the borrower from BNPPLC in a financing arrangement, but rather is a tenant under the Lease with an option to purchase from BNPPLC as provided in subparagraph 2(A)(1), then the parties intend that the Purchase Option be secured by a lien and security interest against the Property. Accordingly, BNPPLC does hereby grant to NAI a lien and security interest against the Property, including all rights, title and interests of BNPPLC from time to time in and to the Land and Improvements, in order to secure (1) BNPPLC’s obligation to convey the Property to NAI or an Affiliate designated by it if NAI exercises the Purchase Option and tenders payment of the Break Even Price to BNPPLC on the Designated Sale Date as provided herein, and (2) NAI’s right to recover any damages from BNPPLC caused by a breach of such obligation, including any such breach caused by a rejection or termination of this Agreement in any bankruptcy or insolvency proceeding instituted by or against BNPPLC, as debtor. NAI may enforce such lien and security interest judicially after any such breach by BNPPLC, but not otherwise.
3 NAI’s Rights, Options and Obligations After the Designated Sale Date.
     (A) NAI’s Right to Buy During the Thirty Days After the Designated Sale Date. Even after a failure to pay any required Supplemental Payment on the Designated Sale Date, NAI may tender (or cause an Applicable Purchaser to tender) to BNPPLC the full Make Whole Amount (including all amounts then due under the other Operative Documents) on any Business Day within thirty days after the Designated Sale Date. If presented with such a tender within thirty days after the Designated Sale Date, BNPPLC must accept it and promptly thereafter deliver to NAI (or the Applicable Purchaser) the Sale Closing Documents and any Escrowed Proceeds then constituting Property held by BNPPLC. Otherwise, BNPPLC will have no further obligation to sell the Property to NAI or to any Affiliate of NAI pursuant to this Agreement, although BNPPLC will continue to have the option to require NAI to buy the Property if the conditions listed in the next subparagraph are satisfied.
     (B) NAI’s Obligation to Buy if Certain Conditions are Satisfied. Regardless of any prior Decision Not to Sell at a Loss, BNPPLC will have the option (the “Put Option”) to require NAI to purchase the Property upon demand at any time after the Designated Sale Date for a cash price equal to the Make Whole Amount if:
     (1) BNPPLC has not already conveyed the Property to consummate a sale of the Property to NAI or an Applicable Purchaser pursuant to other provisions of this Agreement; and
     (2) a 97-1/Default (100%) occurs or is continuing on or after the Designated
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Sale Date; and
     (3) BNPPLC notifies NAI of BNPPLC’s exercise of the Put Option within two years following the Designated Sale Date.
Further, and without limiting the foregoing, if any Event of Default occurs as described in clauses (G), (H) or (I) of the definition Event of Default in the Common Definitions and Provisions Agreement because of any bankruptcy proceeding instituted by or against NAI, as debtor, under Title 11 of the United States Code, then NAI will be obligated (without any further act or notice or demand by BNPPLC) to pay to BNPPLC the Make Whole Amount and purchase the Property, as if (i) BNPPLC had exercised the Put Option, and (ii) the second Business Day after the commencement of such Event of Default was the Final Sale Date.
     (C) NAI’s Extended Right to Remarket. If the Property is not sold to NAI or an Applicable Purchaser on the Designated Sale Date pursuant to this Agreement, NAI will have the right (“NAI’s Extended Remarketing Right”) during the Extended Remarketing Period to arrange a sale of the Property to an Applicable Purchaser, other than an Affiliate of NAI, for a price equal to or in excess of the Must Sell Price (a “Proposed Sale”). NAI’s Extended Remarketing Right will, however, be subject to all of the following conditions:
     (1) BNPPLC has not exercised the Put Option as provided in subparagraph 3(B) or already contracted with another Applicable Purchaser to convey the Property in connection with a Qualified Sale.
     (2) NAI’s Extended Remarketing Right is not terminated pursuant to subparagraph 6(C) because of NAI’s failure to pay any required Supplemental Payment.
     (3) NAI’s Extended Remarketing Right is not terminated pursuant to subparagraph 6(C) because of NAI’s failure to pay any required
97-10 Prepayment.
     (4) NAI must have provided a notice to BNPPLC (a “Notice of Sale”) setting forth (i) the date proposed by NAI as the Final Sale Date (the “Proposed Sale Date”), which must be no sooner than thirty days after BNPPLC’s receipt of the Notice of Sale and no later than the last Business Day of the Extended Remarketing Period, (ii) the full legal name of the Applicable Purchaser and such other information as is needed to prepare the Sale Closing Documents, and (iii) the cash price that will be tendered to BNPPLC for the Property (the “Committed Price”).
     (5) The Committed Price must be no less than the Must Sell Price, computed as of the Proposed Sale Date. Also, if NAI has notified BNPPLC of NAI’s Target Price, the Committed Price must be no less than NAI’s Target Price.
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     (D) Deemed Sale On the Second Anniversary of the Designated Sale Date. If no date prior to the second anniversary of the Designated Sale Date qualifies as the Final Sale Date, then on second anniversary of the Designated Sale Date BNPPLC will, for purposes of the next subparagraph, be deemed to have sold the Property (a “Deemed Sale”) to an Applicable Purchaser at a Qualified Sale for a net cash price equal to its Fair Market Value.
     (E) NAI’s Right to Share in Sales Proceeds Received By BNPPLC From any Qualified Sale. BNPPLC must apply the cash proceeds received by BNPPLC from any Qualified Sale (regardless of whether the sale is arranged by NAI as provided in subparagraph 3(C) or by BNPPLC itself), or deemed to be received in connection with any Deemed Sale, in the following order of priority:
     (1) first, to pay or reimburse to BNPPLC BNPPLC’s Actual Out of Pocket Costs incurred in connection with the Qualified Sale;
     (2) second, to pay or reimburse to BNPPLC the Local Impositions, insurance premiums and other Losses suffered or incurred by BNPPLC with respect to the ownership, operation or maintenance of the Property after the Designated Sale Date, together with interest on such Local Impositions, insurance premiums and other Losses computed at the Default Rate from the date paid or incurred to the date reimbursed from sales proceeds;
     (3) third, to pay to BNPPLC an amount equal to the difference, if any, computed by subtracting (i) the aggregate payments, if any, previously paid by NAI to BNPPLC as a Supplemental Payment or as a 97-10/Prepayment, from (ii) the Adjusted Lease Balance;
     (4) fourth, to reimburse NAI for the aggregate payments, if any, previously made by NAI to BNPPLC as a Supplemental Payment or as 97-10/Prepayments;
     (5) fifth, to pay to BNPPLC an amount that, when added to all payments or reimbursements to BNPPLC described in the preceding clauses (1), (2) and (3), will equal the Make Whole Amount;
     (6) sixth, to pay to BNPPLC any other amounts then due from NAI to BNPPLC under any of the Operative Documents; and
     (7) last, if any such cash proceeds exceed all the payments and reimbursements that are required or may be required as described in the preceding clauses of this subparagraph, BNPPLC may retain the excess.
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If, however, BNPPLC completes any sale and conveyance of the Property after the Extended Remarketing Period expires or is terminated, BNPPLC will not be required by this subparagraph to share any proceeds of the sale or conveyance with NAI or any other party claiming through or under NAI.
4 Transfers By BNPPLC After the Designated Sale Date.
     (A) BNPPLC’s Right to Sell. At any time more than thirty days after the Designated Sale Date, if the Property has not already been sold and conveyed by BNPPLC pursuant to Paragraph 2 or Paragraph 3, BNPPLC will 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 BNPPLC in its sole good faith business judgment.
     (B) Survival of NAI’s Rights and the Supplemental Payment Obligation. If the Property is not sold on the Designated Sale Date, and if BNPPLC completes a sale or other transfer of the Property after the Designated Sale Date, other than a Qualified Sale, the Supplemental Payment Obligation will survive in favor of BNPPLC’s successors and assigns with respect to the Property, and BNPPLC’s successors and assigns will take the Property subject to NAI’s rights under Paragraph 3, all on the same terms and conditions as would have applied to BNPPLC itself if BNPPLC had not transferred or sold the Property. Without limiting the foregoing, any purchaser that acquires the Property from BNPPLC during the Extended Remarketing Period, other than at a Qualified Sale, will be obligated to distribute proceeds of a subsequent Qualified Sale of the Property as described in the subparagraph 3(E) in the same manner and to the same extent that BNPPLC itself would have been obligated if not for the sale by BNPPLC to the purchaser.
     (C) Easements and Other Transfers in the Ordinary Course of Business. No “Permitted Transfer” described in clause (5) (the last clause) of the definition thereof in the Common Definitions and Provisions Agreement will constitute a Qualified Sale if it covers less than all or substantially all of BNPPLC’s then existing interests in the Property. Any such Permitted Transfer of less than all or substantially all of BNPPLC’s then existing interests in the Property will not be prohibited by this Agreement during the Extended Remarketing Period or otherwise; provided, however, any such Permitted Transfer made before the end of one hundred eighty days after the Designated Sale Date, or made to an Affiliate of BNPPLC before the end of the Extended Remarketing Period, or otherwise not made in the ordinary course of business, will be made subject to NAI’s rights under Paragraph 3. Thus, for example, if the Property is not sold by BNPPLC to an Applicable Purchaser on the Designated Sale Date, then at any time more than one hundred eighty days after the Designated Sale Date BNPPLC may in the ordinary course of business convey a utility easement or a lease of space in the Improvements to a Person not an Affiliate of BNPPLC free from NAI’s rights under Paragraph 3, although following such conveyance of the lesser estate, NAI’s rights under Paragraph 3 will continue during the Extended
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Remarketing Period as to BNPPLC’s remaining interest in the Land and the Improvements.
5 Terms of Conveyance Upon Purchase.
     (A) Tender of Sale Closing Documents. As necessary to consummate any sale of the Property to NAI or an Applicable Purchaser pursuant to this Agreement, BNPPLC must, subject to any postponement permitted by subparagraph 2(B), promptly after the tender of the purchase price and any other payments to BNPPLC required pursuant to Paragraph 2 or Paragraph 3, as applicable, convey the Property to NAI or the Applicable Purchaser, as the case may be, by BNPPLC’s execution, acknowledgment (where appropriate) and delivery of the Sale Closing Documents. Such conveyance by BNPPLC will be subject to the Permitted Encumbrances and any other encumbrances that do not constitute Liens Removable by BNPPLC, and such conveyance will not include the rights of BNPPLC 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 Loss incurred by BNPPLC or another Interested Party resulting in whole or in part from events or circumstances occurring or alleged to have occurred before such conveyance. The costs, both foreseen and unforeseen, of any purchase by NAI or an Applicable Purchaser will be the responsibility of the purchaser to the extent (if any) not included in any Break Even Price or Make Whole Amount actually paid to BNPPLC. If for any reason BNPPLC fails to tender the Sale Closing Documents as required by this Paragraph 5(A), BNPPLC will have the right and obligation to cure such failure at any time before thirty days after receipt of a demand for such cure from NAI. Prior to the end of such cure period, NAI may initiate appropriate legal action to specifically enforce BNPPLC’s obligation to deliver the Sale Closing Documents or to foreclose NAI’s liens or security interests against the Property which secure such obligation, but if BNPPLC does cure within such thirty day period, BNPPLC will not be liable for monetary damages because of its prior failure to deliver the Sale Closing Documents.
     (B) Delivery of Escrowed Proceeds. BNPPLC may deliver any Escrowed Proceeds constituting Property directly to NAI or to any Applicable Purchaser purchasing the Property 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; BNPPLC will not be responsible for the proper distribution or application by NAI or any Applicable Purchaser of any such Escrowed Proceeds; and any such payment of Escrowed Proceeds to NAI or an Applicable Purchaser will discharge any obligation of BNPPLC to deliver the same to all Persons claiming an interest therein.
6 Survival and Termination of the Rights and Obligations of NAI and BNPPLC.
     (A) Status of this Agreement Generally. Except as expressly provided in the next
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subparagraph or other provisions of this Agreement, this Agreement will not terminate; nor will NAI have any right to terminate this Agreement; nor will NAI be entitled to any reduction (by setoff or otherwise) of the Break Even Price, the Make Whole Amount or any payment required under this Agreement; nor will any of the obligations of NAI to BNPPLC under Paragraph 2 or Paragraph 3 be excused by reason of (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 BNPPLC under this Agreement or any other Operative Document or any other agreement to which BNPPLC 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 BNPPLC 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) NAI’s prior acquisition or ownership of any interest in the Property, or (ix) 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 under this Agreement (including the obligation to make any Supplemental Payment as provided in Paragraph 2) be separate from and independent of BNPPLC’s obligations under this Agreement or any other agreement between BNPPLC and NAI; however, nothing in this subparagraph will 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 BNPPLC’s failure to remove a Lien Removable by BNPPLC or because of any other default by BNPPLC under this Agreement: (A) the recovery of monetary damages, (B) injunctive relief in case of the violation, or attempted or threatened violation, by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Agreement which are binding upon BNPPLC, or (C) a decree compelling performance by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Agreement which are binding upon BNPPLC.
     (B) Election by NAI to Terminate the Supplemental Payment Obligation Prior to the Completion Date. By delivery of a notice to BNPPLC in the form attached as Exhibit F, NAI may terminate its Supplemental Payment Obligation, but only prior to the Completion Date and only if at the time of such exercise (1) NAI has given (and not rescinded) a Notice of NAI’s Intent to Terminate as provided in the Construction Agreement, or (2) BNPPLC has given any FOCB Notice as provided in the Construction Agreement. (If for any reason BNPPLC does not receive a notice terminating the Supplemental Payment Obligation as described in the preceding sentence prior to the Completion Date, then without any notice or other action by the parties to this Agreement, NAI will cease to have any right to terminate the Supplemental Payment Obligation.) If NAI does send a notice to BNPPLC in the form attached as Exhibit F, such notice will (as
Amended and Restated Purchase Agreement (RTP Data Center) – Page 18

 

 

provided therein) constitute an irrevocable and absolute waiver by NAI of NAI’s rights to purchase the Property or to cause any of its Affiliates to purchase the Property pursuant to this Agreement. However, no such notice will terminate BNPPLC’s right to exercise the Put Option, which BNPPLC may exercise if NAI fails to make a 97-10/Permitted Prepayment required by the Construction Agreement.
     (C) Automatic Termination of NAI’s Rights. If NAI fails to pay the full amount of any Supplemental Payment required by subparagraph 2(A)(3) on the Designated Sale Date, then the Purchase Option, NAI’s Initial Remarketing Rights, NAI’s Extended Remarketing Right and all other rights of NAI under this Agreement, other than its rights under subparagraph 3(A), will terminate automatically. If, however, prior to the Designated Sale Date NAI effectively terminates the Supplemental Payment Obligation pursuant to subparagraph 6(B) by the delivery of a notice to BNPPLC in the form attached as Exhibit F, so that NAI is excused from the obligation to make any Supplemental Payment pursuant to subparagraph 2(A)(3), then NAI’s Extended Remarketing Right will not terminate automatically pursuant to this subparagraph 6(C), but rather will survive except to the extent waived by such notice. No termination of NAI’s rights as described in this subparagraph will limit BNPPLC’s other remedies, including its right to sue NAI for any 97-10/Prepayments, pursuant to any of the Operative Documents or (following a 97-1/Default (100%)) its right to exercise the Put Option.
     (D) Payment Only to BNPPLC. All amounts payable under this Agreement by NAI and, if applicable, by an Applicable Purchaser must be paid directly to BNPPLC. If paid to other parties, such payments will not be effective for purposes of this Agreement.
     (E) Preferences and Voidable Transfers. If any payment to BNPPLC by an Applicable Purchaser is held to constitute a preference or a voidable transfer under Applicable Laws, or must for any other reason be refunded by BNPPLC to the Applicable Purchaser or to another Person, and if such payment to BNPPLC reduced or had the effect of reducing a payment required of NAI by this Agreement (e.g., the Supplemental Payment) or increased or had the effect of increasing any sale proceeds paid over to NAI pursuant to subparagraph 2(A)(2)(b) or pursuant to subparagraph 3(E), then NAI must pay to BNPPLC upon demand an amount equal to the reduction of the payment required of NAI or to the increase of the excess sale proceeds paid to NAI, as applicable, and this Agreement will continue to be effective or will be reinstated as necessary to permit BNPPLC to enforce its right to collect such amount from NAI.
     (F) Remedies Under the Other Operative Documents. No repossession of or re-entering upon the Property or exercise of any other remedies available to BNPPLC under the other Operative Documents will terminate NAI’s rights or obligations under this Agreement, all of which will survive BNPPLC’s exercise of remedies under the other Operative Documents. NAI acknowledges that the consideration for this Agreement is separate from and independent of the consideration for the Construction Agreement, the Lease, the Closing Certificate and other
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agreements executed by the parties, and NAI’s obligations under this Agreement will not be affected or impaired by any event or circumstance that would excuse NAI from performance of its obligations under such other Operative Documents.
7 Certain Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy BNPPLC has with respect to the Property, and each and every right and remedy of BNPPLC will be cumulative and in addition to any other right or remedy given to it under this Agreement or now or hereafter existing in its favor at law or in equity. In addition to other remedies available under this Agreement, either party may obtain a decree compelling specific performance of any of the other party’s agreements hereunder.
8 Attorneys’ Fees and Legal Expenses. If BNPPLC commences any legal action or other proceeding because of any breach of this Agreement by NAI, BNPPLC may recover all Attorneys’ Fees incurred by it in connection therewith from NAI, whether or not such controversy, claim or dispute is prosecuted to a final judgment. Any Attorneys’ Fees incurred by BNPPLC in enforcing a judgment in its favor under this Agreement will 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.
9 Successors and Assigns. The terms, provisions, covenants and conditions hereof will be binding upon NAI and BNPPLC and their respective permitted successors and assigns and will inure to the benefit of NAI and BNPPLC and all permitted transferees, mortgagees, successors and assignees of NAI and BNPPLC with respect to the Property; except that (A) the rights of BNPPLC hereunder will not pass to NAI or any Applicable Purchaser or any subsequent owner claiming through NAI or an Applicable Purchaser, (B) BNPPLC will not assign this Agreement or any rights hereunder except pursuant to a Permitted Transfer, and (C) NAI will not assign this Agreement or any rights hereunder without the prior written consent of BNPPLC.
10 Amendment and Restatement of Prior Purchase Agreement. This Agreement amends, restates and replaces entirely the Prior Purchase Agreement. Without limiting the rights and obligations of NAI under this Agreement, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Purchase Agreement are now made subject to the terms and conditions of this Agreement; and all rights and interests of BNPPLC in and to the Land or other Property under the Prior Purchase Agreement are renewed and extended (rather than terminated) by this Agreement.
[The signature pages follow.]
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     IN WITNESS WHEREOF, this Amended and Restated Purchase Agreement (RTP Data Center) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
Amended and Restated Purchase Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for Amended and Restated Purchase Agreement (RTP Data Center) dated as of November 29, 2007.]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Amended and Restated Purchase Agreement (RTP Data Center) – Signature Page

 

 

Exhibit A
Legal Description
BEING a portion of Site 12 as shown on the map entitled “Exempt Subdivision Map of Site 12”, prepared by Barbara H. Mulkey Engineering, Inc., on May 30, 2000 as recorded in the Book of Maps 2000, Page 1300, Wake County, North Carolina Registry, such portion being described as follows:
Unit 4 and the Additional Leased Premises, both as defined below (collectively, the “Ground Lease Premises”).
As used in this Exhibit:
     (1) “Additional Leased Premises” means the land surrounding and adjacent to Unit 4, depicted on the site plan attached to and made a part of this Exhibit as the area shaded in gray, which includes parking lots, driveways and other areas within the larger area designated as Common Elements in the Condominium Declaration. The outer boundaries of the Additional Leased Premises are described by metes and bounds on the last page attached to and made a part of this Exhibit. All land within those outer boundaries, other than Unit 4, is included in the Additional Leased Premises.
     (2) “Condominium Declaration” means the Declaration of Condominium for NetApp RTP Phase I Condominium recorded in Book 012647, Page 01310, Wake County, North Carolina Registry.
     (3) “Condominium Map” means the plat provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached to and made a part of this Exhibit. (The Condominium Map has also been filed in the Book of Maps CM2007, Page 444A1, Wake County, North Carolina Registry.)
     (4) “Unit 4” means the land designated and described in the Condominium Declaration as Unit 4 and is shown on the Condominium Map and site plan attached to and made a part of this Exhibit.
TOGETHER WITH, easements appurtenant to the Amended and Restated Ground Lease Premises as described in Exhibit A attached to the Ground Lease dated as of November 29, 2007 between BNPPLC, as lessee, and NAI, as lessor (the “Ground Lease”);
SUBJECT, HOWEVER, to an easement reserved over the Additional Leased Premises (but not any part of Unit 4) in favor of the Association as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
Exhibit A to Amended and Restated Purchase Agreement (RTP Data Center) – Page 2

 

 

(MAP)
Exhibit A to Amended and Restated Purchase Agreement (RTP Data Center) – Page 3

 

 

Attachment to Exhibit A — Metes and Bounds
Description of “Additional Leased Premises”
     The following is a metes and bounds description of the outer boundaries of the Additional Leased Premise:
BEGINNING at NCGS Monument “Hopson”. said monument having NC Grid Coordinates of N=773,721.48 and E=2,034,907.39 (NAD 83). traveling thence South 11° 44' 59" West 6154.66 feet to a right-of-way monument on the southern margin of Louis Stephens Drive (a 100 foot public right-of-way), thence North 72° 48' 35" East 164.29 feet to a right-of-way monument on the southern margin of Kit Creek Road (a 150 foot public right-of-way); thence with the southern margin of said Kit Creek Road the following two (2) courses and distances:
     (1) South 68° 46' 54 East 412. 64 feet to a right-of-way monument; and
     (2) with a curve to the right having a radius of 924.83 feet, an are length of 475.96, and a chord bearing and distance of South 54° 02' 59" East 470.72 feet to a computed point;
said computed being the POINT AND PLACE OF BEGINNING; thence from said point of beginning and continuing with the southern margin of Kit Creek Road South 39° 18' 29" East 571.64 feet to a computed point, thence cornering and leaving said right-of-way and with the common line of property now or formerly owned by Research Triangle Foundation of NC (DB 1670 PG 239) the following two (2) courses and distances:
     (1) South 50° 41' 31" West 100.00 feet to an iron pipe found; and
     (2) South 83° 31' 01" West 483.47 feet to an iron pipe found;
thence cornering and along three (3) new lines within the bounds of property owned by Network Appliance, Inc. (DB 10941 Pg 2054) as follows:
     (1) North 12° 44' 00" West 279. 97 feet,
     (2) North 48° 55' 31" West 50. 30 feet; and
     (3) North 32° 57' 24" East 401.61 feet to a point along the southern margin of said Kit Creek Road;
thence with the southern margin of Kit Creek Road along a curve to the right having a radius of 925.04 feet, an arc length of 113.05 feet and a chord bearing and distance of South 42° 48' 33" East 112. 98 feet to the POINT AND PLACE OF BEGINNING, containing 5.36 acres (233, 621 square feet), more or less, said area shown on the rendering attached hereto.
Exhibit A to Amended and Restated Purchase Agreement (RTP Data Center) – Page 4

 

Exhibit B
Valuation Procedures
     This Exhibit explains the procedures to be used to determine Fair Market Value of the Property if such a determination is required by this Agreement. In such event, either party may invoke the procedures set out herein prior to the date the determination will be needed so as to minimize any postponement of any payment, the amount of which depends upon Fair Market Value. In the event such a payment becomes due before the required determination of Fair Market Value is complete, such payment will be postponed until the determination is complete. But in that event, when the required determination is complete, the payment will be made together with interest thereon, computed at a rate equal to ABR, accruing over the period the payment was postponed.
     If any determination of Fair Market Value is required, NAI and BNPPLC will attempt in good faith to reach a written agreement upon the Fair Market Value without unnecessary delay, and either party may propose such an agreement to the other. If, however, for any reason whatsoever, they do not execute such an agreement within seven days after the first such proposed agreement is offered by one party to the other, then the determination will be made by independent appraisers in accordance with the following procedures:
1. Definitions and Assumptions. For purposes of the determination, Fair Market Value will be defined as follows, and all appraisers or others involved in the determination will be instructed to use the following definition:
     “Fair Market Value” means the most probable net cash price, as of a specified date, for which the Property should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.
In addition, the appraisers or others making the determination will be instructed to assume that ordinary and customary brokerage fees, title insurance costs and other sales expenses will be incurred and deducted in the calculation of such net cash price. Such appraisers or others making the determination will also be instructed to assume that the value of the Property (or applicable portion thereof) is neither enhanced nor reduced by any lease to another tenant that BNPPLC may have executed subsequent to the termination or expiration of the Lease (a “Replacement Lease”). In other words, rather than determine value in light of actual rents generated or to be generated by any such Replacement Lease, the Property (or applicable portion thereof) will be valued in light of the most probable rent that it should bring in a competitive and open market (in this section, a “Fair Market Rental”), taking into account:
     (i) the fact that the Ground Lease exists to permit the continued use and enjoyment of the Property during the term of the

 

 

Ground Lease1; and
     (ii) the actual physical condition of the Property2; and
     (iii) that a reasonable period of time may be required to market the Property (or applicable portion thereof) for lease and make it ready for use or occupancy before it is leased at a Fair Market Rental.
2. Initial Selection of Appraisers; Appraiser’s Agreement as to Value. After having failed to reach a written agreement upon Fair Market Value as described in the second paragraph of this Exhibit, either party may deliver a notice to the other demanding the appointment of appraisers (the “First Appraisal Notice”) pursuant to this Exhibit. In such event:
     (a) Within fifteen days after the First Appraisal Notice is delivered, NAI and BNPPLC must each appoint an independent property appraiser who has experience appraising commercial properties in North Carolina and notify the other party of such appointment, including the name of the appointed appraiser (a “Notice of Appointment”).
     (b) If the appraiser appointed by NAI and the appraiser appointed by BNPPLC agree in writing upon the Fair Market Value (an “Appraiser’s Agreement As To Value”), such agreement will be binding upon NAI and BNPPLC. Both NAI and BNPPLC will instruct their respective appraisers to attempt in good faith to quickly reach an Appraiser’s Agreement As To Value. Neither appraiser will be required to produce a formal appraisal prior to reaching an Appraiser’s Agreement As To Value.
3. Selection of a Third Appraiser. If the two appraisers fail to deliver an Appraiser’s Agreement As to Value within thirty days following the later of the dates upon which NAI or BNPPLC delivers its Notice of Appointment, then either party (NAI or BNPPLC) may deliver another notice to the other (a “Third Appraisal Notice”), demanding that the two appraisers appoint a third independent property appraiser to help with the determination of Fair Market Value. Immediately after the Third Appraisal Notice is delivered, each of the first two appraisers
 
1   But for the Ground Lease, the Improvements could not be used and maintained in place. Thus, the parties believe that, but for the Ground Lease, the Improvements would be worth much less. However, it is understood that Property does not include the fee estate in the Land, and the continued use of the Improvements will necessitate the payment of rents as required by the Ground Lease and compliance with the other terms and conditions thereof. Accordingly, the value of the Land itself will not be included in the Fair Market Value of the Property.
 
2   If, however, the use of the Property by BNPPLC or any tenant under any Replacement Lease after NAI vacated the Property has resulted in excess wear and tear, such excess wear and tear will be assumed not to have occurred for purposes of determining Fair Market Value.
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must act promptly, reasonably and in good faith to try to reach agreement upon the third appraiser. If, however, the two appraisers fail to reach agreement upon a third appraiser within ten days after the Third Appraisal Notice is delivered:
     (a) NAI and BNPPLC will each cause its respective appraiser to deliver, no later than fifteen days after the delivery of the Third Appraisal Notice, an unqualified written promise addressed to both of NAI and BNPPLC: (i) to act promptly, reasonably and in good faith in trying to reach agree upon the third appraiser, and (ii) to propose and consider proposals of persons as the third appraiser on the basis of objectivity and competence, not on the basis of such persons’ relationships with the other appraisers or with NAI or BNPPLC, and not on the basis of preferences expressed by NAI or BNPPLC.
     (b) If, despite the delivery of the promises described in the preceding subsection, the two appraisers fail to reach agreement upon a third appraiser within thirty days after the Third Appraisal Notice is delivered, then each of the first two appraisers must immediately submit its top choice for the third appraiser to the then highest ranking officer of the North Carolina Bar Association who will agree to help and who has no attorney/client or other significant relationship to either NAI or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within ten days after such choices are submitted to him.
4. Resolution of Issues by the Third Appraiser. If a third appraiser is selected under the procedure set out above:
     (a) No later than thirty days after a third appraiser is selected, each of the first two appraisers must submit (and NAI and BNPPLC will each cause its appointed appraiser to submit) his best estimate of Fair Market Value, together with a written report supporting such estimate. (Such report need not be in the form of a formal appraisal, and may contain any qualifications the submitting appraiser deems necessary under the circumstances. Any such qualifications, however, may be considered by the third appraiser for purposes of the selection required by the next subsection.)
     (b) After receipt of the two estimates required by the preceding subsection, and no later than forty-five days after the third appraiser is selected, he must (i) choose one or the other of the two estimates of Fair Market Value submitted by the first two appraisers as being the more accurate in his opinion, and (ii) notify NAI and BNPPLC of which estimate he chose. The third appraiser will not be asked or allowed to specify an amount as Fair Market Value that is different than an estimate provided by one of the other two appraisers (either by averaging the two estimates or otherwise). The estimate of Fair Market Value thus chosen by the third appraiser as being the more accurate will be binding upon NAI and BNPPLC.
5. Criteria For Selecting Appraisers; Cost of Appraisals. All appraisers selected for the
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appraisal process set out in this Exhibit will be disinterested, reputable, qualified appraisers with the designation of MAI or equivalent and with at least five years experience in appraising commercial properties comparable to the Property. NAI and BNPPLC will each bear the expense of the appraiser appointed by it, and the expense of the third appraiser and of any officer of the North Carolina Bar Association who participates in the appraisal process described above will be shared equally by NAI and BNPPLC.
6. Time is of the Essence; Defaults.
     (a) All time periods and deadlines specified in this Exhibit are of the essence.
     (b) Each party must cause the appraiser appointed by it (as set forth in Section 2(a)) to comply in a timely manner with the requirements of this Exhibit applicable to such appraiser. Accordingly, if an appraiser appointed by one of the parties as provided in Section 2(a) fails to comply in a timely manner with any provision of this Exhibit, such failure will be considered a default by the party who appointed such appraiser.
     (c) Any breach of or default under this Exhibit by either party will be construed as a breach of the Amended and Restated Purchase Agreement to which this Exhibit is attached.
     (d) Any such breach or default by NAI will constitute a 97-1/Default (100%); provided, however:
     (1) Before characterizing any such breach or default as a 97-1/Default (100%), BNPPLC must first notify NAI of the breach or default and give NAI the opportunity, during the five days after delivery of such notice, to fully rectify the breach or default.
     (2) Any breach or default by NAI under this Exhibit will be deemed rectified if, within such five day period, NAI offers BNPPLC an unqualified written agreement that all determinations of Fair Market Value required by this Agreement will, if made by the appraiser appointed by BNPPLC as hereinabove provided, be binding upon BNPPLC and NAI. (It is understood that following the delivery of any such agreement by NAI, no further input from NAI’s appraiser or from any official of the North Carolina bar association or from a third appraiser will be required for any required determination of Fair Market Value.)
Exhibit B to Amended and Restated Purchase Agreement (RTP Data Center) – Page 4

 

 

Exhibit C
Requirements Re: Forms to Accomplish Assignment and Conveyance
The form of the documents to be used to accomplish any conveyance of BNPPLC’s interest in the Improvements and other Property pursuant to this Agreement will depend upon whether the conveyance is to NAI or an Applicable Purchaser and, in the case of an conveyance by NAI itself, upon whether NAI elects to take an assignment of the Ground Lease or to terminate the Ground Lease.
If NAI is itself acquiring BNPPLC’s interest in the Property, the conveyance of such interest will be accomplished either by (A) the execution of an Agreement Concerning Ground Lease in the form attached as Exhibit C-1, which (among other things) will effectively terminate the Ground Lease with the result that BNPPLC’s interest in all Improvements will revert to NAI by operation of law, or (B) BNPPLC’s execution of assignments in the forms attached as Exhibit C-2 and Exhibit C-3 and NAI’s execution of an Acknowledgment of Disclaimer of Representations and Warranties in the form attached as Exhibit C-4. NAI may choose between the Agreement Concerning Ground Lease or the alternative forms attached as Exhibits C-2, C-3 and C-4; however, if NAI fails to notify BNPPLC at least fifteen days prior to the Designated Sale Date that NAI chooses to receive the assignments in the forms attached as Exhibit C-2 and Exhibit C-3, BNPPLC may assume that NAI has elected instead to have BNPPLC execute the Agreement Concerning Ground Lease in the form attached as Exhibit C-1. If NAI does choose to receive the assignments in the forms attached as Exhibit C-2 and Exhibit C-3, NAI must execute and deliver to BNPPLC the Acknowledgment of Disclaimer of Representations and Warranties in the form attached as Exhibit C-4.
If an Applicable Purchaser is acquiring BNPPLC’s interest in the Improvements and other Property, such interest will be conveyed by BNPPLC’s execution and delivery of assignments in the forms attached as Exhibit C-2 and Exhibit C-3, and the Applicable Purchaser must execute and deliver to BNPPLC an Acknowledgment of Disclaimer of Representations and Warranties in the form attached as Exhibit C-4.

 

 

Exhibit C-1
RECORDING REQUESTED BY AND,
WHEN RECORDED, RETURN TO:
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
AGREEMENT CONCERNING GROUND LEASE
     THIS AGREEMENT CONCERNING GROUND LEASE (this “Agreement”) dated as of                     , 20___ (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
This Agreement is entered into upon, and with respect to, the following facts and intentions:
     A. BNPPLC and NAI have heretofore entered into the following agreements:
     (1) Amended and Restated Ground Lease (RTP Data Center) dated as of November 29, 2007 and recorded (or referenced in a memorandum thereof recorded) in Book ___, page ___ of the Wake County, North Carolina Registry (as the same may have been modified, the “Ground Lease”), whereby NAI, as ground lessor, ground leased to BNPPLC, as ground lessee, that certain land more particularly described in Annex A, attached hereto and incorporated herein by this reference (herein the “Land”); and
     (2) Amended and Restated Lease Agreement (RTP Data Center) dated as of November 29, 2007 (as the same may have been modified, the “Sublease”), which was the subject of that certain Short Form of Sublease, dated as of November 29, 2007 and recorded in Book ___, page ___ of the Wake County, North Carolina Registry (the “Short Form of Sublease”), whereby BNPPLC, as sublessor, leased to NAI, as sublessee, its ground leasehold interest in the Land and all of the improvements located thereon (collectively the “Subleased Premises”); and
     (3) Amended and Restated Purchase Agreement (RTP Data Center) dated as of November 29, 2007 (has the same may have been modified, the “Purchase Agreement”), which was the subject of that certain Memorandum of Purchase Agreement, dated as of November 29, 2007, recorded in Book ___, page ___ of the Wake County, North Carolina Registry.
     (4) Amended and Restated Common Definitions and Provisions Agreement

 

 

(RTP Data Center) dated as of November 29, 2007 Date (as the same may have been modified, the “Common Definitions and Provisions Agreement”). As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     B. BNPPLC and NAI now mutually wish to terminate the Ground Lease on the terms and conditions more particularly herein set forth.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration the adequacy of which is hereby acknowledges, the parties hereto agree as follows:
     1. Termination of Ground Lease. As of the Effective Date, BNPPLC hereby surrenders all of its right title and interest in the Ground Lease unto NAI, subject only to the “Permitted Encumbrances” described in Annex B attached hereto and incorporated herein by this reference, and the Ground Lease is hereby terminated. Notwithstanding anything to the contrary in this Agreement, BNPPLC does, for itself and its successors, covenant, warrant and agree to defend the title to the Land against claims and demands of any person claiming under or through a Lien Removable by BNPPLC. Except as expressly set forth in the preceding sentence, BNPPLC makes no warranty of title, express or implied.
     2. Acknowledgment of Reversion. BNPPLC also acknowledges and agrees that because of the termination of the Ground Lease, all of BNPPLC’s right, title and interest in and to the following property will revert to NAI and BNPPLC does hereby forever relinquish, waive, and quitclaim unto NAI (subject to such Permitted Encumbrances):
  A.   the Sublease;
 
  B.   the Purchase Agreement;
 
  C.   any pending or future award made because of our condemnation affecting the Property or because of any conveyance to be made in lieu thereof, and any unpaid proceeds of insurance or claim or cause of action for damages, loss or injury to the Subleased Premises; and
 
  D.   all other property included within the definition of “Property” as set forth in the Purchase Agreement;
provided, however, that excluded from this conveyance and reserved to BNPPLC are any rights or privileges of BNPPLC under the following are expressly reserved and retained by BNPPLC: (i) the indemnities set forth in the Sublease and the Ground Lease, whether such rights are
Exhibit C-1 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 2

 

 

presently known or unknown, including rights of BNPPLC to be indemnified against environmental claims of third parties, as provided in the Ground Lease which may not presently be known; and (ii) provision in the Sublease that establish the right of BNPPLC to recover any accrued unpaid rent under the Sublease which may be outstanding as of the date hereof; and (iii) agreements between BNPPLC and BNPPLC’s Parent or any Participant, or any modification or extension thereof.
BNPPLC agrees to warrant and defend the title to the Subleased Premises as herein assigned, against claims and demands of any person claiming under or through a Lien Removable by BNPPLC relating to the Subleased Premises.
     3. “As Is” Reversion. Notwithstanding any contrary provisions contained herein, NAI acknowledges that BNPPLC 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 Subleased Premises, and NAI, by acceptance of this agreement, accepts the Subleased Premises “As Is,” “Where Is,” and “With All Faults,” and without any such representation or warranty by BNPPLC as to environmental matters, the physical condition of the Subleased Premises, compliance with subdivision or platting requirements or construction of any improvements. Without limiting the generality of the foregoing, NAI hereby further acknowledges and agrees that warranties of merchantability and fitness for a particular purpose are excluded from the transactions contemplated by this Agreement, as are any warranties arising from a course of dealing or usage of trade. NAI hereby assumes all risk and liability (and agrees that BNPPLC will not be liability 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 Subleased Premises, except for damages proximately caused by (and attributed by any applicable principles of comparative fault to) the “Established Misconduct” of BNPPLC.
     4. Binding Effect. The terms, provisions, covenants, and conditions hereof will be binding upon NAI and BNPPLC and their respective successors and assigns, and any other party claiming through either of them, and will inure to the benefit of NAI and BNPPLC and all transferees, mortgages, successors and assigns.
     5. Miscellaneous. This Agreement and any other agreement relating hereto and executed concurrently herewith represent the entire agreement of the parties hereto with respect to the subject matter hereof and supersede any prior negotiations and agreement between BNPPLC and NAI concerning the subject matter hereof. No amendment or modification of this Agreement will be binding or valid unless express in a writing executed by both parties hereto. This Agreement will be governed by and construed in accordance with the laws of the State of North Carolina without regard to conflict or choice of laws. Words in the singular number will be held to include the plural and vice versa, unless the context otherwise requires. This Agreement may be executed in counterparts, each of which will be an original and all of which together will be a single
Exhibit C-1 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 3

 

 

instrument.
[Signature pages follow.]
Exhibit C-1 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 4

 

 

IN WITNESS WHEREOF, BNPPLC and NAI have signed this Agreement Concerning Ground Lease to be effective as of                     , 20___.
                 
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation		    
 
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
             
STATE OF                                         
    )      
 
    )     SS
COUNTY OF                                         
    )      
I,                                                              , certify that                                          personally came before me this day and acknowledged that he is                                          of BNP Paribas Leasing Corporation, a Delaware corporation, and that he, as a                                          being duly authorized to do so, executed the foregoing on behalf of the corporation.
Witness my hand and official seal this the                      day of                     , 20___.
                                                                                    
Notary Public, State of                      
My Commission Expires:
                                                             
(Notary Seal)
Exhibit C-1 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 5

 

 

[Continuation of signature pages to Agreement Concerning Ground Lease dated to be effective as of                     , 20___.]
                 
    NETWORK APPLIANCE, INC., a
Delaware corporation

    
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
             
STATE OF                                         
    )      
 
    )     SS
COUNTY OF                                         
    )      
I,                                                              , certify that                                          personally came before me this day and acknowledged that he is                                          of Network Appliance, Inc., a Delaware corporation, and that he, as a                                          being duly authorized to do so, executed the foregoing on behalf of the corporation.
Witness my hand and official seal this the                      day of                     , 20___.
                                                                                  
Notary Public, State of                      
My Commission Expires:
                                                             
(Notary Seal)
Exhibit C-1 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 6

 

 

Annex A
Legal Description
[DRAFTING NOTE: TO THE EXTENT THAT THE “LAND” COVERED BY THE GROUND LEASE CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPPLC’S CONSENT OR APPROVAL AS PROVIDED IN THE CLOSING CERTIFICATE, 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 ASSIGNMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
BEING a portion of Site 12 as shown on the map entitled “Exempt Subdivision Map of Site 12”, prepared by Barbara H. Mulkey Engineering, Inc., on May 30, 2000 as recorded in the Book of Maps 2000, Page 1300, Wake County, North Carolina Registry, such portion being described as follows:
Unit 4 and the Additional Leased Premises, both as defined below (collectively, the “Ground Lease Premises”).
As used in this Exhibit:
     (1) “Additional Leased Premises” means the land surrounding and adjacent to Unit 4, depicted on the site plan attached to and made a part of this Exhibit as the area shaded in gray, which includes parking lots, driveways and other areas within the larger area designated as Common Elements in the Condominium Declaration. The outer boundaries of the Additional Leased Premises are described by metes and bounds on the last page attached to and made a part of this Exhibit. All land within those outer boundaries, other than Unit 4, is included in the Additional Leased Premises.
     (2) “Condominium Declaration” means the Declaration of Condominium for NetApp RTP Phase I Condominium recorded in Book 012647, Page 01310, Wake County, North Carolina Registry.
     (3) “Condominium Map” means the plat provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached to and made a part of this Exhibit. (The Condominium Map has also been filed in the Book of Maps CM2007, Page 444A1, Wake County, North Carolina Registry.)
Exhibit C-1 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 7

 

 

     (4) “Unit 4” means the land designated and described in the Condominium Declaration as Unit 4 and is shown on the Condominium Map and site plan attached to and made a part of this Exhibit.
TOGETHER WITH, easements appurtenant to the Amended and Restated Ground Lease Premises as described in Exhibit A attached to the Ground Lease dated as of November 29, 2007 between BNPPLC, as lessee, and NAI, as lessor (the “Ground Lease”);
SUBJECT, HOWEVER, to an easement reserved over the Additional Leased Premises (but not any part of Unit 4) in favor of the Association as described in Exhibit A attached to the Ground Lease.
Exhibit C-1 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 8

 

 

(MAP)
Exhibit C-1 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 9

 

 

(MAP)
Exhibit C-1 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 10

 

 

Attachment to Exhibit A — Metes and Bounds
Description of “Additional Leased Premises”
           The following is a metes and bounds description of the outer boundaries of the Additional Leased Premise:
BEGINNING at NCGS Monument “Hopson”, said monument having NC Grid Coordinates of N=773,721.48 and E=2,034,907.39 (NAD 83), traveling thence South 11o 44' 59" West 6154.66 feet to a right-of-way monument on the southern margin of Louis Stephens Drive (a 100 foot public right-of-way), thence North 72o 48' 35" East 164.29 feet to a right-of-way monument on the southern margin of Kit Creek Road (a 150 foot public right-of-way); thence with the southern margin of said Kit Creek Road the following two (2) courses and distances:
  (1)   South 68o 46' 54 East 412.64 feet to a right-of-way monument; and
 
  (2)   with a curve to the right having a radius of 924.83 feet, an arc length of 475.96, and a chord bearing and distance of South of 54o 02' 59" East 470.72 feet to a computed point;
said computed being the POINT AND PLACE OF BEGINNING; thence from said point of beginning and continuing with the southern margin of Kit Creek Road South 39o 18' 29" East 571.64 feet to a computed point, thence cornering and leaving said right-of-way and with the common line of property now or formerly owned by Research Triangle Foundation of NC (DB 1670 PG 239) the following two (2) courses and distances:
  (1)   South 50o 41' 31" West 100.00 feet to an iron pipe found; and
 
  (2)   South 83o 31' 01" West 483.47 feet to an iron pipe found;
thence cornering and along three (3) new lines within the bounds of property owned by Network Appliance, Inc. (DB 10941 Pg 2054) as follows:
  (1)   North 12o 44' 00" West 279.97 feet;
 
  (2)   North 48o 55' 31" West 50.30 feet; and
 
  (3)   North 32o 57' 24" East 401.61 feet to a point along the southern margin of said Kit Creek Road;
thence with the southern margin of Kit Creek Road along a curve to the right having a radius of 925.04 feet, an arc length of 113.05 feet and a chord bearing and distance of South 42o 48' 33" East 112.98 feet to the POINT AND PLACE OF BEGINNING, containing 5.36 acres (233,621 square feet), more or less, said area shown on rendering attached hereto.
Exhibit C-1 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 11

 

Annex B
Permitted Encumbrances
[DRAFTING NOTE: BEFORE THIS AGREEMENT IS ACTUALLY EXECUTED AND DELIVERED BY BNPPLC: ALL PERMITTED ENCUMBRANCES LISTED IN EXHIBIT B TO THE CLOSING CERTIFICATE WILL BE SET OUT BELOW, IN ADDITION TO THE ITEMS ALREADY LISTED. ALSO, IF ANY ENCUMBRANCES (OTHER THAN “LIENS REMOVABLE BY BNPPLC”) ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW OR IN EXHIBIT B TO THE CLOSING CERTIFICATE, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW. AFTER SUCH ADJUSTMENTS ARE MADE, THIS “DRAFTING NOTE” WILL BE DELETED. THE ADDITIONAL ENCUMBRANCES TO BE LISTED BELOW WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPPLC AS “PERMITTED ENCUMBRANCES” FROM TIME TO TIME OR BECAUSE OF NAI’s REQUEST FOR BNPPLC’S CONSENT OR APPROVAL TO AN ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a “Lien Removable by BNPPLC” (as defined in the Amended and Restated Common Definitions and Provisions Agreement), including the following matters to the extent the same are still valid and in force:
1.   Taxes for the year 2007 and subsequent years, not yet due and payable.
 
2.   Amended Declaration of Covenants recorded in Book 1663, page 559, Wake County Registry and Amended Conditions, Covenants, Restrictions and Reservations recorded in Book 3679, page 53, Wake County Registry as further amended and modified by instrument recorded in Book 3679, page 41, Wake County Registry; instrument recorded in Book 3679, page 48, Wake County Registry; and instrument recorded in Book 3679, page 53, Wake County Registry. The aforesaid covenants were extended by Extension Agreement recorded in Book 6098, page 683, Wake County Registry.
 
3.   Easement(s) to Duke Power Company recorded in Book 1306, page 330; Book 1262, page 51; Book 1262, page 186; Book 1306, page 334; Book 1389, page 570; and Book 1389, page 568, Wake County Registry.
 
4.   Sanitary Sewer Easement recorded in Book 4783, page 360, Wake County Registry; and shown in Map Book 1990, pages 973-976, Wake County Registry.
 
5.   Easement to Duke Power Company as shown in Plat Book 1985, page 1208 and Plat Book 1985, 1347, Wake County Registry.
6.   The following maters as shown on plat prepared by Barbara H. Mulkey Engineering,
Exhibit C-1 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 12

 

 

    Inc., dated May 30, 2000 entitled “Exempt Subdivision Map of Site 12”, recorded in Book of Maps 2000, page 1300, Wake County Registry:
  (a)   New permanent drainage easement along the eastern right of way identified on such plat as “Future Roadway for Louis Stephens Drive”;
 
  (b)   Surface Cover Maintenance easement along the western boundary of Site 12 as shown on such plat;
 
  (c)   One hundred (100) year flood zone along the southern boundary of Site 12 as shown on such plat;
 
  (d)   Temporary drainage easement along norther boundary of Site 12 as shown on such plat;
 
  (e)   Existing sixty (60) foot right of way of Kit Creek Road, which right of way is to be abandoned (if it has not already been abandoned) as located in the northeastern portion of Site 12 as shown on such plat;
 
  (f)   Overhead electric lines located on the northeastern portion of Site 12 as shown on such plat;
 
  (g)   Flood plain area, wetlands and creek located within the Natural Area Preserve as shown on such plat; and
 
  (h)   Thirty (30) foot Wake County sanitary sewer easement within the Natural Areas Preserve as shown on such plat.
7.   Except to the extent inconsistent with or in conflict with the requirements, limitations and qualifications of subparagraphs ?, 11(L) and ? of the Ground Lease, the terms and conditions of the Condominium Declaration.
Exhibit C-1 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 13

 

 

Exhibit C-2
Form of Assignment of Ground Lease and Improvements
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
         
NAME:   [NAI or the Applicable Purchaser]
ADDRESS:
        
ATTN:
 
 
    
CITY:
 
 
    
STATE:
 
 
    
Zip:
 
 
    
 
 
 
    
ASSIGNMENT OF GROUND LEASE AND IMPROVEMENTS
(Covering Improvements and Leasehold Estate in Land)
     BNP Paribas Leasing Corporation (“Assignor”), a Delaware corporation, for and in consideration of the sum of Ten Dollars ($10.00) and other valuable consideration paid to Assignor by [NAI or the Applicable Purchaser] (hereinafter called “Assignee”), the receipt and sufficiency of which are hereby acknowledged, does hereby GRANT, SELL, CONVEY, ASSIGN and DELIVER to Assignee (1) the leasehold estate created by an Amended and Restated Ground Lease (RTP Data Center) from NAI to Assignor dated as of November 29, 2007, which covers the land described in Annex A attached hereto and hereby made a part hereof, and (2) all other rights, titles and interests of Assignor in and to (a) such land, (b) the buildings and other improvements situated on such land, (c) any fixtures and other property affixed thereto and (d) the adjacent streets, alleys and rights-of-way (all of the property interests conveyed hereby being hereinafter collectively referred to as the “Property”); however, this conveyance is made by Assignor and accepted by Assignee subject to the terms and conditions of the aforementioned Ground Lease and to all zoning and other ordinances affecting the Property, all general or special assessments due and payable after the date hereof, all encroachments, variations in area or in measurements, boundary line disputes, roadways and other matters not of record which would be disclosed by a current survey and inspection of the Property, and the encumbrances listed in Annex B attached hereto and made a part hereof (collectively, the “Permitted Encumbrances”).
     TO HAVE AND TO HOLD the Property, together with all and singular the rights and appurtenances thereto belonging unto Assignee, its successors and assigns, forever, and Assignor does hereby bind Assignor and Assignor’s successors and assigns to warrant and forever defend all and singular the said premises unto Assignee, its successors and assigns against every person whomsoever lawfully claiming, or to claim the same, or any part thereof by, through or under Assignor, but not otherwise; subject, however, to the Permitted Encumbrances. Except as expressly set forth in the preceding sentence, Assignor makes no warranty of title, express or

 

 

implied.
     Assignor 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 Property, and Assignee, by acceptance of this Assignment, accepts the Property “AS IS,” “WHERE IS,” “WITH ALL FAULTS” and without any such representation or warranty by Assignor as to environmental matters, the physical condition of the Property, compliance with subdivision or platting requirements or construction of any improvements. Without limiting the generality of the foregoing, by acceptance of this Assignment, Assignee hereby further acknowledges and agrees that warranties of merchantability and fitness for a particular purpose are excluded from the transaction contemplated by this Assignment, as are any warranties arising from a course of dealing or usage of trade.
     Assignee hereby assumes the obligations (including any personal obligations) of Assignor, 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 Assignment.
[Signature pages follow.]
Exhibit C-2 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 2

 

 

IN WITNESS WHEREOF, Assignor and Assignee have signed this Assignment to be effective as of                     , 20___.
                 
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation		    
 
                
 
  By:            
             
 
      Name:        
 
      Title:  
 
    
 
         
 
    
                 
STATE OF
        )      
 
 
     )      SS
COUNTY OF
        )      
 
 
 
            
I,                                                              , certify that                                                               personally came before me this day and acknowledged that he is                                                               of BNP Paribas Leasing Corporation, a Delaware corporation, and that he, as a                                          being duly authorized to do so, executed the foregoing on behalf of the corporation.
Witness my hand and official seal this the                      day of___, 20___.
             
 
     
 
Notary Public, State of                      		   
 
            
My Commission Expires:
            
 
 
            
 
            
(Notary Seal)
            
Exhibit C-2 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 3

 

 

[Continuation of signature pages to Assignment of Ground Lease and Improvements dated to be effective as of                     , 20___.]
         
[NAI or the Applicable Purchaser]    
 
        
By:
        
Name:
 
 
    
Title:
 
 
    
 
 
 
    
                 
STATE OF
        )      
 
 
     )      SS
COUNTY OF
        )      
 
 
 
            
I,                                                              , certify that                                                               personally came before me this day and acknowledged that he is                                                               of [NAI or the Applicable Purchaser], a                                                  , and that he, as a                                                                being duly authorized to do so, executed the foregoing on behalf of the                     .
Witness my hand and official seal this the                      day of___, 20___.
             
 
     
 
Notary Public, State of                      		   
 
            
My Commission Expires:
            
 
 
            
 
            
(Notary Seal)
            
Exhibit C-2 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 4

 

 

Annex A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE “LAND” COVERED BY THE GROUND LEASE CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPPLC’S CONSENT OR APPROVAL AS PROVIDED IN THE CLOSING CERTIFICATE, 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 ASSIGNMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
BEING a portion of Site 12 as shown on the map entitled “Exempt Subdivision Map of Site 12”, prepared by Barbara H. Mulkey Engineering, Inc., on May 30, 2000 as recorded in the Book of Maps 2000, Page 1300, Wake County, North Carolina Registry, such portion being described as follows:
Unit 4 and the Additional Leased Premises, both as defined below (collectively, the “Ground Lease Premises”).
As used in this Exhibit:
     (1) “Additional Leased Premises” means the land surrounding and adjacent to Unit 4, depicted on the site plan attached to and made a part of this Exhibit as the area shaded in gray, which includes parking lots, driveways and other areas within the larger area designated as Common Elements in the Condominium Declaration. The outer boundaries of the Additional Leased Premises are described by metes and bounds on the last page attached to and made a part of this Exhibit. All land within those outer boundaries, other than Unit 4, is included in the Additional Leased Premises.
     (2) “Condominium Declaration” means the Declaration of Condominium for NetApp RTP Phase I Condominium recorded in Book 012647, Page 01310, Wake County, North Carolina Registry.
     (3) “Condominium Map” means the plat provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached to and made a part of this Exhibit. (The Condominium Map has also been filed in the Book of Maps CM2007, Page 444A1, Wake County, North Carolina Registry.)
Exhibit C-2 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 5

 

 

     (4) “Unit 4” means the land designated and described in the Condominium Declaration as Unit 4 and is shown on the Condominium Map and site plan attached to and made a part of this Exhibit.
TOGETHER WITH, easements appurtenant to the Amended and Restated Ground Lease Premises as described in Exhibit A attached to the Ground Lease dated as of November 29, 2007 between BNPPLC, as lessee, and NAI, as lessor (the “Ground Lease”);
SUBJECT, HOWEVER, to an easement reserved over the Additional Leased Premises (but not any part of Unit 4) in favor of the Association as described in Exhibit A attached to the Ground Lease.
Exhibit C-2 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 6

 

 

(MAP)
Exhibit C-2 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 7

 

 

(MAP)
Exhibit C-2 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 8

 

 

Attachment to Exhibit A — Metes and Bounds
Description of “Additional Leased Premises”
     The following is a metes and bounds description of the outer boundaries of the Additional Leased Premise:
BEGINNING at NCGS Monument “Hopson”, said monument having NC Grid Coordinates of N=773,721.48 and E=2,034,907.39 (NAD 83), traveling thence South 11° 44' 59" West 6154.66 feet to a right-of-way monument on the southern margin of Louis Stephens Drive (a 100 foot public right-of-way), thence North 72° 48' 35" East 164.29 feet to a right-of-way monument on the southern margin of Kit Creek Road (a 150 foot public right-of-way); thence with the southern margin of said Kit Creek Road the following two (2) courses and distances:
  (1)   South 68° 46' 54" East 412.64 feet to a right-of-way monument; and
 
  (2)   with a curve to the right having a radius of 924.83 feet, an arc length of 475.96, and a chord bearing and distance of South 54° 02' 59" East 470.72 feet to a computed point;
said computed being the POINT AND PLACE OF BEGINNING; thence from said point of beginning and continuing with the southern margin of Kit Creek Road South 39° 18' 29" East 571.64 feet to a computed point, thence cornering and leaving said right-of-way and with the common line of property now or formerly owned by Research Triangle Foundation of NC (DB 1670 PG 239) the following two (2) courses and distances:
     (1) South 50° 41' 31" West 100.00 feet to an iron pipe found; and
     (2) South 83° 31' 01" West 483.47 feet to an iron pipe found;
thence cornering and along three (3) new lines within the bounds of property owned by Network Appliance, Inc. (DB 10941 Pg 2054) as follows:
     (1) North 12° 44' 00" West 279.97 feet;
     (2) North 48° 55' 31" West 50.30 feet; and
     (3) North 32° 57' 24" East 401.61 feet to a point along the southern margin of said Kit Creek Road;
thence with the southern margin of Kit Creek Road along a curve to the right having a radius of 925.04 feet, an arc length of 113.05 feet and a chord bearing and distance of South 42° 48' 33" East 112.98 feet to the POINT AND PLACE OF BEGINNING, containing 5.36 acres (233,621 square feet), more or less, said area shown on the rendering attached hereto.
Exhibit C-2 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 9

 

 

Annex B
Permitted Encumbrances
[DRAFTING NOTE: BEFORE THIS ASSIGNMENT IS ACTUALLY EXECUTED AND DELIVERED BY BNPPLC: ALL PERMITTED ENCUMBRANCES LISTED IN EXHIBIT B TO THE CLOSING CERTIFICATE WILL BE SET OUT BELOW, IN ADDITION TO THE ITEMS ALREADY LISTED. ALSO, IF ANY ENCUMBRANCES (OTHER THAN “LIENS REMOVABLE BY BNPPLC”) ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW OR IN EXHIBIT B TO THE CLOSING CERTIFICATE, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW. AFTER SUCH ADJUSTMENTS ARE MADE, THIS “DRAFTING NOTE” WILL BE DELETED. THE ADDITIONAL ENCUMBRANCES TO BE LISTED BELOW WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPPLC AS “PERMITTED ENCUMBRANCES” FROM TIME TO TIME OR BECAUSE OF NAI’s REQUEST FOR BNPPLC’S CONSENT OR APPROVAL TO AN ADJUSTMENT.]
     This conveyance is subject to all encumbrances not constituting a “Lien Removable by BNPPLC” (as defined in the Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) incorporated by reference into the Amended and Restated Lease Agreement (RTP Data Center) 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 year 2007 and subsequent years, not yet due and payable.
 
2.   Amended Declaration of Covenants recorded in Book 1663, page 559, Wake County Registry and Amended Conditions, Covenants, Restrictions and Reservations recorded in Book 3679, page 53, Wake County Registry as further amended and modified by instrument recorded in Book 3679, page 41, Wake County Registry; instrument recorded in Book 3679, page 48, Wake County Registry; and instrument recorded in Book 3679, page 53, Wake County Registry. The aforesaid covenants were extended by Extension Agreement recorded in Book 6098, page 683, Wake County Registry.
 
3.   Easement(s) to Duke Power Company recorded in Book 1306, page 330; Book 1262, page 51; Book 1262, page 186; Book 1306, page 334; Book 1389, page 570; and Book 1389, page 568, Wake County Registry.
 
4.   Sanitary Sewer Easement recorded in Book 4783, page 360, Wake County Registry; and shown in Map Book 1990, pages 973-976, Wake County Registry.
 
5.   Easement to Duke Power Company as shown in Plat Book 1985, page 1208 and Plat Book 1985, 1347, Wake County Registry.
Exhibit C-2 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 10

 

 

6.   The following maters as shown on plat prepared by Barbara H. Mulkey Engineering, Inc., dated May 30, 2000 entitled “Exempt Subdivision Map of Site 12”, recorded in Book of Maps 2000, page 1300, Wake County Registry:
  (a)   New permanent drainage easement along the eastern right of way identified on such plat as “Future Roadway for Louis Stephens Drive”;
 
  (b)   Surface Cover Maintenance easement along the western boundary of Site 12 as shown on such plat;
 
  (c)   One hundred (100) year flood zone along the southern boundary of Site 12 as shown on such plat;
 
  (d)   Temporary drainage easement along norther boundary of Site 12 as shown on such plat;
 
  (e)   Existing sixty (60) foot right of way of Kit Creek Road, which right of way is to be abandoned (if it has not already been abandoned) as located in the northeastern portion of Site 12 as shown on such plat;
 
  (f)   Overhead electric lines located on the northeastern portion of Site 12 as shown on such plat;
 
  (g)   Flood plain area, wetlands and creek located within the Natural Area Preserve as shown on such plat; and
 
  (h)   Thirty (30) foot Wake County sanitary sewer easement within the Natural Areas Preserve as shown on such plat.
7.   Except to the extent inconsistent with or in conflict with the requirements, limitations and qualifications of subparagraphs ?, 11(L) and ? of the Ground Lease, the terms and conditions of the Condominium Declaration.
Exhibit C-2 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 11

 

 

Exhibit C-3
BILL OF SALE AND ASSIGNMENT
     Reference is made to: (1) that certain Amended and Restated Purchase Agreement (RTP Data Center) dated as of November 29, 2007, (the “Purchase Agreement”) between BNP Paribas Leasing Corporation (“Assignor”), a Delaware corporation, and Network Appliance, Inc., a Delaware corporation, and (2) that certain Amended and Restated Lease Agreement dated as of November 29, 2007 (the “Lease”) between Assignor, as landlord, and Network Appliance, Inc., a Delaware corporation, as tenant. (Capitalized terms used and not otherwise defined in this document are intended to have the meanings assigned to them in the Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) incorporated by reference into both the Purchase Agreement and Lease.)
     As contemplated by the Purchase Agreement, Assignor hereby sells, transfers and assigns unto [NAI or the Applicable Purchaser], 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 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 personal or intangible 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 6 of the Lease or otherwise acquired by Assignor, at the time of the execution and delivery of the 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 Lease and Purchase Agreement or thereafter arising, under Permitted Encumbrances; and (iii) any general intangibles, 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 interest of Assignor in and to the Property instead of Assignor.
Provided, however, excluded from this conveyance and reserved to Assignor are any rights or privileges of Assignor under the following: (1) the indemnities set forth in the Construction Agreement, the Lease and the Ground 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 Construction Agreement and the Lease which may not presently be known, all of which indemnities will survive the deliver of this Bill of Sale and Assignment and other documents required by the Purchase Agreement, (2) provisions in the Lease that establish the right of Assignor to recover any accrued unpaid rent under the Lease which may be outstanding as of the date hereof, (3) agreements between Assignor and Assignor’s Parent or any Participant, or (4) any other instrument being delivered to Assignor contemporaneously herewith pursuant to the Purchase Agreement.[Drafting Note: The following sentence will be included unless the Property is being sold to NAI or an Affiliate pursuant to subparagraph 2(A)(1), 3(A) or 3(B) of the Purchase Agreement: Also excluded from this conveyance and reserved to Assignor are (i) the right to retain Escrowed Proceeds, if any, that consist of condemnation or insurance proceeds resulting from a Pre-completion Force Majeure Event, and (ii) any right to receive future payments of any such condemnation or insurance proceeds.]
     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 Assignor, but not otherwise.
     Assignee hereby assumes and agrees to keep, perform and fulfill Assignor’s obligations, if any, relating to any permits or contracts (including the Lease), under which Assignor has rights being assigned herein.
[Signature pages follow.]
Exhibit C-3 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 2

 

 

IN WITNESS WHEREOF, Assignor and Assignee have signed this Bill of Sale and Assignment to be effective as of                     , 20___.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:      
    Name:      
    Title:      
 
                 
STATE OF
        )      
 
             
 
        )     SS
COUNTY OF
        )      
 
               
I,                                                              , certify that                                                               personally came before me this day and acknowledged that he is                                                               of BNP Paribas Leasing Corporation, a Delaware corporation, and that he, as a                                                               being duly authorized to do so, executed the foregoing on behalf of the corporation.
Witness my hand and official seal this the                      day of                    , 20___.
                                                                                     
Notary Public, State of                     
My Commission Expires:
                                         
(Notary Seal)
Exhibit C-3 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 3

 

 

[Continuation of signature pages to Bill of Sale and Assignment dated to be effective as of                     , 20___.]
[NAI or the Applicable Purchaser]
By:                                         
Name:                                         
Title:                                         
                 
STATE OF
        )      
 
             
 
        )     SS
COUNTY OF
        )      
 
               
I,                                                                , certify that                                                                 personally came before me this day and acknowledged that he is                                                                 of [NAI or the Applicable Purchaser], a                                                                , and that he, as a                                                                 being duly authorized to do so, executed the foregoing on behalf of the
                                          .
Witness my hand and official seal this the                      day of                    , 20___.
                                                                                      
Notary Public, State of                     
My Commission Expires:
                                         
(Notary Seal)
Exhibit C-3 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 4

 

 

Exhibit C-4
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], a                                          (“Assignee”).
     Contemporaneously with the execution of this Certificate, BNP Paribas Leasing Corporation (“Assignor”), a Delaware corporation, is executing and delivering to Assignee (1) an Assignment of Ground Lease and Improvements, 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, Assignee acknowledges that Assignor 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 Assignee, 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, Assignee 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. Assignee hereby assumes all risk and liability (and agrees that Assignor will 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 Assignor. As used in the preceding sentence, “Established Misconduct” is intended to have, and be limited to, the meaning given to it in the Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) incorporated by reference into the Amended and Restated Purchase Agreement (RTP Data Center) dated as of November 29, 2007 between Assignor and Network Appliance, Inc., pursuant to which Amended and Restated Purchase Agreement Assignor is delivering the Conveyancing Documents.
     The provisions of this Certificate will be binding on Assignee, its successors and assigns and any other party claiming through Assignee. Assignee hereby acknowledges that Assignor is entitled to rely and is relying on this Certificate.
[Signature page follows.]

 

 

Exhibit C-4 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 2

 

IN WITNESS WHEREOF, Assignor and Assignee have signed this Bill of Sale and Assignment to be effective as of                     , 20___.
[NAI or the Applicable Purchaser]
By:                                         
Name:                                         
Title:                                         
                 
STATE OF
        )      
 
             
 
        )     SS
COUNTY OF
        )      
 
               
I,                                                              , certify that                                          personally came before me this day and acknowledged that he is                                          of [NAI or the Applicable Purchaser], a                                          , and that he, as a                                          being duly authorized to do so, executed the foregoing on behalf of the                                            .
Witness my hand and official seal this the                      day of                    , 20___.
                                                                                  
Notary Public, State of                     
My Commission Expires:
                                         
(Notary Seal)
Exhibit C-4 to Amended and Restated Purchase Agreement (RTP Data Center) – Page 3

 

 

Exhibit D
SECRETARY’S CERTIFICATE
     The undersigned, [Secretary or Assistant Secretary] of BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware 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 BNPPLC 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 Sale Closing Documents on behalf of BNPPLC.]
         
Name   Title   Signature
 
        
 
       
 
        
 
       
     3. That the resolutions attached hereto and made a part hereof were duly adopted by the Board of Directors of BNPPLC in accordance with BNPPLC’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                                         , 20___.
                                                                                     
[signature and title]

 

 

CORPORATE RESOLUTIONS OF
BNP PARIBAS LEASING CORPORATION
[DRAFTING NOTE: INSERT HERE COPIES OF RESOLUTIONS ADOPTED BY THE BOARD OF DIRECTORS OF BNPPLC SUFFICIENT TO AUTHORIZE THE DELIVERY OF SALE CLOSING DOCUMENTS. SUCH RESOLUTIONS MAY BE AS FOLLOWS:
     WHEREAS, pursuant to that certain Amended and Restated Purchase Agreement (RTP Data Center) (herein called the “Purchase Agreement”) dated as of November 29, 2007, by and between BNP Paribas Leasing Corporation (“BNPPLC”) and Network Appliance, Inc. (“NAI”) , BNPPLC 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 Wake County, North Carolina, more particularly described therein.
     NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of BNPPLC, in its best business judgment, deems it in the best interest of BNPPLC and its shareholders that BNPPLC convey the Property to NAI or the Applicable Purchaser pursuant to and in accordance with the terms of the Purchase Agreement.
     RESOLVED FURTHER, that the proper officers of BNPPLC, and each of them, are hereby authorized and directed in the name and on behalf of BNPPLC to cause BNPPLC to fulfill its obligations under the Purchase Agreement.
     RESOLVED FURTHER, that the proper officers of BNPPLC, 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, assignments and other documents, instruments and agreements that are 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 D to Amended and Restated Purchase Agreement (RTP Data Center) – Page 2

 

 

Exhibit E
CERTIFICATION OF NON-FOREIGN STATUS
     Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person.
     To inform [NAI or the Applicable Purchaser] (“Transferee”) that withholding of tax is not required upon the disposition of a U.S. real property interest by BNP PARIBAS LEASING CORPORATION (“Transferor”), a Delaware corporation, the undersigned hereby certifies the following on behalf of Transferor:
1) Transferor 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) Transferor is not a disregarded entity (as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax Regulations);
3) Transferor’s U.S. employer identification number is 75-2252918; and
4) Transferor’s office address is:
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Transferor understands that this Certification of Non-Foreign Status may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this Certification of Non-Foreign Status 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 Transferor.
     Dated:                                         , 20___.
         
     
        
    Name:      
    Title:      
 

 

 

Exhibit F
Notice of Election to Terminate the Supplemental Payment Obligation
and Irrevocable Release and Waiver of the Right to Purchase
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Amended and Restated Purchase Agreement (RTP Data Center) dated as of November 29, 2007 (the “Purchase Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Purchase Agreement referenced above. This letter will constitute a notice given pursuant to subparagraph 6(B) of the Purchase Agreement. As provided in that subparagraph, NAI irrevocably elects to terminate the Supplemental Payment Obligation effective immediately, subject only to the conditions described below. In addition, NAI irrevocably waives and releases its rights to purchase or cause an Affiliate of NAI to purchase the Property granted to it by the Purchase Agreement. Because of (but without limiting) such waiver and release, the Purchase Option is terminated and so are all rights of NAI under subparagraphs 2(A) and 3(A) of the Purchase Agreement.
     NAI acknowledges that this notice will not be effective to terminate the Supplemental Payment Obligation if it is not received by BNPPLC prior to the Completion Date.
     NAI also acknowledges that even if no prior 97-10/Meltdown Event has occurred, the delivery of this notice is in and of itself a 
97-10/Meltdown Event under and as defined in the Construction Agreement. Therefore, after receipt of this notice BNPPLC will be entitled to demand and receive a 97-10/Prepayment, if BNPPLC has not already done so, on and subject to the terms and conditions of Paragraph 9 of the Construction Agreement. Further, if NAI fails to make a 97-10/Permitted Prepayment required by the Construction Agreement, BNPPLC may exercise the Put Option as provided in subparagraph 3(B) of the Purchase Agreement.
     NAI also acknowledges that its right to terminate the Supplemental Payment Obligation is subject to the condition precedent that: (1) NAI must have given (and not rescinded) a Notice of NAI’s Intent to Terminate as provided in the Construction Agreement, or (2) BNPPLC must

 

 

have given any FOCB Notice as provided in the Construction Agreement. Accordingly, if neither of the notices described in the preceding sentence have been given, the Supplemental Payment Obligation will not terminate by reason of this notice.
     Finally, NAI acknowledges that because the delivery of this notice constitutes a 97-10/Meltdown Event, BNPPLC will have the right at any time for any reason or no reason to terminate the Lease by notice to NAI.
         
  NETWORK APPLIANCE, INC., a Delaware
corporation
 		  
  By:      
    Name:      
    Title:      
 
[cc all Participants]
Exhibit F to Amended and Restated Purchase Agreement (RTP Data Center) – Page 2

 

exv10w55
Exhibit 10.55
AMENDED AND RESTATED
GROUND LEASE
(RTP DATA CENTER)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
November 29, 2007
 

 

 

TABLE OF CONTENTS
         
      Page  
RECITALS
     1  
GRANTING CLAUSES
     1  
GENERAL TERMS AND CONDITIONS
     3  
 
        
1 Additional Definitions
     3  
“Common Elements”
     3  
“Condominium Declaration”
     3  
“Condominium Instruments”
     3  
“Condominium Map”
     3  
“Contingent Purchase Option”
     3  
“Fair Rental Value”
     3  
“Ground Lease Default”
     4  
“Ground Lease Rent”
     4  
“Ground Lease Term”
     4  
“Leasehold Mortgage”
     4  
“Leasehold Mortgagee”
     4  
“Owner”
     4  
“Plat”
     4  
“Turnover Date”
     4  
“Unit 4”
     4  
 
        
2 Ground Lease Term and Early Termination
     4  
 
        
3 Ground Lease Rent
     5  
 
        
4 Receipt and Application of Insurance and Condemnation Proceeds
     5  
 
        
5 No Lease Termination
     5  
 
        
6 The Lease and Other Operative Documents
     6  
 
        
7 Use of Leased Property
     6  
 
        
8 Assignment and Subletting; Pass Through of BNPPLC’s Liability Insurance and Indemnity Rights
     6  
 
        
9 Estoppel Certificate
     7  
 
        
10 Leasehold Mortgages
     8  
 
        
11 Other Representations, Warranties and Covenants of NAI
     10  
(A) Condition of the Property
     10  

 

 

TABLE OF CONTENTS
(Continued)
         
      Page  
(B) Environmental Representations
     10  
(C) Current Status of Title to the Land
     11  
(D) Intentionally Deleted
     11  
(E) Title to Improvements
     11  
(F) Defense of Adverse Title Claims
     11  
(G) Prohibition Against Consensual Liens on the Leased Property
     13  
(H) Compliance With Permitted Encumbrances
     13  
(I) Compliance With Laws
     13  
(J) Modification of Permitted Encumbrances
     13  
(K) Performance and Preservation of the Permitted Encumbrances for the Benefit of BNPPLC
     13  
(L) Cooperation by NAI and its Affiliates
     14  
(M) Condominium Instruments
     15  
(N) Omissions
     16  
(O) Insurance and Casualty
     17  
(P) Condemnation
     17  
(Q) Further Assurances
     17  
 
        
12 Ground Lease Defaults
     17  
(A) Definition of Ground Lease Default
     17  
(B) Remedy
     18  
 
        
13 Quiet Enjoyment
     18  
 
        
14 Option to Purchase
     18  
 
        
15 Miscellaneous
     19  
(A) No Merger
     19  
(B) Recording; Memorandum of Lease
     19  
 
        
16 Certain Remedies Cumulative
     19  
 
        
17 Attorney’s Fees and Legal Expenses
     19  
 
        
18 Successors and Assigns
     19  
 
        
19 Amendment and Restatement of Prior ground Lease
     20  

(ii)

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
     
Exhibit A
  Legal Description
 
    
Exhibit B
  Permitted Encumbrances List
 
    
Exhibit C
  Contingent Purchase Option
 
    
Exhibit D
  Determination of Fair Value

(iii)

 

AMENDED AND RESTATED
GROUND LEASE
(RTP DATA CENTER)
     This AMENDED AND RESTATED GROUND LEASE (RTP DATA CENTER) (this “Ground Lease”), dated as of November 29, 2007 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Ground Lease, BNPPLC and NAI are executing an Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Ground Lease for all purposes. As used in this Ground Lease, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Ground Lease are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     At the request of NAI, and to facilitate the transactions contemplated in the other Operative Documents, BNPPLC is executing this Ground Lease to acquire from NAI a leasehold estate of 99 years in the Land described in Exhibit A attached hereto (the “Land”) and any existing Improvements on the Land.
     Also contemporaneously with this Ground Lease, BNPPLC and NAI are executing an Amended and Restated Construction Agreement (RTP Data Center) (the“Construction Agreement”) and an Amended and Restated Lease Agreement (RTP Data Center) (the “Lease”). Pursuant to the Construction Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements. When the term of the Lease commences, the Lease will cover all Improvements on the Land.
     Pursuant to an Amended and Restated Purchase Agreement (RTP Data Center) dated as of the Effective Date (the “Purchase Agreement”) between BNPPLC and NAI, NAI will have the right to purchase, among other things, BNPPLC’s leasehold estate under this Ground Lease on and subject to the terms and conditions set forth therein.
GRANTING CLAUSES
     In consideration of the rent to be paid and the covenants and agreements to be performed by BNPPLC, as hereinafter set forth, NAI does hereby LEASE, DEMISE and LET unto BNPPLC for the term hereinafter set forth the Land, together with:

 

 

     (A) all easements and rights-of-way now owned or hereafter acquired by NAI for use in connection with the Land or any Improvements constructed thereon or as a means of access thereto and any and all easements and rights appurtenant to the Land; and
     (B) all right, title and interest of NAI, 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 abutting land not owned by NAI.
The Land and all of the property described in items (1) and (2) above 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 NAI as the owner of any interest in the Real Property, NAI also hereby grants and assigns to BNPPLC for the term of this Ground Lease the right to use and enjoy (and, in the case of contract rights, to enforce) such rights or interests of NAI:
     (A) the Permitted Encumbrances; and
     (B) any general intangibles, permits, licenses, franchises, certificates, and other rights and privileges related to the Real Property that BNPPLC (rather than NAI) would have acquired if BNPPLC had itself acquired the fee estate in the Real Property (excluding, however, the rights and privileges of NAI under this Ground Lease, the Construction Agreement, the Lease, the Purchase Agreement and any other Operative Documents).
Such rights and interests of NAI, 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 “Leased Property.” The Leased Property and all Improvements on the Land now or in the future (whether such Improvements are owned by BNPPLC or NAI) are hereinafter sometimes called the “Improved Property”.
     However, the leasehold estate conveyed hereby and BNPPLC’s rights hereunder are expressly made subject and subordinate to the Permitted Encumbrances listed on Exhibit B.
     Further, so long as any of the other Operative Documents remain in force, the rights and obligations of NAI and BNPPLC hereunder will be subject to any contrary provisions therein, including provisions in the Construction Agreement and the Lease that govern the collection and application of condemnation and
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insurance proceeds in the event of any taking of or damage to the Improved Property.
GENERAL TERMS AND CONDITIONS
     The Leased Property is leased by NAI to BNPPLC and is accepted and is to be used and possessed by BNPPLC upon and subject to the following terms, provisions, covenants, agreements and conditions:
1 Additional Definitions. As used in this Ground Lease, capitalized terms defined above have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and that are used but not otherwise defined have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms have the following respective meanings:
     “Common Elements” has the meaning assigned to it in the Condominium Declaration.
     “Condominium Declaration” means the Declaration of Condominium for NetApp RTP Phase I Condominium recorded in Book 012647, Page 01310, Wake County, North Carolina Registry, as such Declaration may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms and in accordance with the limitations and requirements of this Ground Lease.
     “Condominium Instruments” has the meaning assigned to it in the Condominium Declaration.
     “Condominium Map” means the map showing the units and common elements created by the Condominium Declaration attached to and made a part of Exhibit A. (The Condominium Map has also been filed in the Book of Maps CM2007, Page 444A1, Wake County, North Carolina Registry.)
     “Contingent Purchase Option” means the option granted BNPPLC by NAI as provided in Exhibit C attached to this Ground Lease.
     “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 Exhibit D, that would be agreed upon between a willing tenant, under no compulsion to lease, and a willing landlord, under no compulsion to lease, for
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unimproved land (including appurtenances) 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 this Ground Lease 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.
     “Ground Lease Default” has the meaning assigned to it in subparagraph 13(A) below.
     “Ground Lease Rent” means the rent payable by BNPPLC pursuant to Paragraph 3 below.
     “Ground Lease Term” has the meaning assigned to it in Paragraph 2 below.
     “Leasehold Mortgage” means any mortgage, deed of trust (with or without a private power of sale), security agreement or assignment executed by BNPPLC to secure an obligation to repay borrowed money or other voluntary obligations, which covers BNPPLC’s leasehold estate hereunder or any part thereof or any rents or other charges to be paid to BNPPLC pursuant to any sublease.
     “Leasehold Mortgagee” means any lender or other beneficiary of a Leasehold Mortgage that has notified NAI of the existence such Leasehold Mortgage and of its address to which notices should be delivered.
     “Owner” has the meaning assigned to it in the Condominium Declaration.
     “Plat” means the plat prepared by Barbara H. Mulkey Engineering, Inc., dated May 30, 2000, recorded in Book of Maps 2000, page
1300\, Wake County Registry.
     “Turnover Date” means the day which is thirty days after any Designated Sale Date upon which, for any reason whatsoever, NAI does not purchase the Improved Property from BNPPLC pursuant to the Purchase Agreement.
     “Unit 4” has the meaning assigned to it in the Condominium Declaration.
2 Ground Lease Term and Early Termination. The term of this Ground Lease (herein called the “Ground Lease Term”) will commence on and include the Effective Date and end on the last Business Day prior to the ninety-ninth (99th) anniversary of the Effective Date. However, subject to the prior approval of any Leasehold Mortgagee, BNPPLC will have the right
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to terminate this Ground Lease by giving a notice to NAI stating that BNPPLC 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.
3 Ground Lease Rent. The rent required by this Ground Lease (herein called “Ground Lease Rent”) will equal the Fair Rental Value, determined as provided in Exhibit D, and be paid as follows:
     Prior to the Completion Date, BNPPLC must pay Ground Lease Rent to NAI on the first Business Day of every calendar month for the preceding month. Consistent with the agreement of the parties in Exhibit D that the initial Fair Rental Value is $81,000 per annum, and each such required monthly payment prior to the Completion Date is $6750. (Notwithstanding the forgoing, as was agreed by the parties for administrative convenience at the time of the execution of the Prior Ground Lease, BNPPLC has already prepaid all of the Ground Lease Rent expected to accrue prior to the Completion Date, rather than pay it monthly on the first Business Day of each month.)
     After the Completion Date, Ground Lease Rent will be paid annually in arrears on each anniversary of the Effective Date. So long as the Lease continues, each such payment by BNPPLC may be offset against the reimbursement for such payment required of NAI by the Lease. After the Lease expires or terminates, however, BNPPLC’s obligation for the payment of Ground Lease will continue so long as this Ground Lease continues, on and subject to the terms and conditions set forth herein.
4 Receipt and Application of Insurance and Condemnation Proceeds. All insurance and condemnation proceeds payable with respect to any damage to or taking of the Leased Property will be payable to and become the property of BNPPLC; provided, however, NAI will be entitled to receive condemnation proceeds awarded for the value of NAI’s remainder interest in the Land exclusive of the Improvements. BNPPLC is authorized to take all action necessary on behalf of both BNPPLC and NAI (as lessor under this Ground Lease) to collect insurance and condemnation proceeds.
5 No Lease Termination. Except as expressly provided herein, this Ground Lease will not terminate, nor will NAI have any right to terminate this Ground Lease nor will the obligations of NAI under this Ground Lease be excused, for any reason whatsoever, including without limitation any of the following: (i) any damage to or the destruction of all or any part of the Leased Property from whatever cause, (ii) the taking of the Leased Property or any portion thereof by eminent domain or otherwise for any reason, (iii) any default on the part of BNPPLC under this Ground Lease or under any other agreement to which NAI and BNPPLC are parties, or (iv) any other cause whether similar or dissimilar to the foregoing, any existing or future law to
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the contrary notwithstanding. Notwithstanding the foregoing, after any purchase by NAI of BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement and payment to BNPPLC of the purchase price required by the Purchase Agreement and all other sums dues under any of the other Operative Documents, NAI (as the holder of both the lessor’s and lessee’s interests hereunder) may elect to terminate this Ground Lease; and after a purchase by BNPPLC of the Land because of BNPPLC exercise of the Contingent Purchase Option, BNPPLC (as the holder of both the lessor’s and lessee’s interests hereunder) may elect to terminate this Ground Lease. It is the intention of the parties hereto that the obligations of NAI hereunder will be separate and independent of the covenants and agreements of BNPPLC. However, nothing in this Paragraph will be construed as a waiver by NAI of any right NAI may have at law or in equity to recover monetary damages for any default under this Ground Lease by BNPPLC.
6 The Lease and Other Operative Documents. Nothing contained in this Ground Lease will limit, modify or otherwise affect any of NAI’s or BNPPLC’s respective rights and obligations under the other Operative Documents, which rights and obligations are intended to be separate, independent and in addition to, and not in lieu of, the obligations established by this Ground Lease. In the event of any inconsistency between the terms and provisions of the other Operative Documents and the terms and provisions of this Ground Lease, the terms and provisions of the other Operative Documents will control.
7 Use of Leased Property. Subject to the Permitted Encumbrances and the terms hereof, BNPPLC may use and occupy the Leased Property for any purpose permitted by Applicable Laws and may construct, modify, renovate, replace and remove any Improvements on the Land from time to time, subject only to the constraints that Applicable Laws would impose upon the owner of the Land if the owner were constructing, modifying, renovating, replacing or removing Improvements. To provide NAI an opportunity to file any applicable statutory notice of nonresponsibility, BNPPLC will, before commencing the construction any major Improvements upon the Land after the Turnover Date, endeavor to notify NAI that BNPPLC intends to commence such construction; provided, however, BNPPLC will have no liability for its failure to provide such a notice.
8 Assignment and Subletting; Pass Through of BNPPLC’s Liability Insurance and Indemnity Rights. BNPPLC may sublet or assign this Ground Lease without the consent of NAI or any of its Affiliates, subject only to limitations set forth in the Lease for the benefit of NAI so long as those limitations remain in force.
     To the extent that BNPPLC may from time to time after the Turnover Date require any subtenant to agree to maintain liability insurance against claims of third parties and agree to make BNPPLC an additional or named insured under such insurance, BNPPLC will also require the subtenant to agree to make NAI an additional or named insured. However, BNPPLC will have no liability to NAI for a breach by the subtenant of any such agreements, and to the extent
Amended and Restated Ground Lease (RTP Data Center) – Page 6

 

 

that BNPPLC’s rights as an additional or named insured are subject to exceptions or limitations concerning BNPPLC’s own acts or omissions or the acts or omissions of anyone other than the subtenant, so too may NAI’s rights as an additional or named insured be subject to exceptions or limitations concerning NAI’s own acts or omissions or the acts or omissions of anyone other than the subtenant.
     To the extent that BNPPLC may itself from time to time after the Turnover Date 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 Leased Property, BNPPLC will cause NAI to be an additional or named insured under such insurance, provided NAI pays or reimburses BNPPLC for any additional insurance premium required to have NAI made an insured.
     To the extent that BNPPLC may from time to time after the Turnover Date require any subtenant to agree to indemnify BNPPLC against Environmental Losses or other Losses concerning the Leased Property, BNPPLC will also require the subtenant to agree to indemnify NAI. However, BNPPLC will have no liability to NAI for a breach by the subtenant of any such agreement, and to the extent that BNPPLC’s rights as an indemnitee of the subtenant are subject to exceptions or limitations concerning BNPPLC’s own acts or omissions or the acts or omissions of anyone other than the subtenant, so too may NAI’s rights as an indemnitee be subject to exceptions or limitations concerning NAI’s own acts or omissions or the acts or omissions of anyone other than the subtenant.
9 Estoppel Certificate. NAI and BNPPLC will from time to time, within ten days after receipt of request by the other party hereto, deliver a statement in writing to such other party or other Person(s) designated by such party 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 the party providing such certificate, the other party 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 the party so certifying is able to provide;
     (C) the term of this Ground Lease and the Ground Lease Rent then in effect and any additional charges;
     (D) that to the knowledge of the party providing such certificate, the other party is not in default under any provision of this Ground Lease (or if in default, the nature thereof in detail) and, in any certificate provided by NAI, a statement as to any outstanding obligations on the part of NAI or BNPPLC; and
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     (E) in any certificate provided by NAI, such other factual matters concerning the Leased Property or BNPPLC’s rights and obligations under this Ground Lease as are requested by BNPPLC.
NAI’s failure to deliver such statement within such time will constitute an admission by NAI (i) that this Ground Lease is in full force and effect, without modification except as may be represented by BNPPLC, and (ii) that there are no uncured defaults in BNPPLC’s performance hereunder.
10 Leasehold Mortgages.
     (A) By Leasehold Mortgage BNPPLC may encumber BNPPLC’s leasehold estate in the Leased Property created by this Ground Lease and BNPPLC’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 BNPPLC from the Leased Property. However, prior to the Turnover Date, a Leasehold Mortgage will be permitted hereunder only if it constitutes a Permitted Transfer and only if it is made expressly subject to the rights of NAI under the other Operative Documents.
     (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 BNPPLC’s rights and interests in 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 NAI.
     (C) NAI must serve notice of any default by BNPPLC hereunder upon any Leasehold Mortgagee for which NAI has received written notification from BNPPLC of the Leasehold Mortgagee’s address for such notice. No notice of a default by BNPPLC will be deemed effective until it is so served. Any Leasehold Mortgagee will 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 BNPPLC under this Ground Lease to correct or cure defaults, plus an additional period of thirty days thereafter. NAI will accept performance by any Leasehold Mortgagee of any covenant, condition or agreement on BNPPLC’s part to be performed hereunder with the same force and effect as though performed by BNPPLC.
     (D) If this Ground Lease should terminate by reason of a disaffirmance or rejection of this Ground Lease by BNPPLC or any receiver, liquidator or trustee for the property of BNPPLC,
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or by any governmental authority which had taken possession of the business or property of BNPPLC by reason of the insolvency or alleged insolvency of BNPPLC, then:
     (1) NAI must give notice thereof to each Leasehold Mortgagee for which NAI has received written notification from BNPPLC of the Leasehold Mortgagee’s address for such notice; and upon request of any Leasehold Mortgagee made within sixty days after NAI has given such notice, NAI must enter into a new ground lease of the Leased 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 (including subparagraph 11(E)) as are contained in this Ground Lease (a “New Ground Lease”).
     (2) The estate of the Leasehold Mortgagee, as lessee under the New Ground Lease, will have priority equal to the estate of BNPPLC hereunder. That is, there will be no charge, lien or burden upon the Leased Property prior to or superior to the estate granted by such New Ground Lease which was not prior to or superior to the estate of BNPPLC under this Ground Lease as of the date immediately preceding the termination of this Ground Lease. To the extent, however, that the other Operative Documents are in effect at the time of execution of such New Ground Lease, the New Ground Lease will be made expressly subject to the other Operative Documents.
     (3) Notwithstanding the foregoing, if NAI receives requests to enter into a New Ground Lease from more than one Leasehold Mortgagee because of the expiration or termination of this Ground Lease, NAI will be required to enter into only one New Ground Lease, and the New Ground Lease will be to the requesting Leasehold Mortgagee who holds the highest priority lien or interest in BNPPLC’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 will name all such Leasehold Mortgagees as co-tenants thereunder.
     (E) If BNPPLC 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 BNPPLC, and if NAI has been notified in writing of such agreement, such consent will be required for such Leasehold Mortgagee to be bound by any such modification or early termination of this Ground Lease.
     (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 Leased Property, unless and until the Leasehold Mortgagee acquires BNPPLC’s leasehold estate in the Leased Property at foreclosure or by deed in lieu of foreclosure.
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     (G) Although the foregoing provisions concerning Leasehold Mortgages and Leasehold Mortgagees will be self operative, NAI agrees to include, in addition to the items specified in Paragraph 9, confirmation of the foregoing with respect to any Leasehold Mortgagee or prospective Leasehold Mortgagee in any statement delivered to such Leasehold Mortgagee which is provided to a pursuant to Paragraph 9.
11 Other Representations, Warranties and Covenants of NAI. NAI represents, warrants and covenants as follows:
     (A) Condition of the Property. The Land described in Exhibit A is the same as the land described in the Title Policy and is shown on both the Plat and the Condominium Map, copies of which were delivered to BNPPLC at the request of NAI. Unit 4 is located as shown on the Condominium Map, and all material improvements on the Land as of the Effective Date are as shown on the Plat or the Condominium Map. There are no easements or encroachments (including Permitted Encumbrances) which extend over or within the boundaries of Unit 4. No part of Unit 4 is within a flood plain as designated by any governmental authority. Existing Improvements, if any, are free from latent or patent defects or deficiencies that, either individually or in the aggregate, could materially and adversely affect the use or occupancy of the Improved Property as permitted by the Lease or could reasonably be anticipated to cause injury or death to any person. When the construction contemplated by the Construction Agreement is complete in accordance with plans approved as described therein, the Improved Property and use thereof permitted by the Lease will comply in all material respects with all Applicable Laws, including laws regarding access and use by disabled persons and local zoning ordinances. Adequate provision has been made (or can be made at a cost that is reasonable in connection with future development of the Land) for the Land 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 Improved Property for the construction contemplated by the Construction Agreement or uses permitted by the Lease have been completed and are serviceable or will be completed and made serviceable as part of the construction contemplated by the Construction Agreement. No extraordinary circumstances (including any use of the Land as a habitat for endangered species) exist that would materially and adversely affect such construction or uses of the Improved Property. The Improvements, when constructed as contemplated in the Construction Agreement, will be useable for their intended purpose without the need to obtain any additional easements, rights-of-way or concessions from any third party or parties.
     (B) Environmental Representations. Except as otherwise disclosed in the Environmental Report, to the knowledge of NAI: (i) no Hazardous Substances Activity has occurred prior to the Effective Date; (ii) no owner or operator of the Improved Property has reported or been required to report any release of any Hazardous Substances on or from the
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Leased Property pursuant to any Environmental Law; and (iii) no owner or operator of the Leased 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 Leased Property or regarding a suspected or known violation of Environmental Laws concerning the Leased Property. Further, NAI represents, to its knowledge, that the Environmental Report taken as a whole is not misleading or inaccurate in any material respect.
     (C) Current Status of Title to the Land. NAI holds good and indefeasible title to the Land, free and clear of all liens and encumbrances, other than the Permitted Encumbrances and any Liens Removable by BNPPLC.
     (D) Intentionally Deleted.
     (E) Title to Improvements. The leasehold estate created in favor of BNPPLC by this Ground Lease will extend to and include the rights to use and enjoy any and all Improvements of whatever nature at any time and from time to time located on the Land. Thus, throughout the term of this Ground Lease, BNPPLC and its sublessees, assignees, licensees and concessionaires will be entitled to use and enjoy such Improvements — to the exclusion of NAI as the lessor hereunder, but subject to NAI’s rights under the Operative Documents (including the Lease) so long as they remain in effect — as if the lessee hereunder was the owner of the Improvements. Further, although any Improvements which remain on the Land when this Ground Lease expires or is terminated will revert to NAI, it is also understood and agreed that the lessee hereunder may at any time and from time to time — after NAI ceases to have possession of the Leased Property pursuant to the Construction Agreement or 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 NAI and without any obligation to NAI or its Affiliates to provide compensation or to construct other Improvements on or about the Land. Any Improvements removed as provided in the preceding sentence will be considered severed from the Land and thereupon become personal property of the lessee hereunder.
     (F) Defense of Adverse Title Claims. If any encumbrance or title defect whatsoever affecting the Improved Property, other than Permitted Encumbrances or Liens Removable by BNPPLC, is claimed or discovered (including Liens against any part of or interest in the Improved Property which are not Fully Subordinated or Removable) or if any legal proceedings are instituted with respect to any such claimed or discovered encumbrance or title defect, NAI must give prompt notice thereof to BNPPLC and at NAI’s own cost and expense will promptly remove any such encumbrance and cure any such defect and will take all necessary and proper steps for the defense of any such legal proceedings, including the employment of counsel, the prosecution or defense of litigation and the release or discharge of all adverse claims. If NAI fails to promptly remove any encumbrance or cure any title defect as required by the preceding
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sentence, BNPPLC (whether or not named as a party to legal proceedings with respect thereto) may take such additional steps as in its judgment may be necessary or proper to remove such encumbrance or cure such defect or for the defense of any such attack or legal proceedings or the protection of BNPPLC’s leasehold or other interest in the Improved Property, including the employment of counsel, the prosecution or defense of litigation, the compromise or discharge of any adverse claims made with respect to the Improved Property, the removal of prior liens or security interests, and all expenses (including Attorneys’ Fees) so incurred of every kind and character will be a demand obligation owing by NAI.
     For purposes of this subparagraph 11(B), NAI will be deemed to be acting promptly to remove any encumbrance or to cure any title defect, other than a Lien which NAI or any of its Affiliates has granted or authorized, so long as NAI is in good faith by appropriate proceedings contesting the validity and applicability of the encumbrance or defect, and pending such contest NAI will not be deemed in default under this subparagraph because of the encumbrance or defect, provided that NAI must satisfy the following conditions and requirements:
     (1) NAI must diligently prosecute the contest to completion in a manner reasonably satisfactory to BNPPLC.
     (2) NAI must immediately remove the encumbrance or cure the defect upon a final determination by a court of competent jurisdiction that it is valid and applicable to the Improved Property.
     (3) NAI must in any event conclude the contest and remove the encumbrance or cure the defect and pay any claims asserted against BNPPLC or the Improved Property because of such encumbrance or defect, all prior to (i) the date any criminal charges may be brought against BNPPLC or any of its directors, officers or employees because of such encumbrance or defect or (ii) the date any action is taken or threatened against BNPPLC or any property owned by BNPPLC (including BNPPLC’s leasehold estate under this Ground Lease) by any governmental authority or any other Person who has or claims rights superior to BNPPLC because of the encumbrance or defect. Also, with respect to a contest of any encumbrance or defect discovered or claimed before the Designated Sale Date, NAI must conclude the contest and remove the encumbrance or cure the defect and pay any claims asserted against BNPPLC or the Improved Property because of such encumbrance or defect, all prior to the Designated Sale Date, unless on the Designated Sale Date NAI or an Affiliate of NAI or any Applicable Purchaser purchases the Improved Property pursuant to the Purchase Agreement for a net price to BNPPLC (when taken together with any additional payments made by NAI pursuant to Paragraph 1(a)(ii) of the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Lease Balance.
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     (G) Prohibition Against Consensual Liens on the Leased Property. NAI will not, without the prior consent of BNPPLC, 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 Land or Improvements or any part thereof (other than Permitted Encumbrances and Liens Removable by BNPPLC). It is understood and agreed, however, that any Liens which are Fully Subordinated or Removable will constitute Permitted Encumbrances and thus will not be prohibited by this provision.
     (H) Compliance With Permitted Encumbrances. NAI must comply with and cause to be performed all of the covenants, agreements and obligations imposed upon NAI or the owner of the Leased Property by the Permitted Encumbrances.
     (I) Compliance With Laws. Without limiting the foregoing, the use of the Improved Property permitted by the Lease complies, or will comply after readily available permits are obtained, in all material respects with all Applicable Laws.
     (J) Modification of Permitted Encumbrances. NAI will not enter create any new Permitted Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted Encumbrance that would create or expand or purport to create or expand obligations or restrictions which would encumber the Leased Property or any Improvements constructed thereon without the prior consent of BNPPLC; provided, this provision will not limit any right of the NAI Parties to modify any Lien that is Fully Subordinated or Removable and will remain Fully Subordinated or Removable after the modification. Whether BNPPLC must give any such consent requested by NAI prior to the Designated Sale Date will be governed by subparagraph 4(C) of the Closing Certificate.
     (K) Performance and Preservation of the Permitted Encumbrances for the Benefit of BNPPLC. Not only prior to the expiration or termination of other Operative Documents, but thereafter throughout the term of this Ground Lease, NAI must comply with and perform the obligations imposed by the Permitted Encumbrances upon NAI or upon any owner of the Land and do whatever is required to preserve the rights and benefits conferred or intended to be conferred by the Permitted Encumbrances, as necessary to prevent any claim against or forfeiture of any of the Improved Property and to facilitate the construction and use of any Improvements on the Land after the Turnover Date by BNPPLC and its successors, assigns and subtenants under this Ground Lease. Further, NAI hereby agrees for itself and its Affiliates, as the owner of the Land and any other land now owned or hereafter acquired by NAI or its Affiliates, which is encumbered or benefitted by the Permitted Encumbrances, to assume liability for and to indemnify BNPPLC and other Interested Parties and to defend and hold them harmless from and against all Losses (including Losses caused by any decline in the value of the Leased Property or of the Improvements) that they would not have incurred or suffered but for:
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     (1) any breach by NAI of its obligations under the preceding sentence,
     (2) any termination of any benefit to the owner, users or occupants of the Land or Improvements conferred by the Permitted Encumbrances if NAI agreed to the termination or the termination resulted from a breach of any Permitted Encumbrance by NAI or its Affiliates, or
     (3) any restrictions imposed by or asserted under any Permitted Encumbrance upon any transfer after (but only after) the Turnover Date by BNPPLC of any interests it may then have in the Leased Property or in any Improvements.
NAI’s obligations under this subparagraph 11(K) will be binding upon any successor or assign of NAI or its Affiliates with respect to the Land and other properties encumbered or benefitted by the Permitted Encumbrances, and such obligations will survive any sale of NAI’s interest in the Leased Property to BNPPLC because of BNPPLC’s exercise of the Contingent Purchase Option.
     (L) Cooperation by NAI and its Affiliates.
     (1) After the Turnover Date, if neither NAI nor an Applicable Purchaser has purchased BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement, and if a use of the Improved Property by BNPPLC or any new Improvements or any removal or modification of Improvements proposed by BNPPLC would violate any Permitted Encumbrance or Applicable Law unless NAI or any of its Affiliates, as an owner of adjacent land or otherwise, gave its consent or approval thereto or agreed to join in a modification of a Permitted Encumbrance, then NAI must give and cause its Affiliates to give such consent or approval or join in such modification.
     (2) After the Turnover Date, if neither NAI nor an Applicable Purchaser has purchased BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement, and if any Permitted Encumbrance or Applicable Law requires the consent or approval of NAI or any of its Affiliates or of the city or county in which the Improved Property is located or of any other Person to an assignment of any interest in the Improved Property by BNPPLC or by any of 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 BNPPLC to assist BNPPLC to obtain such consent or approval from the city, county or other Person.
     (3) NAI’s obligations under this subparagraph 11(L) will be binding upon any successor or assign of NAI or its Affiliates with respect to the Land and other properties encumbered or benefitted by the Permitted Encumbrances, and such obligations will survive (a) any sale of the Improved Property by BNPPLC, other than to NAI or an
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Applicable Purchaser under the Purchase Agreement, for the benefit of BNPPLC’s assignees, and (b) any sale of NAI’s interest in the Leased Property to BNPPLC because of BNPPLC’s exercise of the Contingent Purchase Option.
     (M) Condominium Instruments. Without limiting the provisions the preceding subparagraphs 11(K) and 11(L), Ground Lessor agrees as follows with regard to the Condominium Declaration and other Condominium Instruments:
     (1) This Ground Lease will be superior to any and all liens granted in the Condominium Declaration, or arising to secure any obligations created by the Condominium Declaration (including judgment liens which may secure damages because of any failure of the Owner of Unit 4 to satisfy its obligations under the Condominium Instruments).
     (2) As the Owner of Unit 4, NAI will on a timely basis pay any assessments or other amounts required of the Owner of Unit 4 by the Condominium Instruments and take any other action required of the Owner of Unit 4 by the Condominium Instruments, including the filing of any new maps required by the Condominium Declaration after the completion of construction of Improvements over the land designated as Unit 4. In no even will BNPPLC be required to make any such payment or take any such action, nor will BNPPLC suffer any loss of rights or interests under this Ground Lease because of any failure of NAI to do so.
     (3) Before this Ground Lease expires or is terminated, without the prior written consent of BNPPLC in each case: (A) no rules or regulations will be imposed pursuant to the Condominium Declaration that would limit or restrict the rights which BNPPLC would enjoy under this Ground Lease or the other Operative Documents if the Condominium Declaration did not exist; (B) no amendment to any of the Condominium Instruments will be made which would terminate or limit the rights or easements appurtenant to Unit 4 thereunder or expand the obligations of any owner or occupant of the Land thereunder; (C) no liens will be granted or permitted against the Common Elements unless they are expressly subject and subordinate to (i) the rights and easements appurtenant to Unit 4 under the Condominium Declaration, and (ii) the rights and interests of BNPPLC under this Ground Lease and the other Operative Documents; (D) the rights of the Declarant under the Condominium Declaration will not be transferred to anyone other than the Owner of Unit 4; and (E) no conveyance of the fee estate in Unit 4 will be made without a transfer of all rights of the Declarant to the same transferee (i.e., the new Owner of Unit 4). Further, until this Ground Lease expires or is terminated, this Ground Lease and the other Operative Documents will control in the event of any conflict between the Condominium Declaration and the terms and conditions of this Ground Lease or the other Operative Documents.
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     (4) After the Turnover Date: (a) BNPPLC will be entitled to attend and receive notice of any meeting the Owners required or permitted by the Condominium Instruments, and BNPPLC will be entitled to cast a vote in any vote of the Owners required or permitted by the Condominium Instruments, as if BNPPLC were the Owner of Unit 4. (b) Further, if the Owner of Unit 4 breaches any obligations imposed upon it by the Condominium Instruments, BNPPLC will have the right to receive notice of such breach and the right, but not the obligation, to cure such breach, as if BNPPLC itself were the Owner of Unit 4. (c) Also, the rights of BNPPLC and its invitees to use parking and driveways within the Additional Leased Premises (as defined in Exhibit A) will be superior to the rights granted to others by the Condominium Declaration; and BNPPLC may, as it from time to time deems necessary, identify any or all parking areas within the Additional Leased Premises as “reserved” or take other reasonable steps to assure preferred access to such parking by occupants of the Improvements which comprise Unit 4.
     (5) BNPPLC will not be restricted or limited by anything in the Condominium Instruments in the demolition, construction, alteration repair, replacement, use or operation of Improvements. Further, BNPPLC will not be required by reason of the Condominium Instruments to obtain any consent or approval for any such demolition, construction, alteration, use or operation or for any related submissions (including site plans) to Wake County or other governmental authorities.
     (6) The rights of BNPPLC under this Ground Lease or any other Operative Documents to control and to receive and retain or apply insurance or condemnation proceeds with respect to the Property will control over any conflicting provisions of the Condominium Instruments.
     (7) BNPPLC will not be bound by or required to participate in any arbitration by reason of any arbitration provisions or other provisions in the Condominium Instruments.
The agreements of NAI in this subparagraph 11(M) are made by NAI, not only as the current owner of the Ground Leased Premises (as defined in Exhibit A), but also as the current Owner of all Units created by the Condominium Declaration, and with the understanding that all of such agreements will be binding upon all future Owners so long as this Ground Lease remains in force.
     (N) Omissions. None of NAI’s representations or warranties contained in this Ground Lease or in any other document, certificate or written statement furnished to BNPPLC 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
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     misleading.
     (O) Insurance and Casualty. In the event any of the Leased Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance is maintained or required hereunder, (i) BNPPLC may make proof of loss, (ii) each insurance company concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC for application as required by Paragraph 4, and (iii) BNPPLC’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.
     (P) Condemnation. All proceeds of condemnation awards or proceeds of sale in lieu of condemnation with respect to the Leased Property and all judgments, decrees and awards for injury or damage to the Leased Property will be paid to BNPPLC and applied as provided in Paragraph 4 above. BNPPLC is hereby authorized, in the name of NAI, to execute and deliver valid acquittances for, and to appeal from, any such judgment, decree or award concerning condemnation of any of the Leased Property. BNPPLC will 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.
     (Q) Further Assurances. NAI must, on request of BNPPLC, (i) promptly correct any defect, error or omission which may be discovered in the contents of this Ground Lease or in any other instrument executed in connection herewith or in the execution or acknowledgment thereof; (ii) 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 Ground Lease and to subject to this Ground Lease any property intended by the terms hereof to be covered hereby including specifically, but without limitation, any renewals, additions, substitutions, replacements or appurtenances to the Leased Property; (iii) execute, acknowledge, deliver, procure and record or file any document or instrument deemed advisable by BNPPLC to protect BNPPLC’s rights in and to the Leased Property against the rights or interests of third persons; and (iv) 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 BNPPLC to enable BNPPLC or any Leasehold Mortgagee to comply with the requirements or requests of any agency or authority having jurisdiction over them.
12 Ground Lease Defaults.
     (A) Definition of Ground Lease Default. Each of the following events will be deemed to be a “Ground Lease Default” by BNPPLC under this Ground Lease:
     (1) A failure by BNPPLC to pay when due any installment of Ground Lease Rent due hereunder if such failure continues for sixty days after BNPPLC receives notice
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thereof.
     (2) A failure by BNPPLC to comply with any term, provision or covenant of this Ground Lease (other than as described in the other clauses of this subparagraph 13(A)) if such failure is not cured prior to the earlier of (A) ninety days after notice thereof is sent to BNPPLC, or (B) the date any writ or order is issued for the levy or sale of any property owned by NAI or its Affiliates (including the leasehold created by this Ground Lease) because of such failure or any criminal action is instituted against BNPPLC 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 BNPPLC has promptly commenced to cure the same and thereafter prosecutes the curing thereof with reasonable diligence, the period within which such failure may be cured will be extended for such further period as is necessary to complete the cure.
     (B) Remedy. Upon the occurrence of a Ground Lease Default which is not cured within any applicable period expressly permitted by subparagraph 13(A), NAI’s sole and exclusive remedies will be to sue BNPPLC for the collection of any amount due under this Ground Lease, to sue for the specific enforcement of BNPPLC’s obligations hereunder, or to enjoin the continuation of the Ground Lease Default, provided, however, no limitation of NAI’s remedies contained herein will prevent NAI from exercising rights expressly provided in other Operative Documents or from recovering any reasonable costs NAI may incur to mitigate its damages by curing a Ground Lease Default that BNPPLC has failed to cure itself (so long as the cure by NAI is pursued in a lawful manner and the costs NAI seeks to recover do not exceed the actual damages to be mitigated). NAI may not terminate this Ground Lease or BNPPLC’s right to possession under this Ground Lease, except as expressly provided in the Operative Documents. Any judgment which NAI may obtain against BNPPLC for amounts due under this Ground Lease may be collected only through resort of a judgement lien against BNPPLC’s interest in the Leased Property and any Improvements. BNPPLC will have no personal liability for the payment amounts due under this or for the performance of any obligations of BNPPLC under this Ground Lease.
13 Quiet Enjoyment. NAI warrants that neither it nor any third party lawfully claiming any right or interest in the Leased Property will, during the Ground Lease Term, disturb BNPPLC’s peaceable and quiet enjoyment of the Leased Property; however, such enjoyment will be subject to the terms, provisions, covenants, agreements and conditions of this Ground Lease and those Permitted Encumbrances which are listed on Exhibit B.
14 Option to Purchase. Subject to the terms and conditions set forth in Exhibit C, BNPPLC (and any assignee of BNPPLC’s entire interest in the Leased Property, but not any
Amended and Restated Ground Lease (RTP Data Center) – Page 18

 

 

subtenant or assignee of a lesser interest) will have the option, and NAI hereby grants to BNPPLC such option, to purchase NAI’s interest in the Leased Property.
15 Miscellaneous.
     (A) No Merger. There will be no merger of this Ground Lease or of the leasehold estate hereby created with the fee or any other estate in the Leased Property or any part thereof by reason of the fact that the same person may acquire or hold, directly or indirectly, this Ground Lease or the leasehold estate hereby created or any interest in this Ground Lease or in such leasehold estate as well as the fee or any other estate in the Leased Property or any interest in such fee or other estate, unless all parties with an interest in the Leased Property that would be adversely affected by any such merger specifically agree in writing that such a merger has occurred.
     (B) Recording; Memorandum of Lease. Either party may record this Ground Lease in the real property records of Wake County, North Carolina. If NAI and BNPPLC decide not to record this Ground Lease, they will execute a memorandum of this Ground Lease in recordable form which will be filed in the real property records of Wake County, North Carolina.
16 Certain Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy BNPPLC has with respect to the Improved Property, and each and every right and remedy of BNPPLC will be cumulative and in addition to any other right or remedy given to it under this Ground Lease or now or hereafter existing in its favor at law or in equity. In addition to other remedies available under this Ground Lease, either party will be entitled, to the extent permitted by applicable law, to a decree compelling performance of any of the other party’s agreements hereunder.
17 Attorney’s Fees and Legal Expenses. If BNPPLC commences any legal action or other proceeding because of any breach of this Ground Lease by NAI, BNPPLC may recover all Attorneys’ Fees incurred by it in connection therewith from NAI, whether or not such controversy, claim or dispute is prosecuted to a final judgment. Any Attorneys’ Fees incurred by BNPPLC in enforcing a judgment in its favor under this Ground Lease will be recoverable separately from such judgment, and the obligation for such Attorneys’ Fees is intended to be severable from other provisions of this Ground Lease and not to be merged into any such judgment.
18 Successors and Assigns. The terms, provisions, covenants and conditions of this Ground Lease will be binding upon NAI and BNPPLC and their respective permitted successors and assigns and will inure to the benefit of NAI and BNPPLC and all permitted transferees, mortgagees, successors and assignees of NAI and BNPPLC with respect to the Leased Property; except that (A) BNPPLC will not assign this Ground Lease or any rights hereunder except
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pursuant to a Permitted Transfer, and (C) NAI will not assign this Ground Lease or any rights hereunder prior to the Turnover Date without the prior written consent of BNPPLC.
19 Amendment and Restatement of Prior ground Lease. This Lease amends, restates and replaces entirely the Ground Lease dated as of July 17, 2007, between NAI (as lessor) and BNPPLC (as lessee) (as previously amended, the “Prior Ground Lease”). Without limiting the rights and obligations of the parties under this Ground Lease, NAI acknowledges that any and all rights or interest of NAI in and to the Land or other Property under the Prior Ground Lease are now made subject to the terms and conditions of this Ground Lease; and all rights and interests of BNPPLC in and to the Land or other Property under the Prior Ground Lease are renewed and extended (rather than terminated) by this Ground Lease.
[The signature pages follow.]
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     IN WITNESS WHEREOF, this Amended and Restated Ground Lease (RTP Data Center) is executed to be effective as of November 29, 2007.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
             
STATE OF TEXAS
    )      
 
    )     SS
COUNTY OF DALLAS
    )      
I, Kathryn Hackett, certify that Lloyd G. Cox personally came before me this day and acknowledged that he is Managing Director of BNP Paribas Leasing Corporation, a Delaware corporation, and that he, as a Managing Director being duly authorized to do so, executed the foregoing on behalf of the corporation.
Witness my hand and official seal this the 27th day of November, 2007.
         
     
  /s/ Kathryn Hackett    
  Notary Public, State of Texas   
     
         
My Commission Expires:    
       
June 21, 2011    
     
(Notary Seal) NOTARY PUBLIC
STATE OF TEXAS
KATHRYN HACKETT
MY COMMISSION EXPIRES
June 21, 2011		  
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[Continuation of signature pages for Amended and Restated Ground Lease (RTP Data Center) dated as of November 29, 2007.]
         
  NETWORK APPLIANCE, INC., a Delaware corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
             
STATE OF NORTH CAROLINA
    )      
 
    )     SS
COUNTY OF WAKE
    )      
I, Donna M. Mareotte, certify that Ingemar Lanevi personally came before me this day and acknowledged that he is Vice President and Corporate Treasurer of Network Appliance, Inc., a Delaware corporation, and that he, as a Vice President and Corporate Treasurer being duly authorized to do so, executed the foregoing on behalf of the corporation.
Witness my hand and official seal this the 27th day of November, 2007.
         
     
  Donna M. Mareotte    
  Notary Public, State of North Carolina   
     
         
My Commission Expires:    
       
Oct 05, 2008    
     
(Notary Seal)    
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[Continuation of signature pages for Amended and Restated Ground Lease (RTP Data Center dated as of November 29, 2007.]
Consent and Agreement of the Condominium Association
     At the request and direction of NAI, as the current Owner of all Units created by the Condominium Declaration, the undersigned, being the Association under and as defined in the Condominium Declaration, joins in the execution of this Ground Lease for the following limited purposes:
     1. The Association consents to the execution of this Ground Lease and the other Operative Documents by NAI and BNPPLC.
     2. The Association agrees that the Association’s Relevant Property Rights (as defined below) are and will be subject and subordinate to this Ground Lease (and all its terms and conditions), to the leasehold estate created by this Ground Lease and to each and all of the other Operative Documents (and all of their terms and conditions). As used herein, the “Association’s Relevant Property Rights” means any and all rights, titles and interests the Association may have, now or in the future, to the land described in Exhibit A as the Ground Lease Premises, or any part thereof, or to any land burdened by easements appurtenant to the Ground Lease Premises as described in Exhibit A. The Association’s Relevant Property Rights will include its rights, titles and interests in and to Common Elements.
     3. In consideration of the rents to be paid to NAI under this Ground Lease, and to assure BNPPLC that the Association’s Relevant Property Rights will be subject to the leasehold estate contemplated by this Ground Lease, the Association does hereby LEASE, DEMISE AND LET unto BNPPLC the Association’s Relevant Property Rights. However, this lease by the Association to BNPPLC will be limited to the land described in Exhibit A as the Ground Lease Premises and the easements appurtenant to the Ground Lease Premises as described in Exhibit A. Accordingly, any rights of possession or use created in favor of BNPPLC by the lease from the Association will be limited to possession of the Ground Lease Premises and to the nonexclusive use of adjacent land pursuant to such appurtenant easements.
         
  NETAPP RTP PHASE I CONDOMINIUM OWNERS ASSOCIATION,
INC., a North Carolina nonprofit corporation
 		  
  By:   /s/ Steven J. Boons    
    Name:   Steven J. Boons  
    Title:   EVP Finance and CFO   
 
Amended and Restated Ground Lease (RTP Data Center) – Signature Page

 

 

             
STATE OF CALIFORNIA
    )      
 
    )     SS
COUNTY OF SANTA CLARA
    )      
I, Cristina Curiel Morales, certify that Steven Boons personally came before me this day and acknowledged that he is Executive Vice President of NetApp RTP Phase I Condominium Owners Association, Inc., a North Carolina nonprofit corporation, and that he, as a Chief Financial Officer being duly authorized to do so, executed the foregoing on behalf of the corporation.
Witness my hand and official seal this the 26th day of November, 2007.
         
     
  /s/ Cristina Curiel Morales    
  Notary Public, State of California   
     
         
My Commission Expires:    
       
Nov. 2, 2010    
     
(Notary Seal) CRISTINA CURIEL MORALES
COMMISSION # 1782681
NOTARY PUBLIC – CALIFORNIA
SANTA CLARA COUNTY
MY COMM. EXPIRES NOV 2, 2010		  
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Exhibit A
Legal Description
BEING a portion of Site 12 as shown on the map entitled “Exempt Subdivision Map of Site 12”, prepared by Barbara H. Mulkey Engineering, Inc., on May 30, 2000 as recorded in the Book of Maps 2000, Page 1300, Wake County, North Carolina Registry, such portion being described as follows:
Unit 4 and the Additional Leased Premises, both as defined below (collectively, the “Ground Lease Premises”).
As used in this Exhibit:
     (1) “Additional Leased Premises” means the land surrounding and adjacent to Unit 4, depicted on the site plan attached to and made a part of this Exhibit as the area shaded in gray, which includes parking lots, driveways and other areas within the larger area designated as Common Elements in the Condominium Declaration. The outer boundaries of the Additional Leased Premises are described by metes and bounds on the last page attached to and made a part of this Exhibit. All land within those outer boundaries, other than Unit 4, is included in the Additional Leased Premises.
     (2) “Condominium Declaration” means the Declaration of Condominium for NetApp RTP Phase I Condominium recorded in Book 012647, Page 01310, Wake County, North Carolina Registry.
     (3) “Condominium Map” means the plat provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached to and made a part of this Exhibit. (The Condominium Map has also been filed in the Book of Maps CM2007, Page 444A1, Wake County, North Carolina Registry.)
     (4) “Unit 4” means the land designated and described in the Condominium Declaration as Unit 4 and is shown on the Condominium Map and site plan attached to and made a part of this Exhibit.
TOGETHER WITH, easements appurtenant to the Ground Lease Premises (the “Appurtenant Easements”) under, over and across adjacent parcels (“Adjacent Parcels”) which are owned by NAI or the Association (as defined in the Condominium Declaration) for the purposes described below and on and subject to the express terms and conditions set forth below;
SUBJECT, HOWEVER, to an easement appurtenant to the Adjacent Parcels (the “Reserved Easement”) over the Additional Leased Premises (but not any part of Unit 4) in favor of the Association for the purposes described below and on and subject to the express terms and

 

 

conditions set forth below.
The Appurtenant Easements will be for the following purposes:
     1. The construction (including expansion or replacement), use, maintenance and repair of utility lines under, over and across the Adjacent Parcels and related equipment (including lines or equipment for water, sanitary sewer, electricity, phone and gas) (collectively, the “Utility Lines”) to serve improvements constructed from time to time on the Ground Lease Premises.
     2. Access and parking over and in paved driveways and parking lots or garages now or hereafter located on the Adjacent Parcels (“Driveways and Parking Areas”).
     3. The encroachment, support, maintenance, repair and replacement of any buildings constructed on Unit 4 as shown on the Condominium Map during the period that BNPPLC owns or leases Unit 4.
The Appurtenant Easements will be subject to the following terms and conditions:
     A. The Appurtenant Easements for Utility Lines will be limited to:
     (1) those Utility Lines, if any, existing on the first date upon which any instrument is recorded which gives notice of the Appurtenant Easements;
     (2) those Utility Lines, if any, constructed by or at the request of NAI itself;
     (3) any other Utility Lines reasonably necessary for the use of improvements constructed or expected to be constructed as provided in the Construction Agreement dated as of the date of this Ground Lease between NAI and BNPPLC (whether constructed for BNPPLC or otherwise) (and in the case of Utility Lines permitted only because of this clause (3), such Utility Lines must be installed in a location that does not run through or under any then existing building or structured garage on the Adjacent Parcels); and
     (4) replacements (including replacements that may increase utility capacity) for any Utility Lines permitted under the preceding clauses (1) through (3).
     B. Any Utility Line on any Adjacent Parcel may be relocated to another location on the same Adjacent Parcel by the owner of such parcel and at its sole cost and
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expense, so long as the relocation is done in a good and workmanlike manner that does not and will not impose any significant or unexpected interruption of utility services or additional costs upon the owner or occupants of the Ground Lease Premises.
     C. The use of Driveways and Parking Areas by the owner of the Ground Lease Premises and its tenants and other invitees will not exceed that reasonably required to provide buildings constructed on the Ground Lease Premises with parking that both (i) meets local zoning and other legal requirements, and (ii) when taken together with any permanent, concrete parking spaces from time to time constructed on the Ground Lease Premises, causes the Parking Ratio (as defined below) for building(s) constructed upon Unit 4 to equal the average Parking Ratio for all buildings constructed upon all Units created by the Condominium Declaration (collectively, the “Parking Requirements”). As used in the preceding sentence, “Parking Ratio” means, for any building, the percentage computed by dividing of the number of parking spaces on the Additional Leased Premises or on the Adjacent Tracts which are available to the occupants of such building, divided by the useable square footage of such building.
     D. NAI and its successors and assigns as the owners of Adjacent Parcels will always maintain a number of parking spaces on the Adjacent Parcels which is no less than the sum of (1) the spaces required to meet Parking Requirements for buildings on the Ground Lease Premises, and (2) the spaces required to satisfy zoning or other parking requirements for other buildings on or served by parking on the Adjacent Parcels.
The Reserved Easement will be for the following purposes:
     1. The construction (including expansion and replacement), use, maintenance and repair of any structured parking garage on any portion of the Additional Leased Premises (but not any part of Unit 4) and related equipment (including lines or equipment for electricity) (collectively, a “Structured Garage”) as deemed necessary or helpful by the Association to serve improvements constructed from time to time on both Unit 4 and any one or more other Units (as defined in the Condominium Declaration) designated by the Association prior to the construction of the Structured Garage (whether one or more, the “Other Units”); and
     2. Access across paved driveways now or hereafter located on the Additional Leased Premises, including access to loading docks which serve and are part of the building designated as “Building 3” on the Condominium Map.
The Reserved Easement will be subject to the following terms and conditions:
     A. The construction (including expansion or replacement) of any Structured Garage will be not exceed the size or scope required, as proposed in good faith by the
Exhibit A to Amended and Restated Ground Lease (RTP Data Center) – Page 3

 

 

Association and approved by Ground Lessee (which approval will not be unreasonably withheld), to provide Unit 4 and Other Units with parking that both (i) meets local zoning and other legal requirements, and (ii) when taken together with any permanent, concrete parking spaces from time to time constructed and available for use on the Adjacent Tracts, is sufficient to meet the reasonable projected parking needs of the owners and occupants of Unit 4 and the Other Units (collectively, the “Association’s Proposed Parking Requirements”). If, however, the Association does propose, and the tenant under this Ground Lease does approve, the construction of a Structured Garage to meet the Association’s Proposed Parking Requirements, then the Association may undertake such construction pursuant to the Reserved Easement; and in the case of any such construction commenced after the Turnover Date, the Ground Lessee must join with the owners of Other Units to reimburse to the Association all actual, out-of-pocket costs of design and construction in accordance with a schedule of reimbursements imposed by the Association to facilitate the construction.
     B. Before the Turnover Date, Ground Lessee will have no obligation for any such reimbursements to the Association. After the Turnover Date, such reimbursements will be allocated among the Ground Lessee and each owner of Other Units in proportion to the square footage of their respective buildings to be served by the Structured Garage; subject, however, to any reasonable determination of the Association that (1) some other allocation of the cost would be more equitable, (2) is made before construction commences and contemporaneously with the Association’s determination that construction of a Structured Garage is required to meet the Association’s Proposed Parking Requirements, and (3) is made at a time when none of the parties affected by such determination has voting control of the Association.
     B. Prior to the Turnover Date, Ground Lessee will have no obligation to pay or reimburse the costs of operating or maintaining any Structured Garage. However, after the Turnover Date and construction of any Structured Garage by the Association, the cost of operating and maintaining it (including property taxes) will be allocated among the Ground Lessee and the owners of Other Units in the same proportion as the original costs of construction pursuant to the preceding paragraph.
     C. The Reserved Easement will not preclude any construction by the Ground Lessee, at its own expense, of any Structured Garage on the Additional Leased Premises if ever the Ground Lessee itself should determine that a Structured Garage is needed to meet the parking needs of the occupants of Unit 4.
Exhibit A to Amended and Restated Ground Lease (RTP Data Center) – Page 4

 

 

(MAP)
Exhibit A to Amended and Restated Ground Lease (RTP Data Center) – Page 5

 

 

(MAP)
Exhibit A to Amended and Restated Ground Lease (RTP Data Center) – Page 6

 

 

Attachment to Exhibit A — Metes and Bounds
Description of “Additional Leased Premises”
     The following is a metes and bounds description of the outer boundaries of the Additional Leased premise:
BEGINNING at NCOS Monument “Hopson”, said monument having NC Grid Coordinates of N=773,721.48 and E=2,034,907.39 (NAD 83), traveling thence South 11° 44' 59" West 6154.66 feet to a right-of-way, monument on the southern margin of Louis Stephens Drive (a 100 foot public right-of-way), thence North 72° 48' 35" East 164.29 feet to a right-of-way monument on the southern margin of Kit Creek Road (a 150 foot public right-of-way); thence with the southern margin of said Kit Creek Road the following two (2) courses and distances:
     (1) South 68° 46' 54 East 412.64 feet to a right-of-way monument; and
     (2) with a curve to the right having a radius of 924.83 feet, an arc length of 475.96 and a chord bearing and distance of South 54° 02' 59” East 470.72 feet to a computed point;
said computed being the POINT AND PLACE OF BEGINNING; thence from said point of beginning and continuing with the southern margin of Kit Creek Road South 39° 18' 29" East 571.64 feet to a computed point, thence cornering and leaving said right-of-way and with the common line of property now or formerly owned by Research Triangle Foundation of NC (DB 1670 PG 239) the following two (2) courses and distances:
     (1) South 50° 41' 31" West 100.00 feet to an iron pipe found; and
     (2) South 83° 31' 01" West 483.47 feet to an iron pipe found;
thence cornering and along three (3) new lines within the bounds of property owned by Network Appliance. Inc. (DB 10941 Pg 2054) as follows:
     (1) North 12° 44' 00" West 279.97 feet
     (2) North 48° 55' 31" West 50.30 feet; and
     (3) North 32° 57' 24" East 401. 61 feet to a point along tile southern margin of said Kit Creek Road;
thence with the southern margin of Kit Creek Road along a curve to the right having a radius of 925.04 feet, an arc length of 113.05 feet and a chord bearing and distance of South 42° 48' 33" East 112.98 feet to the POINT AND PLACE OF BEGINNING, containing 5.36 acres (233,621 square feet), more or less, said area shown on the rendering attached hereto.
Exhibit A to Amended and Restated Ground Lease (RTP Data Center) – Page 7

 

 

Exhibit B
Permitted Encumbrances
     The leasehold and other interests in the Land hereby conveyed by NAI are conveyed subject to the following matters to the extent the same are still valid and in force:
1.   Taxes for the year 2007 and subsequent years, not yet due and payable.
 
2.   Amended Declaration of Covenants recorded in Book 1663, page 559, Wake County Registry and Amended Conditions, Covenants, Restrictions and Reservations recorded in Book 3679, page 53, Wake County Registry as further amended and modified by instrument recorded in Book 3679, page 41, Wake County Registry; instrument recorded in Book 3679, page 48, Wake County Registry; and instrument recorded in Book 3679, page 53, Wake County Registry. The aforesaid covenants were extended by Extension Agreement recorded in Book 6098, page 683, Wake County Registry.
 
3.   Easement(s) to Duke Power Company recorded in Book 1306, page 330; Book 1262, page 51; Book 1262, page 186; Book 1306, page 334; Book 1389, page 570; and Book 1389, page 568, Wake County Registry.
 
4.   Sanitary Sewer Easement recorded in Book 4783, page 360, Wake County Registry; and shown in Map Book 1990, pages 973-976, Wake County Registry.
 
5.   Easement to Duke Power Company as shown in Plat Book 1985, page 1208 and Plat Book 1985, 1347, Wake County Registry.
 
6.   The following maters as shown on plat prepared by Barbara H. Mulkey Engineering, Inc., dated May 30, 2000 entitled “Exempt Subdivision Map of Site 12”, recorded in Book of Maps 2000, page 1300, Wake County Registry:
  (a)   New permanent drainage easement along the eastern right of way identified on such plat as “Future Roadway for Louis Stephens Drive”;
 
  (b)   Surface Cover Maintenance easement along the western boundary of Site 12 as shown on such plat;
 
  (c)   One hundred (100) year flood zone along the southern boundary of Site 12 as shown on such plat;
 
  (d)   Temporary drainage easement along norther boundary of Site 12 as shown on such plat;
 
  (e)   Existing sixty (60) foot right of way of Kit Creek Road, which right of way is to be abandoned (if it has not already been abandoned) as located in the northeastern

 

 

    portion of Site 12 as shown on such plat;
 
  (f)   Overhead electric lines located on the northeastern portion of Site 12 as shown on such plat;
 
  (g)   Flood plain area, wetlands and creek located within the Natural Area Preserve as shown on such plat; and
 
  (h)   Thirty (30) foot Wake County sanitary sewer easement within the Natural Areas Preserve as shown on such plat.
7.   Except to the extent inconsistent with or in conflict with the requirements, limitations and qualifications of subparagraphs 11(K), 11(L) and 11(M) of this Ground Lease, the terms and conditions of the Condominium Declaration.
Exhibit B to Amended and Restated Ground Lease (RTP Data Center) – Page 2

 

 

Exhibit C
CONTINGENT PURCHASE OPTION
     Subject to the terms of this Exhibit, BNPPLC shall have an option (the “Option”) to buy NAI’ fee interest in the Leased Property at any time during the term of this Ground Lease after (but only after) any breach by NAI under the Purchase Agreement, provided NAI does not cure the breach within any time permitted for cure by the express provisions of the Purchase Agreement, for a purchase price (the “Option Price”) to NAI equal to fair market value.
     For the purposes of this Exhibit, “fair market value” 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 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 of BNPPLC’s exercise of the Option 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 the exercise of the Option.
     If BNPPLC exercises the Option, which BNPPLC may do by notifying NAI that BNPPLC has elected to buy NAI’ interest in the Leased Property as provided herein, then:
     (1) To the extent, if any, required as a condition imposed by law to the conveyance of the fee interest in the Leased Property to BNPPLC, NAI shall promptly at its expense do whatever is necessary and possible (including, without limitation, cooperating with BNPPLC in seeking any zoning variances requested by BNPPLC) to obtain approvals of a new recorded plat or lot line adjustments. Should it be determined that it is not possible to satisfy any such condition imposed by law, neither NAI nor BNPPLC shall be required to consummate any purchase pursuant to this Exhibit, and this Ground Lease will continue as if BNPPLC had not exercised the Option.
     (2) Upon BNPPLC’s tender of the Option Price to NAI, NAI will convey good and indefeasible title to the fee estate in the Land and its interest in all other Leased Property to BNPPLC by general warranty deed and assignment subject only to the Permitted Encumbrances, to any claims of BNPPLC or Liens Removable by BNPPLC, and (to the extent still in force) to the Lease and the Purchase Agreement.
     (3) BNPPLC’s obligation to close the purchase shall be subject to the following terms and conditions, all of which are for the benefit of BNPPLC: (a) BNPPLC shall have been furnished with evidence satisfactory to BNPPLC that NAI can convey title as required by the preceding subparagraph; (b) nothing shall have occurred or been discovered after BNPPLC exercised the Option that could significantly and adversely affect title to the Leased Property or BNPPLC’s use thereof, (c) all of the representations of NAI 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 NAI or any of NAI’ representatives, would continue to be true on the date of the closing if all relevant facts and circumstances were known to NAI and such representatives, and (d) BNPPLC shall have been tendered the deed and other documents which are described in this Exhibit as documents to be delivered to BNPPLC at the closing of BNPPLC’s purchase.
     (4) 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 Exhibit and after any approvals described in subparagraph (1) above are obtained, and prior to closing BNPPLC’s occupancy of the Leased Property shall continue to be subject to the terms and conditions of this Ground Lease, including the terms setting forth BNPPLC’s obligation to pay rent. Closing shall take place at the offices of any title insurance company reasonably selected by BNPPLC to insure title under the title insurance policy described below.
     (5) Any transfer taxes or notices or registrations required by law in connection with the sale contemplated by this Exhibit will be the responsibility of NAI.
     (6) NAI will deliver a certificate of nonforeign status to BNPPLC at closing as needed to comply with the provisions of the U.S. Foreign Investors Real Property Tax Act (FIRPTA) or any comparable federal, state or local law in effect at the time.
     (7) NAI will also pay for and deliver to BNPPLC 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 BNPPLC (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 BNPPLC and to Permitted Encumbrances.
     (8) NAI shall also deliver at the closing all other documents or things reasonably required to be delivered to BNPPLC or by the title insurance company to evidence NAI’ ability to transfer the Leased Property to BNPPLC.
     If NAI and BNPPLC do not otherwise agree upon the amount of the Option Price within twenty days after BNPPLC exercises the Option, the Option Price shall be determined in accordance with the following procedure:
     (a) NAI and BNPPLC 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
Exhibit C to Amended and Restated Ground Lease (RTP Data Center) – Page 2

 

 

described in this Exhibit has been invoked. The agreement of the two appraisers as to the Option Price will be binding upon NAI and BNPPLC. 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 third appraiser as the closest to the prevailing monthly fair market value will be binding upon NAI and BNPPLC. Notification in writing of the Option Price shall be made to NAI and BNPPLC within fifteen days following the selection of the third appraiser.
     (b) If appraisers must be selected under the procedure set out above and either BNPPLC or NAI 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 Exhibit 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.
     (c) 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 NAI and BNPPLC may require the first two appraisers to immediately submit its top choice for the third appraiser to the then highest ranking officer of the Dallas, Texas Bar Association who will agree to help and who has no attorney/client or other significant relationship to either NAI or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within ten days after such choices are submitted to him.
     (d) Either NAI or BNPPLC 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
Exhibit C to Amended and Restated Ground Lease (RTP Data Center) – Page 3

 

 

by the other appraiser (i.e., the notifying party’s appraiser) will be binding upon NAI and BNPPLC.
     (e) NAI and BNPPLC shall each bear the expense of the appraiser appointed by it, and the expense of the third appraiser and of any officer of the Dallas, Texas Bar Association who participates in the appraisal process described above will be shared equally by NAI and BNPPLC.
Exhibit C to Amended and Restated Ground Lease (RTP Data Center) – Page 4

 

 

Exhibit D
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 Exhibit, “Rental Determination Date” means the (1) the Effective Date, (2) the earliest anniversary of the Effective Date to follow the Turnover Date by more than thirty days, and (3) after the second Rental Determination Date described in clause (2), each fifth anniversary of the preceding Rental Determination Date.
     As of the Effective Date (i.e., the first Rental Determination Date), the parties have agreed that Fair Rental Value is the dollar amount set forth in Paragraph 3 of this Ground Lease.
     If NAI and BNPPLC have not agreed upon Fair Rental Value as of any subsequent Rental Determination Date within one hundred eighty days after the such date, then Fair Rental Value will be determined as follows:
     (a) NAI and BNPPLC 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 Exhibit has been invoked. The agreement of the two appraisers as to Fair Rental Value will be binding upon NAI and BNPPLC. 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 NAI and BNPPLC. Notification in writing of this estimate shall be made to NAI and BNPPLC within fifteen days following the selection of the third appraiser.
     (b) If appraisers must be selected under the procedure set out above and either BNPPLC or NAI 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 Exhibit 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.
     (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 NAI and BNPPLC may require the first two appraisers to immediately submit its top choice for the third appraiser to the then highest ranking officer of the Dallas, Texas Bar Association who will agree to help and who has no attorney/client or other significant relationship to either NAI or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within twenty days after such choices are submitted to him.
     (d) Either NAI or BNPPLC 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 NAI and BNPPLC.
     (e) NAI and BNPPLC shall each bear the expense of the appraiser appointed by it, and the expense of the third appraiser and of any officer of the Dallas, Texas Bar Association who participates in the appraisal process described above will be shared equally by NAI and BNPPLC.
Exhibit D to Amended and Restated Ground Lease (RTP Data Center) – Page 2

 

exv10w56
Exhibit 10.56
FIRST MODIFICATION AGREEMENT
(RTP DATA CENTER)
     This FIRST MODIFICATION AGREEMENT (RTP DATA CENTER) (this “Amendment”), dated as of April 9, 2008 (the “Amendment Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETAPP, INC. (“NAI”), a Delaware corporation which is a successor by merger to Network Appliance, Inc.
RECITALS
     BNPPLC and Network Appliance, Inc. executed an Amended and Restated Common Definitions and Provisions Agreement (RTP Data Center) dated as of November 29, 2007 (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Amendment for all purposes. As used in this Amendment, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Amendment are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     BNPPLC and Network Appliance, Inc. also executed other Operative Documents, including an Amended and Restated Closing Certificate and Agreement (RTP Data Center) dated as of November 29, 2007 (the “Closing Certificate”), pursuant to which (among other things) NAI is currently bound by certain financial covenants set forth therein.
     Bank of America, N.A.; Goldman Sachs Credit Partners L.P.; JPMorgan Chase Bank, National Association; Keybank National Association; Morgan Stanley Bank; Sumitomo Mitsui Banking Corporation; and Wells Fargo Bank, N.A., as “Participants” (herein so called), and BNPPLC have all previously become parties to a Participation Agreement (RTP Data Center) dated as of November 29, 2007 (the “Participation Agreement”), in which the Participants have agreed with BNPPLC to participate in the risks and rewards to BNPPLC of the Operative Documents.
     BNPPLC and NAI now desire to amend the Common Definitions and Provisions Agreement and the Closing Certificate as more particularly provided below in this Amendment.
AGREEMENTS
     In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1 Amendments to the Operative Documents.
     (A) Amendments to the Closing Certificate. Effective as of the Amendment Date, but subject to the satisfaction of the condition precedent set forth in Section 9 below, the Closing

 

 

Certificate is hereby amended as follows:
     (1) The definition of “Consolidated EBITDA” in Subparagraph 3(A) of the Closing Certificate is hereby amended and restated in its entirety as follows:
“Consolidated EBITDA” means, with reference to any period, the sum of the following: (a) Consolidated Net Income for such period, plus (b) without duplication and to the extent deducted from revenues in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii) expense for taxes paid or accrued during such period, (iii) all amounts attributable to depreciation, (iv) amortization during such period, (v) extraordinary non-cash charges incurred other than in the ordinary course of business during such period, (vi) nonrecurring extraordinary non-cash restructuring charges, (vii) share-based non-cash compensation expense, and (viii) any non-cash charge with respect to the amortization of the value or cost of any derivative instrument that is excluded from the definition of “Swap Agreement” below by reason of clause (b) or clause (c) of the proviso at the end of that definition, minus without duplication and to the extent included in determining such Consolidated Net Income, (c) interest income, (d) extraordinary non-cash gains realized other than in the ordinary course of business and (e) any cash payments made during such period in respect of the item described in clause (vii) above subsequent to the fiscal quarter in which the relevant share-based non-cash compensation expense was incurred, all calculated for NAI and its Subsidiaries in accordance with GAAP on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period NAI or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period NAI or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by NAI and its Subsidiaries in excess of $50,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to NAI or any of its Subsidiaries in excess of $50,000,000.
First Modification Agreement (RTP Data Center) – Page 2

 

 

     (2) The definition of “Swap Agreement” in Subparagraph 3(A) of the Closing Certificate is hereby amended and restated in its entirety as follows:
“Swap Agreement” means any agreement entered into for the primary purpose of hedging or mitigating risk or speculation with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that the following shall be excluded from this definition: (a) any of the foregoing involving, or settled by reference to, Equity Interests of NAI and entered into or issued in connection with compensatory arrangements for directors, officers, employees or consultants of NAI or any of the Subsidiaries, (b) any of the foregoing that is, or at the election of the issuer may be, settled (after payment of any premium for any option or any prepayment under any forward contract) through the issuance of Equity Interests of NAI, and (c) any of the foregoing to the extent it constitutes a derivative embedded in a convertible security issued by NAI that involves, or is settled by reference to, Equity Interests of NAI (including, for avoidance of doubt, “net share settled” convertible securities).
     (B) Amendment to the Common Definitions and Provisions Agreement. Effective as of the Amendment Date, but subject to the satisfaction of the condition precedent set forth in Section 9 below, clause (F) of the definition of “Event of Default” in Article 1 of the Common Definitions and Provisions Agreement is hereby amended and restated in its entirety as follows:
(F) NAI or any Subsidiary of NAI fails to pay any principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event occurs or condition exists under any agreement or instrument relating to any such Indebtedness and continues after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate the maturity of such Indebtedness (other than by conversion of any convertible debt instrument pursuant to its terms); or any such Indebtedness is declared by the creditor to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness is required to be made, in each case prior to the stated maturity thereof (other than, in each case, by conversion of any convertible debt instrument pursuant to its terms).
First Modification Agreement (RTP Data Center) – Page 3

 

 

2 Confirmation of Operative Documents by NAI. NAI confirms that it is, as successor by merger to Network Appliance, Inc., a party to and bound by the Operative Documents as was Network Appliance, Inc. Further, NAI ratifies and confirms all terms and conditions of the Operative Documents, as hereby amended, including the representations made by Network Appliance, Inc. concerning the Property in the Ground Lease. NAI also confirms that (a) all such representations which concern the Property would continue to be accurate and complete in all material respects if made as of the Amendment Date, and (b) NAI is not currently aware of any Default or Event of Default which has occurred and is continuing or of any defense, counterclaim, set-off, right of recoupment, abatement or other claim which NAI may now have against BNPPLC under the Operative Documents.
3 Other Representations and Covenants of NAI. NAI also represents and covenants to BNPPLC as follows:
     (A) Concerning NAI and this Amendment.
     (1) Authority. The Constituent Documents of NAI permit the execution, delivery and performance of this Amendment by NAI, and all actions and approvals necessary to bind NAI under this Amendment have been taken and obtained. Without limiting the foregoing, this Amendment will be binding upon NAI when signed on behalf of NAI by Ingemar Lanevi, Vice President and Corporate Treasurer of NAI.
     (2) Truth of Information. Any reports, financial statements or other data furnished by NAI to BNPPLC in connection with the agreements set forth in this Amendment are true and correct in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading. No material adverse change has occurred since the dates of such reports, statements and other data in the financial condition of NAI.
     (3) No Default or Violation. The execution and performance by NAI of this Amendment do not and will not contravene or result in a breach of or default under any other agreement to which NAI is a party or by which NAI is bound or which affects any assets of NAI. Such execution and performance by NAI do not contravene any law, order, decree, rule or regulation to which NAI is subject. Further, such execution 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, any property of NAI pursuant to the provisions of any such other agreement.
     (4) Enforceability. This Amendment constitutes the legal, valid and binding obligations of NAI enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
First Modification Agreement (RTP Data Center) – Page 4

 

 

     (B) Further Assurances. NAI will, upon the reasonable request of BNPPLC, (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 Amendment and to subject to this Amendment any property intended to be covered hereby, 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 BNPPLC 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 BNPPLC to enable BNPPLC to comply with the requirements or requests of any agency or authority having jurisdiction over it.
     (C) Reimbursement of Costs. NAI will pay or reimburse BNPPLC, upon demand, for all reasonable out-of-pocket costs and expenses (including the reasonable fees, charges and disbursements of counsel) incurred by BNPPLC in connection with the preparation, negotiation, execution and delivery of this Amendment.
4 Reservation of Rights. The execution and delivery by BNPPLC of this Amendment will not be deemed to create a course of dealing or otherwise obligate BNPPLC to enter into amendments under the same, similar, or any other circumstances in the future. NAI is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon BNPPLC or Participants or any other Person. Except as expressly provided above, this Amendment will not limit, modify or otherwise affect any of NAI’s obligations under any of the Operative Documents, as heretofore amended.
5 No Implied Representations or Promises by BNPPLC. NAI acknowledges and agrees that neither BNPPLC nor its representatives or agents have made any representations or promises with respect to the subject matter of this Amendment except as expressly set forth herein.
6 Provisions Incorporated by Reference from the Common Definitions and Provisions Agreement. All terms and conditions set forth in Article II of the Common Definitions and Provisions Agreement will apply to this Amendment as if this Amendment was one of the Operative Documents referenced therein.
7 References to Operative Documents. From and after the Amendment Date, all references to any of the Operative Documents in the Operative Documents or in other documents related to the transactions contemplated therein are intended to mean the Operative Documents, as modified by this Amendment, unless the context shall otherwise require.
First Modification Agreement (RTP Data Center) – Page 5

 

 

8 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 and successors and, to the extent assignment is permitted under the Operative Documents, their respective assigns.
9 Condition Precedent — Consents of Participants. The Participation Agreement requires that BNPPLC obtain approval of a Majority (as defined in the Participation Agreement) before it becomes bound by one or more amendments set forth in Section 1 above. The Participation Agreement defines “Majority” by reference to the Percentages (as defined therein) of the parties thereto. More specifically, the Participation Agreement defines “Majority” as parties to the Participation Agreement (i.e., Participants or BNPPLC and Participants), the aggregate Percentages of which equal or exceed sixty-seven percent (67%) of the Percentages of BNPPLC and of all the Participants then entitled to vote on certain matters specified in the Participation Agreement. For purposes of such voting, the Percentages of BNPPLC and the Participants under the Participation Agreement are currently as follows:
         
BNP PARIBAS LEASING CORPORATION:
     23.1124807397 %
BANK OF AMERICA, N.A.:
     4.6224961479 %
GOLDMAN SACHS CREDIT PARTNERS L.P.
     3.0816640986 %
JPMORGAN CHASE BANK
     9.2449922958 %
KEYBANK NATIONAL ASSOCIATION
     22.1879815100 %
MORGAN STANLEY BANK
     8.4745762712 %
SUMITOMO MITSUI BANKING CORPORATION
     6.1633281972 %
WELLS FARGO BANK, N.A.
     23.1124807396 %
In order to comply with the requirements of the Participation Agreement, BNPPLC and NAI agree that the amendments set forth in Section 1 above shall not become effective until Participants with aggregate Percentages of at least 43.888% (i.e., 67% less the Percentage of BNPPLC itself) have executed this Amendment in the spaces provided below to evidence their consents. However, so long as Participants with aggregate percentages of at least 43.888% do sign this Amendment to evidence their consents, then the amendments in Section 1 above will become effective even if other Participants fail or refuse to sign this Amendment or give their consents.
[The signature pages follow.]
First Modification Agreement (RTP Data Center) – Page 6

 

 

     IN WITNESS WHEREOF, this First Modification Agreement (RTP Data Center) is executed to be effective as of April 9, 2008.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
First Modification Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (RTP Data Center) dated as of April 9, 2008]
         
  NETAPP, INC., a Delaware corporation, which is
the successor by merger to Network Appliance, Inc.
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
First Modification Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (RTP Data Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, BANK OF AMERICA, N.A., joins in the execution of this First Modification Agreement (RTP Data Center) as a Participant solely to evidence its consent to this First Modification Agreement (RTP Data Center).
         
  BANK OF AMERICA, N.A.
 		  
  By:   /s/ Fred L. Thorne   
    Name:   Fred L. Thorne    
    Title:   Managing Director   
 
First Modification Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (RTP Data Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, GOLDMAN SACHS CREDIT PARTNERS L.P., joins in the execution of this First Modification Agreement (RTP Data Center) as a Participant solely to evidence its consent to this First Modification Agreement (RTP Data Center).
         
  GOLDMAN SACHS CREDIT PARTNERS L.P.
 		  
  By:   /s/ Andrew Caditz    
    Name:   Andrew Caditz    
    Title:   Authorized Signatory   
 
First Modification Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (RTP Data Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, joins in the execution of this First Modification Agreement (RTP Data Center) as a Participant solely to evidence its consent to this First Modification Agreement (RTP Data Center).
         
  JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION
 		  
  By:   /s/ Anthony Galea    
    Name:   Anthony Galea   
    Title:   Vice President   
 
First Modification Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (RTP Data Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, KEYBANK NATIONAL ASSOCIATION, joins in the execution of this First Modification Agreement (RTP Data Center) as a Participant solely to evidence its consent to this First Modification Agreement (RTP Data Center).
         
  KEYBANK NATIONAL ASSOCIATION
 		  
  By:   /s/ Raed Y. Alfayoumi    
    Name:   Raed Y. Alfayoumi   
    Title:   Vice President   
 
First Modification Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (RTP Data Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, MORGAN STANLEY BANK, joins in the execution of this First Modification Agreement (RTP Data Center) as a Participant solely to evidence its consent to this First Modification Agreement (RTP Data Center).
         
  MORGAN STANLEY BANK
 		  
  By:   /s/ Elizabeth Hendricks    
    Name:   Elizabeth Hendricks   
    Title:   Authorized Signatory   
 
First Modification Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (RTP Data Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, SUMITOMO MITSUI BANKING CORPORATION, joins in the execution of this First Modification Agreement (RTP Data Center) as a Participant solely to evidence its consent to this First Modification Agreement (RTP Data Center).
         
  SUMITOMO MITSUI BANKING
CORPORATION
 		  
  By:   /s/ Leo E. Pagarigan    
    Name:   Leo E. Pagarigan   
    Title:   General Manager   
 
First Modification Agreement (RTP Data Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (RTP Data Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, WELLS FARGO BANK, N.A., joins in the execution of this First Modification Agreement (RTP Data Center) as a Participant solely to evidence its consent to this First Modification Agreement (RTP Data Center).
         
  WELLS FARGO BANK, N.A.
 		  
  By:   /s/ Alicia Kachmarik    
    Name:   Alicia Kachmarik   
    Title:   Assistant Vice President   
 
First Modification Agreement (RTP Data Center) – Signature Page

 

exv10w64
Exhibit 10.64
FIRST MODIFICATION AGREEMENT
(MOFFETT BUSINESS CENTER)
     This FIRST MODIFICATION AGREEMENT (MOFFETT BUSINESS CENTER) (this “Amendment”), dated as of April 9, 2008 (the “Amendment Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETAPP, INC. (“NAI”), a Delaware corporation which is a successor by merger to Network Appliance, Inc.
RECITALS
     BNPPLC and Network Appliance, Inc. executed a Common Definitions and Provisions Agreement (Moffett Business Center) dated as of November 29, 2007 (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Amendment for all purposes. As used in this Amendment, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Amendment are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     BNPPLC and Network Appliance, Inc. also executed other Operative Documents, including a Closing Certificate and Agreement (Moffett Business Center) dated as of November 29, 2007 (the “Closing Certificate”), pursuant to which (among other things) NAI is currently bound by certain financial covenants set forth therein.
     Bank of America, N.A.; Goldman Sachs Credit Partners L.P.; JPMorgan Chase Bank, National Association; Keybank National Association; Morgan Stanley Bank; Sumitomo Mitsui Banking Corporation; and Wells Fargo Bank, N.A., as “Participants” (herein so called), and BNPPLC have all previously become parties to a Participation Agreement (Moffett Business Center) dated as of November 29, 2007 (the “Participation Agreement”), in which the Participants have agreed with BNPPLC to participate in the risks and rewards to BNPPLC of the Operative Documents.
     BNPPLC and NAI now desire to amend the Common Definitions and Provisions Agreement and the Closing Certificate as more particularly provided below in this Amendment.
AGREEMENTS
     In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1 Amendments to the Operative Documents.
     (A) Amendments to the Closing Certificate. Effective as of the Amendment Date, but subject to the satisfaction of the condition precedent set forth in Section 9 below, the Closing

 

 

Certificate is hereby amended as follows:
     (1) The definition of “Consolidated EBITDA” in Subparagraph 3(A) of the Closing Certificate is hereby amended and restated in its entirety as follows:
“Consolidated EBITDA” means, with reference to any period, the sum of the following: (a) Consolidated Net Income for such period, plus (b) without duplication and to the extent deducted from revenues in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii) expense for taxes paid or accrued during such period, (iii) all amounts attributable to depreciation, (iv) amortization during such period, (v) extraordinary non-cash charges incurred other than in the ordinary course of business during such period, (vi) nonrecurring extraordinary non-cash restructuring charges, (vii) share-based non-cash compensation expense, and (viii) any non-cash charge with respect to the amortization of the value or cost of any derivative instrument that is excluded from the definition of “Swap Agreement” below by reason of clause (b) or clause (c) of the proviso at the end of that definition, minus without duplication and to the extent included in determining such Consolidated Net Income, (c) interest income, (d) extraordinary non-cash gains realized other than in the ordinary course of business and (e) any cash payments made during such period in respect of the item described in clause (vii) above subsequent to the fiscal quarter in which the relevant share-based non-cash compensation expense was incurred, all calculated for NAI and its Subsidiaries in accordance with GAAP on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period NAI or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period NAI or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by NAI and its Subsidiaries in excess of $50,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to NAI or any of its Subsidiaries in excess of $50,000,000.
First Modification Agreement (Moffett Business Center) – Page 2

 

 

     (2) The definition of “Swap Agreement” in Subparagraph 3(A) of the Closing Certificate is hereby amended and restated in its entirety as follows:
“Swap Agreement” means any agreement entered into for the primary purpose of hedging or mitigating risk or speculation with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that the following shall be excluded from this definition: (a) any of the foregoing involving, or settled by reference to, Equity Interests of NAI and entered into or issued in connection with compensatory arrangements for directors, officers, employees or consultants of NAI or any of the Subsidiaries, (b) any of the foregoing that is, or at the election of the issuer may be, settled (after payment of any premium for any option or any prepayment under any forward contract) through the issuance of Equity Interests of NAI, and (c) any of the foregoing to the extent it constitutes a derivative embedded in a convertible security issued by NAI that involves, or is settled by reference to, Equity Interests of NAI (including, for avoidance of doubt, “net share settled” convertible securities).
     (B) Amendment to the Common Definitions and Provisions Agreement. Effective as of the Amendment Date, but subject to the satisfaction of the condition precedent set forth in Section 9 below, clause (F) of the definition of “Event of Default” in Article 1 of the Common Definitions and Provisions Agreement is hereby amended and restated in its entirety as follows:
(F) NAI or any Subsidiary of NAI fails to pay any principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event occurs or condition exists under any agreement or instrument relating to any such Indebtedness and continues after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate the maturity of such Indebtedness (other than by conversion of any convertible debt instrument pursuant to its terms); or any such Indebtedness is declared by the creditor to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness is required to be made, in each case prior to the stated maturity thereof (other than, in each case, by conversion of any convertible debt instrument pursuant to its terms).
First Modification Agreement (Moffett Business Center) – Page 3

 

 

2 Confirmation of Operative Documents by NAI. NAI confirms that it is, as successor by merger to Network Appliance, Inc., a party to and bound by the Operative Documents as was Network Appliance, Inc. Further, NAI ratifies and confirms all terms and conditions of the Operative Documents, as hereby amended, including the representations made by Network Appliance, Inc. concerning the Property in the Ground Lease. NAI also confirms that (a) all such representations which concern the Property would continue to be accurate and complete in all material respects if made as of the Amendment Date, and (b) NAI is not currently aware of any Default or Event of Default which has occurred and is continuing or of any defense, counterclaim, set-off, right of recoupment, abatement or other claim which NAI may now have against BNPPLC under the Operative Documents.
3 Other Representations and Covenants of NAI. NAI also represents and covenants to BNPPLC as follows:
     (A) Concerning NAI and this Amendment.
     (1) Authority. The Constituent Documents of NAI permit the execution, delivery and performance of this Amendment by NAI, and all actions and approvals necessary to bind NAI under this Amendment have been taken and obtained. Without limiting the foregoing, this Amendment will be binding upon NAI when signed on behalf of NAI by Ingemar Lanevi, Vice President and Corporate Treasurer of NAI.
     (2) Truth of Information. Any reports, financial statements or other data furnished by NAI to BNPPLC in connection with the agreements set forth in this Amendment are true and correct in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading. No material adverse change has occurred since the dates of such reports, statements and other data in the financial condition of NAI.
     (3) No Default or Violation. The execution and performance by NAI of this Amendment do not and will not contravene or result in a breach of or default under any other agreement to which NAI is a party or by which NAI is bound or which affects any assets of NAI. Such execution and performance by NAI do not contravene any law, order, decree, rule or regulation to which NAI is subject. Further, such execution 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, any property of NAI pursuant to the provisions of any such other agreement.
     (4) Enforceability. This Amendment constitutes the legal, valid and binding obligations of NAI enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
First Modification Agreement (Moffett Business Center) – Page 4

 

 

     (B) Further Assurances. NAI will, upon the reasonable request of BNPPLC, (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 Amendment and to subject to this Amendment any property intended to be covered hereby, 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 BNPPLC 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 BNPPLC to enable BNPPLC to comply with the requirements or requests of any agency or authority having jurisdiction over it.
     (C) Reimbursement of Costs. NAI will pay or reimburse BNPPLC, upon demand, for all reasonable out-of-pocket costs and expenses (including the reasonable fees, charges and disbursements of counsel) incurred by BNPPLC in connection with the preparation, negotiation, execution and delivery of this Amendment.
4 Reservation of Rights. The execution and delivery by BNPPLC of this Amendment will not be deemed to create a course of dealing or otherwise obligate BNPPLC to enter into amendments under the same, similar, or any other circumstances in the future. NAI is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon BNPPLC or Participants or any other Person. Except as expressly provided above, this Amendment will not limit, modify or otherwise affect any of NAI’s obligations under any of the Operative Documents, as heretofore amended.
5 No Implied Representations or Promises by BNPPLC. NAI acknowledges and agrees that neither BNPPLC nor its representatives or agents have made any representations or promises with respect to the subject matter of this Amendment except as expressly set forth herein.
6 Provisions Incorporated by Reference from the Common Definitions and Provisions Agreement. All terms and conditions set forth in Article II of the Common Definitions and Provisions Agreement will apply to this Amendment as if this Amendment was one of the Operative Documents referenced therein.
7 References to Operative Documents. From and after the Amendment Date, all references to any of the Operative Documents in the Operative Documents or in other documents related to the transactions contemplated therein are intended to mean the Operative Documents, as modified by this Amendment, unless the context shall otherwise require.
First Modification Agreement (Moffett Business Center) – Page 5

 

 

8 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 and successors and, to the extent assignment is permitted under the Operative Documents, their respective assigns.
9 Condition Precedent — Consents of Participants. The Participation Agreement requires that BNPPLC obtain approval of a Majority (as defined in the Participation Agreement) before it becomes bound by one or more amendments set forth in Section 1 above. The Participation Agreement defines “Majority” by reference to the Percentages (as defined therein) of the parties thereto. More specifically, the Participation Agreement defines “Majority” as parties to the Participation Agreement (i.e., Participants or BNPPLC and Participants), the aggregate Percentages of which equal or exceed sixty-seven percent (67%) of the Percentages of BNPPLC and of all the Participants then entitled to vote on certain matters specified in the Participation Agreement. For purposes of such voting, the Percentages of BNPPLC and the Participants under the Participation Agreement are currently as follows:
         
BNP PARIBAS LEASING CORPORATION:
     23.1124807397 %
BANK OF AMERICA, N.A.:
     4.6224961479 %
GOLDMAN SACHS CREDIT PARTNERS L.P.
     3.0816640986 %
JPMORGAN CHASE BANK
     9.2449922958 %
KEYBANK NATIONAL ASSOCIATION
     22.1879815100 %
MORGAN STANLEY BANK
     8.4745762712 %
SUMITOMO MITSUI BANKING CORPORATION
     6.1633281972 %
WELLS FARGO BANK, N.A.
     23.1124807396 %
In order to comply with the requirements of the Participation Agreement, BNPPLC and NAI agree that the amendments set forth in Section 1 above shall not become effective until Participants with aggregate Percentages of at least 43.888% (i.e., 67% less the Percentage of BNPPLC itself) have executed this Amendment in the spaces provided below to evidence their consents. However, so long as Participants with aggregate percentages of at least 43.888% do sign this Amendment to evidence their consents, then the amendments in Section 1 above will become effective even if other Participants fail or refuse to sign this Amendment or give their consents.
[The signature pages follow.]
First Modification Agreement (Moffett Business Center) – Page 6

 

 

     IN WITNESS WHEREOF, this First Modification Agreement (Moffett Business Center) is executed to be effective as of April 9, 2008.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
First Modification Agreement (Moffett Business Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Moffett Business Center) dated as of April 9, 2008]
         
  NETAPP, INC., a Delaware corporation, which is the
successor by merger to Network Appliance, Inc.
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
First Modification Agreement (Moffett Business Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Moffett Business Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, BANK OF AMERICA, N.A., joins in the execution of this First Modification Agreement (Moffett Business Center) as a Participant solely to evidence its consent to this First Modification Agreement (Moffett Business Center).
         
  BANK OF AMERICA, N.A.
 		  
  By:   /s/ Fred L. Thorne    
    Name:   Fred L. Thorne   
    Title:   Managing director   
 
First Modification Agreement (Moffett Business Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Moffett Business Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, GOLDMAN SACHS CREDIT PARTNERS L.P., joins in the execution of this First Modification Agreement (Moffett Business Center) as a Participant solely to evidence its consent to this First Modification Agreement (Moffett Business Center).
         
  GOLDMAN SACHS CREDIT PARTNERS L.P.
 		  
  By:   /s/ Andrew Caditz    
    Name:   Andrew Caditz    
    Title:   Authorized Signatory   
 
First Modification Agreement (Moffett Business Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Moffett Business Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, joins in the execution of this First Modification Agreement (Moffett Business Center) as a Participant solely to evidence its consent to this First Modification Agreement (Moffett Business Center).
         
  JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
 		  
  By:   /s/ Anthony Galea    
    Name:   Anthony Galea   
    Title:   Vice President   
 
First Modification Agreement (Moffett Business Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Moffett Business Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, KEYBANK NATIONAL ASSOCIATION, joins in the execution of this First Modification Agreement (Moffett Business Center) as a Participant solely to evidence its consent to this First Modification Agreement (Moffett Business Center).
         
  KEYBANK NATIONAL ASSOCIATION
 		  
  By:   /s/ Raed Y. Alfayoumi    
    Name:   Raed Y. Alfayoumi    
    Title:   Vice President   
 
First Modification Agreement (Moffett Business Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Moffett Business Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, MORGAN STANLEY BANK, joins in the execution of this First Modification Agreement (Moffett Business Center) as a Participant solely to evidence its consent to this First Modification Agreement (Moffett Business Center).
         
  MORGAN STANLEY BANK
 		  
  By:   /s/ Elizabeth Hendricks    
    Name:   Elizabeth Hendricks   
    Title:   Authorized Signatory   
 
First Modification Agreement (Moffett Business Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Moffett Business Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, SUMITOMO MITSUI BANKING CORPORATION, joins in the execution of this First Modification Agreement (Moffett Business Center) as a Participant solely to evidence its consent to this First Modification Agreement (Moffett Business Center).
         
  SUMITOMO MITSUI BANKING CORPORATION
 		  
  By:   /s/ Leo E. Pagarigan    
    Name:   Leo E. Pagarigan   
    Title:   General Manager   
 
First Modification Agreement (Moffett Business Center) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Moffett Business Center) dated as of April 9, 2008]
Consent of Participant
The undersigned, WELLS FARGO BANK, N.A., joins in the execution of this First Modification Agreement (Moffett Business Center) as a Participant solely to evidence its consent to this First Modification Agreement (Moffett Business Center).
         
  WELLS FARGO BANK, N.A.
 		  
  By:   /s/ Alicia Kachmarik  
    Name:   Alicia Kachmarik  
    Title:   Assistant Vice President   
 
First Modification Agreement (Moffett Business Center) – Signature Page

 

exv10w69
Exhibit 10.69
FIRST MODIFICATION AGREEMENT
(1299 ORLEANS)
     This FIRST MODIFICATION AGREEMENT (1299 ORLEANS) (this “Amendment”), dated as of April 9, 2008 (the “Amendment Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETAPP, INC. (“NAI”), a Delaware corporation which is a successor by merger to Network Appliance, Inc.
RECITALS
     BNPPLC and Network Appliance, Inc. executed a Common Definitions and Provisions Agreement (1299 Orleans) dated as of November 29, 2007 (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Amendment for all purposes. As used in this Amendment, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Amendment are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     BNPPLC and Network Appliance, Inc. also executed other Operative Documents, including a Closing Certificate and Agreement (1299 Orleans) dated as of November 29, 2007 (the “Closing Certificate”), pursuant to which (among other things) NAI is currently bound by certain financial covenants set forth therein.
     Bank of America, N.A.; Goldman Sachs Credit Partners L.P.; JPMorgan Chase Bank, National Association; Keybank National Association; Morgan Stanley Bank; Sumitomo Mitsui Banking Corporation; and Wells Fargo Bank, N.A., as “Participants” (herein so called), and BNPPLC have all previously become parties to a Participation Agreement (1299 Orleans) dated as of November 29, 2007 (the “Participation Agreement”), in which the Participants have agreed with BNPPLC to participate in the risks and rewards to BNPPLC of the Operative Documents.
     BNPPLC and NAI now desire to amend the Common Definitions and Provisions Agreement and the Closing Certificate as more particularly provided below in this Amendment.
AGREEMENTS
     In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1 Amendments to the Operative Documents.
     (A) Amendments to the Closing Certificate. Effective as of the Amendment Date, but subject to the satisfaction of the condition precedent set forth in Section 9 below, the Closing Certificate is hereby amended as follows:

 

 

     (1) The definition of “Consolidated EBITDA” in Subparagraph 3(A) of the Closing Certificate is hereby amended and restated in its entirety as follows:
“Consolidated EBITDA” means, with reference to any period, the sum of the following: (a) Consolidated Net Income for such period, plus (b) without duplication and to the extent deducted from revenues in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii) expense for taxes paid or accrued during such period, (iii) all amounts attributable to depreciation, (iv) amortization during such period, (v) extraordinary non-cash charges incurred other than in the ordinary course of business during such period, (vi) nonrecurring extraordinary non-cash restructuring charges, (vii) share-based non-cash compensation expense, and (viii) any non-cash charge with respect to the amortization of the value or cost of any derivative instrument that is excluded from the definition of “Swap Agreement” below by reason of clause (b) or clause (c) of the proviso at the end of that definition, minus without duplication and to the extent included in determining such Consolidated Net Income, (c) interest income, (d) extraordinary non-cash gains realized other than in the ordinary course of business and (e) any cash payments made during such period in respect of the item described in clause (vii) above subsequent to the fiscal quarter in which the relevant share-based non-cash compensation expense was incurred, all calculated for NAI and its Subsidiaries in accordance with GAAP on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period NAI or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period NAI or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by NAI and its Subsidiaries in excess of $50,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to NAI or any of its Subsidiaries in excess of $50,000,000.
First Modification Agreement (1299 Orleans) – Page 2

 

 

     (2) The definition of “Swap Agreement” in Subparagraph 3(A) of the Closing Certificate is hereby amended and restated in its entirety as follows:
“Swap Agreement” means any agreement entered into for the primary purpose of hedging or mitigating risk or speculation with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that the following shall be excluded from this definition: (a) any of the foregoing involving, or settled by reference to, Equity Interests of NAI and entered into or issued in connection with compensatory arrangements for directors, officers, employees or consultants of NAI or any of the Subsidiaries, (b) any of the foregoing that is, or at the election of the issuer may be, settled (after payment of any premium for any option or any prepayment under any forward contract) through the issuance of Equity Interests of NAI, and (c) any of the foregoing to the extent it constitutes a derivative embedded in a convertible security issued by NAI that involves, or is settled by reference to, Equity Interests of NAI (including, for avoidance of doubt, “net share settled” convertible securities).
     (B) Amendment to the Common Definitions and Provisions Agreement. Effective as of the Amendment Date, but subject to the satisfaction of the condition precedent set forth in Section 9 below, clause (F) of the definition of “Event of Default” in Article 1 of the Common Definitions and Provisions Agreement is hereby amended and restated in its entirety as follows:
(F) NAI or any Subsidiary of NAI fails to pay any principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event occurs or condition exists under any agreement or instrument relating to any such Indebtedness and continues after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate the maturity of such Indebtedness (other than by conversion of any convertible debt instrument pursuant to its terms); or any such Indebtedness is declared by the creditor to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness is required to be made, in each case prior to the stated maturity thereof (other than, in each case, by conversion of any convertible debt instrument pursuant to its terms).
First Modification Agreement (1299 Orleans) – Page 3

 

 

2 Confirmation of Operative Documents by NAI. NAI confirms that it is, as successor by merger to Network Appliance, Inc., a party to and bound by the Operative Documents as was Network Appliance, Inc. Further, NAI ratifies and confirms all terms and conditions of the Operative Documents, as hereby amended, including the representations made by Network Appliance, Inc. concerning the Property in the Ground Lease. NAI also confirms that (a) all such representations which concern the Property would continue to be accurate and complete in all material respects if made as of the Amendment Date, and (b) NAI is not currently aware of any Default or Event of Default which has occurred and is continuing or of any defense, counterclaim, set-off, right of recoupment, abatement or other claim which NAI may now have against BNPPLC under the Operative Documents.
3 Other Representations and Covenants of NAI. NAI also represents and covenants to BNPPLC as follows:
     (A) Concerning NAI and this Amendment.
     (1) Authority. The Constituent Documents of NAI permit the execution, delivery and performance of this Amendment by NAI, and all actions and approvals necessary to bind NAI under this Amendment have been taken and obtained. Without limiting the foregoing, this Amendment will be binding upon NAI when signed on behalf of NAI by Ingemar Lanevi, Vice President and Corporate Treasurer of NAI.
     (2) Truth of Information. Any reports, financial statements or other data furnished by NAI to BNPPLC in connection with the agreements set forth in this Amendment are true and correct in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading. No material adverse change has occurred since the dates of such reports, statements and other data in the financial condition of NAI.
     (3) No Default or Violation. The execution and performance by NAI of this Amendment do not and will not contravene or result in a breach of or default under any other agreement to which NAI is a party or by which NAI is bound or which affects any assets of NAI. Such execution and performance by NAI do not contravene any law, order, decree, rule or regulation to which NAI is subject. Further, such execution 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, any property of NAI pursuant to the provisions of any such other agreement.
     (4) Enforceability. This Amendment constitutes the legal, valid and binding obligations of NAI enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
First Modification Agreement (1299 Orleans) – Page 4

 

 

     (B) Further Assurances. NAI will, upon the reasonable request of BNPPLC, (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 Amendment and to subject to this Amendment any property intended to be covered hereby, 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 BNPPLC 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 BNPPLC to enable BNPPLC to comply with the requirements or requests of any agency or authority having jurisdiction over it.
     (C) Reimbursement of Costs. NAI will pay or reimburse BNPPLC, upon demand, for all reasonable out-of-pocket costs and expenses (including the reasonable fees, charges and disbursements of counsel) incurred by BNPPLC in connection with the preparation, negotiation, execution and delivery of this Amendment.
4 Reservation of Rights. The execution and delivery by BNPPLC of this Amendment will not be deemed to create a course of dealing or otherwise obligate BNPPLC to enter into amendments under the same, similar, or any other circumstances in the future. NAI is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon BNPPLC or Participants or any other Person. Except as expressly provided above, this Amendment will not limit, modify or otherwise affect any of NAI’s obligations under any of the Operative Documents, as heretofore amended.
5 No Implied Representations or Promises by BNPPLC. NAI acknowledges and agrees that neither BNPPLC nor its representatives or agents have made any representations or promises with respect to the subject matter of this Amendment except as expressly set forth herein.
6 Provisions Incorporated by Reference from the Common Definitions and Provisions Agreement. All terms and conditions set forth in Article II of the Common Definitions and Provisions Agreement will apply to this Amendment as if this Amendment was one of the Operative Documents referenced therein.
7 References to Operative Documents. From and after the Amendment Date, all references to any of the Operative Documents in the Operative Documents or in other documents related to the transactions contemplated therein are intended to mean the Operative Documents, as modified by this Amendment, unless the context shall otherwise require.
First Modification Agreement (1299 Orleans) – Page 5

 

 

8 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 and successors and, to the extent assignment is permitted under the Operative Documents, their respective assigns.
9 Condition Precedent — Consents of Participants. The Participation Agreement requires that BNPPLC obtain approval of a Majority (as defined in the Participation Agreement) before it becomes bound by one or more amendments set forth in Section 1 above. The Participation Agreement defines “Majority” by reference to the Percentages (as defined therein) of the parties thereto. More specifically, the Participation Agreement defines “Majority” as parties to the Participation Agreement (i.e., Participants or BNPPLC and Participants), the aggregate Percentages of which equal or exceed sixty-seven percent (67%) of the Percentages of BNPPLC and of all the Participants then entitled to vote on certain matters specified in the Participation Agreement. For purposes of such voting, the Percentages of BNPPLC and the Participants under the Participation Agreement are currently as follows:
         
BNP PARIBAS LEASING CORPORATION:
     23.1124807397 %
BANK OF AMERICA, N.A.:
     4.6224961479 %
GOLDMAN SACHS CREDIT PARTNERS L.P.
     3.0816640986 %
JPMORGAN CHASE BANK
     9.2449922958 %
KEYBANK NATIONAL ASSOCIATION
     22.1879815100 %
MORGAN STANLEY BANK
     8.4745762712 %
SUMITOMO MITSUI BANKING CORPORATION
     6.1633281972 %
WELLS FARGO BANK, N.A.
     23.1124807396 %
In order to comply with the requirements of the Participation Agreement, BNPPLC and NAI agree that the amendments set forth in Section 1 above shall not become effective until Participants with aggregate Percentages of at least 43.888% (i.e., 67% less the Percentage of BNPPLC itself) have executed this Amendment in the spaces provided below to evidence their consents. However, so long as Participants with aggregate percentages of at least 43.888% do sign this Amendment to evidence their consents, then the amendments in Section 1 above will become effective even if other Participants fail or refuse to sign this Amendment or give their consents.
[The signature pages follow.]
First Modification Agreement (1299 Orleans) – Page 6

 

 

     IN WITNESS WHEREOF, this First Modification Agreement (1299 Orleans) is executed to be effective as of April 9, 2008.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
First Modification Agreement (1299 Orleans) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (1299 Orleans) dated as of April 9, 2008]
         
  NETAPP, INC., a Delaware corporation, which is the
successor by merger to Network Appliance, Inc.
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate Treasurer   
       
 
First Modification Agreement (1299 Orleans) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (1299 Orleans) dated as of April 9, 2008]
Consent of Participant
The undersigned, BANK OF AMERICA, N.A., joins in the execution of this First Modification Agreement (1299 Orleans) as a Participant solely to evidence its consent to this First Modification Agreement (1299 Orleans).
                 
    BANK OF AMERICA, N.A.    
 
                
    By:   /s/ Fred L. Thorne    
             
 
      Name:   Fred L. Thorne    
 
      Title:   Managing Director    
First Modification Agreement (1299 Orleans) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (1299 Orleans) dated as of April 9, 2008]
Consent of Participant
The undersigned, GOLDMAN SACHS CREDIT PARTNERS L.P., joins in the execution of this First Modification Agreement (1299 Orleans) as a Participant solely to evidence its consent to this First Modification Agreement (1299 Orleans).
                 
    GOLDMAN SACHS CREDIT PARTNERS L.P.    
 
                
    By:   /s/ Andrew Caditz    
             
 
      Name:   Andrew Caditz    
 
      Title:   Authorized Signator    
First Modification Agreement (1299 Orleans) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (1299 Orleans) dated as of April 9, 2008]
Consent of Participant
The undersigned, JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, joins in the execution of this First Modification Agreement (1299 Orleans) as a Participant solely to evidence its consent to this First Modification Agreement (1299 Orleans).
                 
    JPMORGAN CHASE BANK, NATIONAL ASSOCIATION    
 
                
    By:   /s/ Anthony Galea    
             
 
      Name:   Anthony Galea    
 
      Title:   Vice President    
First Modification Agreement (1299 Orleans) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (1299 Orleans) dated as of April 9, 2008]
Consent of Participant
The undersigned, KEYBANK NATIONAL ASSOCIATION, joins in the execution of this First Modification Agreement (1299 Orleans) as a Participant solely to evidence its consent to this First Modification Agreement (1299 Orleans).
                 
    KEYBANK NATIONAL ASSOCIATION    
 
                
    By:   /s/ Read Y. Alfayoumi    
             
 
      Name:   Read Y. Alfayoumi    
 
      Title:   Vice President    
First Modification Agreement (1299 Orleans) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (1299 Orleans) dated as of April 9, 2008]
Consent of Participant
The undersigned, MORGAN STANLEY BANK, joins in the execution of this First Modification Agreement (1299 Orleans) as a Participant solely to evidence its consent to this First Modification Agreement (1299 Orleans).
                 
    MORGAN STANLEY BANK    
 
                
    By:   /s/ Elizabeth Hendricks    
             
 
      Name:   Elizabeth Hendricks    
 
      Title:   Authorized Signatory    
First Modification Agreement (1299 Orleans) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (1299 Orleans) dated as of April 9, 2008]
Consent of Participant
The undersigned, SUMITOMO MITSUI BANKING CORPORATION, joins in the execution of this First Modification Agreement (1299 Orleans) as a Participant solely to evidence its consent to this First Modification Agreement (1299 Orleans).
                 
    SUMITOMO MITSUI BANKING CORPORATION    
 
                
    By:   /s/ Leo E. Pagarigan    
             
 
      Name:   Leo E. Pagarigan    
 
      Title:   General Manager    
First Modification Agreement (1299 Orleans) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (1299 Orleans) dated as of April 9, 2008]
Consent of Participant
The undersigned, WELLS FARGO BANK, N.A., joins in the execution of this First Modification Agreement (1299 Orleans) as a Participant solely to evidence its consent to this First Modification Agreement (1299 Orleans).
                 
    WELLS FARGO BANK, N.A.    
 
                
    By:   /s/ Alicia Kachmarik    
             
 
       Name:   Alicia Kachmarik    
 
      Title:   Assistant Vice President    
First Modification Agreement (1299 Orleans) – Signature Page

 

exv10w70
Exhibit 10.70
         
     
 
 
      
 
 
      
 
 
      
 
 
      
 
 
      
  CLOSING CERTIFICATE
AND AGREEMENT
  
  (BUILDING 9)
  
 
 
      
 
 
      
 
 
      
 
 
      
  BETWEEN
  
 
 
      
 
 
      
 
 
      
 
 
      
  NETWORK APPLIANCE, INC.
  
  (“NAI”)
  
 
 
      
 
 
      
 
 
      
  AND
  
 
 
      
 
 
      
 
 
      
  BNP PARIBAS LEASING CORPORATION
  
  (“BNPPLC”)
  
 
 
      
 
 
      
 
 
      
 
 
      
 
 
      
  February 1, 2008
  
 
 
      
 
 
      
 
 
      
 
 
      
     

 

 

TABLE OF CONTENTS
                     
                Page  
                   
1   Representations, Covenants and Acknowledgments of NAI Concerning the Property     2  
    (A)   Prior Inspections and Investigations Concerning the Property     2  
 
   (B)   Title         2  
    (C)   Compliance with Covenants and Laws     2  
 
                    
2   Representations and Covenants by NAI     2  
    (A)   Concerning NAI and the Operative Documents     2  
 
       (1)   Entity Status     2  
 
       (2)   Authority     3  
 
       (3)   Solvency     3  
 
       (4)   Financial Reports     3  
 
       (5)   Pending Legal Proceedings     3  
 
       (6)   No Default or Violation     3  
 
       (7)   Use of Proceeds     4  
 
       (8)   Enforceability     4  
 
       (9)   Pari Passu     4  
 
       (10)   Conduct of Business and Maintenance of Existence     4  
 
       (11)   Investment Company Act, etc     4  
 
       (12)   Not a Foreign Person     5  
 
       (13)   ERISA     5  
 
       (14)   Compliance With Laws     5  
 
       (15)   Payment of Taxes Generally     5  
 
       (16)   Maintenance of Insurance Generally     5  
 
       (17)   Franchises, Licenses, etc     6  
 
       (18)   Patents, Trademarks, etc     6  
 
       (19)   Labor     6  
 
       (20)   Title to Properties Generally     6  
 
       (21)   Books and Records     7  
    (B)   Further Assurances     7  
    (C)   Syndication     7  
    (D)   Financial Statements; Required Notices; Certificates     7  
    (F)   OFAC     10  
 
                    
3   Financial Covenants and Negative Covenants of NAI     10  
    (B)   Negative Covenants     19  
 
       (1)   Subsidiary Indebtedness     20  
 
       (2)   Liens     21  
 
       (3)   Fundamental Changes and Asset Sales     23  
 
       (4)   Speculative Swap Agreements     24  
 
       (5)   Transactions with Affiliates     24  
 
       (6)   Restrictive Agreements     24  

 

 

TABLE OF CONTENTS
(Continued)
                     
    (C)   Financial Covenants     25  
 
       (1)   Maximum Leverage Ratio     25  
 
       (2)   Minimum Liquidity     25  
 
                    
4   Limited Representations and Covenants of BNPPLC     25  
    (A)   Concerning Accounting Matters     25  
    (B)   Other Limited Representations     27  
 
       (1)   Entity Status     27  
 
       (2)   Authority     27  
 
       (3)   Solvency     28  
 
       (4)   Pending Legal Proceedings     28  
 
       (5)   No Default or Violation     28  
 
       (6)   Enforceability     29  
 
       (7)   Conduct of Business and Maintenance of Existence     29  
 
       (8)   Not a Foreign Person     29  
    (C)   Further Assurances     29  
    (D)   Actions Permitted by NAI Without BNPPLC’s Consent     33  
    (E)   Waiver of Landlord’s Liens     33  
    (F)   Estoppel Letters     34  
    (G)   No Implied Representations or Promises by BNPPLC     34  
 
                    
5   Usury Savings Provision     34  
 
                    
6   Obligations of NAI Under Other Operative Documents Not Limited by this Certificate     35  
 
                    
7   Obligations of NAI Hereunder Not Limited by Other Operative Documents     35  
 
                    
8   Waiver of Jury Trial     35  

(ii)

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
     
Exhibit A
  Legal Description
 
    
Exhibit B
  Quarterly Certificate
 
    
Exhibit C
  Form of Disclosure Letter
 
    
Exhibit D
  Supplemental Disclosures
 
    
Exhibit E
  Certificate to be Provided by BNPPLC Re: Accounting

(iii)

 

CLOSING CERTIFICATE AND AGREEMENT
(BUILDING 9)
     This CLOSING CERTIFICATE AND AGREEMENT (BUILDING 9) (this “Certificate”), dated as of February 1, 2008 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Certificate, BNPPLC and NAI are executing a Common Definitions and Provisions Agreement (Building 9) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Certificate for all purposes. As used in this Certificate, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Certificate are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     Also contemporaneously with this Certificate, BNPPLC is executing and accepting a Ground Lease (Building 9) from NAI (the “Ground Lease”), pursuant to which BNPPLC is acquiring a leasehold estate in the Land described in Exhibit A and any existing Improvements on the Land.
     Also contemporaneously with this Certificate, BNPPLC and NAI are executing a Construction Agreement (Building 9) (the “Construction Agreement”) and a Lease Agreement (Building 9) (the “Lease”). Pursuant to the Construction Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements. When the term of the Lease commences, the Lease will cover all Improvements on the Land described in Exhibit A.
     Also contemporaneously with this Certificate, BNPPLC and NAI are executing a Purchase Agreement (Building 9) (the “Purchase Agreement”), pursuant to which NAI may purchase or arrange for the purchase of the Property and BNPPLC may collect a Supplemental Payment from NAI sufficient to cover all or a substantial portion of the Lease Balance not otherwise repaid to BNPPLC from the proceeds of any sale of the Property.
     As a condition to BNPPLC’s execution of the other Operative Documents, BNPPLC requires the representations and covenants of NAI set out below.
AGREEMENTS
     In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

 

1    Representations, Covenants and Acknowledgments of NAI Concerning the Property. To induce BNPPLC to enter into the Ground Lease, and to enter into this Certificate and the other Operative Documents, NAI represents, covenants and acknowledges as follows:
     (A)      Prior Inspections and Investigations Concerning the Property. NAI has thoroughly inspected, investigated and evaluated the condition of and title to the Property and Applicable Laws which will govern the construction, use and operation of the Property required or permitted by the Operative Documents, as necessary to make the representations concerning the Property set forth in this Certificate and other Operative Documents.
     (B)      Title. Good and indefeasible title to the Land and any existing Improvements thereon is currently vested in NAI, subject only to the rights of BNPPLC under the Ground Lease, the Permitted Encumbrances and any Liens Removable by BNPPLC. Neither the construction contemplated by the Construction Agreement, nor the lease of property contemplated by the Ground Lease or by the Lease, nor any assignment or transfer contemplated by the Purchase Agreement, will violate any Permitted Encumbrance or invoke any purchase option, right of first refusal or other preferential purchase right contained in any Permitted Encumbrance. So long as NAI has any rights under the Construction Agreement, the Lease or the Purchase Agreement, NAI will not permit any Person to acquire rights of the landlord under the Ground Lease other than NAI itself or a corporation that controls, is controlled by or under common control with NAI.
     (C)      Compliance with Covenants and Laws. The construction contemplated by the Construction Agreement and use of the Property permitted by the Lease comply, or will comply after NAI obtains readily available permits (either as the construction manager under the Construction Agreement or as the tenant under the Lease), in all material respects with all Applicable Laws. NAI has obtained or can and will promptly obtain all utility, building, health and operating permits required by any governmental authority or municipality having jurisdiction over the Property for the construction contemplated in the Construction Agreement and the use of the Property permitted by the Lease.
2      Representations and Covenants by NAI. NAI also represents and covenants to BNPPLC as follows:
     (A)      Concerning NAI and the Operative Documents.
            (1)      Entity Status. NAI is a corporation duly incorporated and validly existing in the State of Delaware and is authorized to do business in and is in good standing under the laws of California.
 
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     (2)      Authority. The Constituent Documents of NAI permit the execution, delivery and performance of the Operative Documents by NAI, and all actions and approvals necessary to bind NAI under the Operative Documents have been taken and obtained. Without limiting the foregoing, the Operative Documents will be binding upon NAI when signed on behalf of NAI by Ingemar Lanevi, Vice President and Corporate Treasurer of NAI. NAI has all requisite power and all governmental certificates of authority, licenses, permits and qualifications to carry on its business as now conducted and contemplated to be conducted and to perform the Operative Documents.
     (3)      Solvency. NAI is not “insolvent” on the Effective Date (that is, the sum of NAI’s absolute and contingent liabilities — including the obligations of NAI under the Operative Documents — does not exceed the fair market value of NAI’s assets), and NAI 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 by the Operative Documents 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. No petition or answer has been filed by or, to NAI’s knowledge, against NAI in bankruptcy or other legal proceedings that seeks 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, a reorganization, arrangement, rearrangement, composition, extension, liquidation or dissolution of NAI or similar relief under the federal Bankruptcy Code or any state law.
     (4)      Financial Reports. All reports, financial statements and other data furnished by NAI to BNPPLC in connection with the agreements set forth in the Operative Documents are true and correct in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading. No material adverse change has occurred since the dates of such reports, statements and other data in the financial condition of NAI.
     (5)      Pending Legal Proceedings. No judicial or administrative investigations, actions, suits or proceedings are pending or, to the knowledge of NAI, threatened against or affecting NAI by or before any court or other Governmental Authority that have or could reasonably be expected to have a Material Adverse Effect. NAI is not in default with respect to any order, writ, injunction, decree or demand of any court or other Governmental Authority in a manner that has or could reasonably be expected to have a Material Adverse Effect.
     (6)      No Default or Violation. The execution and performance by NAI of the Operative Documents do not and will not contravene or result in a breach of or default
 
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under any other agreement to which NAI is a party or by which NAI is bound or which affects any assets of NAI. Such execution and performance by NAI do not contravene any law, order, decree, rule or regulation to which NAI is subject. Further, such execution 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, any property of NAI pursuant to the provisions of any such other agreement.
     (7)      Use of Proceeds. In no event will the funds from any Funding Advance 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 in Regulation U 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 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.
     (8)      Enforceability. The Operative Documents constitute the legal, valid and binding obligations of NAI enforceable in accordance with their terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
     (9)      Pari Passu. The claims of BNPPLC against NAI under the Operative Documents rank at least pari passu with the claims of all its other unsecured creditors, except those whose claims are preferred solely by any laws of general application having effect in relation to bankruptcy, insolvency, liquidation or other similar events.
     (10)      Conduct of Business and Maintenance of Existence. So long as any obligations of NAI under the Operative Documents remain outstanding, NAI will continue to engage in business of the same general type as now conducted by it and will preserve, renew and keep in full force and effect its corporate existence and its rights, privileges and franchises necessary or desirable in the normal conduct of business.
     (11)      Investment Company Act, etc. NAI is not and will not become, by reason of the Operative Documents or any business or transactions in which it participates voluntarily, (a) an “investment company” or a company “controlled” by an “investment company” (as each of the quoted terms is defined or used in the Investment Company Act of 1940, as amended), or (b) subject to regulation under the Federal Power Act, or any foreign, federal or local statute or regulation limiting NAI’s ability to incur or guarantee indebtedness or obligations, or to pledge its assets to secure indebtedness or obligations, as contemplated by any of the Operative Documents.
 
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     (12)      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).
     (13)      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. No ERISA Termination Event has occurred with respect to any Plan, and NAI and its Subsidiaries are in compliance with ERISA. Neither NAI nor its Subsidiaries are required to contribute to, or has any other absolute or contingent liability in respect of, any Multiemployer Plan. As of the Effective Date no “accumulated funding deficiency” (as defined in Section 412(a) of the Code) exists with respect to any Plan, whether or not waived by the Secretary of the Treasury or his delegate, and there are no Unfunded Benefit Liabilities with respect to any Plan.
     (14)      Compliance With Laws. NAI and its Subsidiaries comply and will comply with all Applicable Laws (including environmental laws and ERISA and the rules and regulations thereunder), except when the necessity of compliance is contested in good faith by appropriate proceedings which do not have and could not reasonably be expected to have a Material Adverse Effect. Neither NAI nor its Subsidiaries have received any notice asserting or describing a material failure on the part of NAI or any Subsidiary to comply with Applicable Laws, other than failures that have been fully rectified by NAI or the Subsidiary, as the case may be, in a manner approved or accepted by Governmental Authorities responsible for the enforcement of the Applicable Laws.
     (15)      Payment of Taxes Generally. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect (taking into account any appropriate contest of taxes), NAI and its Subsidiaries have filed and will file all tax declarations, reports and returns which are required by (and in the form required by) Applicable Laws and have paid and will pay all taxes or other charges shown to be due and payable on such declarations, reports and returns and all assessments made against it or its assets by any Governmental Authority; and no liens have been filed or established by any Governmental Authority against NAI or its assets or against any Subsidiary or its assets to secure the payment of taxes or assessments that are past due or claimed to be past due.
     (16)      Maintenance of Insurance Generally. Except when the failure to do so
 
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does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have maintained and will maintain insurance with respect to its properties and businesses, with financially sound and reputable insurers, having coverages against losses or damages of the kinds customarily insured against by reputable companies in the same or similar businesses, such insurance being the types, and in amounts no less than the amounts, which are customary for such companies under similar circumstances.
     (17)      Franchises, Licenses, etc. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and comply with, and will have and will comply with, all franchises, certificates, licenses, permits and other authorizations from Governmental Authorities that are necessary for the ownership, maintenance and operation of its properties and assets.
     (18)      Patents, Trademarks, etc. Except when the failure to do so does not have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and will have and maintain in full force and effect all patents, trademarks, service marks, trade names, copyrights, licenses and other such rights, free from burdensome restrictions, which are necessary for the operation of its businesses. Without limiting the foregoing, to the knowledge of NAI, no product, process, method, service or other item presently sold by or employed by NAI or any Subsidiary in connection with its business as presently conducted infringes any patents, trademark, service mark, trade name, copyright, license or other right owned by any other Person. No claim or litigation is presently pending, or to the knowledge of NAI, threatened against or affecting NAI or any Subsidiary that contests its right to sell or use any such product, process, method, substance or other item and that has or could reasonably be expected to have a Material Adverse Effect.
     (19)      Labor. Neither NAI nor any of its Subsidiaries has experienced strikes, labor disputes, slow downs or work stoppages due to labor disagreements that currently have or could reasonably be expected to have a Material Adverse Effect, and to the knowledge of NAI there are no such strikes, disputes, slow downs or work stoppages threatened against it or against any Subsidiary. The hours worked and payment made to employees of NAI and its Subsidiaries have not been in violation in any material respect of the Fair Labor Standards Act or any other Applicable Laws dealing with such matters. All material payments due on account of wages or employee health and welfare insurance and other benefits from NAI or from any Subsidiary have been paid or accrued as liabilities on its books.
     (20)      Title to Properties Generally. Except when the failure to do so does not
 
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have and could not reasonably be expected to have a Material Adverse Effect, NAI and its Subsidiaries have and will have and maintain good and indefeasible fee simple title to or valid leasehold interests in all of its real property and good title to or a valid leasehold interest in all of its other material assets, as such properties and assets are reflected in the most recent financial statements delivered to BNPPLC, other than properties or assets disposed of in the ordinary course of business since such date; subject, however, in the case of the Property, to Permitted Encumbrances and Liens created by the Operative Documents. NAI enjoys peaceful and undisturbed possession under all of its leases.
            (21)      Books and Records. NAI will keep proper books of record and account, containing complete and accurate entries of all its financial and business transactions.
     (B)      Further Assurances. NAI will, upon the reasonable request of BNPPLC, (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 the Operative Documents and to subject to any of the Operative Documents any property intended by the terms thereof to be covered 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 BNPPLC 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 BNPPLC to enable BNPPLC to comply with the requirements or requests of any agency or authority having jurisdiction over it.
     (C)      Syndication. Without limiting the foregoing, NAI will cooperate with BNPPLC as reasonably required to allow BNPPLC to induce banks not affiliated with BNPPLC to become Participants. Such cooperation will include the execution of any modification proposed by BNPPLC to any of the Operative Documents at the request of a prospective Participant; subject, however, to the conditions that (i) in no event will NAI be required to approve or accept an increase in the Spread or other modifications that change the economics of the transactions contemplated by the Operative Documents to NAI, and (ii) in other respects the form and substance of any such modification agreement must not be reasonably objectionable to NAI.
     (D)      Financial Statements; Required Notices; Certificates. Prior to the Completion Date and throughout the Term of the Lease, NAI will deliver to BNPPLC and to each Participant of which NAI has been notified:
            (1)      as soon as available and in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of NAI, the unaudited consolidated balance sheet of NAI and its Subsidiaries as of the end of such quarter and consolidated
 
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unaudited statements of income, stockholders’ equity and cash flow of NAI and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in comparative form figures for the corresponding period in the preceding fiscal year, in the case of such statements of income, stockholders’ equity and cash flow, and figures for the preceding fiscal year in the case of such balance sheet, all in reasonable detail, in accordance with GAAP, and certified in a manner acceptable to BNPPLC by a Responsible Financial Officer of NAI (subject to normal year-end adjustments); provided, that so long as NAI is a company subject to the periodic reporting requirements of Section 12 of the Securities Exchange Act of 1934, as amended, NAI will be deemed to have satisfied its obligations under this clause (1) if NAI delivers to BNPPLC the same quarterly reports, certified by a Responsible Financial Officer of NAI (subject to year-end adjustments), that NAI delivers to its shareholders;
     (2)      as soon as available and in any event within ninety days after the end of each fiscal year of NAI, the consolidated balance sheet of NAI and its Subsidiaries as of the end of such fiscal year and consolidated statements of income, stockholders’ equity and cash flow of NAI and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such fiscal year, setting forth in comparative form figures for the preceding fiscal year, all in reasonable detail, in accordance with GAAP, and certified in a manner acceptable to BNPPLC by independent public accountants of recognized national standing reasonably acceptable to BNPPLC; provided, that so long as NAI is a company subject to the periodic reporting requirements of Section 12 of the Securities Exchange Act of 1934, as amended, NAI will be deemed to have satisfied its obligations under this clause (ii) if NAI delivers to BNPPLC the same annual report and report and opinion of accountants that NAI delivers to its shareholders;
     (3)      in each case if requested in writing by BNPPLC, together with the financial statements furnished in accordance with subparagraph 2(D)(1) and 2(D)(2), a certificate of a Responsible Financial Officer of NAI in the form of certificate attached hereto as Exhibit B (a) representing that no Event of Default or material Default by NAI has occurred (or, if an Event of Default or material Default by NAI has occurred, stating the nature thereof and the action which NAI has taken or proposes to take to rectify it), (b) stating that the representations and warranties by NAI contained herein are true and complete in all material respects on and as of the date of such certificate as though made on and as of such date, and (c) setting forth calculations which show whether NAI is complying with financial covenants set forth in subparagraph 3(C);
     (4)      as soon as possible and in any event within five days after the occurrence of each Event of Default or material Default known to a Responsible Financial Officer of NAI, a statement of NAI setting forth details of such Event of Default or material Default
 
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and the action which NAI has taken and proposes to take with respect thereto;
     (5)      promptly after the sending or filing thereof, copies of all such financial statements, proxy statements, notices and reports which NAI or any Subsidiary sends to its public stockholders, and copies of all reports and registration statements (without exhibits) which NAI or any Subsidiary files with the Securities and Exchange Commission (or any governmental body or agency succeeding to the functions of the Securities and Exchange Commission) or any national securities exchange;
     (6)      as soon as practicable and in any event within thirty days after a Responsible Financial Officer of NAI knows or has reason to know that any ERISA Termination Event with respect to any Plan has occurred, a statement of a Responsible Financial Officer of NAI describing such ERISA Termination Event and the action, if any, which NAI proposes to take with respect thereto;
     (7)      upon request by BNPPLC, 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 either stating that no Default exists under the Operative Documents or specifying each such Default; it being intended that any such statement by NAI may be relied upon by any prospective purchaser or mortgagee of the Property or any prospective Participant; and
     (8)      such other information respecting the condition or operations, financial or otherwise, of NAI, of its Subsidiaries or of the Property as BNPPLC or BNPPLC’s Parent or any Participant through BNPPLC may from time to time reasonably request.
Reports and financial statements required to be delivered pursuant to paragraphs (1), (2) and (5) of this subparagraph 2(D) shall be deemed to have been delivered on the date on which such reports, or reports containing such financial statements, are posted for downloading (in a “PDF” or other readily available format) on one of NAI’s internet websites at www.netapp.com or www.investors.netapp.com or on the SEC’s internet website at www.sec.gov; provided, however, that after being posted they remain available for downloading at the applicable website for at least 90 days.
BNPPLC is hereby authorized to deliver a copy of any information or certificate delivered to it pursuant to this subparagraph 2(D) to any Participant and to any regulatory body having
 
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jurisdiction over BNPPLC, BNPPLC’s Parent or any Participant that requires or requests it.
        (E)      Omissions. None of NAI’s representations in the Operative Documents or in any other document, certificate or written statement furnished to BNPPLC 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.
        (F)      OFAC. None of NAI or any subsidiary or affiliate of NAI: (i) is a person named on the list of Specially Designated Nationals or Blocked Persons maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise published from time to time; or (ii) is (A) an agency of the government of a country, (B) an organization controlled by a country, or (C) a person resident in a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise published from time to time, as such program may be applicable to such agency, organization or person; or (iii) derives more than 15% of its assets or operating income from investments in or transactions with any such country, agency, organization or person. Further, none of the proceeds from the Initial Advance or any Construction Advance will be used to finance any operations, investments or activities in, or make any payments to, any such country, agency, organization, or person.
        (G)      U.S. Patriot Act. NAI acknowledges that BNPPLC, BNPPLC’s Parent and Participants may be required, pursuant to the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), to obtain, verify, record and disclose to law enforcement authorities information that identifies the NAI, including the name and address of NAI. NAI will provide to BNPPLC and Participants any such information they may request pursuant to the Patriot Act, and NAI agrees that any of BNPPLC, BNPPLC’s Parent and Participants may disclose such information to law enforcement authorities if the authorities make a request or demand for disclosure pursuant to the Patriot Act. NAI also acknowledges that, in such event, none of BNPPLC, BNPPLC’s Parent or Participants may be required or even permitted by the Patriot Act to notify NAI of the request or demand for disclosure.
3      Financial Covenants and Negative Covenants of NAI. NAI represents and covenants as follows:
        (A)      Definitions Applicable in this Paragraph. As used in (and only for purposes of) this Paragraph 3:
          “Accepted Contest Requirements” means, with respect to any Tax or other payment due or claimed to be due from NAI or any Subsidiary or any demand for payment made upon NAI or any Subsidiary, that (a) NAI or such Subsidiary must contest
 
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the validity or amount thereof in good faith by appropriate proceedings, (b) NAI or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment thereof pending such contest could not reasonably be expected to result in a Material Adverse Effect.
          “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
          “Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of Equity Interests representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of NAI; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of NAI by Persons who were neither (i) nominated by the board of directors of NAI nor (ii) appointed by directors so nominated; or (c) NAI ceasing to own, directly or indirectly, 100% of the issued and outstanding Equity Interests of each Material Domestic Subsidiary except in accordance with subparagraph 3(B)(3) below.
          “Consolidated Debt for Borrowed Money” means at any time (1) the sum, without duplication, of (a) items that, in accordance with GAAP, would be classified as indebtedness on the consolidated balance sheet of NAI and its Subsidiaries and (b) the capitalized portion of any synthetic leases, minus (2) the then aggregate outstanding principal amount of Indebtedness under NAI’s Secured Revolver and under that certain Loan Agreement dated as of March 31, 2006 by and among Network Appliance Global Ltd. and JPMorgan Chase Bank, National Association as initial lender and as administrative agent. (In clause (b) of this definition, “capitalized portion” means, with respect to any synthetic lease, the price for which the lessee can purchase the leased property or could purchase it if the synthetic lease expired on the date of the applicable calculation of the Consolidated Debt for Borrowed Money. Thus, for example, the “capitalized portion” of the transactions governed by the Operative Documents will equal the Lease Balance.)
          “Consolidated EBITDA” means, with reference to any period, the sum of the following: (a) Consolidated Net Income for such period, plus (b) without duplication and to the extent deducted from revenues in determining such Consolidated Net Income, the
 
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sum of (i) Consolidated Interest Expense for such period, (ii) expense for taxes paid or accrued during such period, (iii) all amounts attributable to depreciation, (iv) amortization during such period, (v) extraordinary non-cash charges incurred other than in the ordinary course of business during such period, (vi) nonrecurring extraordinary non-cash restructuring charges, and (vii) share-based non-cash compensation expense minus without duplication and to the extent included in determining such Consolidated Net Income, (c) interest income, (d) extraordinary non-cash gains realized other than in the ordinary course of business and (e) any cash payments made during such period in respect of the item described in clause (vii) above subsequent to the fiscal quarter in which the relevant share-based non-cash compensation expense was incurred, all calculated for NAI and its Subsidiaries in accordance with GAAP on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period NAI or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period NAI or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by NAI and its Subsidiaries in excess of $50,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to NAI or any of its Subsidiaries in excess of $50,000,000.
          “Consolidated Interest Expense” means, with reference to any period, the interest expense (including without limitation interest expense under Capital Lease Obligations that is treated as interest in accordance with GAAP) of NAI and its Subsidiaries calculated on a consolidated basis for such period with respect to (a) all outstanding Indebtedness of NAI and its Subsidiaries allocable to such period in accordance with GAAP and (b) Swap Agreements (including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers acceptance financing and net costs under interest rate Swap Agreements to the extent such net costs are allocable to such period in accordance with GAAP). In addition, for purposes of calculating the Leverage Ratio only, rents payable for any period pursuant to NAI’s synthetic leases shall be included in Consolidated Interest Expense for
 
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such period; excluding, however, any amounts (whether on not designated as rents) paid or to be paid as compensation for or reimbursement of any Losses, and also excluding any payments which reduce or will reduce the outstanding lease balance of any synthetic lease. For example, Base Rents payable under the Lease will be included in Consolidated Interest Expense, but not Additional Rents.
          “Consolidated Net Income” means, with reference to any period, the net income (or loss) of NAI and its Subsidiaries calculated in accordance with GAAP on a consolidated basis (without duplication) for such period.
          “Consolidated Total Assets” means, as of the date of any determination thereof, total assets of NAI and its Subsidiaries calculated in accordance with GAAP on a consolidated basis as of such date.
          “Disclosure Letter” means the disclosure letter (the form of which is attached to this Certificate as Exhibit C) given by NAI to Chase Bank, National Association, as Administrative Agent, in connection with NAI’s recently executed Credit Agreement dated as of November 2, 2007, as amended or supplemented from time to time by NAI with the written consent of BNPPLC.
          “Domestic Subsidiary” means any Subsidiary that is incorporated or organized under the laws of the United States of America, any state thereof or in the District of Columbia.
          “Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.
          “Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
          “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to
 
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advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.
          “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are paid or payable, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (k) the Net Mark-to Market Exposure of all Swap Obligations of such Person, and (l) any other Off-Balance Sheet Liability. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
          “Leverage Ratio” means the ratio, determined as of the end of each fiscal quarter of NAI, of Consolidated Debt for Borrowed Money as of the end of such fiscal quarter to Consolidated EBITDA for the period of 4 consecutive fiscal quarters ending with the end of such fiscal quarter.
          “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or other security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
 
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          “Liquidity” means, with respect to NAI and its Subsidiaries as of any date of determination, the sum of all unrestricted cash and unrestricted Permitted Investments which are not subject to any Lien (other than Liens permitted under subparagraph 3(B)(2)(e)) and which would be included on the consolidated balance sheet of NAI and such Subsidiaries in accordance with GAAP as of such date of determination.
          “Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations or condition, financial or otherwise, of NAI and its Subsidiaries taken as a whole, or (b) the ability of NAI or any Material Domestic Subsidiary to perform any of its obligations under any of the Operative Documents or (c) the rights of or benefits available to BNPPLC under any of the Operative Documents.
          “Material Domestic Subsidiary” means each Material Subsidiary that is a Domestic Subsidiary. The Material Domestic Subsidiaries on the Effective Date are identified as such in Schedule 3.01 to the Disclosure Letter.
          “Material Subsidiary” means each Subsidiary (a) which, as of the most recent fiscal quarter of NAI, for the period covering the then most recently ended fiscal year and the portion of the then current fiscal year ending at the end of such fiscal quarter, for which financial statements have been delivered pursuant to subparagraph 2(D), contributed greater than five percent (5%) of NAI’s Consolidated EBITDA for such period or (b) which contributed greater than five percent (5%) of NAI’s Consolidated Total Assets as of such date.
          “Moody’s” means Moody’s Investors Service, Inc.
          “NAI’s Secured Revolver” means the Secured Credit Agreement dated as of October 5, 2007 by and among NAI, certain lenders and JPMorgan Chase Bank, National Association, as administrative agent, as it exists and is in force on the Effective Date.
          “Net Mark-to-Market Exposure” of a Person means, as of any date of determination, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from each Swap Agreement transaction. “Unrealized losses” means the fair market value of the cost to such Person of replacing such transaction as of the date of determination (assuming such transaction were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such transaction as of the date of determination (assuming such transaction was to be terminated as of that date).
          “Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person
 
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that is related to retained credit risk, or (b) any indebtedness, liability or obligation under any so-called “synthetic lease” transaction entered into by such Person.
          “Permitted Liens or Encumbrances” means:
          (a) Liens imposed by law for Taxes or other governmental charges that are not yet due or are being contested in accordance with Accepted Contest Requirements;
          (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than sixty (60) days or are being contested in accordance with Accepted Contest Requirements;
          (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;
          (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;
          (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (J) of the definition thereof in the Common Definitions and Provisions Agreement;
          (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere in any material respect with the ordinary conduct of business of NAI or any Subsidiary;
          (g) leases or subleases granted to other Persons and not interfering in any material respect with the business of the lessor or sublessor;
          (h) Liens arising from precautionary Uniform Commercial Code filings or similar filings relating to operating leases;
          (i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection within the importation of goods;
 
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          (j) Liens on insurance proceeds securing the premium of financed insurance proceeds;
          (k) Liens incurred in the ordinary course of business on cash collateral to secure letters of credit, bank guarantees and banker’s acceptances and Swap Agreements;
          (l) licenses of intellectual property in the ordinary course of business;
          (m) any interest or title of a lessor or sublessor under any lease of real property or personal property; and
          (n) other Liens on assets securing Indebtedness or other obligations not prohibited under provisions of the Operative Documents other than this Paragraph 3 in an aggregate amount not to exceed $50,000,000 at any time outstanding;
provided that the term “Permitted Liens or Encumbrances” shall not include any Lien securing Indebtedness.
          “Permitted Investments” means:
          (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;
          (b) investments in commercial paper maturing within 365 days from the date of acquisition thereof and having, at such date of acquisition, a rating of “A-2” (or better) from S&P or “P-2” (or better) from Moody’s;
          (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof or any other country which has a combined capital and surplus and undivided profits of not less than $500,000,000;
          (d) fully collateralized repurchase agreements with a term of not more
 
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than thirty (30) days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above;
          (e) money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, as amended, to the extent such money market fund is governed thereby, (ii) are rated AA by S&P and Aa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000;
          (f) investments made pursuant to a cash management investment policy approved by the board of directors of the Person making such investment and as in effect on the Effective Date, as such policy may be amended or otherwise modified from time to time with the written consent of BNPPLC; and
          (g) investments described in the following table:
           
 
  Type of Security     Remaining Maturity/ S&P/ Moody’s  
        Rating  
 
JPMorgan Certificates of Deposit
        
 
 
        
 
US Treasury Treasuries
        
 
 
        
 
US Agency Securities
    Less than 30 years  
 
 
        
 
USD Commercial Paper
    A1/P1 Less than or equal to 270 days  
 
 
        
 
 
     US Gov’t  
 
Money Market Funds (Must be
through JPMorgan)
     Treasury Plus  
 
 
    Cash Management  
 
 
    100% US Treasury  
 
 
    Federal Money Market  
 
 
        
 
Medium Term Notes, Corporate Bonds, Corporate Debentures, Floating Rate Notes, and Auction Rate Securities
    A or better  
 
          “S&P” means Standard & Poor’s, a division of the McGraw-Hill Companies.
          “Sale and Leaseback Transaction” means any sale or other transfer of assets or property by any Person with the intent to lease any such asset or property as lessee.
 
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          “Subordinated Indebtedness” means any Indebtedness of NAI or any Subsidiary the payment of which is subordinated to payment of the obligations under the Operative Documents to the written satisfaction of BNPPLC.
          “subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.
          “Subsidiary” means any subsidiary of NAI.
          “Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of NAI or the Subsidiaries shall be a Swap Agreement.
          “Swap Obligations” of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any such Swap Agreement transaction.
          “Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.
          (B)      Negative Covenants. Prior to the Designated Sale Date and so long thereafter as any amount shall continue to be due and payable by NAI to BNPPLC pursuant to any of the Operative Documents, NAI covenants and agrees as follows:
 
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          (1)      Subsidiary Indebtedness. NAI will not permit any Subsidiary to create, incur, assume or permit to exist any Indebtedness, except:
          (a) by Guarantee or assumption of any obligations evidenced or created by (x) any of the Operative Documents, (y) or other comparable agreements between BNPPLC and NAI covering other properties, or (z) the Credit Agreement referenced on the first page of the Disclosure Letter;
          (b) Indebtedness existing on the date hereof and listed in Schedule 6.01 to the Disclosure Letter or in Section 1 of Exhibit D, and extensions, renewals and replacements of any such Indebtedness that do not increase the then outstanding principal amount thereof;
          (c) Indebtedness of (i) any Subsidiary to any Material Domestic Subsidiary and (ii) any Subsidiary that is not a Material Domestic Subsidiary to any other Subsidiary that is not a Material Domestic Subsidiary;
          (d) Guarantees by any Subsidiary of Indebtedness of NAI or any other Subsidiary;
          (e) Indebtedness of any Subsidiary incurred to finance the acquisition, construction or improvements of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets (and additions, accessions, parts, improvement and attachments thereto and the proceeds thereof) prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the then outstanding principal amount thereof; provided that such Indebtedness is incurred prior to or within 120 days after such acquisition or the completion of such construction or improvement; and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof;
          (f) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof;
          (g) Indebtedness of any Subsidiary as an account party in respect of letters of credit, bank guarantees and bankers’ acceptances;
 
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          (h) Indebtedness in respect of Swap Agreements permitted under subparagraph 3(B)(4);
          (i) Indebtedness of Subsidiaries which are not Material Domestic Subsidiaries in an aggregate principal amount not exceeding 5% of Consolidated Total Assets at any time outstanding; and
          (j) other Indebtedness of any Subsidiary which is a Material Domestic Subsidiary so long as, at the time of the incurrence thereof and after giving effect thereto (on a pro forma basis), NAI is in pro forma compliance with the maximum Leverage Ratio permitted under subparagraph 3(C)(1).
            (2)      Liens. NAI will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it (and for purposes hereof, any capital stock issued by NAI which is held by NAI as treasury stock shall not be deemed to be property or an asset of NAI and shall not be subject to this subparagraph 3(B)(2)), or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except that the following shall be permitted so long as they do not encumber any interest in the Property in violation of other provisions of the Operative Documents:
          (a) Permitted Liens or Encumbrances;
          (b) any Lien on any property or asset of NAI or any Subsidiary existing on the date hereof and set forth in Schedule 6.02 to the Disclosure Letter or referenced in Section 2 of Exhibit D; provided that (i) such Lien shall not apply to any other property or asset of NAI or any Subsidiary and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;
          (c) any Lien existing on any property or asset prior to the acquisition thereof by NAI or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of NAI or any Subsidiary and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be, and extensions, renewals and replacements thereof that do not increase the outstanding principal amount
 
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thereof;
          (d) Liens on fixed or capital assets (and additions, accessions, parts, improvements and attachments thereto and the proceeds thereof) acquired, constructed or improved by NAI or any Subsidiary; provided that:
          (i) such security interests secure Indebtedness not otherwise prohibited under the Operative Documents;
          (ii) such security interests and the Indebtedness secured thereby are either (A) incurred prior to or within one hundred twenty (120) days after such acquisition or the completion of such construction or improvement, or (B) granted and incurred to extend, renew or replace any security interest and Indebtedness secured thereby that are permitted by this clause (d) and do not increase the outstanding principal amount thereof by more than 5%;
          (iii) the Indebtedness secured thereby does not exceed 105% of the cost of acquiring, constructing or improving such fixed or capital assets; and
          (iv) such security interests shall not apply to any other property or assets of NAI or any Subsidiary;
          (e) customary bankers’ Liens and rights of setoff arising by operation of law or contract and incurred on deposits made in the ordinary course of business;
          (f) assignments of the right to receive income effected (i) as a part of the sale of a Subsidiary or a business unit or (ii) for factoring in the ordinary course of business;
          (g) Liens on any cash earnest money deposit made by NAI or any Subsidiary in connection with any letter of intent or acquisition agreement that is not prohibited by the Operative Documents;
          (h) customary Liens granted in favor a trustee to secure fees and other amounts owing to such trustee under an indenture or other agreement pursuant to Indebtedness not otherwise prohibited under the Operative Documents; and
          (i) Liens granted as provided in and securing Indebtedness under NAI’s Secured Revolver, provided such Liens do not at any time secure an outstanding
 
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principal balance of more than $500,000,000.
            (3)      Fundamental Changes and Asset Sales.
          (a) NAI will not, and will not permit any Subsidiary to, merge into, consolidate with, or otherwise be acquired by, any other Person, or sell, transfer, lease or otherwise dispose (including pursuant to a Sale and Leaseback Transaction) of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or here-after acquired, and for purposes hereof, any capital stock issued by NAI which is held by NAI as treasury stock shall not be deemed to be property or an asset of NAI and shall not be subject to this subparagraph 3(B)(3), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Subsidiary may merge into a Material Domestic Subsidiary in a transaction in which the surviving entity is such Material Domestic Subsidiary, (ii) any wholly owned Subsidiary may merge into or consolidate with any wholly owned Subsidiary in a transaction in which the surviving entity is a wholly owned Subsidiary and no Person other than NAI or a wholly owned Subsidiary receives any consideration, provided that if any such merger described in this clause (ii) shall involve a Material Domestic Subsidiary, the surviving entity of such merger shall be a Material Domestic Subsidiary, (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to a Material Domestic Subsidiary or any wholly owned Subsidiary pursuant to a transaction not otherwise prohibited under the Operative Documents, (iv) any Subsidiary may liquidate or dissolve if NAI determines in good faith that such liquidation or dissolution is in the best interests of NAI, (v) NAI may merge with any other Person so long as NAI is the surviving entity, (vi) any Subsidiary may merge with any other Person so long as the surviving entity is, in the case of a Subsidiary Guarantor, the Subsidiary Guarantor, and in all other cases, a wholly owned Subsidiary and (vii) any Subsidiary other than a Subsidiary Guarantor may merge into, and NAI or any Subsidiary may dispose of assets to, any other Person so long as NAI delivers a certificate to BNPPLC demonstrating pro forma compliance with subparagraph 3(C) after giving effect to such transaction.
          (b) NAI will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by NAI and its Subsidiaries on the date of execution of the Operative Documents and businesses reasonably related thereto.
          (c) NAI will not, and will not permit any of its Subsidiaries to, change its
 
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fiscal year to end on a day other than as such fiscal year end is currently determined or change NAI’s method of determining fiscal quarters.
          (4)      Speculative Swap Agreements. NAI will not, and will not permit any of its Subsidiaries to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which NAI or any Subsidiary has actual exposure (other than those in respect of Equity Interests or Subordinated Indebtedness of NAI or any of its Subsidiaries), and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of NAI or any Subsidiary.
          (5)      Transactions with Affiliates. NAI will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to NAI or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among NAI and its wholly owned Subsidiaries not involving any other Affiliate, (c) to enter into indemnification arrangements with or to pay customary fees and reimburse out-of-pocket expenses of directors or (d) as set forth on the Disclosure Letter.
          (6)      Restrictive Agreements. NAI will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of NAI or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to NAI or any other Subsidiary or to Guarantee Indebtedness of NAI or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law, by any Operative Document, by any document relating to NAI’s unsecured syndicated revolving credit facility from certain lenders and JPMorgan Chase Bank, National Association as administrative agent, by NAI’s Secured Revolver, or by any document relating to NAI’s synthetic lease facilities, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified in Schedule 6.06 to the Disclosure Letter or in Section 3 of Exhibit D (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of assets or of a Subsidiary pending such sale, provided such restrictions and conditions apply only to such assets or such Subsidiary that are to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall
 
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not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by the Operative Documents if such restrictions or conditions apply only to the property or assets securing such Indebtedness, and (v) clause (a) of the foregoing shall not apply to customary provisions in leases, licenses, joint venture agreements and other agreements entered into in the ordinary course of business restricting the assignment thereof.
          (C)      Financial Covenants. Prior to the Designated Sale Date and so long thereafter as any amount shall continue to be due and payable by NAI to BNPPLC pursuant to any of the Operative Documents:
          (1)      Maximum Leverage Ratio. NAI will not permit the Leverage Ratio to be greater than 3.0 to 1.0.
          (2)      Minimum Liquidity. NAI and its Subsidiaries on a consolidated basis shall maintain, at all times, Liquidity of not less than $300,000,000.
4      Limited Representations and Covenants of BNPPLC
        (A)      Concerning Accounting Matters.
          (1)      To permit NAI to determine the appropriate accounting for NAI’s relationship with BNPPLC under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN 46”), BNPPLC represents that to the knowledge of BNPPLC the fair value of the Property and of other properties, if any, leased to NAI by BNPPLC (collectively, whether one or more, the “Properties Leased to NAI”) are, as of the Effective Date, less than half of the total of the fair values of all assets of BNPPLC, excluding any assets of BNPPLC held within a silo. Further, none of the Properties Leased to NAI are, as of the Effective Date, held within a silo. Consistent with the directions of NAI (based upon the current interpretation of FIN 46 by NAI and its auditors), and for purposes of this representation only:
  •   “held within a silo” means, with respect to any asset or group of assets leased by BNPPLC to a single lessee or group of affiliated lessees, that BNPPLC has obtained funds equal to or in excess of 95% of the fair value of the leased asset or group of assets to acquire or maintain its investment in such asset or group of assets through non-recourse financing or other contractual arrangements (such as targeted equity or bank participations), the effect of which is to leave such asset or group of assets (or proceeds thereof) as the only significant asset or assets of BNPPLC at risk for the
 
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      repayment of such funds;
 
  •   “fair value” means, with respect to any asset, the amount for which the asset could be bought or sold in a current transaction negotiated at arms length between willing parties (that is, other than in a forced or liquidation sale);
 
  •   with respect to the Properties Leased to NAI (regardless of how BNPPLC accounts for the leases of the Properties Leased to NAI), and with respect to other assets that are subject to leases accounted for by BNPPLC as operating leases pursuant to Financial Accounting Standards Board Statement 13 (“FAS 13”), fair value is determined without regard to residual value guarantees, remarketing agreements, non-recourse financings, purchase options or other contractual arrangements, whether made by BNPPLC with NAI or with other parties, that might otherwise impact the fair value of such assets;
 
  •   with respect to assets, other than Properties Leased to NAI, that are subject to leases accounted for by BNPPLC as leveraged leases pursuant to FAS 13, fair value is determined on a gross basis prior to the application of leveraged lease accounting, recognizing that equity investments made by BNPPLC in its assets subject to leveraged lease accounting should be grossed up in applying this test (however, equity investments made by BNPPLC through another legal entity should not be so grossed up in applying this test);
 
  •   with respect to assets, other than Properties Leased to NAI, that are subject to leases accounted for by BNPPLC as direct financing leases pursuant to FAS 13, fair value is determined as the sum of the fair values (considering current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities) of the corresponding finance lease receivables and related unguaranteed residual values.
          (2)      BNPPLC also represents that BNPPLC’s Parent is, as of the Effective Date, including BNPPLC as a consolidated subsidiary in the audited financial statements issued by BNPPLC’s Parent.
          (3)      BNPPLC covenants that, as reasonably requested by NAI from time to
 
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time with respect to any accounting period during which the Lease is or was in effect, BNPPLC will provide to NAI confirmation of facts concerning BNPPLC and its assets as necessary to permit NAI to determine the proper accounting for the Lease (including updates of the facts set forth in clauses (1) and (2) above); except that BNPPLC will not be required by this provision to (w) provide any information that is not in the possession or control of BNPPLC or its Affiliates, (x) disclose the specific terms and conditions of its leases or other transactions with other parties or the names of such parties, (y) make disclosures prohibited by any law applicable to BNPPLC or BNPPLC’s Parent, or (z) disclose any other information that is protected from disclosure by confidentiality provisions in favor of such other parties or would be protected if their agreements with BNPPLC contained confidentiality provisions similar in scope and substance to any confidentiality provisions set forth in the Operative Documents for the benefit of NAI or its Affiliates. BNPPLC will represent that information provided by it pursuant to this clause is true and complete in all material respects, but only to the knowledge of BNPPLC as of the date it is provided, utilizing the form of the certificate attached hereto as Exhibit E (signed by an officer of BNPPLC), which certificate will be provided periodically by BNPPLC within five business days of reasonable written request therefor by NAI as provided above, or such longer period of time as may be reasonably necessary under the circumstances in order for BNPPLC to confirm such information.
          (4)      Although the representations required of BNPPLC by this subparagraph are intended to cover facts, it is understood and agreed (consistent with subparagraph 4(C) of the Lease) that BNPPLC has not made and will not make any representation or warranty as to the proper accounting by NAI or its Affiliates of the Lease or as to other accounting conclusions.
        (B)      Other Limited Representations. BNPPLC represents that:
          (1)      Entity Status. BNPPLC is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware.
          (2)      Authority. The Constituent Documents of BNPPLC permit the execution, delivery and performance of the Operative Documents by BNPPLC, and all actions and approvals necessary to bind BNPPLC under the Operative Documents have been taken and obtained. Without limiting the foregoing, the Operative Documents will be binding upon BNPPLC when signed on behalf of BNPPLC by Lloyd G. Cox, Managing Director of BNPPLC. BNPPLC has all requisite power and all governmental certificates of authority, licenses, permits and qualifications to carry on its business as now conducted and contemplated to be conducted and to perform the Operative Documents, except that BNPPLC makes no representation as to whether it has obtained governmental certificates of authority, licenses, permits, qualifications or other documentation required by state or
 
Closing Certificate and Agreement (Building 9) – Page 27

 

 

local Applicable Laws. With regard to any such state or local requirements, NAI may require that BNPPLC obtain a specific governmental certificates of authority, licenses, permits, qualifications or other documentation pursuant to subparagraph 4(C), subject to the conditions set forth in that subparagraph.
          (3)      Solvency. BNPPLC is not “insolvent” on the Effective Date (that is, the sum of BNPPLC’s absolute and contingent liabilities — including the obligations of BNPPLC under the Operative Documents — does not exceed the fair market value of BNPPLC’s assets), and BNPPLC has no outstanding liens, suits, garnishments or court actions which could render BNPPLC insolvent or bankrupt. BNPPLC’s capital is adequate for the businesses in which BNPPLC is engaged and intends to be engaged. BNPPLC has not incurred (whether by the Operative Documents or otherwise), nor does BNPPLC intend to incur or believe that it will incur, debts which will be beyond its ability to pay as such debts mature. No petition or answer has been filed by or, to BNPPLC’s knowledge, against BNPPLC in bankruptcy or other legal proceedings that seeks an assignment for the benefit of creditors, the appointment of a receiver, trustee, custodian or liquidator with respect to BNPPLC or any significant portion of BNPPLC’s property, a reorganization, arrangement, rearrangement, composition, extension, liquidation or dissolution of BNPPLC or similar relief under the federal Bankruptcy Code or any state law. (As used in the Operative Documents, “BNPPLC’s knowledge” and words of like effect mean the present actual knowledge of Lloyd G. Cox and Barry Mendelsohn, the current officers of BNPPLC having primary responsibility for the negotiation of the Operative Documents.)
          (4)      Pending Legal Proceedings. No judicial or administrative investigations, actions, suits or proceedings are pending or, to the knowledge of BNPPLC, threatened against or affecting BNPPLC by or before any court or other Governmental Authority. BNPPLC is not in default with respect to any order, writ, injunction, decree or demand of any court or other Governmental Authority in a manner that has or could reasonably be expected to have a material adverse effect on BNPPLC or its ability to perform its obligations under the Operative Documents.
          (5)      No Default or Violation. The execution and performance by BNPPLC of the Operative Documents do not and will not contravene or result in a breach of or default under any other agreement to which BNPPLC is a party or by which BNPPLC is bound or which affects any assets of BNPPLC. Such execution and performance by BNPPLC do not contravene any law, order, decree, rule or regulation to which BNPPLC is subject. Further, such execution and performance by BNPPLC 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, any property of BNPPLC pursuant to the provisions of any such other agreement.
 
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          (6)      Enforceability. The Operative Documents constitute the legal, valid and binding obligations of BNPPLC enforceable in accordance with their terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
          (7)      Conduct of Business and Maintenance of Existence. So long as any of the Operative Documents remains in force, BNPPLC will continue to engage in business of the same general type as now conducted by it and will preserve, renew and keep in full force and effect its corporate existence and its rights, privileges and franchises necessary or desirable in the normal conduct of business.
          (8)      Not a Foreign Person. BNPPLC is not a “foreign person” within the meaning of Sections 1445 and 7701 of the Code (i.e. BNPPLC 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).
Notwithstanding the foregoing, however or any other provision herein or in other Operative Documents to the contrary, it is understood that NAI is not relying upon BNPPLC for any evaluation of California or local Applicable Laws upon the transactions contemplated in the Operative Documents, and BNPPLC makes no representation and will not make any representation 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.
        (C)      Further Assurances. Prior to the Completion Date and during the Term of the Lease BNPPLC will take any action reasonably requested by NAI to facilitate the construction contemplated by the Construction Agreement or the use of the Property permitted by the Lease or the establishment of a commercial condominium regime that includes the Property (a “Condominium Regime”) or replatting of the Land and other adjacent land owned by NAI (a “Replatting”); subject, however, to the following terms and conditions:
          (1)      This subparagraph 4(C) will not impose upon BNPPLC the obligation to take any action that can be taken by NAI, NAI’s Affiliates or anyone else other than BNPPLC as the lessee under the Ground Lease or the owner of the Property.
          (2)      BNPPLC will not be required by this subparagraph 4(C) to incur any expense or make any payment to another Person unless (a) BNPPLC has received funds from NAI, in excess of any other amounts due from NAI under any of the Operative Documents, sufficient to cover the expense or make the payment or (b) the request by NAI which will result in such expense or payment is made before the Completion Date and BNPPLC can include such expense or payment in the Outstanding Construction Allowance for purposes of the Construction Agreement.
 
Closing Certificate and Agreement (Building 9) – Page 29

 

 

          (3)      BNPPLC will have no obligations whatsoever under this subparagraph 4(C) at any time after a 97-10/Meltdown Event or when a Default has occurred and is continuing.
          (4)      NAI must request any action to be taken by BNPPLC pursuant to this subparagraph 4(C), and such request must be specific and in writing, if required by BNPPLC at the time the request is made.
          (5)      No action may be required of BNPPLC pursuant to this subparagraph 4(C) that could constitute a violation of any Applicable Laws or compromise or constitute a waiver of BNPPLC’s rights under other provisions of this Certificate or any of the other Operative Documents or that for any other reason is reasonably objectionable to BNPPLC.
          The actions BNPPLC will take pursuant to this subparagraph 4(C) 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, relocation 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 (which will, in the case of agreements made with NAI or its Affiliates, remain subject to subparagraphs (J), (K) and (L) of Paragraph 11 of the Ground Lease or comparable provisions included in amendments to the Operative Documents) 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”, (VII) modifications of Permitted Encumbrances, (VIII) permit applications or other documents required to accommodate the Construction Project or any Replatting, (IX) confirmations of NAI’s rights under any particular provisions of the Operative Documents which NAI may wish to provide to a third party, (X) tract or parcel map subdividing the Land and adjacent land into lots or parcels as part of a final Replatting consistent with the tentative map attached to and made a part of Exhibit A, or (XI) condominium documents (e.g., a condominium declaration or map) meeting the requirements of Applicable Laws to establish a Condominium Regime. However, the determination of whether any such action is reasonably requested or reasonably objectionable to BNPPLC may depend in whole or in part upon the extent to which the requested action may result in a lien to secure payment or performance obligations against BNPPLC’s interest in the Property, may cause the
 
Closing Certificate and Agreement (Building 9) – Page 30

 

 

value of the Property to be less than the Lease Balance after any Qualified Prepayments that may result from such action are taken into account, or may impose upon BNPPLC any present or future obligations greater than the obligations BNPPLC is willing to accept, taking into consideration the indemnifications provided by NAI under the Construction Agreement or the Lease, as applicable.
          In addition, with respect to any request made by NAI to facilitate a relocation of any easements or a substitution of new easements for those described in Exhibit A, the following will be relevant to the determination of whether the request is reasonable:
          (i)      whether material encroachments will result from the relocation or replacement, and whether title to the land over or under which any such easement is to be relocated or replaced is encumbered by Liens other than those which are Fully Subordinated or Removable or which otherwise constitute Permitted Encumbrances;
          (ii)      whether the relocation or replacement will result in any interruption of access or services provided to the Property which is likely to extend beyond the Designated Sale Date (it being understood, however, that any such interruption which is not likely to extend beyond the Designated Sale Date will not be a reason for BNPPLC to decline the request); and
          (iii)      whether the relocation or replacement is to be accomplished in a manner that will not, when the relocation or replacement is complete, result in a material adverse change in the access to or services provided to the Improvements or the Land.
          With respect to any request made by NAI to facilitate the establishment of a Condominium Regime, the following will be relevant to the determination of whether the request is reasonable:
          (1)      whether the Condominium Regime will create one or more distinct condominium units or parcels of land that include all significant Improvements constructed or to be constructed by NAI for BNPPLC pursuant to the Construction Agreement’ and only such Improvements (whether one or more, the “Applicable Units”);
          (2)      whether NAI is willing to amend the Operative Documents by amendments in form and substance acceptable to BNPPLC (the “Anticipated Amendments”) as necessary to ensure that:
          (A)      the Property will include all of the Applicable Units, together with appurtenant access, parking and other rights and easements (whether exclusive or nonexclusive) at least comparable to those existing or created as of the Effective
 
Closing Certificate and Agreement (Building 9) – Page 31

 

 

Date by the Ground Lease (as described in Exhibit A thereto) (“Appurtenant Condo Rights”);
          (B)      the land leased to BNPPLC pursuant to the Ground Lease will include the land over which exclusive possession and control must reasonably be vested in the owner of the Applicable Units to preserve the value and utility of the Applicable Units to such owner, taking into account Appurtenant Condo Rights; and
          (C)      in the event discretionary approvals or consents are required from any “declarant” or “operator” or “owners’ association” by the Condominium Regime over the design, construction or alteration of Improvements or over the sale, use, leasing or financing of the Property, then (i) the “declarant” or “operator” or “owners’ association” will be NAI or controlled by it or another party acceptable to BNPPLC and will be bound by and remain bound by subparagraphs (J), (K) and (L) of Paragraph 11 of the Ground Lease or comparable provisions in the Anticipated Amendments with respect to such discretionary approvals or consents;
            (3)      whether the request itself (if granted) or the proposed Condominium Regime is likely to have any material adverse impact on the value or utility of the Property, taken as a whole, after giving effect to the Anticipated Amendments and taking into account Appurtenant Condo Rights; and
            (4)      whether the request itself (if granted) or the Condominium Regime will materially limit, or give NAI or its Affiliates discretionary control over, the rights of BNPPLC and its successors and assigns to use or lease, sell or otherwise transfer the Applicable Units in the event NAI declines for any reason to purchase the Property on the Designated Sale Date pursuant to the Purchase Agreement, but taking into account any superior rights BNPPLC has or may reserve under or by reference to subparagraphs (J), (K) and (L) of Paragraph 11 of the Ground Lease or comparable provisions in the Anticipated Amendments.
          Any and all Losses incurred by BNPPLC because of any action taken after the Completion Date pursuant to this subparagraph 4(C) will be covered by the indemnifications of BNPPLC set forth in Construction Agreement or in the Lease. Further, for purposes of such indemnification, any such action taken by BNPPLC 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 Lease or the other Operative Documents.
 
Closing Certificate and Agreement (Building 9) – Page 32

 

 

        (D)      Actions Permitted by NAI Without BNPPLC’s Consent. No refusal by BNPPLC to execute or join in the execution of any agreement, application or other document requested by NAI pursuant to the preceding subparagraph 4(C) will prevent NAI from itself executing such agreement, application or other document, so long as NAI is not purporting to act for BNPPLC and does not thereby create or expand any obligations or restrictions that encumber BNPPLC’s title to the Property. Further, subject to the other terms and conditions of the Lease and other Operative Documents, NAI may do any of the following in NAI’s own name and to the exclusion of BNPPLC before and during the Term of the Lease, so long as no 97-10/Meltdown Event has occurred and no Default has occurred and is continuing, and provided NAI is not purporting to act for BNPPLC and does not thereby create or expand any obligations or restrictions that encumber BNPPLC’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 Permitted Encumbrances;
          (2)      perform obligations arising under and exercise and enforce the rights of NAI or the owner of the Property with respect to any other contracts or documents (such as building permits) included within the Personal Property; and
          (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 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 BNPPLC and NAI under the other Operative Documents with respect to the collection and application of such monetary damages will be the same as for condemnation proceeds payable because of a taking of all or any part of the Property.
        (E)      Waiver of Landlord’s Liens. BNPPLC waives any security interest, statutory landlord’s lien or other interest BNPPLC 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; however, BNPPLC 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 Lease. Although computer equipment or other tangible personal property may be “bolted down” or otherwise firmly affixed to Improvements, it will 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 Lease.
        Without limiting the foregoing, BNPPLC acknowledges that NAI may obtain financing from other parties for inventory, furnishings, equipment, machinery and other personal property
 
Closing Certificate and Agreement (Building 9) – Page 33

 

 

that is located in or about the Improvements, but that is not included in or integral to the Property, and to secure such financing NAI may grant a security interest under the California Uniform Commercial Code in such inventory, furnishings, equipment, machinery and other personal property. Further, BNPPLC acknowledges that the lenders providing such financing may require confirmation from BNPPLC of its agreements concerning landlord’s liens and other matters set forth in this subparagraph 4(E), and NAI may obtain such confirmation in any statement required of BNPPLC by the next subparagraph.
        (F)      Estoppel Letters. Upon thirty days written request by NAI at any time and from time to time prior to the Designated Sale Date, BNPPLC must 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 Base Rent payable by NAI under the Lease has been paid, stating whether BNPPLC is aware of any Default by NAI that may exist under the Operative Documents and confirming BNPPLC’s agreements concerning landlord’s liens and other matters set forth in subparagraph 4(E). Any such statement by BNPPLC 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.
        (G)      No Implied Representations or Promises by BNPPLC. NAI acknowledges and agrees that neither BNPPLC nor its representatives or agents have made any representations or promises with respect to the Property or the transactions contemplated in the Operative Documents except as expressly set forth in the Operative Documents, and no rights, easements or licenses are being acquired by NAI from BNPPLC by implication or otherwise, except as expressly set forth in the other Operative Documents.
5      Usury Savings Provision. Notwithstanding anything to the contrary in any of the Operative Documents, BNPPLC does not intend to contract for, charge or collect any amount of money from NAI that constitutes interest in excess of the maximum nonusurious rate of interest, if any, allowed by applicable usury laws (the “Maximum Rate”). BNPPLC and NAI agree that it is their intent in the execution of the Lease, the Purchase Agreement and other Operative Documents to contract in strict compliance with applicable usury laws, if any. In furtherance thereof, BNPPLC and NAI stipulate and agree that none of the provisions of the Lease, the Purchase Agreement or the other Operative Documents shall ever be construed to create a contract requiring compensation for the use, forbearance or detention of money at a rate in excess of the Maximum Rate, and the provisions of this paragraph shall control over all other provisions of this Certificate or other Operative Documents which may be in apparent conflict herewith. All interest paid or agreed to be paid by NAI to BNPPLC shall, to the extent permitted by applicable usury laws, be amortized, prorated, allocated, and spread throughout the period that any principal upon which such interest accrues is expected to be outstanding (including without limitation any
 
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renewal or extension of the term of the Lease) so that the amount of interest included in such payments does not exceed the maximum nonusurious amount permitted by applicable usury laws. If the Designated Sale Date is accelerated and as a result thereof amounts paid by NAI to BNPPLC as interest are determined to exceed the interest that would have accrued at the Maximum Rate for the period prior to the Designated Sale Date, then BNPPLC shall, at its option, either refund to NAI the amount of such excess or credit such excess as a Qualified Prepayment (and thus reduce the Lease Balance and other amounts, the determination of which depend upon Qualified Prepayments credited to NAI) and thereby shall render inapplicable any and all penalties of any kind provided by applicable usury laws as a result of such excess interest. If BNPPLC receives money (or anything else) that is determined to constitute interest and that would, but for this provision, increase the effective interest rate received by BNPPLC under or in connection with the Operative Documents to a rate in excess of the Maximum Rate, then the amount determined to constitute interest in excess of the maximum nonusurious interest shall, immediately following such determination, be returned to NAI or be credited as a Qualified Prepayment, in which event any and all penalties of any kind under applicable usury law shall be inapplicable. If BNPPLC does not actually receive, but shall contract for, request or demand, a payment of money (or anything else) which is determined to constitute interest and to increase the effective interest rate contracted for or charged to a rate in excess of the Maximum Rate, BNPPLC shall be entitled, following such determination, to waive or rescind the contractual claim, request or demand for the amount determined to exceed the Maximum Rate, in which event any and all penalties of any kind under applicable usury law shall be inapplicable. If at any time NAI should have reason to believe that the transactions evidenced by the Operative Documents are in fact usurious, NAI shall promptly give BNPPLC notice of such condition, after which BNPPLC shall have ninety days in which to make appropriate refund or other adjustment in order to correct such condition if it in fact exists.
6      Obligations of NAI Under Other Operative Documents Not Limited by this Certificate. Except as provided above in Paragraph 5, nothing contained in this Certificate will limit, modify or otherwise affect any of NAI’s obligations under the other Operative Documents. Subject to Paragraph 5, those obligations are intended to be separate, independent and in addition to, and not in lieu of, those established by this Certificate.
7      Obligations of NAI Hereunder Not Limited by Other Operative Documents. Recognizing that but for this Certificate (including the representations of NAI set forth in Paragraph 1) BNPPLC would not acquire the Property or enter into the other Operative Documents, NAI agrees that BNPPLC’s rights for any breach of this Certificate (including a breach of such representations) will not be limited by any provision of the other Operative Documents that would limit NAI’s liability thereunder.
8      Waiver of Jury Trial. Each of the parties hereto hereby waives its right to a jury trial of any claim or cause of action based upon or arising out of this Agreement, the other Operative
 
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Documents or any of the transactions contemplated hereby or thereby, including contract claims, tort claims, breach of duty claims, and all other common law or statutory claims (collectively, the “Claims”). If and to the extent that the foregoing waiver of the right to a jury trial is unenforceable for any reason in such forum, each of the parties hereto hereby consents to the adjudication of all Claims pursuant to judicial reference as provided in California Code of Civil Procedure Section 638, and the judicial referee shall be empowered to hear and determine all issues in such reference, whether fact or law. Each of the parties hereto represents that each has reviewed this waiver and consent and each knowingly and voluntarily waives its jury trial rights and consents to judicial reference following consultation with legal counsel on such matters. In the event of litigation, a copy of this Agreement may be filed as a written consent to a trial by the court or to judicial reference under California Code of Civil Procedure Section 638 as provided herein.
[The signature pages follow.]
 
Closing Certificate and Agreement (Building 9) – Page 36

 

 

     IN WITNESS WHEREOF, this Closing Certificate and Agreement (Building 9) is executed to be effective as of February 1, 2008.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation

 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
 
Closing Certificate and Agreement (Building 9) – Signature Page

 

 

[Continuation of signature pages for Closing Certificate and Agreement (Building 9) dated as of February 1, 2008.]
         
  NETWORK APPLIANCE, INC., a Delaware
corporation
 		  
 
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
 
Closing Certificate and Agreement (Building 9) – Signature Page

 

 

Exhibit A
Legal Description
Parcel 9 and the Additional Leased Premises, as defined below, (collectively, the “Building 9 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs along the same line as the northern boundary of Common Lot A, as shown on the Tentative Map, extending from the corner of two streets adjacent to the Additional Leased Premises to the northeast corner of Parcel 12, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as (but extends beyond) the eastern boundary of Parcel 12, as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 9 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
 
Exhibit A to Closing Certificate and Agreement (Building 9) – Page 2

 

 

Exhibit B
Quarterly Certificate
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Gentlemen:
     This Certificate is furnished pursuant to subparagraph 2(D)(3) of the Closing Certificate and Agreement (Building 9) dated as of February 1, 2008 between Network Appliance, Inc. and BNP Paribas Leasing Corporation(as amended, the “Closing Certificate”). Terms defined in the Closing Certificate and used but not otherwise defined in this Certificate are intended to have the respective meanings ascribed to them in the Closing Certificate.
     The undersigned, being a Responsible Financial Officer of Network Appliance, Inc., represents and certifies the following to BNP Paribas Leasing Corporation:
     (a)      No Event of Default or material Default by NAI has occurred except as follows:
[If an Event of Default or material Default by NAI has occurred, insert a description of the nature thereof and the action which NAI has taken or proposes to take to rectify it; otherwise, insert the word “none”.]
     (b)      The representations and warranties by NAI in the Closing Certificate are true and complete in all material respects on and as of the date of this Certificate as though made on and as of such date.
     (c)      the calculations set forth in the attachment to this Certificate, which show whether NAI is complying with financial covenants set forth in subparagraph 3(C) of the Closing Certificate based upon the most recent information available, are true and complete.
     Executed this             day of                     , 20     .
[INSERT SIGNATURE BLOCK FOR A
RESPONSIBLE FINANCIAL OFFICER]

 

 

Exhibit C
Form of Disclosure Letter
 
NETWORK APPLIANCE, INC.
DISCLOSURE LETTER
To:     JPMorgan Chase Bank, National Association, as Administrative Agent (“Agent”), under that certain Credit Agreement dated as of November ___, 2007 (as such agreement may be amended, restated or otherwise modified in writing from time to time, the “Credit Agreement”) among Network Appliance, Inc. (the “Borrower”), the lenders from time to time party thereto, BNP Paribas, as syndication agent, and Agent.
This Disclosure Letter is delivered to you pursuant to the Credit Agreement. The items set forth in the attached Schedules represent exceptions, qualifications, permitted items and disclosures that are listed herein pursuant to the terms of the Credit Agreement. Capitalized terms used herein (or in the attached schedules) and defined in the Credit Agreement shall have the meanings ascribed in the Credit Agreement, unless the context otherwise requires.
IN WITNESS WHEREOF, the undersigned has executed this Disclosure Letter as of November ___, 2007.
         
  NETWORK APPLIANCE, INC.
 		  
  By:      
    Name:   Ingemar Lanevi   
    Title:   Treasurer   
 

 

 

Schedule 3.01
Subsidiaries
                             
 
  Subsidiary     Material     Jurisdiction     Shareholder     Percentage  
        Domestic                 Interest  
        Subsidiary                    
        (Y/N)                    
                             
                             
 
Network Appliance
Global Ltd.
    N     Bermuda     Network
Appliance Inc. 		    100%  
 
Network Appliance
Holdings Ltd.
    N     Cyprus     Network
Appliance
Global Ltd. 		    100%  
 
Network Appliance
Holding & Manufacturing
BV
    N     Netherlands     Network
Appliance
Holdings
Ltd. 		    100%  
 
Network Appliance BV
    N     Netherlands     Network
Appliance
Holding &
Mfg BV 		    100%  
 
Network Appliance ApS
    N     Denmark     Network
Appliance
Holdings
Ltd. 		    100%  
 
Network Appliance Ltd
    N     UK     Network
Appliance
BV 		    100%  
 
Network Appliance SAS
    N     France     Network
Appliance
BV 		    100%  
 
Network Appliance
GmbH
    N     Germany     Network
Appliance
BV 		    100%  
 
Network Appliance Srl.
    N     Italy     Network
Appliance
BV 		    100%  
 
Network Appliance GmbH
    N     Switzerland     Network
Appliance
BV 		    100%  
 
 
Exhibit C to Closing Certificate and Agreement (Building 9) – Page 2

 

 

                             
 
  Subsidiary     Material     Jurisdiction     Shareholder     Percentage  
        Domestic                 Interest  
        Subsidiary                    
        (Y/N)                    
                             
                             
 
Network Appliance
(Sales) Limited
    N     Ireland     Network
Appliance
BV 		    100%  
 
Network Appliance
GesmbH
    N     Austria     Network
Appliance
BV 		    100%  
 
Network Appliance SL
    N     Spain     Network
Appliance
BV 		    100%  
 
Network Appliance
BVBA
    N     Belgium     Network
Appliance
BV 		    100%  
 
Network Appliance Israel
Ltd.
    N     Israel     Network
Appliance
BV 		    100%  
 
Network Appliance Israel
R&D, Ltd.
    N     Israel     Network
Appliance
Inc. 		    100%  
 
Network Appliance
Poland Sp. z.o.o.
    N     Poland     Network
Appliance
BV 		    100%  
 
Network Appliance
Sweden AB
    N     Sweden     Network
Appliance
BV 		    100%  
 
Network Appliance South
Africa (Pty) Ltd.
    N     South
Africa 		    Network
Appliance
BV 		    100%  
 
Network Appliance
Finland Oy
    N     Finland     Network
Appliance
BV 		    100%  
 
Network Appliance
Norway AS
    N     Norway     Network
Appliance
BV 		    100%  
 
Network Appliance BV
(Representative Office)
    N     UAE     Network
Appliance
BV 		    100%  
 
 
Exhibit C to Closing Certificate and Agreement (Building 9) – Page 3

 

 

                             
 
  Subsidiary     Material     Jurisdiction     Shareholder     Percentage  
        Domestic                 Interest  
        Subsidiary                    
        (Y/N)                    
                             
                             
 
Network Appliance BV
(Representative Office)
    N     Turkey     Network
Appliance
BV 		    100%  
 
Network Appliance BV
(Representative Office)
    N     Russia     Network
Appliance
BV 		    100%  
 
Network Appliance
Luxembourg S.a.r.l.
    N     Luxembourg     Network
Appliance
BV 		    100%  
 
Network Appliance BV
(Representative Office)
    N     Indonesia     Network
Appliance
BV 		    100%  
 
Network Appliance BV
(Representative Office
    N     Philippines     Network
Appliance
BV 		    100%  
 
Network Appliance KK
    N     Japan     Network
Appliance
Inc. 		    100%  
 
Network Appliance Pty.
Ltd.
    N     Australia     Network
Appliance
Global Ltd. 		    100%  
 
Network Appliance
Mexico S. de R.L. de C.V.
    N     Mexico     Network
Appliance
Inc. 		    100%  
 
Network Appliance
Singapore Private Ltd.
    N     Singapore     Network
Appliance
Inc. 		    100%  
 
Network Appliance Sdn
Bhd
    N     Malaysia     Network
Appliance
Inc. 		    100%  
 
Network Appliance
Systems Private Ltd.
    N     India     Network
Appliance
Inc. 		    100%  
 
Network Appliance
Argentina Srl
    N     Argentina     Network
Appliance
Inc. 		    100%  
 
 
Exhibit C to Closing Certificate and Agreement (Building 9) – Page 4

 

 

                             
 
  Subsidiary     Material     Jurisdiction     Shareholder     Percentage  
        Domestic                 Interest  
        Subsidiary                    
        (Y/N)                    
                             
                             
 
Network Appliance Ltd.
    N     Brazil     Network
Appliance
Inc. 		    100%  
 
Network Appliance Canada
Ltd.
    N     Canada     Network
Appliance
Inc. 		    100%  
 
Network Appliance
(Shanghai) Commercial
Co., Ltd.
    N     China     Network
Appliance
BV 		    100%  
 
Network Appliance (Hong
Kong) Limited
    N     Hong Kong     Network
Appliance
BV 		    100%  
 
Network Appliance, Inc.
(Representative Office)
    N     China, Beijing     Network
Appliance
Inc. 		    100%  
 
Network Appliance, Inc.
(Representative Office)
    N     China, Shanghai     Network
Appliance
Inc. 		    100%  
 
Network Appliance, Inc.
(Representative Office)
    N     China, Guangzhou     Network
Appliance
Inc. 		    100%  
 
Network Appliance, Inc.
(Representative Office)
    N     Korea     Network
Appliance
Inc. 		    100%  
 
Network Appliance, Inc.
(Representative Office)
    N     Taiwan     Network
Appliance
Inc. 		    100%  
 
Network Appliance, Inc.
(Representative Office)
    N     Hong Kong     Network
Appliance
Inc. 		    100%  
 
Network Appliance
Federal Systems, Inc.
    N     California     Network
Appliance
Inc. 		    100%  
 
Network Appliance
Financial Solutions, Inc.
    N     Delaware     Network
Appliance
Inc. 		    100%  
 
 
Exhibit C to Closing Certificate and Agreement (Building 9) – Page 5

 

 

                             
 
  Subsidiary     Material     Jurisdiction     Shareholder     Percentage  
        Domestic                 Interest  
        Subsidiary                    
        (Y/N)                    
                             
                             
 
Spinnaker Networks, Inc.
    N     Delaware     Network
Appliance
Inc. 		    100%  
 
Spinnaker Networks, LLC
    N     Delaware     Network
Appliance
Inc. 		    100%  
 
Alacritus, Inc.
    N     Delaware     Network
Appliance
Inc. 		    100%  
 
Decru, Inc.
    N     Delaware     Network
Appliance
Inc. 		    100%  
 
Decru BV
    N     Netherlands     Network
Appliance
Holding &
Mfg BV 		    100%  
 
Network Appliance Limited
    N     Thailand     Network
Appliance
Inc. 		    100%  
 
Network Appliance Saudi
Arabia LLFC
    N     Saudi Arabia     Network
Appliance
BV 		    100%  
 
Decru Ltd.
    N     U.K.     Decru Inc.     100%  
 
Topio, Inc.
    N     Delaware     Network
Appliance
Inc. 		    100%  
 
Commitments or Obligations of Borrower or any Subsidiary to issue capital or other equity interests:
     None.
Options, warrants or other rights to acquire capital or other equity interests of Borrower or any Subsidiary:
     None.
 
Exhibit C to Closing Certificate and Agreement (Building 9) – Page 6

 

 

Schedule 3.06
Disclosed Matters
     None.
 
Exhibit C to Closing Certificate and Agreement (Building 9) – Page 7

 

 

Schedule 6.01
Existing Indebtedness
Secured Credit Agreement, dated as of October 5, 2007, by and among Network Appliance, Inc., the lenders party thereto and JPMorgan Chase Bank, National Association, as administrative agent.
Loan Agreement, dated as of March 31, 2006, by and among Network Appliance Global, Ltd., as the borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.
See attached schedule of existing letters of credit and bank guarantees.
Lease Agreements, dated as of December 15, 2005, December 16, 2006, and July 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc., and those certain Closing Certificates executed in connection with such Lease Agreements, dated as of December 15, 2005, December 16, 2006, and July 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc.
 
Exhibit C to Closing Certificate and Agreement (Building 9) – Page 8

 

 

Schedule 6.02
Existing Liens
     Liens in connection with items disclosed on Schedule 6.01.
 
Exhibit C to Closing Certificate and Agreement (Building 9) – Page 9

 

 

Schedule 6.05
Existing Affiliate Transactions
Transaction arising in connection with commissionaire agreements between Network Appliance B. V. and each of its subsidiaries and related arrangements with respect to payment of value added taxes.
Transactions arising in connection that certain Technology License Agreement, effective as of May 1, 2000, by and between Network Appliance Global Ltd. and Network Appliance B.V.
Transactions arising in connection that certain Technology License Agreement, effective as of May 1, 2000, by and between Network Appliance Global Ltd. and Network Appliance Inc.
Transactions arising in connection with that certain Technology License Agreement, entered into as of April 27, 2002, by and between Network Appliance, Inc. and Network Appliance Global Ltd.
Transactions arising in connection with that certain Technology License Agreement, entered into as of May 1, 2004, by and between Network Appliance Global Ltd. and Spinnaker Networks Inc.
Transactions arising in connection with that certain Technology License Agreement, entered into as of May 3, 2005, by and between Network Appliance Inc. and Alacritus Inc.
Transactions arising in connection with that certain Technology License Agreement, entered into as of April 29, 2006, by and between Network Appliance Global Ltd. and Decru Inc.
 
Exhibit C to Closing Certificate and Agreement (Building 9) – Page 10

 

 

Schedule 6.06
Existing Restrictive Agreements
Secured Credit Agreement, dated as of October 5, 2007, by and among Network Appliance, Inc., the lenders party thereto and JPMorgan Chase Bank, National Association, as administrative agent.
Loan Agreement dated as of March 31, 2006, by and among Network Appliance Global, Ltd., as the borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
Lease Agreements, dated as of December 15, 2005, December 16, 2006, and June 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc., and those certain
Closing Certificates executed in connection with such Lease Agreements, dated as of December 15, 2005, December 16, 2006, and June 17, 2007, by and between BNP Paribas Leasing Corporation and Network Appliance, Inc.
Letter Agreement between Wells Fargo Bank, National Association, and Borrower, dated as of December 1, 2006, providing Borrower with a revolving line of credit for the issuance of letters of credit in an aggregate principal amount not to exceed $5,000,000.
 
Exhibit C to Closing Certificate and Agreement (Building 9) – Page 11

 

 

Exhibit D
Supplemental Disclosures
Section 1. Existing Indebtedness: Indebtedness created or governed by:
     A. Lease Agreement (Building 7) by and between BNP Paribas Leasing Corporation and Network Appliance, Inc. and related documents referenced therein, all dated as of November 29, 2007. Such Lease Agreement amends and restates a Lease Agreement dated as of December 15, 2005 referenced in Schedule 6.01 to the Disclosure Letter.
     B. Lease Agreement (Building 8) by and between BNP Paribas Leasing Corporation and Network Appliance, Inc. and related documents referenced therein, all dated as of November 29, 2007. Such Lease Agreement amends and restates a Lease Agreement dated as of December 16, 2006 referenced in Schedule 6.01 to the Disclosure Letter.
     C. Lease Agreement (RTP Data Center) by and between BNP Paribas Leasing Corporation and Network Appliance, Inc. and related documents referenced therein, all dated as of November 29, 2007. Such Lease Agreement amends and restates a Lease Agreement dated as of July 17, 2007 referenced in Schedule 6.01 to the Disclosure Letter.
     D. Lease Agreement (Moffett Business Center) by and between BNP Paribas Leasing Corporation and Network Appliance, Inc. and related documents referenced therein, all dated as of November 29, 2007. Such Lease Agreement covers a newly acquired property.
     E. Lease Agreement (1299 Orleans) by and between BNP Paribas Leasing Corporation and Network Appliance, Inc. and related documents referenced therein, all dated as of November 29, 2007. Such Lease Agreement covers a newly acquired property.
     E. Lease Agreement (1277 Orleans) by and between BNP Paribas Leasing Corporation and Network Appliance, Inc. and related documents referenced therein, all dated as of December 21, 2007. Such Lease Agreement covers a newly acquired property.
     G. Secured Credit Agreement dated as of October 5, 2007 by and among Network Appliance, Inc., certain lenders and JPMorgan Chase Bank, National Association, as administrative agent
     H. Credit Agreement dated as of November 2, 2007 made by JPMorgan Chase Bank, National Association, as administrative agent, Network Appliance, Inc., as Borrower, the lenders from time to time party thereto, and BNP Paribas, as syndication agent.
Section 2. Existing Liens: Those created by or securing agreements described in subsections A through F of the preceding Section 1.

 

 

Section 3. Restrictive Agreements: Those contained in the agreements referenced in Section 1 above.
 
Exhibit D to Closing Certificate and Agreement (Building 9) – Page 2

 

 

Exhibit E
Certificate of BNPPLC Re: Accounting
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Gentlemen:
     This certificate is furnished pursuant to subparagraph 4(A) of the Closing Certificate and Agreement (Building 9) dated as of February 1, 2008 between BNP Paribas Leasing Corporation and Network Appliance, Inc. (as amended, the “Closing Certificate”). Terms defined in the Closing Certificate and used but not otherwise defined in this certificate are intended to have the respective meanings ascribed to them in the Closing Certificate.
     BNP Paribas Leasing Corporation (“ BNPPLC”) certifies that the following are true and complete in all material respects, but only to the knowledge of BNPPLC as of the date hereof:
     (A) The facts disclosed in any financial statements or other documents listed in the Annex attached to this certificate were (as of their respective dates) true and complete in all material respects. Copies of such statements or other documents were provided by or behalf of BNPPLC to NAI prior to the date hereof to permit NAI to determine the appropriate accounting for NAI’s relationship with BNPPLC under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN 46”).
     (B The fair value of the Property and of other properties, if any, leased to NAI by BNPPLC (collectively, whether one or more, the “Properties Leased to NAI”) are, as of the date hereof, less than half of the total of the fair values of all assets of BNPPLC, excluding any assets of BNPPLC which are held within a silo. Further, none of the Properties Leased to NAI are, as of the date hereof, held within a silo.
     Although the representations required of BNPPLC by this certificate are intended to cover facts, it is understood and agreed (consistent with subparagraph 4(C) of the Lease) that BNPPLC has not made and will not make any representation or warranty as to the proper accounting by NAI or its Affiliates of the Lease or other Operative Documents or as to other accounting conclusions.

 

 

     Executed this            day of                     , 20     .
             
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
         
 
Exhibit E to Closing Certificate and Agreement (Building 9) – Page 2

 

exv10w71
Exhibit 10.71

      

LEASE AGREEMENT
(BUILDING 9)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
February 1, 2008
      


 

 

TABLE OF CONTENTS
                 
            Page  
1      Term; Lease Obligations Deferred Until Completion of Initial Improvements; Termination Prior to Lease Commencement     3  
 
   (A)   Scheduled Term; Deferral of Obligations     3  
 
   (B)   Option of BNPPLC to Terminate     3  
 
   (C)   Automatic Termination     3  
 
   (D)   Extension of the Term     3  
 
                
2   Use and Condition of the Property     4  
 
   (A)   Use     4  
 
   (B)   Condition of the Property     5  
 
   (C)   Consideration for and Scope of Waiver     5  
 
                
3   Rent     6  
 
   (A)   Base Rent Generally     6  
 
   (B)   Calculation of and Due Dates for Base Rent     6  
 
       (1)     Determination of Payment Due Dates Generally     6  
 
       (2)     Special Adjustments to Base Rent Payment Dates and Periods     6  
 
       (3)     Base Rent Formula     7  
 
       (4)     Fixed Rate Lock     7  
 
   (C)   Early Termination of Fixed Rate Lock     8  
 
   (D)   Additional Rent     9  
 
   (E)   Administrative Fees     9  
 
   (F)   No Demand or Setoff     9  
 
   (G)   Default Interest and Order of Application     9  
 
   (H)   Calculations by BNPPLC Are Conclusive     9  
 
                
4   Nature of this Agreement     9  
 
   (A)   "Net" Lease Generally     9  
 
   (B)   No Termination     10  
 
   (C)   Characterization of this Lease     11  
 
                
5   Payment of Executory Costs and Losses Related to the Property     13  
 
   (A)   Local Impositions     13  
 
   (B)   Increased Costs; Capital Adequacy Charges     13  
 
   (C)   NAI's Payment of Other Losses; General Indemnification     15  
 
   (D)   Exceptions and Qualifications to Indemnities     19  
 
   (E)   Refunds and Credits Related to Losses Paid by NAI     23  
 
   (F)   Reimbursement of Excluded Taxes Paid by NAI     25  
 
   (G)   Collection on Behalf of Participants     25  
 
                
6   Replacement of Participants     25  

 

 

TABLE OF CONTENTS
(Continued)
                 
            Page  
 
   (A)   NAI’s Right to Substitute Participants     25  
 
   (B)   Conditions to Replacement of Participants     25  
 
                
7   Items Included in the Property     26  
 
   (A)   Status of Property     26  
 
   (B)   Changes in the Land Covered by the Ground Lease     27  
 
                
8
   Environmental       27  
 
   (A)   Environmental Covenants by NAI     27  
 
   (B)   Right of BNPPLC to do Remedial Work Not Performed by NAI     28  
 
   (C)   Environmental Inspections and Reviews     28  
 
   (D)   Communications Regarding Environmental Matters     29  
 
                
9   Insurance Required and Condemnation     30  
 
   (A)   Liability Insurance     30  
 
   (B)   Property Insurance     30  
 
   (C)   Failure to Obtain Insurance     31  
 
   (D)   Condemnation     31  
 
   (E)   Waiver of Subrogation     32  
 
                
10   Application of Insurance and Condemnation Proceeds     32  
 
   (A)   Collection and Application of Insurance and Condemnation Proceeds Generally     32  
 
   (B)   Advances of Escrowed Proceeds to NAI     33  
 
   (C)   Application of Escrowed Proceeds as a Qualified Prepayment     33  
 
   (D)   Right of NAI to Receive and Apply Remaining Proceeds Below a Certain Level     33  
 
   (E)   Special Provisions Applicable After a 97-10/Meltdown Event or an Event of Default     33  
 
   (F)   NAI’s Obligation to Restore     34  
 
   (G)   Takings of All or Substantially All of the Property on or after the Completion        
 
       Date     34  
 
   (H)   If Remaining Proceeds Exceed the Lease Balance     34  
 
                
11      Additional Representations, Warranties and Covenants of NAI Concerning the Property     35  
 
   (A)   Operation and Maintenance     35  
 
   (B)   Debts for Construction, Maintenance, Operation or Development     36  

(ii)

 

TABLE OF CONTENTS
(Continued)
                 
            Page  
 
   (C)   Repair, Maintenance, Alterations and Additions     36  
 
   (D)   Permitted Encumbrances     37  
 
   (E)   Books and Records Concerning the Property     37  
 
                
12   Assignment and Subletting by NAI     38  
 
   (A)   BNPPLC’s Consent Required     38  
 
   (B)   Standard for BNPPLC’s Consent to Assignments and Certain Other Matters     38  
 
   (C)   Consent Not a Waiver     39  
 
                
13   Assignment by BNPPLC     39  
 
   (A)   Restrictions on Transfers     39  
 
   (B)   Effect of Permitted Transfer or other Assignment by BNPPLC     39  
 
                
14   BNPPLC’s Right to Enter and to Perform for NAI     40  
 
   (A)   Right to Enter     40  
 
   (B)   Performance for NAI     40  
 
   (C)   Building Security     40  
 
                
15   Remedies     41  
 
   (A)   Traditional Lease Remedies     41  
 
   (B)   Foreclosure Remedies     43  
 
   (C)   Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement     43  
 
   (D)   Enforceability     44  
 
   (E)   Remedies Cumulative     44  
 
                
16   Default by BNPPLC     44  
 
                
17   Quiet Enjoyment     45  
 
                
18   Surrender Upon Termination     45  
 
                
19   Holding Over by NAI     45  
 
                
20   Recording Memorandum     46  
 
                
21   Independent Obligations Evidenced by Other Operative Documents     46  

(iii)

 

TABLE OF CONTENTS
(Continued)
                 
            Page  
22   Proprietary Information and Confidentiality     46  
 
   (A)   Proprietary Information     46  
 
   (B)   Confidentiality     46  
 
                
Exhibits and Schedules
        
 
                
Exhibit A   Legal Description
Exhibit B   California Lien and Foreclosure Provisions

(iv)

 

LEASE AGREEMENT
(BUILDING 9)
     This LEASE AGREEMENT (BUILDING 9) (this “Lease”), dated as of February 1, 2008 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Lease, BNPPLC and NAI are executing a Common Definitions and Provisions Agreement (Building 9) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Lease for all purposes. As used in this Lease, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Lease are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     At the request of NAI and to facilitate the transactions contemplated in the other Operative Documents, BNPPLC is entering into the Ground Lease, pursuant to which BNPPLC will have a leasehold estate in the Land described in Exhibit A and any existing improvements on the Land from NAI contemporaneously with the execution of this Lease.
     In anticipation of BNPPLC’s acquisition of the leasehold estate under the Ground Lease and other property described below, BNPPLC and NAI have reached agreement as to the terms and conditions upon which BNPPLC is willing to sublease the Land to NAI and to lease to NAI any existing Improvements and the Improvements to be constructed on the Land as hereinafter provided, and by this Lease BNPPLC and NAI desire to evidence such agreement.
GRANTING CLAUSES
     BNPPLC does hereby LEASE, DEMISE and LET unto NAI for the Term (as hereinafter defined) all right, title and interest of BNPPLC, now owned or hereafter acquired, in and to:
     (1)      the Land, including the leasehold estate in the Land acquired by BNPPLC under the Ground Lease;
     (2)      any and all Improvements;
     (3)      all easements and other rights appurtenant to the leasehold estate created by the Ground Lease or to the Improvements; and
     (4)      (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 abutting land.
BNPPLC’s interest in all property described in clauses (1) through (4) above is 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 BNPPLC under the Ground Lease or as described in subparagraph 7(A) below, BNPPLC also hereby grants and assigns to NAI for the term of this Lease the right to use and enjoy (and, in the case of contract rights, to enforce) such rights or interests of BNPPLC:
     (a)      any goods, equipment, furnishings, furniture and other tangible personal property of whatever nature that are located on the Real Property and all renewals or replacements of or substitutions for any of the foregoing (collectively, the “Tangible Personal Property”);
     (b)      the benefits, if any, conferred upon the owner of the Real Property by the Permitted Encumbrances; and
     (c)      any permits, licenses, franchises, certificates, and other rights and privileges against third parties related to the Real Property or Tangible Personal Property, including warranties, if any, given by vendors from whom any Tangible Personal Property was or may be acquired.
Such rights and interests of BNPPLC, 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 by this Lease and NAI’s rights hereunder are expressly made subject and subordinate to the terms and conditions of this Lease and the Ground Lease, to the matters listed in Exhibit B to the Closing Certificate and all other Permitted Encumbrances, and to any other claims or encumbrances not constituting Liens Removable by BNPPLC.
GENERAL TERMS AND CONDITIONS
     The Property is leased by BNPPLC to NAI and is accepted and is to be used and possessed by NAI upon and subject to the following terms and conditions:
 
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1      Term; Lease Obligations Deferred Until Completion of Initial Improvements; Termination Prior to Lease Commencement.
     (A)      Scheduled Term; Deferral of Obligations. The term of this Lease (the “Term”) will not commence until a Completion Date occurs because of a Completion Notice given by NAI to BNPPLC, as required by subparagraph 2(B) of the Construction Agreement after NAI substantially completes the Construction Project. The Term will begin on and include any such Completion Date and will end on the first business Day of February, 2015, unless the Term is extended as provided in subparagraph 1(D) or sooner terminated as expressly provided in other provisions of this Lease.
     BNPPLC and NAI intend to be legally bound by this Lease when it is executed by them. They also intend, however, that this Lease will not impose any payment obligations upon either of them prior to the Completion Date. Accordingly, neither NAI nor BNPPLC will have any obligation to make any payments under this Lease until the Completion Date, and if this Lease terminates before the Completion Date pursuant to subparagraph 1(B) or subparagraph 1(C), the Term will never commence and neither party will have any obligation for payments by reason of this Lease following the termination.
     Nothing in this subparagraph 1(A) nor any other provision of this Lease will defer or terminate the rights and obligations of the parties under the other Operative Documents. Unlike this Lease, the other Operative Documents will, when executed, immediately impose payment obligations upon BNPPLC and NAI.
     (B)      Option of BNPPLC to Terminate. BNPPLC will have the option to terminate this Lease, which BNPPLC may exercise by notice to NAI, at any time after any 97-10/Meltdown Event or after BNPPLC’s receipt of a Pre-lease Force Majeure Notice. Such option may be exercised by BNPPLC as it deems appropriate in its sole and absolute discretion.
     (C)      Automatic Termination. If NAI elects to accelerate the Designated Sale Date (as provided in the definition thereof in the Common Definitions and Provisions Agreement) prior to the Completion Date, or if a Termination of NAI’s Work occurs under and as provided in the Construction Agreement before the Completion Date, then this Lease will terminate automatically before the Term begins.
     (D)      Extension of the Term. The Term may be extended at the option of NAI for up to two successive periods of five years each; provided, however, that prior to each such extension the following conditions must have been satisfied: (A) NAI must have delivered a notice of its election to exercise the option at least one hundred eighty days prior to the end of the Term, and prior to the commencement of any such extension BNPPLC and NAI must have agreed in writing
 
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upon, and received the written consent and approval of BNPPLC’s Parent and all Participants (other than Participants being replaced at the request of NAI as provided in Paragraph 6) to, (1) a corresponding extension of the date specified in clause (1) of the definition of Designated Sale Date in the Common Definitions and Provisions Agreement and of the term of the Ground Lease, and (2) an adjustment to the Rent that NAI will be required to pay during the extension, it being expected that the Rent for the extension may be different than the Rent required for the original Term or any prior extension, and it being understood that the Rent for any extension must in all events be satisfactory to both BNPPLC and NAI, each in its sole and absolute discretion; (B) at the time of NAI’s exercise of its option to extend, no Event of Default has occurred and is continuing, and no Event of Default will result from the extension; (C) immediately prior to any such extension, this Lease must then remain in effect; and (D) if this Lease has been assigned by NAI, then NAI must have executed a guaranty (or confirmed an existing guaranty, if applicable), guaranteeing NAI’s assignee’s obligations under the Operative Documents throughout such extended Term. With respect to the condition that BNPPLC and NAI must have agreed upon the Rent required for any extension of the Term, neither NAI nor BNPPLC is willing to submit itself to a risk of liability or loss of rights hereunder for being judged unreasonable. Similarly, neither BNPPLC’s Parent nor any Participant is expected to submit itself to a risk of liability or loss of rights for being judged to have unreasonably withheld consent or approval to any extension of the Term. Accordingly, NAI, BNPPLC, BNPPLC’s Parent and Participants will each have sole and absolute discretion in making its determination, and both NAI and BNPPLC 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 and satisfaction of the other conditions listed in this subparagraph, if NAI exercises its option to extend the Term as provided in this subparagraph, this Lease will continue in full force and effect, and the leasehold estate hereby granted to NAI will 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 Effective Date and before the extension.
     2      Use and Condition of the Property.
     (A)  Use. Subject to the Permitted Encumbrances, NAI may use and occupy the Property during the Term, but only for the following purposes and other lawful purposes incidental thereto:
     (1) construction and development of the Construction Project;
     (2) administrative and office space;
     (3) activities related to NAI’s research and development or production of 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;
 
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     (4) cafeteria and other support facilities that NAI may provide to its employees; and
     (5) 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 BNPPLC, which approval will not be unreasonably withheld after completion of the Construction Project (but NAI acknowledges that BNPPLC’s withholding of such approval shall be reasonable if BNPPLC determines in good faith that (1) giving the approval may materially increase BNPPLC’s risk of liability for any existing or future environmental problem, or (2) giving the approval is likely to substantially increase BNPPLC’s administrative burden of complying with or monitoring NAI’s compliance with the requirements of this Lease or other Operative Documents).
     (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 BNPPLC or other Interested Parties regarding the title thereto or the rights of any parties in possession of any part thereof, except as expressly set forth in Paragraph 17. BNPPLC will not be responsible for any latent or other defect or change of condition in the Land, Improvements or other Property or for any violations with respect thereto of Applicable Laws. Further, BNPPLC will not be required to furnish to NAI any facilities or services of any kind, including water, phone, sewer, steam, heat, gas, air conditioning, electricity, light or power.
     (C)      Consideration for and Scope of Waiver. The provisions of subparagraph 2(B) have been negotiated by BNPPLC and NAI as being consistent with the Rent payable under this Lease, and such provisions are intended to be a complete exclusion and negation of any representations or warranties of BNPPLC or other Interested Parties, 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 BNPPLC is not intended to impair any representations or warranties made by other parties, including any architects, engineers or contractors engaged to work on the Construction Project, the benefit of which may
 
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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 must pay BNPPLC rent (“Base Rent”), calculated as provided below . Each payment of Base Rent must be received by BNPPLC no later than 1:00 p.m. (Eastern time) on the date it becomes due; if received after 1:00 p.m. (Eastern time) it will be considered for purposes of this 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 becomes due, BNPPLC will notify NAI in writing of the amount of each installment, calculated as provided below. Any failure by BNPPLC to so notify NAI, however, will not constitute a waiver of BNPPLC’s right to payment, but absent such notice NAI will 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 BNPPLC of the underpayment.
     (B)      Calculation of and Due Dates for Base Rent. Payments of Base Rent will be calculated and become due as follows:
     (1) Determination of Payment Due Dates Generally. For Base Rent Periods subject to a LIBOR Period Election of six months, Base Rent will 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. For all other Base Rent Periods, Base Rent will be due in one installment on the Base Rent Date upon which the Base Rent Period ends.
     (2) Special Adjustments to Base Rent Payment Dates and Periods. Notwithstanding the foregoing, if NAI or any Applicable Purchaser purchases BNPPLC’s interest in the Property pursuant to the Purchase Agreement, any accrued unpaid Base Rent and all outstanding Additional Rent will be due on the date of purchase in addition to the purchase price and other sums due to BNPPLC under the Purchase Agreement.
 
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     (3) Base Rent Formula. Each installment of Base Rent payable for any Base Rent Period will equal:
  •   the Lease Balance on the first day of such Base Rent Period, less Losses (if any) that BNPPLC suffered or incurred prior to the Term and that qualify as Pre-lease Force Majeure Losses (as defined in the Construction Agreement), times
 
  •   the sum of the Effective Rate and the Spread, 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.
     Only for the purpose of illustration, assume the following for a hypothetical Base Rent Period: that prior to the first day of such Base Rent Period the Construction Allowance has been fully funded, and no Pre-lease Force Majeure Losses have occurred, but Qualified Prepayments have been received by BNPPLC, leaving a Lease Balance of $30,000,000; that the Effective Rate for the Base Rent Period is 6%; that the Spread is one hundred fifty basis points (150/100 of 1%); and that such Base Rent Period contains exactly thirty days. Under such assumptions, Base Rent for the hypothetical Base Rent Period will equal:
$30,000,000 x [6% + 1.50%] x 30/360 = $187,500.
     (4)      Fixed Rate Lock. At any time during the Term, NAI may deliver a notice in the form attached to the Common Definitions and Provisions Agreement as Annex 2 (a “Fixed Rate Lock Notice”), requesting that BNPPLC establish a fixed rate for use in the calculation of the Effective Rate hereunder (a “Fixed Rate Lock”) for all Base Rent Periods commencing on or after a date specified in such notice, which date must be the first Business Day of a calendar month (the “Fixed Rate Lock Date”). Promptly after receiving a Fixed Rate Lock Notice, BNPPLC will enter into an Interest Rate Swap with BNP Paribas (the “Fixed Rate Swap”); except that BNPPLC may decline to enter into the Fixed Rate Swap and to establish a Fixed Rate Lock if:
     (a)      NAI does not deliver the Fixed Rate Lock Notice to BNPPLC at least ten Business days prior to the Fixed Rate Lock Date specified therein;
     (b)      NAI specifies a Fixed Rate Lock Date in the Fixed Rate Lock Notice that is prior to the end of any Base Rent Period which commenced before
 
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BNPPLC receives the Fixed Rate Lock Notice;
     (c)      any notice has been given to accelerate the Designated Sale Date as provided in the definition thereof in the Common Definitions and Provisions Agreement;
     (d)      the estimate of the Fixed Rate (hereinafter defined) specified by NAI in the Fixed Rate Lock Notice is for any reason less than the fixed rate available to BNPPLC under any Interest Rate Swap proposed by BNP Paribas;
     (e)      at the time the Fixed Rate Lock Notice is given, the Interest Rate Swap requested thereby is contrary to any Applicable Laws or any interpretation thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency (including, without limitation, any such requirement imposed by the Board of Governors of the United States Federal Reserve System); or
     (f)      any event has occurred or circumstance exists that constitutes a Default or a 97-10/Meltdown Event.
The notional principal amount of the Fixed Rate Swap will equal the Lease Balance on the date such notice is given. The fixed rate used to calculate payments required of BNPPLC under the Fixed Rate Swap, as the counterparty designated the fixed rate payor, will constitute the “Fixed Rate” for purposes of this Lease.
     (C)      Early Termination of Fixed Rate Lock. After a Fixed Rate Lock is established, BNPPLC may cause or suffer a termination in whole or in part of the Fixed Rate Swap in the event that (i) NAI fails to make any payment of Base Rent required hereunder on the Base Rent Date when it first becomes due, (ii) the Designated Sale Date occurs before the date specified in clause (1) of the definition thereof in the Common Definitions and Provisions Agreement, (iii) for any reason a Qualified Prepayment is applied to reduce the Lease Balance, (iv) the Lease Balance on the Fixed Rate Lock Date is less than the notional amount of the Fixed Rate Swap for any reason. NAI must reimburse to BNPPLC any Fixed Rate Settlement Amount charged to BNPPLC in connection with such a termination, and if the termination is a complete, rather than a partial, termination of the Fixed Rate Swap then in effect, it will for purposes of this Lease constitute a termination of the Fixed Rate Lock itself. Further, if BNPPLC is charged penalties or interest because of its failure to make a timely payment required under the Fixed Rate Swap, and if BNPPLC’s failure to make the timely payment was caused by NAI’s failure to make a timely payment of Base Rent or other amounts due hereunder or under other Operative
 
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Documents, then such penalties or interest will constitute Losses against which BNPPLC is entitled to be indemnified pursuant to subparagraph 5(C). If a Fixed Rate Lock is terminated as provided in this subparagraph, NAI shall have no right to require BNPPLC to enter into another Interest Rate Swap in order to establish a new fixed rate.
     (D)      Additional Rent. All amounts which NAI is required to pay to or on behalf of BNPPLC pursuant to this Lease, together with every charge, premium, interest and cost set forth herein which may be added for nonpayment or late payment thereof, will constitute rent (all such amounts, other than Base Rent, are herein called “Additional Rent”; and, collectively, Base Rent and Additional Rent are herein sometimes called “Rent”).
     (E)      Administrative Fees. In addition to other amounts payable by NAI hereunder, on or before each anniversary of the Effective Date after the Completion Date and prior to the Designated Sale Date, NAI must pay BNPPLC an annual administrative agency fee (an “Administrative Fee”) as provided in the Closing Letter. Each payment of an Administrative Fee will represent Additional Rent for the first Base Rent Period during which it first becomes due.
     (F)      No Demand or Setoff. Except as expressly provided herein, NAI must pay all Rent without notice or demand and without counterclaim, deduction, setoff or defense.
     (G)      Default Interest and Order of Application. All Rent will 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. BNPPLC may 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 BNPPLC elects.
     (H)      Calculations by BNPPLC Are Conclusive. All calculations by BNPPLC of Base Rent, Additional Rent or any amount needed to calculate Base Rent (including the Effective Rate for any Base Rent Period and the Lease Balance) or Additional Rent will, in the absence of clear and demonstrable error, be conclusive and binding upon NAI.
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 BNPPLC and NAI that Base Rent and other payments herein specified will be absolutely net to BNPPLC and that NAI must pay all costs, expenses and obligations of every kind relating to the Property or this Lease which may arise or become due. Further, it is understood that all amounts payable by NAI to BNPPLC under this Lease and the other Operative Documents are expressed as minimum payments to be made net of any deduction
 
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\

or withholding required under any Applicable Laws.
     (B)      No Termination. Except as expressly provided in this Lease itself, this Lease will not terminate, nor will NAI have any right to terminate this Lease, nor will NAI be entitled to any abatement of or setoff against the Rent, nor will the obligations of NAI under this 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 BNPPLC under this Lease or any of the other Operative Documents or any other agreement to which BNPPLC 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 BNPPLC 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) NAI’s ownership of any interest in the Property, or (ix) 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 hereunder be separate and independent of the covenants and agreements of BNPPLC, that Base Rent and all other sums payable by NAI hereunder continue to be payable in all events and that the obligations of NAI hereunder continue unaffected, unless the requirement to pay or perform the same have been terminated or limited pursuant to an express provision of this 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 “warranty of suitability” or other warranties implied as a matter of law) (i) to quit, terminate or surrender this 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) will 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 BNPPLC’s failure to remove a Lien Removable by BNPPLC or because of any other default by BNPPLC under this Lease: (i) the recovery of monetary damages in the case of any default that continues beyond the period for cure provided in Paragraph 16, (ii) injunctive relief in case of the violation, or attempted or threatened violation, by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Lease which are binding upon BNPPLC (including the confidentiality provisions set forth in subparagraph 22(B) below), or (iii) a decree compelling performance by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Lease which are binding upon BNPPLC.
 
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     (C)     Characterization of this Lease.
           (1)     Both NAI and BNPPLC intend that (A) for the purposes of determining the proper accounting for this Lease by NAI, BNPPLC will be treated as the owner and landlord of the Property and NAI will be treated as the tenant of the Property, and (B) for income tax purposes and commercial law (including real estate and bankruptcy law) and regulatory purposes, (1) this Lease and the other Operative Documents will be treated as a financing arrangement, (2) BNPPLC will be deemed a lender making loans to NAI in the principal amount equal to the Lease Balance, which loans are secured by the Property, and (3) NAI will be treated as the owner of the Property and will be entitled to all tax benefits available to the owner of the Property. Consistent with such intent, by the provisions set forth in Exhibit B, NAI is granting to BNPPLC a lien upon and mortgaging and warranting title to a leasehold estate in the Land (the terms and conditions of which leasehold estate are as set forth in the Ground Lease) and the Improvements and all rights, titles and interests of NAI in and to other Property, WITH POWER OF SALE, to secure all obligations (monetary or otherwise) of NAI arising under or in connection with any of the Operative Documents. Without limiting the generality of the foregoing, NAI and BNPPLC desire that their intent as set forth in this subparagraph be given effect both in the context of any bankruptcy, insolvency or receivership proceedings concerning NAI or BNPPLC and in other contexts. Accordingly, NAI and BNPPLC expect that in the event of any bankruptcy, insolvency or receivership proceedings affecting NAI or BNPPLC or any enforcement or collection actions arising out of such proceedings, the transactions evidenced by this Lease and the other Operative Documents will be characterized and treated as loans made to NAI by BNPPLC, as an unrelated third party lender to NAI, secured by the Property.
           (2)     Notwithstanding the foregoing, NAI acknowledges and agrees that none of BNPPLC or the other Interested Parties has made, or will be deemed to have made, in the Operative Documents or otherwise, any representations or warranties concerning how this Lease and the other Operative Documents will be characterized or treated under applicable accounting rules, income tax, regulatory, commercial or real estate law, bankruptcy, insolvency or receivership law or any other rules or requirements concerning the tax, accounting or legal characteristics of the Operative Documents. NAI further acknowledges and agrees that it is sophisticated and knowledgeable regarding all such matters and that it has, as it deemed appropriate, obtained from and relied upon its own professional accountants, counsel and other advisors for such tax, accounting and legal advice concerning the Operative Documents.
           (3)     In any event, NAI will be required by subparagraph 5(C) below to indemnify and hold harmless BNPPLC from and against all additional taxes that may arise or become due because of any refusal of taxing authorities to recognize and give
 
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effect to the intention of the parties as set forth in subparagraph 4(C)(1) (“Unexpected Recharacterization Taxes”), including any additional income or capital gain tax that may become due because of payments to BNPPLC of the purchase price upon any sale under the Purchase Agreement resulting from any insistence of such taxing authorities that BNPPLC be treated as the “true owner” of the Property for tax purposes  (a “Forced Recharacterization”); provided, however, NAI will not be required to pay or reimburse Unexpected Recharacterization Taxes to the extent that they are, in any given tax year, eliminated or offset by actual savings to BNPPLC because of additional depreciation deductions or other tax benefits available to BNPPLC in the same year only by reason of the Forced Recharacterization (“Unexpected Tax Savings”). To the extent Unexpected Recharacterization Taxes are eliminated or offset by Unexpected Tax Savings in a given tax year, including the tax year in which any sale under the Purchase Agreement occurs (the “Year of Sale”), such Unexpected Recharacterization Taxes will constitute Excluded Taxes as provided in clause (D) of the definition thereof in the Common Definitions and Provisions Agreement. Also, for purposes of this provision, it is understood that any depreciation deductions first available to BNPPLC in tax years prior to the Year of Sale and resulting from a Forced Recharacterization (“Prior Year Depreciation Deductions”) will be considered “available to BNPPLC” in the Year of Sale (and thus will eliminate or offset any Unexpected Recharacterization Taxes resulting from the recapture of such Prior Year Depreciation Deductions upon a sale under the Purchase Agreement) to the extent that (A) such Prior Year Depreciation Deductions are not otherwise used to generate Unexpected Tax Savings or Unexpected Net Tax Benefits (as defined below), and (B) the tax laws and regulations applicable in the Year of Sale effectively permit BNPPLC to carry over the Prior Year Depreciation Deductions to the Year of Sale by allowing BNPPLC to carry over net operating losses from the years in which the Prior Year Depreciation Deductions were first available to BNPPLC to the Year of Sale.
           (4)     After any Forced Recharacterization, BNPPLC will make a reasonable effort to determine whether Unexpected Tax Savings exceed Unexpected Recharacterization Taxes in any given tax year (any such excess being hereinafter called an “Unexpected Net Tax Benefit”); and if BNPPLC does determine that an Unexpected Net Tax Benefit has been realized and the amount thereof, BNPPLC will notify NAI of the same and either credit the amount thereof against payments otherwise then due or to become due from NAI under this Lease or the other Operative Documents or pay the amount of such Unexpected Net Tax Benefit to NAI. It is understood, however, that the tax position of BNPPLC (and the consolidated tax group of which it is a part) may, in any given tax year, be such that no Unexpected Net Tax Benefit exists or can be determined with a reasonable effort on the part of BNPPLC. Therefore, BNPPLC makes no representation that NAI will receive any credits or payments pursuant to this provision after any Forced Recharacterization. Also, the determination by BNPPLC of the amount of any Unexpected Net Tax Benefit will be conclusive absent clear and manifest error, as
 
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will any determination by BNPPLC that the amount of any Unexpected Net Tax Benefit in a given tax year cannot be calculated with a reasonable effort. If NAI is dissatisfied with any such determination by BNPPLC prior to the Designated Sale Date, NAI will be entitled to accelerate the Designated Sale Date (as provided in clause (2) of the definition thereof), after which NAI may purchase or cause an Applicable Purchaser to purchase the Property on the accelerated Designated Sale Date pursuant to the Purchase Agreement.
5     Payment of Executory Costs and Losses Related to the Property.
       (A)     Local Impositions. Subject only to the exceptions listed in subparagraph 5(D) below, NAI must pay or cause to be paid prior to delinquency all Local Impositions. If requested by BNPPLC from time to time, NAI must furnish BNPPLC with receipts or other appropriate evidence showing payment of all Local Impositions at least ten days 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 Local Imposition, and pending such contest NAI will not be deemed in default under any of the provisions of this Lease because of the Local Imposition if (1) NAI diligently prosecutes such contest to completion in a manner reasonably satisfactory to BNPPLC, 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 must be concluded and the contested Local Impositions must be paid by NAI prior to the earliest of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC 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 BNPPLC (including the Property) may be seized or sold or any other action is taken or overtly threatened against BNPPLC or against any property owned or leased by BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price (when taken together with any Supplemental Payment paid by NAI pursuant to 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:
           (1)     If there is any increase in the cost to BNPPLC’s Parent or any Participant of agreeing to make or making, funding or maintaining advances to BNPPLC in connection with the Property because of any Banking Rules Change, then NAI must from time to time (after receipt of a request from BNPPLC’s Parent or such Participant as
 
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provided below) pay to BNPPLC for the account of BNPPLC’s Parent or such Participant, as the case may be, additional amounts sufficient to compensate BNPPLC’s Parent or the Participant for such increased cost. A certificate as to the amount of such increased cost, submitted to BNPPLC and NAI by BNPPLC’s Parent or the Participant, will be conclusive and binding upon NAI, absent clear and demonstrable error.
           (2)     BNPPLC’s Parent or any Participant may demand additional payments (“Capital Adequacy Charges”) if BNPPLC’s Parent or the 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 or for BNPPLC to permit BNPPLC to maintain BNPPLC’s investment in the Property. To the extent that BNPPLC’s Parent or any Participant demands Capital Adequacy Charges as compensation for the additional capital requirements reasonably allocable to such investment or advances, NAI must pay to BNPPLC for the account of BNPPLC’s Parent or the Participant, as the case may be, the amount so demanded.
           (3)     Notwithstanding the foregoing provisions of this subparagraph 5(B), NAI will not be obligated to pay any claim for compensation pursuant to this subparagraph 5(B) that arises or accrues (a) in the case of BNPPLC’s Parent, as a result of any change in the rating assigned to BNPPLC by rating agencies or bank regulators in regard to BNPPLC’s creditworthiness, record keeping or failure to comply with Applicable Laws (including U.S. banking regulations applicable to subsidiaries of a bank holding company), or (b) in the case of BNPPLC’s Parent or any Participant, more than nine months prior to the date NAI is notified of the intent of BNPPLC’s Parent or such Participant to make a claim for such charges; provided, that if the Banking Rules Change which results in a claim for compensation is retroactive, then the nine month period will be extended to include the period of the retroactive effect of such Banking Rules Change. Further, BNPPLC will cause BNPPLC’s Parent and any Participant that is an Affiliate of BNPPLC to use commercially reasonable efforts to reduce or eliminate any claim for compensation pursuant to this subparagraph 5(B), including a change in the office of BNPPLC’s Parent or such Participant through which it provides and maintains Funding Advances if such change will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of BNPPLC’s Parent or such Participant, be otherwise disadvantageous to it. It is understood that NAI may also request similar commercial reasonable efforts on the part of any Participant that is not an Affiliate of BNPPLC, but if a claim for additional compensation by any such Participant is not eliminated or waived, then NAI may request that BNPPLC replace such Participant as provided in Paragraph 6. Nothing in this subparagraph will be construed to require BNPPLC’s Parent or any Participant to create any new office through which to make or maintain Funding Advances.
 
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           (4)     Any amount required to be paid by NAI under this subparagraph 5(B) will be due ten days after a notice requesting such payment is received by NAI from BNPPLC’s Parent or the applicable Participant.
       (C)     NAI’s Payment of Other Losses; General Indemnification. Subject only to the exceptions listed in subparagraph 5(D) below:
           (1)     Agreement to Indemnify. As directed by BNPPLC, NAI must pay, reimburse, indemnify, defend, protect and hold harmless BNPPLC and all other Interested Parties from and against all Losses (including Environmental Losses) asserted against or incurred or suffered by any of them at any time and from time to time by reason of, in connection with, arising out of, or in any way related to the following:
  •   the ownership or alleged ownership of any interest in the Property or the Rents;
 
  •   the purchase, design, construction, preparation, installation, inspection, delivery, non-delivery, acceptance, rejection, possession, use, operation, maintenance, management, rental, lease, sublease, repossession, condition (including defects, whether or not discoverable), destruction, repair, alteration, modification, restoration, addition or substitution, storage, transfer of title, redelivery, return, sale or other disposition of all or any part of or interest in the Property;
 
  •   the imposition of any Lien (or incurring of any liability to refund or pay over any amount as a result of any Lien) against all or any part of or interest in the Property;
 
  •   any failure of the Property or NAI itself to comply with Applicable Laws;
 
  •   Permitted Encumbrances or any violation thereof;
 
  •   Hazardous Substance Activities, including those occurring prior to the Term;
 
  •   the negotiation, administration or enforcement of the Operative Documents or the Participation Agreement;
 
  •   the making or maintenance of Funding Advances;
 
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  •   any Interest Rate Swap that BNPPLC enters into as described in subparagraph 3(B)(4) of this Lease;
 
  •   the breach by NAI of this Lease, any other Operative Document or any other document executed by NAI pursuant to or in connection with any Operative Document;
 
  •   any obligations of BNPPLC under the Closing Certificate or the Ground Lease; or
 
  •   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.
NAI’s obligations under this indemnity will apply whether or not any Interested Party is also indemnified as to the applicable Loss by another Interested Party and whether or not the Loss arises or accrues because of any condition of the Property or other circumstance concerning the Property prior to the Effective Date.
Further, in the event, for income tax purposes, an Interested Party must include in its taxable income any payment or reimbursement from NAI which is required by this indemnity (in this provision, the “Original Indemnity Payment”), and yet the Interested Party is not entitled during the same taxable year to a corresponding and equal deduction from its taxable income for the Loss paid or reimbursed by such Original Indemnity Payment (in this provision, the “Corresponding Loss”), then NAI must also pay to such Interested Party on demand the additional amount (in this provision, the “Additional Indemnity Payment”) needed to gross up the Original Indemnity Payment for any and all resulting additional income taxes. That is, NAI must pay an Additional Indemnity Payment as is needed so that the Corresponding Loss (computed net of the reduction, if any, of the Interested Party’s income taxes because of credits or deductions that are attributable to the Interested Party’s payment or deemed payment of the Corresponding Loss and that are recognized for tax purposes in the same taxable year during which the Interested Party must recognize the Original Indemnity Payment as income) will not exceed the difference computed by subtracting (i) all income taxes (determined for this purpose based on the highest marginal income tax rates charged to corporations by federal, state and local tax authorities, as applicable, for the relevant period or periods) imposed because of the receipt or constructive receipt of the Original Indemnity Payment and the Additional Indemnity Payment, from (ii) the sum of the Original Indemnity Payment and the Additional Indemnity Payment. (With regard to any payment or reimbursement of an Original Indemnity Payment, “After Tax Basis” means that such payment or reimbursement is or will be made together with the additional amount needed
 
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to gross up such Original Indemnity Payment as described in this provision.)
           (2)     Scope of Indemnities and Releases. Every indemnity and release provided in this Lease and the other Operative Documents for the benefit of BNPPLC or other Interested Parties, including the indemnity set forth in subparagraph 5(C)(1), will apply even if and when the subject matter of the indemnity or release arises out of or results from the negligence or strict liability of BNPPLC or any other Interested Party. Further, all such indemnities and releases will apply even if insurance obtained by NAI or required of NAI by this Lease or the other Operative Documents is not adequate to cover Losses against or for which the indemnities and releases are provided. (However, NAI’s liability for any failure to obtain insurance required by this Lease or the other Operative Documents will not be limited to Losses against which indemnities are provided, it being understood that the parties have agreed upon insurance requirements for reasons that extend beyond providing a source of payment for Losses against which BNPPLC and other Interested Parties may be indemnified by NAI.)
           (3)     Nonexclusive List of Costs Covered by Indemnity. Costs and expenses for which NAI is responsible on an After Tax Basis pursuant to this subparagraph 5(C) will include all of the following, except to the extent that the following are included in the Initial Advance or in the calculation of any Break Even Price or Make Whole Amount paid to BNPPLC pursuant to the Purchase Agreement:
  •   appraisal fees;
 
  •   Uniform Commercial Code search fees;
 
  •   filing and recording fees;
 
  •   inspection fees and expenses;
 
  •   brokerage fees and commissions;
 
  •   survey fees;
 
  •   title policy premiums and escrow fees;
 
  •   any Breakage Costs or Fixed Rate Settlement Amount;
 
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  •   Attorneys’ Fees incurred by BNPPLC with respect to the drafting, negotiation, administration or enforcement of this Lease or the other Operative Documents; and
 
  •   all taxes (except Excluded Taxes) related to the Property or to the transactions contemplated in the Operative Documents.
Such costs and expenses will also include all rent or other payments required of BNPPLC under the Ground Lease, so long as this Lease remains in force or NAI remains in possession of the Property or is entitled to possession by this Lease. (It is understood, however, that with respect to payments which are required by the Ground Lease from BNPPLC to NAI and for which NAI is required to reimburse BNPPLC, such payments and the corresponding reimbursements will be offset and deemed paid by offsetting book entries rather than by an actual transfer of funds back and forth between the parties.)
          (4)     Defense and Settlement of Indemnified Claims.
          (a)     By notice to NAI BNPPLC may direct NAI to assume on behalf of BNPPLC or any other Interested Party and to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation included in or concerning any Loss for which NAI is responsible pursuant to subparagraph 5(C)(1). NAI must promptly comply with any such direction using counsel selected by NAI and reasonably satisfactory to BNPPLC or the other Interested Party, as applicable, to represent BNPPLC or the other Interested Party, as applicable. In the event NAI fails to promptly comply with any such direction from BNPPLC, BNPPLC or any other affected Interested Party may contest or settle the claim, proceeding or investigation using counsel of its own selection at NAI’s expense, subject to subparagraph 5(D)(3) if that subparagraph is applicable.
          (b)     Also, although subparagraphs 5(D)(3) and 5(D)(4) will apply to tort claims asserted against any Interested Party related to the Property, the right of an Interested Party to be indemnified pursuant to this subparagraph 5(C) for taxes or other payments made to satisfy governmental requirements (“Government Mandated Payments”) will not be conditioned in any way upon NAI having consented to or approved of, or having been provided with an opportunity to defend against or contest, such Government Mandated Payments. In all cases, however, including those which may involve Government Mandated Payments, the rights of each Interested Party to be indemnified will be subject to subparagraph 5(D)(5).
 
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           (5)     Payments Due. Any amount to be paid by NAI under this subparagraph 5(C) will be due ten days after a notice requesting such payment is given to NAI, subject to any applicable contest rights expressly granted to NAI by other provisions of this Lease.
           (6)     Survival. NAI’s obligations under this subparagraph 5(C) will survive the termination or expiration of this Lease with respect to Losses suffered by any Interested Party on or prior to, or by reason of any actual or alleged occurrence or circumstances on or prior to, the later of the dates upon which (a) this Lease terminates or expires, or (b) NAI surrenders possession and control of the Property.
     (D)     Exceptions and Qualifications to Indemnities.
           (1)     Exceptions. BNPPLC acknowledges and agrees that nothing in Paragraph 4 or the preceding subparagraphs of this Paragraph 5 will be construed to require NAI to pay or reimburse:
          •     Excluded Taxes; or
          •     Losses incurred or suffered by any Interested Party to the extent proximately caused by (and attributed by any applicable principles of comparative fault to) the Established Misconduct of that Interested Party; or
          •     Losses that result from any Liens Removable by BNPPLC; or
          •     transaction expenses (including Attorneys’ Fees) incurred by any of the Participants in connection with the drafting, negotiation or execution of the Participation Agreement (or supplements making them parties thereto) or in connection with any due diligence Participants may undertake before entering into the Participation Agreement; or
          •     Local Impositions or other Losses contested, if and so long as they are contested, by NAI in accordance with any of the provisions of this Lease or other Operative Documents which expressly authorize such contests; or
          •     transaction expenses or other Losses caused by or necessary to accomplish any conveyance by BNPPLC to BNPPLC’s Parent or a Qualified Affiliate which constitutes a Permitted Transfer only by reason of clause (3) of the definition of Permitted Transfer in the Common Definitions and Provisions Agreement; or
 
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          •     any amount which may from time to time be payable by BNPPLC to any Participant representing the excess of “Base Rent” as defined in the Participation Agreement over Base Rent as defined in and calculated pursuant to this Lease and the Common Definitions and Provisions Agreement; or
          •     any decline in the value of the Property solely by reason of decline in general market conditions and not because of any breach of this Lease or other Operative Documents by NAI.
Further, without limiting BNPPLC’s rights (as provided in other provisions of this Lease and other Operative Documents) to include the following in the calculation of the Lease Balance, the Break Even Price and the Make Whole Amount (as applicable) or to collect Base Rent, a Supplemental Payment and other amounts, the calculation of which depends upon the Lease Balance, BNPPLC acknowledges and agrees that nothing in Paragraph 4 or the preceding subparagraphs of this Paragraph 5 will be construed to require NAI to pay or reimburse an Interested Party for costs paid by BNPPLC with the proceeds of the Initial Advance as part of the Transaction Expenses or with Construction Advances.
           (2)     Notice of Claims. If an Interested Party receives a written notice of a claim for taxes or a claim alleging a tort or other unlawful conduct that the Interested Party believes is covered by the indemnity in subparagraph 5(C)(1), 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 will not excuse NAI from its obligations under subparagraph 5(C)(1); except that if such failure continues for more than fifteen days after the notice is received by such Interested Party and NAI is unaware of the matters described in the notice, with the result that NAI is unable to assert defenses or to take other actions which could minimize its obligations, then NAI will be excused from its obligation to indemnify such Interested Party (and any Affiliate of such Interested Party) against Losses, if any, which would not have been incurred or suffered but for such failure. For example, if BNPPLC fails to provide NAI with a copy of a notice of an overdue tax obligation covered by the indemnity set out in subparagraph 5(C)(1) and NAI is not otherwise already aware of such obligation, and if as a result of such failure BNPPLC 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 BNPPLC (or any Affiliate of BNPPLC) to pay the excess.
           (3)     Withholding of Consent to Settlements Proposed by NAI. With regard to any tort claim against an Interested Party for which NAI undertakes to defend the Interested Party as provided in subparagraph 5(C)(4)(a), if the Interested Party unreasonably refuses to consent to a settlement of the claim which is proposed by NAI
 
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and which will meet the conditions listed in the next sentence, NAI’s liability for the cost of continuing the defense and for any other amounts payable in respect of the claim will be limited to the total cost for which the settlement proposed by NAI would have been accomplished but for the unreasonable refusal to consent. Any such settlement proposed by NAI must meet the following conditions: (A) at the time of the settlement by NAI, NAI must pay all amounts required to release the Interested Party and its property interests from any further obligation for or liens securing the applicable claim and from any interest, penalties and other related liabilities, and (B) the settlement or compromise must not involve an admission of fraud or criminal wrongdoing or result in some other material adverse consequence to the Interested Party.
           (4)     Settlements Without the Prior Consent of NAI.
           (a)     Except as otherwise provided in subparagraph 5(D)(4)(b), if any Interested Party settles any tort claim for which it is entitled to be indemnified by NAI without NAI’s consent, then NAI may, by notice given to the Interested Party no later than ten days after NAI is notified of the settlement, elect to pay Reasonable Settlement Costs to the Interested Party in lieu of a payment or reimbursement of actual settlement costs. (With respect to any tort claim asserted against an Interested Party, “Reasonable Settlement Costs” means the maximum amount that a prudent Person in the position of the Interested Party, but able to pay any amount, might reasonably agree to pay to settle the tort claim, taking into account the nature and amount of the claim, the relevant facts and circumstances known to such Interested Party at the time of settlement and the additional Attorneys Fees’ and other costs of defending the claim which could be anticipated but for the settlement.) After making an election to pay Reasonable Settlement Costs with regard to a particular tort claim and a particular Interested Party, NAI will have no right to rescind or revoke the election, despite any subsequent determination that Reasonable Settlement Costs exceed actual settlement costs. It is understood that Reasonable Settlement Costs may be more or less than actual settlement costs and that a final determination of Reasonable Settlement Costs may not be possible until after NAI must decide between paying Reasonable Settlement Costs or paying actual settlement costs.
           (b)     Notwithstanding the foregoing, NAI will have no right to elect to pay Reasonable Settlement Costs in lieu of actual settlement costs if an Interested Party settles claims without NAI’s consent at any time when an Event of Default has occurred and is continuing or after a failure by NAI to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation as provided in subparagraph 5(C)(4)(a).
 
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           (c)     Except as provided in this subparagraph 5(D)(4), no settlement by any Interested Party of any claim made against it will excuse NAI from any obligation to indemnify the Interested Party against the settlement costs or other Losses suffered by reason of, in connection with, arising out of, or in any way related to such claim.
           (5)     No Authority to Admit Wrongdoing by NAI or to Bind NAI to any Settlement. No Interested Party will under any circumstances have any authority to bind NAI to an admission of wrongdoing or responsibility to any third party claimant with regard to matters for which such Interested Party claims a right to indemnification from NAI under this Lease.
Further, nothing herein contained, including the foregoing provisions concerning settlements by Interested Parties of indemnified Losses, will be construed as authorizing any Interested Party to bind NAI to do or refrain from doing anything to satisfy a third party claimant. If, for example, a claim is made by a Governmental Authority that NAI must refrain from some particular conduct on or about the Land in order to comply with Applicable Laws, BNPPLC cannot bind NAI (and will not purport to bind NAI) to any agreement to refrain from such conduct or otherwise prevent NAI from continuing to contest the claim by reason of any provision set forth herein.
Moreover, so long as this Lease continues, no Interested Party may settle any claim involving the Property by executing any agreement (including any consent decree proposed by any Governmental Authority) which purports to prohibit, limit or impose conditions upon any use of the Property by NAI without the prior written consent of NAI. In the case of any proposed settlement of a claim asserted by a Governmental Authority against BNPPLC, NAI will not unreasonably withhold such consent. However, for purposes of determining whether it is reasonable for NAI to withhold such consent, any diligent ongoing undertaking by NAI to contest such the claim on behalf of BNPPLC will be relevant.
Subject to the foregoing provisions in this subparagraph 5(D)(5), any Interested Party may agree for itself (and only for itself) to act or refrain from doing anything as demanded or requested by a third party claimant; provided, however, in no event will such an agreement impede NAI from continuing to exercise its rights to operate its business on the Property or elsewhere in any lawful manner deemed appropriate by NAI, nor will any such agreement limit or impede NAI’s right to contest claims raised by any third party claimants (including Governmental Authorities) that NAI is not complying or has not complied with Applicable Laws.
           (6)     Defense of Tax Claims. This Lease does not grant to NAI any right to
 
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control the defense of or contest any tax claim for which an Interested Party may have a right to indemnity under subparagraph 5(C), other than the right to contest Local Impositions as provided in subparagraph 5(A), nor does this Lease grant to NAI the right to inspect the income tax returns, books or records of any Interested Party. Nevertheless, if a tax claim is asserted against BNPPLC for which it is entitled to be indemnified pursuant to subparagraph 5(C), BNPPLC will consider in good faith any defenses and strategies proposed by NAI with regard to such claim. Further, if any such tax claim is asserted against BNPPLC which involves assertions that apply not only to the transactions contemplated by this Lease, but also to other similar transactions in which BNPPLC has participated, then BNPPLC will not settle the claim on a basis that results in a disproportionately greater tax burden with respect to the transactions contemplated herein than with respect to such other similar transactions. For example, if taxing authorities assert that both this Lease and other comparable lease agreements made by BNPPLC are not financing arrangements as intended by the parties thereto, and on the basis of such assertions the taxing authorities claim that BNPPLC owes income taxes which are not Excluded Taxes, then BNPPLC will not settle the claim in a manner that would cause NAI’s liability under subparagraph 5(C) to be disproportionately greater than the indemnity obligation of another similarly situated tenant of BNPPLC under another lease agreement with an indemnity provision comparable to subparagraph 5(C). Also, BNPPLC will not grant to another tenant the right to dictate to BNPPLC the tax position BNPPLC must take in regard to the Property or the Operative Documents, except that BNPPLC may include provisions comparable to the foregoing in other leases to assure other tenants against a disproportionately greater burden than NAI will bear in regard to any settlement of a tax claim by BNPPLC.
           (7)     Indemnified Parties Other than Landlord. As a condition to making any indemnity payment for Losses directly to any Interested Party other than BNPPLC itself, NAI may require the Interested Party to confirm and agree in writing that it will be obligated to make the payments to NAI as provided in subparagraph 5(E)(2) in the event the Interested Party subsequently receives a refund of the Losses covered by such indemnity payment.
     (E)     Refunds and Credits Related to Losses Paid by NAI.
           (1)     If BNPPLC receives a refund of any Losses paid, reimbursed or advanced by NAI pursuant to this Paragraph 5 that has not already been accounted for in the After Tax Basis calculation described in subparagraph 5(C)(1), BNPPLC will promptly pay to NAI the amount of such refund, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of the refund and such payment to NAI; provided, that the amount payable to NAI will not exceed the amount of the indemnity payment in respect of such refunded Losses that was made by NAI. If it is subsequently determined that BNPPLC
 
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was not entitled to the refund, the portion of the refund that is repaid or recaptured will be treated as a Loss for which NAI must indemnify BNPPLC pursuant to this Paragraph 5 without regard to subparagraph 5(D). If, in connection with any such refund, BNPPLC also receives an amount representing interest on such refund, BNPPLC will promptly pay to NAI the amount of such interest, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of the receipt or accrual of the interest and as a result of such payment to NAI; provided, that BNPPLC will not be required to make any such payment in respect of the interest (if any) that is fairly attributable to a period for which NAI had not yet paid, reimbursed or advanced the Losses refunded to BNPPLC.
           (2)     If any Interested Party (other than BNPPLC itself) receives a refund of any Loss paid, reimbursed or advanced by NAI pursuant to this Paragraph 5 that has not already been accounted for in the After Tax Basis calculation described in subparagraph 5(C)(1), NAI may demand (and enforce the demand pursuant to any agreement previously delivered by the Interested Party as provided in subparagraph 5(D)(7)) that such Interested Party promptly pay to NAI the amount of such refund, plus or minus any net tax benefits or detriments realized by such Interested Party as a result of the refund and such payment to NAI; provided, that the amount payable to NAI will not exceed the amount of the indemnity payment in respect of such refunded Losses that was made by NAI. If it is subsequently determined that such Interested Party was not entitled to the refund, the portion of the refund that is repaid or recaptured will be treated as a Loss for which NAI must indemnify such Interested Party pursuant to this Paragraph 5 without regard to subparagraph 5(D). If, in connection with any such refund, such Interested Party also receives an amount representing interest on such refund, NAI may demand that such Interested Party promptly pay to NAI the amount of such interest, plus or minus any net tax benefits or detriments realized by such Interested Party as a result of the receipt or accrual of the interest and as a result of such payment to NAI; provided, that such Interested Party will not be required to make any such payment in respect of the interest (if any) which is fairly attributable to a period before NAI paid, reimbursed or advanced the Losses refunded to such Interested Party.
           (3)     With respect to Losses incurred or suffered by an Interested Party and paid or reimbursed by NAI on an After Tax Basis, if taxes of such Interested Party which are not subject to indemnification by NAI are reduced because of such Losses (whether by reason of a deduction, credit or otherwise) and such reduction was not taken into account in the calculation of the required reimbursement or payment by NAI, then for purposes of this subparagraph 5(E) such reduction will be considered a “refund”.
           (4)     Notwithstanding the foregoing, in no event will BNPPLC or any other Interested Party be required to make any payment to NAI pursuant to this subparagraph 5(E) when an Event of Default has occurred and is continuing.
 
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       (F)     Reimbursement of Excluded Taxes Paid by NAI. If NAI is ever required (by laws imposing withholding tax obligations or otherwise) to pay Excluded Taxes that any Interested Party should have paid, but failed to pay when due, in connection with this Lease, such Interested Party must reimburse NAI for such Excluded Taxes (together with any additional amount required to preserve for NAI the full amount of such reimbursement after related taxes are considered, calculated in the same manner that an Additional Indemnity Payment would be calculated under subparagraph 5(C)(1) in the case of a reimbursement owed by NAI to an Interested Party) within 30 days after such Interested Party’s receipt of a written demand for such reimbursement by NAI.
       (G)     Collection on Behalf of Participants. BNPPLC may, on behalf of any Participant or its Affiliates, collect any amount that becomes due from NAI to such Participant or its Affiliates pursuant to subparagraph 5(B) or 5(C), in which case BNPPLC will be obligated to such Participant in respect of the collected amount as provided in the Participation Agreement. Alternatively, as provided in the Participation Agreement, BNPPLC may assign the right to collect any such amount to such Participant, in which case the Participant will be entitled to collect the same directly from NAI.
6     Replacement of Participants.
       (A)     NAI’s Right to Substitute Participants. During the Term, so long as no Event of Default exists and subject to the terms and conditions set forth in subparagraph 6(B), if any Participant which is not an Affiliate of BNPPLC (in this Paragraph, the “Unrelated Participant”) (1) declines to approve the Rent for an extension of this Lease under subparagraph 1(D), or (2) makes a demand for compensation under subparagraph 5(B), NAI may request that BNPPLC execute Participation Agreement Supplements (as defined in the Participation Agreement) as needed to transfer the rights of the Unrelated Participant thereunder to one or more new Participants (in this subparagraph, whether one or more, the “New Participants”) designated by NAI who are willing and able to accept such interests and to make Funding Advances as necessary to terminate the Unrelated Participant’s right to payments in respect of Base Rent and the Lease Balance under the Operative Documents. BNPPLC will execute such Participation Agreement Supplements within ten Business Days of the later to occur of such request by NAI and satisfaction of all conditions set forth in subparagraph 6(B).
       (B)     Conditions to Replacement of Participants. NAI and BNPPLC, working together, will endeavor in good faith to identify New Participants that are willing to replace any Unrelated Participant described in the preceding subparagraph and that are acceptable to both NAI and BNPPLC. (The term New Participants may include new parties to the Participation Agreement and it may include existing Participants that increase their Funding Advances as needed to replace the Unrelated Participant.) However, nothing contained herein will be construed to require BNPPLC itself to increase its Percentage (as defined in the Participation Agreement) to
 
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replace an Unrelated Participant, and nothing herein contained will be construed to require BNPPLC itself to provide or to obtain from its Affiliates Funding Advances to replace the Funding Advances that an Unrelated Participant has provided or agreed to provide. Also, New Participants will be subject to the approval of BNPPLC; provided, that BNPPLC must not unreasonably withhold its approval for the substitution of any New Participant proposed by NAI for any Unrelated Participant so long as (i) no Event of Default has occurred and is continuing, (ii) BNPPLC determines it can give such approval without violating Applicable Laws, without breaching its obligations under the Participation Agreement, and without waiving rights or remedies it has under this Lease or the other Operative Documents, (iii) BNPPLC or BNPPLC’s Parent is not involved in any material litigation adverse to the New Participant in any pending lawsuit or other legal proceeding, and (iv) all of the conditions listed in the next sentence are satisfied. Any substitution of New Participants for an Unrelated Participant as provided in this Paragraph will be subject to the following conditions:
           (1)     the proposed substitution does not include a waiver of rights by BNPPLC against any Unrelated Participant or require BNPPLC to pay any amounts out-of-pocket that are not reimbursed concurrently by NAI or the New Participants;
           (2)     the New Participants must become parties to the Participation Agreement (by executing supplements to that agreement as provided therein) and must provide all funds due to the Unrelated Participant being replaced because of the termination of the Unrelated Participant’s rights to receive payments in respect of Net Cash Flow and Net Sales Proceeds (both as defined in the Participation Agreement); and
           (3)     the obligations of BNPPLC to the New Participants must not exceed the obligations that BNPPLC would have had to the Unrelated Participant if there had been no substitution, other than those for which NAI is liable.
Upon consummation of any such substitution NAI must pay to the replaced Participant Breakage Costs, if any, incurred by the replaced Participant because of the substitution.
7     Items Included in the Property
       (A)     Status of Property. All Improvements on the Land from time to time will constitute “Property” covered by this Lease. Further, as provided in the Construction Agreement, to the extent heretofore or hereafter acquired by NAI (in whole or in part) with any portion of the Initial Advance or with any Construction Advances or with other funds for which NAI has received or receives reimbursement from such funds previously advanced, the Initial Advance or Construction Advances, all furnishings, furniture, chattels, permits, licenses, franchises, certificates and other personal property of whatever nature will be deemed to have been acquired on behalf of BNPPLC by NAI and will constitute “Property” covered by this Lease, as will all
 
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renewals or replacements of or substitutions for any such Property. Upon request of BNPPLC, but not more often than once in any period of twelve consecutive months, NAI will deliver to BNPPLC an inventory describing all significant items of Personal Property (and, in the case of Tangible Personal Property, showing the make, model, serial number and location thereof) with a certification by NAI that such inventory is true and complete and that all items specified in the inventory are covered by this Lease free and clear of any Lien other than the Permitted Encumbrances or Liens Removable by BNPPLC.
       (B)     Changes in the Land Covered by the Ground Lease. Upon any amendment of the definition of the “Land” covered by the Ground Lease, the “Land” as defined in and covered by this Lease and the other Operative Documents will also be so amended.
8     Environmental.
       (A)     Environmental Covenants by NAI.
                  (1)     NAI will not conduct or permit others to conduct Hazardous Substance Activities on the Property, except Permitted Hazardous Substance Use and Remedial Work.
                  (2)     NAI will not discharge or permit the discharge of anything (including Permitted Hazardous Substances) on or from the Property that would require any permit under applicable Environmental Laws, other than (i) storm water runoff, (ii) waste water discharges through a publicly owned treatment works, (iii) discharges that are a necessary part of any Remedial Work, and (iv) other similar discharges consistent with the definition herein of Permitted Hazardous Substance Use which do not significantly increase the risk of Environmental Losses to BNPPLC, in each case in strict compliance with Environmental Laws.
                  (3)     Following any discovery that Remedial Work is required by Environmental Laws or is otherwise reasonably believed by BNPPLC to be required, and to the extent not inconsistent with the other provisions of this Lease, NAI must promptly perform and diligently and continuously pursue such Remedial Work.
                  (4)     If requested by BNPPLC in connection with any Remedial Work required by this subparagraph, NAI must retain environmental consultants reasonably acceptable to BNPPLC 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 must implement
 
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any such additional measures to the extent required with respect to the Property by Environmental Laws or otherwise reasonably believed by BNPPLC to be required.
       (B)     Right of BNPPLC to do Remedial Work Not Performed by NAI. If NAI’s failure to perform any Remedial Work required as provided in subparagraph 8(A) continues beyond the Environmental Cure Period (as defined below), BNPPLC 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 BNPPLC pursuant to the preceding sentence (including any removal of Hazardous Substances), the cost thereof will be a demand obligation owing by NAI to BNPPLC. As used in this subparagraph, "Environmental Cure Period” means the period ending on the earliest of: (1) ninety days after NAI is notified of the breach which must be cured within such period or, if during such ninety days NAI initiates the Remedial Work and diligently and continuously pursues it in accordance with a timetable accepted and approved by applicable Governmental Authorities (which may include delays waiting for permits or other authorizations), the date by which such Remedial Work is to be completed according to such timetable, (2) the date that any writ or order is issued for the levy or sale of any property owned by BNPPLC (including the Property) because of such breach, (3) the date that any criminal action is instituted or overtly threatened against BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a net price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
       (C)     Environmental Inspections and Reviews. BNPPLC reserves the right to retain environmental consultants to review any report prepared by NAI or to conduct BNPPLC’s own investigation to confirm whether NAI is complying with the requirements of this Paragraph 8. NAI grants to BNPPLC and to BNPPLC’s agents, employees, consultants and contractors the right to enter upon the Property during reasonable hours and after reasonable notice to inspect the Property and to perform such tests as BNPPLC deems reasonably necessary or appropriate to review or investigate Hazardous Substances in, on, under or about the Property or any discharge or reasonably suspected discharge of Hazardous Substances into groundwater or surface water from the Property. NAI must promptly reimburse BNPPLC for the fees of its environmental consultants and the costs of any such inspections and tests; provided, however, BNPPLC’s right to reimbursement for the fees of any consultant engaged as provided in this subparagraph or for the costs of any inspections or test undertaken as provided in this subparagraph will be limited to the following circumstances: (1) an Event of Default has occurred and is continuing at the time of such engagement, tests or inspections; (2) NAI has not exercised the Purchase Option and BNPPLC has retained the consultant to establish the condition of the Property prior to any conveyance thereof pursuant to the Purchase Agreement or to the expiration of this Lease; (3) BNPPLC has retained the consultant to satisfy any regulatory requirements applicable to
 
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BNPPLC or its Affiliates; (4) BNPPLC has retained the consultant because it has reason to believe, and does in good faith believe, that a significant violation of Environmental Laws concerning the Property has occurred; or (5) BNPPLC has retained the consultant because BNPPLC has been notified of a possible violation of Environmental Laws concerning the Property by any Governmental Authority having jurisdiction.
       (D)     Communications Regarding Environmental Matters.
           (1)     NAI must promptly advise BNPPLC and Participants of (i) any discovery known to NAI of any event or circumstance which would render any of the representations of NAI herein or in any of the other Operative Documents 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, (ii) 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, (iii) any discovery known to NAI of any occurrence or condition on any real property adjoining or in the vicinity of the Property which would or could reasonably be expected to cause the Property or any part thereof to be subject to any ownership, occupancy, transferability or use restrictions under Environmental Laws, or (iv) any investigation or inquiry known to NAI 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 will deliver to BNPPLC within thirty days after BNPPLC’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 BNPPLC may reasonably request.
           (2)     NAI will provide BNPPLC and Participants with copies of all material written communications with Governmental Authorities relating to the matters listed in the preceding clause (1). NAI will also provide BNPPLC and Participants 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.
           (3)     Prior to NAI’s submission of a communication to any 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
 
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any Remedial Work, NAI must, to the extent practicable, deliver to BNPPLC and Participants a draft of the proposed submission (together with the proposed date of submission), and in good faith assess and consider any comments of BNPPLC regarding the same. Promptly after BNPPLC’s request, NAI will meet with BNPPLC to discuss the submission, will provide any additional information reasonably requested by BNPPLC and will provide a written explanation to BNPPLC addressing the issues raised by comments (if any) of BNPPLC regarding the submission.
9     Insurance Required and Condemnation.
       (A)     Liability Insurance. Throughout the Term NAI must 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 Minimum Insurance Requirements. NAI must deliver and maintain with BNPPLC for each liability insurance policy required by this 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 Minimum Insurance Requirements.
       (B)     Property Insurance.
           (1)     Throughout the Term NAI must 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 Minimum Insurance Requirements. NAI must deliver and maintain with BNPPLC for each property insurance policy required by this 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 Minimum Insurance Requirements.
           (2)     If any of the Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance is required hereunder, (a) BNPPLC may, but will not be obligated to, make proof of loss if not made promptly by NAI after notice from BNPPLC, (b) each insurance company concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC (or, if so instructed by BNPPLC, to NAI) for application as required by Paragraph 10, and (c) BNPPLC will be entitled, in its own name or in the name of NAI or in the name of both, to settle, adjust or compromise any and all claims for loss, damage or destruction under any policy or policies of insurance; except that, if any such claim is for less than $1,000,000, if no 97-10/Meltdown Event has occurred and if no Event of Default has occurred and is continuing, NAI alone will have the right to settle, adjust or compromise the claim as NAI deems appropriate; and, except that, during the Term, so long as no
 
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Event of Default has occurred and is continuing, BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s intention to settle any such claim before settling it unless NAI has already approved of the settlement by BNPPLC.
           (3)     BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any insurance proceeds.
           (4)     If any casualty results in damage to or loss or destruction of the Property, NAI must give prompt notice thereof to BNPPLC and Paragraph 10 will 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 Lease, BNPPLC will 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 BNPPLC’s other remedies under the circumstances, BNPPLC may require NAI to reimburse BNPPLC for the cost of such insurance and to pay interest thereon computed at the Default Rate from the date such cost was paid by BNPPLC until the date of reimbursement 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 will promptly notify the other (provided, however, BNPPLC will have no liability for its failure to provide such notice) of the pendency of such proceedings. (As used herein, “condemnation of the Property” or words of like effect will include any indirect condemnation by means of a taking of the Land or the Existing Appurtenant Easements or any part thereof.) NAI must, at its expense, diligently prosecute any such proceedings and must consult with BNPPLC, its attorneys and experts and cooperate with them as reasonably requested in the carrying on or defense of any such proceedings. BNPPLC is hereby authorized, in its own name or in the name of NAI or in the name of both, at any time after a 97-10/Meltdown Event or when an Event of Default has occurred and is continuing, but not otherwise without 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. BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any such proceeds, judgments, decrees or awards.
       Notwithstanding the foregoing provisions of this subparagraph, if condemnation proceeds totaling not more than $1,000,000 are to be recovered as a result of a taking of less than all or substantially all of the Property, NAI may directly receive and hold such proceeds during the Term, so long as no Event of Default has occurred and is continuing and NAI applies such proceeds as required herein.
 
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       (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 BNPPLC or any other Interested Party to recover Losses for which NAI is compensated by insurance or would be compensated by the insurance contemplated in this 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 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 will govern the application of proceeds received by BNPPLC 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 (e.g.,damage resulting from a third party’s release of Hazardous Materials onto the Property); excluding, however, any funds paid to BNPPLC by BNPPLC’s Parent, by an Affiliate of BNPPLC or by any Participant that is made to compensate BNPPLC for any Losses BNPPLC may suffer or incur in connection with this Lease or the Property. Except as provided in subparagraph 10(D), NAI must promptly pay over to BNPPLC 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 BNPPLC from NAI or third parties, will be applied as follows:
           (1)     First, proceeds covered by this Paragraph 10 will be used to reimburse BNPPLC for any reasonable costs and expenses, including Attorneys’ Fees, that BNPPLC incurred to collect the proceeds.
           (2)     Second, the proceeds remaining after such reimbursement to BNPPLC (hereinafter, the “Remaining Proceeds”) will be applied, as hereinafter more particularly provided, either as a Qualified Prepayment or to reimburse NAI or BNPPLC for the actual out-of-pocket costs of repairing or restoring the Property. Until, however, any Remaining Proceeds received by BNPPLC are applied by BNPPLC as a Qualified Prepayment or applied by BNPPLC to reimburse costs of repairs to or restoration of the Property pursuant to this Paragraph 10, BNPPLC will hold and maintain such Remaining Proceeds as Escrowed Proceeds in an interest bearing account, and all interest earned on such account will be added to and made a part of such Escrowed Proceeds.
 
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       (B)     Advances of Escrowed Proceeds to NAI. Except as otherwise provided below in this Paragraph 10, BNPPLC will 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 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 BNPPLC to assure the completion of such repair or restoration with available funds. So long as any Lease Balance remains outstanding, however, BNPPLC will not 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 reasonably satisfactory to BNPPLC, it being understood that BNPPLC may retain and, after NAI has completed the applicable repair or restoration and been reimbursed for the out-of-pocket cost thereof, apply any such excess (or so much thereof as is needed to reduce the Lease Balance to zero) as a Qualified Prepayment.
       (C)     Application of Escrowed Proceeds as a Qualified Prepayment. During the Term, so long as no Event of Default has occurred and is continuing, BNPPLC will 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 BNPPLC 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 BNPPLC’s actual receipt of the notice, BNPPLC may postpone the date of the Qualified Prepayment to any date not later than five Business Days after BNPPLC’s receipt of the notice. In any event, BNPPLC may deduct Breakage Costs or any Fixed Rate Settlement Amount incurred in connection with any Qualified Prepayment from the Remaining Proceeds or other amounts available for application as the Qualified Prepayment, and NAI must reimburse BNPPLC upon request for any such Breakage Costs or Fixed Rate Settlement Amount that BNPPLC incurs but does not deduct.
       (D)     Right of NAI to Receive and Apply Remaining Proceeds Below a Certain Level. If, after the Completion Date, any condemnation of any portion of the Property or any casualty resulting in the diminution, destruction, demolition or damage to any portion of the Property will (in the good faith judgment of BNPPLC) reduce the then current “AS IS” market value by less than $1,000,000 and (in the good faith estimation of BNPPLC) be unlikely to result in Remaining Proceeds of more than $1,000,000, and if no 97-10/Meltdown Event has occurred and no Event of Default has occurred and is continuing, then BNPPLC will, upon NAI’s request, instruct the condemning authority or insurer, as applicable, to pay the Remaining Proceeds resulting therefrom directly to NAI. NAI must apply any such Remaining Proceeds to the repair or restoration of the Property to a safe and secure condition and to a value of no less than the value before taking or casualty.
       (E)     Special Provisions Applicable After a 97-10/Meltdown Event or an Event of Default. Notwithstanding the foregoing, after any 97-10/Meltdown Event, and when any Event of
 
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Default has occurred and is continuing, BNPPLC will 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 BNPPLC in its sole discretion, either (A) to the reimbursement of NAI or BNPPLC for the out-of-pocket cost of repairing or restoring the Property, or (B) as Qualified Prepayments. Further, when any Event of Default has occurred and is continuing, if the Remaining Proceeds paid to BNPPLC with respect to any damage or destruction of the Property are reduced by reason of any insurance deductible or self-insured retention, NAI must pay to BNPPLC upon demand an additional amount equal to the full amount of such deductible or self insured retention, whereupon the additional amount paid will be added to the Remaining Proceeds and applied as such by BNPPLC in accordance with the provisions of this Lease.
       (F)     NAI’s Obligation to Restore. Regardless of the adequacy of any Remaining Proceeds available to NAI hereunder, if on or after the Completion 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 either (1) promptly restore or improve the Property or the remainder thereof to a value no less than the Lease Balance and to a reasonably safe and sightly condition, or (2) promptly restore the Property or remainder thereof to a reasonably safe and sightly condition and pay to BNPPLC for application as a Qualified Prepayment the amount (if any), as determined by BNPPLC, needed to reduce the Lease Balance to no more than the then current “AS IS” market value of the Property or remainder thereof.
       (G)     Takings of All or Substantially All of the Property on or after the Completion Date. In the event of any taking of all or substantially all of the Property on or after the Completion Date, BNPPLC will be entitled to apply all Remaining Proceeds (or so much thereof as is required to reduce the Lease Balance to zero) as a Qualified Prepayment. Any taking of so much of the Property as, in BNPPLC’s good faith judgment, makes it impracticable to restore or improve the remainder thereof as required by part (1) of the preceding subparagraph will be considered a taking of substantially all the Property for purposes of this Paragraph 10.
       (H)     If Remaining Proceeds Exceed the Lease Balance. Notwithstanding the various provisions of this Paragraph 10 authorizing BNPPLC to apply Remaining Proceeds received by it during the Term as a Qualified Prepayment, in the event any such Remaining Proceeds exceed the sum of (i) all payments thereof made to NAI to reimburse it for the costs of repairs and restoration to the Property, (ii) any application thereof to cover costs incurred by BNPPLC for the repair or restoration the Property and (iii) the Lease Balance, such excess will not be applied as a Qualified Prepayment, but rather will constitute Escrowed Proceeds which must, if NAI exercises the Purchase Option pursuant to the Purchase Agreement, be delivered to the purchaser of the Property (be it NAI or an Applicable Purchaser) as provided therein.
 
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11     Additional Representations, Warranties and Covenants of NAI Concerning the Property. NAI represents, warrants and covenants as follows:
       (A)     Operation and Maintenance. NAI must operate and maintain the Property in a good and workmanlike manner and in compliance with Applicable Laws in all material respects and pay or cause to be paid all fees or charges of any kind due 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 complaint or demand for corrective action given by any Governmental Authority to NAI, or to BNPPLC and forwarded by it to NAI, then for purposes of the preceding sentence, NAI will be considered not to have maintained the Property “in compliance with all Applicable Laws in all material respects” whether or not the noncompliance would be material in the absence of the complaint or demand.) NAI will not use or occupy, or allow the use or occupancy of, the Property in any manner which violates any Applicable Laws or which constitutes a public or private nuisance or which makes void, voidable or cancelable any insurance then in force with respect to the Property. To the extent that any of the following would, individually or in the aggregate, materially and adversely affect the value of the Property or the use of the Property for purposes permitted by this Lease, NAI will not, without BNPPLC’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. NAI will 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 will not do anything that could reasonably be expected to significantly reduce the market value of the Property. If NAI receives a notice or claim from any Governmental Authority that the Property is not in compliance with any Applicable Law, or that any action may be taken against BNPPLC because the Property does not comply with any Applicable Law, NAI must promptly furnish a copy of such notice or claim to BNPPLC.
     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 will 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 BNPPLC, 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 must be concluded and the violation of such Applicable Law must be corrected by NAI and any claims asserted against BNPPLC or the Property because of such violation must be paid by NAI, all prior to the earliest of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC or any of its directors, officers or employees because of such violation, (ii) the
 
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date that any action is taken or overtly threatened by any Governmental Authority against BNPPLC or any property owned by BNPPLC (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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
       (B)     Debts for Construction, Maintenance, Operation or Development. NAI must cause all debts and liabilities incurred in the construction, maintenance, operation or development of the Property, including invoices for labor, material and equipment and all debts and charges for utilities servicing the Property, to be promptly paid.
       Notwithstanding the foregoing, NAI may in good faith, by appropriate proceedings, contest the validity, applicability or amount of any asserted statutory liens in the nature of contractors’, mechanics’ or materialmens’ liens, and pending such contest NAI will not be deemed in default under this subparagraph because of the contested lien if (1) within thirty days after being asked to do so by BNPPLC, NAI bonds over to BNPPLC’s reasonable satisfaction all such contested liens against the Property alleged to secure an amount in excess of $1,000,000 (individually or in the aggregate), (2) NAI diligently prosecutes such contest to completion in a manner reasonably satisfactory to BNPPLC, 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 must be concluded and the lien, interest and costs must be paid by NAI prior to the earliest of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC 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 BNPPLC has an interest may be seized or sold or any other action is taken or overtly threatened against BNPPLC or any property in which BNPPLC 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 does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
       (C)     Repair, Maintenance, Alterations and Additions. NAI must keep the Property in good order, operating condition and appearance and must 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 will promptly replace any worn-out fixtures and Tangible Personal Property with fixtures and personal property comparable to the replaced items when new. NAI will not, without the prior consent of BNPPLC, (i) remove from the Property any
 
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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 following completion of the Work contemplated in the Construction Agreement.
       However, during the Term, so long as no Event of Default has occurred and is continuing, BNPPLC will not unreasonably withhold a consent requested by NAI pursuant to the preceding sentence for the construction or alteration of Improvements. NAI acknowledges, however, that BNPPLC’s refusal or failure to give such consent will be deemed reasonable if BNPPLC believes in good faith that the construction or alteration for which NAI is requesting consent could have a material adverse impact upon the value of the Property (taken as whole), or if NAI has not provided BNPPLC with adequate information to allow BNPPLC to properly evaluate such impact on value.
       Without limiting the foregoing, NAI must notify BNPPLC before making any significant alterations to the Improvements during the Term, regardless of the impact on the value of the Property expected to result from such alterations.
       (D)     Permitted Encumbrances. NAI must 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. Without limiting the foregoing, NAI must 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 BNPPLC, NAI will not create any new Permitted Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted Encumbrance that would create or expand or purport to create or expand obligations or restrictions which would encumber BNPPLC’s interest in the Property or be binding upon BNPPLC itself. (Whether BNPPLC must give any such consent requested by NAI during the Term of this Lease will be governed by subparagraph 4(C) of the Closing Certificate.)
       (E)     Books and Records Concerning the Property. NAI must keep books and records that are accurate and complete in all material respects for the Property and, subject to Paragraph 22, must 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 BNPPLC during normal business hours. (BNPPLC will not over the objection of NAI inspect or copy such materials more than once in any twelve month period unless BNPPLC believes in good faith that more frequent
 
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inspection and copying is required to determine whether a Default or an Event of Default has occurred and is continuing or to assess the effect thereof or to properly exercise remedies with respect thereto.) This subparagraph will not be construed as requiring NAI to regularly maintain separate books and records relating exclusively to the Property, but NAI will as reasonably requested from time to time by BNPPLC construct or abstract from its regularly maintained books and records information required by this subparagraph relating to the Property.
12     Assignment and Subletting by NAI.
       (A)     BNPPLC’s Consent Required. Without the prior consent of BNPPLC, NAI will not assign, transfer, mortgage, pledge or hypothecate this Lease or any interest of NAI hereunder and will not sublet all or any part of the Property, by operation of law or otherwise, except as follows:
           (1)     During the Term, so long as no Event of Default has occurred and is continuing, NAI may sublet (a) to Affiliates of NAI, or (b) no more than thirty-three percent (33%) (computed on the basis of square footage) of the useable space in then existing and completed building Improvements to Persons who are not NAI’s Affiliates, subject to the conditions that (i) any such sublease by NAI must be made expressly subject and subordinate to the terms hereof, (ii) the sublease must have a term equal to or less than the remainder of the then effective Term of this Lease, and (iii) the use permitted by the sublease must be expressly limited to uses consistent with subparagraph 2(A) or other uses approved in advance by BNPPLC as uses that will not present any extraordinary risk of uninsured environmental or other liability.
           (2)     During the Term, so long as no Event of Default has occurred and is continuing, NAI may assign all of its rights under this Lease and the other Operative Documents to an Affiliate of NAI, subject to the conditions that (a) the assignment must be in writing and must unconditionally provide that the Affiliate assumes all of NAI’s obligations hereunder and thereunder, and (b) NAI must execute an unconditional guaranty of the obligations assumed by the Affiliate in form satisfactory to BNPPLC, confirming (x) that notwithstanding the assignment NAI will remain primarily liable for all of the obligations undertaken by NAI under the Operative Documents, (y) that such guaranty is a guaranty of payment and performance and not merely of collection, and (z) that NAI waives to the extent permitted by Applicable Law all defenses otherwise available to guarantors or sureties.
       (B)     Standard for BNPPLC’s Consent to Assignments and Certain Other Matters. Consents and approvals of BNPPLC which are required by this Paragraph 12 will not be unreasonably withheld, but NAI acknowledges that BNPPLC’s withholding of such consent or approval will be reasonable if BNPPLC determines in good faith that (1) giving the approval may
 
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increase BNPPLC’s risk of liability for any existing or future environmental problem, (2) giving the approval is likely to substantially increase BNPPLC’s administrative burden of complying with or monitoring NAI’s compliance with the requirements of this Lease, or (3) any transaction for which NAI has requested the consent or approval would negate NAI’s representations in the Operative Documents regarding ERISA or cause any of the Operative Documents (or any exercise of BNPPLC’s rights thereunder) to constitute a violation of any provision of ERISA. Further, NAI acknowledges that BNPPLC may reasonably require, as a condition to giving its consent to any assignment by NAI, that NAI execute an unconditional guaranty providing that NAI will remain primarily liable for all of the tenant’s obligations hereunder and under other Operative Documents. Any such guaranty must be a guaranty of payment and not merely of collection, must provide that NAI waives to the extent permitted by Applicable Law all defenses otherwise available to guarantors or sureties, and must otherwise be in a form satisfactory to BNPPLC.
       (C)     Consent Not a Waiver. No consent by BNPPLC to a sale, assignment, transfer, mortgage, pledge or hypothecation of this Lease or NAI’s interest hereunder, and no assignment or subletting of the Property or any part thereof in accordance with this Lease or otherwise with BNPPLC’s consent, will release NAI from liability hereunder; and any such consent will apply only to the specific transaction thereby authorized and will not relieve NAI from any requirement of obtaining the prior consent of BNPPLC to any further sale, assignment, transfer, mortgage, pledge or hypothecation of this Lease or any interest of NAI hereunder.
13     Assignment by BNPPLC.
       (A)     Restrictions on Transfers. Except by a Permitted Transfer, BNPPLC will not assign, transfer, mortgage, pledge, encumber or hypothecate this Lease or the other Operative Documents or any interest of BNPPLC 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 payable to BNPPLC hereunder because of BNPPLC’s assignment of this Lease to any citizen of, or any corporation or other entity formed under the laws of, a country other than the United States, NAI will not be required to compensate BNPPLC or any such assignee for the withholding tax.
       (B)     Effect of Permitted Transfer or other Assignment by BNPPLC. If by a Permitted Transfer BNPPLC sells or otherwise transfers the Property and assigns to the transferee all of BNPPLC’s rights under this Lease and under the other Operative Documents, and if the transferee expressly assumes all of BNPPLC’s obligations under this Lease and under the other Operative Documents, then BNPPLC will thereby be released from any obligations arising after such assumption under this Lease or under the other Operative Documents (other than any liability for a breach of any continuing obligation to provide Construction Advances under the
 
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Construction Agreement), and NAI must look solely to each successor in interest of BNPPLC for performance of such obligations.
14     BNPPLC’s Right to Enter and to Perform for NAI.
       (A)     Right to Enter. BNPPLC and BNPPLC’s representatives may, subject to subparagraph 14(C), enter the Property for the purpose of making inspections or performing any work BNPPLC is authorized to undertake by the next subparagraph or for the purpose of confirming whether NAI has complied with the requirements of this Lease or the other Operative Documents. During the Term, so long as no Event of Default has occurred and is continuing and no apparent emergency exists which would justify immediate entry, BNPPLC will give NAI at least two Business Days notice before making any such entry over the objection of NAI and will limit any such entry to normal business hours.
       (B)     Performance for NAI. If NAI fails to perform any act or to take any action required of it by this Lease or the Closing Certificate, or to pay any money which NAI is required by this Lease or the Closing Certificate to pay, and if such failure or action constitutes an Event of Default or renders BNPPLC or any director, officer, employee or Affiliate of BNPPLC at risk of criminal prosecution or renders BNPPLC’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, BNPPLC may, perform or cause to be performed such act or take such action or pay such money. Any expenses so incurred by BNPPLC, and any money so paid by BNPPLC, will be a demand obligation owing by NAI to BNPPLC. Further, upon making such payment, BNPPLC will be subrogated to all of the rights of the person, corporation or body politic receiving such payment. But nothing herein will imply any duty upon the part of BNPPLC to do any work which under any provision of this Lease NAI may be required to perform, and the performance thereof by BNPPLC will not constitute a waiver of NAI’s default. BNPPLC may during the progress of any such work by BNPPLC keep and store upon the Property all necessary materials, tools, and equipment. BNPPLC will 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 the performance of any such work, or on account of bringing materials, supplies and equipment into or through the Property during the course of such work, and the obligations of NAI under this Lease will not thereby be excused in any manner.
       (C)     Building Security. So long as NAI remains in possession of the Property, BNPPLC or BNPPLC’s representative will, before making any inspection or performing any work on the Property authorized by this Lease, do the following
           (1)     BNPPLC will give NAI at least 24 hours notice, unless BNPPLC believes in good faith that an emergency may exist or a Default has occurred and is continuing, because of which significant damage to the Property or other significant Losses may be
 
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sustained if BNPPLC delays entry to the Property; and
           (2)     if then requested to do so by NAI in order to maintain NAI’s security, BNPPLC or its representative will: (i) sign in at NAI’s security or information desk if NAI has such a desk on the premises, (ii) wear a visitor’s badge or other reasonable identification, (iii) permit an employee of NAI to observe such inspection or work, and (iv) comply with other similar reasonable nondiscriminatory security requirements of NAI that do not, individually or in the aggregate, significantly interfere with inspections or work of BNPPLC authorized by this Lease.
15     Remedies.
       (A)     Traditional Lease Remedies. At any time after an Event of Default and after BNPPLC has given any notice required by subparagraph 15(C), BNPPLC will be entitled at BNPPLC’s option (and without limiting BNPPLC in the exercise of any other right or remedy BNPPLC may have, and without any further demand or notice except as expressly described in this subparagraph 15(A)), to exercise any one or more of the following remedies:
           (1)     By notice to NAI, BNPPLC may terminate NAI’s right to possession of the Property. However, only a notice clearly and unequivocally confirming that BNPPLC has elected to terminate NAI’s right of possession will be effective for purposes of this provision.
           (2)     Upon termination of NAI’s right to possession as provided in the immediately preceding subsection (1) and without further demand or notice, BNPPLC may re-enter the Property in any manner not prohibited by Applicable Laws and take possession of all improvements, additions, alterations, equipment and fixtures thereon and remove any persons in possession thereof. Any personal property on the Land may be removed and stored in a warehouse or elsewhere, and in such event the cost of any such removal and storage will be at the expense and risk of and for the account of NAI.
           (3)     Upon termination of NAI’s right to possession as provided in the immediately preceding subsection (1), this Lease will terminate and BNPPLC may recover from NAI damages which include the following:
           (a)     the worth at the time of award of the unpaid Rent which had been earned at the time of termination;
           (b)     costs and expenses actually incurred by BNPPLC to repair damage to the Property that NAI was obligated to (but failed to) repair prior to the termination;
 
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     (c)      the sum of the following (“Lease Termination Damages”):
           1)      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;
           2)      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;
           3)      any other amount necessary to compensate BNPPLC for all the detriment proximately caused by NAI’s failure to perform NAI’s obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including the costs and expenses of preparing and altering the Property for reletting and all other costs and expenses of reletting (including Attorneys’ Fees, advertising costs and brokers’ commissions), and
     (d)      such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California law.
The “worth at the time of award” of the amounts referred to in subparagraph 15(A)(3)(a) and subparagraph 15(A)(3)(c)1) will be computed by allowing interest at the Default Rate. The “worth at the time of award” of the amount referred to in subparagraph 15(A)(3)(c)2) will 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%).
Notwithstanding the foregoing, the total Lease Termination Damages which BNPPLC may recover from NAI will be limited in amount to the extent required, if any, to prevent the sum of recoverable Lease Termination Damages, plus any Supplemental Payment that BNPPLC has received or remains entitled to recover pursuant to the Purchase Agreement, from being more than the Maximum Remarketing Obligation; provided, however, if a Supplemental Payment is owed to BNPPLC according to the Purchase Agreement, but NAI fails to pay it, this limitation upon BNPPLC’s right to recover Lease Termination Damages will be of no effect. For purposes of this provision, “Maximum Remarketing Obligation” is intended to have the meaning assigned to it in the Purchase Agreement and is intended to be computed as of the date any award of Lease Termination Damages to BNPPLC as if such date was the Designated Sale Date.
 
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     (4)      Even after a breach of this Lease or abandonment of the Property by NAI, BNPPLC may continue this Lease in force and recover Rent as it becomes due. Accordingly, despite any breach or abandonment by NAI, this Lease will continue in effect for so long as BNPPLC does not terminate NAI’s right to possession, and BNPPLC may enforce all of BNPPLC’s rights and remedies under this Lease, including the right to recover the Rent as it becomes due under this Lease. NAI’s right to possession will not be deemed to have been terminated by BNPPLC except pursuant to subparagraph 15(A)(1) hereof. The following, in and of themselves, will 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 BNPPLC to protect BNPPLC’s interest under this Lease; or
          (c)      Reasonable withholding of consent to an assignment or subletting, or terminating a subletting or assignment by NAI.
          (B)      Foreclosure Remedies. At any time when an Event of Default has occurred and is continuing, BNPPLC may notify NAI of BNPPLC’s intent to pursue remedies described in Exhibit B, and at any time thereafter, regardless of whether the Event of Default is continuing, if NAI has not already purchased the Property or caused an Applicable Purchaser to purchase the Property pursuant to the Purchase Agreement, (i) BNPPLC will have the power and authority, to the extent provided by law, after proper notice and lapse of such time as may be required by law, to sell or arrange for a sale to foreclose its lien and security interest granted in Exhibit B, and (ii) BNPPLC, in lieu of or in addition to exercising any power of sale granted in Exhibit B, may proceed by a suit or suits in equity or at law, whether for a foreclosure or sale of the Property, or against NAI for the Lease Balance, or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure or sale of the Property, or for the enforcement of any other appropriate legal or equitable remedy.
          (C)      Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement. During the Term, so long as NAI remains in possession of the Property and there has been no termination of the Purchase Option as provided in Paragraph 6(B) of the Purchase Agreement, BNPPLC’s right to exercise remedies provided in subparagraph 15(A) or to complete any foreclosure sale as provided in subparagraph 15(B) will be subject to the condition precedent that BNPPLC has notified NAI, at a time when an Event of Default has occurred and is continuing and no less than thirty days prior to exercising such remedies or completing such a sale, of BNPPLC’s intent to do so. The condition precedent is intended to provide NAI with an opportunity to exercise the Purchase Option before losing possession of the Property because of
 
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the remedies enumerated in subparagraph 15(A) or because of a sale authorized by subparagraph 15(B). 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, BNPPLC may proceed immediately to exercise remedies provided in subparagraph 15(A) or complete a sale authorized by subparagraph 15(B) at any time after the earliest of (i) thirty days after BNPPLC 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.
          (D)      Enforceability. This Paragraph 15 will be enforceable to the maximum extent not prohibited by Applicable Laws, and the unenforceability of any provision in this Paragraph will not render any other provision unenforceable.
          (E)      Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy, and each and every such right and remedy will be cumulative and in addition to any other right or remedy given to BNPPLC under this Lease or other Operative Documents or now or hereafter existing in favor of BNPPLC under Applicable Laws, except as otherwise expressly provided in the last provision of subparagraph 15(A)(3) above. In addition to other remedies provided in this Lease, BNPPLC will 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 Lease, or to a decree compelling performance of any of the other covenants, agreements, conditions or provisions of this Lease to be performed by NAI, or to any other remedy allowed to BNPPLC at law or in equity. Nothing contained in this Lease will limit or prejudice the right of BNPPLC to prove for and obtain in proceedings for bankruptcy or insolvency of NAI by reason of the termination of this 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 will modify, limit or impair any of the rights and remedies of BNPPLC under the Purchase Agreement, and BNPPLC will not be required to give the thirty day notice described in subparagraph 15(C) as a condition precedent to any acceleration of the Designated Sale Date or to taking any action to enforce the Purchase Agreement. However, to prevent a double recovery, BNPPLC acknowledges that BNPPLC’s right to recover Lease Termination Damages may be limited by the last provision of subparagraph 15(A)(3) above in the event BNPPLC collects or remains entitled to collect a Supplemental Payment as provided in the Purchase Agreement.
16      Default by BNPPLC. If BNPPLC should default in the performance of any of its obligations under this Lease, BNPPLC will 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
 
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and specifying what action NAI believes is necessary to cure the default.
17      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, BNPPLC will not during the Term disturb NAI’s peaceable and quiet enjoyment of the Property; however, such enjoyment will be subject to the terms and conditions of this Lease, to the Ground Lease, to Permitted Encumbrances and to any other claims not constituting Liens Removable by BNPPLC. If any Lien Removable by BNPPLC is established against the Property, BNPPLC will remove the Lien Removable by BNPPLC promptly. Any breach by BNPPLC of this Paragraph will render BNPPLC liable to NAI for any monetary damages proximately caused thereby, but as more specifically provided in subparagraph 4(B) above, no such breach will entitle NAI to terminate this Lease or excuse NAI from its obligation to pay Rent.
18      Surrender Upon Termination. Unless NAI or an Applicable Purchaser is purchasing or has purchased BNPPLC’s entire interest in the Property pursuant to the terms of the Purchase Agreement, NAI must, upon the termination of NAI’s right to occupancy, surrender to BNPPLC 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 Lease, and (ii) demolition, alterations and additions which are expressly permitted by the terms of this Lease 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 BNPPLC so elects, will be deemed abandoned and become the property of BNPPLC without any payment or offset therefor. If BNPPLC does not so elect, BNPPLC may remove such property from the Property and store it at NAI’s risk and expense. NAI must bear the expense of repairing any damage to the Property caused by such removal by BNPPLC or NAI.
19      Holding Over by NAI. Should NAI not purchase BNPPLC’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 Lease without objection by BNPPLC, whether such termination occurs by lapse of time or otherwise, such holding over will constitute and be construed as a tenancy from day to day only on and subject to all of the terms, provisions, covenants and agreements on the part of NAI hereunder; except that the Base Rent required for each day the holding over continues will be due and payable by NAI to BNPPLC upon demand and will equal the difference computed by subtracting (a) any interest accruing on such day under the Purchase Agreement on any past due Supplemental Payment, from (b) an amount equal to (i) the difference computed by subtracting any Supplemental Payment previously made by NAI to
 
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BNPPLC from the Lease Balance, times (ii) the per annum Default Rate computed as of such day, divided by (iii) three hundred sixty. No payments of money by NAI to BNPPLC after the termination of this Lease will reinstate, continue or extend the Term of this Lease and no extension of this Lease after the termination thereof will be valid unless and until the same is reduced to writing and signed by both BNPPLC and NAI.
20      Recording Memorandum. Contemporaneously with the execution of this Lease, the parties will execute and record a memorandum of this Lease for purposes of effecting constructive notice to all Persons of NAI’s rights hereunder.
21      Independent Obligations Evidenced by Other Operative Documents. NAI acknowledges and agrees that nothing contained in this Lease will 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. Further, in the event of any inconsistency between the express terms and provisions of the Purchase Agreement and the express terms and provisions of this Lease, the express terms and provisions of the Purchase Agreement will control.
22      Proprietary Information and Confidentiality.
          (A)      Proprietary Information. NAI will have no obligation to provide proprietary information (as defined in the next sentence) to BNPPLC, except and to the extent (1) expressly required by other terms and conditions of the Operative Documents, or (2) requested by BNPPLC in connection with any inspection of the Property pursuant to the various provisions hereof and, in BNPPLC’s reasonably determination, required to allow BNPPLC to accomplish the purposes of such inspection. (Before NAI delivers any such proprietary information in connection with any inspection of the Property, NAI may require that BNPPLC confirm and ratify the confidentiality agreements covering such proprietary information set forth herein.) For purposes of this Lease and the other Operative Documents, “proprietary information” means NAI’s intellectual property, trade secrets and other confidential information of value to NAI (including, among other things, information about NAI’s manufacturing processes, products, marketing and corporate strategies) that (1) is received by any representative of BNPPLC at the time of any on-site visit to the Property or (2) otherwise delivered to BNPPLC by or on behalf of NAI and labeled “proprietary” or “confidential” or by some other similar designation to identify it as information which NAI considers to be proprietary or confidential.
          (B)      Confidentiality. BNPPLC will endeavor in good faith to use reasonable precautions to keep confidential any proprietary information that BNPPLC may receive from NAI or otherwise discover with respect to NAI or NAI’s business in connection with the administration of this Lease or any investigation by BNPPLC hereunder. This provision will not, however, render BNPPLC liable for any disclosures of proprietary information made by it or its
 
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employees or representatives, unless the disclosure is intentional and made for no reason other than to damage NAI’s business. Also, this provision will not apply to disclosures: (i) specifically and previously authorized in writing by NAI; (ii) to any assignee of BNPPLC as to any interest in the Property so long as such assignee has agreed in writing to use its reasonable efforts to keep such information confidential in accordance with the terms of this paragraph; (iii) to legal counsel, accountants, auditors, environmental consultants and other professional advisors to BNPPLC so long as BNPPLC informs such persons in writing (if practicable) of the confidential nature of such information and directs them to treat such information confidentially; (iv) to regulatory officials having jurisdiction over BNPPLC or BNPPLC’s Parent (although the disclosing party will request confidential treatment of the disclosed information, if practicable); (v) as required by legal process (although the disclosing party will request confidential treatment of the disclosed information, if practicable); (vi) of information which has previously become publicly available through the actions or inactions of a person other than BNPPLC not, to BNPPLC’s knowledge, in breach of an obligation of confidentiality to NAI; (vii) to any Participant so long as the Participant is bound by and has not repudiated a confidentiality provision concerning NAI’s proprietary information set forth in the Participation Agreement; or (vii) that are reasonably believed by BNPPLC to be necessary or helpful to the determination or enforcement of any contractual or other rights which BNPPLC has or may have against NAI or its Affiliates or which BNPPLC has or may have concerning the Property (provided, that BNPPLC must cooperate with NAI as NAI may reasonably request to mitigate any risk that such disclosures will result in subsequent disclosures of proprietary information which are not necessary or helpful to any such determination or enforcement; such cooperation to include, for example, BNPPLC’s agreement not to oppose a motion by NAI to seal records containing proprietary information in any court proceeding initiated because of a dispute between the parties over the Property or the Operative Documents).
Further, notwithstanding any other contrary provision contained in this Lease or the other Operative Documents, BNPPLC and NAI (and each of their respective employees, representatives or other agents) may disclose, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Lease and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment and tax structure, other than any information for which non-disclosure is reasonably necessary in order to comply with applicable securities laws and other than any information the disclosure of which would waive the attorney-client privilege, the tax advisor privilege under Section 7525 of the Internal Revenue Code, or similar privileges.
[The signature pages follow.]
 
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          IN WITNESS WHEREOF, this Lease Agreement (Building 9) is executed to be effective as of February 1, 2008.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
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          [Continuation of signature pages for Lease Agreement (Building 9) dated as of February 1, 2008]
         
  NETWORK APPLIANCE, INC., a Delaware
corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
Lease Agreement (Building 9) – Signature Page

 

 

         
Exhibit A
Legal Description
Parcel 9 and the Additional Leased Premises, as defined below, (collectively, the “Building 9 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs along the same line as the northern boundary of Common Lot A, as shown on the Tentative Map, extending from the corner of two streets adjacent to the Additional Leased Premises to the northeast corner of Parcel 12, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as (but extends beyond) the eastern boundary of Parcel 12, as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 9 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
 
Exhibit A to Lease Agreement (Building 9) – Page 2

 

 

Exhibit B
California Foreclosure Provisions
Without limiting any of the provisions set forth in the body of this Lease or other attachments to this Lease, the following provisions are included in and made a part of this Lease for all purposes:
GRANT OF LIEN AND SECURITY INTEREST.
          NAI, for and in consideration of the sum of Ten Dollars ($10.00) to NAI in hand paid by Lloyd G. Cox, Trustee, of Dallas County, Texas (in this Exhibit called the “Trustee”), in order to secure the recovery of the Lease Balance by BNPPLC and the payment of all of the other obligations, covenants, agreements and undertakings of NAI under this Lease or other Operative Documents (in this Exhibit called the “Secured Obligations”), does hereby irrevocably GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET OVER to the Trustee, IN TRUST WITH POWER OF SALE, for the benefit of BNPPLC, a leasehold estate in the Land (the terms and conditions of which leasehold estate are as set forth in the Ground Lease), together with (i) all the buildings and other improvements now on or hereafter located thereon; (ii) all materials, equipment, fixtures or other property whatsoever now or hereafter attached or affixed to or installed in said buildings and other improvements, including, but not limited to, all heating, plumbing, lighting, water heating, refrigerating, incinerating, ventilating and air conditioning equipment, utility lines and equipment (whether owned individually or jointly with others), sprinkler systems, fire extinguishing apparatus and equipment, water tanks, engines, machines, elevators, motors, cabinets, shades, blinds, partitions, window screens, screen doors, storm windows, awnings, drapes, and floor coverings, and all fixtures, accessions and appurtenances thereto, and all renewals or replacements of or substitutions for any of the foregoing, all of which are hereby declared to be permanent fixtures and accessions to the freehold and part of the realty conveyed herein as security for the obligations mentioned hereinabove; (iii) all easements and rights of way now and at any time hereafter used in connection with any of the foregoing property or as a means of ingress to or egress from the Land or for utilities to said property; (iv) all interests of NAI in and to any streets, ways, alleys and/or strips of land adjoining said land or any part thereof; (v) all rents, issues, profits, royalties, bonuses, income and other benefits derived from or produced by the Land or Improvements; (vi) all leases or subleases of the Land or Improvements or any part thereof now or hereafter in effect, including all security or other deposits, advance or prepaid rents, and deposits or payments of similar nature; (vii) all options to purchase or lease the Land or Improvements or any part thereof or interest therein, and any greater estate in the Land or Improvements now owned or hereafter acquired by NAI; (viii) all right, title, estate and interest of every kind and nature, at law or in equity, which NAI now has or may hereafter acquire in the Land or Improvements; and (ix) all other claims and demands with respect to the Land or Improvements or the Collateral (as hereinafter defined), including all claims or demands to all proceeds of all insurance now or hereafter in effect with respect to the Land, Improvements or Collateral, all awards made for the taking by condemnation or the power of eminent domain, or by any proceeding or purchase in lieu thereof, of the Land, Improvements or Collateral, or any part thereof, or any damage or injury thereto, all awards resulting from a

 

 

change of grade of streets, and all awards for severance damages; and (vi) all rights, estates, powers and privileges appurtenant or incident to the foregoing.
          TO HAVE AND TO HOLD the foregoing property (in this Exhibit called the “Mortgaged Property”) unto the Trustee, IN TRUST, and his successors or substitutes in this trust and to his or their successors and assigns upon the terms, provisions and conditions herein set forth for the benefit of BNPPLC.
          In order to secure the Secured Obligations, NAI also hereby grants to BNPPLC a security interest in: all components of the Property which constitute personalty, whether owned by NAI now or hereafter, and all fixtures, accessions and appurtenances thereto, and all renewals or replacements of or substitutions for any of the foregoing (including all building materials and equipment now or hereafter delivered to said premises and intended to be installed or in or incorporated as part of the Improvements); all rents and other amounts from and under leases of all or any part of the Property; all issues, profits and proceeds from all or any part of the Property; all proceeds (including premium refunds) of each policy of insurance relating to the Property; all proceeds from the taking of the Property or any part thereof or any interest therein or right or estate appurtenant thereto by eminent domain or by purchase in lieu thereof; all permits, licenses, franchises, certificates, and other rights and privileges obtained in connection with the Property; all plans, specifications, maps, surveys, reports, architectural, engineering and construction contracts, books of account, insurance policies and other documents, of whatever kind or character, relating to the use, construction upon, occupancy, leasing, sale or operation of the Property; all proceeds and other amounts paid or owing to NAI under or pursuant to any and all contracts and bonds relating to the construction, erection or renovation of the Property; and all oil, gas and other hydrocarbons and other minerals produced from or allocated to the Property and all products processed or obtained therefrom, the proceeds thereof, and all accounts and general intangibles under which such proceeds may arise, together with any sums of money that may now or at any time hereafter become due and payable to NAI by virtue of any and all royalties, overriding royalties, bonuses, delay rentals and any other amount of any kind or character arising under any and all present and future oil, gas and mining leases covering the Property or any part thereof (all of the property described in this section are collectively called the “Collateral” in this Exhibit) and all proceeds of the Collateral. (The Mortgaged Property and the Collateral are in this Exhibit sometimes collectively called the “Security”.)
FORECLOSURE BY POWER OF SALE
          Upon the occurrence of any Event of Default, the Trustee, its successor or substitute, and/or BNPPLC is authorized and empowered to execute all written notices then required by law to cause the Security to be sold under power of sale to satisfy the Secured Obligations. Trustee will give and record such notices as the law then requires as a condition precedent to a trustee’s sale. When the minimum period of time required by law after giving all required notices has elapsed, Trustee, without notice to or demand upon NAI except as otherwise required by law,
 
Exhibit B to Lease Agreement (Building 9) – Page 2

 

 

will sell the Security at the time and place of sale fixed by it in the notice of sale, at one or several sales, either as a whole or in separate parcels and in such manner and order, all as BNPPLC or Trustee in its sole discretion may determine, at public auction to the highest bidder for cash, in lawful money of the United States, payable at the time of sale (the obligations hereby secured being the equivalent of cash for purposes of said sale). NAI will have no right to direct the order in which the Security is sold or to require that the Security be sold in separate lots or parcels or items. The sale by the Trustee of less than the whole of the Mortgaged Property will not exhaust the power of sale herein granted, and the Trustee is specifically empowered to make successive sale or sales under such power until the whole of the Mortgaged Property is sold; and, if the proceeds of such sale of less than the whole of the Mortgaged Property is less than the aggregate of the indebtedness secured hereby and the expense of executing this trust as provided herein, the rights and remedies of BNPPLC hereunder and the lien hereof will remain in full force and effect as to the unsold portion of the Mortgaged Property just as though no sale or sales had been made; provided, however, that NAI will never have any right to require the sale of less than the whole of the Mortgaged Property but BNPPLC will have the right, at its sole election, to request the Trustee to sell less than the whole of the Mortgaged Property. Subject to requirements and limits imposed by law, including California Civil Code § 2924g, Trustee may postpone sale of all or any portion of the Security by public announcement at such time and place of sale and from time to time may postpone the sale by public announcement at the time and place fixed by the preceding postponement. Any person or entity, including Trustee, NAI or BNPPLC, may purchase at the sale, and NAI hereby covenants to warrant and defend the title of such purchaser or purchasers. Trustee will deliver to the purchaser at such sale a deed conveying the Security or portion thereof so sold, but without any covenant or warranty, express or implied. At any such sale (i) NAI hereby agrees, in its behalf and in behalf of its heirs, executors, administrators, successors, personal representatives and assigns, that any and all recitals made in any deed of conveyance given by Trustee of any matters or facts stated therein, including without limitation, the identity of BNPPLC, the occurrence or existence of any default, the acceleration of the maturity of any of the Secured Obligations, the request to sell, the notice of sale, the giving of notice to all debtors legally entitled thereto, the time, place, terms, and manner of sale, and receipt, distribution and application of the money realized therefrom, and the due and proper appointment of a substitute Trustee and any other act or thing duly done by BNPPLC or by Trustee hereunder, will be taken by all courts of law and equity as prima facie evidence that the statement or recitals state facts and are without further question to be so accepted as conclusive proof of the truthfulness thereof, and NAI hereby ratifies and confirms every act that Trustee or any substitute Trustee hereunder may lawfully do in the premises by virtue hereof; and (ii) the purchaser may disaffirm any easement granted, or rental, lease or other contract made, in violation of any provision of any of the Operative Documents, and may take immediate possession of the Security free from, and despite the terms, of, such grant of easement and rental or lease contract.
BNPPLC may elect to cause the Security or any part thereof to be sold under the power of sale herein granted in any manner permitted by applicable law. In connection with any sale or sales
 
Exhibit B to Lease Agreement (Building 9) – Page 3

 

 

hereunder, BNPPLC may elect to treat any portion of the Security which consists of a right in action or which is property that can be severed from the Security without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with applicable law, separate and apart from the sale of the real property. Any sale of any personal property hereunder will be conducted in any manner permitted by the California Uniform Commercial Code (in this Exhibit called the “Code”). Where any portion of the Security consists of real property and personal property or fixtures, whether or not such personal property is located on or within the real property, BNPPLC may elect in its discretion to exercise its rights and remedies against any or all of the real property, personal property and fixtures, in such order and manner as is now or hereafter permitted by applicable law. Without limiting the generality of the foregoing, BNPPLC may, in its sole and absolute discretion and without regard to the adequacy of its security, elect to proceed against any or all of the real property, personal property and fixtures in any manner permitted by the Code; and if BNPPLC elects to sell both personal property and real property together as permitted by the Code, the power of sale herein granted will be exercisable with respect to all or any of the real property, personal property and fixtures covered hereby, as designated by BNPPLC, and Trustee is hereby authorized and empowered to conduct any such sale of any real property, personal property and fixtures in accordance with the procedures applicable to real property. Where any portion of the Security consists of real property and personal property, any reinstatement of the Secured Obligations, following default and an election by BNPPLC to accelerate the maturity of said obligations, which is made by NAI or any other person or entity permitted to exercise the right of reinstatement under § 2924c of the California Civil Code or any successor statute, will, in accordance with the terms of Code, not prohibit BNPPLC or Trustee from conducting a sale or other disposition of any personal property or fixtures or from otherwise proceeding against or continuing to proceed against any personal property or fixtures in any manner permitted by the Code, nor will any such reinstatement invalidate, rescind or otherwise affect any sale, disposition or other proceeding held, conducted or instituted with respect to any personal property or fixtures prior to such reinstatement or pending at the time of such reinstatement. Any sums paid to BNPPLC in effecting any reinstatement pursuant to § 2924c of the California Civil Code will be applied to the indebtedness secured hereby, and to BNPPLC’s reasonable costs and expenses in the manner required by § 2924c. Should BNPPLC elect to sell any portion of the Security which is real property, or which is personal property or fixtures that BNPPLC has elected to sell together with the real property in accordance with the laws governing a sale of real property, BNPPLC or Trustee will give such notice of default and election to sell as may then be required by law, and without the necessity of any demand on NAI, Trustee, at the time(s) and place(s) specified in the notice of sale, will sell said real property, and all estate, right, title, interest, claim and demand therein, and equity and right of redemption thereof, at such times and places as required or permitted by law, upon such terms as BNPPLC or Trustee may fix and specify in the notice of sale or as may be required by law. If the Security consists of several lots, parcels or items of property, BNPPLC may: (i) designate the order in which such lots, parcels or items will be offered for sale or sold, or (ii) elect to sell such lots, parcels or items through a single sale, or through two or more successive sales, or in any other manner BNPPLC deems in its best interest.
 
Exhibit B to Lease Agreement (Building 9) – Page 4

 

 

Should BNPPLC desire that more than one sale or other disposition of the Mortgaged Property be conducted, BNPPLC may, at its option, cause the same to be conducted simultaneously, or successively, on the same day, or on such different days or times and in such order as BNPPLC may deem to be in its best interests, and no such sale will exhaust the power of sale herein granted or terminate or otherwise affect the lien granted by NAI herein on, or the security interests of BNPPLC in, any part of the Security not sold, until all of the indebtedness secured hereby has been fully paid and satisfied. In the event BNPPLC elects to dispose of the Security through more than one sale, NAI agrees to pay the costs and expenses of each such sale and of any judicial proceedings wherein the same may be made, including reasonable compensation to BNPPLC and Trustee, their agents and counsel, and to pay all expenses, liabilities and advances made or incurred by BNPPLC and Trustee (or either of them) in connection with such sale or sale, together with interest on all such advances made by BNPPLC and Trustee (or either of them) at the Default Rate..
JUDICIAL FORECLOSURE
          This instrument will be effective as a mortgage as well as a deed of trust and upon the occurrence of an Event of Default may be foreclosed as to any of the Security in any manner permitted by the laws of the State of California or of any other state in which any part of the Security is situated, and any foreclosure suit may be brought by the Trustee or by BNPPLC. In the event a foreclosure hereunder is commenced by the Trustee, or his substitute or successor, BNPPLC may at any time before the sale of the Security direct the said Trustee to abandon the sale, and may then institute suit for the collection of the Secured Obligations and for the judicial foreclosure of this instrument. It is agreed that if BNPPLC should institute a suit for the collection of the Secured Obligations and for the foreclosure of this instrument, BNPPLC may at any time before the entry of a final judgment in said suit dismiss the same, and require the Trustee, his substitute or successor to exercise the power of sale granted herein to sell the Security in accordance with the provisions of this instrument.
BNPPLC AS PURCHASER
          BNPPLC will have the right to become the purchaser at any sale held by any Trustee or substitute or successor or by any receiver or public officer, and any BNPPLC purchasing at any such sale will have the right to credit upon the amount of the bid made therefor, to the extent necessary to satisfy such bid, the outstanding Lease Balance and other Secured Obligations owing to such BNPPLC.
UNIFORM COMMERCIAL CODE REMEDIES
          Upon the occurrence of an Event of Default, BNPPLC may exercise its rights of enforcement with respect to the Collateral under the California Uniform Commercial Code, as
 
Exhibit B to Lease Agreement (Building 9) – Page 5

 

 

amended, and in conjunction with, in addition to or in substitution for those rights and remedies:
          (a)     BNPPLC may enter upon the Land to take possession of, assemble and collect the Collateral or to render it unusable; and
          (b)     BNPPLC may require NAI to assemble the Collateral and make it available at a place BNPPLC designates which is mutually convenient to allow BNPPLC to take possession or dispose of the Collateral; and
          (c)     written notice mailed to NAI as provided herein ten (10) days prior to the date of public sale of the Collateral or prior to the date after which private sale of the Collateral will be made shall constitute reasonable notice; and
          (d)      any sale made pursuant to the provisions of this section will be deemed to have been a public sale conducted in a commercially reasonable manner if held contemporaneously with the sale of the Mortgaged Property under power of sale as provided herein upon giving the same notice with respect to the sale of the Collateral hereunder as is required for such sale of the Mortgaged Property under power of sale; and
           (e)      in the event of a foreclosure sale, whether made by the Trustee exercising the power of sale granted herein, or under judgment of a court, the Collateral and the Mortgaged Property may, at the option of BNPPLC, be sold as a whole; and
          (f)     it will not be necessary that BNPPLC take possession of the Collateral or any part thereof prior to the time that any sale pursuant to the provisions of this section is conducted and it will not be necessary that the Collateral or any part thereof be present at the location of such sale; and
          (g)     prior to application of proceeds of disposition of the Collateral to the Secured Obligations, such proceeds will be applied to the reasonable expenses of retaking, holding, preparing for sale or lease, selling, leasing and the like and the reasonable attorney’s fees and legal expenses incurred by BNPPLC; and
          (h)     any and all statements of fact or other recitals made in any bill of sale or assignment or other instrument evidencing any foreclosure sale hereunder as to nonpayment of the Secured Obligations or as to the occurrence of any Event of Default, or as to BNPPLC having declared any of the Secured Obligations to be due and payable, or as to notice of time, place and terms of sale and of the properties to be sold having been duly given, or as to any other act or thing having been duly done by BNPPLC, will be taken as prima facie evidence of the truth of the facts so stated and recited; and
          (i)     BNPPLC may appoint or delegate any one or more persons as agent to
 
Exhibit B to Lease Agreement (Building 9) – Page 6

 

 

perform any act or acts necessary or incident to any sale held by BNPPLC, including the sending of notices and the conduct of the sale, but in the name and on behalf of BNPPLC.
APPOINTMENT OF A RECEIVER
          In addition to all other remedies herein provided for, if any Event of Default occurs or continues after the Designated Sale Date, BNPPLC will as a matter of right be entitled to the appointment of a receiver or receivers for all or any part of the Security, whether such receivership be incident to a proposed sale of such property or otherwise, and without regard to the adequacy of the security or the value of the Security or the solvency of any person or persons liable for the payment of the Secured Obligations, and NAI does hereby irrevocably consent to the appointment of such receiver or receivers, waives any and all defenses to such appointment and agrees not to oppose any application therefor by BNPPLC, but nothing herein is to be construed to deprive BNPPLC of any other right, remedy or privilege it may now have under the law to have a receiver appointed. Any such receiver or receivers will have all of the usual powers and duties of receivers in like or similar cases and will continue as such and exercise all such powers until the date of confirmation of sale of the Security unless such receivership is sooner terminated. Any money advanced by BNPPLC in connection with any such receivership will be a demand obligation owing by NAI to BNPPLC and will bear interest from the date of making such advancement by BNPPLC until paid at the Default Rate and will be a part of the Secured Obligations and will be secured by this lien and by any other instrument securing the Secured Obligations.
PROVISIONS CONCERNING THE TRUSTEE
          Trustee accepts this trust when a Short Form Lease or memorandum referencing the provisions of this Exhibit, duly executed and acknowledged, is made a public record as provided by law. The trust hereby created will be irrevocable by NAI.
          In the event the Trustee takes any action pursuant to the provisions of this Exhibit, NAI must pay to Trustee reasonable compensation for services rendered in the administration of this trust, which will be in addition to any required reimbursement for Attorney’s Fees or other expenses.
          BNPPLC may appoint a substitute to replace and act as the Trustee hereunder in any manner now or hereafter provided by law, or in lieu thereof, BNPPLC may from time to time, by an instrument in writing, appoint substitutes as successor or successors to any Trustee named herein or acting hereunder, which instrument, executed and acknowledged by BNPPLC and recorded in the Office of the Recorder of the county in which the Property is located, will be conclusive proof of proper substitution of such successor Trustee or Trustees, who will thereupon and without conveyance from the predecessor Trustee, succeed to all its title, estate, rights,
 
Exhibit B to Lease Agreement (Building 9) – Page 7

 

 

powers and duties. Such instrument must contain the name of the original NAI, Trustee and BNPPLC hereunder, the instrument number of this Deed of Trust, and the name and address of the successor Trustee. In the event the Secured Obligations are at any time owned by more than one person or entity, the holder or holders of not less than a majority in the amount of such Secured Obligations will have the right and authority to make the appointment of a successor or substitute trustee provided for in the preceding sentences. Such appointment and designation by BNPPLC or by the holder or holders of not less than a majority of the Secured Obligations will be full evidence of the right and authority to make the same and of all facts therein recited. If BNPPLC is a corporation and such appointment is executed in its behalf by an officer of such corporation, such appointment will be conclusively presumed to be executed with authority and will be valid and sufficient without proof of any action by the board of directors or any superior officer of the corporation. Upon the making of any such appointment and designation, all of the estate and title of the Trustee in the Security will vest in the named successor or substitute trustee and he will thereupon succeed to and will hold, possess and execute all the rights, powers, privileges, immunities and duties herein conferred upon the Trustee; but nevertheless, upon the written request of BNPPLC or of the successor or substitute Trustee, the Trustee ceasing to act must execute and deliver an instrument transferring to such successor or substitute Trustee all of the estate and title in the Security of the Trustee so ceasing to act, together with all the rights, powers, privileges, immunities and duties herein conferred upon the Trustee, and must duly assign, transfer and deliver any of the properties and moneys held by said Trustee hereunder to said successor or substitute Trustee. All references herein to the Trustee will be deemed to refer to the Trustee (including any successor or substitute appointed and designated as herein provided) from time to time acting hereunder. NAI hereby ratifies and confirms any and all acts which the herein named Trustee or his successor or successors, substitute or substitutes, in this trust, do lawfully by virtue hereof.
          THE TRUSTEE WILL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT OR ACT DONE BY THE TRUSTEE IN GOOD FAITH, OR BE OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES WHATSOEVER (INCLUDING THE TRUSTEE’S NEGLIGENCE), EXCEPT FOR THE TRUSTEE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. The Trustee will have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by him hereunder, believed by him in good faith to be genuine. All moneys received by the Trustee will, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law), and the Trustee will be under no liability for interest on any moneys received by him hereunder. NAI WILL REIMBURSE THE TRUSTEE FOR, AND INDEMNIFY AND SAVE HIM HARMLESS AGAINST, ANY AND ALL LIABILITY AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES) WHICH MAY BE INCURRED BY HIM IN THE PERFORMANCE OF HER DUTIES HEREUNDER (INCLUDING ANY LIABILITY AND EXPENSES RESULTING FROM THE TRUSTEE’S OWN NEGLIGENCE). The foregoing indemnity will not terminate upon release, foreclosure or other termination of this instrument.
 
Exhibit B to Lease Agreement (Building 9) – Page 8

 

 

MISCELLANEOUS
          BNPPLC may resort to any security given by this instrument or to any other security now existing or hereafter given to secure the payment of the Secured Obligations, in whole or in part, and in such portions and in such order as may seem best to BNPPLC in its sole and uncontrolled discretion, and any such action will not in anywise be considered as a waiver of any of the rights, benefits, liens or security interests evidenced by this instrument.
          To the full extent NAI may do so, NAI agrees that NAI will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force pertaining to the rights and remedies of sureties or redemption, and NAI, for NAI and NAI’s successors and assigns, and for any and all persons ever claiming any interest in the Security, to the extent permitted by law, hereby waives and releases all rights of redemption, valuation, appraisement, stay of execution, notice of intention to mature or declare due the whole of the Secured Obligations, notice of election to mature or declare due the whole of the Secured Obligations and all rights to a marshaling of the assets of NAI, including the Security, or to a sale in inverse order of alienation in the event of foreclosure of the liens and security interests hereby created. NAI will not have or assert any right under any statute or rule of law pertaining to the marshaling of assets, sale in inverse order of alienation, the exemption of homestead, the administration of estates of decedents or other matters whatever to defeat, reduce or affect the right of BNPPLC under the terms of this instrument to a sale of the Security for the collection of the Secured Obligations without any prior or different resort for collection, or the right of BNPPLC under the terms of this instrument to the payment of the Secured Obligations out of the proceeds of sale of the Security in preference to every other claimant whatever. If any law referred to in this section and now in force, of which NAI or NAI’s successors and assigns and such other persons claiming any interest in the Security might take advantage despite this provision, is hereafter repealed or ceases to be in force, such law shall not thereafter be deemed to preclude the application of this provision.
          In the event there is a foreclosure sale hereunder and at the time of such sale NAI or NAI’s successors or assigns or any other persons claiming any interest in the Security by, through or under NAI are occupying or using the Security, or any part thereof, each and all will immediately become the tenant of the purchaser at such sale. Such tenancy will be a tenancy from day-to-day, terminable at the will of either landlord or tenant, at a reasonable rental per day based upon the value of the property occupied, such rental to be due daily to the purchaser. In the event the tenant fails to surrender possession of said property upon demand, the purchaser will be entitled to institute and maintain an action to obtain possession in any court of competent jurisdiction in California.
          NAI agrees to pay BNPPLC for each statement of BNPPLC (as beneficiary) regarding the
 
Exhibit B to Lease Agreement (Building 9) – Page 9

 

 

obligations secured hereby the maximum fee allowed by law or, if there is no maximum fee, such reasonable fee as is then charged by BNPPLC for rendering such statement.
          Notwithstanding any contrary provisions regarding the giving of notices in the Common Definitions or Provisions Agreement or other Operative Documents, any service of a notice required by California Civil Code §2924 will be considered complete when the requirements of that statute are met.
          All rights of action under this Exhibit be enforced by BNPPLC or Trustee without the possession of any instruments secured hereby and without the production thereof or of this Lease or other Operative Documents at any trial or other proceeding relative thereto.
 
Exhibit B to Lease Agreement (Building 9) – Page 10

 

exv10w72
Exhibit 10.72

      

COMMON DEFINITIONS
AND PROVISIONS AGREEMENT
(BUILDING 9)
between
BNP PARIBAS LEASING CORPORATION
and
NETWORK APPLIANCE, INC.
Dated as of February 1, 2008
 


 

 

TABLE OF CONTENTS
         
      Page  
 
        
ARTICLE I — LIST OF DEFINED TERMS
     1  
97-10/Maximum Permitted Prepayment
     1  
97-10/Meltdown Event
     1  
97-10/Prepayment
     1  
97-10/Project Costs
     1  
97-10/Pronouncement
     1  
ABR
     1  
ABR Period Election
     2  
Active Negligence
     2  
Additional Rent
     2  
Administrative Fees
     2  
Advance Date
     2  
Affiliate
     3  
After Tax Basis
     3  
Applicable Laws
     3  
Applicable Purchaser
     3  
Appurtenant Easements
     3  
Arrangement Fee
     3  
Attorneys’ Fees
     3  
Balance of Unpaid Construction Period Losses
     3  
Banking Rules Change
     3  
Base Rent
     4  
Base Rent Commencement Date
     4  
Base Rent Date
     4  
Base Rent Period
     4  
BNPPLC
     5  
BNPPLC’s Parent
     5  
Breakage Costs
     5  
Break Even Price
     6  
Business Day
     6  
Capital Adequacy Charges
     6  
Carrying Costs
     6  
Closing Certificate
     6  
Closing Letter
     6  
Code
     7  
Commitment Fees
     7  
Common Definitions and Provisions Agreement
     7  
Completion Date
     7  
Completion Notice
     7  
Consolidated Debt for Borrowed Money
     7  

 

 

TABLE OF CONTENTS
(Continued)
         
      Page  
 
        
Consolidated EBITDA
     7  
Constituent Documents
     7  
Construction Advances
     7  
Construction Advance Request
     7  
Construction Agreement
     7  
Construction Allowance
     7  
Construction Period
     7  
Construction Project
     8  
Covered Construction Period Losses
     8  
Default
     8  
Default Rate
     8  
Defective Work
     8  
Designated Sale Date
     8  
Effective Date
     9  
Effective Rate
     9  
Eligible Financial Institution
     10  
Environmental Cutoff Date
     10  
Environmental Laws
     11  
Environmental Losses
     11  
Environmental Report
     11  
ERISA
     12  
ERISA Affiliate
     12  
ERISA Termination Event
     12  
Escrowed Proceeds
     12  
Established Misconduct
     13  
Eurocurrency Liabilities
     14  
Eurodollar Rate Reserve Percentage
     14  
Event of Default
     14  
Excluded Taxes
     16  
Fed Funds Rate
     17  
Fixed Rate
     18  
Fixed Rate Lock
     18  
Fixed Rate Lock Date
     18  
Fixed Rate Lock Termination
     18  
Fixed Rate Lock Termination Date
     18  
Fixed Rate Lock Notice
     18  
Fixed Rate Loss
     18  
Fixed Rate Settlement Amount
     19  

(ii)

 

TABLE OF CONTENTS
(Continued)
         
      Page  
 
        
Fixed Rate Swap
     19  
Floating Rate Payor
     19  
FOCB Notice
     19  
Force Majeure Event
     19  
Fully Subordinated or Removable
     19  
Funded Construction Allowance
     20  
Funding Advances
     20  
Future Work
     20  
GAAP
     20  
Ground Lease
     20  
Hazardous Substance
     20  
Hazardous Substance Activity
     21  
Improvements
     21  
Increased Commitment
     21  
Increased Funding Commitment
     21  
Increased Time Commitment
     21  
Indebtedness
     21  
Initial Advance
     23  
Interested Party
     23  
Interest Rate Swap
     23  
Land
     23  
Lease
     24  
Lease Balance
     24  
Lease Termination Damages
     24  
Liabilities
     24  
LIBOR
     24  
LIBOR Period Election
     25  
Lien
     26  
Liens Removable by BNPPLC
     26  
Local Impositions
     27  
Losses
     27  
Market Quotation
     27  
Maximum Construction Allowance
     28  
Maximum Remarketing Obligation
     28  
Minimum Insurance Requirements
     28  
Multiemployer Plan
     28  
NAI
     28  
NAI’s Estimate of Force Majeure Excess Costs
     28  

(iii)

 

TABLE OF CONTENTS
(Continued)
         
      Page  
 
        
NAI’s Estimate of Force Majeure Delays
     28  
NAI’s Initial Remarketing Right
     28  
Notice of NAI’s Intent to Terminate
     28  
Notice of NAI’s Intent to Terminate Because of a Force Majeure Event
     29  
Notice of Termination by NAI
     29  
Operative Documents
     29  
Outstanding Construction Allowance
     29  
Owner’s Election to Continue Construction
     29  
Participant
     29  
Participation Agreement
     29  
Period
     30  
Permitted Encumbrances
     30  
Permitted Hazardous Substance Use
     30  
Permitted Hazardous Substances
     31  
Permitted Transfer
     31  
Person
     32  
Personal Property
     32  
Plan
     32  
Pre-lease Casualty
     32  
Pre-lease Force Majeure Delays
     32  
Pre-lease Force Majeure Event
     32  
Pre-lease Force Majeure Event Notice
     32  
Pre-lease Force Majeure Excess Costs
     32  
Pre-lease Force Majeure Losses
     32  
Prime Rate
     32  
Prior Work
     33  
Projected Cost Overruns
     33  
Property
     33  
Purchase Agreement
     33  
Purchase Option
     33  
Qualified Affiliate
     33  
Qualified Income Payments
     33  
Qualified Prepayments
     33  
Real Property
     34  
Reimbursable Construction-Period Costs
     34  
Remedial Work
     34  
Rent
     35  
Responsible Financial Officer
     35  

(iv)

 

TABLE OF CONTENTS
(Continued)
         
      Page  
 
        
Rolling Four Quarters Period
     35  
Scope Change
     35  
Spread
     35  
Subsidiary
     36  
Supplemental Payment
     36  
Supplemental Payment Obligation
     36  
Tangible Personal Property
     36  
Target Completion Date
     36  
Term
     36  
Termination of NAI’s Work
     37  
Third Party Contract
     37  
Third Party Contract/Termination Fees
     37  
Transaction Expenses
     37  
Unfunded Benefit Liabilities
     37  
Upfront Fees
     37  
Work
     37  
Work/Suspension Event
     37  
Work/Suspension Notice
     37  
Work/Suspension Period
     37  
             
 
            
ARTICLE II — SHARED PROVISIONS     37  
1.
   Notices     37  
2.
   Severability     40  
3.
   No Merger     40  
4.
   No Implied Waiver     40  
5.
   Entire and Only Agreements     40  
6.
   Binding Effect     41  
7.
   Time is of the Essence     41  
8.
   Governing Law     41  
9.
   Paragraph Headings     41  
10.
   Negotiated Documents     41  
11.
   Terms Not Expressly Defined in an Operative Document     41  
12.
   Other Terms and References     41  
13.
   Execution in Counterparts     42  
14.
   Not a Partnership, Etc     42  
15.
   No Fiduciary Relationship Intended     42  

(v)

 

TABLE OF CONTENTS
(Continued)
     
    Page
 
    

Annexes
 
    
Annex 1
  ABR Period Election Form
 
    
Annex 2
  Fixed Rate Lock Notice Form
 
    
Annex 3
  LIBOR Period Election Form
 
    
Annex 4
  Minimum Insurance Requirements

(vi)

 

COMMON DEFINITIONS AND PROVISIONS AGREEMENT
(BUILDING 9)
          This COMMON DEFINITIONS AND PROVISIONS AGREEMENT (BUILDING 9) (this “Agreement”), dated as of February 1, 2008 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
          Contemporaneously with the execution of this Agreement, NAI and BNPPLC are executing the Closing Certificate (as defined below), the Ground Lease (as defined below), the Lease (as defined below), the Construction Agreement (as defined below) and the Purchase Agreement (as defined below), all of which concern NAI or the Property (as defined below). Each of the Closing Certificate, the Ground Lease, the Lease, the Construction Agreement and the Purchase Agreement (together with this Agreement, the “Operative Documents”) are intended to create separate and independent obligations upon the parties thereto. However, NAI and BNPPLC intend that all of the Operative Documents share certain consistent definitions and other miscellaneous provisions. To that end, the parties are executing this Agreement 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 will have the respective indicated meanings as used herein and in the other Operative Documents:
          “97-10/Maximum Permitted Prepayment” has the meaning indicated in the Construction Agreement .
          “97-10/Meltdown Event” has the meaning indicated in the Construction Agreement.
          “97-10/Prepayment” has the meaning indicated in the Construction Agreement.
          “97-10/Project Costs“has the meaning indicated in the Construction Agreement.
          “97-10/Pronouncement” has the meaning indicated in the Construction Agreement.
          “ABR” means, for any day, a fluctuating rate of interest per annum (rounded upwards, if necessary, to the next 1/100th of 1%) equal to the higher of (a) the Prime Rate in effect on such day and (b) the Fed Funds Rate in effect one day prior to such day plus 1/4 of 1% per annum.
          

 

 

For any period (including any Base Rent Period), “ABR” means the average of the ABR for each day during such period.
          “ABR Period Election” means an election to have the Effective Rate for any Period calculated by reference to the ABR, rather than by reference to LIBOR or a Fixed Rate. NAI may (subject to the limitations and qualifications set forth in this definition) make any Period after the first Construction Period subject to an ABR Period Election by a notice given to BNPPLC in the form attached as Annex 1 at least five Business Days prior to the commencement of such Period. After an ABR Period Election becomes effective, it will remain in effect for all subsequent Periods until the Fixed Rate Lock Date for any Fixed Rate Lock or a different election is made in accordance with the provisions of this definition and the definition of LIBOR Period Election. In no event will changes in any ABR Period Election or LIBOR Period Election become effective except upon the commencement of a new Period. (For purposes of the Operative Documents, an ABR Period Election for any Period will also be considered in effect on the Effective Date, Advance Date, Base Rent Commencement Date or Base Rent Date upon which such Period begins.)
          “Active Negligence” of any Person 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 (other than NAI) in a manner that proximately causes actual bodily injury or property damage for which NAI does not carry (and is not obligated by the Construction Agreement or the Lease to carry) insurance. “Active Negligence” will not include (1) any negligent failure of BNPPLC to act when the duty to act would not have been imposed but for BNPPLC’s status as owner of any interest in the Land, the Improvements or any other Property or as a party to the transactions described in the Lease or the other Operative Documents, (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 BNPPLC or participation or facilitation in any manner, directly or indirectly, of the transactions described in the Lease or other Operative Documents, or (3) the exercise in a lawful manner by BNPPLC (or any party lawfully claiming through or under BNPPLC) of any right or remedy provided in or under the Lease or the other Operative Documents.
          “Additional Rent” has the meaning indicated in subparagraph 3(F) of the Lease.
          “Administrative Fees” means the fees identified as such in subparagraph 3(E) of the Lease and subparagraph 3(A) of the Construction Agreement.
          “Advance Date” means, regardless of whether any Construction Advance is actually made on such date, the first Business Day of every calendar month, beginning with the first Business Day in March, 2008 and continuing regularly thereafter to and including the Base Rent Commencement Date, which will be the last Advance Date.
 
Common Definitions and Provisions Agreement (Building 9) – Page 2

 

 

          “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.
          “After Tax Basis” has the meaning indicated in subparagraph 5(C)(1) of the Lease.
          “Applicable Laws” means any or all of the following, to the extent applicable to BNPPLC, NAI, the Property or the Operative Documents, after giving effect to the contractual choice of law provisions in the 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 to purchase BNPPLC’s interest in the Property and in any Escrowed Proceeds as provided in the Purchase Agreement.
          “Appurtenant Easements” has the meaning indicated in Exhibit A attached to the Ground Lease.
          “Arrangement Fee” has the meaning indicated in the Construction Agreement.
          “Attorneys’ Fees” means the expenses and reasonable fees of counsel to the parties incurring the same, including costs or expenses of in-house counsel (whether or not accounted for as general overhead or administrative expenses) and 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 will also include all such expenses and reasonable fees 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 Losses” has the meaning indicated in the Purchase Agreement.
          “Banking Rules Change” means either: (1) the introduction of or any change after the Effective Date (other than any change by way of imposition or increase of reserve requirements included in the Eurodollar Rate Reserve Percentage) in any law or regulation applicable to BNPPLC, BNPPLC’s Parent or any 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
 
Common Definitions and Provisions Agreement (Building 9) – Page 3

 

 

change by way of imposition or increase of reserve requirements included in the Eurodollar Rate Reserve Percentage) or (2) the compliance by BNPPLC, BNPPLC’s Parent or any Participant with any new guideline or new request issued after the Effective Date from any central bank or other governmental authority (whether or not having the force of law).
          “Base Rent” means the rent payable by NAI pursuant to subparagraph 3(A) of the Lease.
          “Base Rent Commencement Date” means the first Business Day of the first calendar month after the Completion Date.
          “Base Rent Date” means a date upon which Base Rent must be paid under the Lease, all of which dates will be the first Business Day of a calendar month. The first Base Rent Date will be determined as follows:
          a)     If an ABR Period Election or 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 will be the first Base Rent Date.
          b)     If a LIBOR Period Election of three months or six months is in effect on the Base Rent Commencement Date, then the first Business Day of the third calendar month following the Base Rent Commencement Date will be the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date will 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 an ABR Period Election or a LIBOR Period Election of one month is in effect on a Base Rent Date, or if a Fixed Rate Lock commences or continues on a Base Rent Date, then the first Business Day of the first calendar month following such Base Rent Date will be the next following Base Rent Date.
          (2)     If a LIBOR Period Election of three months or longer is in effect on a Base Rent Date, then the first Business Day of the third calendar month following such Base Rent Date will be the next following Base Rent Date.
Thus, for example, if the Base Rent Commencement Date falls on the first Business Day of September, 2008 and a LIBOR Period Election of three months commences on the Base Rent Commencement Date, then the first Base Rent Date will be the first Business Day of December, 2008.
          “Base Rent Period” means a period for which Base Rent must be paid under the Lease,
 
Common Definitions and Provisions Agreement (Building 9) – Page 4

 

 

each of which periods will correspond to the ABR Period Election or LIBOR Period Election for the period (except when a Fixed Rate Lock continues in effect). The first Base Rent Period will begin on and include the Base Rent Commencement Date, and each successive Base Rent Period will begin on and include the Base Rent Date upon which the preceding Base Rent Period ends. Each Base Rent Period, including the first Base Rent Period, will 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 an ABR Period Election or a LIBOR Period Election of one month or three months is in effect for a Base Rent Period, or if a Fixed Rate Lock commences or continues on the first day of the Base Rent Period, then such Base Rent Period will end on but not include the first Base Rent Date after the Base Rent Date upon which such period began.
          (2)     If a LIBOR Period Election of six months is in effect for a Base Rent Period, then such Base Rent Period will end on but not include 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, 2009, 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 but not include the first Business Day in April, 2009, the third calendar month after January, 2009.
          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, 2009, 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, 2009.
          “BNPPLC” means BNPPLC Leasing Corporation, a Delaware corporation.
          “BNPPLC’s Parent” means BNP Paribas, 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 BNPPLC’s Parent (as a Participant or otherwise) or any Participant, for which BNPPLC’s Parent or the Participant requests reimbursement from BNPPLC, because of:
          (1)     the resulting liquidation or redeployment of deposits or other funds that were used to make or maintain Funding Advances upon application of a Qualified
 
Common Definitions and Provisions Agreement (Building 9) – Page 5

 

 

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)     the resulting liquidation or redeployment of deposits or other funds that were reserved to provide a Construction Advance requested by NAI, if and when the Construction Advance is not made as anticipated, either because NAI declined to accept the Construction Advance for any reason or because NAI failed to satisfy any of the conditions to such Construction Advance specified in the Construction Agreement; or
          (3)     the resulting liquidation or redeployment of deposits or other funds that were used to make or maintain Funding Advances upon the acceleration of the end of any Construction Period or Base Rent Period because of an acceleration of the Designated Sale Date as described in clauses (2) or (3) of the definition thereof.
Breakage Costs will include, for example, losses on Funding Advances maintained by BNPPLC’s Parent or any Participant which are attributable to any decline in LIBOR as of the effective date of any application described in the clause (1) preceding, as compared to the LIBOR used to determine the Effective Rate then in effect. Each determination of Breakage Costs by BNPPLC’s Parent or by any Participant, as applicable, will be conclusive and binding upon NAI in the absence of clear and demonstrable error.
          “Break Even Price” has the meaning indicated in 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, 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” will mean any day described in clause (1).
          “Capital Adequacy Charges” means any additional amounts BNPPLC’s Parent or any Participant requests BNPPLC to pay as compensation for an increase in required capital as provided in subparagraph 5(B)(2) of the Lease.
          “Carrying Costs” has the meaning indicated in the Construction Agreement.
          “Closing Certificate” means the Closing Certificate and Agreement (Building 9) dated as of the Effective Date executed by NAI and BNPPLC, as such Closing Certificate and Agreement may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
          “Closing Letter” means the letter agreement dated as of the Effective Date between
 
Common Definitions and Provisions Agreement (Building 9) – Page 6

 

 

BNPPLC and NAI confirming the amount of the Initial Advance and the Transactions Expenses paid from the Initial Advance.
          “Code” means the Internal Revenue Code of 1986, as amended.
          “Commitment Fees” has the meaning indicated in the Construction Agreement.
          “Common Definitions and Provisions Agreement” means this Agreement, which is incorporated by reference into each of the other Operative Documents, as this Agreement may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
          “Completion Date” has the meaning indicated in the Construction Agreement.
          “Completion Notice” has the meaning indicated in the Construction Agreement.
          “Consolidated Debt for Borrowed Money” has the meaning indicated in subparagraph 3(A) of the Closing Certificate.
          “Consolidated EBITDA” has the meaning indicated in subparagraph 3(A) of the Closing Certificate.
          “Constituent Documents” of any entity means the organizational documents pursuant to which such entity was created and is governed, such as the articles of incorporation and bylaws of a corporation, the articles of organization and regulations of a limited liability company or the partnership agreement of a partnership.
          “Construction Advances” has the meaning indicated in the Construction Agreement.
          “Construction Advance Request” has the meaning indicated in the Construction Agreement.
          “Construction Agreement” means the Construction Agreement (Building 9) dated as of the Effective Date between BNPPLC and NAI, as such Construction Agreement may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
          “Construction Allowance” has the meaning indicated in the Construction 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
 
Common Definitions and Provisions Agreement (Building 9) – Page 7

 

 

Construction Period will begin on and include the day on which the preceding Construction Period ends and will end on but not include the next following Advance Date, until the last Construction Period, which will 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 purchases BNPPLC’s interest in the Property pursuant to the Purchase Agreement.
          “Construction Project” has the meaning indicated in the Construction Agreement.
          “Covered Construction Period Losses” has the meaning indicated in the Construction Agreement.
          “Default” means any event or circumstance which constitutes, or which would with the passage of time or the giving of notice or both (if not cured within any applicable cure period) constitute, an Event of Default.
          “Default Rate” means, a floating per annum rate equal to two percent (2%) above ABR, except that for purposes of computing interest accruing for any period that commences thirty or more days after the Designated Sale Date on any 97-10/Prepayment, Base Rent or Supplemental Payment that has become due, but remains to be paid to BNPPLC by NAI, the Default Rate will mean a floating per annum rate equal to five percent (5%) above ABR. Notwithstanding the foregoing, in no event will the “Default Rate” at any time exceed the maximum interest rate permitted by Applicable Laws.
          “Defective Work” has the meaning indicated in the Construction Agreement.
          “Designated Sale Date” means the earliest of:
          (1)      the date upon which the Term is scheduled to expire as provided in Paragraph 1(A) of the Lease (i.e., the first Business Day of February, 2015); or
          (2)     any Business Day designated as the “Designated Sale Date” for purposes of this Agreement and the other Operative Documents in an irrevocable, unconditional notice given by NAI to BNPPLC before any 97-10/Meltdown Event has occurred; provided, that if the Business Day so designated by NAI as the Designated Sale Date is not at least twenty days after the date of such notice, the notice will be of no effect for purposes of this definition; and provided, further, that to be effective, any such notice must include an irrevocable exercise by NAI of the Purchase Option under subparagraph 2(A)(1) of the Purchase Agreement and thereby obligate NAI to tender payment of the full Break Even Price to BNPPLC on the Business Day so designated; or
          (3)     any Business Day designated as the “Designated Sale Date” for purposes of this Agreement and the other Operative Documents in a notice given by BNPPLC to
 
Common Definitions and Provisions Agreement (Building 9) – Page 8

 

 

NAI:
•        when an Event of Default has occurred and is continuing and after the Completion Date; or
•        after a 97-10/Meltdown Event or after BNPPLC’s receipt of a Pre-lease Force Majeure Event Notice from NAI; or
•        following any change in the zoning or other Applicable Laws after the Completion Date affecting the permitted use or development of the Property that, in BNPPLC’s judgment, materially reduces the value of the Property; or
•        following any discovery of conditions or circumstances on or about the Property after the Completion Date, such as the presence of an endangered species, which are likely to substantially impede the use or development of the Property and thereby, in BNPPLC’s judgment, materially reduce the value of the Property;
provided, however, that if the Business Day so designated by BNPPLC as the Designated Sale Date is not at least thirty days after the date of such notice, the notice will be of no effect for purposes of this definition; or
          (4)      the first Business Day after the commencement of any Event of Default described in clauses (G), (H) or (I) of the definition Event of Default herein that occurs because of any bankruptcy proceeding instituted by or against NAI, as debtor, under Title 11 of the United States Code; or
          (5)      any date upon which the Lease terminates pursuant to subparagraph 1(B) or subparagraph 1(C) of the Lease.
          “Effective Date” means February 1, 2008.
          “Effective Rate” means, for each Period, a per annum rate determined as follows:
          (1)      In the case of any Period subject to a LIBOR Period Election, the Effective Rate will equal the rate per annum determined by dividing (A) LIBOR for such Period, by (B) one hundred percent (100%) minus the Eurodollar Rate Reserve Percentage for such Period.
          (2)      In the case of any Period that is not subject to a LIBOR Period Election, the Effective Rate will equal the ABR for such Period.
 
Common Definitions and Provisions Agreement (Building 9) – Page 9

 

 

          (3)      Notwithstanding the foregoing, for any Base Rent Period that begins on or after the Fixed Rate Lock Date applicable to a Fixed Rate Lock and that ends before or on the date such Fixed Rate Lock is terminated as provided in subparagraph 3(C) of the Lease, the Effective Rate will equal the Fixed Rate.
So long as any LIBOR Period Election remains in effect, as LIBOR or the Eurodollar Rate Reserve Percentage changes from Period to Period, the Effective Rate will be automatically increased or decreased, as the case may be, without prior notice to NAI. Also, during any period when no LIBOR Period Election or Fixed Rate Lock is in effect, as the ABR changes from Period to Period, the Effective Rate will be automatically increased or decreased, as the case may be, without prior notice to NAI.
If for any reason BNPPLC determines that it is impossible or unreasonably difficult to determine the Effective Rate with respect to a given Period in accordance with the foregoing, then the “Effective Rate” for that Period will equal any published index or per annum interest rate determined in good faith by BNPPLC 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 BNPPLC’s comparison of past eurodollar market rates to past yields on such Treasury obligations.
          “Eligible Financial Institution” means (a) a commercial bank organized under the laws of the United States, or any State thereof or the District of Columbia, and having total assets in excess of $5,000,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (“OECD”) or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having total assets in excess of $5,000,000,000; provided, that such bank is acting through a branch or agency located in the United States; (c) the central bank of any country which is a member of the OECD; and (d) a finance company, insurance company or other financial institution (whether a corporation, partnership or other entity, but excluding any savings and loan association) which is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business, and having total assets in excess of $5,000,000,000; provided, however, that in no event will any bank or other Person qualify as an Eligible Financial Institution at any time when it has outstanding obligations with a credit rating less than investment grade from Standard & Poor’s, a division of the McGraw-Hill Companies, or Moody’s Investors Service, Inc. or another nationally recognized rating service.
          “Environmental Cutoff Date” means the later of the dates upon which (i) the Lease terminates or NAI’s interests in the Property are sold at foreclosure as provided in Exhibit B attached to the Lease, or (ii) NAI surrenders possession and control of the Property and ceases to
 
Common Definitions and Provisions Agreement (Building 9) – Page 10

 

 

have interest in the Land or Improvements or rights with respect thereto under any of the Operative Documents.
          “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, 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.
          “Environmental Losses” means Losses suffered or incurred by BNPPLC 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 that occurs or is alleged to have occurred on or prior to the Environmental Cutoff Date; (ii) any violation of any applicable Environmental Laws relating to the Land or the Property or to the ownership, use, occupancy or operation thereof that occurs or is alleged to have occurred in whole or in part on or prior to the Environmental Cutoff Date; (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 in whole or in part 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 Lease, any actual or alleged Hazardous Substance Activity or violation of Environmental Laws relating to the Land or 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 Report” means, collectively, the following reports, which were provided by NAI to BNPPLC prior to the Effective Date:
          (1)      Phase I and Screen Level Phase II Environmental Assessment for 495 Java Drive, Sunnyvale, California dated October 1, 1997 provided by McLaren Hart Environmental Engineering Corporation;
          (2)      Phase I and Screen Level Phase II Environmental Assessment for 475 Java Drive, Sunnyvale, California dated March 24, 1998 provided by McLaren Hart Environmental Engineering Corporation;
 
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          (3)      Phase I Environmental Site Assessment for 1275 Crossman Avenue, Sunnyvale, California dated June 29, 1998 provided by Dames & Moore Group; and
          (4)      Phase I Environmental Site Assessment for 1330 & 1350 Geneva Drive and 1345 & 1347 Crossman Avenue, Sunnyvale, California dated November 1, 1999 provided 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.
          “ERISA Termination Event” means (a) the occurrence with respect to any Plan of (1) a reportable event described in Sections 4043(b)(5) or (6) of ERISA or (2) any other reportable event described in Section 4043(b) of ERISA other than a reportable event not subject to the provision for thirty-day notice to the Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation under Section 4043(a) of ERISA, or (b) the withdrawal of NAI or any ERISA Affiliate from a Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of intent to terminate any Plan or the treatment of any Plan amendment as a termination under Section 4041 of ERISA, or (d) the institution of proceedings to terminate any Plan by the Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.
          “Escrowed Proceeds” means, subject to the exclusions specified in the next sentence, any money that is received by BNPPLC 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 (including any indirect condemnation by means of a taking of any of the Land or appurtenant easements), (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 will be deducted all expenses and costs of every type, kind and nature (including Attorneys’ Fees) incurred by BNPPLC to collect such proceeds. Notwithstanding the foregoing, “Escrowed Proceeds” will not include (A) any payment to BNPPLC by a Participant or an Affiliate of BNPPLC that is made to compensate BNPPLC for the Participant’s or Affiliate’s share of any Losses BNPPLC may incur as a result of any of the
 
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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, Fixed Rate Settlement Amount 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, BNPPLC returns or pays to a third party because of BNPPLC’s good faith belief that such return or payment is required by law, (D) any money or proceeds paid by BNPPLC to NAI or offset against any amount owed by NAI, or (E) any money or proceeds used by BNPPLC in accordance with the 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 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, BNPPLC will keep the same deposited in one or more interest bearing accounts, and all interest earned on such account will 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, conduct of such Person that constitutes a breach by it of the express provisions of the Operative Documents or the Participation Agreement, as applicable, and that continues beyond any period for cure provided therein, 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)      conduct of such Person or its Affiliates that has been determined to constitute willful 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.
In no event, however, will Established Misconduct include actions of any Person undertaken in good faith to mitigate Losses that such Person may suffer because of a breach or repudiation by NAI of any of the Operative Documents. Further, negligence other than Active Negligence will not in any event constitute Established Misconduct. For purposes of this definition, “conduct of a Person” will consist of (1) the conduct of any employee of that Person to the extent (and only to the extent) that the employee is acting within the scope of his employment by that Person, 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 (a) acting within the scope of the authority granted to him by such Person, and (b) neither NAI nor acting with the consent or approval of or at the request of or under the direction of NAI or NAI’s Affiliates, employees or agents. Established Misconduct of one Interested Party will not be attributed to a second Interested Party unless the second Interested Party is an Affiliate of the first, and it is understood that BNPPLC has not been authorized, and nothing in the Participation Agreement will be construed as
 
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authorizing BNPPLC, to act as an “agent” for any Participant as the term is used in this definition.
          “Eurocurrency Liabilities” has the meaning indicated 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 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 BNPPLC’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” means any of the following:
          (A)      NAI fails to pay when due any installment of Base Rent or Administrative Fees required by the Lease, and such failure continues for three Business Days after NAI is notified in writing thereof.
          (B)      NAI fails to pay the full amount of any 97-10/Prepayment when due as provided in the Construction Agreement or fails to pay the full amount of any Supplemental Payment as provided in the Purchase Agreement on the Designated Sale Date.
          (C)      NAI fails to pay when first due any amount required by the Operative Documents (other than Base Rent or Administrative Fees required as provided in the Lease, any 97-10/Prepayment required as provided in the Construction Agreement or any Supplemental Payment required as provided in the Purchase Agreement) and such failure continues for ten Business Days after NAI is notified thereof.
          (D)      NAI fails to cause any representation or warranty of NAI contained in any of the Operative Documents 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 definition), or NAI fails to comply with any provision of the Operative Documents (other than as described in the other clauses of this definition), and in either case does not cure such failure prior to the earlier of (A) thirty days after notice thereof is given to NAI or (B) the date any writ or order is issued for the levy or sale of any property owned by BNPPLC (including the Property) or any criminal prosecution is instituted or overtly threatened against BNPPLC 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 will be extended for a further period (not to exceed an
 
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additional one hundred twenty days) as is 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 promptly commences to cure such failure and thereafter continuously prosecutes 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 to or beyond the Designated Sale Date.
          (E)      NAI abandons any material part of the Property.
          (F)      NAI or any Subsidiary of NAI fails to pay any principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event occurs or condition exists under any agreement or instrument relating to any such Indebtedness and continues after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate the maturity of such Indebtedness; or any such Indebtedness is declared by the creditor to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness is required to be made, in each case prior to the stated maturity thereof.
          (G)      NAI or any Subsidiary of NAI is generally not paying its debts as such debts become due, or admits in writing its inability to pay its debts generally, or makes a general assignment for the benefit of creditors; or any proceeding is instituted by or against NAI or any Subsidiary of NAI seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding remains undismissed or unstayed for a period of sixty consecutive days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) occurs; or NAI or any Subsidiary of NAI takes any corporate action to authorize any of the actions set forth above in this clause.
          (H)      Any order, judgment or decree is entered in any proceedings against NAI or any of NAI’s Subsidiaries decreeing its dissolution and such order, judgment or decree remains unstayed and in effect for more than sixty days.
          (I)      Any order, judgment or decree is entered in any proceedings against NAI or any of
 
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NAI’s Subsidiaries decreeing a divestiture of any of assets that represent a substantial part, or the divestiture of the stock of any of NAI’s Subsidiaries whose assets represent a substantial part, of the total assets of NAI and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) or which requires the divestiture of assets, or stock of any of NAI’s Subsidiaries, which have contributed a substantial part of the net income of NAI and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) for any of the three fiscal years then most recently ended, and such order, judgment or decree remains unstayed and in effect for more than sixty days.
          (J)      A judgment or order for the payment of money in an amount (not covered by insurance) which exceeds $25,000,000 is rendered against NAI or any of NAI’s Subsidiaries and either (i) enforcement proceedings is commenced by any creditor upon such judgment, or (ii) within thirty days after the entry thereof, such judgment or order is not discharged or execution thereof stayed pending appeal, or within thirty days after the expiration of any such stay, such judgment is not discharged.
          (K)      Any ERISA Termination Event occurs that BNPPLC determines in good faith would constitute grounds for a termination of any Plan or for the appointment by the appropriate United States district court of a trustee to administer any Plan and such ERISA Termination Event is continuing thirty days after notice to such effect is given to NAI by BNPPLC, or any Plan is terminated, or a trustee is appointed by a United States district court to administer any Plan, or the Pension Benefit Guaranty Corporation institutes proceedings to terminate any Plan or to appoint a trustee to administer any Plan.
          (L)      NAI enters into any transaction which would cause any of the Operative Documents or any other document executed in connection herewith (or any exercise of BNPPLC’s rights hereunder or thereunder) to constitute a non-exempt prohibited transaction under ERISA.
          (M)      NAI fails to comply with the financial covenants set forth in subparagraph 3(C) of the Closing Certificate.
          (N)      Any Change in Control (as defined in subparagraph 3(A) of the Closing Certificate) shall occur.
          “Excluded Taxes” means:
          (A)      taxes upon or measured by net income to the extent such taxes are payable in respect of Base Rent or other Qualified Income Payments;
          (B)      transfer or change of ownership taxes assessed because of BNPPLC’s transfer or conveyance to any third party of any rights or interest in the Improvements Lease, the Purchase
 
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Agreement or the Property (other than any such taxes assessed because of any Permitted Transfer under clauses (1), (4) or (5) of the definition of Permitted Transfer in this Agreement);
          (C)      federal, state and local income taxes upon any amounts paid as reimbursement for or to satisfy Losses incurred by BNPPLC or any Participant to the extent, but only to the extent, such taxes are offset by a corresponding reduction of BNPPLC’s or the applicable Participant’s income taxes which are not otherwise subject to reimbursement or indemnification by NAI because of BNPPLC’s or such Participant’s deduction of the reimbursed Losses from its taxable income or because of any tax credits attributable thereto;
          (D)      income taxes that are (i) payable by BNPPLC in respect of any Qualified Prepayment or any net sales proceeds paid to BNPPLC upon a sale of the Property because of Forced Recharacterization as described in subparagraph 4(C)(3) of the Lease, and (ii) offset in the same taxable period by a reduction in the taxes of BNPPLC which are not otherwise subject to reimbursement or indemnification by NAI resulting from depreciation deductions or other tax benefits available to BNPPLC only because of the refusal of the tax authorities to treat the Lease and other Operative Documents as a financing arrangement;
          (E)      any withholding taxes that subparagraph 13(A) of the Lease excuses NAI from paying or requires BNPPLC to pay; and
          (F)      any franchise taxes payable by BNPPLC, but only to the extent that such franchise taxes would be payable by BNPPLC even if the transactions contemplated by the Lease and the other Operative Documents were characterized for tax purposes as a mere financing arrangement and not as a lease or sale.
It is understood that if tax rates used to calculate income taxes which constitute Excluded Taxes under clause (1) of this definition are increased, the resulting increase will not be subject to reimbursement or indemnification by NAI. If, however, a change in Applicable Laws after the Effective Date, as applied to the transactions contemplated by the Operative Documents on a stand-alone basis, results in an increase in such income 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 (1) of this definition), then for purposes of the Operative Documents, the term “Excluded Taxes” will not include the actual increase in such taxes attributable to the change. Accordingly, BNPPLC or any Participant may recover any such net increase from NAI pursuant to subparagraph 5(B) of the Lease.
It is also understood that nothing in this definition of “Excluded Taxes” will prevent any Original Indemnity Payment (as defined in subparagraph 5(C)(1) of the Lease) from being paid on an After Tax Basis.
          “Fed Funds Rate” means, for any period, a fluctuating interest rate (expressed as a per
 
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annum rate and rounded upwards, if necessary, to the next 1/16 of 1%) equal on 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 each day during such period on such transactions received by BNPPLC’s Parent from three Federal funds brokers of recognized standing selected by BNPPLC’s Parent.
          “Fixed Rate” means the fixed rate of interest established by BNPPLC’s execution of an Interest Rate Swap as described in subparagraph 3(B)(4) of the Lease.
          “Fixed Rate Lock” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease.
          “Fixed Rate Lock Date” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease.
          “Fixed Rate Lock Termination” means any termination in whole or in part of the Fixed Rate Swap as described in the first and second sentences of subparagraph 3(C) of the Lease.
          “Fixed Rate Lock Termination Date” means the date upon which a Fixed Rate Lock Termination is effective. In the case of a Fixed Rate Lock Termination that results from BNPPLC’s receipt of a Qualified Prepayment, the date such Qualified Prepayment is applied to reduce the Lease Balance will constitute the Fixed Rate Lock Termination Date. In the case of any Fixed Rate Lock Termination resulting from an acceleration of the Designated Sale Date as provided in clauses (2) or (3) the definition thereof in this Agreement, the Fixed Rate Lock Termination Date will constitute the Designated Sale Date.
          “Fixed Rate Lock Notice” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease, which includes a reference to the form attached as Annex 2.
          “Fixed Rate Loss” means an amount reasonably determined in good faith by the Floating Rate Payor to be its total losses and costs in connection with any Fixed Rate Lock Termination. Fixed Rate Loss will include any loss of bargain, cost of funding or, at the election of the Floating Rate Payor but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position. The Floating Rate Payor will be expected to determine the Fixed Rate Loss as of the date of the relevant Fixed Rate Lock Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. The Floating Rate Payor may (but need not) determine its Fixed Rate Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets.
 
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          “Fixed Rate Settlement Amount” means, with respect to any Fixed Rate Lock Termination:
(a)      the Market Quotation for such Fixed Rate Lock Termination, if a Market Quotation can be determined and if (in the reasonable belief of the Floating Rate Payor as the party making the determination) determining a Market Quotation would produce a commercially reasonable result; or
(b)      the Fixed Rate Loss, if any, for such Fixed Rate Lock Termination if a Market Quotation cannot be determined or would not (in the reasonable belief of the Floating Rate Payor as the party making the determination) produce a commercially reasonable result.
          “Fixed Rate Swap” has the meaning assigned to it in subparagraph 3(B)(4) of the Lease.
          “Floating Rate Payor” means BNP Paribas or any successor or assign of BNP Paribas under an Interest Rate Swap.
          “FOCB Notice” has the meaning indicated in the Construction Agreement.
          “Force Majeure Event” has the meaning indicated in the Construction Agreement.
          “Fully Subordinated or Removable” means, with respect to any Lien encumbering the Land or any appurtenant easement, that such Lien is, either by operation of Applicable Laws or by the express terms of documents which grant or create such Lien:
          (1) fully subject and subordinate to the Ground Lease and to all rights and property interests of BNPPLC under the Operative Documents; or
          (2) subject to release and removal by BNPPLC or any subsequent owner of the Property at any time after a Designated Sale Date without any requirement that BNPPLC or the subsequent owner compensate the holder of such Lien or make any other significant payment in connection with such release and removal;
provided, however, a Lien will not qualify as Fully Subordinated or Removable under clause (1) preceding if a purchase of the Land by BNPPLC pursuant to the purchase option set forth in the Ground Lease (as such option may be modified from time to time by agreement of lessor and lessee under the Ground Lease) will not, by operation of law or the express agreement of the holder of the Lien, effectively cut off and terminate such Lien insofar as it applies to or affects the Improvements and the Land purchased by BNPPLC; and, provided further, a Lien will not qualify as Fully Subordinated or Removable under clause (2) preceding if it provides or includes a power of sale or other right or remedy in favor of the holder of such Lien which could result in
 
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a foreclosure sale or other forfeiture of BNPPLC’s rights or interests under the Ground Lease or in the Property.
          “Funded Construction Allowance” has the meaning indicated in the Construction Agreement.
          “Funding Advances” means all advances made by BNPPLC’s Parent or any Participant to or on behalf of BNPPLC to allow BNPPLC to make the Initial Advance and to provide the Construction Allowance or maintain its investment in the Property.
          “Future Work” has the meaning indicated in the Construction 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 2(A)(4) of the Closing Certificate (except for changes with which NAI’s independent public accountants concur).
          “Governmental Authority” means (1) the United States, the state, the county, the municipality, and any other political subdivision in which the Land is located, and (2) any other nation, state or other political subdivision or agency or instrumentality thereof having or asserting jurisdiction over NAI or the Property.
          “Ground Lease” means the Ground Lease (Building 9) dated as of the Effective Date, under which the Land is leased from NAI to BNPPLC, as such Ground Lease may be extended, supplemented, amended, restated or otherwise modified from time to time in accordance with its terms.
          “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 (iv)  any other material that, because of its quantity, concentration or physical or chemical characteristics, is the subject of regulation under Applicable Law or 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 Land or 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 Land or the Property to any remedial obligations under, any Environmental Laws, assuming disclosure to the applicable Governmental Authorities of all relevant facts, conditions and circumstances pertaining to the Property.
          “Improvements” means any and all (1) buildings and other real property improvements previously 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.
          “Increased Commitment” has the meaning indicated in the Construction Agreement.
          “Increased Funding Commitment” has the meaning indicated in the Construction Agreement.
          “Increased Time Commitment” has the meaning indicated in the Construction Agreement.
          “Indebtedness” of any Person means (without duplication of any item) Liabilities of such Person in any of the following categories:
          (A)      Liabilities for borrowed money;
          (B)      Liabilities constituting an obligation to pay the deferred purchase price of property or services;
          (C)      Liabilities evidenced by a bond, debenture, note or similar instrument;
          (D)      Liabilities which (1) would under GAAP be shown on such Person’s balance sheet as a liability, and (2) are payable more than one year from the date of
 
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creation thereof (other than reserves for taxes and reserves for contingent obligations);
          (E)      Liabilities constituting principal under leases capitalized in accordance with GAAP;
          (F)      Liabilities arising under conditional sales or other title retention agreements;
          (G)      Liabilities owing under direct or indirect guaranties of Liabilities of any other Person or otherwise constituting obligations to purchase or acquire or to otherwise protect or insure a creditor against loss in respect of Liabilities of any other Person (such as obligations under working capital maintenance agreements, agreements to keep-well, or agreements to purchase Liabilities, assets, goods, securities or services), but excluding endorsements in the ordinary course of business of negotiable instruments in the course of collection;
          (H)      Liabilities (for example, repurchase agreements, mandatorily redeemable preferred stock and sale/leaseback agreements) consisting of an obligation to purchase or redeem securities or other property, if such Liabilities arises out of or in connection with the sale or issuance of the same or similar securities or property;
          (I)      Liabilities with respect to letters of credit or applications or reimbursement agreements therefor;
          (J)      Liabilities with respect to payments received in consideration of oil, gas, or other commodities yet to be acquired or produced at the time of payment (including obligations under “take-or-pay” contracts to deliver gas in return for payments already received and the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment);
          (K)      Liabilities with respect to other obligations to deliver goods or services in consideration of advance payments therefor; or
          (L)      Liabilities under any “synthetic” or other lease of property or related documents (including a separate purchase agreement) which obligate such Person or any of its Affiliates (whether by purchasing or causing another Person to purchase any interest in the leased property or otherwise) to guarantee a minimum residual value of the leased property to the lessor.
For purposes of this definition, the amount of Liabilities described in the last clause of the preceding sentence with respect to any lease classified according to GAAP as an “operating lease,” will equal the sum of (1) the present value of rentals and other minimum lease payments
 
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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; except that such amount will not exceed the price, as of the date a determination of Indebtedness 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 will be excused from paying rentals or other minimum lease payments that would otherwise accrue after the purchase.
Notwithstanding the foregoing, the “Indebtedness” of any Person will not include Liabilities that were incurred by such Person on ordinary trade terms to vendors, suppliers, or other Persons providing goods and services for use by such Person in the ordinary course of its business, unless and until such Liabilities are outstanding more than 90 days past the original invoice or billing date therefor.
          “Initial Advance” has the meaning indicated in the Construction Agreement.
          “Interested Party” means each of following Persons and their Affiliates: (1) BNPPLC and its successors and permitted assigns as to the Property or any part thereof or any interest therein, (2) BNPPLC’s Parent, and (3) the Participants and their successors and permitted assigns under the Participation Agreement; provided, however, none of the following Persons will constitute an Interested Party: (a) any Person to whom BNPPLC 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 a transfer by such a Person, (b) NAI and its Affiliates, (c) any Person claiming through or under a conveyance made by NAI after any purchase by NAI of BNPPLC’s interest in the Property pursuant to the Purchase Agreement, or (d) any Applicable Purchaser designated by NAI under the Purchase Agreement who purchases the Property pursuant to a sale arranged by NAI and any Person that cannot lawfully claim an interest in the Property except through or under a conveyance from such an Applicable Purchaser.
          “Interest Rate Swap” means an interest rate exchange transaction, entered into between BNPPLC, as the fixed rate payor, and BNP Paribas, as the swap counterparty and floating rate payor, under the then most recent form of Master Agreement published by the International Swaps and Derivatives Association, Inc., as supplemented by the definitions and such schedules, annexes, exhibits and supplements as are agreed upon by the parties thereto, pursuant to which BNP Paribas agrees to pay monthly to BNPPLC a floating rate of interest equal to LIBOR and BNPPLC agrees to pay monthly to BNP Paribas a fixed rate of interest for a term that commences on the Fixed Rate Lock Date and ends on the last day of the scheduled Term of the Lease. The notional principal amount used for any such interest rate exchange transaction will equal the Lease Balance calculated as of the date such transaction is entered into.
          “Land” means the land described in Exhibit A attached to the Closing Certificate, the
 
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Lease, the Ground Lease and the Purchase Agreement.
          “Lease” means the Lease Agreement (Building 9) dated as of the Effective Date between BNPPLC, as landlord, and NAI, as tenant, pursuant to which NAI has agreed to lease BNPPLC’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.
          “Lease Balance” as of any date means the amount equal to the sum of the Initial Advance, plus the sum of all Construction Advances, Carrying Costs and other amounts added to the Outstanding Construction Allowance as provided in the Construction Agreement on or prior to such date, minus all funds actually received by BNPPLC and applied as Qualified Prepayments on or prior to such date. Under no circumstances will any payment of Base Rent or other Qualified Income Payments reduce the Lease Balance.
          “Lease Termination Damages” has the meaning indicated in subparagraph 15(A)(3)(c) of the Lease.
          “Liabilities” means, as to any Person, all indebtedness, liabilities and obligations of such Person, whether matured or unmatured, liquidated or unliquidated, primary or secondary, direct or indirect, absolute, fixed or contingent, and whether or not required to be considered pursuant to GAAP.
          “LIBOR” means, for purposes of determining the Effective Rate for any Period, the per annum rate equal to:
          (a) the offered rate for deposits in U.S. dollars as of approximately 11:00 a.m., London time, on the day that is two London Banking Days (hereinafter defined) prior to the day upon which such Period begins (the “Reset Date”), as reported:
          (1) on Reuters Screen LIBOR01 page (or any replacement page or pages on which London interbank rates of major banks for U.S. dollars are displayed) by the Reuters service; or
          (2) on Moneyline Telerate Page 3750, British Bankers Association Interest Settlement Rates, or another news page selected by BNPPLC’s Parent if the Reuters Screen LIBOR01 page is removed from the Reuters system or changed such that, in the opinion of BNPPLC’s Parent, the interest rates shown on it no longer represent the same kind of interest rates as when the Operative Documents were executed; or
          (b) if such offered rate is for any reason unavailable, the rate per annum determined by BNPPLC’s Parent on the basis of rates offered for deposits in U.S. dollars
 
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by four major banks in the London interbank market selected by BNPPLC’s Parent (“Reference Banks”) at approximately 11:00 a.m., London time, on the day that is two London Banking Days preceding the Reset Date to prime banks in the London interbank market for a period corresponding as nearly as possible to the applicable Period. ( If this clause (b) applies, BNPPLC’s Parent will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two quotations are provided, “LIBOR” will be the arithmetic mean of the quotations. If, however, fewer than two quotations are provided, “LIBOR” will be the arithmetic mean of the rates quoted by major banks in New York selected by BNPPLC’s Parent, at approximately 11:00 a.m., New York time, on the Reset Date for loans in U.S. dollars to leading U.S. banks for a period corresponding as nearly as possible to the applicable Period.)
As used in this definition, “London Banking Day” means any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London, England.
          “LIBOR Period Election” means an election to have the Effective Rate for any Period calculated by reference to LIBOR, rather than by reference to the ABR or the Fixed Rate, and to have such period extend for approximately one month, three months or six months. The first Construction Period will be subject to a LIBOR Period Election of one month; and, subject to the limitations and qualifications set forth in this definition, NAI may make any subsequent Period subject to a LIBOR Period Election by a notice given to BNPPLC in the form attached as Annex 3 at least five Business Days prior to the commencement of such Period. After a LIBOR Period Election becomes effective, it will remain in effect for all subsequent Periods until a different election is made in accordance with the provisions of this definition and the definition of ABR Period Election above. (For purposes of the Construction Agreement and the Lease a LIBOR Period Election for any Period will also be considered the LIBOR Period Election in effect on the Effective Date, Advance Date, Base Rent Commencement Date or Base Rent Date upon which such Period begins.) Notwithstanding the foregoing:
  l   No LIBOR Period Election for a period of more than one month will be effective prior to the Completion Date.
 
  l   No LIBOR Period Election will be effective that would cause a Base Rent Period to extend beyond the end of the scheduled Term or beyond a Fixed Rate Lock Date.
 
  l   No LIBOR Period Election will commence or continue during any period that begins on or after the Fixed Rate Lock Date applicable to a Fixed Rate Lock and that ends before or on the date such Fixed Rate Lock is terminated as provided in subparagraph 3(C) of the Lease.
 
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  l   Changes in any ABR Period Election or LIBOR Period Election will become effective only upon the commencement of a new Period.
 
  l   In the event BNPPLC determines that it would be unlawful (or any central bank or governmental authority asserts that it would be unlawful) for BNPPLC, BNPPLC’s Parent or any Participant to provide or maintain Funding Advances during a Period if the Carrying Costs or Base Rent accrued during such Period at a rate based upon LIBOR, NAI will be deemed to have made such Period subject to an ABR Period Election, not a LIBOR Period Election.
 
  l   If for any reason (including BNPPLC’s receipt of a notice from NAI purporting to make a LIBOR Period Election that is contrary to the foregoing provisions), BNPPLC is unable to determine with certainty whether a particular Period is subject to a specific LIBOR Period Election of one month, three months or six months, or if any Event of Default has occurred and is continuing on the third Business Day preceding the commencement of a particular Period, NAI will be deemed to have made an ABR Period Election for that particular Period.
          “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).
          “Liens Removable by BNPPLC” means, and is limited to, Liens encumbering the Property that are asserted (1) other than as contemplated in the Operative Documents, by BNPPLC itself or by BNPPLC’s Parent, (2) by third parties lawfully claiming through or under BNPPLC (which for purposes of the Operative Documents will include any judgment liens established against the Property because of a judgment rendered against BNPPLC and will also include any liens established against the Property to secure past due Excluded Taxes), or (3) by third parties claiming under a deed or other instrument duly executed by BNPPLC; provided, however, Liens Removable by BNPPLC will not include (A) any Permitted Encumbrances (regardless of whether claimed through or under BNPPLC), (B) the Operative Documents or any other document executed by BNPPLC with the knowledge of (and without objection by) NAI or NAI’s counsel contemporaneously with the execution and delivery of the Operative Documents, (C) Liens which are neither lawfully claimed through or under BNPPLC (as described above) nor claimed under a deed or other instrument duly executed by BNPPLC, (D) Liens claimed by NAI or claimed through or under a conveyance made by NAI other than NAI’s conveyance of the leasehold estate to BNPPLC under the Ground Lease, (E) Liens arising because of BNPPLC’s compliance with Applicable Law, the Operative Documents, Permitted Encumbrances 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
 
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of past due Excluded Taxes or to secure damages caused by (and attributed by any applicable principles of comparative fault to) BNPPLC’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 any Applicable Purchaser does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
          “Local Impositions” means all sales, excise, ad valorem, gross receipts, business, transfer, stamp, occupancy, rental and other taxes (other than taxes on net income and corporate franchise taxes), levies, fees, charges, surcharges, assessments, interest, additions to tax, or penalties imposed by the State of California or any agency or political subdivision thereof upon BNPPLC or any owner of the Property or any part of or interest in the Property because of (i) the Lease or other Operative Documents, (ii) the status of record title to the Property, (iii) the ownership, leasing, occupancy, sale or operation of the Property or any part thereof or interest therein, or (iv) the Permitted Encumbrances; excluding, however, Excluded Taxes. “Local Impositions” will include any real estate taxes imposed because of a change of use or ownership of the Property resulting from, or occurring on or prior to the date of, any sale by BNPPLC pursuant to the Purchase Agreement.
          “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 of settlement and other 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, known and unknown.
          “Market Quotation” means, with respect to any Fixed Rate Lock Termination, an amount determined by the Floating Rate Payor on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid by the Floating Rate Payor in consideration of an agreement between it and the quoting Reference Market-maker to enter into a transaction (the “Replacement Transaction”) that would have the effect of preserving for the Floating Rate Payor the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) that would, but for the occurrence of the relevant Fixed Rate Lock Termination, have been required under the Fixed Rate Swap. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The Floating Rate Payor (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on the effective date of or as soon as
 
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reasonably practicable after the relevant Fixed Rate Lock Termination. The date and time as of which those quotations are to be obtained will be selected in good faith by the Floating Rate Payor. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations will be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Fixed Rate Lock Termination cannot be determined.
          “Material Adverse Effect” means a material adverse effect on (a) the assets, operations, financial condition or businesses of NAI, (b) the ability of NAI to perform any of its obligations under the Operative Documents, (c) the rights of or benefits available to BNPPLC under the Operative Documents, (d) the value, utility or useful life of the Property or (e) the priority, perfection or status of any of BNPPLC’s interests in the Property or in any of the Operative Documents.
          “Maximum Construction Allowance” has the meaning indicated in the Construction Agreement.
          “Maximum Remarketing Obligation” has the meaning indicated in the Purchase Agreement.
          “Minimum Insurance Requirements” means the insurance requirements outlined in Annex 4 attached to this 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 Delaware corporation.
          “NAI’s Estimate of Force Majeure Excess Costs” has the meaning indicated in the Construction Agreement.
          “NAI’s Estimate of Force Majeure Delays” has the meaning indicated in the Construction Agreement.
          “NAI’s Initial Remarketing Right” has the meaning indicated in the Purchase Agreement.
          “Notice of NAI’s Intent to Terminate” has the meaning indicated in the Construction
 
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Agreement.
          “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” has the meaning indicated in the Construction Agreement.
          “Notice of Termination by NAI” has the meaning indicated in the Construction Agreement.
          “Operative Documents” means the Closing Letter, the Closing Certificate, the Ground Lease, the Lease, the Construction Agreement, the Purchase Agreement and this Common Definitions and Provisions Agreement.
          “Outstanding Construction Allowance” has the meaning indicated in the Construction Agreement.
          “Owner’s Election to Continue Construction” has the meaning indicated in the Construction Agreement.
          “Participant” means any Person other than BNPPLC that from time to time, by executing the Participation Agreement or supplements as contemplated therein, becomes a party to the Participation Agreement and thereby agrees to participate in all or some of the risks and rewards to BNPPLC of the Operative Documents; provided, however, no such Person will qualify as a Participant for purposes of the Operative Documents unless (i) such Person is approved to be a Participant by NAI or (ii) such Person becomes a Participant when an Event of Default has occurred and is continuing. As of the Effective Date, NAI has approved only BANK OF AMERICA, N.A.; GOLDMAN SACHS CREDIT PARTNERS L.P.; JPMORGAN CHASE BANK, NATIONAL ASSOCIATION; KEYBANK NATIONAL ASSOCIATION; MORGAN STANLEY BANK; SUMITOMO MITSUI BANKING CORPORATION; and WELLS FARGO BANK, N.A. (all of which are original parties to the Participation Agreement). BNPPLC may, however, from time to time request NAI’s approval for other prospective Participants. NAI will not unreasonably withhold or delay any approval required for any prospective Participant which is an Eligible Financial Institution. However, as to any prospective Participant that is not already a party to the Participation Agreement or an Eligible Financial Institution, NAI may withhold such approval in its sole discretion. Further, it is understood that if giving such approval will increase NAI’s liability for withholding taxes or other taxes not constituting Excluded Taxes under tax laws or regulations then in effect, NAI may reasonably refuse to give such approval.
          “Participation Agreement” means the Participation Agreement (Building 9) dated as of the Effective Date, pursuant to which BANK OF AMERICA, N.A.; GOLDMAN SACHS CREDIT PARTNERS L.P.; JPMORGAN CHASE BANK, NATIONAL ASSOCIATION; KEYBANK NATIONAL ASSOCIATION; MORGAN STANLEY BANK; SUMITOMO MITSUI BANKING CORPORATION; and WELLS FARGO BANK, N.A. are agreeing with
 
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BNPPLC to participate in the risks and rewards to BNPPLC of the 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 will expressly make NAI a third party beneficiary of each Participant’s obligations thereunder to make advances to BNPPLC in connection with Construction Advances under the Construction Agreement, NAI’s consent will be required to any amendment of the Participation Agreement that limits or excuses such obligations.
          “Period” means a Construction Period or Base Rent Period.
          “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 BNPPLC at the request of or with the consent of NAI, (iii) any Liens securing the payment of Local Impositions which are not delinquent or claimed to be delinquent or which are being contested in accordance with subparagraph 5(A) of the Lease, (iv) statutory liens, if any, in the nature of contractors’, mechanics’ or materialmen’s liens for amounts not past due or claimed to be past due for more than thirty days or which are being contested in accordance with subparagraph 11(B) of the Lease, (v) Liens which are Fully Subordinated or Removable, (vi) any documents or maps which NAI executes and records, with the consent of BNPPLC as provided in subparagraph 4(C) of the Closing Certificate, and (vii) other easements (if any) that (A) have previously been executed by NAI (as owner of the Land) in favor of the City of Sunnyvale or a local utility provider for the use or installation of streets, sidewalks or utilities, (B) do not extend under, over or through any building or other structure constructed or be constructed on the Land, (C) do not and will not have any significant adverse impact on the value of the Property, and (D) do and will not preclude or significantly impede any development or construction contemplated in or permitted by the Operative Documents.
          “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 will not:
          (1) exceed that reasonably required for the construction of the Construction Project in accordance with the Construction Agreement or for the use and operation of the Property for the purposes expressly permitted under subparagraph 2(A) of the 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
 
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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 will not include any use of the Property (including as a landfill, incinerator or other waste disposal facility) in a manner that requires a treatment, storage or disposal permit under 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..
          “Permitted Hazardous Substances” means Hazardous Substances used and reasonably required for the construction of the Construction Project or for the use and operation of the Property by NAI and its permitted subtenants and assigns for the purposes expressly permitted by subparagraph 2(A) of the 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 will include usual and customary office and janitorial products.
          “Permitted Transfer” means any one or more of the following:
          (1)      the creation or conveyance by BNPPLC of rights and interests in favor of Participants pursuant to the Participation Agreement;
          (2)      any lien, security interest or assignment covering the Property or the Rents which is granted by BNPPLC in favor of Participants or an agent appointed for them to secure their rights under the Participation Agreement, and any subsequent assignment or conveyance made to accomplish a foreclosure of such lien or security interest, provided that such lien, security interest or assignment and any such subsequent assignment or conveyance are all made expressly subject to the rights of NAI under the Operative Documents;
          (3)      other than as described in the preceding clauses, any conveyance to BNPPLC’s Parent or to any Qualified Affiliate of BNPPLC of all or any interest in or rights with respect to the Property or any portion thereof, provided that NAI and Participants must be notified before any such conveyance to BNPPLC’s Parent or a Qualified Affiliate which will be recorded in the real property records of the county in which the Land is situated;
          (4)      any assignment or conveyance by BNPPLC requested by NAI or required by any Permitted Encumbrance, by the Purchase Agreement or by Applicable Laws; or
 
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          (5)      any assignment or conveyance after a Designated Sale Date on which NAI does not purchase or cause an Applicable Purchaser to purchase BNPPLC’s interest in the Property and, if applicable, after the expiration of the thirty day cure period specified in Paragraph 3(A) 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” has the meaning indicated on page 2 of the 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 during the preceding six years and which is covered by Title IV of ERISA, including any Multiemployer Plan.
          “Pre-lease Casualty” has the meaning indicated in the Construction Agreement.
          “Pre-lease Force Majeure Delays” has the meaning indicated in the Construction Agreement.
          “Pre-lease Force Majeure Event” has the meaning indicated in the Construction Agreement.
          “Pre-lease Force Majeure Event Notice” has the meaning indicated in the Construction Agreement.
          “Pre-lease Force Majeure Excess Costs” has the meaning indicated in the Construction Agreement.
          “Pre-lease Force Majeure Losses” has the meaning indicated in the Construction Agreement.
          “Prime Rate” means the prime interest rate or equivalent charged by BNPPLC’s Parent in the United States of America as announced or published by BNPPLC’s Parent from time to time, which need not be the lowest interest rate charged by BNPPLC’s Parent. If for any reason BNPPLC’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 BNPPLC will 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
 
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this definition.
          “Prior Work” has the meaning indicated in the Construction Agreement.
          “Projected Cost Overruns” has the meaning indicated in the Construction 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, but the leasehold estate conveyed to BNPPLC under the Ground Lease will be included.
          “Purchase Agreement” means the Purchase Agreement (Building 9) dated as of the Effective Date between BNPPLC 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 Option” has the meaning indicated in the Purchase Agreement.
          “Qualified Affiliate” means any Person that, like BNPPLC, (i) is one hundred percent (100%) owned, directly or indirectly, by BNPPLC’s Parent or any successor of such bank, (ii) can make (and has in writing made) the same representations to NAI that BNPPLC has made in subparagraphs 4(A) and 4(B) of the Closing Certificate (except that it need not be incorporated in or qualified to do business in Delaware), and (iii) is an entity organized under the laws of the State of Delaware or another state within the United States of America.
          “Qualified Income Payments” means: (A) Base Rent; (B) payments that are made to BNPPLC only because the following amounts are capitalized (i.e., added to the Lease Balance) as described in subparagraph 3 of the Construction Agreement: the Upfront Fees, the Arrangement Fee, Administrative Fees, Commitment Fees, Increased Cost Charges and Capital Adequacy Charges; (C) payments of the following made to BNPPLC to satisfy the Lease: Administrative Fees, Increased Cost Charges and Capital Adequacy Charges; (D) any interest paid to BNPPLC or any Participant pursuant to subparagraph 3(G) of the Lease; and (E) payments by BNPPLC to Participants required under the Participation Agreements because of BNPPLC’s receipt of payments described in the preceding clauses (A) through (D).
          “Qualified Prepayments” means any payments received by BNPPLC 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 (including any indirect condemnation by means of a taking of any of the Land or appurtenant easements), (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. For the purposes of determining the amount of any Qualified Prepayment and other amounts
 
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dependent upon Qualified Prepayments (e.g., the Lease Balance, the Outstanding Construction Allowance and the Break Even Price):
     (i)      there will be deducted all expenses and costs of every kind, type and nature (including taxes and Attorneys’ Fees) incurred by BNPPLC with respect to the collection or application of such payments;
     (ii)      Qualified Prepayments will not include any payment to BNPPLC by a Participant or an Affiliate of BNPPLC that is made to compensate BNPPLC for the Participant’s or Affiliate’s share of any Losses BNPPLC may incur as a result of any of the events described in the preceding clauses (1) through (4);
     (iii)      Qualified Prepayments will not include any payments received by BNPPLC that BNPPLC has paid or is obligated to pay to NAI for the repair, restoration or replacement of the Property or that BNPPLC is holding as Escrowed Proceeds in accordance with the Paragraph 10 of the Lease or other provisions of the Operative Documents;
     (iv)      payments described in the preceding clauses (i) through (iii) will be considered as Escrowed Proceeds, not Qualified Prepayments, until they are actually applied as Qualified Prepayments by BNPPLC as provided in Paragraph 10 of the Lease; and
     (v)      in no event will interest that accrues under the Purchase Agreement on a past due Supplemental Payment constitute a Qualified Prepayment.
For purposes of computing the total Qualified Prepayments (and other amounts dependent upon Qualified Prepayments, such as the Lease Balance, the Outstanding Construction Allowance and the Break Even Price) paid to or received by BNPPLC 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 BNPPLC as provided in the Paragraph 10 of the Lease.
          “Real Property” has the meaning indicated on page 2 of the Lease.
          “Reimbursable Construction-Period Costs” has the meaning indicated in the Construction 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
 
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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.
          “Rent” means the Base Rent and all Additional Rent.
          “Responsible Financial Officer” means the chief financial officer, the controller, the treasurer or the assistant treasurer of NAI.
          “Rolling Four Quarters Period” has the meaning indicated in subparagraph 3(A) of the Closing Certificate.
          “Scope Change” has the meaning indicated in the Construction Agreement.
          “Spread” means, for each Construction Period and for 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 of the date (in this definition, the “Spread Test Date”) that is two Business Days prior to such period by reference to the pricing grid below, based upon the ratio calculated by dividing (1) Consolidated EBITDA for the then latest Rolling Four Quarters Period that ended prior to (and for which NAI has reported earnings as necessary to compute Consolidated EBITDA) into (2) the Consolidated Debt for Borrowed Money as of the end of such Rolling Four Quarters Period. In each case, the Spread will be established at the Level in the pricing grid below which corresponds to such ratio; provided, that:
     (a) promptly after earnings are reported by NAI for the latest quarter in any Rolling Four Quarters Period, NAI must notify BNPPLC of any resulting change in the Spread under this definition, and no reduction in the 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 BNPPLC with a written notice setting forth and certifying the calculation under this definition that justifies the reduction;
     (b) if Carrying Costs are understated or Base Rent is underpaid for any Period because of any misstatement, subsequently discovered, of Consolidated EBITDA or Consolidated Debt for Borrowed Money, BNPPLC will be entitled to collect from NAI all additional payments that would have been expected under the Operative Documents but for the misstatement, together with interest on each such additional payment computed at the Default Rate from the date it would have been expected to the date it is actually paid; and
 
Common Definitions and Provisions Agreement (Building 9) – Page 35

 

 

     (c) notwithstanding anything to the contrary in this definition, on any date when an Event of Default has occurred and is continuing, the Spread will equal the Default Rate less the Effective Rate.

                 
  Levels     Ratio of Consolidated Debt for     Spread  
        Borrowed Money to        
        Consolidated EBITDA        
  Level I     less than 0.5     35.0 basis points  
  Level II     greater than or equal to 0.5, but less
than 1.0 		    45.0 basis points  
  Level III     greater than or equal to 1.0, but less
than 1.5 		    55.0 basis points  
  Level IV     greater than or equal to 1.5, but less
than 2.0 		    70.0 basis points  
  Level IV     greater than or equal to 2.0     85.0 basis points  
All determinations of the Spread by BNPPLC will, in the absence of clear and demonstrable error, be binding and conclusive for purposes of the Operative Documents. Further BNPPLC may, but will not be required, to rely on the determination of the Spread set forth in any notice delivered by NAI as described above in clause (a) of this definition.
          “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” has the meaning indicated in the Purchase Agreement.
          “Supplemental Payment Obligation” has the meaning indicated in the Purchase Agreement.
          “Tangible Personal Property” has the meaning indicated on page 2 of the Lease.
          “Target Completion Date” has the meaning indicated in the Construction Agreement.
          “Term” has the meaning indicated in subparagraph 1(A) of the Lease.
 
Common Definitions and Provisions Agreement (Building 9) – Page 36

 

 

          “Termination of NAI’s Work” has the meaning indicated in the Construction Agreement.
          “Third Party Contract” has the meaning indicated in the Construction Agreement.
          “Third Party Contract/Termination Fees” has the meaning indicated in the Construction 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, 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 exceeds the market value of all Plan assets allocable to such benefit liabilities, as determined on the most recent valuation date of the Plan and in accordance with the provisions of ERISA for calculating the potential liability of NAI or any ERISA Affiliate under Title IV of ERISA.
          “Upfront Fees” has the meaning indicated in the Construction Agreement.
          “Work” has the meaning indicated in the Construction Agreement.
          “Work/Suspension Event” has the meaning indicated in the Construction Agreement.
          “Work/Suspension Notice” has the meaning indicated in the Construction Agreement.
          “Work/Suspension Period” has the meaning indicated in the Construction Agreement.
 
Common Definitions and Provisions Agreement (Building 9) – Page 37

 

 

ARTICLE II — SHARED PROVISIONS
          The following provisions will apply to and govern the construction of this Agreement and the other Operative Documents (including attachments), except to the extent (if any) a clear, contrary intent is expressed herein or therein:
          1.      Notices. Any provision of (1) any of the Operative Documents, (2) any other document which references this provision for purposes of establishing notice requirements (in this provision, a “Related Document”), or (3) any Applicable Law, that makes reference to any required payment from NAI or BNPPLC to the other or that makes reference to the sending, mailing or delivery of any notice or demand will be subject to the following provisions (except that any notice given by BNPPLC to satisfy any statutory requirement, including any notice of eviction or foreclosure, will be considered sufficient if it satisfies the statutory requirements applicable to the notice, regardless of whether the notice or payment satisfies the following provisions):
     (i)      All Rent and other amounts required to be paid by NAI to BNPPLC must be paid to BNPPLC in immediately available funds by wire transfer to:
Federal Reserve Bank of New York
BNP Paribas — New York Branch
Favor: BNP Paribas Leasing Corporation
ABA 026 007 689
/AC/ 0200-517000-070-78
Reference: Network Appliance, Inc./Building 9 Lease
or at such other place and in such other manner as BNPPLC may designate in a notice to NAI.
     (ii)      All advances paid to NAI by BNPPLC under the Construction Agreement or in connection therewith will be paid by wire transfer to:
Wells Fargo Bank
San Francisco, CA
ABA#121000248
Acct#4311-790562
Account of: Network Appliance
Reference: BNP Lease
or at such other place and in such other manner as NAI may reasonably designate from time to time by notice to BNPPLC signed by a Responsible Financial Officer of NAI.
 
Common Definitions and Provisions Agreement (Building 9) – Page 38

 

 

     (iii)      All notices, demands, approvals, consents and other communications to be made under any Operative Document or Related Document to or by the parties thereto must, to be effective for purposes thereof, be in writing. Notices, demands and other communications required or permitted under any Operative Document or Related Document must be given by any of the following means: (A) personal service (including local and overnight courier), with proof of delivery or attempted delivery retained; (B) electronic communication, whether by electronic mail 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 will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to clause (C) will be deemed received five days following deposit in the mail. Notices, demands and other communications required or permitted by any Related Document are to be sent to the addresses set forth therein; and notices, demands and other communications required or permitted by under any Operative Document are to be sent to the following addresses (or in the case of communications to Participants, at the addresses set forth in Schedule 1 to the Participation Agreement):
Address of BNPPLC:
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Address of NAI:
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
With a copy to:
Network Appliance, Inc.
495 East Java Drive
Sunnyvale, California 94089
Attention: Mr. Thom Bryant
Telecopy: (408)-822-4463
 
Common Definitions and Provisions Agreement (Building 9) – Page 39

 

 

However, any party to any Operative Document or Related Document may change its address above or in the Related Document, as applicable, by written notice to the other parties to such Operative Document or Related Document given in accordance with this provision.
          2.      Severability. If any term or provision of any Operative Document or the application thereof is to any extent 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, will not be affected thereby.
          3.      No Merger. There will be no merger of the Lease or of the leasehold estate created by the Lease or of the mortgage and security interest granted in subparagraph 4(C)(1) of the 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 Lease or the leasehold estate created thereby or such mortgage and security interest 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 has occurred. There will 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 rights and options granted by the Purchase Agreement 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 has occurred.
          4.      No Implied Waiver. The failure of any party to any Operative Document to insist at any time upon the strict performance of any covenant or agreement therein or to exercise any option, right, power or remedy contained therein will 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 will not prevent a similar subsequent act from constituting a violation. Any express waiver of any provision of any Operative Document will 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 will be deemed to have been made unless expressed in writing and signed by the party to be bound by the waiver. A receipt by any party to any Operative Document of any payment thereunder (including the receipt by BNPPLC of any Rent paid under the Lease) with knowledge of the breach by another party of any covenant or agreement contained in that or any other Operative Document will not be deemed a waiver of such breach.
          5.      Entire and Only Agreements. The Operative Documents supersede any prior negotiations and agreements between BNPPLC and NAI concerning the Property, and no amendment or modification of any Operative Document will be binding or valid unless expressed in a writing executed by all parties to such Operative Document.
 
Common Definitions and Provisions Agreement (Building 9) – Page 40

 

 

          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 will 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 created by the Operative Documents and as to all notices expressly required by the Operative Documents.
          8.      Governing Law. Each Operative Document will be governed by and construed in accordance with the laws of the State of California without regard to conflict or choice of laws principles that might require the application of the laws of another jurisdiction.
          9.      Paragraph Headings. The paragraph and section headings contained in the Operative Documents are for convenience only and will in no way enlarge or limit the scope or meaning of the various and several provisions thereof.
          10.      Negotiated Documents. All 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 will 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 Agreement, but is defined in another Operative Document, will 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 will be held and construed to include any other gender, and words in the singular number will 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 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 refer to the corresponding Schedule or Exhibit attached to that Operative Document, which are made a part thereof by such reference. All capitalized terms used in each Operative Document which refer to other documents will 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 BNPPLC or NAI is a party or intended beneficiary, without its consent. All accounting terms used but not specifically
 
Common Definitions and Provisions Agreement (Building 9) – Page 41

 

 

defined in any Operative Document will 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, and the words “include”, “including” and similar terms will be construed as if followed by “without limitation to”. The rule of ejusdem generis will not be applied to limit the generality of a term in any of the Operative Documents when followed by specific examples. When used to qualify any representation or warranty made by a Person, the phrases “to the knowledge of [such Person]” or “to the best knowledge of [such Person]” are intended to mean only that such Person does not have knowledge of facts or circumstances which make the representation or warranty false or misleading in some material respect; such phrases are not intended to suggest that the Person does indeed know the representation or warranty is true.
          13.      Execution in Counterparts. To facilitate execution, each of the Operative Documents may be executed in multiple identical counterparts. It will 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, will collectively constitute a single instrument. But it will not be necessary in making proof of any of the Operative Documents to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties to such document. Any signature page may be detached from one counterpart and then attached to a second counterpart with identical provisions without impairing the legal effect of the signatures on the signature page. Signing and sending a counterpart (or a signature page detached from the counterpart) by facsimile or other electronic means to another party will have the same legal effect as signing and delivering an original counterpart to the other party. A copy (including a copy produced by facsimile or other electronic means) of any signature page that has been signed by or on behalf of a party to any of the Operative Documents will be as effective as the original signature page for the purpose of proving such party’s agreement to be bound.
          14.      Not a Partnership, Etc. Nothing in any Operative Document is intended to create any partnership, joint venture, or other joint enterprise between NAI and BNPPLC or any other Interested Party.
          15.      No Fiduciary Relationship Intended. Neither the execution of the Operative Documents or other documents referenced in this Agreement nor the administration thereof by BNPPLC will create any fiduciary obligations of BNPPLC (or any other Interested Party) to NAI. Moreover, BNPPLC and NAI disclaim any intent to create any fiduciary or special relationship between themselves (or on the part of any other Interested Party) under or by reason of the Operative Documents or the transactions described therein or any other documents
 
Common Definitions and Provisions Agreement (Building 9) – Page 42

 

 

or agreements referenced therein.
[The signature pages follow.]
 
Common Definitions and Provisions Agreement (Building 9) – Page 43

 

 

          IN WITNESS WHEREOF, this Common Definitions and Provisions Agreement (Building 9) is executed to be effective as of February 1, 2008.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:   /s/ Lloyd G. Cox    
    Lloyd G. Cox, Managing Director   
       
 
 
Common Definitions and Provisions Agreement (Building 9) – Signature Page

 

 

[Continuation of signature pages for Common Definitions and Provisions Agreement (Building 9) dated as of February 1, 2008]
         
  NETWORK APPLIANCE, INC., a Delaware
corporation
 		  
  By:   /s/ Ingemar Lanevi    
    Ingemar Lanevi, Vice President and Corporate   
    Treasurer   
 
 
Common Definitions and Provisions Agreement (Building 9) – Signature Page

 

 

Annex 1
Notice of ABR Period Election
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Gentlemen:
          Capitalized terms used in this letter are intended to have the meanings assigned to them in the Common Definitions and Provisions Agreement (Building 9) dated as of February 1, 2008, between you, BNP Paribas Leasing Corporation, and the undersigned, Network Appliance, Inc. This letter constitutes notice of our election to make the first Construction Period or Base Rent Period beginning on or after                    , 20___subject to an ABR Period Election.
          We understand that until a different election becomes effective as provided in definitions of “ABR Period Election” and “LIBOR Period Election” in the Common Definitions and Provisions Agreement (Building 9), all subsequent Periods will also be subject to an ABR Period Election.
NOTE: YOU ARE ENTITLED TO DISREGARD THIS NOTICE IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF THE ABR PERIOD ELECTION IS LESS THAN FIVE 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.
             
    NETWORK APPLIANCE, INC., a Delaware
corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
[cc all Participants]

 

 

Annex 2
Fixed Rate Lock Notice
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Gentlemen:
          Capitalized terms used in this letter are intended to have the meanings assigned to them in the Common Definitions and Provisions Agreement (Building 9) dated as of February 1, 2008, between you, BNP Paribas Leasing Corporation, and the undersigned, Network Appliance, Inc.. By this letter, which is given pursuant to subparagraph 3(B)(4) of the Lease, NAI requests that BNPPLC promptly establish a Fixed Rate for a notional amount equal to the Lease Balance as of the date of this letter for use in the calculation of the Effective Rate for all Base Rent Periods commencing on or after the following Fixed Rate Lock Date:                     , 20___.
          As contemplated in the conditions set forth in subparagraph 3(B)(4) of the Lease, such Fixed Rate Lock Date is the first Business Day of a calendar month which falls after the projected Base Rent Commencement Date; such Fixed Rate Lock Date does not fall prior to the end of any Base Rent Period which has commenced or will commence before BNPPLC receives this notice; and NAI expects BNPPLC to receive this notice more than ten days prior to such Fixed Rate Lock Date.
          In an earlier phone conversation today between a representative of NAI and                      at the New York Branch of BNP Paribas, NAI requested an estimate from BNP Paribas of the Fixed Rate that would be established by BNPPLC and BNP Paribas entering into an Interest Rate Swap. The estimate provided by telephone was:                      percent (___%) per annum.
          By this letter, NAI confirms that it will accept such a rate or any lower rate as the Fixed Rate for purposes of the Lease.
NOTE: BNPPLC will be entitled to disregard this notice if the conditions to a Fixed Rate Lock, as specified in subparagraph 3(B)(4) of the Lease, have not been satisfied. However, NAI requests that BNPPLC notify NAI immediately if for any reason BNPPLC believes this notice will not be effective.

 

 

             
    NETWORK APPLIANCE, INC., a Delaware
corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
[cc all Participants]
Annex 2 – Page 2

 

 

Annex 3
Notice of LIBOR Period Election
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Gentlemen:
          Capitalized terms used in this letter are intended to have the meanings assigned to them in the Common Definitions and Provisions Agreement (Building 9) dated as of February 1, 2008, between you, BNP Paribas Leasing Corporation, and the undersigned, Network Appliance, Inc.. This letter constitutes notice of our election to make the first Construction Period or Base Rent Period beginning on or after                    , 20___subject to a LIBOR Period Election of                      month(s).
          We understand that until a different election becomes effective as provided in definitions of “ABR Period Election” and “LIBOR Period Election” in the Common Definitions and Provisions Agreement (Building 9), all subsequent Periods will also be subject to the same LIBOR Period Election.
NOTE: YOU ARE 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 AGREEMENT (BUILDING 9), OR IF THE DATE SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF THE LIBOR PERIOD ELECTION IS LESS THAN FIVE 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.
             
    NETWORK APPLIANCE, INC., a Delaware
corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
[cc all Participants]

 

 

Annex 4
Minimum Insurance Requirements
A. PROVISIONS APPLICABLE BOTH BEFORE AND AFTER THE COMPLETION DATE.
          1.      Other Requirements Not Affected: The insurance coverages required by this Annex represent minimum requirements of BNPPLC and other Interested Parties and are not to be construed to modify or limit NAI’s indemnities or other agreements in the Agreement to which this Annex is attached or in any other Operative Document. Such required coverages do not constitute a representation or determination by BNPPLC of the minimum insurance coverages NAI should maintain for its own protection.
          2.      Requirements Apply Only to the Property: Further, the insurance coverages required by this Annex apply only to the Property, it being understood that nothing in this Annex is intended to impose minimum insurance requirements upon NAI with respect to other properties owned or leased by NAI.
          3.      Failure to Obtain: Failure of BNPPLC to demand certificate or other evidence of full compliance with these insurance requirements, or failure of BNPPLC to identify a deficiency from evidence that is provided, will not be construed as a waiver of NAI’s obligation to maintain required insurance.
          4.      Copies of Policies: NAI must provide to BNPPLC, at the offices of NAI, copies of all insurance policies required herein within ten (10) days after receipt of a request for such copies from BNPPLC or as soon as practicable if policies are in the process of being issued by the applicable insurer. Such copies must be certified as complete and correct by an authorized representative of the applicable insurer, subject to availability from the insurance company.
          5.      Inconsistent Endorsements. The insurance policies maintained to comply with these requirements will contain no endorsements that restrict, limit, or exclude coverages in any manner that is inconsistent with these express requirements without the prior express written approval of BNPPLC.
          6.      Limits of Liability. The limits of liability necessary to satisfy these requirements may be provided by a single policy of insurance or by a combination of primary and umbrella/excess policies, but in no event will the total limits of liability available for any one occurrence or accident be less than the amount required herein.
          7.      Additional Insured Status. Additional insured status will be provided in favor
Annex 4 – Page 1

 

 

of BNPPLC and other Interested Parties on all liability insurance required herein except workers’ compensation and employer’s liability. Such additional insured status will be provided on a basis that neither limits coverage to the additional insured by reason of its negligence (sole or otherwise) nor excludes coverage for completed operations with respect to construction of the Improvements.
          8.      Primary Liability. The insurance policies maintained to comply with these requirements will be primary to all insurance available to BNPPLC and other Interested Parties, collectively or individually, with BNPPLC and other Interested Parties’ insurance being excess, secondary and non-contributing (except in the case of workers’ compensation and employer’s liability insurance). Where necessary, coverage will be endorsed to provide such primary liability.
B. PROVISIONS APPLICABLE BEFORE THE COMPLETION DATE.
          1. General Terms and Conditions.
     A.    Definitions: For purposes of this Annex:
      “Construction Period Policies” means insurance policies that satisfy the minimum requirements set forth in this Annex and that NAI has obtained or required its Contractors to obtain with respect to the Property prior to the Completion Date.
 
      “Contractor” will include subcontractors of any tier.
 
      “ISO” means Insurance Services Office.
B.      Status and Rating of Insurance Company. All insurance coverages required herein prior to the Completion Date will be written through insurance companies admitted to do business in the State of California and rated upon each renewal no less than A-: VII in the then most current edition of A.M. Best’s Key Rating Guide.
C.      Waiver of Subrogation. All insurance coverages carried by NAI with respect to the Construction Project, whether required herein or not, will provide a waiver of subrogation in favor of BNPPLC and other Interested Parties.
D.      Release and Waiver: Without limiting other waivers or provisions in favor of BNPPLC and other Interested Parties in any of the Operative Documents or other attachments thereto, NAI hereby releases, and agrees to cause all Contractors performing any Work prior to the Completion Date (other than subcontractors providing goods and/or
Annex 4 – Page 2

 

 

services with a value of less than $100,000) to release, BNPPLC and all other Interested Parties from any and all claims or causes of action whatsoever that NAI and/or such Contractors might otherwise now or hereafter have resulting from or in any way connected with any loss covered by insurance, whether required herein or not, or which would have been covered by insurance required herein but for a failure of NAI and/or its Contractors to maintain such insurance.
E.      Initial Insurance Representations to BNPPLC and Other Interested Parties: NAI represents, acknowledges and agrees that:
     1.      Any Construction Period Policies not previously obtained will be obtained by NAI (or by the primary Contractor engaged by NAI to perform the Work), and the initial premiums for all Construction Period Policies will be paid, before NAI requests Construction Advances that cause the Lease Balance to exceed $2,000,000; and notwithstanding anything to the contrary in the Construction Agreement, BNPPLC may refuse to fund any Construction Advances that would cause the Lease Balance to exceed $2,000,000 prior to such time as BNPPLC is satisfied that NAI has obtained and paid the premiums for the Construction Period Policies. Moreover, in the case of the Builder’s Risk Policy, the premium must be paid or prepaid for the entire period through the projected Completion Date before the Lease Balance exceeds $2,000,000.
     2.      The coverages provided by the Construction Period Policies will not be terminated or modified to reduce, limit or qualify coverages in any material respect without BNPPLC’s prior written consent in each case by reason of any act or omission on the part of NAI or anyone acting for or authorized to act for NAI (including any Contractor engaged by NAI to obtain the Construction Period Policies for NAI). Without limiting the foregoing, NAI will not do or authorize any act or omission that could cause the coverage provided with respect to any Improvements by the Builder’s Risk Policy to expire or lapse before the Completion Date.
     3.      NAI must notify BNPPLC with reasonable promptness of any possible damage claims known to NAI that NAI believes are, individually or taken together, reasonably likely to a exceed seventy-five percent (75%) of any aggregate limit of the Builder’s Risk Policy required herein.
     4.      NAI will endeavor in good faith to cause each certificate of insurance which is provided to BNPPLC by an insurer, or its authorized
Annex 4 – Page 3

 

 

representative, at the request of NAI in regard to any Construction Period Policies to include the following express provision:
This is to certify that the policies of insurance described herein have been issued to the Insured for whom this certificate is executed and are in force at this time. In the event of cancellation or non-renewal of coverage affecting the certificate holder, other than by reason of nonpayment of premium, thirty (30) days prior written notice will be given to the certificate holder by certified mail or registered mail, return receipt requested. In the event of cancellation or non-renewal of coverage affecting the certificate holder by reason of nonpayment of premium, ten (10) days prior written notice will be given to the certificate holder by certified mail or registered mail, return receipt requested.
It is understood, however, that an insurer issuing such a certificate may decline to include the foregoing statement in the certificate, in which case NAI will instead deliver the certificate to BNPPLC with a cover letter from NAI itself which states substantially as follows:
Enclosed is a certificate of insurance, which has been issued by an insurer or its authorized representative, and which we are providing to you to confirm that policies described in the certificate have been issued to NAI or another insured named in the certificate and are in force at this time. NAI also certifies to you that such policies have been issued, and in the event of any cancellation, non-renewal, or reduction in coverage affecting you (BNP Paribas Leasing Corporation) or other Interested Parties, NAI will give you thirty (30) days prior written notice by certified mail or registered mail, return receipt requested.
     5.      NAI will also endeavor in good faith to cause each Construction Period Policy to be endorsed to provide, in effect, that (A) in the event of cancellation, non-renewal, or reduction in coverage affecting BNPPLC, other than by reason of nonpayment of premium, thirty (30) days prior written notice will be given by the insurer to BNPPLC by certified mail or registered mail, return receipt requested; and (B) in the event of cancellation, non-renewal, or reduction in coverage affecting BNPPLC by reason of nonpayment of premium, ten (10) days prior written
Annex 4 – Page 4

 

 

notice will be given by the insurer to BNPPLC by certified mail or registered mail, return receipt requested.
          2.      Commercial General Liability Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain commercial general liability insurance in accordance with the following requirements:
A.      Coverage: Such insurance will cover liability (as to claims covered by the form of CGL policy specified below, including claims for bodily injury and property damage) arising from any occurrence on or about the Land or from any operations conducted on or about the Land, including but not limited to tort liability assumed under any of the Operative Documents. Defense will be provided as an additional benefit and not included within the limit of liability.
B.      Form: Commercial General Liability Occurrence form (ISO CG 0001, dated 12 04, or an equivalent substitute form providing the same or greater coverage, and in any case written to provide primary coverage to BNPPLC as provided in Part A.8 above).
C.      Amount of Insurance: Coverage will be provided with limits of not less than:
             
i.
   Each Occurrence Limit   $ 1,000,000  
 
            
ii.
   General Aggregate Limit   $ 2,000,000  
 
            
iii.
   Product-Completed
        
 
   Operations Aggregate Limit   $ 2,000,000  
 
            
iv.
   Personal and Advertising Injury Limit   $ 1,000,000  
D.      Required Endorsements:
         
i.
  Additional Insured.   as required in Part A.7 above.
.
        
ii.
  Aggregate Per Location   The aggregate limit will apply separately to each location through use of an Aggregate Limit of Insurance Per Location endorsement (ISO CG 2504 1185 or its equivalent).
Annex 4 – Page 5

 

 

             
 
  iii.   Notice of Cancellation,    
 
      Nonrenewal or    
 
      Reduction in Coverage:   Consistent with Part B.1.E.5 above.
 
            
 
  iv.   Personal Injury Liability:   The personal injury contractual liability exclusion will be deleted.
 
            
 
  v.   Primary Liability:   As required in Part A.8 above.
 
            
 
  vi.   Waiver of Subrogation:   As required in Part B.1.C above.
E.    Deductible or Self Insured Retention Under Liability Policies: If a gap in the liability insurance coverage provided to BNPPLC or another Interested Party under any Construction Period Policy results from any deductible, self-insured retention or other similar arrangement to which NAI agrees, then such gap must be covered by one or more other Construction Period Policies, such that liability insurance protection afforded to BNPPLC and other Interested Parties by all such Construction Period Policies, taken together, is no less than it would be if NAI had not agreed to the deductible, self-insured retention or other similar arrangement.
     3.      Workers’ Compensation/Employer’s Liability Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain workers’ compensation and employer’s liability insurance in accordance with the following requirements:
A.   Coverage: Such insurance will cover liability arising out of NAI’s employment of workers and anyone for whom NAI may be liable for workers’ compensation claims.
B.   Amount of Insurance: Coverage will be provided with a limit of not less than:
             
 
  i.   Workers’ Compensation:   Statutory limits.
 
            
 
  ii.   Employer’s Liability:   $1,000,000 each accident and each disease.
C.   Required Endorsements:
             
 
  i.   Notice of Cancellation, Nonrenewal or Reduction in Coverage:   Consistent with Part B.1.E.5 above.
 
            
 
  ii.   Waiver of Subrogation:   As required in Part B.1.C above.
Annex 4 – Page 6

 

 

     4.      Umbrella/Excess Liability Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain umbrella/excess liability insurance in accordance with the following requirements:
A.      Coverage: Such insurance will be excess over and be no less broad than all coverages described in the preceding subsections 1, 2 and 3 and will include a drop-down provision if commercially available.
B.      Form: This policy will have the same inception and expiration dates as the commercial general liability insurance required above or a nonconcurrency endorsement.
C.      Amount of Insurance: Coverage will be provided with a limit of not less than $10,000,000 per occurrence and in the aggregate.
     5.      Builders Risk Insurance. Throughout the period from the Effective Date to the Completion Date, NAI will maintain or cause to be maintained property insurance (Builders Risk Insurance) in accordance with the following requirements:
A.      Insureds: Protection will extend to BNPPLC as a Named Insured or Additional Named Insured as its interest may appear; and the policy will be modified if necessary so that the protection afforded to BNPPLC is not reduced or impaired by acts or omissions of NAI or any other beneficiary or insured. (Such modification of the policy may be by endorsement comparable to a standard mortgagee clause; not limited, however, by its terms to BNPPLC’s rights “as a mortgagee” and not conditioned upon rights of the insurer to be subrogated to BNPPLC’s rights under the Operative Documents in the event of a payment of insurance proceeds to BNPPLC.)
B.       Covered Property: Such insurance will cover:
  i.   Improvements and any equipment made or to be made a permanent part of the Property;
 
  ii.   structure(s) under construction;
 
  iii.   property including materials and supplies on site for installation;
 
  iv.   property including materials and supplies at other locations but intended for use at the site;
 
  v.   property including materials and supplies in transit to the site for installation; and
Annex 4 – Page 7

 

 

  vi.   temporary structures (e.g., scaffolding, falsework, and temporary buildings) located at the site.
C.       Form: Coverage will be on an “all risk” form, will include theft, flood, earthquake, and earthquake sprinkler leakage, and be written on a completed-value basis with no co-insurance provision. No protective safeguard warranty will be permitted.
D.       Amount of Insurance: Real property coverage will be provided in an amount equal at all times to the full replacement value, exclusive of land, foundation, footings, excavations and grading.
E.      Deductibles. Deductibles applicable to the Builder’s Risk Policy will not exceed the following:
             
 
  i.   All Risks of Direct Damage, Per Occurrence, except flood or water damage and earthquake   $50,000
 
            
 
  ii.   Delayed Opening Waiting Period   30 Days
 
            
 
  iii   Water Damage (including flood), Per Occurrence   $50,000; or (in the case of flood) excess of NFIP if in Flood Zone A
 
            
 
  iv   Earthquake and Earthquake Sprinkler Leakage, Per Occurrence   5% of total project value at risk at the time of the loss, subject to a minimum of $100,000
F.       Termination of Coverage: The termination of coverage provision will be endorsed to permit occupancy of the covered property being constructed. Further, NAI will maintain or cause the insurance to be maintained in effect, unless otherwise provided for the Operative Documents, until the earliest of the following dates:
  i.   the date on which all persons and organizations who are insureds under the policy agree that it is terminated;
 
  ii.   any termination or expiration of the Lease upon the Designated Sale Date, which is the date upon which final payment is expected under the Operative Documents; or
Annex 4 – Page 8

 

 

  iii.   the date on which the insurable interests in the Covered Property of all insureds other than NAI have ceased;
     G.  Required Endorsements and Minimum Sublimits:
             
 
  i.   Additional Expenses Due To Delay In Completion Project, including but not limited to financing costs including interest expenses, insurance expenses,   Included with specific sublimits (based on an estimated 12 period of indemnity) as follows:
 
      professional fees and taxes;    
 
          $1,900,000 — construction financing interest.
 
            
 
          $380,000 — real estate taxes
 
            
 
          $204,000 — insurance premiums
 
            
 
  ii.   Agreed Value;   No coinsurance
 
            
 
  iii.   Boiler & Machinery on a Comprehensive Basis;   Included without sublimit
 
            
 
  iv.   Damage Resulting From or Arising From Error, Omission or Deficiency In Design, Specifications, Workmanship or Materials, Including Collapse;   Included without sublimit
 
            
 
  v.   Debris Removal Additional Limit; Debris Removal   $4,000,000 sublimit
 
            
 
  vi.   Earthquake including Sprinkler Leakage;   $10,000,000 sublimit
 
            
 
  vii.   Expediting Expenses;   $50,000 sublimit
 
            
 
  viii.   Flood — Annual Aggregate including Earthquake Sprinkler Leakage;   $10,000,000 sublimit
Annex 4 – Page 9

 

 

             
 
  ix.   Freezing;   $100,000 sublimit
 
            
 
  x.   Notice of Cancellation or Reduction;   Consistent with Part B.1.E.5 above
 
            
 
  xi.   Occupancy Clause;   Consistent with Part B.5.F above
 
            
 
  xii.   Demolition /Increased Cost of Cost of Construction — Per Occurrence   $1,000,000 sublimit
 
            
 
  xiii.   Pollutant Clean-Up and Removal, provided that such condition ensues following a loss from a covered peril;   Included in Debris
Removal sublimit
 
            
 
  xiv.   Preservation of Property;   Included without sublimit
 
            
 
  xv.   Repair, Replace or Re-erect Valuation Clause;   Included without sublimit
 
            
 
  xvi.   Testing;   Included without sublimit
 
            
 
  xvii.   Waiver of Subrogation.   As required in Part B.1.C above
     6.      Evidence of Insurance. NAI will provide confirmation of the insurance required prior to the Completion Date in accordance with the following:
A.      Provision of Evidence. Evidence of the insurance coverage required to be maintained by NAI, represented by certificates of insurance or policies and endorsements issued by the insurance company or its legal agent, must be furnished to BNPPLC prior to the Effective Date. New certificates of insurance or policies and endorsements will be provided to BNPPLC prior to or concurrent with the termination date of the current certificates of insurance or policies and endorsements.
B.    Form:
  i.   The Builders Risk Insurance will be evidenced by ACORD form 28, “Evidence of Property Insurance”, completed in a manner satisfactory to BNPPLC to show compliance with the requirements of this Annex. To the extent requested by BNPPLC, copies of endorsements to such insurance must be attached to such form.
Annex 4 – Page 10

 

 

  ii.   All liability insurance required herein will be evidenced by ACORD form 25, “Certificate of Insurance”, in each case completed in a manner satisfactory to BNPPLC to show compliance with the requirements of this Annex. To the extent requested by BNPPLC, copies of endorsements to this insurance must be attached to such form.
C.    Specifications: Such certificates of insurance or policies and endorsements will specify:
  i.   BNPPLC as a certificate holder with correct mailing address as provided by BNPPLC.
 
  ii.   Insured’s name, which must match that on the Agreement to which this Annex is attached.
 
  iii.   Insurance companies affording each coverage, policy number of each coverage, policy dates of each coverage, all coverages and limits described herein, and signature of authorized representative of insurance company.
 
  iv.   Producer of the certificate with correct address and phone number listed.
 
  v.   Additional or named insured status of BNPPLC as required by this Annex.
 
  vi.   Aggregate limits per location (except as to the umbrella liability insurance) required by this Annex.
 
  vii.   Amount of any deductibles and/or retentions.
 
  viii.   Cancellation, nonrenewal and reduction in coverage notification consistent with Part B.1.E.5 above. Additionally, NAI will endeavor in good faith to cause any insurer issuing to BNPPLC a certificate on ACORD form 25 to delete the words “endeavor to” and “but failure to mail such notice shall impose no obligation or liability of any kind upon Company, it agents or representatives” from the cancellation provision of such form.
 
  ix.   Primary status as required by this Annex.
 
  x.   Waivers of subrogation as required by this Annex.
D.    Required Endorsements. A copy of each required endorsement will, if and as requested by BNPPLC from time to time, also be provided.
Annex 4 – Page 11

 

 

E.    Commencement of Construction. Commencement of construction without provision of the required certificate of insurance and/or required policies and endorsements, or without compliance with any other provision of this Annex or the Agreement to which it is attached, will not constitute a waiver by BNPPLC of any rights. BNPPLC will have the right, but not the obligation, of prohibiting NAI or any Contractor from performing any work until such certificate of insurance and/or required policies and endorsements are received by BNPPLC.
     7.    Contractor’s Insurance: To the extent, if any, necessary to preserve or provide liability coverage for BNPPLC and other Interested Parties with regard to operations performed on or about the Property prior to the Completion Date, NAI will require Contractors to provide (or will provide the coverage on behalf of Contractors) similar to that required of NAI by the foregoing provisions of this Annex. In the event NAI requires any Contractor to maintain Construction Period Policies necessary to comply with these insurance requirements, NAI will also require such Contractor to provide and maintain certificates of insurance containing provisions as described herein (modified to recognize the Contractor, rather than NAI, as named insured) enumerating, among other things, the waivers of subrogation, additional or named insured status, and primary liability as required herein; and in such event NAI will cause the Contractor to make those insurance certificates available to BNPPLC upon request.
C. PROVISIONS APPLICABLE AFTER THE COMPLETION DATE.
       1.    Liability Insurance: After the Completion Date and throughout the Term of the Lease, NAI must maintain commercial general liability insurance against claims for bodily injury, death, advertising injury and property damage occurring in or upon or resulting from any occurrence in or upon the Property under one or more insurance policies, all in such amounts, with such insurance companies and upon such terms and conditions (including self-insurance, whether by deductible, retention, or otherwise) as are consistent with NAI’s normal insurance practices in the United States. In any event, policies under which NAI maintains such liability insurance must provide, by endorsement or otherwise, that BNPPLC and other Interested Parties are also insured thereunder against such claims with coverage that is not limited by any negligence or allegation of negligence on their part and with coverage that is primary, not merely excess over or contributory with the other commercial general liability coverage they may themselves maintain.
       2.    Property Insurance: After the Completion Date and throughout the Term of the Lease, NAI must 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, all in such amounts, with such insurance companies and upon such terms and conditions (including self-insurance, whether by deductible, retention, or otherwise) as are consistent with NAI’s normal insurance practices in the United States. In any event, policies under which NAI
Annex 4 – Page 12

 

 

maintains such insurance must:
  i.   show BNPPLC as an additional insured as its interest may appear; and
 
  ii.   provide that the protection afforded to BNPPLC thereunder is primary (such that any policies maintained by BNPPLC itself will be excess, secondary and noncontributing) and is not to be reduced or impaired by acts or omissions of NAI or any other beneficiary or insured.
     3.      Evidence of Insurance. NAI will provide confirmation of the insurance required after the Completion Date in accordance with the following:
A.      Provision of Evidence. Evidence of the insurance coverage required to be maintained by NAI, represented by certificates of insurance, evidence of insurance, and endorsements issued by the insurance company or its legal agent, must be furnished to BNPPLC prior to the Completion Date. New certificates of insurance, evidence of insurance, and endorsements will be provided to BNPPLC prior to or concurrent with the termination date of the current certificates of insurance, evidence of insurance, and endorsements.
  B.   Form:
  i.   The property insurance will be evidenced by ACORD form 28, “Evidence of Property Insurance”, completed in a manner reasonably satisfactory to BNPPLC to show compliance with the requirements of this Annex.
 
  ii.   The liability insurance will be evidenced by ACORD form 25, “Certificate of Insurance”, in each case completed in a manner reasonably satisfactory to BNPPLC to show compliance with the requirements of this Annex. To the extent requested by BNPPLC, copies of endorsements giving additional insured status to BNPPLC and other Interested Parties must be attached to such form.
  C.   Specifications: Such certificates of insurance or policies and endorsements will specify:
  i.   BNPPLC as a certificate holder with correct mailing address as provided by BNPPLC.
 
  ii.   Insured’s name, which must match that on the Agreement to which this Annex is attached.
Annex 4 – Page 13

 

 

  iii.   Insurance companies affording each coverage, policy number of each coverage, policy dates of each coverage, all coverages and limits described herein, and signature of authorized representative of insurance company.
 
  iv.   Producer of the certificate with correct address and phone number listed.
 
  v.   Additional or named insured status of BNPPLC as required by this Annex.
 
  vi.   Aggregate limits.
 
  vii.   Amount of any deductibles and/or retentions.
 
  viii.   Primary status as required by this Annex.
 
  ix.   Waivers of subrogation as required by this Annex.
Annex 4 – Page 14

 

exv10w73
Exhibit 10.73
         
     
 
 
      
 
 
      
 
 
      
 
 
      
 
 
      
  PURCHASE AGREEMENT
  
  (BUILDING 9)
  
 
 
      
 
 
      
 
 
      
 
 
      
  BETWEEN
  
 
 
      
 
 
      
 
 
      
 
 
      
  NETWORK APPLIANCE, INC.
  
  (“NAI”)
  
 
 
      
 
 
      
 
 
      
  AND
  
 
 
      
 
 
      
 
 
      
  BNP PARIBAS LEASING CORPORATION
  
  (“BNPPLC”)
  
 
 
      
 
 
      
 
 
      
 
 
      
 
 
      
  February 1, 2008
  
 
 
      
 
 
      
 
 
      
 
 
      
     

 

 

TABLE OF CONTENTS
             
          Page  
1
  Additional Definitions     2  
 
  “97-1/Default (100%)”     2  
 
  “Adjusted Lease Balance”     3  
 
  “Applicable Purchaser”     3  
 
  “Balance of Unpaid Construction Period Losses”     3  
 
  “BNPPLC’s Actual Out of Pocket Costs”     4  
 
  “Break Even Price”     5  
 
  “Committed Price”     5  
 
  “Conditions to NAI’s Initial Remarketing Rights”     5  
 
  “Contingent Losses”     5  
 
  “Decision Not to Sell at a Loss”     5  
 
  “Deemed Sale”     6  
 
  “Extended Remarketing Period”     6  
 
  “Fair Market Value”     6  
 
  “Final Sale Date”     6  
 
  “Initial Remarketing Notice”     6  
 
  “Initial Remarketing Price”     6  
 
  “Lease Balance”     6  
 
  “Make Whole Amount”     7  
 
  “Maximum Remarketing Obligation”     7  
 
  “Must Sell Price”     8  
 
  “NAI’s Extended Remarketing Right”     8  
 
  “NAI’s Initial Remarketing Rights”     8  
 
  “NAI’s Target Price”     8  
 
  “Notice of Sale”     8  
 
  “Proposed Sale”     8  
 
  “Proposed Sale Date”     8  
 
  “Purchase Option”     8  
 
  “Put Option”     8  
 
  “Qualified Sale”     8  
 
  “Sale Closing Documents”     9  
 
  “Supplemental Payment”     9  
 
  “Supplemental Payment Obligation”     9  
 
  “Valuation Procedures”     9  
 
            
2
  NAI’s Options and Obligations on the Designated Sale Date     10  
 
  (A)     Purchase Option; Initial Remarketing Rights; Supplemental Payment Obligation     10  
 
  (B)     Designation of the Purchaser     11  
 
  (C)     Delivery of Property Related Documents If BNPPLC Retains the Property     12  
 
  (D)     Effect of the Purchase Option and NAI’s Initial Remarketing Rights on        

 

 

TABLE OF CONTENTS
(Continued)
             
Subsequent Title Encumbrances
    12
 
  (E)     Security for NAI’s Purchase Option     12  
 
            
3
  NAI’s Rights, Options and Obligations After the Designated Sale Date     13  
 
  (A)     NAI’s Right to Buy During the Thirty Days After the Designated Sale Date     13  
 
  (B)     NAI’s Obligation to Buy if Certain Conditions are Satisfied     13  
 
  (C)      NAI’s Extended Right to Remarket     14  
 
  (D)     Deemed Sale On the Second Anniversary of the Designated Sale Date     14  
 
  (E)     NAI’s Right to Share in Sales Proceeds Received By BNPPLC From any Qualified Sale     15  
4
  Transfers By BNPPLC After the Designated Sale Date     16  
 
  (A)     BNPPLC’s Right to Sell     16  
 
  (B)     Survival of NAI’s Rights and the Supplemental Payment Obligation     16  
 
  (C)     Easements and Other Transfers in the Ordinary Course of Business     16  
 
            
5
  Terms of Conveyance Upon Purchase     16  
 
  (A)     Tender of Sale Closing Documents     16  
 
  (B)     Delivery of Escrowed Proceeds     17  
 
            
6
  Survival and Termination of the Rights and Obligations of NAI and BNPPLC     17  
 
  (A)     Status of this Agreement Generally     17  
 
  (B)     Election by NAI to Terminate the Supplemental Payment Obligation Prior to the Completion Date     18  
 
  (C)     Automatic Termination of NAI’s Rights     19  
 
  (D)     Payment Only to BNPPLC     19  
 
  (E)     Preferences and Voidable Transfers     19  
 
  (F)     Remedies Under the Other Operative Documents     19  
7
  Certain Remedies Cumulative     20  
 
            
8
  Attorneys’ Fees and Legal Expenses     20  
 
            
9
  Successors and Assigns     20  

(ii)

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
Exhibit A   Legal Description
     
Exhibit B   Valuation Procedures
     
Exhibit C   Requirements Re: Forms to Accomplish Assignment and Conveyance
     
        Exhibit C-1   Agreement Concerning Ground Lease
     
        Exhibit C-2   Form of Assignment of Ground Lease and Improvements
     
        Exhibit C-3   Form of Bill of Sale and Assignment
     
        Exhibit C-4   Form of Acknowledgment of Disclaimer of Representations and Warranties
     
Exhibit D   Secretary’s Certificate
     
Exhibit E   FIRPTA Statement
     
Exhibit F   Notice of Election to Terminate the Supplemental Payment Obligation

(iii)

 

PURCHASE AGREEMENT
(BUILDING 9)
     This PURCHASE AGREEMENT (BUILDING 9) (this “Agreement”), dated as of February 1, 2008 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Agreement, BNPPLC and NAI are executing a Common Definitions and Provisions Agreement (Building 9) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Agreement for all purposes. As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     Contemporaneously with this Agreement, BNPPLC is executing and accepting a Ground Lease (Building 9) dated as of the Effective Date (the “Ground Lease”) from NAI, pursuant to which BNPPLC is acquiring a leasehold estate in the Land described in Exhibit A and any existing Improvements on the Land.
     Also contemporaneously with this Agreement, BNPPLC and NAI are executing a Construction Agreement (Building 9) dated as of the Effective Date (the“Construction Agreement”) and a Lease Agreement (Building 9) dated as of the Effective Date (the “Lease”). Pursuant to the Construction Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements. When the term of the Lease commences, the Lease will cover all Improvements on the Land described in Exhibit A. (As used herein, “Property” means (i) all of BNPPLC’s interests, including those created by the Ground Lease, in the Land and in the Improvements and in all other real and personal property from time to time covered or to be covered by the Lease and included within the “Property” as defined therein, and (ii) BNPPLC’s interest in any Escrowed Proceeds yet to be applied as a Qualified Prepayment or to the cost of repairs to the Improvements or other property covered by the Lease; except that, for purposes of this Agreement, the Property will not include any condemnation or insurance proceeds included in Escrowed Proceeds as a result of any Pre-lease Force Majeure Event, nor will it include any right to receive any such condemnation or insurance proceeds in the future, unless NAI itself or one of its Affiliates purchases the Property from BNPPLC as provided in subparagraphs 2(A)(1), 3(A) or 3(B) below.)
     NAI and BNPPLC have agreed on the terms and conditions upon which NAI may purchase or arrange for the purchase of the Property, and by this Agreement they desire to confirm all such terms and conditions.

 

 

AGREEMENTS
1      Additional Definitions. As used in this Agreement, capitalized terms defined above have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and that are used but not otherwise defined have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms have the following respective meanings:
     “97-1/Default (100%)” means a Default that is or results from any of the following:
          (A) a failure of NAI to make any payment required by any Operative Document, including (i) any 97-10/Prepayment payable as provided in Paragraph 9 of the Construction Agreement, (ii) any other amounts payable under the Construction Agreement because of Covered Construction Period Losses, (iii) any payment of Rent required by the Lease or (iv) any Supplemental Payment required by this Agreement;
          (B) any Hazardous Substance Activities on or about the Land;
          (C) any failure of NAI after the Completion Date to insure, maintain, operate or repair the Property in accordance with all terms and conditions of the Lease;
          (D) any failure of NAI to apply insurance or condemnation proceeds received by NAI as required by the Construction Agreement or the Lease, as applicable;
          (E) any breach by NAI of the Ground Lease;
          (F) any bankruptcy or insolvency proceeding involving NAI or any of its Subsidiaries, as the debtor, or any of the events or circumstances described in clauses (G), (H) or (I) of the definition of Event of Default in the Common Definitions and Provisions Agreement;
          (G) any breach by NAI of the financial covenants in subparagraph 3(C) of the Closing Certificate that occurs or continues after the Completion Date;
          (H) a failure of NAI or any of its Subsidiaries, which occurs or continues after the Completion Date, to pay when due a regularly scheduled payment of the principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000, as described in clause (F) of the definition of Event of Default in the Common Definitions and Provisions Agreement;
          (I) a failure of NAI or any of its Subsidiaries, which occurs or continues after the
 
Purchase Agreement (Building 9) – Page 2

 

 

Completion Date, to pay any judgment or order for the payment of money rendered against it in an amount (not covered by insurance) which exceeds $25,000,000, as described in clause (J) of the definition of Event of Default in the Common Definitions and Provisions Agreement;
          (J) any fraud, misapplication of Construction Advances or other funds, illegal acts or willful misconduct on the part of NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI (including any contractor working for NAI) that occurs prior to the Completion Date; or
          (K) subject to the proviso at the end of Exhibit B, any breach by NAI of the provisions set forth in Exhibit B.
Except as provided in subparagraph 3(B), the characterization of any Default as a 97-1/Default (100%) will not affect the rights or remedies available to BNPPLC because of the Default.
“Adjusted Lease Balance” means a dollar amount equal to the following (but not less than zero):
  l   the Lease Balance, less
 
  l   Pre-lease Force Majeure Losses (if any).
“Applicable Purchaser” means (1) the third party designated by NAI to purchase the Property at any sale arranged by NAI as provided in this Agreement, or (2) the third party designated by BNPPLC as the purchaser at any Qualified Sale not arranged by NAI.
“Balance of Unpaid Construction Period Losses” means, subject to the qualifications set forth below in this definition, an amount equal to the sum of:
  (1)   the total Losses (if any), including Contingent Losses, that have been incurred or suffered by BNPPLC or other Interested Parties at any time and from time to time prior to the Completion Date (or, if no Completion Date occurs prior to the Designated Sale Date, then prior to the Designated Sale Date) by reason of, in connection with or arising out of (A) their ownership or alleged ownership of any interest in the Property or the payments required by the Operative Documents, (B) the use or operation of the Property, (C) the negotiation, administration or enforcement of the Operative Documents, (D) the making of Funding Advances, (E) the Construction Project, (F) the breach by NAI of this Agreement or any other Operative Document or any other document executed by NAI in connection
 
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      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 of BNPPLC under the Ground Lease or the Closing Certificate, 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; plus
 
  (2)   interest accruing at the Default Rate, compounded annually, on each payment of any such Losses by BNPPLC or any other Interested Party from the date such payment was made to the Designated Sale Date.
For purposes of computing the Balance of Unpaid Construction Period Losses, Losses as described in clause (1) of this definition will include each reduction (if any) (i) in the Carrying Costs added to the Outstanding Construction Allowance as provided in the Construction Agreement, or (ii) in the Base Rent payable to BNPPLC as provided in the Lease, that results from Pre-lease Force Majeure Losses. In other words, the Losses described in clause (1) will include the additional (if any) Carrying Costs and Base Rent that would have accrued if Pre-lease Force Majeure Losses were set at zero dollars ($0.00) in the formulas set forth in the Construction Agreement and in the Lease for calculating Carrying Costs and Base Rent, respectively.
Notwithstanding the foregoing, however, none of the following will be included in the Balance of Unpaid Construction Period Losses: (i) amounts included in or paid by BNPPLC with the proceeds of the Initial Advance (including Transaction Expenses); (ii) Losses paid or reimbursed from Construction Advances (including Local Impositions, insurance premiums and amounts paid by NAI prior to the Completion Date and reimbursed to it through Construction Advances made pursuant to the Construction Agreement, and also including costs and expenditures incurred or paid by or on behalf of BNPPLC after any Owner’s Election to Continue Construction, to the extent that such costs and expenditures are considered to be Construction Advances as provided in the Construction Agreement); (iii) any other Losses which NAI has paid prior to the Designated Sale Date or for which NAI remains fully obligated to pay pursuant to the other Operative Documents (including Covered Construction Period Losses paid or payable by NAI pursuant to the Construction Agreement); and (iv) any decline in the value of the Property, including any such decline that is attributable solely to a Pre-lease Force Majeure Event and thus constitutes a Pre-lease Force Majeure Loss.
“BNPPLC’s Actual Out of Pocket Costs” means the out-of-pocket costs and expenses, if any, incurred by BNPPLC in connection with a sale of the Property under this Agreement or in connection with the collection of payments due to it under this Agreement (including any Breakage Costs; Attorneys’ Fees; appraisal costs; and income,
 
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transfer, withholding or other taxes which do not constitute Excluded Taxes; but not including Excluded Taxes or costs of removing any Lien Removable by BNPPLC).
“Break Even Price” means an amount equal to:
  l   the Lease Balance, plus
 
  l   BNPPLC’s Actual Out of Pocket Costs, and plus
 
  l   an amount equal to the Balance of Unpaid Construction Period Losses (if any).
If, however, the Balance of Unpaid Construction Period Losses includes Contingent Losses, then for purposes of computing the Break Even Price applicable to any proposed sale on the Designated Sale Date, NAI may elect to exclude such Contingent Losses from the Break Even Price by providing to BNPPLC, for the benefit of BNPPLC and other Interested Parties, a written agreement to indemnify and defend BNPPLC and other Interested Parties against the excluded Losses. However, to be effective for purposes of reducing 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)(1), (2), (3), (4) and (5) of the Lease and otherwise must be in form and substance reasonably satisfactory to BNPPLC.
“Committed Price” has the meaning indicated in subparagraph 3(C)(4).
“Conditions to NAI’s Initial Remarketing Rights” has the meaning indicated in subparagraph 2(A)(2)(a).
“Contingent Losses” means any Losses that consist of claims asserted against BNPPLC or another Interested Party prior to the Designated Sale Date, but that are not liquidated or paid on or prior to the Designated Sale Date. Any Contingent Losses included in the Unpaid Balance of Construction Period Losses, and thus which are relevant to the computation of the Break Even Price, will equal the sum as reasonably estimated by BNPPLC of (i) all Attorneys’ Fees and other costs that will be incurred to defend against such claims, and (ii) the amount for which BNPPLC or the other Interested Party can settle or satisfy such claims.
“Decision Not to Sell at a Loss” means a decision by BNPPLC not to sell the Property on the Designated Sale Date to an Applicable Purchaser as provided in subparagraph 2(A)(2), despite NAI’s satisfaction of the Conditions to NAI’s Initial Remarketing Rights.
 
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“Deemed Sale” has the meaning indicated in subparagraph 3(D).
“Extended Remarketing Period” means a period beginning on the Designated Sale Date and ending on the Final Sale Date.
“Fair Market Value” has the meaning indicated in Exhibit B.
“Final Sale Date” means the earliest of:
  l   any date after the Designated Sale Date upon which BNPPLC conveys the Property to consummate a sale of the Property to NAI because of BNPPLC’s exercise of the Put Option as provided in subparagraph 3(B); or
 
  l   any date after the Designated Sale Date upon which BNPPLC conveys the Property to consummate a sale of the Property to NAI or to any Affiliate of NAI, including any such sale resulting from NAI’s exercise of its rights under subparagraph 3(A); or
 
  l   any date after the Designated Sale Date upon which BNPPLC conveys the Property to consummate a Qualified Sale, or would have done so but for a material breach of this Agreement by NAI (including any breach of its obligation to make any Supplemental Payment required in connection with such Qualified Sale); or
 
  l   the second anniversary of the Designated Sale Date, which will be the date of a Deemed Sale as provided in subparagraph 3(D) if no earlier date qualifies as the Final Sale Date and the entire Property is not sold by BNPPLC to NAI or an Applicable Purchaser prior to the second anniversary of the Designated Sale Date.
“Initial Remarketing Notice” means a notice delivered to BNPPLC by NAI prior to the Designated Sale Date in which NAI confirms NAI’s decision to exercise NAI’s Initial Remarketing Rights and the amount of the Initial Remarketing Price. (Once given, any such notice may not be rescinded or modified without BNPPLC’s consent.)
“Initial Remarketing Price” means the cash price set forth in an Initial Remarketing Notice delivered by NAI to BNPPLC as the price for which NAI has arranged a sale of the Property on the Designated Sale Date to an Applicable Purchaser which is not an Affiliate of NAI. Such price may be any price negotiated by the Applicable Purchaser in good faith and on an arms length basis with NAI.
“Lease Balance” means the Lease Balance (as defined in the Common Definitions and
 
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Provisions Agreement) on the Designated Sale Date, but computed without deduction for any Supplemental Payment or other amount paid to BNPPLC pursuant to this Agreement on the Designated Sale Date.
“Make Whole Amount” means the sum of the following:
          (1)      the amount (if any) by which the Lease Balance on the Designated Sale Date exceeds the following, as applicable: (a) all 97-10/Prepayments (if any) which were actually paid to BNPPLC on or before the Designated Sale Date, or (b) any Supplemental Payment which was actually paid to BNPPLC on the Designated Sale Date; together with interest on such excess computed at the Default Rate for the period commencing on the Designated Sale Date and ending on the Final Sale Date; plus
          (2)      any unpaid Base Rent or other amounts due to BNPPLC pursuant to the other Operative Documents; plus
          (3)      BNPPLC’s Actual Out of Pocket Costs; plus
          (4)      an amount equal to the Balance of Unpaid Construction Period Losses (if any), together with interest on thereon computed at the Default Rate for the period commencing on the Designated Sale Date and ending on the Final Sale Date; plus
          (5)      the amount, but not less than zero, by which (i) all Local Impositions, insurance premiums and other Losses of every kind suffered or incurred by BNPPLC (whether or not reimbursed in whole or in part by another Interested Party) with respect to the ownership, operation or maintenance of the Property during the Extended Remarketing Period, exceeds (ii) any rents or other sums collected by BNPPLC during such period from third parties as consideration for any lease or other contracts made by BNPPLC that authorize the use and enjoyment of the Property by such parties; together with interest on such excess computed at the Default Rate for each day prior to the Final Sale Date.
“Maximum Remarketing Obligation” means a dollar amount equal to the following (but not less than zero):
  l   85% of the Adjusted Lease Balance; less
 
  l   any Fixed Rate Settlement Amount that NAI is required to pay pursuant to the Lease because of any acceleration of the Designated Sale Date which causes it to occur prior to the date upon which the Term of the Lease is scheduled to expire (as such date is confirmed in clause (1) of the definition of Designated Sale Date
 
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      in the Common Definitions and Provisions Agreement).
“Must Sell Price” means, with respect to any Proposed Sale arranged by NAI pursuant to subparagraph 3(C), a cash price to BNPPLC equal to the Make Whole Amount, computed as of the Proposed Sale Date applicable to such Proposed Sale, plus all reimbursements or payments by BNPPLC to NAI that will be required by clause (4) of subparagraph 3(E) in connection with the Proposed Sale.
“NAI’s Extended Remarketing Right” has the meaning indicated in subparagraph 3(C).
“NAI’s Initial Remarketing Rights” has the meaning indicated in subparagraph 2(A)(2).
“NAI’s Target Price” means the cash purchase price that, according to NAI, should reasonably be expected for the Property during the Extended Remarketing Period if the parties make a reasonable marketing effort to sell the Property, as such price is set forth in a notice given by NAI to BNPPLC after the Designated Sale Date. Once established by any such notice, the amount of NAI’s Target Price will not be increased, although nothing in this definition will be construed to prevent NAI from arranging a sale of the Property pursuant to this Agreement at a price higher than NAI’s Target Price. After providing a notice of NAI’s Target Price to BNPPLC, NAI may later decrease NAI’s Target Price by another notice to BNPPLC, but only if the decrease is justified by a material adverse change in the physical condition of the Property (e.g., significant damage to the Property by fire or other casualty).
“Notice of Sale” has the meaning indicated in subparagraph 3(C)(4).
“Proposed Sale” has the meaning indicated in subparagraph 3(C).
“Proposed Sale Date” has the meaning indicated in subparagraph 3(C)(4).
“Purchase Option” has the meaning indicated in subparagraph 2(A)(1).
“Put Option” has the meaning indicated in subparagraph 3(B).
“Qualified Sale” means any (1) Deemed Sale as described in subparagraph 3(D), or (2) actual sale (prior to any such Deemed Sale) of all or substantially all of the Property to an Applicable Purchaser that occurs after the thirty day period specified in subparagraph 3(A) and that:
  l   results from NAI’s exercise of NAI’s Extended Remarketing Right as described in subparagraph 3(C); or
 
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  l   is approved in advance as a Qualified Sale by NAI; or
 
  l   is to a third party which is not an Affiliate of BNPPLC and, if it is completed by a conveyance from BNPPLC prior to eighteen months after the Designated Sale Date, is for a price not less than the least of the following amounts:
  (a)   the lowest price at which BNPPLC will be obligated, pursuant to clause (4) of subparagraph 3(E), to reimburse to NAI (i) the entire amount of any Supplemental Payment theretofore made by NAI to BNPPLC, or (ii) if no such Supplemental Payment has been made, but NAI has theretofore made one or more 97-1/Prepayments to BNPPLC, all such 97-10/Prepayments; or
 
  (b)   (i) if NAI notified BNPPLC of NAI’s Target Price prior to the date BNPPLC and the third party agreed to a price for the sale, NAI’s Target Price, or (ii) if NAI did not notify BNPPLC of NAI’s Target Price prior to the date BNPPLC and the third party agreed to a price for the sale, any price satisfactory to BNPPLC in its sole good faith business judgment; or
 
  (c)   90% of the Fair Market Value of the Property.
NAI acknowledges that BNPPLC’s own marketing efforts after the Designated Sale Date will depend upon the minimum price required for a Qualified Sale, and such efforts could be hampered if NAI’s Target Price is too high. Thus, after receipt of any notice of NAI’s Target Price from NAI, BNPPLC may (but will not be obligated to) invoke the Valuation Procedures in order to determine the minimum price permitted under clause (c) preceding.
“Sale Closing Documents” means the following documents, which BNPPLC must tender pursuant to Paragraph 5(A) to consummate any sale of the Property pursuant to this Agreement: (1) documents in the forms required by Exhibit C, including either a termination of or an assignment of the Ground Lease and other rights and interests of BNPPLC in the Property, (2) a Secretary’s Certificate in the form attached as Exhibit D and (3) a certificate concerning tax withholding in the form attached as Exhibit E.
“Supplemental Payment” has the meaning indicated in subparagraph 2(A)(3).
“Supplemental Payment Obligation” has the meaning indicated in subparagraph 2(A)(3).
“Valuation Procedures” means procedures set forth in Exhibit B, which are to be
 
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followed in the event a determination of the Fair Market Value of the Property or any portion thereof is required by this Agreement.
2     NAI’s Options and Obligations on the Designated Sale Date.
     (A)      Purchase Option; Initial Remarketing Rights; Supplemental Payment Obligation. Whether or not an Event of Default has occurred and is continuing, but subject to Paragraph 6 below:
          (1)      NAI will have the right (the “Purchase Option”) to purchase or cause an Affiliate of NAI, as the Applicable Purchaser, to purchase the Property on the Designated Sale Date for a cash price equal to the Break Even Price.
          (2)      If NAI does not exercise the Purchase Option, NAI will have the following rights (collectively, “NAI’s Initial Remarketing Rights”):
           (a)      First, NAI will have the right to designate a third party, other than an Affiliate of NAI, as the Applicable Purchaser and to cause such Applicable Purchaser to purchase the Property on the Designated Sale Date for a cash price equal to the Initial Remarketing Price. Such right, however, will be subject to the conditions (the “Conditions to NAI’s Initial Remarketing Rights”) that (i) NAI deliver an Initial Remarketing Notice to BNPPLC within the thirty days prior to the Designated Sale Date, (ii) on the Designated Sale Date the Applicable Purchaser tenders to BNPPLC a payment equal to the Initial Remarketing Price, and (iii) NAI itself tenders to BNPPLC the Supplemental Payment, if any, which will be required by subparagraph 2(A)(3) in the event BNPPLC completes the sale to the Applicable Purchaser. Further, notwithstanding the satisfaction of the Conditions to NAI’s Initial Remarketing Rights on the Designated Sale Date, if the sum of the price to be paid by the Applicable Purchaser for the Property (i.e., the Initial Remarketing Price) and any Supplemental Payment required by subparagraph 2(A)(3) is less than the Break Even Price, then BNPPLC may affirmatively elect not to complete the sale of the Property to the Applicable Purchaser on the Designated Sale Date (and thereby defer the sale of the Property pursuant to this Agreement) by making a Decision Not to Sell at a Loss.
           (b)      Second, if BNPPLC completes a sale of the Property to an Applicable Purchaser on the Designated Sale Date pursuant to subparagraph 2(A)(2)(a) and the price paid by the Applicable Purchaser for the Property (i.e., the Initial Remarketing Price) is greater than the Break Even Price, then BNPPLC will pay the excess to NAI or as otherwise required by Applicable Law.
 
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          (3)      If for any reason whatsoever BNPPLC does not receive a cash price for the Property on the Designated Sale Date equal to or in excess of the Break Even Price in connection with a sale made pursuant to subparagraph 2(A)(1) or subparagraph 2(A)(2)(a), then NAI will have the obligation (the “Supplemental Payment Obligation”) to pay to BNPPLC on the Designated Sale Date a supplemental payment (the “Supplemental Payment”) equal to the lesser of:
          (a)      the amount by which the Break Even Price exceeds any such cash price actually received by BNPPLC on the Designated Sale Date; or
          (b)      the Maximum Remarketing Obligation.
Without limiting the generality of the foregoing, NAI must (unless excused by subparagraph 6(B) below) make the Supplemental Payment even if BNPPLC does not sell the Property to NAI or an Applicable Purchaser on the Designated Sale Date because of (A) a Decision Not to Sell at a Loss, or (B) a failure of NAI to exercise, or a decision by NAI not to exercise, the Purchase Option or NAI’s Initial Remarketing Rights, or (C) a failure of NAI or any Applicable Purchaser to tender the price required by the forgoing provisions on the Designated Sale Date following any exercise of or attempt by NAI to exercise the Purchase Option or NAI’s Initial Remarketing Rights.
NAI acknowledges that it is undertaking the Supplemental Payment Obligation in consideration of the rights afforded to it by this Agreement, but that such obligation is not contingent upon any exercise by NAI of such rights or upon any purchase of the Property by NAI or an Applicable Purchaser. If any Supplemental Payment due according to this subparagraph 2(A)(3) is not actually paid to BNPPLC on the Designated Sale Date, then NAI must pay interest on the past due amount computed at the Default Rate. However, NAI will be entitled to a credit against the interest required by the preceding sentence equal to the Base Rent, if any, actually paid by NAI pursuant to the Lease for any period after the Designated Sale Date.
          (4)      For the avoidance of doubt, BNPPLC acknowledges that NAI may elect not to exercise the Purchase Option or NAI’s Initial Remarketing Rights and instead pay to BNPPLC a Supplemental Payment equal to the Maximum Remarketing Obligation on the Designated Sale Date in full satisfaction of its obligations under this subparagraph 2(A).
     (B)    Designation of the Purchaser. To give BNPPLC the opportunity before the Designated Sale Date to prepare the Sale Closing Documents, NAI must, by a notice to BNPPLC given at least ten days prior to the Designated Sale Date, specify irrevocably, unequivocally and with particularity any party who will purchase the Property because of NAI’s exercise of its
 
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Purchase Option or of NAI’s Initial Remarketing Rights. If NAI fails to do so, BNPPLC may postpone the delivery of the Sale Closing Documents until a date after the Designated Sale Date and not more than ten 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 subparagraph 2(A)(3).
     (C)      Delivery of Property Related Documents If BNPPLC Retains the Property. Unless NAI or its Affiliate or another Applicable Purchaser purchases the Property pursuant to subparagraph 2(A), promptly after the Designated Sale Date NAI must deliver and assign to BNPPLC all plans and specifications for the Property previously prepared for NAI or otherwise available to NAI (including those prepared in connection with the construction contemplated by the Construction Agreement), together with all other files, documents and permits of NAI (including any subleases then in force) which may be necessary or useful to any future owner’s or occupant’s use of the Property. Without limiting the foregoing, NAI will transfer or arrange the transfer to BNPPLC of all utility, building, health and other operating permits required by any municipality or other governmental authority having jurisdiction over the Property for uses of the Property permitted by the Lease or for any remaining construction required to complete the Improvements contemplated by the Construction Agreement if neither NAI nor any Affiliate or other Applicable Purchaser purchases the Property pursuant to subparagraph 2(A).
     (D)      Effect of the Purchase Option and NAI’s Initial Remarketing Rights on Subsequent Title Encumbrances. Any conveyance made to consummate a sale of the Property to NAI or any Applicable Purchaser pursuant to subparagraph 2(A) will cut off and terminate all interests in the Property claimed by, through or under BNPPLC, including Liens Removable by BNPPLC (including any leasehold estate or other interests conveyed by BNPPLC to third parties, even if conveyed in the ordinary course of BNPPLC’s business, and including any judgment liens established against the Property because of a judgment rendered against BNPPLC), but not personal obligations of NAI to BNPPLC under the Lease or other Operative Documents (including obligations of NAI arising under the indemnities in the Construction Agreement or the Lease, which indemnities will survive any such sale). Anyone accepting or taking any interest in the Property through or under BNPPLC on or after the Effective Date will acquire such interest subject to the Purchase Option.
     (E)      Security for NAI’s Purchase Option. If (contrary to the intent of the parties as expressed in subparagraph 4(C) of the Lease) it is determined that NAI is not, under applicable state law as applied to the Operative Documents, the equitable owner of the Property and the borrower from BNPPLC in a financing arrangement, but rather is a tenant under the Lease with an option to purchase from BNPPLC as provided in subparagraph 2(A)(1), then the parties intend that the Purchase Option be secured by a lien and security interest against the Property. Accordingly, BNPPLC does hereby grant to NAI a lien and security interest against the Property, including all rights, title and interests of BNPPLC from time to time in and to the
 
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Land and Improvements, in order to secure (1) BNPPLC’s obligation to convey the Property to NAI or an Affiliate designated by it if NAI exercises the Purchase Option and tenders payment of the Break Even Price to BNPPLC on the Designated Sale Date as provided herein, and (2) NAI’s right to recover any damages from BNPPLC caused by a breach of such obligation, including any such breach caused by a rejection or termination of this Agreement in any bankruptcy or insolvency proceeding instituted by or against BNPPLC, as debtor. NAI may enforce such lien and security interest judicially after any such breach by BNPPLC, but not otherwise.
3     NAI’s Rights, Options and Obligations After the Designated Sale Date.
     (A)      NAI’s Right to Buy During the Thirty Days After the Designated Sale Date. Even after a failure to pay any required Supplemental Payment on the Designated Sale Date, NAI may tender (or cause an Applicable Purchaser to tender) to BNPPLC the full Make Whole Amount (including all amounts then due under the other Operative Documents) on any Business Day within thirty days after the Designated Sale Date. If presented with such a tender within thirty days after the Designated Sale Date, BNPPLC must accept it and promptly thereafter deliver to NAI (or the Applicable Purchaser) the Sale Closing Documents and any Escrowed Proceeds then constituting Property held by BNPPLC. Otherwise, BNPPLC will have no further obligation to sell the Property to NAI or to any Affiliate of NAI pursuant to this Agreement, although BNPPLC will continue to have the option to require NAI to buy the Property if the conditions listed in the next subparagraph are satisfied.
     (B)      NAI’s Obligation to Buy if Certain Conditions are Satisfied. Regardless of any prior Decision Not to Sell at a Loss, BNPPLC will have the option (the “Put Option”) to require NAI to purchase the Property upon demand at any time after the Designated Sale Date for a cash price equal to the Make Whole Amount if:
          (1)      BNPPLC has not already conveyed the Property to consummate a sale of the Property to NAI or an Applicable Purchaser pursuant to other provisions of this Agreement; and
          (2)      a 97-1/Default (100%) occurs or is continuing on or after the Designated Sale Date; and
          (3)      BNPPLC notifies NAI of BNPPLC’s exercise of the Put Option within two years following the Designated Sale Date.
Further, and without limiting the foregoing, if any Event of Default occurs as described in clauses (G), (H) or (I) of the definition Event of Default in the Common Definitions and Provisions Agreement because of any bankruptcy proceeding instituted by or against NAI, as
 
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debtor, under Title 11 of the United States Code, then NAI will be obligated (without any further act or notice or demand by BNPPLC) to pay to BNPPLC the Make Whole Amount and purchase the Property, as if (i) BNPPLC had exercised the Put Option, and (ii) the second Business Day after the commencement of such Event of Default was the Final Sale Date.
     (C)      NAI’s Extended Right to Remarket. If the Property is not sold to NAI or an Applicable Purchaser on the Designated Sale Date pursuant to this Agreement, NAI will have the right (“NAI’s Extended Remarketing Right”) during the Extended Remarketing Period to arrange a sale of the Property to an Applicable Purchaser, other than an Affiliate of NAI, for a price equal to or in excess of the Must Sell Price (a “Proposed Sale”). NAI’s Extended Remarketing Right will, however, be subject to all of the following conditions:
          (1)      BNPPLC has not exercised the Put Option as provided in subparagraph 3(B) or already contracted with another Applicable Purchaser to convey the Property in connection with a Qualified Sale.
          (2)      NAI’s Extended Remarketing Right is not terminated pursuant to subparagraph 6(C) because of NAI’s failure to pay any required Supplemental Payment.
          (3) NAI’s Extended Remarketing Right is not terminated pursuant to subparagraph 6(C) because of NAI’s failure to pay any required 97-10 Prepayment .
          (4)      NAI must have provided a notice to BNPPLC (a “Notice of Sale”) setting forth (i) the date proposed by NAI as the Final Sale Date (the “Proposed Sale Date”), which must be no sooner than thirty days after BNPPLC’s receipt of the Notice of Sale and no later than the last Business Day of the Extended Remarketing Period, (ii) the full legal name of the Applicable Purchaser and such other information as is needed to prepare the Sale Closing Documents, and (iii) the cash price that will be tendered to BNPPLC for the Property (the “Committed Price”).
          (5)      The Committed Price must be no less than the Must Sell Price, computed as of the Proposed Sale Date. Also, if NAI has notified BNPPLC of NAI’s Target Price, the Committed Price must be no less than NAI’s Target Price.
     (D)      Deemed Sale On the Second Anniversary of the Designated Sale Date. If no date prior to the second anniversary of the Designated Sale Date qualifies as the Final Sale Date, then on second anniversary of the Designated Sale Date BNPPLC will, for purposes of the next subparagraph, be deemed to have sold the Property (a “Deemed Sale”) to an Applicable Purchaser at a Qualified Sale for a net cash price equal to its Fair Market Value.
 
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     (E)      NAI’s Right to Share in Sales Proceeds Received By BNPPLC From any Qualified Sale. BNPPLC must apply the cash proceeds received by BNPPLC from any Qualified Sale (regardless of whether the sale is arranged by NAI as provided in subparagraph 3(C) or by BNPPLC itself), or deemed to be received in connection with any Deemed Sale, in the following order of priority:
          (1)      first, to pay or reimburse to BNPPLC BNPPLC’s Actual Out of Pocket Costs incurred in connection with the Qualified Sale;
          (2)      second, to pay or reimburse to BNPPLC the Local Impositions, insurance premiums and other Losses suffered or incurred by BNPPLC with respect to the ownership, operation or maintenance of the Property after the Designated Sale Date, together with interest on such Local Impositions, insurance premiums and other Losses computed at the Default Rate from the date paid or incurred to the date reimbursed from sales proceeds;
          (3)      third, to pay to BNPPLC an amount equal to the difference, if any, computed by subtracting (i) the aggregate payments, if any, previously paid by NAI to BNPPLC as a Supplemental Payment or as a 97-10/Prepayment, from (ii) the Adjusted Lease Balance;
          (4)      fourth, to reimburse NAI for the aggregate payments, if any, previously made by NAI to BNPPLC as a Supplemental Payment or as 97-10/Prepayments;
          (5)      fifth, to pay to BNPPLC an amount that, when added to all payments or reimbursements to BNPPLC described in the preceding clauses (1), (2) and (3), will equal the Make Whole Amount;
          (6)      sixth, to pay to BNPPLC any other amounts then due from NAI to BNPPLC under any of the Operative Documents; and
          (7)      last, if any such cash proceeds exceed all the payments and reimbursements that are required or may be required as described in the preceding clauses of this subparagraph, BNPPLC may retain the excess.
If, however, BNPPLC completes any sale and conveyance of the Property after the Extended Remarketing Period expires or is terminated, BNPPLC will not be required by this subparagraph to share any proceeds of the sale or conveyance with NAI or any other party claiming through or under NAI.
 
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4     Transfers By BNPPLC After the Designated Sale Date.
     (A)      BNPPLC’s Right to Sell. At any time more than thirty days after the Designated Sale Date, if the Property has not already been sold and conveyed by BNPPLC pursuant to Paragraph 2 or Paragraph 3, BNPPLC will 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 BNPPLC in its sole good faith business judgment.
     (B)      Survival of NAI’s Rights and the Supplemental Payment Obligation. If the Property is not sold on the Designated Sale Date, and if BNPPLC completes a sale or other transfer of the Property after the Designated Sale Date, other than a Qualified Sale, the Supplemental Payment Obligation will survive in favor of BNPPLC’s successors and assigns with respect to the Property, and BNPPLC’s successors and assigns will take the Property subject to NAI’s rights under Paragraph 3, all on the same terms and conditions as would have applied to BNPPLC itself if BNPPLC had not transferred or sold the Property. Without limiting the foregoing, any purchaser that acquires the Property from BNPPLC during the Extended Remarketing Period, other than at a Qualified Sale, will be obligated to distribute proceeds of a subsequent Qualified Sale of the Property as described in the subparagraph 3(E) in the same manner and to the same extent that BNPPLC itself would have been obligated if not for the sale by BNPPLC to the purchaser.
     (C)      Easements and Other Transfers in the Ordinary Course of Business. No “Permitted Transfer” described in clause (5) (the last clause) of the definition thereof in the Common Definitions and Provisions Agreement will constitute a Qualified Sale if it covers less than all or substantially all of BNPPLC’s then existing interests in the Property. Any such Permitted Transfer of less than all or substantially all of BNPPLC’s then existing interests in the Property will not be prohibited by this Agreement during the Extended Remarketing Period or otherwise; provided, however, any such Permitted Transfer made before the end of one hundred eighty days after the Designated Sale Date, or made to an Affiliate of BNPPLC before the end of the Extended Remarketing Period, or otherwise not made in the ordinary course of business, will be made subject to NAI’s rights under Paragraph 3. Thus, for example, if the Property is not sold by BNPPLC to an Applicable Purchaser on the Designated Sale Date, then at any time more than one hundred eighty days after the Designated Sale Date BNPPLC may in the ordinary course of business convey a utility easement or a lease of space in the Improvements to a Person not an Affiliate of BNPPLC free from NAI’s rights under Paragraph 3, although following such conveyance of the lesser estate, NAI’s rights under Paragraph 3 will continue during the Extended Remarketing Period as to BNPPLC’s remaining interest in the Land and the Improvements.
5     Terms of Conveyance Upon Purchase.
     (A)      Tender of Sale Closing Documents. As necessary to consummate any sale of the
 
Purchase Agreement (Building 9) – Page 16

 

 

Property to NAI or an Applicable Purchaser pursuant to this Agreement, BNPPLC must, subject to any postponement permitted by subparagraph 2(B), promptly after the tender of the purchase price and any other payments to BNPPLC required pursuant to Paragraph 2 or Paragraph 3, as applicable, convey the Property to NAI or the Applicable Purchaser, as the case may be, by BNPPLC’s execution, acknowledgment (where appropriate) and delivery of the Sale Closing Documents. Such conveyance by BNPPLC will be subject to the Permitted Encumbrances and any other encumbrances that do not constitute Liens Removable by BNPPLC, and such conveyance will not include the rights of BNPPLC 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 Loss incurred by BNPPLC or another Interested Party resulting in whole or in part from events or circumstances occurring or alleged to have occurred before such conveyance. The costs, both foreseen and unforeseen, of any purchase by NAI or an Applicable Purchaser will be the responsibility of the purchaser to the extent (if any) not included in any Break Even Price or Make Whole Amount actually paid to BNPPLC. If for any reason BNPPLC fails to tender the Sale Closing Documents as required by this Paragraph 5(A), BNPPLC will have the right and obligation to cure such failure at any time before thirty days after receipt of a demand for such cure from NAI. Prior to the end of such cure period, NAI may initiate appropriate legal action to specifically enforce BNPPLC’s obligation to deliver the Sale Closing Documents or to foreclose NAI’s liens or security interests against the Property which secure such obligation, but if BNPPLC does cure within such thirty day period, BNPPLC will not be liable for monetary damages because of its prior failure to deliver the Sale Closing Documents.
     (B)     Delivery of Escrowed Proceeds. BNPPLC may deliver any Escrowed Proceeds constituting Property directly to NAI or to any Applicable Purchaser purchasing the Property 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; BNPPLC will not be responsible for the proper distribution or application by NAI or any Applicable Purchaser of any such Escrowed Proceeds; and any such payment of Escrowed Proceeds to NAI or an Applicable Purchaser will discharge any obligation of BNPPLC to deliver the same to all Persons claiming an interest therein.
6   Survival and Termination of the Rights and Obligations of NAI and BNPPLC.
     (A)      Status of this Agreement Generally. Except as expressly provided in the next subparagraph or other provisions of this Agreement, this Agreement will not terminate; nor will NAI have any right to terminate this Agreement; nor will NAI be entitled to any reduction (by setoff or otherwise) of the Break Even Price, the Make Whole Amount or any payment required under this Agreement; nor will any of the obligations of NAI to BNPPLC under Paragraph 2 or Paragraph 3 be excused by reason of (i) any damage to or the destruction of all or any part of the
 
Purchase Agreement (Building 9) – Page 17

 

 

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 BNPPLC under this Agreement or any other Operative Document or any other agreement to which BNPPLC 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 BNPPLC 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) NAI’s prior acquisition or ownership of any interest in the Property, or (ix) 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 under this Agreement (including the obligation to make any Supplemental Payment as provided in Paragraph 2) be separate from and independent of BNPPLC’s obligations under this Agreement or any other agreement between BNPPLC and NAI; however, nothing in this subparagraph will 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 BNPPLC’s failure to remove a Lien Removable by BNPPLC or because of any other default by BNPPLC under this Agreement: (A) the recovery of monetary damages, (B) injunctive relief in case of the violation, or attempted or threatened violation, by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Agreement which are binding upon BNPPLC, or (C) a decree compelling performance by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Agreement which are binding upon BNPPLC.
     (B)      Election by NAI to Terminate the Supplemental Payment Obligation Prior to the Completion Date. By delivery of a notice to BNPPLC in the form attached as Exhibit F, NAI may terminate its Supplemental Payment Obligation, but only prior to the Completion Date and only if at the time of such exercise (1) NAI has given (and not rescinded) a Notice of NAI’s Intent to Terminate as provided in the Construction Agreement, or (2) BNPPLC has given any FOCB Notice as provided in the Construction Agreement. (If for any reason BNPPLC does not receive a notice terminating the Supplemental Payment Obligation as described in the preceding sentence prior to the Completion Date, then without any notice or other action by the parties to this Agreement, NAI will cease to have any right to terminate the Supplemental Payment Obligation.) If NAI does send a notice to BNPPLC in the form attached as Exhibit F, such notice will (as provided therein) constitute an irrevocable and absolute waiver by NAI of NAI’s rights to purchase the Property or to cause any of its Affiliates to purchase the Property pursuant to this Agreement. However, no such notice will terminate BNPPLC’s right to exercise the Put Option, which BNPPLC may exercise if NAI fails to make a 97-10/Permitted Prepayment required by the Construction Agreement.
 
Purchase Agreement (Building 9) – Page 18

 

 

     (C)      Automatic Termination of NAI’s Rights. If NAI fails to pay the full amount of any Supplemental Payment required by subparagraph 2(A)(3) on the Designated Sale Date, then the Purchase Option, NAI’s Initial Remarketing Rights, NAI’s Extended Remarketing Right and all other rights of NAI under this Agreement, other than its rights under subparagraph 3(A), will terminate automatically. If, however, prior to the Designated Sale Date NAI effectively terminates the Supplemental Payment Obligation pursuant to subparagraph 6(B) by the delivery of a notice to BNPPLC in the form attached as Exhibit F, so that NAI is excused from the obligation to make any Supplemental Payment pursuant to subparagraph 2(A)(3), then NAI’s Extended Remarketing Right will not terminate automatically pursuant to this subparagraph 6(C), but rather will survive except to the extent waived by such notice. No termination of NAI’s rights as described in this subparagraph will limit BNPPLC’s other remedies, including its right to sue NAI for any 97-10/Prepayments, pursuant to any of the Operative Documents or (following a 97-1/Default (100%)) its right to exercise the Put Option.
     (D)      Payment Only to BNPPLC. All amounts payable under this Agreement by NAI and, if applicable, by an Applicable Purchaser must be paid directly to BNPPLC. If paid to other parties, such payments will not be effective for purposes of this Agreement.
     (E)      Preferences and Voidable Transfers. If any payment to BNPPLC by an Applicable Purchaser is held to constitute a preference or a voidable transfer under Applicable Laws, or must for any other reason be refunded by BNPPLC to the Applicable Purchaser or to another Person, and if such payment to BNPPLC reduced or had the effect of reducing a payment required of NAI by this Agreement (e.g., the Supplemental Payment) or increased or had the effect of increasing any sale proceeds paid over to NAI pursuant to subparagraph 2(A)(2)(b) or pursuant to subparagraph 3(E), then NAI must pay to BNPPLC upon demand an amount equal to the reduction of the payment required of NAI or to the increase of the excess sale proceeds paid to NAI, as applicable, and this Agreement will continue to be effective or will be reinstated as necessary to permit BNPPLC to enforce its right to collect such amount from NAI.
     (F)      Remedies Under the Other Operative Documents. No repossession of or re-entering upon the Property or exercise of any other remedies available to BNPPLC under the other Operative Documents will terminate NAI’s rights or obligations under this Agreement, all of which will survive BNPPLC’s exercise of remedies under the other Operative Documents. NAI acknowledges that the consideration for this Agreement is separate from and independent of the consideration for the Construction Agreement, the Lease, the Closing Certificate and other agreements executed by the parties, and NAI’s obligations under this Agreement will not be affected or impaired by any event or circumstance that would excuse NAI from performance of its obligations under such other Operative Documents.
 
Purchase Agreement (Building 9) – Page 19

 

 

7      Certain Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy BNPPLC has with respect to the Property, and each and every right and remedy of BNPPLC will be cumulative and in addition to any other right or remedy given to it under this Agreement or now or hereafter existing in its favor at law or in equity. In addition to other remedies available under this Agreement, either party may obtain a decree compelling specific performance of any of the other party’s agreements hereunder.
8      Attorneys’ Fees and Legal Expenses. If BNPPLC commences any legal action or other proceeding because of any breach of this Agreement by NAI, BNPPLC may recover all Attorneys’ Fees incurred by it in connection therewith from NAI, whether or not such controversy, claim or dispute is prosecuted to a final judgment. Any Attorneys’ Fees incurred by BNPPLC in enforcing a judgment in its favor under this Agreement will 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.
9      Successors and Assigns. The terms, provisions, covenants and conditions hereof will be binding upon NAI and BNPPLC and their respective permitted successors and assigns and will inure to the benefit of NAI and BNPPLC and all permitted transferees, mortgagees, successors and assignees of NAI and BNPPLC with respect to the Property; except that (A) the rights of BNPPLC hereunder will not pass to NAI or any Applicable Purchaser or any subsequent owner claiming through NAI or an Applicable Purchaser, (B) BNPPLC will not assign this Agreement or any rights hereunder except pursuant to a Permitted Transfer, and (C) NAI will not assign this Agreement or any rights hereunder without the prior written consent of BNPPLC.
[The signature pages follow.]
 
Purchase Agreement (Building 9) – Page 20

 

 

          IN WITNESS WHEREOF, this Purchase Agreement (Building 9) is executed to be effective as of February 1, 2008.
             
    BNP PARIBAS LEASING CORPORATION, a    
    Delaware corporation    
 
            
 
  By:   /s/ Lloyd G. Cox    
 
     
 
Lloyd G. Cox, Managing Director 		   
 
Purchase Agreement (Building 9) – Signature Page

 

 

[Continuation of signature pages for Purchase Agreement (Building 9) dated as of February 1, 2008.]
             
    NETWORK APPLIANCE, INC., a Delaware    
    corporation    
 
            
 
  By:   /s/ Ingemar Lanevi    
 
     
 
Ingemar Lanevi, Vice President and Corporate 		   
 
      Treasurer    
 
Purchase Agreement (Building 9) – Signature Page

 

 

Exhibit A
Legal Description
Parcel 9 and the Additional Leased Premises, as defined below, (collectively, the “Building 9 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs along the same line as the northern boundary of Common Lot A, as shown on the Tentative Map, extending from the corner of two streets adjacent to the Additional Leased Premises to the northeast corner of Parcel 12, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as (but extends beyond) the eastern boundary of Parcel 12, as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 9 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.

 

 

(MAP)
 
Exhibit A to Purchase Agreement (Building 9) – Page 2

 

 

Exhibit B
Valuation Procedures
     This Exhibit explains the procedures to be used to determine Fair Market Value of the Property if such a determination is required by this Agreement. In such event, either party may invoke the procedures set out herein prior to the date the determination will be needed so as to minimize any postponement of any payment, the amount of which depends upon Fair Market Value. In the event such a payment becomes due before the required determination of Fair Market Value is complete, such payment will be postponed until the determination is complete. But in that event, when the required determination is complete, the payment will be made together with interest thereon, computed at a rate equal to ABR, accruing over the period the payment was postponed.
     If any determination of Fair Market Value is required, NAI and BNPPLC will attempt in good faith to reach a written agreement upon the Fair Market Value without unnecessary delay, and either party may propose such an agreement to the other. If, however, for any reason whatsoever, they do not execute such an agreement within seven days after the first such proposed agreement is offered by one party to the other, then the determination will be made by independent appraisers in accordance with the following procedures:
1.   Definitions and Assumptions. For purposes of the determination, Fair Market Value will be defined as follows, and all appraisers or others involved in the determination will be instructed to use the following definition:
     “Fair Market Value” means the most probable net cash price, as of a specified date, for which the Property should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.
In addition, the appraisers or others making the determination will be instructed to assume that ordinary and customary brokerage fees, title insurance costs and other sales expenses will be incurred and deducted in the calculation of such net cash price. Such appraisers or others making the determination will also be instructed to assume that the value of the Property (or applicable portion thereof) is neither enhanced nor reduced by any lease to another tenant that BNPPLC may have executed subsequent to the termination or expiration of the Lease (a “Replacement Lease”). In other words, rather than determine value in light of actual rents generated or to be generated by any such Replacement Lease, the Property (or applicable portion thereof) will be valued in light of the most probable rent that it should bring in a competitive and open market (in this section, a “Fair Market Rental”), taking into account:
     (i)      the fact that the Ground Lease exists to permit the continued use and enjoyment of the Property during the term of the

 

 

Ground Lease 1 ; and
     (ii)      the actual physical condition of the Property 2 ; and
     (iii)      that a reasonable period of time may be required to market the Property (or applicable portion thereof) for lease and make it ready for use or occupancy before it is leased at a Fair Market Rental.
2.   Initial Selection of Appraisers; Appraiser’s Agreement as to Value. After having failed to reach a written agreement upon Fair Market Value as described in the second paragraph of this Exhibit, either party may deliver a notice to the other demanding the appointment of appraisers (the “First Appraisal Notice”) pursuant to this Exhibit. In such event:
     (a)      Within fifteen days after the First Appraisal Notice is delivered, NAI and BNPPLC must each appoint an independent property appraiser who has experience appraising commercial properties in California and notify the other party of such appointment, including the name of the appointed appraiser (a “Notice of Appointment”).
     (b)      If the appraiser appointed by NAI and the appraiser appointed by BNPPLC agree in writing upon the Fair Market Value (an “Appraiser’s Agreement As To Value”), such agreement will be binding upon NAI and BNPPLC. Both NAI and BNPPLC will instruct their respective appraisers to attempt in good faith to quickly reach an Appraiser’s Agreement As To Value. Neither appraiser will be required to produce a formal appraisal prior to reaching an Appraiser’s Agreement As To Value.
3.   Selection of a Third Appraiser. If the two appraisers fail to deliver an Appraiser’s Agreement As to Value within thirty days following the later of the dates upon which NAI or BNPPLC delivers its Notice of Appointment, then either party (NAI or BNPPLC) may deliver another notice to the other (a “Third Appraisal Notice”), demanding that the two appraisers appoint a third independent property appraiser to help with the determination of Fair Market Value. Immediately after the Third Appraisal Notice is delivered, each of the first two appraisers
 
     1 But for the Ground Lease, the Improvements could not be used and maintained in place. Thus, the parties believe that, but for the Ground Lease, the Improvements would be worth much less. However, it is understood that Property does not include the fee estate in the Land, and the continued use of the Improvements will necessitate the payment of rents as required by the Ground Lease and compliance with the other terms and conditions thereof. Accordingly, the value of the Land itself will not be included in the Fair Market Value of the Property.
     2 If, however, the use of the Property by BNPPLC or any tenant under any Replacement Lease after NAI vacated the Property has resulted in excess wear and tear, such excess wear and tear will be assumed not to have occurred for purposes of determining Fair Market Value.
 
Exhibit B to Purchase Agreement (Building 9) – Page 2

 

 

must act promptly, reasonably and in good faith to try to reach agreement upon the third appraiser. If, however, the two appraisers fail to reach agreement upon a third appraiser within ten days after the Third Appraisal Notice is delivered:
     (a)      NAI and BNPPLC will each cause its respective appraiser to deliver, no later than fifteen days after the delivery of the Third Appraisal Notice, an unqualified written promise addressed to both of NAI and BNPPLC: (i) to act promptly, reasonably and in good faith in trying to reach agree upon the third appraiser, and (ii) to propose and consider proposals of persons as the third appraiser on the basis of objectivity and competence, not on the basis of such persons’ relationships with the other appraisers or with NAI or BNPPLC, and not on the basis of preferences expressed by NAI or BNPPLC.
     (b) If, despite the delivery of the promises described in the preceding subsection, the two appraisers fail to reach agreement upon a third appraiser within thirty days after the Third Appraisal Notice is delivered, then each of the first two appraisers must 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 NAI or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within ten days after such choices are submitted to him.
4.   Resolution of Issues by the Third Appraiser. If a third appraiser is selected under the procedure set out above:
     (a)      No later than thirty days after a third appraiser is selected, each of the first two appraisers must submit (and NAI and BNPPLC will each cause its appointed appraiser to submit) his best estimate of Fair Market Value, together with a written report supporting such estimate. (Such report need not be in the form of a formal appraisal, and may contain any qualifications the submitting appraiser deems necessary under the circumstances. Any such qualifications, however, may be considered by the third appraiser for purposes of the selection required by the next subsection.)
     (b)      After receipt of the two estimates required by the preceding subsection, and no later than forty-five days after the third appraiser is selected, he must (i) choose one or the other of the two estimates of Fair Market Value submitted by the first two appraisers as being the more accurate in his opinion, and (ii) notify NAI and BNPPLC of which estimate he chose. The third appraiser will not be asked or allowed to specify an amount as Fair Market Value that is different than an estimate provided by one of the other two appraisers (either by averaging the two estimates or otherwise). The estimate of Fair Market Value thus chosen by the third appraiser as being the more accurate will be binding upon NAI and BNPPLC.
5.   Criteria For Selecting Appraisers; Cost of Appraisals. All appraisers selected for the
 
Exhibit B to Purchase Agreement (Building 9) – Page 3

 

 

appraisal process set out in this Exhibit will be disinterested, reputable, qualified appraisers with the designation of MAI or equivalent and with at least five years experience in appraising commercial properties comparable to the Property. NAI and BNPPLC will 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 NAI and BNPPLC.
6.   Time is of the Essence; Defaults.
     (a)      All time periods and deadlines specified in this Exhibit are of the essence.
     (b)      Each party must cause the appraiser appointed by it (as set forth in Section 2(a)) to comply in a timely manner with the requirements of this Exhibit applicable to such appraiser. Accordingly, if an appraiser appointed by one of the parties as provided in Section 2(a) fails to comply in a timely manner with any provision of this Exhibit, such failure will be considered a default by the party who appointed such appraiser.
     (c)      Any breach of or default under this Exhibit by either party will be construed as a breach of the Purchase Agreement to which this Exhibit is attached.
     (d)      Any such breach or default by NAI will constitute a 97-1/Default (100%); provided, however:
           (1)      Before characterizing any such breach or default as a 97-1/Default (100%), BNPPLC must first notify NAI of the breach or default and give NAI the opportunity, during the five days after delivery of such notice, to fully rectify the breach or default.
           (2)      Any breach or default by NAI under this Exhibit will be deemed rectified if, within such five day period, NAI offers BNPPLC an unqualified written agreement that all determinations of Fair Market Value required by this Agreement will, if made by the appraiser appointed by BNPPLC as hereinabove provided, be binding upon BNPPLC and NAI. (It is understood that following the delivery of any such agreement by NAI, no further input from NAI’s appraiser or from any official of the California bar association or from a third appraiser will be required for any required determination of Fair Market Value.)
 
Exhibit B to Purchase Agreement (Building 9) – Page 4

 

 

Exhibit C
Requirements Re: Forms to Accomplish Assignment and Conveyance
The form of the documents to be used to accomplish any conveyance of BNPPLC’s interest in the Improvements and other Property pursuant to this Agreement will depend upon whether the conveyance is to NAI or an Applicable Purchaser and, in the case of an conveyance by NAI itself, upon whether NAI elects to take an assignment of the Ground Lease or to terminate the Ground Lease.
If NAI is itself acquiring BNPPLC’s interest in the Property, the conveyance of such interest will be accomplished either by (A) the execution of an Agreement Concerning Ground Lease in the form attached as Exhibit C-1, which (among other things) will effectively terminate the Ground Lease with the result that BNPPLC’s interest in all Improvements will revert to NAI by operation of law, or (B) BNPPLC’s execution of assignments in the forms attached as Exhibit C-2 and Exhibit C-3 and NAI’s execution of an Acknowledgment of Disclaimer of Representations and Warranties in the form attached as Exhibit C-4. NAI may choose between the Agreement Concerning Ground Lease or the alternative forms attached as Exhibits C-2, C-3 and C-4; however, if NAI fails to notify BNPPLC at least fifteen days prior to the Designated Sale Date that NAI chooses to receive the assignments in the forms attached as Exhibit C-2 and Exhibit C-3, BNPPLC may assume that NAI has elected instead to have BNPPLC execute the Agreement Concerning Ground Lease in the form attached as Exhibit C-1. If NAI does choose to receive the assignments in the forms attached as Exhibit C-2 and Exhibit C-3, NAI must execute and deliver to BNPPLC the Acknowledgment of Disclaimer of Representations and Warranties in the form attached as Exhibit C-4.
If an Applicable Purchaser is acquiring BNPPLC’s interest in the Improvements and other Property, such interest will be conveyed by BNPPLC’s execution and delivery of assignments in the forms attached as Exhibit C-2 and Exhibit C-3, and the Applicable Purchaser must execute and deliver to BNPPLC an Acknowledgment of Disclaimer of Representations and Warranties in the form attached as Exhibit C-4.

 

 

Exhibit C-1
RECORDING REQUESTED BY AND,
WHEN RECORDED, RETURN TO:
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
AGREEMENT CONCERNING GROUND LEASE
     THIS AGREEMENT CONCERNING GROUND LEASE (this “Agreement”) dated as of                     , 20___(the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
This Agreement is entered into upon, and with respect to, the following facts and intentions:
     A. BNPPLC and NAI have heretofore entered into the following agreements:
     (1)      Ground Lease (Building 9) dated as of February 1, 2008 and recorded (or referenced in a memorandum thereof recorded) in the official records of Santa Clara County, California (the “Official Records”) on or about February 1, 2008 as Instrument Number                      (as the same may have been modified, the “Ground Lease”), whereby NAI, as ground lessor, ground leased to BNPPLC, as ground lessee, that certain land more particularly described in Annex A, attached hereto and incorporated herein by this reference (herein the “Land”); and
     (2)      Lease Agreement (Building 9) dated as of February 1, 2008 (as the same may have been modified, the “Sublease”), which was the subject of that certain Short Form of Sublease, dated as of February 1, 2008, recorded in the Official Records on or about February 1, 2008 as Instrument Number                      (the “Short Form of Sublease”), whereby BNPPLC, as sublessor, leased to NAI, as sublessee, its ground leasehold interest in the Land and all of the improvements located thereon (collectively the “Subleased Premises”); and
     (3)      Purchase Agreement (Building 9) dated as of February 1, 2008 (has the same may have been modified, the “Purchase Agreement”), which was the subject of that certain Memorandum of Purchase Agreement, dated as of February 1, 2008, recorded in the Official Records on or about February 1, 2008 as Instrument Number                     .
     (4)      Common Definitions and Provisions Agreement (Building 9) dated as of

 

 

February 1, 2008 Date (as the same may have been modified, the “Common Definitions and Provisions Agreement”). As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     B. BNPPLC and NAI now mutually wish to terminate the Ground Lease on the terms and conditions more particularly herein set forth.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration the adequacy of which is hereby acknowledges, the parties hereto agree as follows:
     1. Termination of Ground Lease. As of the Effective Date, BNPPLC hereby surrenders all of its right title and interest in the Ground Lease unto NAI, subject only to the “Permitted Encumbrances” described in Annex B attached hereto and incorporated herein by this reference, and the Ground Lease is hereby terminated. Notwithstanding anything to the contrary in this Agreement, BNPPLC does, for itself and its successors, covenant, warrant and agree to defend the title to the Land against claims and demands of any person claiming under or through a Lien Removable by BNPPLC. Except as expressly set forth in the preceding sentence, BNPPLC makes no warranty of title, express or implied.
     2. Acknowledgment of Reversion. BNPPLC also acknowledges and agrees that because of the termination of the Ground Lease, all of BNPPLC’s right, title and interest in and to the following property will revert to NAI and BNPPLC does hereby forever relinquish, waive, and quitclaim unto NAI (subject to such Permitted Encumbrances):
  A.   the Sublease;
  B.   the Purchase Agreement;
  C.   any pending or future award made because of our condemnation affecting the Property or because of any conveyance to be made in lieu thereof, and any unpaid proceeds of insurance or claim or cause of action for damages, loss or injury to the Subleased Premises; and
  D.   all other property included within the definition of “Property” as set forth in the Purchase Agreement;
provided, however, that excluded from this conveyance and reserved to BNPPLC are any rights or privileges of BNPPLC under the following are expressly reserved and retained by BNPPLC: (i) the indemnities set forth in the Sublease and the Ground Lease, whether such rights are presently known or unknown, including rights of BNPPLC to be indemnified against
 
Exhibit C-1 to Purchase Agreement (Building 9) – Page 2

 

 

environmental claims of third parties, as provided in the Ground Lease which may not presently be known; and (ii) provision in the Sublease that establish the right of BNPPLC to recover any accrued unpaid rent under the Sublease which may be outstanding as of the date hereof; and (iii) agreements between BNPPLC and BNPPLC’s Parent or any Participant, or any modification or extension thereof.
BNPPLC agrees to warrant and defend the title to the Subleased Premises as herein assigned, against claims and demands of any person claiming under or through a Lien Removable by BNPPLC relating to the Subleased Premises.
     3. “As Is” Reversion. Notwithstanding any contrary provisions contained herein, NAI acknowledges that BNPPLC 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 Subleased Premises, and NAI, by acceptance of this agreement, accepts the Subleased Premises “As Is,” “Where Is,” and “With All Faults,” and without any such representation or warranty by BNPPLC as to environmental matters, the physical condition of the Subleased Premises, compliance with subdivision or platting requirements or construction of any improvements. Without limiting the generality of the foregoing, NAI hereby further acknowledges and agrees that warranties of merchantability and fitness for a particular purpose are excluded from the transactions contemplated by this Agreement, as are any warranties arising from a course of dealing or usage of trade. NAI hereby assumes all risk and liability (and agrees that BNPPLC will not be liability 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 Subleased Premises, except for damages proximately caused by (and attributed by any applicable principles of comparative fault to) the “Established Misconduct” of BNPPLC.
     4. Binding Effect. The terms, provisions, covenants, and conditions hereof will be binding upon NAI and BNPPLC and their respective successors and assigns, and any other party claiming through either of them, and will inure to the benefit of NAI and BNPPLC and all transferees, mortgages, successors and assigns.
     5. Miscellaneous. This Agreement and any other agreement relating hereto and executed concurrently herewith represent the entire agreement of the parties hereto with respect to the subject matter hereof and supersede any prior negotiations and agreement between BNPPLC and NAI concerning the subject matter hereof. No amendment or modification of this Agreement will be binding or valid unless express in a writing executed by both parties hereto. This Agreement will be governed by and construed in accordance with the laws of the State of California without regard to conflict or choice of laws. Words in the singular number will be held to include the plural and vice versa, unless the context otherwise requires. This Agreement may be executed in counterparts, each of which will be an original and all of which together will be a single
 
Exhibit C-1 to Purchase Agreement (Building 9) – Page 3

 

 

     instrument.
[Signature pages follow.]
 
Exhibit C-1 to Purchase Agreement (Building 9) – Page 4

 

 

IN WITNESS WHEREOF, BNPPLC and NAI have signed this Agreement Concerning Ground Lease to be effective as of                     , 20___.
             
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
             
STATE OF                     
    )      
 
    )     SS
COUNTY OF                     
    )      
On                     , 200___, before me                                         , a Notary Public in and for the County and State aforesaid, personally appeared
                                                            , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
WITNESS, my hand and official seal.
                                                        
 
Exhibit C-1 to Purchase Agreement (Building 9) – Page 5

 

 

[Continuation of signature pages to Agreement Concerning Ground Lease dated to be effective as of                     , 20___.]
             
    NETWORK APPLIANCE, INC., a Delaware
corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
             
STATE OF                     
    )      
 
    )     SS
COUNTY OF                     
    )      
On                     , 200___, before me                                         , a Notary Public in and for the County and State aforesaid, personally appeared
                                                            , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
WITNESS, my hand and official seal.
                                                        
 
Exhibit C-1 to Purchase Agreement (Building 9) – Page 6

 

 

Annex A
Legal Description
[DRAFTING NOTE: TO THE EXTENT THAT THE “LAND” COVERED BY THE GROUND LEASE CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPPLC’S CONSENT OR APPROVAL AS PROVIDED IN THE CLOSING CERTIFICATE, 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 ASSIGNMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
Parcel 9 and the Additional Leased Premises, as defined below, (collectively, the “Building 9 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs along the same line as the northern boundary of Common Lot A, as shown on the Tentative Map, extending from the corner of two streets adjacent to the Additional Leased Premises to the northeast corner of Parcel 12, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as (but extends beyond) the eastern boundary of Parcel 12, as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 9 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.
 
Exhibit C-1 to Purchase Agreement (Building 9) – Page 7

 

 

(MAP)
 
Exhibit C-1 to Purchase Agreement (Building 9) – Page 8

 

 

Annex B
Permitted Encumbrances
[DRAFTING NOTE: BEFORE THIS AGREEMENT IS ACTUALLY EXECUTED AND DELIVERED BY BNPPLC: ALL PERMITTED ENCUMBRANCES LISTED IN EXHIBIT B TO THE CLOSING CERTIFICATE WILL BE SET OUT BELOW, IN ADDITION TO THE ITEMS ALREADY LISTED. ALSO, IF ANY ENCUMBRANCES (OTHER THAN “LIENS REMOVABLE BY BNPPLC”) ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW OR IN EXHIBIT B TO THE CLOSING CERTIFICATE, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW. AFTER SUCH ADJUSTMENTS ARE MADE, THIS “DRAFTING NOTE” WILL BE DELETED. THE ADDITIONAL ENCUMBRANCES TO BE LISTED BELOW WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPPLC AS “PERMITTED ENCUMBRANCES” FROM TIME TO TIME OR BECAUSE OF NAI’s REQUEST FOR BNPPLC’S CONSENT OR APPROVAL TO AN ADJUSTMENT.]
This conveyance is subject to all encumbrances not constituting a “Lien Removable by BNPPLC” (as defined in the Common Definitions and Provisions Agreement), including the following matters to the extent the same are still valid and in force:
1.   Taxes and assessments for the year 200___and subsequent years, which are not yet due and 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   : Slope Easement
 
  In favor of   : City of Sunnyvale
 
  Recorded   : October 9, 1964 in Book 6695, page 430, Official Records
 
  Affects   : Easterly 18 feet, as shown on a survey plat entitled ALTA/ACSM
 
      Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
4.   EASEMENT for the purposes stated herein and incidents thereto
         
 
  Purpose   : Public utilities easement
 
  In favor of   : City of Sunnyvale
 
Exhibit C-1 to Purchase Agreement (Building 9) – Page 9

 

 

         
 
  Recorded   : October 9, 1964 in Book 6695, page 450, Official Records
 
  Affects   : Easterly 7 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
5.   Covenants, Conditions and Restrictions in the Declaration of Protective Covenants — Moffett Industrial Park No. 2) recorded December 23, 1971 in Book 9640, page 443, Official Records; which provide that a violation thereof shall not defeat or render invalid the lien of any Mortgage or Deed of Trust made in good faith and for value. Said Covenants, Conditions and Restrictions do not provide for reversion of title in the event of a breach thereof. Restrictions, if any, based upon race, color, religion, sex, handicap, familial status, or national origin are deleted, unless and only to the extent that said covenant (a) is exempt under Chapter 42, Section 3607, of the United States Code, or (b) related to handicap but does not discriminate against handicapped persons.
     ASSIGNMENT AND ASSUMPTION of the rights, powers, duties, obligations, and reservations of Moffett Park Associates, in favor of The Prudential Insurance Company of America, recorded February 8, 1977 in Book C583, page 685, Official Records.
6.   EASEMENT for the purposes stated herein and incidents thereto
         
 
  Purpose   : Public utilities
 
  Granted to   : City of Sunnyvale
 
  Recorded   : November 16, 1976 in Book C414, page 105, Official Records
 
  Affects :   Southerly 10 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
7.   LIMITATIONS, covenants, restrictions, reservations, exceptions or terms, 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 USC 3604(c), contained in the document recorded February 5, 1980 in Book F122, page 460, Official Records.
 
Exhibit C-1 to Purchase Agreement (Building 9) – Page 10

 

 

Exhibit C-2
Form of Assignment of Ground Lease and Improvements
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
     
NAME:
  [NAI or the Applicable Purchaser]
ADDRESS:
                                          
ATTN:
                                          
CITY:
                                          
STATE:
                                          
Zip:
                                          
ASSIGNMENT OF GROUND LEASE AND IMPROVEMENTS
(Covering Improvements and Leasehold Estate in Land)
     BNP Paribas Leasing Corporation (“Assignor”), a Delaware corporation, for and in consideration of the sum of Ten Dollars ($10.00) and other valuable consideration paid to Assignor by [NAI or the Applicable Purchaser] (hereinafter called “Assignee”), the receipt and sufficiency of which are hereby acknowledged, does hereby GRANT, SELL, CONVEY, ASSIGN and DELIVER to Assignee (1) the leasehold estate created by an Ground Lease (Building 9) from NAI to Assignor dated as of February 1, 2008, which covers the land described in Annex A attached hereto and hereby made a part hereof, and (2) all other rights, titles and interests of Assignor in and to (a) such land, (b) the buildings and other improvements situated on such land, (c) any fixtures and other property affixed thereto and (d) the adjacent streets, alleys and rights-of-way (all of the property interests conveyed hereby being hereinafter collectively referred to as the “Property”); however, this conveyance is made by Assignor and accepted by Assignee subject to the terms and conditions of the aforementioned Ground Lease and to all zoning and other ordinances affecting the Property, all general or special assessments due and payable after the date hereof, all encroachments, variations in area or in measurements, boundary line disputes, roadways and other matters not of record which would be disclosed by a current survey and inspection of the Property, and the encumbrances listed in Annex B attached hereto and made a part hereof (collectively, the “Permitted Encumbrances”).
     TO HAVE AND TO HOLD the Property, together with all and singular the rights and appurtenances thereto belonging unto Assignee, its successors and assigns, forever, and Assignor does hereby bind Assignor and Assignor’s successors and assigns to warrant and forever defend all and singular the said premises unto Assignee, its successors and assigns against every person whomsoever lawfully claiming, or to claim the same, or any part thereof by, through or under Assignor, but not otherwise; subject, however, to the Permitted Encumbrances. Except as expressly set forth in the preceding sentence, Assignor makes no warranty of title, express or implied.

 

 

     Assignor 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 Property, and Assignee, by acceptance of this Assignment, accepts the Property “AS IS,” “WHERE IS,” “WITH ALL FAULTS” and without any such representation or warranty by Assignor as to environmental matters, the physical condition of the Property, compliance with subdivision or platting requirements or construction of any improvements. Without limiting the generality of the foregoing, by acceptance of this Assignment, Assignee hereby further acknowledges and agrees that warranties of merchantability and fitness for a particular purpose are excluded from the transaction contemplated by this Assignment, as are any warranties arising from a course of dealing or usage of trade.
     Assignee hereby assumes the obligations (including any personal obligations) of Assignor, 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 Assignment.
[Signature pages follow.]
 
Exhibit C-2 to Purchase Agreement (Building 9) – Page 2

 

 

IN WITNESS WHEREOF, Assignor and Assignee have signed this Assignment to be effective as of                     , 20___.
             
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
             
STATE OF                          
    )      
 
    )     SS
COUNTY OF                        
    )      
On                                         , 200___, before me                                                              , a Notary Public in and for the County and State aforesaid, personally appeared                                                             , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
WITNESS, my hand and official seal.
                                                        
 
Exhibit C-2 to Purchase Agreement (Building 9) – Page 3

 

 

[Continuation of signature pages to Assignment of Ground Lease and Improvements dated to be effective as of                     , 20___.]
[NAI or the Applicable Purchaser]
By:                                                                  
Name:                                                             
Title:                                                               
             
STATE OF                          
    )      
 
    )     SS
COUNTY OF                        
    )      
On                                         , 200___, before me                                                              , a Notary Public in and for the County and State aforesaid, personally appeared                                                             , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
WITNESS, my hand and official seal.
                                                        
 
Exhibit C-2 to Purchase Agreement (Building 9) – Page 4

 

 

Annex A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE “LAND” COVERED BY THE GROUND LEASE CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR WHICH NAI REQUESTS BNPPLC’S CONSENT OR APPROVAL AS PROVIDED IN THE CLOSING CERTIFICATE, 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 ASSIGNMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.]
Parcel 9 and the Additional Leased Premises, as defined below, (collectively, the “Building 9 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs along the same line as the northern boundary of Common Lot A, as shown on the Tentative Map, extending from the corner of two streets adjacent to the Additional Leased Premises to the northeast corner of Parcel 12, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as (but extends beyond) the eastern boundary of Parcel 12, as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 9 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.
 
Exhibit C-2 to Purchase Agreement (Building 9) – Page 5

 

 

(MAP)
 
Exhibit C-2 to Purchase Agreement (Building 9) – Page 6

 

 

Annex B
Permitted Encumbrances
[DRAFTING NOTE: BEFORE THIS ASSIGNMENT IS ACTUALLY EXECUTED AND DELIVERED BY BNPPLC: ALL PERMITTED ENCUMBRANCES LISTED IN EXHIBIT B TO THE CLOSING CERTIFICATE WILL BE SET OUT BELOW, IN ADDITION TO THE ITEMS ALREADY LISTED. ALSO, IF ANY ENCUMBRANCES (OTHER THAN “LIENS REMOVABLE BY BNPPLC”) ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW OR IN EXHIBIT B TO THE CLOSING CERTIFICATE, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW. AFTER SUCH ADJUSTMENTS ARE MADE, THIS “DRAFTING NOTE” WILL BE DELETED. THE ADDITIONAL ENCUMBRANCES TO BE LISTED BELOW WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPPLC AS “PERMITTED ENCUMBRANCES” FROM TIME TO TIME OR BECAUSE OF NAI’s REQUEST FOR BNPPLC’S CONSENT OR APPROVAL TO AN ADJUSTMENT.]
     This conveyance is subject to all encumbrances not constituting a “Lien Removable by BNPPLC” (as defined in the Common Definitions and Provisions Agreement (Building 9) incorporated by reference into the Lease Agreement (Building 9) 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 and assessments for the year 200___and subsequent years, which are not yet due and 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   : Slope Easement
 
  In favor of   : City of Sunnyvale
 
  Recorded   : October 9, 1964 in Book 6695, page 430, Official Records
 
  Affects   : Easterly 18 feet, as shown on a survey plat entitled ALTA/ACSM
Land Title Survey for: Network Appliance, 1345 Crossman
Avenue, dated December 2, 1999, prepared by Kier & Wright, Job
No. 97208-16.
4.   EASEMENT for the purposes stated herein and incidents thereto
         
 
  Purpose   : Public utilities easement
 
Exhibit C-2 to Purchase Agreement (Building 9) – Page 7

 

 

         
 
  In favor of   : City of Sunnyvale
 
  Recorded   : October 9, 1964 in Book 6695, page 450, Official Records
 
  Affects   : Easterly 7 feet, as shown on a survey plat entitled ALTA/ACSM
Land Title Survey for: Network Appliance, 1345 Crossman
Avenue, dated December 2, 1999, prepared by Kier & Wright, Job
No. 97208-16.
5.   Covenants, Conditions and Restrictions in the Declaration of Protective Covenants — Moffett Industrial Park No. 2) recorded December 23, 1971 in Book 9640, page 443, Official Records; which provide that a violation thereof shall not defeat or render invalid the lien of any Mortgage or Deed of Trust made in good faith and for value. Said Covenants, Conditions and Restrictions do not provide for reversion of title in the event of a breach thereof. Restrictions, if any, based upon race, color, religion, sex, handicap, familial status, or national origin are deleted, unless and only to the extent that said covenant (a) is exempt under Chapter 42, Section 3607, of the United States Code, or (b) related to handicap but does not discriminate against handicapped persons.
     ASSIGNMENT AND ASSUMPTION of the rights, powers, duties, obligations, and reservations of Moffett Park Associates, in favor of The Prudential Insurance Company of America, recorded February 8, 1977 in Book C583, page 685, Official Records.
6.   EASEMENT for the purposes stated herein and incidents thereto
         
 
  Purpose   : Public utilities
 
  Granted to   : City of Sunnyvale
 
  Recorded   : November 16, 1976 in Book C414, page 105, Official Records
 
  Affects   : Southerly 10 feet, as shown on a survey plat entitled
ALTA/ACSM Land Title Survey for: Network Appliance, 1345
Crossman Avenue, dated December 2, 1999, prepared by Kier &
Wright, Job No. 97208-16.
7.   LIMITATIONS, covenants, restrictions, reservations, exceptions or terms, 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 USC 3604(c), contained in the document recorded February 5, 1980 in Book F122, page 460, Official Records.
 
Exhibit C-2 to Purchase Agreement (Building 9) – Page 8

 

 

Exhibit C-3
BILL OF SALE AND ASSIGNMENT
     Reference is made to: (1) that certain Purchase Agreement (Building 9) dated as of February 1, 2008, (the “Purchase Agreement”) between BNP Paribas Leasing Corporation (“Assignor”), a Delaware corporation, and Network Appliance, Inc. , a Delaware corporation, and (2) that certain Lease Agreement dated as of February 1, 2008 (the “Lease”) between Assignor, as landlord, and Network Appliance, Inc. , a Delaware corporation, as tenant. (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 (Building 9) incorporated by reference into both the Purchase Agreement and Lease.)
     As contemplated by the Purchase Agreement, Assignor hereby sells, transfers and assigns unto [NAI or the Applicable Purchaser], 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 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 personal or intangible 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 6 of the Lease or otherwise acquired by Assignor, at the time of the execution and delivery of the 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 Lease and Purchase Agreement or thereafter arising, under Permitted Encumbrances; and (iii) any general intangibles, 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 interest of Assignor in and to the Property instead of Assignor.
Provided, however, excluded from this conveyance and reserved to Assignor are any rights or privileges of Assignor under the following: (1) the indemnities set forth in the Construction Agreement, the Lease and the Ground 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 Construction Agreement and the Lease which may not presently

 

 

be known, all of which indemnities will survive the deliver of this Bill of Sale and Assignment and other documents required by the Purchase Agreement, (2) provisions in the Lease that establish the right of Assignor to recover any accrued unpaid rent under the Lease which may be outstanding as of the date hereof, (3) agreements between Assignor and Assignor’s Parent or any Participant, or (4) any other instrument being delivered to Assignor contemporaneously herewith pursuant to the Purchase Agreement. [Drafting Note: The following sentence will be included unless the Property is being sold to NAI or an Affiliate pursuant to subparagraph 2(A)(1), 3(A) or 3(B) of the Purchase Agreement: Also excluded from this conveyance and reserved to Assignor are (i) the right to retain Escrowed Proceeds, if any, that consist of condemnation or insurance proceeds resulting from a Pre-completion Force Majeure Event, and (ii) any right to receive future payments of any such condemnation or insurance proceeds. ]
     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 Assignor, but not otherwise.
     Assignee hereby assumes and agrees to keep, perform and fulfill Assignor’s obligations, if any, relating to any permits or contracts (including the Lease), under which Assignor has rights being assigned herein.
[Signature pages follow.]
 
Exhibit C-3 to Purchase Agreement (Building 9) – Page 2

 

 

IN WITNESS WHEREOF, Assignor and Assignee have signed this Bill of Sale and Assignment to be effective as of                     , 20___.
             
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
             
STATE OF                          
    )      
 
    )     SS
COUNTY OF                        
    )      
On                                         , 200___, before me                                                              , a Notary Public in and for the County and State aforesaid, personally appeared                                                             , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
WITNESS, my hand and official seal.
                                                         
 
Exhibit C-3 to Purchase Agreement (Building 9) – Page 3

 

 

[Continuation of signature pages to Bill of Sale and Assignment dated to be effective as of                     , 20___.]
[NAI or the Applicable Purchaser]
By:                                                                  
Name:                                                             
Title:                                                               
             
STATE OF                          
    )      
 
    )     SS
COUNTY OF                        
    )      
On                                         , 200___, before me                                                              , a Notary Public in and for the County and State aforesaid, personally appeared                                                             , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
WITNESS, my hand and official seal.
                                                        
 
Exhibit C-3 to Purchase Agreement (Building 9) – Page 4

 

 

Exhibit C-4
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], a                                          (“Assignee”).
     Contemporaneously with the execution of this Certificate, BNP Paribas Leasing Corporation (“Assignor”), a Delaware corporation, is executing and delivering to Assignee (1) an Assignment of Ground Lease and Improvements, 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, Assignee acknowledges that Assignor 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 Assignee, 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, Assignee 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. Assignee hereby assumes all risk and liability (and agrees that Assignor will 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 Assignor. 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 (Building 9) incorporated by reference into the Purchase Agreement (Building 9) dated as of February 1, 2008 between Assignor and Network Appliance, Inc., pursuant to which Purchase Agreement Assignor is delivering the Conveyancing Documents.
     The provisions of this Certificate will be binding on Assignee, its successors and assigns and any other party claiming through Assignee. Assignee hereby acknowledges that Assignor is entitled to rely and is relying on this Certificate.
[Signature page follows.]

 

 

IN WITNESS WHEREOF, Assignor and Assignee have signed this Bill of Sale and Assignment to be effective as of                     , 20___.
[NAI or the Applicable Purchaser]
         
By:
       
 
       
Name:
        
 
       
Title:
        
 
       
                 
STATE OF
        )      
 
               
COUNTY OF
        )
)		     SS
 
               
On                                         , 200___, before me                                                             , a Notary Public in and for the County and State aforesaid, personally appeared                                                             , who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
WITNESS, my hand and official seal.
                                                            
 
Exhibit C-4 to Purchase Agreement (Building 9) – Page 2

 

 

Exhibit D
SECRETARY’S CERTIFICATE
     The undersigned, [Secretary or Assistant Secretary] of BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware 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 BNPPLC 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 Sale Closing Documents on behalf of BNPPLC.]
         
Name
  Title   Signature
 
        
 
       
 
        
 
       
     3.      That the resolutions attached hereto and made a part hereof were duly adopted by the Board of Directors of BNPPLC in accordance with BNPPLC’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                                         , 20___.
 
[signature and title]

 

 

CORPORATE RESOLUTIONS OF
BNP PARIBAS LEASING CORPORATION
[DRAFTING NOTE: INSERT HERE COPIES OF RESOLUTIONS ADOPTED BY THE BOARD OF DIRECTORS OF BNPPLC SUFFICIENT TO AUTHORIZE THE DELIVERY OF SALE CLOSING DOCUMENTS. SUCH RESOLUTIONS MAY BE AS FOLLOWS:
     WHEREAS, pursuant to that certain Purchase Agreement (Building 9) (herein called the “Purchase Agreement”) dated as of February 1, 2008, by and between BNP Paribas Leasing Corporation (“BNPPLC”) and Network Appliance, Inc. (“NAI”) , BNPPLC 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 Santa Clara County, California, more particularly described therein.
     NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of BNPPLC, in its best business judgment, deems it in the best interest of BNPPLC and its shareholders that BNPPLC convey the Property to NAI or the Applicable Purchaser pursuant to and in accordance with the terms of the Purchase Agreement.
     RESOLVED FURTHER, that the proper officers of BNPPLC, and each of them, are hereby authorized and directed in the name and on behalf of BNPPLC to cause BNPPLC to fulfill its obligations under the Purchase Agreement.
     RESOLVED FURTHER, that the proper officers of BNPPLC, 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, assignments and other documents, instruments and agreements that are 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 D to Purchase Agreement (Building 9) – Page 2

 

 

Exhibit E
CERTIFICATION OF NON-FOREIGN STATUS
          Section 1445 of the Internal Revenue Code 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] (“Transferee”) that withholding of tax is not required upon the disposition of a U.S. real property interest by BNP PARIBAS LEASING CORPORATION (“Transferor”), a Delaware corporation, the undersigned hereby certifies the following on behalf of Transferor:
1.      Transferor 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.      Transferor is not a disregarded entity (as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax Regulations);
3.      Transferor’s U.S. employer identification number is 75-2252918; and
4.      Transferor’s office address is:
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
Transferor understands that this Certification of Non-Foreign Status may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this Certification of Non-Foreign Status 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 Transferor.
     Dated:                     , 20___.
         
     
 
  Name:    
 
       
 
  Title:    
 
       

 

 

Exhibit F
Notice of Election to Terminate the Supplemental Payment Obligation
and Irrevocable Release and Waiver of the Right to Purchase
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
     Re: Purchase Agreement (Building 9) dated as of February 1, 2008 (the “Purchase Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings assigned to them in the Purchase Agreement referenced above. This letter will constitute a notice given pursuant to subparagraph 6(B) of the Purchase Agreement. As provided in that subparagraph, NAI irrevocably elects to terminate the Supplemental Payment Obligation effective immediately, subject only to the conditions described below. In addition, NAI irrevocably waives and releases its rights to purchase or cause an Affiliate of NAI to purchase the Property granted to it by the Purchase Agreement. Because of (but without limiting) such waiver and release, the Purchase Option is terminated and so are all rights of NAI under subparagraphs 2(A) and 3(A) of the Purchase Agreement.
     NAI acknowledges that this notice will not be effective to terminate the Supplemental Payment Obligation if it is not received by BNPPLC prior to the Completion Date.
     NAI also acknowledges that even if no prior 97-10/Meltdown Event has occurred, the delivery of this notice is in and of itself a 97-10/Meltdown Event under and as defined in the Construction Agreement. Therefore, after receipt of this notice BNPPLC will be entitled to demand and receive a 97-10/Prepayment, if BNPPLC has not already done so, on and subject to the terms and conditions of Paragraph 9 of the Construction Agreement. Further, if NAI fails to make a 97-10/Permitted Prepayment required by the Construction Agreement, BNPPLC may exercise the Put Option as provided in subparagraph 3(B) of the Purchase Agreement.
     NAI also acknowledges that its right to terminate the Supplemental Payment Obligation is subject to the condition precedent that: (1) NAI must have given (and not rescinded) a Notice of NAI’s Intent to Terminate as provided in the Construction Agreement, or (2) BNPPLC must have given any FOCB Notice as provided in the Construction Agreement. Accordingly, if neither

 

 

of the notices described in the preceding sentence have been given, the Supplemental Payment Obligation will not terminate by reason of this notice.
     Finally, NAI acknowledges that because the delivery of this notice constitutes a 97-10/Meltdown Event, BNPPLC will have the right at any time for any reason or no reason to terminate the Lease by notice to NAI.
             
    NETWORK APPLIANCE, INC., a Delaware corporation
 
            
 
  By:        
         
 
      Name:    
 
           
 
      Title:    
 
           
[cc all Participants]
 
Exhibit F to Purchase Agreement (Building 9) – Page 2

 

 

BNP Paribas Leasing Corporation
________________, 200__
Page 6
         
          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, BNPPLC to assume the Agreement in the event NAI is evicted from the Project.
         
  Network Appliance, Inc.
 		  
  By:      
    Name:      
    Title:      
 
Exhibit K to Construction Agreement (Building 9) – Page 6

 

exv10w74
Exhibit 10.74
         
     
 
 
      
 
 
      
 
 
      
 
 
      
 
 
      
 
GROUND LEASE
  
  (BUILDING 9)
  
 
 
      
 
 
      
 
 
      
 
 
      
  BETWEEN
  
 
 
      
 
 
      
 
 
      
 
 
      
  NETWORK APPLIANCE, INC.
  
  (“NAI”)
  
 
 
      
 
 
      
 
 
      
  AND
  
 
 
      
 
 
      
 
 
      
  BNP PARIBAS LEASING CORPORATION
  
  (“BNPPLC”)
  
 
 
      
 
 
      
 
 
      
 
 
      
 
 
      
  February 1, 2008
  
 
 
      
 
 
      
 
 
      
 
 
      
     

 

 

TABLE OF CONTENTS
                 
            Page  
RECITALS     1  
GRANTING CLAUSES     1  
GENERAL TERMS AND CONDITIONS     3  
 
                
1   Additional Definitions     3  
 
       “Contingent Purchase Option”     3  
 
       “Fair Rental Value”     3  
 
       “Ground Lease Default”     3  
 
       “Ground Lease Rent”     3  
 
       “Ground Lease Term”     3  
 
       “Leasehold Mortgage”     3  
 
       “Leasehold Mortgagee”     4  
 
       “Turnover Date”     4  
 
                
2   Ground Lease Term and Early Termination     4  
 
                
3   Ground Lease Rent     4  
 
                
4   Receipt and Application of Insurance and Condemnation Proceeds     4  
 
                
5   No Lease Termination     5  
 
                
6   The Lease and Other Operative Documents     5  
 
                
7   Use of Leased Property     5  
 
                
8    Assignment and Subletting; Pass Through of BNPPLC’s Liability Insurance and Indemnity Rights     6  
 
                
9   Estoppel Certificate     6  
 
                
10   Leasehold Mortgages     7  
 
                
11   Other Representations, Warranties and Covenants of NAI     9  
 
   (A)   Condition of the Property     9  
 
   (B)   Environmental Representations     10  
 
   (C)   Current Status of Title to the Land     10  
 
   (D)   Intentionally Deleted     10  
 
   (E)   Title to Improvements     10  
 
   (F)   Defense of Adverse Title Claims     11  
 
   (G)   Prohibition Against Consensual Liens on the Leased Property     12  
 
   (H)   Compliance With Permitted Encumbrances     12  

 

 

TABLE OF CONTENTS
(Continued)
                 
               
 
   (I)   Compliance With Laws     12  
 
   (J)   Modification of Permitted Encumbrances     12  
 
   (K)   Performance and Preservation of the Permitted Encumbrances for the Benefit of BNPPLC     12  
 
   (L)   Cooperation by NAI and its Affiliates     13  
 
   (M)   Intentionally Deleted     14  
 
   (N)   Omissions     14  
 
   (O)   Insurance and Casualty     14  
 
   (P)   Condemnation     14  
 
   (Q)   Further Assurances     14  
 
                
12   Ground Lease Defaults     15  
 
   (A)   Definition of Ground Lease Default     15  
 
   (B)   Remedy     15  
 
                
13   Quiet Enjoyment     16  
 
                
14   Option to Purchase     16  
 
                
15   Miscellaneous     16  
 
   (A)   No Merger     16  
 
   (B)   Recording; Memorandum of Lease     16  
 
                
16   Certain Remedies Cumulative     16  
 
                
17   Attorney’s Fees and Legal Expenses     17  
 
                
18   Successors and Assigns     17  
Exhibits and Schedules
     
Exhibit A
  Legal Description
 
    
Exhibit B
  Permitted Encumbrances List
 
    
Exhibit C
  Contingent Purchase Option
 
    
Exhibit D
  Determination of Fair Value

(ii)

 

GROUND LEASE
(BUILDING 9)
     This GROUND LEASE (BUILDING 9) (this “Ground Lease”), dated as of February 1, 2008 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Ground Lease, BNPPLC and NAI are executing a Common Definitions and Provisions Agreement (Building 9) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Ground Lease for all purposes. As used in this Ground Lease, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Ground Lease are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     At the request of NAI, and to facilitate the transactions contemplated in the other Operative Documents, BNPPLC is executing this Ground Lease to acquire from NAI a leasehold estate of 99 years in the Land described in Exhibit A attached hereto (the “Land”) and any existing Improvements on the Land.
     Also contemporaneously with this Ground Lease, BNPPLC and NAI are executing a Construction Agreement (Building 9) (the“Construction Agreement”) and a Lease Agreement (Building 9) (the “Lease”). Pursuant to the Construction Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements. When the term of the Lease commences, the Lease will cover all Improvements on the Land.
     Pursuant to a Purchase Agreement (Building 9) dated as of the Effective Date (the “Purchase Agreement”) between BNPPLC and NAI, NAI will have the right to purchase, among other things, BNPPLC’s leasehold estate under this Ground Lease on and subject to the terms and conditions set forth therein.
GRANTING CLAUSES
     In consideration of the rent to be paid and the covenants and agreements to be performed by BNPPLC, as hereinafter set forth, NAI does hereby LEASE, DEMISE and LET unto BNPPLC for the term hereinafter set forth the Land, together with:
     (A)     all easements and rights-of-way now owned or hereafter acquired by NAI for use in connection with the Land or any Improvements constructed thereon or as a

 

 

means of access thereto and any and all easements and rights appurtenant to the Land; and
     (B)      all right, title and interest of NAI, 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 abutting land not owned by NAI.
The Land and all of the property described in items (1) and (2) above 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 NAI as the owner of any interest in the Real Property, NAI also hereby grants and assigns to BNPPLC for the term of this Ground Lease the right to use and enjoy (and, in the case of contract rights, to enforce) such rights or interests of NAI:
     (A)      the Permitted Encumbrances; and
     (B)      any general intangibles, permits, licenses, franchises, certificates, and other rights and privileges related to the Real Property that BNPPLC (rather than NAI) would have acquired if BNPPLC had itself acquired the fee estate in the Real Property (excluding, however, the rights and privileges of NAI under this Ground Lease, the Construction Agreement, the Lease, the Purchase Agreement and any other Operative Documents).
Such rights and interests of NAI, 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 “Leased Property.” The Leased Property and all Improvements on the Land now or in the future (whether such Improvements are owned by BNPPLC or NAI) are hereinafter sometimes called the “Improved Property”.
     However, the leasehold estate conveyed hereby and BNPPLC’s rights hereunder are expressly made subject and subordinate to the Permitted Encumbrances listed on Exhibit B.
     Further, so long as any of the other Operative Documents remain in force, the rights and obligations of NAI and BNPPLC hereunder will be subject to any contrary provisions therein, including provisions in the Construction Agreement and the Lease that govern the collection and application of condemnation and insurance proceeds in the event of any taking of or damage to the Improved Property.
 
Ground Lease (Building 9) – Page 2

 

 

GENERAL TERMS AND CONDITIONS
     The Leased Property is leased by NAI to BNPPLC and is accepted and is to be used and possessed by BNPPLC upon and subject to the following terms, provisions, covenants, agreements and conditions:
1      Additional Definitions. As used in this Ground Lease, capitalized terms defined above have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and that are used but not otherwise defined have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms have the following respective meanings:
     “Contingent Purchase Option” means the option granted BNPPLC by NAI as provided in Exhibit C attached to this Ground Lease.
     “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 Exhibit D, 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 (including appurtenances) 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 this Ground Lease 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.
     “Ground Lease Default” has the meaning assigned to it in subparagraph 13(A) below.
     “Ground Lease Rent” means the rent payable by BNPPLC pursuant to Paragraph 3 below.
     “Ground Lease Term” has the meaning assigned to it in Paragraph 2 below.
     “Leasehold Mortgage” means any mortgage, deed of trust (with or without a private power of sale), security agreement or assignment executed by BNPPLC to secure an obligation to repay borrowed money or other voluntary obligations, which covers BNPPLC’s leasehold estate hereunder or any part thereof or any rents or other charges to
 
Ground Lease (Building 9) – Page 3

 

 

be paid to BNPPLC pursuant to any sublease.
     “Leasehold Mortgagee” means any lender or other beneficiary of a Leasehold Mortgage that has notified NAI of the existence such Leasehold Mortgage and of its address to which notices should be delivered.
     “Turnover Date” means the day which is thirty days after any Designated Sale Date upon which, for any reason whatsoever, NAI does not purchase the Improved Property from BNPPLC pursuant to the Purchase Agreement.
2      Ground Lease Term and Early Termination. The term of this Ground Lease (herein called the “Ground Lease Term”) will commence on and include the Effective Date and end on the last Business Day prior to the ninety-ninth (99th) anniversary of the Effective Date. However, subject to the prior approval of any Leasehold Mortgagee, BNPPLC will have the right to terminate this Ground Lease by giving a notice to NAI stating that BNPPLC 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.
3      Ground Lease Rent. The rent required by this Ground Lease (herein called “Ground Lease Rent”) will equal the Fair Rental Value, determined as provided in Exhibit D, and be paid as follows:
     Prior to the Completion Date, BNPPLC must pay Ground Lease Rent to NAI on the first Business Day of every calendar month for the preceding month. Consistent with the agreement of the parties in Exhibit D that the initial Fair Rental Value is $225,000 per annum, and each such required monthly payment prior to the Completion Date is $18,750. (Notwithstanding the forgoing, for administrative convenience, BNPPLC has already prepaid all of the Ground Lease Rent expected to accrue prior to the Completion Date, rather than pay it monthly on the first Business Day of each month.)
     After the Completion Date, Ground Lease Rent will be paid annually in arrears on each anniversary of the Effective Date. So long as the Lease continues, each such payment by BNPPLC may be offset against the reimbursement for such payment required of NAI by the Lease. After the Lease expires or terminates, however, BNPPLC’s obligation for the payment of Ground Lease will continue so long as this Ground Lease continues, on and subject to the terms and conditions set forth herein.
4     Receipt and Application of Insurance and Condemnation Proceeds. All insurance and condemnation proceeds payable with respect to any damage to or taking of the Leased Property will be payable to and become the property of BNPPLC; provided, however,
 
Ground Lease (Building 9) – Page 4

 

 

NAI will be entitled to receive condemnation proceeds awarded for the value of NAI’s remainder interest in the Land exclusive of the Improvements. BNPPLC is authorized to take all action necessary on behalf of both BNPPLC and NAI (as lessor under this Ground Lease) to collect insurance and condemnation proceeds.
5     No Lease Termination. Except as expressly provided herein, this Ground Lease will not terminate, nor will NAI have any right to terminate this Ground Lease nor will the obligations of NAI under this Ground Lease be excused, for any reason whatsoever, including without limitation any of the following: (i) any damage to or the destruction of all or any part of the Leased Property from whatever cause, (ii) the taking of the Leased Property or any portion thereof by eminent domain or otherwise for any reason, (iii) any default on the part of BNPPLC under this Ground Lease or under any other agreement to which NAI and BNPPLC are parties, or (iv) any other cause whether similar or dissimilar to the foregoing, any existing or future law to the contrary notwithstanding. Notwithstanding the foregoing, after any purchase by NAI of BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement and payment to BNPPLC of the purchase price required by the Purchase Agreement and all other sums dues under any of the other Operative Documents, NAI (as the holder of both the lessor’s and lessee’s interests hereunder) may elect to terminate this Ground Lease; and after a purchase by BNPPLC of the Land because of BNPPLC exercise of the Contingent Purchase Option, BNPPLC (as the holder of both the lessor’s and lessee’s interests hereunder) may elect to terminate this Ground Lease. It is the intention of the parties hereto that the obligations of NAI hereunder will be separate and independent of the covenants and agreements of BNPPLC. However, nothing in this Paragraph will be construed as a waiver by NAI of any right NAI may have at law or in equity to recover monetary damages for any default under this Ground Lease by BNPPLC.
6     The Lease and Other Operative Documents. Nothing contained in this Ground Lease will limit, modify or otherwise affect any of NAI’s or BNPPLC’s respective rights and obligations under the other Operative Documents, which rights and obligations are intended to be separate, independent and in addition to, and not in lieu of, the obligations established by this Ground Lease. In the event of any inconsistency between the terms and provisions of the other Operative Documents and the terms and provisions of this Ground Lease, the terms and provisions of the other Operative Documents will control.
7     Use of Leased Property. Subject to the Permitted Encumbrances and the terms hereof, BNPPLC may use and occupy the Leased Property for any purpose permitted by Applicable Laws and may construct, modify, renovate, replace and remove any Improvements on the Land from time to time, subject only to the constraints that Applicable Laws would impose upon the owner of the Land if the owner were constructing, modifying, renovating, replacing or removing Improvements. To provide NAI an opportunity to file any applicable statutory notice of nonresponsibility, BNPPLC will, before commencing the construction any major Improvements upon the Land after the Turnover Date, endeavor to notify NAI that BNPPLC
 
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intends to commence such construction; provided, however, BNPPLC will have no liability for its failure to provide such a notice.
8   Assignment and Subletting; Pass Through of BNPPLC’s Liability Insurance and Indemnity Rights. BNPPLC may sublet or assign this Ground Lease without the consent of NAI or any of its Affiliates, subject only to limitations set forth in the Lease for the benefit of NAI so long as those limitations remain in force.
     To the extent that BNPPLC may from time to time after the Turnover Date require any subtenant to agree to maintain liability insurance against claims of third parties and agree to make BNPPLC an additional or named insured under such insurance, BNPPLC will also require the subtenant to agree to make NAI an additional or named insured. However, BNPPLC will have no liability to NAI for a breach by the subtenant of any such agreements, and to the extent that BNPPLC’s rights as an additional or named insured are subject to exceptions or limitations concerning BNPPLC’s own acts or omissions or the acts or omissions of anyone other than the subtenant, so too may NAI’s rights as an additional or named insured be subject to exceptions or limitations concerning NAI’s own acts or omissions or the acts or omissions of anyone other than the subtenant.
     To the extent that BNPPLC may itself from time to time after the Turnover Date 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 Leased Property, BNPPLC will cause NAI to be an additional or named insured under such insurance, provided NAI pays or reimburses BNPPLC for any additional insurance premium required to have NAI made an insured.
     To the extent that BNPPLC may from time to time after the Turnover Date require any subtenant to agree to indemnify BNPPLC against Environmental Losses or other Losses concerning the Leased Property, BNPPLC will also require the subtenant to agree to indemnify NAI. However, BNPPLC will have no liability to NAI for a breach by the subtenant of any such agreement, and to the extent that BNPPLC’s rights as an indemnitee of the subtenant are subject to exceptions or limitations concerning BNPPLC’s own acts or omissions or the acts or omissions of anyone other than the subtenant, so too may NAI’s rights as an indemnitee be subject to exceptions or limitations concerning NAI’s own acts or omissions or the acts or omissions of anyone other than the subtenant.
9   Estoppel Certificate. NAI and BNPPLC will from time to time, within ten days after receipt of request by the other party hereto, deliver a statement in writing to such other party or other Person(s) designated by such party 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);
 
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     (B)     that to the knowledge of the party providing such certificate, the other party 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 the party so certifying is able to provide;
     (C)     the term of this Ground Lease and the Ground Lease Rent then in effect and any additional charges;
     (D)     that to the knowledge of the party providing such certificate, the other party is not in default under any provision of this Ground Lease (or if in default, the nature thereof in detail) and, in any certificate provided by NAI, a statement as to any outstanding obligations on the part of NAI or BNPPLC; and
     (E)     in any certificate provided by NAI, such other factual matters concerning the Leased Property or BNPPLC’s rights and obligations under this Ground Lease as are requested by BNPPLC.
NAI’s failure to deliver such statement within such time will constitute an admission by NAI (i) that this Ground Lease is in full force and effect, without modification except as may be represented by BNPPLC, and (ii) that there are no uncured defaults in BNPPLC’s performance hereunder.
10   Leasehold Mortgages.
     (A)     By Leasehold Mortgage BNPPLC may encumber BNPPLC’s leasehold estate in the Leased Property created by this Ground Lease and BNPPLC’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 BNPPLC from the Leased Property. However, prior to the Turnover Date, a Leasehold Mortgage will be permitted hereunder only if it constitutes a Permitted Transfer and only if it is made expressly subject to the rights of NAI under the other Operative Documents.
     (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 BNPPLC’s rights and interests in 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 NAI.
 
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          (C)     NAI must serve notice of any default by BNPPLC hereunder upon any Leasehold Mortgagee for which NAI has received written notification from BNPPLC of the Leasehold Mortgagee’s address for such notice. No notice of a default by BNPPLC will be deemed effective until it is so served. Any Leasehold Mortgagee will 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 BNPPLC under this Ground Lease to correct or cure defaults, plus an additional period of thirty days thereafter. NAI will accept performance by any Leasehold Mortgagee of any covenant, condition or agreement on BNPPLC’s part to be performed hereunder with the same force and effect as though performed by BNPPLC.
          (D)     If this Ground Lease should terminate by reason of a disaffirmance or rejection of this Ground Lease by BNPPLC or any receiver, liquidator or trustee for the property of BNPPLC, or by any governmental authority which had taken possession of the business or property of BNPPLC by reason of the insolvency or alleged insolvency of BNPPLC, then:
          (1)     NAI must give notice thereof to each Leasehold Mortgagee for which NAI has received written notification from BNPPLC of the Leasehold Mortgagee’s address for such notice; and upon request of any Leasehold Mortgagee made within sixty days after NAI has given such notice, NAI must enter into a new ground lease of the Leased 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 (including subparagraph 11(E)) as are contained in this Ground Lease (a “New Ground Lease”).
          (2)     The estate of the Leasehold Mortgagee, as lessee under the New Ground Lease, will have priority equal to the estate of BNPPLC hereunder. That is, there will be no charge, lien or burden upon the Leased Property prior to or superior to the estate granted by such New Ground Lease which was not prior to or superior to the estate of BNPPLC under this Ground Lease as of the date immediately preceding the termination of this Ground Lease. To the extent, however, that the other Operative Documents are in effect at the time of execution of such New Ground Lease, the New Ground Lease will be made expressly subject to the other Operative Documents.
          (3)     Notwithstanding the foregoing, if NAI receives requests to enter into a New Ground Lease from more than one Leasehold Mortgagee because of the expiration or termination of this Ground Lease, NAI will be required to enter into only one New Ground Lease, and the New Ground Lease will be to the requesting Leasehold Mortgagee who holds the highest priority lien or interest in BNPPLC’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 will name all such Leasehold Mortgagees as co-tenants thereunder.
 
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     (E)     If BNPPLC 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 BNPPLC, and if NAI has been notified in writing of such agreement, such consent will be required for such Leasehold Mortgagee to be bound by any such modification or early termination of this Ground Lease.
     (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 Leased Property, unless and until the Leasehold Mortgagee acquires BNPPLC’s leasehold estate in the Leased 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, NAI agrees to include, in addition to the items specified in Paragraph 9, confirmation of the foregoing with respect to any Leasehold Mortgagee or prospective Leasehold Mortgagee in any statement delivered to such Leasehold Mortgagee which is provided to a pursuant to Paragraph 9.
11   Other Representations, Warranties and Covenants of NAI. NAI represents, warrants and covenants as follows:
     (A)     Condition of the Property. The Land described in Exhibit A is the same as the land as shown on the plat included as part of the survey prepared by December 2, 1999, prepared by Kier & Wright, Job No. 97208-16 (the “Survey”), which survey was delivered to BNPPLC at the request of NAI. All material improvements on the Land as of the Effective Date are as shown on the Survey, and except as shown on the Survey there are no easements or encroachments encumbering or affecting the Improved Property. No part of the Land is within a flood plain as designated by any governmental authority. Existing Improvements, if any, are free from latent or patent defects or deficiencies that, either individually or in the aggregate, could materially and adversely affect the use or occupancy of the Improved Property as permitted by the Lease or could reasonably be anticipated to cause injury or death to any person. When the construction contemplated by the Construction Agreement is complete in accordance with plans approved as described therein, the Improved Property and use thereof permitted by the Lease will comply in all material respects with all Applicable Laws, including laws regarding access and use by disabled persons and local zoning ordinances. Adequate provision has been made (or can be made at a cost that is reasonable in connection with future development of the Land) for the Land 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 Improved Property for the construction contemplated by the Construction Agreement or uses permitted by the Lease have been completed and are serviceable or will be completed and made
 
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serviceable as part of the construction contemplated by the Construction Agreement. No extraordinary circumstances (including any use of the Land as a habitat for endangered species) exist that would materially and adversely affect such construction or uses of the Improved Property. The Improvements, when constructed as contemplated in the Construction Agreement, will be useable for their intended purpose without the need to obtain any additional easements, rights-of-way or concessions from any third party or parties.
     (B)     Environmental Representations. Except as otherwise disclosed in the Environmental Report, to the knowledge of NAI: (i) no Hazardous Substances Activity has occurred prior to the Effective Date; (ii) no owner or operator of the Improved Property has reported or been required to report any release of any Hazardous Substances on or from the Leased Property pursuant to any Environmental Law; and (iii) no owner or operator of the Leased 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 Leased Property or regarding a suspected or known violation of Environmental Laws concerning the Leased Property. Further, NAI represents, to its knowledge, that the Environmental Report taken as a whole is not misleading or inaccurate in any material respect.
     (C)     Current Status of Title to the Land. NAI holds good and indefeasible title to the Land, free and clear of all liens and encumbrances, other than the Permitted Encumbrances and any Liens Removable by BNPPLC.
     (D)     Intentionally Deleted.
     (E)     Title to Improvements. The leasehold estate created in favor of BNPPLC by this Ground Lease will extend to and include the rights to use and enjoy any and all Improvements of whatever nature at any time and from time to time located on the Land. Thus, throughout the term of this Ground Lease, BNPPLC and its sublessees, assignees, licensees and concessionaires will be entitled to use and enjoy such Improvements — to the exclusion of NAI as the lessor hereunder, but subject to NAI’s rights under the Operative Documents (including the Lease) so long as they remain in effect - as if the lessee hereunder was the owner of the Improvements. Further, although any Improvements which remain on the Land when this Ground Lease expires or is terminated will revert to NAI, it is also understood and agreed that the lessee hereunder may at any time and from time to time - after NAI ceases to have possession of the Leased Property pursuant to the Construction Agreement or 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 NAI and without any obligation to NAI or its Affiliates to provide compensation or to construct other Improvements on or about the Land. Any Improvements removed as provided in the preceding sentence will be considered severed from the Land and thereupon become personal property of the lessee hereunder.
 
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     (F)     Defense of Adverse Title Claims. If any encumbrance or title defect whatsoever affecting the Improved Property, other than Permitted Encumbrances or Liens Removable by BNPPLC, is claimed or discovered (including Liens against any part of or interest in the Improved Property which are not Fully Subordinated or Removable) or if any legal proceedings are instituted with respect to any such claimed or discovered encumbrance or title defect, NAI must give prompt notice thereof to BNPPLC and at NAI’s own cost and expense will promptly remove any such encumbrance and cure any such defect and will take all necessary and proper steps for the defense of any such legal proceedings, including the employment of counsel, the prosecution or defense of litigation and the release or discharge of all adverse claims. If NAI fails to promptly remove any encumbrance or cure any title defect as required by the preceding sentence, BNPPLC (whether or not named as a party to legal proceedings with respect thereto) may take such additional steps as in its judgment may be necessary or proper to remove such encumbrance or cure such defect or for the defense of any such attack or legal proceedings or the protection of BNPPLC’s leasehold or other interest in the Improved Property, including the employment of counsel, the prosecution or defense of litigation, the compromise or discharge of any adverse claims made with respect to the Improved Property, the removal of prior liens or security interests, and all expenses (including Attorneys’ Fees) so incurred of every kind and character will be a demand obligation owing by NAI.
     For purposes of this subparagraph 11(B), NAI will be deemed to be acting promptly to remove any encumbrance or to cure any title defect, other than a Lien which NAI or any of its Affiliates has granted or authorized, so long as NAI is in good faith by appropriate proceedings contesting the validity and applicability of the encumbrance or defect, and pending such contest NAI will not be deemed in default under this subparagraph because of the encumbrance or defect, provided that NAI must satisfy the following conditions and requirements:
     (1)     NAI must diligently prosecute the contest to completion in a manner reasonably satisfactory to BNPPLC.
     (2)     NAI must immediately remove the encumbrance or cure the defect upon a final determination by a court of competent jurisdiction that it is valid and applicable to the Improved Property.
     (3)     NAI must in any event conclude the contest and remove the encumbrance or cure the defect and pay any claims asserted against BNPPLC or the Improved Property because of such encumbrance or defect, all prior to (i) the date any criminal charges may be brought against BNPPLC or any of its directors, officers or employees because of such encumbrance or defect or (ii) the date any action is taken or threatened against BNPPLC or any property owned by BNPPLC (including BNPPLC’s leasehold estate under this Ground Lease) by any governmental authority or any other Person who has or claims rights superior to BNPPLC because of the encumbrance or defect. Also, with respect to a
 
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contest of any encumbrance or defect discovered or claimed before the Designated Sale Date, NAI must conclude the contest and remove the encumbrance or cure the defect and pay any claims asserted against BNPPLC or the Improved Property because of such encumbrance or defect, all prior to the Designated Sale Date, unless on the Designated Sale Date NAI or an Affiliate of NAI or any Applicable Purchaser purchases the Improved Property pursuant to the Purchase Agreement for a net price to BNPPLC (when taken together with any additional payments made by NAI pursuant to Paragraph 1(a)(ii) of the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Lease Balance.
     (G)     Prohibition Against Consensual Liens on the Leased Property. NAI will not, without the prior consent of BNPPLC, 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 Land or Improvements or any part thereof (other than Permitted Encumbrances and Liens Removable by BNPPLC). It is understood and agreed, however, that any Liens which are Fully Subordinated or Removable will constitute Permitted Encumbrances and thus will not be prohibited by this provision.
     (H)     Compliance With Permitted Encumbrances. NAI must comply with and cause to be performed all of the covenants, agreements and obligations imposed upon NAI or the owner of the Leased Property by the Permitted Encumbrances.
     (I)     Compliance With Laws. Without limiting the foregoing, the use of the Improved Property permitted by the Lease complies, or will comply after readily available permits are obtained, in all material respects with all Applicable Laws.
     (J)     Modification of Permitted Encumbrances. NAI will not enter create any new Permitted Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted Encumbrance that would create or expand or purport to create or expand obligations or restrictions which would encumber the Leased Property or any Improvements constructed thereon without the prior consent of BNPPLC; provided, this provision will not limit any right of the NAI Parties to modify any Lien that is Fully Subordinated or Removable and will remain Fully Subordinated or Removable after the modification. Whether BNPPLC must give any such consent requested by NAI prior to the Designated Sale Date will be governed by subparagraph 4(C) of the Closing Certificate.
     (K)     Performance and Preservation of the Permitted Encumbrances for the Benefit of BNPPLC. Not only prior to the expiration or termination of other Operative Documents, but thereafter throughout the term of this Ground Lease, NAI must comply with and perform the obligations imposed by the Permitted Encumbrances upon NAI or upon any owner of the Land and do whatever is required to preserve the rights and benefits conferred or intended to be
 
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conferred by the Permitted Encumbrances, as necessary to prevent any claim against or forfeiture of any of the Improved Property and to facilitate the construction and use of any Improvements on the Land after the Turnover Date by BNPPLC and its successors, assigns and subtenants under this Ground Lease. Further, NAI hereby agrees for itself and its Affiliates, as the owner of the Land and any other land now owned or hereafter acquired by NAI or its Affiliates, which is encumbered or benefitted by the Permitted Encumbrances, to assume liability for and to indemnify BNPPLC and other Interested Parties and to defend and hold them harmless from and against all Losses (including Losses caused by any decline in the value of the Leased Property or of the Improvements) that they would not have incurred or suffered but for:
     (1)     any breach by NAI of its obligations under the preceding sentence,
     (2)     any termination of any benefit to the owner, users or occupants of the Land or Improvements conferred by the Permitted Encumbrances if NAI agreed to the termination or the termination resulted from a breach of any Permitted Encumbrance by NAI or its Affiliates, or
     (3)     any restrictions imposed by or asserted under any Permitted Encumbrance upon any transfer after (but only after) the Turnover Date by BNPPLC of any interests it may then have in the Leased Property or in any Improvements.
NAI’s obligations under this subparagraph 11(K) will be binding upon any successor or assign of NAI or its Affiliates with respect to the Land and other properties encumbered or benefitted by the Permitted Encumbrances, and such obligations will survive any sale of NAI’s interest in the Leased Property to BNPPLC because of BNPPLC’s exercise of the Contingent Purchase Option.
          (L)     Cooperation by NAI and its Affiliates.
     (1)     After the Turnover Date, if neither NAI nor an Applicable Purchaser has purchased BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement, and if a use of the Improved Property by BNPPLC or any new Improvements or any removal or modification of Improvements proposed by BNPPLC would violate any Permitted Encumbrance or Applicable Law unless NAI or any of its Affiliates, as an owner of adjacent land or otherwise, gave its consent or approval thereto or agreed to join in a modification of a Permitted Encumbrance, then NAI must give and cause its Affiliates to give such consent or approval or join in such modification.
     (2)     After the Turnover Date, if neither NAI nor an Applicable Purchaser has purchased BNPPLC’s interest in the Improved Property pursuant to the Purchase Agreement, and if any Permitted Encumbrance or Applicable Law requires the consent or approval of NAI or any of its Affiliates or of the city or county in which the Improved
 
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Property is located or of any other Person to an assignment of any interest in the Improved Property by BNPPLC or by any of 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 BNPPLC to assist BNPPLC to obtain such consent or approval from the city, county or other Person.
     (3)     NAI’s obligations under this subparagraph 11(L)will be binding upon any successor or assign of NAI or its Affiliates with respect to the Land and other properties encumbered or benefitted by the Permitted Encumbrances, and such obligations will survive (a) any sale of the Improved Property by BNPPLC, other than to NAI or an Applicable Purchaser under the Purchase Agreement, for the benefit of BNPPLC’s assignees, and (b) any sale of NAI’s interest in the Leased Property to BNPPLC because of BNPPLC’s exercise of the Contingent Purchase Option.
          (M)     Intentionally Deleted.
          (N)     Omissions. None of NAI’s representations or warranties contained in this Ground Lease or in any other document, certificate or written statement furnished to BNPPLC 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.
          (O)     Insurance and Casualty. In the event any of the Leased Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance is maintained or required hereunder, (i) BNPPLC may make proof of loss, (ii) each insurance company concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC for application as required by Paragraph 4, and (iii) BNPPLC’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.
          (P)     Condemnation. All proceeds of condemnation awards or proceeds of sale in lieu of condemnation with respect to the Leased Property and all judgments, decrees and awards for injury or damage to the Leased Property will be paid to BNPPLC and applied as provided in Paragraph 4 above. BNPPLC is hereby authorized, in the name of NAI, to execute and deliver valid acquittances for, and to appeal from, any such judgment, decree or award concerning condemnation of any of the Leased Property. BNPPLC will 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.
          (Q)     Further Assurances. NAI must, on request of BNPPLC, (i) promptly correct any defect, error or omission which may be discovered in the contents of this Ground Lease or in any
 
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other instrument executed in connection herewith or in the execution or acknowledgment thereof; (ii) 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 Ground Lease and to subject to this Ground Lease any property intended by the terms hereof to be covered hereby including specifically, but without limitation, any renewals, additions, substitutions, replacements or appurtenances to the Leased Property; (iii) execute, acknowledge, deliver, procure and record or file any document or instrument deemed advisable by BNPPLC to protect BNPPLC’s rights in and to the Leased Property against the rights or interests of third persons; and (iv) 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 BNPPLC to enable BNPPLC or any Leasehold Mortgagee to comply with the requirements or requests of any agency or authority having jurisdiction over them.
12)     Ground Lease Defaults.
          (A)     Definition of Ground Lease Default. Each of the following events will be deemed to be a “Ground Lease Default” by BNPPLC under this Ground Lease:
           (1)     A failure by BNPPLC to pay when due any installment of Ground Lease Rent due hereunder if such failure continues for sixty days after BNPPLC receives notice thereof.
           (2)     A failure by BNPPLC to comply with any term, provision or covenant of this Ground Lease (other than as described in the other clauses of this subparagraph 13(A)) if such failure is not cured prior to the earlier of (A) ninety days after notice thereof is sent to BNPPLC, or (B) the date any writ or order is issued for the levy or sale of any property owned by NAI or its Affiliates (including the leasehold created by this Ground Lease) because of such failure or any criminal action is instituted against BNPPLC 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 BNPPLC has promptly commenced to cure the same and thereafter prosecutes the curing thereof with reasonable diligence, the period within which such failure may be cured will be extended for such further period as is necessary to complete the cure.
          (B)     Remedy. Upon the occurrence of a Ground Lease Default which is not cured within any applicable period expressly permitted by subparagraph 13(A), NAI’s sole and exclusive remedies will be to sue BNPPLC for the collection of any amount due under this Ground Lease, to sue for the specific enforcement of BNPPLC’s obligations hereunder, or to enjoin the continuation of the Ground Lease Default, provided, however, no limitation of NAI’s
 
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remedies contained herein will prevent NAI from exercising rights expressly provided in other Operative Documents or from recovering any reasonable costs NAI may incur to mitigate its damages by curing a Ground Lease Default that BNPPLC has failed to cure itself (so long as the cure by NAI is pursued in a lawful manner and the costs NAI seeks to recover do not exceed the actual damages to be mitigated). NAI may not terminate this Ground Lease or BNPPLC’s right to possession under this Ground Lease, except as expressly provided in the Operative Documents. Any judgment which NAI may obtain against BNPPLC for amounts due under this Ground Lease may be collected only through resort of a judgement lien against BNPPLC’s interest in the Leased Property and any Improvements. BNPPLC will have no personal liability for the payment amounts due under this or for the performance of any obligations of BNPPLC under this Ground Lease.
13     Quiet Enjoyment. NAI warrants that neither it nor any third party lawfully claiming any right or interest in the Leased Property will, during the Ground Lease Term, disturb BNPPLC’s peaceable and quiet enjoyment of the Leased Property; however, such enjoyment will be subject to the terms, provisions, covenants, agreements and conditions of this Ground Lease and those Permitted Encumbrances which are listed on Exhibit B.
14     Option to Purchase. Subject to the terms and conditions set forth in Exhibit C, BNPPLC (and any assignee of BNPPLC’s entire interest in the Leased Property, but not any subtenant or assignee of a lesser interest) will have the option, and NAI hereby grants to BNPPLC such option, to purchase NAI’s interest in the Leased Property.
15     Miscellaneous.
          (A)     No Merger. There will be no merger of this Ground Lease or of the leasehold estate hereby created with the fee or any other estate in the Leased Property or any part thereof by reason of the fact that the same person may acquire or hold, directly or indirectly, this Ground Lease or the leasehold estate hereby created or any interest in this Ground Lease or in such leasehold estate as well as the fee or any other estate in the Leased Property or any interest in such fee or other estate, unless all parties with an interest in the Leased Property that would be adversely affected by any such merger specifically agree in writing that such a merger has occurred.
          (B)     Recording; Memorandum of Lease. Either party may record this Ground Lease in the real property records of Santa Clara County, California. If NAI and BNPPLC decide not to record this Ground Lease, they will execute a memorandum of this Ground Lease in recordable form which will be filed in the real property records of Santa Clara County, California.
     16     Certain Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy BNPPLC has with
 
Ground Lease (Building 9) – Page 16

 

 

respect to the Improved Property, and each and every right and remedy of BNPPLC will be cumulative and in addition to any other right or remedy given to it under this Ground Lease or now or hereafter existing in its favor at law or in equity. In addition to other remedies available under this Ground Lease, either party will be entitled, to the extent permitted by applicable law, to a decree compelling performance of any of the other party’s agreements hereunder.
17     Attorney’s Fees and Legal Expenses. If BNPPLC commences any legal action or other proceeding because of any breach of this Ground Lease by NAI, BNPPLC may recover all Attorneys’ Fees incurred by it in connection therewith from NAI, whether or not such controversy, claim or dispute is prosecuted to a final judgment. Any Attorneys’ Fees incurred by BNPPLC in enforcing a judgment in its favor under this Ground Lease will be recoverable separately from such judgment, and the obligation for such Attorneys’ Fees is intended to be severable from other provisions of this Ground Lease and not to be merged into any such judgment.
18     Successors and Assigns. The terms, provisions, covenants and conditions of this Ground Lease will be binding upon NAI and BNPPLC and their respective permitted successors and assigns and will inure to the benefit of NAI and BNPPLC and all permitted transferees, mortgagees, successors and assignees of NAI and BNPPLC with respect to the Leased Property; except that (A) BNPPLC will not assign this Ground Lease or any rights hereunder except pursuant to a Permitted Transfer, and (C) NAI will not assign this Ground Lease or any rights hereunder prior to the Turnover Date without the prior written consent of BNPPLC.
[The signature pages follow.]
 
Ground Lease (Building 9) – Page 17

 

 

     IN WITNESS WHEREOF, this Ground Lease (Building 9) is executed to be effective as of February 1, 2008.
                     
                BNP PARIBAS LEASING CORPORATION, a
                Delaware corporation
 
                    
 
              By:   /s/ Lloyd G. Cox
 
                   
 
                  Lloyd G. Cox, Managing Director
 
                    
STATE OF TEXAS
    )              
 
    )         SS    
COUNTY OF DALLAS
    )              
On January 25, 2008, before me Kathryn Hackett, a Notary Public in and for the County and State aforesaid, personally appeared Lloyd G. Cox, Managing Director of BNP Paribas Leasing Corporation, who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity and that by his signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
    
 
    
/s/ Kathryn Hackett
 
    
(SEAL)
 
Ground Lease (Building 9) – Signature Page

 

 

[Continuation of signature pages for Ground Lease (Building 9) dated as of February 1, 2008.]
                     
                NETWORK APPLIANCE, INC., a Delaware
corporation
 
                    
 
              By:   /s/ Ingemar Lanevi
 
                   
 
                  Ingemar Lanevi, Vice President and Corporate
Treasurer
 
                    
STATE OF NORTH CAROLINA
    )              
 
    )         SS    
COUNTY OF WAKE
    )              
On January 29th, 2008, before me DONNA M. MARCOTTE, a Notary Public in and for the County and State aforesaid, personally appeared Ingemar Lanevi, Vice President and Corporate Treasurer of Network Appliance, Inc., who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument.
     
WITNESS, my hand and official seal.
    
 
    
/s/ Donna M. Marcotte
 
    
 
Ground Lease (Building 9) – Signature Page

 

 

Exhibit A
Legal Description
Parcel 9 and the Additional Leased Premises, as defined below, (collectively, the “Building 9 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs along the same line as the northern boundary of Common Lot A, as shown on the Tentative Map, extending from the corner of two streets adjacent to the Additional Leased Premises to the northeast corner of Parcel 12, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as (but extends beyond) the eastern boundary of Parcel 12, as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 9 Ground Lease Premises (the “Appurtenant Easements”) under, over and across adjacent parcels (“Adjacent Parcels”) which are owned by NAI for the purposes described below and on and subject to the express terms and conditions set forth below:
The Appurtenant Easements will be for the following purposes:
     1.     The use, maintenance, repair, replacement expansion of utility lines under, over and across the Adjacent Parcels and related equipment (including lines or equipment for water, sanitary sewer, electricity, phone and gas) (collectively, the “Utility Lines”) to serve improvements constructed from time to time on the Building 9 Ground Lease Premises.
     2.     Access and parking over and in paved driveways and parking lots or garages now or hereafter located on the Adjacent Parcels (“Driveways and Parking Areas”).
     3.     The encroachment, support, maintenance, repair and replacement of any buildings constructed on Parcel 9 as shown on the Tentative Map during the period that BNPPLC owns or leases Parcel 9.
The Appurtenant Easements will be subject to the following terms and conditions:

 

 

     A.     The Appurtenant Easements for Utility Lines will be limited to:
     (1)     those Utility Lines, if any, existing on the first date upon which any instrument is recorded which gives notice of the Appurtenant Easements;
     (2)     those Utility Lines, if any, constructed by or at the request of NAI itself;
     (3)     any other Utility Lines reasonably necessary for the use of improvements constructed by NAI (whether constructed for BNPPLC or otherwise) on the Building 9 Ground Lease Premises (and in the case of Utility Lines permitted only because of this clause (3), such Utility Lines must be installed in a location that does not run through or under any then existing building or structured garage on the Adjacent Parcels); and
     (4)     replacements (including replacements that may increase utility capacity) for any Utility Lines permitted under the preceding clauses (1) through (3).
     B.     Any Utility Line on any Adjacent Parcel may be relocated to another location on the same Adjacent Parcel by the owner of such parcel and at its sole cost and expense, so long as the relocation is done in a good and workmanlike manner that does not and will not impose any significant or unexpected interruption of utility services or additional costs upon the owner or occupants of the Building 9 Ground Lease Premises.
     C.     The use of Driveways and Parking Areas by the owner of the Building 9 Ground Lease Premises and its tenants and other invitees will not exceed that reasonably required to provide buildings constructed on the Building 9 Ground Lease Premises with parking that both (i) meets local zoning and other legal requirements, and (ii) when taken together with any permanent, concrete parking spaces from time to time constructed on the Building 9 Ground Lease Premises, provides at least the minimum number of parking spaces for buildings on the Building 9 Ground Lease Premises necessary to cause the parking ratio for buildings on the Building 9 Ground Lease Premises to be not less than 1 parking space per 333 square feet of interior building floor area (the “Minimum Parking Requirements”). However, for purposes of computing the Minimum Parking Requirements, parking spaces from time to time constructed on the Building 9 Ground Lease Premises which are made available for parking by owners or occupants of any Adjacent Parcel pursuant to any easement which encumbers the Building 9 Ground Lease Premises (or any leasehold estate therein) will be treated as if they did not exist. In other words, any such parking spaces available to owners or occupants of Adjacent Parcels will not be included in the numbers of parking spaces considered as available to owners or occupants of the Building 9 Ground Lease Premises to satisfy the Minimum Parking
 
Exhibit A to Ground Lease (Building 9) – Page 2

 

 

Requirements.
     D.     NAI and its successors and assigns as the owners of Adjacent Parcels will always maintain a number of parking spaces on the Adjacent Parcels which is no less than the sum of (1) the spaces required to meet Minimum Parking Requirements for buildings on the Building 9 Ground Lease Premises, and (2) the spaces required to satisfy zoning or other parking requirements for other buildings on or served by parking on the Adjacent Parcels.
     E.     The Appurtenant Easement for parking on Adjacent Parcels will be subject to the following condition subsequent: If a sufficient number of permanent, concrete parking spaces in parking lots or structured garages are constructed on the Building 9 Ground Lease Premises to satisfy Minimum Parking Requirements (computed as described above) without the need for additional parking spaces on Adjacent Parcels, then the owners of Adjacent Parcels may terminate such parking easement by notice to the owner of the Building 9 Ground Lease Premises and by recording a copy of such notice in the real property deed records. (This provision will not, however, be construed to require the construction of such lots or garages on the Building 9 Ground Lease Premises.)
     F.     Notwithstanding the foregoing, at any time when BNPPLC or any successor of BNPPLC owns or leases (i) all or any part of the land shown on the Tentative Map as Parcel 7 and adjacent parking lots, driveways and other areas within Common Lot A (collectively, the “Building 7 Ground Lease Premises”) or (ii) all or any part of the land shown on the Tentative Map as Parcels 8 and 12 and adjacent parking lots, driveways and other areas within Common Lot A (collectively, the “Building 8 Ground Lease Premises”), BNPPLC may, at its sole option and at any time or from time to time, cause all or any portion of the Building 7 Ground Lease Premises and/or the Building 8 Ground Lease Premises to be released from all or any of the Appurtenant Easements. Notwithstanding any such release, the Appurtenant Easements will continue as to Adjacent Parcels other than the released portions of the Building 7 Ground Lease Premises and/or the Building 8 Ground Lease Premises, as applicable. BNPPLC may exercise such option by written notice recorded in the real property records of Santa Clara County, California.
 
Exhibit A to Ground Lease (Building 9) – Page 3

 

 

(PICTURE)
 
Exhibit A to Ground Lease (Building 9) – Page 4

 

 

Exhibit B
Permitted Encumbrances
     The leasehold and other interests in the Land hereby conveyed by NAI are conveyed subject to the following matters to the extent the same are still valid and in force:
1.     TAXES for the fiscal year 2007-2008, 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
  : Slope Easement
In favor of
  : City of Sunnyvale
Recorded
  : October 9, 1964 in Book 6695, page 430, Official Records
Affects
  : Easterly 18 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
4.     EASEMENT for the purposes stated herein and incidents thereto
     
Purpose
  : Public utilities easement
In favor of
  : City of Sunnyvale
Recorded
  : October 9, 1964 in Book 6695, page 450, Official Records
Affects
  : Easterly 7 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
5.     Covenants, Conditions and Restrictions in the Declaration of Protective Covenants — Moffett Industrial Park No. 2) recorded December 23, 1971 in Book 9640, page 443, Official Records; which provide that a violation thereof shall not defeat or render invalid the lien of any Mortgage or Deed of Trust made in good faith and for value. Said Covenants, Conditions and Restrictions do not provide for reversion of title in the event of a breach thereof. Restrictions, if any, based upon race, color, religion, sex, handicap, familial status, or national origin are deleted, unless and only to the extent that said covenant (a) is exempt under Chapter 42, Section 3607, of the United States Code, or (b) related to handicap but does not discriminate against handicapped persons.
     ASSIGNMENT AND ASSUMPTION of the rights, powers, duties, obligations, and reservations of Moffett Park Associates, in favor of The Prudential Insurance Company of

 

 

America, recorded February 8, 1977 in Book C583, page 685, Official Records.
6.     EASEMENT for the purposes stated herein and incidents thereto
     
Purpose
  : Public utilities
Granted to
  : City of Sunnyvale
Recorded
  : November 16, 1976 in Book C414, page 105, Official Records
Affects
  : Southerly 10 feet, as shown on a survey plat entitled ALTA/ACSM Land Title Survey for: Network Appliance, 1345 Crossman Avenue, dated December 2, 1999, prepared by Kier & Wright, Job No. 97208-16.
7.     LIMITATIONS, covenants, restrictions, reservations, exceptions or terms, 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 USC 3604(c), contained in the document recorded February 5, 1980 in Book F122, page 460, Official Records.
 
Exhibit B to Ground Lease (Building 9) – Page 2

 

 

Exhibit C
CONTINGENT PURCHASE OPTION
     Subject to the terms of this Exhibit, BNPPLC shall have an option (the “Option”) to buy NAI’ fee interest in the Leased Property at any time during the term of this Ground Lease after (but only after) any breach by NAI under the Purchase Agreement, provided NAI does not cure the breach within any time permitted for cure by the express provisions of the Purchase Agreement, for a purchase price (the “Option Price”) to NAI equal to fair market value.
     For the purposes of this Exhibit, “fair market value” 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 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 of BNPPLC’s exercise of the Option 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 the exercise of the Option.
     If BNPPLC exercises the Option, which BNPPLC may do by notifying NAI that BNPPLC has elected to buy NAI’ interest in the Leased Property as provided herein, then:
     (1)     To the extent, if any, required as a condition imposed by law to the conveyance of the fee interest in the Leased Property to BNPPLC, NAI shall promptly at its expense do whatever is necessary and possible (including, without limitation, cooperating with BNPPLC in seeking any zoning variances requested by BNPPLC) to obtain approvals of a new recorded plat or lot line adjustments. Should it be determined that it is not possible to satisfy any such condition imposed by law, neither NAI nor BNPPLC shall be required to consummate any purchase pursuant to this Exhibit, and this Ground Lease will continue as if BNPPLC had not exercised the Option.
     (2)     Upon BNPPLC’s tender of the Option Price to NAI, NAI will convey good and indefeasible title to the fee estate in the Land and its interest in all other Leased Property to BNPPLC by general warranty deed and assignment subject only to the Permitted Encumbrances, to any claims of BNPPLC or Liens Removable by BNPPLC, and (to the extent still in force) to the Lease and the Purchase Agreement.
     (3)     BNPPLC’s obligation to close the purchase shall be subject to the following terms and conditions, all of which are for the benefit of BNPPLC: (a) BNPPLC shall have been furnished with evidence satisfactory to BNPPLC that NAI can convey title as required by the preceding subparagraph; (b) nothing shall have occurred or been discovered after BNPPLC exercised the Option that could significantly and adversely affect title to the Leased Property or BNPPLC’s use thereof, (c) all of the representations of NAI 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 NAI or any of NAI’ representatives, would continue to be true on the date of the closing if all relevant facts and circumstances were known to NAI and such representatives, and (d) BNPPLC shall have been tendered the deed and other documents which are described in this Exhibit as documents to be delivered to BNPPLC at the closing of BNPPLC’s purchase.
     (4)      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 Exhibit and after any approvals described in subparagraph (1) above are obtained, and prior to closing BNPPLC’s occupancy of the Leased Property shall continue to be subject to the terms and conditions of this Ground Lease, including the terms setting forth BNPPLC’s obligation to pay rent. Closing shall take place at the offices of any title insurance company reasonably selected by BNPPLC to insure title under the title insurance policy described below.
     (5)     Any transfer taxes or notices or registrations required by law in connection with the sale contemplated by this Exhibit will be the responsibility of NAI.
     (6)     NAI will deliver a certificate of nonforeign status to BNPPLC at closing as needed to comply with the provisions of the U.S. Foreign Investors Real Property Tax Act (FIRPTA) or any comparable federal, state or local law in effect at the time.
     (7)     NAI will also pay for and deliver to BNPPLC 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 BNPPLC (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 BNPPLC and to Permitted Encumbrances.
     (8)     NAI shall also deliver at the closing all other documents or things reasonably required to be delivered to BNPPLC or by the title insurance company to evidence NAI’ ability to transfer the Leased Property to BNPPLC.
     If NAI and BNPPLC do not otherwise agree upon the amount of the Option Price within twenty days after BNPPLC exercises the Option, the Option Price shall be determined in accordance with the following procedure:
          (a)     NAI and BNPPLC 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
 
Exhibit C to Ground Lease (Building 9) – Page 2

 

 

described in this Exhibit has been invoked. The agreement of the two appraisers as to the Option Price will be binding upon NAI and BNPPLC. 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 third appraiser as the closest to the prevailing monthly fair market value will be binding upon NAI and BNPPLC. Notification in writing of the Option Price shall be made to NAI and BNPPLC within fifteen days following the selection of the third appraiser.
     (b)     If appraisers must be selected under the procedure set out above and either BNPPLC or NAI 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 Exhibit 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.
     (c)     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 NAI and BNPPLC may require the first two appraisers to immediately submit its top choice for the third appraiser to the then highest ranking officer of the Dallas, Texas Bar Association who will agree to help and who has no attorney/client or other significant relationship to either NAI or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within ten days after such choices are submitted to him.
     (d)     Either NAI or BNPPLC 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
 
Exhibit C to Ground Lease (Building 9) – Page 3

 

 

by the other appraiser (i.e., the notifying party’s appraiser) will be binding upon NAI and BNPPLC.
     (e)     NAI and BNPPLC shall each bear the expense of the appraiser appointed by it, and the expense of the third appraiser and of any officer of the Dallas, Texas Bar Association who participates in the appraisal process described above will be shared equally by NAI and BNPPLC.
 
Exhibit C to Ground Lease (Building 9) – Page 4

 

 

Exhibit D
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 Exhibit, "Rental Determination Date” means the (1) the Effective Date, (2) the earliest anniversary of the Effective Date to follow the Turnover Date by more than thirty days, and (3) after the second Rental Determination Date described in clause (2), each fifth anniversary of the preceding Rental Determination Date.
     As of the Effective Date (i.e., the first Rental Determination Date), the parties have agreed that Fair Rental Value is the dollar amount set forth in Paragraph 3 of this Ground Lease.
     If NAI and BNPPLC have not agreed upon Fair Rental Value as of any subsequent Rental Determination Date within one hundred eighty days after the such date, then Fair Rental Value will be determined as follows:
     (a)     NAI and BNPPLC 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 Exhibit has been invoked. The agreement of the two appraisers as to Fair Rental Value will be binding upon NAI and BNPPLC. 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 NAI and BNPPLC. Notification in writing of this estimate shall be made to NAI and BNPPLC within fifteen days following the selection of the third appraiser.
     (b)     If appraisers must be selected under the procedure set out above and either BNPPLC or NAI 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 Exhibit 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.
     (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 NAI and BNPPLC may require the first two appraisers to immediately submit its top choice for the third appraiser to the then highest ranking officer of the Dallas, Texas Bar Association who will agree to help and who has no attorney/client or other significant relationship to either NAI or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within twenty days after such choices are submitted to him.
     (d)     Either NAI or BNPPLC 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 NAI and BNPPLC.
     (e)     NAI and BNPPLC shall each bear the expense of the appraiser appointed by it, and the expense of the third appraiser and of any officer of the Dallas, Texas Bar Association who participates in the appraisal process described above will be shared equally by NAI and BNPPLC.
 
Exhibit D to Ground Lease (Building 9) – Page 2

 

exv10w75
Exhibit 10.75
CONSTRUCTION AGREEMENT
(BUILDING 9)
BETWEEN
NETWORK APPLIANCE, INC.
(“NAI”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
February 1, 2008
 

 

 

TABLE OF CONTENTS
                         
 
                  Page  
 
                        
ENGAGEMENT AND AUTHORIZATION     1  
 
                        
GENERAL TERMS AND CONDITIONS     2  
 
                        
1   Additional definitions     2  
    “97-10/Maximum Permitted Prepayment”     2  
    “97-10/Meltdown Event”     2  
    “97-10/Prepayment”     3  
    “97-10/Project Costs”     3  
    “97-10/Pronouncement”     4  
    “NAI’s Estimate of Force Majeure Delays”     4  
    “NAI’s Estimate of Force Majeure Excess Costs”     4  
    “Accrued Construction Period Interest Expense”     4  
    “Administrative Fee”     5  
    “Affiliate’s Contract”     5  
    “Arrangement Fee”     5  
    “Capital Adequacy Charges”     5  
    “Carrying Costs”     5  
    “Commitment Fee Rate”     5  
    “Commitment Fees”     6  
    “Complete Taking”     6  
    “Completion Date”     6  
    “Completion Notice”     7  
    “Construction Advances”     7  
    “Construction Advance Request”     7  
    “Construction Allowance”     7  
    “Construction Budget”     7  
    “Construction Project”     7  
    “Covered Construction Period Losses”     7  
    “Defective Work”     7  
    “FOCB Notice”     7  
    “Force Majeure Event”     8  
    “Funded Construction Allowance”     8  
    “Future Work”     8  
    “Ground Lease Rents”     8  
    “Increased Cost Charges”     8  
    “Increased Commitment”     8  
    “Increased Funding Commitment”     8  
    “Increased Time Commitment”     9  
    “Initial Advance”     9  

 

 

TABLE OF CONTENTS
(Continued)
                         
    “Maximum Construction Allowance”     9  
    “Notice of NAI’s Intent to Terminate”     9  
    “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event”     9  
    “Notice of Termination by NAI”     9  
    “Outstanding Construction Allowance”     9  
    “Owner’s Election to Continue Construction”     9  
    “Pre-lease Casualty”     9  
    “Pre-lease Force Majeure Delays”     9  
    “Pre-lease Force Majeure Event”     9  
    “Pre-lease Force Majeure Event Notice”     10  
    “Pre-lease Force Majeure Excess Costs”     10  
    “Pre-lease Force Majeure Losses”     10  
    “Prior Work”     11  
    “Projected Cost Overruns”     11  
    “Reimbursable Construction Period Costs”     11  
    “Remaining Proceeds”     11  
    “Scope Change”     11  
    “Target Completion Date”     12  
    “Termination of NAI’s Work”     12  
    “Third Party Contract”     12  
    “Third Party Contract/Termination Fees”     12  
    “Timing or Budget Shortfall”     12  
    “Upfront Fees”     13  
    “Work”     13  
    “Work/Suspension Event”     13  
    “Work/Suspension Notice”     13  
    “Work/Suspension Period”     13  
 
                        
2   Construction and Management of the Property by NAI     14  
    (A)   The Construction Project     14  
        (1)   Construction Approvals by BNPPLC     14  
 
          (a)   Preconstruction Approvals by BNPPLC     14  
 
          (b)   Approval of Scope Changes     14  
        (2)   NAI’s Right to Possession and to Control Construction     14  
 
          (a)   Performance of the Work     15  
 
          (b)   Third Party Contracts     15  
 
          (c)   Adequacy of Drawings, Specifications and Budgets     16  
 
          (d)   Existing Condition of the Land and Improvements     16  

(ii)

 

TABLE OF CONTENTS
(Continued)
                         
 
          (e)   Correction of Defective Work     16  
 
          (f)   Clean Up     16  
 
          (g)   No Damage for Delays     16  
 
          (h)   No Fee For Construction Management     17  
        (3)   Quality of Work     17  
    (B)   Completion Notice     17  
    (C)   Status of Property Acquired With BNPPLC’s Funds     17  
    (D)   Insurance     18  
        (1)   Liability Insurance     18  
        (2)   Property Insurance     18  
        (3)   Failure of NAI to Obtain Insurance     19  
        (4)   Waiver of Subrogation     19  
    (E)   Condemnation     19  
    (F)   Additional Representations, Warranties and Covenants of NAI Concerning the Property     20  
        (1)   Payment of Local Impositions     20  
        (2)   Operation and Maintenance     21  
        (3)   Debts for Construction, Maintenance, Operation or Development     22  
        (4)   Permitted Encumbrances and the Ground Lease     22  
        (5)   Books and Records Concerning the Property     22  
    (G)   BNPPLC’s Right of Access     22  
        (1)   Access Generally     22  
        (2)   Failure of NAI to Perform     23  
 
                        
3   Amounts to be Added to the Lease Balance (in Addition to Construction Advances)     24  
    (A)   Initial Advance     24  
    (B)   Carrying Costs     24  
    (C)   Commitment Fees     25  
    (D)   Future Administrative Fees and Out-of-Pocket Costs     25  
    (E)   Increased Cost Charges and Capital Adequacy Charges     26  
    (F)   Ground Lease Payments     27  
 
                        
4   Construction Advances     27  
    (A)   Costs Subject to Reimbursement Through Construction Advances     27  
    (B)   Exclusions From Reimbursable Construction Period Costs     29  
    (C)   Conditions to NAI’s Right to Receive Construction Advances     29  
        (1)   Construction Advance Requests     29  
        (2)   Amount of the Advances     30  
 
          (a)   The Maximum Construction Allowance     30  

(iii)

 

TABLE OF CONTENTS
(Continued)
                         
 
          (b)   Costs Previously Incurred by NAI     30  
 
          (c)   Limits During any Work/Suspension Period     31  
 
          (d)   Restrictions Imposed for Administrative Convenience     31  
        (3)   No Advances After Certain Dates     31  
    (D)   Breakage Costs for Construction Advances Requested But Not Taken     31  
    (E)   No Third Party Beneficiaries     32  
    (F)   No Waiver     32  
 
                        
5   Application of Insurance and Condemnation Proceeds     32  
    (A)   Collection and Application Generally     32  
    (B)   Advances of Escrowed Proceeds to NAI     33  
    (C)   Status of Escrowed Proceeds After Commencement of the Term of the Lease     33  
    (D)   Special Provisions Applicable After a 97-10/Meltdown Event or Event of Default     33  
    (E)   NAI’s Obligation to Restore     33  
    (F)   Special Provisions Concerning a Complete Taking     34  
 
                        
6   Notice of Cost Overruns and Pre-lease Force Majeure Events     34  
    (A)   Notice of Projected Cost Overruns     34  
    (B)   Pre-lease Force Majeure Event Events and Notices     34  
 
                        
7   Suspension and Termination of NAI’s Work     34  
    (A)   Rights and Obligations During a Work/Suspension Period     34  
    (B)   NAI’s Election to Terminate NAI’s Work     34  
    (C)   BNPPLC’s Election to Terminate NAI’s Work     38  
    (D)   Surviving Rights and Obligations     38  
    (E)   Cooperation After a Termination of NAI’s Work     38  
 
                        
8   Continuation of Construction by BNPPLC     40  
    (A)   Owner’s Election to Continue Construction     40  
        (1)   Take Control of the Property     40  
        (2)   Continuation of Construction     40  
        (3)   Arrange for Turnkey Construction     41  
        (4)   Suspension or Termination of Construction by BNPPLC     41  
    (B)   Powers Coupled With an Interest     42  
 
                        
9   NAI’s Obligation for 97-10/Prepayments     42  
 
                        
10   Indemnity for Covered Construction Period Losses     43  

(iv)

 

TABLE OF CONTENTS
(Continued)
                         
    (A)   Covenant to Indemnify Against Covered Construction Period Losses     43  
    (B)   Certain Losses Included or Excluded     44  
        (1)   Back to Back Claims by Participants Against BNPPLC     44  
        (2)   Environmental     45  
        (3)   Failure to Maintain a Safe Work Site     45  
        (4)   Failure to Complete Construction     46  
        (5)   Fraud     46  
        (6)   Excluded Taxes and Established Misconduct     46  
    (C)   Express Negligence Protection     46  
    (D)   Survival of Indemnity     47  
    (E)   Due Date for Indemnity Payments     47  
    (F)   Order of Application of Payments     47  
    (G)   Defense of BNPPLC     47  
        (1)   Assumption of Defense     47  
        (2)   Indemnity Not Contingent     47  
    (H)   Notice of Claims     48  
    (I)   Withholding of Consent to Settlements Proposed by NAI     48  
    (J)   Settlements Without the Prior Consent of NAI     48  
        (1)   Election to Pay Reasonable Settlement Costs in Lieu of Actual     48  
        (2)   Conditions to Election     49  
        (3)   Indemnity Survives Settlement     49  
    (K)   No Authority to Admit Wrongdoing on the Part of NAI     49  
    (L)   Refunds of Covered Construction Period Losses Paid by NAI     50  
        (1)   Payment by BNPPLC After Refund     50  
        (2)   Meaning of Refund     50  
        (3)   Conditions to Payment     51  
 
                        
11   Characterization of Operative Documents; Remedies     51  
    (A)   Characterization of Operative Documents     51  
        (1)   Confirmation of Lien and Security Interest Granted in the Lease     51  
        (2)   Foreclosure Remedies     51  
    (B)   Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement     52  
    (C)   Remedies Cumulative     52  
    (D)   Third Party Estoppels     53  

(v)

 

TABLE OF CONTENTS
(Continued)
Exhibits and Schedules
     
Exhibit A   Legal Description
     
Exhibit B   Description of the Construction Project and Budget
     
Exhibit C   Construction Advance Request Form
     
Exhibit D   Pre-lease Force Majeure Event Notice
     
Exhibit E   Notice of Termination by NAI’s Work
     
Exhibit F   Notice of NAI’s Intent to Terminate
     
Exhibit G   Notice of Increased Funding Commitment by BNPPLC
     
Exhibit H   Notice of Increased Time Commitment by BNPPLC
     
Exhibit I   Notice of Rescission of NAI’s Intent to Terminate
     
Exhibit J   Form of Contractor Estoppel
     
Exhibit K   Form of Design Professional Estoppel

(vi)

 

CONSTRUCTION AGREEMENT
(BUILDING 9)
          This CONSTRUCTION AGREEMENT (BUILDING 9) (this “Agreement”), dated as of February 1, 2008 (the “Effective Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETWORK APPLIANCE, INC. (“NAI”), a Delaware corporation.
RECITALS
          Contemporaneously with the execution of this Agreement, BNPPLC and NAI are executing a Common Definitions and Provisions Agreement (Building 9) dated as of the Effective Date (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Agreement for all purposes. As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
          At the request of NAI and to facilitate the transaction contemplated in the other Operative Documents, contemporaneously with this Agreement BNPPLC is executing and accepting a Ground Lease (Building 9) from NAI (the “Ground Lease”), pursuant to which BNPPLC is acquiring a leasehold estate in the Land described in Exhibit A and any existing Improvements on such Land.
          Also contemporaneously with this Agreement, BNPPLC and NAI are executing a Lease Agreement (Building 9) (the “Lease”), pursuant to which the parties expect that NAI will lease the Improvements on the Land described in Exhibit A from BNPPLC for a lease term that will commence on the Completion Date (as defined below).
          In anticipation of the construction of new or additional Improvements for NAI’s use pursuant to the Lease, BNPPLC and NAI have agreed upon the terms and conditions upon which BNPPLC is willing to authorize NAI to arrange and manage such construction and upon which BNPPLC is willing to provide funds for such construction, and by this Agreement BNPPLC and NAI desire to evidence such agreement.
ENGAGEMENT AND AUTHORIZATION
          Subject to the terms and conditions set forth in this Agreement, BNPPLC does hereby engage and authorize NAI — and NAI does hereby accept such engagement and authorization, as an independent contractor for BNPPLC — to construct the Construction Project on the Land and to manage such construction for BNPPLC. As more particularly provided in subparagraph 2(A)(2) below, NAI will take possession and control of the Land and all Improvements on the Land to

 

 

accomplish such construction. However, the rights and authority granted to NAI by this Agreement are expressly made subject and subordinate to the terms and condition hereinafter set forth and to the Ground Lease, to the Permitted Encumbrances and to any other claims or encumbrances affecting the Land or the Property that may be asserted by third parties other than Liens Removable by BNPPLC.
GENERAL TERMS AND CONDITIONS
1       Additional definitions. As used in this Agreement, capitalized terms defined above will have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and that are used but not defined herein will have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms will have the following respective meanings:
“97-10/Maximum Permitted Prepayment” as of any date means the amount equal to eighty-nine and nine-tenths of one percent (89.9%) of the aggregate of all 97-10/Project Costs paid or incurred on or prior to such date.
“97-10/Meltdown Event” means any of the following:
          (a)     NAI gives a Notice of NAI’s Intent to Terminate and thereafter (i) fails to rescind the same as described in subparagraph 7(B)(7) within ten days after BNPPLC responds with any Increased Commitment, or (ii) gives a Notice of Termination by NAI as provided in subparagraph 7(B)(1); or
          (b)     NAI gives a notice to terminate its Supplemental Payment Obligation under the Purchase Agreement as described in subparagraph 6(B) of the Purchase Agreement; or
          (c)     BNPPLC gives notice to NAI as described in subparagraph 7(C) to cause a Termination of NAI’s Work; or
          (d)     NAI fails for any reason whatsoever to substantially complete the Construction Project and give a Completion Notice to BNPPLC prior to the Target Completion Date; or
          (e)     for any reason whatsoever (including the accrual of Carrying Costs), the Funded Construction Allowance exceeds the
 
Construction Agreement (Building 9) – Page 2

 

 

Maximum Construction Allowance.
“97-10/Prepayment” means any payment to BNPPLC required by Paragraph 9, which in each case will equal (A) the 97-10/Maximum Permitted Prepayment, computed as of the date on which the payment becomes due, less (B) the sum of (1) the accreted value of any prior payments actually received by BNPPLC from NAI constituting 97-10/Prepayments, and (2) amounts (if any) then owed by BNPPLC to NAI pursuant to this Agreement as reimbursements for Reimbursable Construction Period Costs paid by NAI and not theretofore reimbursed. For purposes of the preceding sentence, “accreted value” of a payment means 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 plus the Spread.
“97-10/Project Costs” means the following:
          (a)      costs incurred for 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 any Permitted Encumbrance,
 
   •   site preparation costs, and
 
   •   costs of offsite and other public improvements required as conditions of governmental approvals for the Construction Project or required by any Permitted Encumbrances;
          (b)      costs incurred to maintain insurance required by (and consistent with the requirements of) this Agreement prior to the Completion Date;
          (c)      Local Impositions that have accrued or become due prior to the Completion Date;
          (d)      Accrued Construction Period Interest Expense; and
          (e)      any costs in addition to those described in clauses (a) through (d) preceding that GAAP (as it exists on the Effective Date) would allow BNPPLC to capitalize as part of the cost of the Property or that the 97-10/Pronouncement would allow BNPPLC to characterize as project costs, including: (1) cancellation or termination fees
 
Construction Agreement (Building 9) – Page 3

 

 

or other compensation payable by NAI or BNPPLC pursuant to any contract concerning the Construction Project made by NAI or BNPPLC with any general contractor, architect, engineer or other third party because of any election by NAI or BNPPLC to cancel or terminate such contract, and (2) any costs that BNPPLC incurs and is allowed to capitalize to continue or complete the Construction Project after any Owner’s Election to Continue Construction as provided in subparagraph 8(A).
However, notwithstanding the foregoing, 97-10/Project Costs will not include Pre-lease Force Majeure Losses, Administrative Fees, the Arrangement Fee or any legal fees which are included in Transaction Expenses.
“97-10/Pronouncement” means the pronouncement issued by the Emerging Issues Task Force of the Financial Accounting Standards Board in 1998 titled “EITF 97-10: The Effect of Lessee Involvement in Asset Construction”, which provides that certain kinds of involvement by a lessee in pre-lease commencement construction will cause the lessee to be considered as the owner of the leased property during the construction period and then will require application of the appropriate sale and leaseback accounting rules.
“NAI’s Estimate of Force Majeure Delays” has the meaning indicated in subparagraph 7(B)(4).
“NAI’s Estimate of Force Majeure Excess Costs” has the meaning indicated in subparagraph 7(B)(3).
“Accrued Construction Period Interest Expense” means interest that has accrued and that BNPPLC has paid or is obligated to pay on Funding Advances for any period prior to the Completion Date. Such interest will include a percentage, equal to the aggregate Percentages of all Participants (under and as defined in the Participation Agreement), of Carrying Costs and Commitment Fees that accrue after the execution of any Participation Agreement and that are added to the Outstanding Construction Allowance as provided in this Agreement, it being understood that the additional amounts BNPPLC must pay to the Participants under the Participation Agreement because of the accrual of Carrying Costs and Commitment Fees effectively constitute construction period interest on advances the Participants make to BNPPLC under the Participation Agreement. Accrued Construction Period Interest Expense will also include any interest and other finance charges that accrue prior to the Completion Date because of Funding Advances provided to BNPPLC by BNPPLC’s Parent in the form of loans, regardless of whether BNPPLC’s obligation in respect of such loans is limited to BNPPLC’s interest in the Property. However, any such interest and other finance charges accruing on Funding Advances provided by BNPPLC’s Parent and included in Accrued Construction Period Interest Expense will not exceed the Carrying Costs attributable to the portion of the Lease Balance funded or maintained by
 
Construction Agreement (Building 9) – Page 4

 

 

such Funding Advances. Further, Accrued Construction Period Interest will not include any portion of Carrying Costs included in Pre-lease Force Majeure Losses (as set forth in the definition thereof below) or interest or finance charges that BNPPLC must pay to the Participants under the Participation Agreement because of the accrual of such portion of Carrying Costs.
“Administrative Fee” has the meanings indicated in subparagraph 3(A) and subparagraph 3(D).
“Affiliate’s Contract” has the meaning indicated in subparagraph 2(A)(2)(b)2).
“Arrangement Fee” has the meaning indicated in subparagraph 3(A).
“Capital Adequacy Charges” has the meaning indicated in subparagraph 3(E)(1).
“Carrying Costs” has the meaning indicated in subparagraph 3(B).
“Commitment Fee Rate” means, for each Construction Period, the amount established as of the date (in this definition, the “CFR Test Date”) that is two Business Days prior to such period by reference to the pricing grid below, based upon the ratio calculated by dividing (1) Consolidated EBITDA for the then latest Rolling Four Quarters Period that ended prior to (and for which NAI has reported earnings as necessary to compute Consolidated EBITDA) into (2) the Consolidated Debt for Borrowed Money as of the end of such Rolling Four Quarters Period. In each case, the Commitment Fee Rate will be established at the Level in the pricing grid below which corresponds to such ratio; provided, that:
          (a)      promptly after earnings are reported by NAI for the latest quarter in any Rolling Four Quarters Period, NAI must notify BNPPLC 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 this Agreement unless, prior to the CFR Test Date for the next period, NAI shall have provided BNPPLC with a written notice setting forth and certifying the calculation under this definition that justifies the reduction; and
          (b)      if Commitment Fees are understated during any Construction Period because of any misstatement, subsequently discovered, of Consolidated EBITDA or Consolidated Debt for Borrowed Money, BNPPLC will be entitled to add to the Outstanding Construction Allowance or (after the Completion Date) collect from NAI all additional amounts that would have been added to the Outstanding Construction Allowance hereunder or expected to be paid under the other
 
Construction Agreement (Building 9) – Page 5

 

 

Operative Documents but for the misstatement, together with interest on each such additional amount computed at the Default Rate from the date it would have been included in the Outstanding Construction Allowance or expected to be paid to the date it is actually added or paid.
                 
 
  Levels     Ratio of Consolidated Debt for     Spread  
        Borrowed Money to        
        Consolidated EBITDA        
  Level I     less than 0.5     6.0 basis points  
  Level II     greater than or equal to 0.5, but
less than 1.0 		    7.0 basis points  
  Level III     greater than or equal to 1.0, but
less than 1.5 		    8.0 basis points  
  Level IV     greater than or equal to 1.5, but
less than 2.0 		    10.0 basis point  
  Level V     greater than or equal to 2.0     15.0 basis points  
 
All determinations of the Commitment Fee Rate by BNPPLC will, in the absence of clear and demonstrable error, be binding and conclusive for purposes of this Agreement. Further BNPPLC may, but will 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 (a) of this definition.
“Commitment Fees” has the meaning indicated in subparagraph 3(C).
“Complete Taking” means a taking by eminent domain prior to the Completion Date over NAI’s objection of all of the Land or the Property, or so much thereof as to make it impossible to complete the Construction Project for its intended uses on the Land regardless of any Scope Changes BNPPLC may be willing to approve or any Increased Commitment that BNPPLC may be willing to provide.
“Completion Date” means the date upon which NAI gives the notice to BNPPLC which is required by subparagraph 2(B), after having substantially completed the Construction Project and having obtained any certificate of occupancy or other permit (temporary or permanent) required for the commencement of NAI’s use of the Improvements.
 
Construction Agreement (Building 9) – Page 6

 

 

“Completion Notice” means the notice required by subparagraph 2(B) from NAI to BNPPLC, advising BNPPLC that NAI has substantially completed construction of the Construction Project and has obtained any certificate of occupancy or other permit (temporary or permanent) required for the commencement of NAI’s use of the Improvements.
“Construction Advances” means (1) actual advances of funds made by or on behalf of BNPPLC to or on behalf of NAI as provided in Paragraph 4, which sets forth NAI’s rights to receive advances for Reimbursable Construction Period Costs, and (2) other amounts paid or incurred by BNPPLC that subparagraph 8(A) or other provisions of this Agreement allow BNPPLC to characterize as Construction Advances. The term “Construction Advances” will not, however, include advances of insurance proceeds, condemnation proceeds or other Escrowed Proceeds to pay or reimburse costs of repairs or restoration.
“Construction Advance Request” has the meaning indicated in subparagraph 4(C)(1).
“Construction Allowance” means the allowance to be provided by BNPPLC for the design and construction of the Construction Project, against which and from which Carrying Costs, Construction Advances and other amounts will be or may be charged and paid as provided in various provisions of this Agreement (including Paragraphs 3, 4 and 8).
“Construction Budget” means the budget for the Construction Project set forth in Exhibit B.
“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.
“Covered Construction Period Losses” has the meaning indicated in subparagraph 10(A).
“Defective Work” has the meaning indicated in subparagraph 2(A)(2)(e).
“FOCB Notice” means a notice from BNPPLC to NAI advising NAI of any of the following events or circumstances, and also advising NAI that because of any of the following events or circumstances BNPPLC will be entitled to make the election described in subparagraph 7(C), which will constitute a Termination of NAI’s Work and a 97-10/Meltdown Event:
 
Construction Agreement (Building 9) – Page 7

 

 

          (1)     NAI has taken action to cancel or terminate or reduce the coverage available to BNPPLC under the builder’s risk insurance obtained for the Construction Project as required by this Agreement, or NAI has otherwise failed to maintain any insurance or to provide insurance certificates to BNPPLC as required by this Agreement and not cured such failure within ten days after receiving notice thereof, or
          (2)     NAI has given any Pre-lease Force Majeure Event Notice to BNPPLC, or
          (3)     an Event of Default has occurred and is continuing; or
          (4)     a Work/Suspension Event has occurred and continued for more than thirty consecutive days after NAI’s receipt of a Work/Suspension Notice advising NAI of such Work/Suspension Event, and subsequent to such thirty day period the Work/Suspension Event has not been rectified by NAI.
“Force Majeure Event” means (A) any taking of any part of the Property by eminent domain prior to the Completion Date, and (B) any damage to the Improvements or disruption of the Work that occurs prior to the Completion Date and that is caused by fire or acts of God (such as flood, lightning, earthquake or hurricane), war, strikes and other labor disputes, or riot or similar civil disturbance, but only to the extent such damage or disruption (i) is beyond the control of and not caused in whole or in part by negligence, illegal acts or willful misconduct on the part of NAI or of its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI, and (ii) could not have been avoided or overcome by the exercise of due diligence or reasonable foresight on the part of NAI or of any other such party.
“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.
“Future Work” has the meaning indicated in subparagraph 4(C)(2)(b).
“Ground Lease Rents” has the meaning indicated in subparagraph 3(F).
“Increased Cost Charges” has the meaning indicated in subparagraph 3(E)(1).
“Increased Commitment” has the meaning indicated in subparagraph 7(B)(6).
“Increased Funding Commitment” has the meaning indicated in
 
Construction Agreement (Building 9) – Page 8

 

 

subparagraph 7(B)(6)(a).
“Increased Time Commitment” has the meaning indicated in subparagraph 7(B)(6)(b).
“Initial Advance” has the meaning indicated in subparagraph 3(A).
“Maximum Construction Allowance” means an amount equal to the difference computed by subtracting the Initial Advance from $48,950,000, as such amount may be increased from time to time by any Increased Funding Commitment made by BNPPLC as provided in subparagraph 7(B)(6).
“Notice of NAI’s Intent to Terminate” has the meaning indicated in subparagraph 7(B)(2).
“Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” has the meaning indicated in subparagraph 7(B)(5).
“Notice of Termination by NAI” has the meaning indicated in subparagraph 7(B)(1).
“Outstanding Construction Allowance” means, as of any date, the difference (but not less than zero) of (A) the total Construction Advances made by or on behalf of BNPPLC on or prior to such date in question, plus (B) all Carrying Costs, Commitment Fees, Administrative Fees, Increased Cost Charges and Capital Adequacy Charges added on or prior to the date as provided in Paragraph 3, less (C) any funds received and applied as Qualified Prepayments on or prior to such date.
“Owner’s Election to Continue Construction” has the meaning indicated in subparagraph 8(A).
“Pre-lease Casualty” has the meaning indicated in subparagraph 2(A)(2)(a).
“Pre-lease Force Majeure Delays” means delays in the completion of the Work to the extent (but only to the extent) caused solely by a Pre-lease Force Majeure Event.
“Pre-lease Force Majeure Event” means a Force Majeure Event that occurs prior to the Completion Date; provided, however, that if NAI does not notify BNPPLC of any such Force Majeure Event by the delivery of a Pre-lease Force Majeure Event Notice within thirty days after the Force Majeure Event first occurs or commences, then such Force Majeure Event will not qualify as a “Pre-lease Force Majeure Event” for purposes of this Agreement or the other Operative Documents.
 
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“Pre-lease Force Majeure Event Notice” has the meaning indicated in subparagraph 6(B).
“Pre-lease Force Majeure Excess Costs” means the amount (if any) by which the increases in the costs of the Work resulting directly and solely from a Pre-lease Force Majeure Event (such as, for example, the costs of repairing damage to the Improvements caused by a Pre-lease Force Majeure Event) exceed the amounts available to pay or reimburse NAI for such increased costs. Amounts available to pay or reimburse such increased costs will include (a) insurance proceeds or any recovery from a third party (including any Escrowed Proceeds held by BNPPLC), and (b) any part of the Construction Allowance (including any unused contingency amount in the Construction Budget) not used or needed to cover other Reimbursable Construction Period Costs.
“Pre-lease Force Majeure Losses” means any of the following Losses that BNPPLC suffers by reason of any taking or damage to the Improvements which constitutes a Pre-lease Force Majeure Event:
          (a)     the costs of repairing any such damage to the extent that such costs have, as of the date of any required determination of Pre-lease Force Majeure Losses, been paid or reimbursed from a Construction Advance (and thus are included in the Lease Balance as of that date), to be distinguished from costs of repairs paid or reimbursed from insurance proceeds or from any recovery from a third party;
          (b)     any diminution in the value of the Improvements resulting from any such taking or resulting from any such damage that has not, as of the date of the required determination of Pre-lease Force Majeure Losses, been repaired;
          (c)     any increase in the total amount of Carrying Costs, Commitment Fees, Administrative Fees, Increased Cost Charges, Capital Adequacy Charges and Ground Lease Rents (and any other amounts) added to the Lease Balance as provided in Paragraph 3 solely by reason of Pre-lease Force Majeure Delays; and
          (d)     to the extent not already included in the increase described in the preceding clause, all increases in Carrying Costs that are attributable to the amounts included in Pre-lease Force Majeure Losses pursuant to the preceding clause (a);
but in each case such amounts will constitute Pre-lease Force Majeure Losses only to the extent, if any, that they are not offset by condemnation or insurance proceeds which are (1) paid by reason of such Pre-lease Force Majeure Event (including insurance proceeds paid to compensate BNPPLC or NAI for increased financing costs, the lost time value of
 
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BNPPLC’s investment in the Project or business interruption) and (2) applied as a Qualified Prepayment to reduce the Lease Balance.
Also, for purposes of this definition, the diminution in the value of the Improvements, as described in the preceding clause (b), because of any damage that constitutes a Pre-lease Force Majeure Event will not exceed the amount thereof estimated in good faith by any independent appraiser or insurance adjuster engaged by BNPPLC to determine such amount after BNPPLC has received a Pre-lease Force Majeure Event Notice as provided in subparagraph 6(B), nor will it exceed the cost of repairing the damage as estimated in good faith by any such independent insurance adjuster or as indicated by any bona fide written bid to make the repairs that BNPPLC obtains from a reputable contractor capable of making the repairs.
“Prior Work” has the meaning indicated in subparagraph 4(C)(2)(b).
“Projected Cost Overruns” means 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 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, plus (ii) any Escrowed Proceeds then available or expected to be available to cover costs of repairs and restoration that NAI will perform as part of the Work after a casualty or condemnation, less (iii) all projected future Carrying Costs, Commitment Fees, Administrative Fees and other amounts to be added to the Outstanding Construction Allowance as provided in Paragraph 3.
“Reimbursable Construction Period Costs” has the meaning indicated in subparagraph 4(A).
“Remaining Proceeds” has the meaning indicated in subparagraph 5(A).
“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 the site plan or 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 BNPPLC by NAI. As used in this definition, a “material difference” means a difference that could reasonably be expected to (a) cause the Lease Balance to exceed
 
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the fair market value of the Property when the Construction Project is completed and all Construction Advances required in connection therewith have been funded, or significantly increase any such excess, (b) change the general character of the Improvements from that needed to accommodate the uses to be permitted by subparagraph 2(A) of the Lease, or (c) cause or exacerbate Projected Cost Overruns.
“Target Completion Date” means the last Business Day of the calendar month which includes the second anniversary of the Effective Date, as such date may be extended from time to time by any Increased Time Commitment made by BNPPLC as provided in subparagraph 7(B)(6)(b).
“Termination of NAI’s Work” means a termination of NAI’s rights and obligations to continue the Work because of an election to terminate made by NAI pursuant to subparagraph 7(B) or because of an election by BNPPLC made pursuant to subparagraph 7(C).
“Third Party Contract” has the meaning indicated in subparagraph 2(A)(2)(b)1).
“Third Party Contract/Termination Fees” means any amounts, 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 only by reason of Prior Work as of the date of any such termination will not be characterized as Third Party Contract/Termination Fees. If NAI reserves an absolute express right in a Third Party Contract to terminate such contract at any time, without cause, for a specified U.S. dollar amount, such amount will constitute a Third Party Contract/Termination Fee. If no such right is reserved in a Third Party Contract, the amount of damages that NAI is required to pay (in addition to payments required for Prior Work) upon a repudiation of the Third Party Contract by NAI will qualify as a “Third Party Contract/Termination Fee” applicable to such contract for purposes of this Agreement.
“Timing or Budget Shortfall” means that, as of any time prior to the Completion Date, (i) the remaining available Construction Allowance will not be sufficient to cover Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances (x) because the cost of the Work exceeds budgeted expectations (resulting in Projected Cost Overruns) through no fault of NAI or its employees or any other party acting under NAI’s control or with the approval or authorization of NAI, (y) because of any Pre-lease Force Majeure Event or (z) because NAI can no longer satisfy conditions to BNPPLC’s obligation to provide further Construction Advances, or (ii) the Work will not be substantially completed prior to the Target Completion Date through no fault of NAI or its employees or any other party acting under NAI’s control or with the approval or
 
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authorization of NAI. As used in this definition with respect to any party, the term “fault” will not include inadequate estimation of time or dollars unless shown to be caused by the negligence or wilful misconduct of that party.
“Upfront Fees” has the meaning indicated in subparagraph 3(A).
“Work” has the meaning indicated in subparagraph 2(A)(2)(a).
“Work/Suspension Event” means any of the following:
          (1)     Projected Cost Overruns have become more likely than not, in BNPPLC’s good faith judgment (taking into account any notices or Construction Draw Requests from NAI indicating that a Pre-lease Force Majeure Event may result in Projected Cost Overruns), and BNPPLC has notified NAI of such judgement and the reasons therefor.
          (2)     Delays in the Work (including any delays resulting from damage to the Property by fire or other casualty or from any taking of any part of the Property by condemnation) have made it substantially unlikely, in BNPPLC’s good faith judgment, that NAI will be able to complete the Construction Project in accordance with the requirements of this Agreement prior to the Target Completion Date using only the funds available to NAI under this Agreement, and BNPPLC has notified NAI of such judgement and the reasons therefor.
          (3)     BNPPLC has requested with respect to any Construction Advance, but NAI has failed to provide within thirty days after receipt of the request: (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 or other evidence reasonably establishing that all prior Construction Advances paid to NAI have been used by NAI to pay the Reimbursable Construction Period Costs for which the prior advances were requested and made.
“Work/Suspension Notice” means a notice from BNPPLC to NAI advising NAI of any event or circumstances that constitute a Work/Suspension Event and advising NAI that (1) before the Work/Suspension Event is rectified BNPPLC may limit Construction Advances to NAI as permitted by this Agreement, and (2) unless NAI does rectify the Work/Suspension Event within thirty days after NAI’s receipt of such notice, BNPPLC may elect to send an FOCB Notice in anticipation of a Termination of NAI’s Work.
“Work/Suspension Period” means any period (1) beginning with the date of any Work/Suspension Notice, FOCB Notice or Notice of NAI’s Intent to Terminate, and (2)
 
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ending on the earlier of (a) the first date upon which (i) no Work/Suspension Events are continuing, (ii) all previous FOCB Notices and Notices of NAI’s Intent to Terminate (if any) have been rescinded, and (iii) no 97-10/Meltdown Events have occurred, or (b) the effective date of any Termination of NAI’s Work as described in subparagraph 7(B) or subparagraph 7(C).
2       Construction and Management of the Property by NAI.
          (A)    The Construction Project.
          (1)     Construction Approvals by BNPPLC.
          (a)     Preconstruction Approvals by BNPPLC. NAI has submitted and obtained BNPPLC’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 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, must not be inconsistent in any material respect with the plans or other items referenced in Exhibit B, except to the extent otherwise provided by any Scope Change approved by BNPPLC and except as otherwise provided in subparagraph 8(A) if BNPPLC should make an Owner’s Election to Continue Construction after any Termination of NAI’s Work.
          (b)     Approval of Scope Changes. Before making a Scope Change, NAI must provide to BNPPLC a reasonably detailed written description of the Scope Change, a revised Construction Budget 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 BNPPLC before the Scope Change is implemented. After receiving such items, BNPPLC will endeavor in good faith to respond promptly (and in any event no later than thirty days after such receipt) to any request by NAI for approval of the Scope Change. BNPPLC will not, however, be liable for any failure to provide a prompt response. Further, BNPPLC’s approval will not in any event constitute a waiver of subparagraph 2(A)(3) or of any other provision of this Agreement or other Operative Documents.
          (2)     NAI’s Right to Possession and to Control Construction. Subject to the terms and conditions set forth in this Agreement, and prior to any Termination of NAI’s Work as provided in subparagraphs 7(B) and 7(C), NAI will have possession of the Land and all Improvements on the Land to the exclusion of BNPPLC and will have the sole
 
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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 vest in BNPPLC (as more particularly provided in subparagraph 2(C)), BNPPLC’s obligation with respect to the Construction Project will be limited to the making of advances under and subject to the conditions set forth in this Agreement. Without limiting the foregoing, NAI acknowledges and agrees that:
          (a)      Performance of the Work. Except as provided in subparagraphs 7(A) and 7(D), NAI must, using its best skill and judgment and in an expeditious and economical manner not inconsistent with the interests of BNPPLC, perform or cause to be performed all work required, and must provide or cause to be provided all supplies and materials required, to design and complete construction of the Construction Project (collectively, the “Work”) no later than the Target Completion Date. 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, or required in connection with the use and occupancy thereof (e.g., 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 Completion Date (a “Pre-lease Casualty”); provided, however, the cost of any such repairs or restoration will be subject to reimbursement not only through Construction Advances made to NAI on and subject to the terms and conditions of this Agreement, but also through the application of Escrowed Proceeds as provided in Paragraph 5; and, provided further, like other Work, any such repairs and restoration to be provided by NAI will be subject to subparagraphs 7(A) and 7(B), which establish certain rights of NAI to suspend or discontinue any Work. 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.
          (b)      Third Party Contracts.
          1)     NAI will 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 BNPPLC or otherwise purport to bind BNPPLC 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 must reserve the right to terminate such contract at any time, without cause, and without subjecting
 
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NAI to liability for any Third Party Contract/Termination Fee. Further, NAI must 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.
          (c)     Adequacy of Drawings, Specifications and Budgets. BNPPLC has not made and will not make any representations as to the adequacy of the Construction Budget or any other budget or any 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.
          (d)     Existing Condition of the Land and Improvements. NAI is familiar with the conditions of the Land and any existing Improvements on the Land. NAI will have no claim for damages against BNPPLC or for an increase in the Construction Allowance or for an extension of the deadline specified in subparagraph 2(A)(2)(a) for completing the Work by reason of any condition (concealed or otherwise) of or affecting the Land or Improvements.
          (e)     Correction of Defective Work. NAI will promptly correct all Work performed prior to any Termination of NAI’s Work that does not comply with the requirements of this Agreement for any reason other than a Pre-lease Casualty (“Defective Work”). If NAI fails to correct any Defective Work or fails to carry out Work in accordance with this Agreement, BNPPLC may (but will not be required to) order NAI to stop all Work until the cause for such failure has been eliminated.
          (f)     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.
          (g)     No Damage for Delays. NAI will have no claim for damages against BNPPLC or for an increase in the Construction Allowance by reason of any delay in the performance of any Work. Nor will NAI have any claim for an extension of the deadline specified in subparagraph 2(A)(2)(a) for completing the Work because of any such period of delay, except that (i) in the case of any Pre-
 
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lease Force Majeure Delays, NAI will have certain rights as set forth in subparagraph 7(B) and other provisions of this Agreement, and (ii) in the event of intentional interference with the Work by BNPPLC itself for which NAI provides written notice to cease, NAI will be entitled to an extension of the deadline specified in subparagraph 2(A)(2)(a) as needed because of any delays resulting from such intentional interference. It is also understood that any such intentional interference by BNPPLC will constitute a Force Majeure Event. In no event, however, will BNPPLC’s exercise of its rights and remedies permitted under this Agreement or the other Operative Documents be construed as intentional interference with NAI’s performance of any Work; and thus neither BNPPLC’s exercise of its right to withhold Construction Advances at any time when NAI has failed to satisfy all conditions herein to such advances, nor BNPPLC’s exercise of its right to terminate Work by NAI as provided in subparagraph 7(C), be considered as intentional interference with the Work or a Pre-lease Force Majeure Event.
          (h)     No Fee For Construction Management. NAI will have no claim under this Agreement for any fee or other compensation or for any reimbursement of internal administrative or overhead expenses (other than the out-of-pocket overhead expenses properly included in the Construction Budget, if any), it being understood that NAI is executing this Agreement in consideration of the rights expressly granted to it herein and in the other Operative Documents.
          (3)     Quality of Work. NAI will 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, and (c) in compliance with the provisions of this Agreement and the material provisions of the Permitted Encumbrances.
          (B)     Completion Notice. Within fifteen Business Days after NAI substantially completes construction of the Construction Project and obtains any certificate of occupancy or other permit (temporary or permanent) required by Applicable Laws for the commencement of NAI’s use and occupancy of the Improvements, NAI must provide a notice (a “Completion Notice”) to BNPPLC, advising BNPPLC thereof, and thereby establish the Completion Date. For purposes of this Agreement and the other Operative Documents, BNPPLC will be entitled to rely without investigation upon any such notice given by NAI as evidence that NAI has, in fact, substantially completed the Construction Project and has obtained any certificate of occupancy or other permit (temporary or permanent) required for the commencement of NAI’s use of the Improvements, and after giving any such notice NAI will be estopped from later claiming that the Completion Date has not occurred.
          (C)     Status of Property Acquired With BNPPLC’s Funds. All Improvements
 
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constructed on the Land as provided in this Agreement will constitute “Property” for purposes of the Lease and other Operative Documents. Further, to the extent heretofore or hereafter acquired (in whole or in part) with any portion of the Initial Advance or with any Construction Advances or with other funds for which NAI receives reimbursement from the Initial Advance or Construction Advances, all furnishings, furniture, chattels, permits, licenses, franchises, certificates and other personal property of whatever nature will be considered as having been acquired on behalf of BNPPLC by NAI and will constitute “Property” for purposes of the Lease and other Operative Documents, as will all renewals or replacements of or substitutions for any such Property. The parties intend that title to the Improvements and to any other such Property will vest in BNPPLC without passing through NAI or NAI’s Affiliates before it is transferred to BNPPLC from contractors, suppliers, vendors or other third Persons, but with the understanding that all such Property will be accepted by BNPPLC subject to the terms and conditions of the other Operative Documents, including subparagraph 4(C)(1) of the Lease (concerning the characterization of the Lease and other Operative Documents for tax and certain other purposes). Although nothing herein constitutes authorization of NAI by BNPPLC to bind BNPPLC to any construction contract or other agreement with a third Person, any construction contract or other agreement executed by NAI for the acquisition or construction of Improvements or other components of the Property may, as NAI deems appropriate, provide for the direct transfer of title to BNPPLC as described in the preceding sentence.
          (D)    Insurance.
          (1)     Liability Insurance. Throughout the period prior to any Termination of NAI’s Work, NAI must 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 Minimum Insurance Requirements, which are set forth in an exhibit to the Common Definitions and Provisions Agreement. NAI must deliver and maintain with BNPPLC for each liability insurance policy required by this Agreement 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 Minimum Insurance Requirements.
          (2)     Property Insurance. Throughout the period prior to any Termination of NAI’s Work, NAI must also 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 Minimum Insurance Requirements. NAI must deliver and maintain with BNPPLC for each property insurance policy required by this Agreement 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 Minimum Insurance Requirements. If any of the
 
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Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance has been required hereunder, (i) BNPPLC may, but will not be obligated to, make proof of loss if not made promptly by NAI after notice from BNPPLC, (ii) each insurance company concerned is hereby authorized and directed to make payment for such loss directly to BNPPLC for application as required by Paragraph 5, and (iii) BNPPLC may settle, adjust or compromise any and all claims for loss, damage or destruction under any policy or policies of insurance (provided, that so long as no 97-10/Meltdown Event has occurred and no Event of Default has occurred and is continuing, BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s intention to settle any such claim before settling it unless NAI has already approved of the settlement by BNPPLC). BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any insurance proceeds. If any casualty results in damage to or loss or destruction of the Property, NAI must give prompt notice thereof to BNPPLC and Paragraph 5 will apply.
          (3)     Failure of NAI to Obtain Insurance. If NAI fails to obtain any insurance or to provide confirmation of any insurance as required by this Agreement, BNPPLC will 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 BNPPLC’s other remedies under the circumstances, BNPPLC may charge the cost of such insurance against the Construction Allowance as if it were a Construction Advance paid to NAI as hereinafter provided.
          (4)     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 BNPPLC or any other Interested Party 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 Agreement, 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 Agreement. 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.
          (E)     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 must promptly notify the other (provided, however, BNPPLC will have no liability for its failure to provide such notice) of the pendency of such proceedings. Prior to any Termination of NAI’s Work, NAI must, if requested by BNPPLC, diligently
 
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prosecute any such proceedings and consult with BNPPLC, its attorneys and experts and cooperate with them as reasonably 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 will be paid to BNPPLC as Escrowed Proceeds, and all such proceeds will be applied as provided in Paragraph 5. BNPPLC is hereby authorized, in its own name or in the name of NAI or in the name of both, to settle and deliver valid acquittances for, or to challenge and to appeal from, any such judgment, decree or award concerning condemnation of any of the Property (provided, that so long as no 97-10/Meltdown Event has occurred and no Event of Default has occurred and is continuing, BNPPLC must provide NAI with at least forty-five days notice of BNPPLC’s intention to settle any such claim before settling it unless NAI has already approved of the settlement by BNPPLC). BNPPLC will not in any event or circumstances be liable or responsible for failure to collect, or to exercise diligence in the collection of, any such proceeds, judgments, decrees or awards.
          (F)     Additional Representations, Warranties and Covenants of NAI Concerning the Property. Without limiting the rights granted to NAI by other provisions of this Agreement to be reimbursed from Construction Advances for the cost of complying with the following, NAI represents, warrants and covenants as follows:
          (1)     Payment of Local Impositions. Throughout the period prior to any Termination of NAI’s Work, NAI must pay or cause to be paid prior to delinquency all ad valorem taxes assessed against the Property and other Local Impositions. If requested by BNPPLC from time to time, NAI will furnish BNPPLC with receipts or other appropriate evidence showing payment of all Local 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 Local Imposition, and pending such contest NAI will not be deemed in default under any of the provisions of this Agreement because of the Local Imposition if (1) NAI diligently prosecutes such contest to completion in a manner reasonably satisfactory to BNPPLC, 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 must be concluded and the contested Local Impositions must be paid by NAI prior to the earlier of (i) the date that any criminal prosecution is instituted or overtly threatened against BNPPLC 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 BNPPLC (including the Property) may be seized or sold or any other action is taken or overtly threatened against BNPPLC or against any property owned or leased by BNPPLC because of the
 
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nonpayment thereof, or (iii) any Designated Sale Date upon which, for any reason, NAI or an Affiliate of NAI or any Applicable Purchaser does not purchase BNPPLC’s interest in the Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken together with any Supplemental Payment paid by NAI pursuant to the Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to the Break Even Price.
          (2)     Operation and Maintenance. Throughout the period prior to any Termination of NAI’s Work, NAI must operate and maintain the Property in a good and workmanlike manner and in compliance with Applicable Laws in all material respects and 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 complaint or demand for corrective action given by any Governmental Authority to NAI, or to BNPPLC and forwarded by it to NAI, then for purposes of the preceding sentence, NAI will be considered not to have maintained the Property “in compliance with all Applicable Laws in all material respects” whether or not the noncompliance would be material in the absence of the complaint or demand.) NAI must 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. Without limiting the generality of the foregoing, NAI must not conduct or permit others to conduct Hazardous Substance Activities on the Property, except Permitted Hazardous Substance Use and Remedial Work; and NAI must not discharge or permit the discharge of anything (including Permitted Hazardous Substances) on or from the Property that would require any permit under applicable Environmental Laws, other than (1) storm water runoff, (2) fume hood emissions, (3) waste water discharges through a publicly owned treatment works, (4) discharges that are a necessary part of any Remedial Work, and (5) other similar discharges consistent with the definition of Permitted Hazardous Substance Use which do not significantly increase the risk of Environmental Losses to BNPPLC, in each case in strict compliance with Environmental Laws. To the extent that any of the following would, individually or in the aggregate, increase the likelihood of a 97-10/Meltdown Event or materially and adversely affect the value of the Property or the use of the Property for purposes permitted by this Agreement, NAI must not, without BNPPLC’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. NAI will 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 must not do anything that could
 
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reasonably be expected to significantly reduce the market value of the Property. If NAI receives a notice or claim from any federal, state or other governmental authority that the Property is not in compliance with any Applicable Law, or that any action may be taken against BNPPLC because the Property does not comply with any Applicable Law, NAI must promptly furnish a copy of such notice or claim to BNPPLC.
          (3)     Debts for Construction, Maintenance, Operation or Development. NAI must promptly pay or cause to be paid all debts and liabilities incurred by it or its contractors or subcontractors in the construction, maintenance, operation or development of the Property. Such debts and liabilities will include those incurred for labor, material and equipment and all debts and charges for utilities servicing the Property.
          (4)     Permitted Encumbrances and the Ground Lease. NAI must 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 or the Ground Lease throughout the period prior to any Termination of NAI’s Work. NAI must not, without the prior consent of BNPPLC, create any new Permitted Encumbrance or enter into, initiate, approve or consent to any modification of any Permitted Encumbrance that would create or expand or purport to create or expand obligations or restrictions encumbering BNPPLC’s interest in the Property. (Whether BNPPLC must give any such consent requested by NAI prior to the Completion Date will be governed by subparagraph 4(C) of the Closing Certificate.)
          (5)     Books and Records Concerning the Property. NAI must keep books and records that are accurate and complete in all material respects for NAI’s construction and management of the Property as contemplated in this Agreement and must 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 BNPPLC.
          (G)     BNPPLC’s Right of Access.
          (1)     Access Generally. BNPPLC and BNPPLC’s representatives may enter the Property at any time for the purpose of making inspections or performing any work BNPPLC is authorized to undertake by the next subparagraph or for the purpose confirming whether NAI has complied with the requirements of this Agreement or the other Operative Documents. However, prior to any Termination of NAI’s Work, BNPPLC or BNPPLC’s representative will, before making any entry upon the Property or performing any work on the Property authorized by this Agreement, do the following
          (a)     BNPPLC will give NAI at least 24 hours notice, unless BNPPLC
 
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believes in good faith that an emergency may exist or a Default has occurred and is continuing, because of which significant damage to the Property or other significant Losses may be sustained if BNPPLC delays entry to the Property; and
          (b)     if then requested to do so by NAI in order to maintain NAI’s security, BNPPLC or its representative will: (i) sign in at NAI’s security or information desk if NAI has such a desk on the premises, (ii) wear a visitor’s badge or other reasonable identification, (iii) permit an employee of NAI to observe such inspection or work, and (iv) comply with other similar reasonable nondiscriminatory security requirements of NAI that do not, individually or in the aggregate, significantly interfere with inspections or work of BNPPLC authorized by this Agreement.
          (2)     Failure of NAI to Perform. If NAI fails to perform any act or to take any action required of it by this Agreement or other Operative Documents, or to pay any money which NAI is required by this Agreement or other Operative Documents to pay, and if such failure or action constitutes an Event of Default or renders BNPPLC or any director, officer, employee or Affiliate of BNPPLC at risk of criminal prosecution or renders BNPPLC’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, BNPPLC may, perform or cause to be performed such act or take such action or pay such money. (To the extent that expenses so incurred by BNPPLC, or money so paid by BNPPLC, qualify as a Covered Construction Period Losses, NAI must pay the same to BNPPLC upon demand. If any such expenses incurred or money paid do not qualify as Covered Construction Period Losses, but do constitute 97-10/Project Costs, BNPPLC may treat them as Construction Advances hereunder. To the extent that any such expenses incurred or money paid do not qualify as Covered Construction Period Losses and do constitute 97-10/Project Costs, they will be included – with interest – in the Balance of Unpaid Covered Construction Period Losses under and as defined in the Purchase Agreement.) Further, BNPPLC, upon making such payment, will be subrogated to all of the rights of the person, corporation or body politic receiving such payment. But nothing herein will imply any duty upon the part of BNPPLC to do any work which, under any provision of this Agreement or otherwise, NAI may be required to perform, and the performance thereof by BNPPLC will not constitute a waiver of NAI’s default. BNPPLC may during the progress of any such work permitted by BNPPLC hereunder on or in the Property keep and store upon the Property all necessary materials, tools, and equipment. BNPPLC will 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 BNPPLC’s performance of any such work, or on account of bringing materials, supplies and equipment into or through the Property during the course of such work, and the obligations of NAI under this Agreement and the other Operative
 
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Documents will not thereby be excused in any manner.
3       Amounts to be Added to the Lease Balance (in Addition to Construction Advances).
          (A)     Initial Advance. Upon execution and delivery of this Agreement by BNPPLC, an advance (the “Initial Advance”) will be made by BNPPLC to cover the cost of certain Transaction Expenses and other amounts described in this subparagraph. The amount of the Initial Advance, which will be included in the Lease Balance, may be confirmed by a separate closing certificate executed by NAI as of the Effective Date. An arrangement fee (the “Arrangement Fee”), an initial administrative agency fee (an “Administrative Fee”) and upfront fees (the “Upfront Fees”) will all be paid from the Initial Advance (and thus be included in the Lease Balance) in the amounts provided in the Closing Letter. To the extent that BNPPLC does not itself use the entire the Initial Advance to pay such fees and Transaction Expenses incurred by BNPPLC, the remainder thereof will be advanced to NAI, with the understanding that NAI will use any such amount advanced for one or more of the following purposes: (1) the payment or reimbursement of Transaction Expenses incurred by NAI and all “soft costs” incurred by NAI in connection with the planning, design, engineering, construction and permitting of the Construction Project; (2) the maintenance of the Property; or (3) the payment of other amounts due pursuant to the Operative Documents. (Before executing the separate closing certificate to confirm the Initial Advance, NAI will make a reasonable effort to determine all prior expenses incurred by it as described in clause (1) of the preceding sentence and to request an Initial Advance sufficient in amount to cover all such expenses in addition to the Arrangement Fee, the initial Administrative Fee, the Upfront Fees and all Transaction Expenses incurred by BNPPLC. However, no failure by NAI to identify and include all such expenses in the amount of the requested Initial Advance will preclude NAI from requesting reimbursement for the same through a subsequent Construction Advance as provided in Paragraph 4. Reimbursable Construction Period Costs to be paid or reimbursed pursuant to Paragraph 4 will not be limited to those incurred after the Effective Date.)
          (B)     Carrying Costs. For each Construction Period certain charges (“Carrying Costs”) will accrue and be added to 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). If, however, for any reason the Lease Balance (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 will 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
 
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to but not including the date in question. Carrying Costs accruing for any Construction Period will be equal to:
    •   the amount equal on the first day of such Construction Period to the Lease Balance, times
 
    •   the sum of the Effective Rate and the Spread for such Construction Period, times
 
    •   a fraction, the numerator of which is the number of days in such Construction Period and the denominator of which is three hundred sixty.
           (C)     Commitment Fees. For each Construction Period additional charges (“Commitment Fees”) will accrue and be added to 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). If, however, for any reason the Lease Balance (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 will include not only Commitment Fees added on or before the immediately preceding Advance Date computed as described below, but also Commitment Fees accruing on and after such preceding Advance Date to but not including the date in question. Commitment Fees for each Construction Period will be computed as follows:
    •   the Commitment Fee Rate for such Construction Period, times an amount equal to:
(1) the Maximum Construction Allowance, less
(2) 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.
           (D)     Future Administrative Fees and Out-of-Pocket Costs. If the Completion Date does not occur prior to the first anniversary of the Effective Date, then on each anniversary of the Effective Date prior to the Completion Date, an administrative agency fee (also, an “Administrative Fee”) will be added to the Outstanding Construction Allowance by BNPPLC in the amount provided in the Closing Letter. Also, to the extent that BNPPLC incurs any out-of-pocket costs prior to the Completion Date with respect to the administration of or performance of
 
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its obligations under this Agreement or other Operative Documents (e.g., any rents required by the Ground Lease and any Attorneys’ Fees or other costs incurred to evaluate lien releases and other information submitted by NAI with requests for Construction Advances), BNPPLC may add such costs to the Outstanding Construction Allowance from time to time.
          (E)     Increased Cost Charges and Capital Adequacy Charges.
          (1)     If after the Effective Date there is any increase in the cost to BNPPLC’s Parent or any Participant agreeing to make or making, funding or maintaining advances to BNPPLC in connection with the Property because of any Banking Rules Change, then BNPPLC may agree or become obligated to pay to BNPPLC’s Parent or such Participant, as the case may be, additional amounts (“Increased Cost Charges”) sufficient to compensate BNPPLC’s Parent or the Participant for such increased costs. Any Increased Cost Charges paid by BNPPLC or for which BNPPLC becomes obligated to pay, prior to the Completion Date, will be added to the Outstanding Construction Allowance by BNPPLC.
          (2)     BNPPLC’s Parent or any Participant may demand additional payments (“Capital Adequacy Charges”) if BNPPLC’s Parent or the 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 BNPPLC to permit BNPPLC to maintain BNPPLC’s investment in the Property or to make Construction Advances. To the extent that BNPPLC’s Parent or a Participant demands Capital Adequacy Charges as compensation for the additional capital requirements reasonably allocable to such investment or advances, and BNPPLC pays or becomes obligated to pay to BNPPLC’s Parent or the Participant the amount so demanded prior to the Completion Date, such amount will also be added to the Outstanding Construction Allowance by BNPPLC.
          (3)     Notwithstanding the foregoing provisions of this subparagraph 3(E), the Outstanding Construction Allowance will not be increased by Increased Cost Charges or Capital Adequacy Charges that arise or accrue (a) as a result of any change in the rating assigned to BNPPLC by rating agencies or bank regulators in regard to BNPPLC’s creditworthiness, record keeping or failure to comply with Applicable Laws (including U.S. banking regulations applicable to subsidiaries of a bank holding company), or (b) more than nine months prior to the date NAI is notified of the intent of BNPPLC’s Parent or a Participant to make a claim for such charges; provided, that if the Banking Rules Change which results in a claim for compensation is retroactive, then the nine month period will be extended to include the period of the retroactive effect of such Banking Rules Change. Further, BNPPLC will cause BNPPLC’s Parent and any Participant that is an Affiliate of BNPPLC to use commercially reasonable efforts to reduce or eliminate any
 
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claim for compensation pursuant to this subparagraph 3(E), including a change in the office of BNPPLC’s Parent or such Participant through which it provides and maintains Funding Advances if such change will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of BNPPLC’s Parent or such Participant, be otherwise disadvantageous to it. It is understood that NAI may also request similar commercial reasonable efforts on the part of any Participant that is not an Affiliate of BNPPLC, but if a claim for additional compensation by any such Participant is not eliminated or waived, then NAI may request that BNPPLC replace such Participant under the Participation Agreement.
          (F)     Ground Lease Payments. All rentals payable by BNPPLC under the Ground Lease prior to the Completion Date (“Ground Lease Rents”) will be added to the Outstanding Construction Allowance by BNPPLC on the date paid.
4       Construction Advances.
          (A)     Costs Subject to Reimbursement Through Construction Advances. Subject to the terms and conditions set forth herein, NAI will be entitled to a Construction Allowance, from which BNPPLC 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 BNPPLC from the Initial 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)     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 payable to third parties (whether or not incurred prior to the Effective Date), such as legal fees, architectural fees, engineering fees, construction management fees, transaction management fees and fees and costs paid in connection with obtaining project permits and approvals required by governmental authorities or any of the Permitted Encumbrances,
 
   •   site preparation costs,
 
   •   costs of offsite and other public improvements required as conditions of
 
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      governmental approvals for the Construction Project, and
   •   to the extent that funds from the Construction Allowance can be used for such costs without causing Projected Cost Overruns, the costs of constructing parking lots, driveways and other improvements on the land subject to the Appurtenant Easements;
          (3)     the cost of title insurance in favor of BNPPLC and of maintaining other insurance required by (and consistent with the requirements of) this Agreement prior to the Completion Date, and costs of repairing any damage to the Improvements caused by a Pre-lease Casualty to the extent such costs are not covered by Escrowed Proceeds made available to NAI as provided herein prior to the Completion Date;
          (4)     Local Impositions that accrue or become due prior to the Completion Date;
          (5)     reasonable and ordinary out-of-pocket costs of operating and maintaining the Property prior to the Completion Date in accordance with the requirements of this Agreement;
          (6)     Third Party Contract/Termination Fees, not to exceed in the aggregate ten percent (10%) of the Maximum Construction Allowance, 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 Work/Suspension Period; and
          (7)     furniture, trade fixtures and equipment and other tenant improvements to support NAI’s use and occupancy of the Property for the permitted uses described in subparagraph 2(A) of the Lease, but that are not integral to or affixed in such a manner as to become part of the Improvements, the aggregate cost of which does not exceed ten percent (10%) of the Maximum Construction Allowance; provided, that no Construction Advance for furniture and other items described in this clause will be required of BNPPLC or requested by NAI before the Construction Project is substantially complete and substantially all other Reimbursable Construction Period Costs have been paid or reimbursed from Construction Advances.
 
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          (B)     Exclusions From Reimbursable Construction Period Costs. Notwithstanding anything herein to the contrary, BNPPLC will not be required to make any Construction Advance to pay or to reimburse or compensate NAI for Covered Construction Period Losses paid by NAI as provided in subparagraph 10(A) or for any of the following Losses which may be incurred by NAI or any other party:
          (1)     Environmental Losses;
          (2)     Losses that would not have been incurred but for any affirmative act taken by NAI or by any of NAI’s contractors or subcontractors, which act is contrary to the other terms and conditions of this Agreement or to the terms and conditions of the other Operative Documents (e.g., undertaking a Scope Change without prior authorization of BNPPLC);
          (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 NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI; and
          (4)     Losses that would not have been incurred but for any bankruptcy proceeding involving NAI as the debtor.
          (C)     Conditions to NAI’s Right to Receive Construction Advances. BNPPLC’s obligation to provide Construction Advances to NAI from time to time under this Agreement will be subject to the following terms and conditions, all of which terms and conditions are intended for the sole benefit of BNPPLC, and none of which will limit in any way the right of BNPPLC to treat costs or expenditures incurred or paid by or on behalf of BNPPLC as Construction Advances pursuant to subparagraph 8(A):
          (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 C. NAI will not submit more than one Construction Advance Request in any calendar month.
 
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          (2)     Amount of the Advances.
          (a)     The Maximum Construction Allowance. NAI will not be entitled to require any Construction Advance that would cause the Funded Construction Allowance to exceed the Maximum Construction Allowance or that would increase the amount of any such excess.
          (b)     Costs Previously Incurred by NAI. NAI will not be entitled to require any Construction Advance 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 BNPPLC, substantiated as having been paid or incurred by NAI other than for Work (e.g., Local Impositions), plus
          (ii) the Reimbursable Construction Period Costs that NAI has, to the reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred for Prior Work as of the date of the Construction Advance Request in which NAI requests 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, as part of the Work in accordance with this Agreement prior to the date in question, and “Future Work” means labor and services performed or to be performed, and materials delivered or to be delivered, as part of the Work on or after the date in question. For purposes of this Agreement, NAI and BNPPLC 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 parties not affiliated with NAI (e.g., a construction contractor engaged by NAI); 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, BNPPLC will 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 BNPPLC’s right to challenge or verify allocations required with respect to future
 
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Construction Advances, rely without investigation upon the accuracy of NAI’s own Construction Advance Requests.
          (c)     Limits During any Work/Suspension Period. Without limiting the other terms and conditions imposed by this Agreement for the benefit of BNPPLC with respect all Construction Advances, BNPPLC will have no obligation to make any Construction Advance during any Work/Suspension Period 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 BNPPLC, substantiated as having been paid or incurred by NAI other than for Work (e.g., Local Impositions), plus
          (ii) the Reimbursable Construction Period Costs that NAI has, to the reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred for Prior Work as of the date the Work/Suspension Period commenced.
For purposes of computing the limits described in this subparagraph 4(C)(2)(c), Reimbursable Construction Period Costs “other than for Work” will include Third Party Contract/Termination Fees that qualify as Reimbursable Construction Period Costs pursuant to subparagraph 4(A)(6). However, as provided in subparagraph 4(A)(6), the amount of such Third Party Contract/Termination Fees subject to reimbursement will not in any event exceed ten percent (10%) of the Maximum Construction Allowance. If NAI fails to manage and administer Third Party Contracts as necessary to ensure that NAI can (at any point in time) terminate all such contracts without becoming liable for Third Party Contract/Termination Fees in excess of ten percent (10%) of the Maximum Construction Allowance, then the excess will be the responsibility of NAI.
          (d)     Restrictions Imposed for Administrative Convenience. NAI will not request any Construction Advance (other than the final Construction Advance NAI intends to request) for an amount less than $1,000,000.
          (3)     No Advances After Certain Dates. BNPPLC will have no obligation to make any Construction Advance (x) after the last Advance Date, (y) on or after the Designated Sale Date, or (z) on or after the effective date of any Termination of NAI’s Work pursuant to subparagraph 7(B) or subparagraph 7(C).
          (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
 
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Construction Advance that it is not permitted to take because of its failure to satisfy any of the conditions specified in subparagraph 4(C), BNPPLC will be entitled to add any resulting Breakage Costs to the Outstanding Construction Allowance and the Lease Balance.
          (E)     No Third Party Beneficiaries. No contractor or other third party will be entitled to require BNPPLC to make advances as a third party beneficiary of this Agreement, and nothing contained herein or in any of the other Operative Documents will be construed as an agreement obligating BNPPLC to make advances to anyone other than NAI itself.
          (F)     No Waiver. No funding of Construction Advances and no failure of BNPPLC to object to any Work proposed or performed by or for NAI will constitute a waiver by BNPPLC of the requirements contained in this Agreement.
5       Application of Insurance and Condemnation Proceeds.
          (A)     Collection and Application Generally. This Paragraph 5 will govern the application of proceeds received by BNPPLC or NAI from any third party prior to the commencement of the Term of the Lease (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 (e.g., damage resulting from a third party’s release of Hazardous Materials onto the Property); excluding, however, any funds paid to BNPPLC by BNPPLC’s Parent, by an Affiliate of BNPPLC or by any Participant that is made to compensate BNPPLC for any Losses BNPPLC may suffer or incur in connection with this Agreement or the Property. NAI will promptly pay over to BNPPLC any insurance, condemnation or other proceeds covered by this Paragraph 5 which NAI may receive from any insurer, condemning authority or other third party. All proceeds covered by this Paragraph 5, including those received by BNPPLC from NAI or third parties, will be applied as follows:
          (1)     First, proceeds covered by this Paragraph 5 will be used to reimburse BNPPLC for any reasonable costs and expenses, including Attorneys’ Fees, that BNPPLC incurred to collect the proceeds.
          (2)     Second, the proceeds remaining after such reimbursement to BNPPLC (the “Remaining Proceeds”) will be applied, as hereinafter more particularly provided, either as a Qualified Prepayment or to pay or reimburse NAI or BNPPLC for the actual out-of-pocket costs of repairing or restoring the Property. Until any Remaining Proceeds received by BNPPLC are applied by BNPPLC as a Qualified Prepayment or applied by
 
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BNPPLC to reimburse costs of repairs to or restoration of the Property pursuant to this Paragraph 5, BNPPLC will hold and maintain such Remaining Proceeds as Escrowed Proceeds in an interest bearing account, and all interest earned on such account will 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 5, BNPPLC will hold all such Escrowed Proceeds until they are advanced 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 Agreement. BNPPLC will so advance the Escrowed Proceeds as the applicable repair or restoration progresses and upon compliance by NAI with such conditions and requirements as may be reasonably imposed by BNPPLC, including conditions and requirements similar to those that set forth herein for the payment of Construction Advances. In no event, however, will BNPPLC be required to pay Escrowed Proceeds to NAI in excess of the actual out-of-pocket cost to NAI of the applicable repair, restoration or replacement, as evidenced by invoices or other documentation reasonably satisfactory to BNPPLC.
          (C)     Status of Escrowed Proceeds After Commencement of the Term of the Lease. Any Remaining Proceeds governed by this Paragraph 5 which BNPPLC is continuing to hold as Escrowed Proceeds when the Term of the Lease commences will be applied in accordance with the terms and conditions of the Lease as if received by BNPPLC immediately after the Term commenced.
          (D)     Special Provisions Applicable After a 97-10/Meltdown Event or Event of Default. Notwithstanding the foregoing, after any 97-10/Meltdown Event and when any Event of Default has occurred and is continuing, BNPPLC will be entitled to receive and collect all insurance, condemnation or other proceeds governed by this Paragraph 5 and to apply all Remaining Proceeds, when and in such order and to such extent deemed appropriate by BNPPLC in its sole discretion, either (A) to the reimbursement of NAI or BNPPLC 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, if the Property is damaged by fire or other casualty or any part of the Property is taken by condemnation, NAI must to the maximum extent possible, as part of the Work, 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 this Agreement; provided, however, like other Work, any such restoration and continuation of construction by NAI will be subject to subparagraphs 7(A) and 7(B), which establish certain rights of NAI to suspend or discontinue any Work; and, provided further, any additional costs required to complete the Construction Project resulting from such a casualty or taking prior to the Completion Date will, to the extent not covered by Remaining Proceeds paid to NAI as provided
 
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herein, be subject to reimbursement by BNPPLC as Reimbursable Construction Period Costs on the same terms and conditions that apply to reimbursements of other costs of the Work hereunder.
          (F)     Special Provisions Concerning a Complete Taking. NAI may react to any threat of a Complete Taking from a governmental authority by exercising NAI’s right to accelerate the Designated Sale Date (as provided in the definition thereof) and by exercising the Purchase Option under the Purchase Agreement. By so doing, NAI will put itself in a position to control condemnation proceedings and to receive all proceeds of the Complete Taking. If, however, NAI does not buy the Property pursuant to the Purchase Agreement prior to any Complete Taking, then BNPPLC will be entitled to receive and retain all amounts paid for the Property in connection with the Complete Taking, notwithstanding any contrary provision herein or in the other Operative Documents and notwithstanding that such proceeds may exceed the Lease Balance.
6       Notice of Cost Overruns and Pre-lease Force Majeure Events.
          (A)     Notice of Projected Cost Overruns. If, at the time NAI submits any Construction Advance Request, NAI believes 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) that Projected Cost Overruns are more likely than not, NAI must 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.
          (B)     Pre-lease Force Majeure Event Events and Notices. NAI may from time to time provide a notice to BNPPLC in the form attached as Exhibit D (a “Pre-lease Force Majeure Event Notice”), describing any Pre-lease Force Majeure Event that has occurred or commenced within the 30 days prior to such notice and setting forth NAI’s preliminary good faith estimate of any Pre-lease Force Majeure Delays, Pre-lease Force Majeure Losses and Pre-lease Force Majeure Excess Costs that are likely to result from such event. BNPPLC will have the option to respond to any Pre-lease Force Majeure Event Notice with an FOCB Notice or, alternatively and if applicable, with an Increased Commitment as provided in subparagraph 7(B)(6).
7       Suspension and Termination of NAI’s Work.
          (A)     Rights and Obligations During a Work/Suspension Period. During any Work/Suspension Period, NAI will have the right to suspend the Work; however, the obligations of NAI which are to survive any Termination of NAI’s Work as provided in subparagraph 7(D) will continue and survive during any Work/Suspension Period.
          (B)     NAI’s Election to Terminate NAI’s Work. NAI may elect to terminate its rights
 
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and obligations to continue Work at any time prior to the Completion Date if at such time NAI believes in good faith that a Timing or Budget Shortfall exists. To be effective, however, any such election by NAI must be made in accordance with the following provisions:
          (1)     Any such election by NAI to terminate its rights and obligations to continue the Work must be made by notice to BNPPLC in the form of Exhibit E (a “Notice of Termination by NAI”).
          (2)     At least forty-five days before giving any such Notice of Termination by NAI, NAI must give a notice of NAI’s intent to terminate to BNPPLC in the form of Exhibit F (a “Notice of NAI’s Intent to Terminate”), and the Notice of NAI’s Intent to Terminate must state the reasons, in NAI’s good faith determination, for the Timing or Budget Shortfall.
          (3)     Without limiting the forgoing, prior to giving any Notice of Termination by NAI predicated upon NAI’s belief that the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of a Pre-lease Force Majeure Event, NAI must — after having notified BNPPLC of the such event by the delivery of a Pre-lease Force Majeure Event Notice in accordance with subparagraph 6(B) — expressly set forth such belief in the Notice of NAI’s Intent to Terminate as indicated in Exhibit F. In any such Notice of NAI’s Intent to Terminate, NAI must also specify its good faith estimate of the Pre-lease Force Majeure Excess Costs likely to be incurred (“NAI’s Estimate of Force Majeure Excess Costs”).
          (4)     Similarly, prior to giving any Notice of Termination by NAI predicated upon NAI’s belief that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays resulting from a Pre-lease Force Majeure Event, NAI must — after having notified BNPPLC of such event by the delivery of a Pre-lease Force Majeure Event Notice in accordance with subparagraph 6(B) — expressly set forth such belief in the Notice of NAI’s Intent to Terminate as indicated in Exhibit F. In any such Notice of NAI’s Intent to Terminate, NAI must also specify its good faith estimate of the Pre-lease Force Majeure Delays likely to occur (“NAI’s Estimate of Force Majeure Delays”).
          (5)     As used herein, a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” means any Notice of NAI’s Intent to Terminate that sets forth NAI’s belief, by the optional provisions contemplated in Exhibit F, that either or both: (a) the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of a Pre-lease Force Majeure Event, or (b) the Work will not be substantially complete before the Target
 
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Completion Date only because of Pre-lease Force Majeure Delays resulting from a Pre-lease Force Majeure Event. Should any Termination of NAI’s Work occur before NAI sends a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event (in accordance with this subparagraph and in the form attached as Exhibit F), such Termination of NAI’s Work will, for purposes of determining whether any 97-10/Prepayment may be required pursuant to Paragraph 9, be conclusively presumed to have occurred for reasons other than a Pre-lease Force Majeure Event.
          (6)     After receipt of any Notice of NAI’s Intent to Terminate and before receipt of a Notice of Termination by NAI, BNPPLC may, but will not be obligated to, respond to NAI with certain commitments as follows (such a response being hereinafter called an “Increased Commitment”):
          (a)     In the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses NAI’s belief that the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs, BNPPLC may respond with a written commitment to increase the Construction Allowance (an “Increased Funding Commitment”) by an amount at least equal to NAI’s Estimate of Force Majeure Excess Costs as set forth in such Notice of NAI’s Intent to Terminate. Any such Increased Funding Commitment may be in the form of Exhibit G.
          (b)     In the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses NAI’s belief that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays, BNPPLC may respond with a written commitment to extend the Target Completion Date (an “Increased Time Commitment”) by at least the number of days included in NAI’s Estimate of Force Majeure Delays as set forth in such Notice of NAI’s Intent to Terminate. Any such Increased Time Commitment may be in the form of Exhibit H.
          (c)     In the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses NAI’s belief that both (i) the remaining available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs and (ii) the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays, BNPPLC may respond with both an Increased Funding Commitment and an Increased Time Commitment as provided in the preceding subparagraphs (a) and (b).
          (d)     In the case of a Notice of Intent to Terminate which is not a Notice
 
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of Intent to Terminate Because of a Force Majeure Event (and thus not covered by any of the preceding subparagraphs (a) through (c)), BNPPLC may require NAI to promptly provide a good faith estimate of the minimum Increased Funding Commitment or Increased Time Commitment (or both) reasonably required to eliminate the reasons for NAI’s delivery of the Notice of Intent to Terminate. After receipt of NAI’s good faith estimate, BNPPLC may respond with an Increased Funding Commitment or Increased Time Commitment (or both) consistent with such estimate.
          (7)     If BNPPLC does respond to a Notice of NAI’s Intent to Terminate with an Increased Commitment, NAI will be entitled to, and will not unreasonably refuse to, rescind such Notice of NAI’s Intent to Terminate within ten days after receipt of such Increased Commitment. To be effective, any such rescission must be by notice to BNPPLC in the form of Exhibit I. In any event, except as provided in the next subparagraph, the failure of NAI to so rescind any Notice of NAI’s Intent to Terminate within ten days after receipt of the Increased Commitment will, for purposes of determining whether any 97-10/Prepayment may be required pursuant to Paragraph 9, create a conclusive presumption that any Termination of NAI’s Work after the date of such response was made for reasons other than a Pre-lease Force Majeure Event.
          (8)     For the avoidance of doubt, BNPPLC acknowledges that NAI’s rescission of any Notice of NAI’s Intent to Terminate (including any Notice of NAI’s Intent to Terminate Because of a Force Majeure Event) after receipt of an Increased Commitment as described in the preceding subsection will not preclude NAI from subsequently exercising its rights under this subparagraph 7(B) in the event NAI subsequently believes in good faith that a Timing or Budget Shortfall exists.
Thus, for example, if NAI rescinds a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event after receiving an Increased Commitment from BNPPLC, but subsequently determines that such Increased Commitment is insufficient (through no fault of NAI or its employees or any other party acting under NAI’s control or with the approval or authorization of NAI) to rectify the Timing or Budget Shortfall which caused NAI to send such notice, then NAI may deliver a second Notice of NAI’s Intent to Terminate Because of a Force Majeure Event, and in response thereto BNPPLC may elect to provide yet another Increased Commitment. Moreover, such process may be repeated any number of times, in each case without causing NAI to lose its right to subsequently invoke this subparagraph 7(B) and send yet another Notice of NAI’s Intent to Terminate (including another Notice of NAI’s Intent to Terminate Because of a Force Majeure Event).
          (9)     Notwithstanding the foregoing, in the event of a Complete Taking, NAI
 
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may deliver a Notice of NAI’s Intent to Terminate Because of a Force Majeure Event that explains the futility of continuing with the Construction Project on the Land regardless of any willingness of BNPPLC to approve or consider Scope Changes or an Increased Commitment, and no offer by BNPPLC of an Increased Commitment after a Complete Taking will preclude a “Termination of NAI’s Work Because of a Pre-lease Force Majeure Event” for the purposes of determining whether NAI must pay a 97-10/Prepayment pursuant to Paragraph 9.
          (C)     BNPPLC’s Election to Terminate NAI’s Work. By notice to NAI BNPPLC may elect to terminate NAI’s rights and obligations to continue the Work at any time (i) more than thirty days after BNPPLC has given an FOCB Notice to NAI, or (ii) after BNPPLC’s receipt of a Notice of NAI’s Intent to Terminate and before an election by NAI to rescind the same as described in subparagraph 7(B)(7).
          (D)     Surviving Rights and Obligations. Following any Termination of NAI’s Work as provided in subparagraph 7(B) or in 7(C), NAI will have no obligation to continue or complete any Work; however, no such Termination of NAI’s Work will reduce or excuse the following rights and obligations of the parties, it being intended that all such rights and obligations will survive and continue after any Termination of NAI’s Work:
          (1)     NAI’s obligations described in the next subparagraph 7(E);
          (2)     the rights and obligations of NAI and BNPPLC under the Ground Lease;
          (3)     the rights and obligations of NAI and BNPPLC under the Purchase Agreement, other than NAI’s Supplemental Payment Obligation if it has been terminated as provided in subparagraph 6(B) of the Purchase Agreement;
          (4)     any obligations of NAI under the other Operative Documents by reason of any misrepresentation or other act or omission of NAI that occurred prior to the Termination of NAI’s Work or during any subsequent period in which NAI remains in possession or control of the Construction Project; and
          (5)     NAI’s obligations to indemnify BNPPLC as set forth in subparagraph 10(A).
          (E)     Cooperation After a Termination of NAI’s Work. After any Termination of NAI’s Work as provided in subparagraph 7(B) or subparagraph 7(C), NAI must comply with the following terms and conditions, all of which will survive notwithstanding any such termination:
          (1)     NAI must promptly deliver copies to BNPPLC of all Third Party Contracts
 
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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 must 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 BNPPLC made with respect to any Third Party Contract, NAI must deliver a letter confirming: (i) whether NAI has performed any act or executed any other instrument which invalidates or modifies such contract in whole or in part (and, if so, the nature thereof); (ii) the extent to which such contract is valid and subsisting and in full force and effect; (iii) that, to NAI’s knowledge, 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 or potential default, the nature of such default in detail); (iv) whether the services and construction contemplated by such contract are proceeding in a satisfactory manner in all material respects (and 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) NAI’s good faith estimate of the 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 BNPPLC may reasonably request to allow it to decide what steps it should take concerning the contract within BNPPLC’s rights under this Agreement and the other Operative Documents.
          (3)     As and to the extent requested by BNPPLC, NAI will make every reasonable effort (but without any obligation to incur any expense or liability to do so, unless BNPPLC agrees to reimburse the same with reasonable promptness) to secure any required consents or approvals for an assignment of any then existing Third Party Contract to BNPPLC or its designee, upon terms satisfactory to BNPPLC. To the extent assignable, any then existing Third Party Contract will be assigned by NAI to BNPPLC upon request, without charge by NAI.
          (4)     If NAI has canceled any Third Party Contract before and in anticipation of a Termination of NAI’s Work, then as and to the extent requested by BNPPLC, NAI must make every reasonable effort (but without any obligation to incur any expense or liability to do so, unless BNPPLC agrees to reimburse the same with reasonable promptness) to secure a reinstatement of such Third Party Contract in favor of BNPPLC and upon terms
 
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satisfactory to BNPPLC.
          (5)     For a period not to exceed thirty days after the Termination of NAI’s Work, NAI must 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. Without regard to the conditions applicable to other payments required of BNPPLC by this Agreement, BNPPLC must with reasonable promptness reimburse any reasonable out-of-pocket expenses incurred by NAI to comply with this subparagraph (5); however, BNPPLC may at any time or from time to time by notice to NAI limit or terminate such reimbursements as to expenses incurred after NAI’s receipt of such notice, and thereafter NAI will be excused from any obligation to incur expenses that BNPPLC may decline to reimburse.
8       Continuation of Construction by BNPPLC.
          (A)     Owner’s Election to Continue Construction. Without limiting BNPPLC’s other rights and remedies under this Agreement or the other Operative Documents, and without terminating NAI’s surviving obligations under this Agreement or NAI’s obligations under the other Operative Documents, after any Termination of NAI’s Work as provided in subparagraph 7(B) or subparagraph 7(C), BNPPLC will 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 not substantially inconsistent (to the extent practicable under Applicable Laws) with the general description of the Construction Project set forth in Exhibit B. (As used herein, “Owner’s Election to Continue Construction” means any election by BNPPLC to continue or complete the Construction Project pursuant to the preceding sentence.) After any Owner’s Election to Continue Construction, BNPPLC may do any one or more of the following pursuant to this subparagraph without further notice and regardless of whether any breach of this Agreement by NAI is then continuing:
          (1)     Take Control of the Property. BNPPLC may cause NAI and any contractors or other parties on the Property to vacate the Property until the Construction Project is complete or BNPPLC elects not to continue work on the Construction Project.
          (2)     Continuation of Construction. BNPPLC 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 BNPPLC is not substantially inconsistent (to the extent practicable under Applicable Laws) with the general description of the Construction Project set forth in Exhibit B and the permitted use of the Property set forth in the Lease, BNPPLC will have complete discretion to:
          (a)     proceed with construction according to such plans and
 
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specifications as BNPPLC may from time to time approve;
          (b)     establish and extend construction deadlines as BNPPLC from time to time deems appropriate, without obligation to adhere to any deadlines for construction by NAI set forth in this Agreement;
          (c)     hire, fire and replace architects, engineers, contractors, construction managers and other consultants as BNPPLC 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 BNPPLC 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 BNPPLC from time to time reasonably deems appropriate;
          (e)     pay, settle or compromise existing or future bills and claims which are or may be liens against the Property or as BNPPLC reasonably 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 BNPPLC from time to time deems appropriate; and
          (h)     generally do anything that NAI itself might have done if NAI had satisfied or obtained BNPPLC’s waiver of the conditions specified therein.
          (3)     Arrange for Turnkey Construction. Without limiting the generality of the foregoing, BNPPLC may engage any contractor or real estate developer BNPPLC believes to be reputable to take over and complete construction of the Construction Project on a “turnkey” basis.
          (4)     Suspension or Termination of Construction by BNPPLC. Notwithstanding
 
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any Owner’s Election to Continue Construction, BNPPLC may subsequently elect at any time to suspend or terminate further construction without obligation to NAI.
For purposes of the Operative Documents (including the determination of the Outstanding Construction Allowance, the Lease Balance and the Break Even Price), after any Owner’s Election to Continue Construction, all costs and expenditures incurred or paid by or on behalf of BNPPLC to complete or continue construction as provided in this subparagraph 8(A) will be considered Construction Advances, 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 BNPPLC will include costs that BNPPLC has become obligated to pay to any third party that is not an Affiliate of BNPPLC (including any construction contractor), even if the payments for which BNPPLC has become so obligated constitute prepayments for work or services to be rendered after payment and notwithstanding that BNPPLC’s obligations for the payments may be conditioned upon matters beyond BNPPLC’s control. For example, even if a construction contract between BNPPLC and a contractor excuses BNPPLC from making further progress payments to the contractor upon NAI’s failure to make any required 97-10/Prepayment under this Agreement, the obligation to make a progress payment would nonetheless be “incurred” by BNPPLC, for purposes of determining whether BNPPLC has incurred costs considered to be 97-10/Project Costs and Construction Advances, when BNPPLC’s obligation to pay it became subject only to NAI’s payment of a 97-10/Prepayment or other conditions beyond BNPPLC’s control.
          (B)     Powers Coupled With an Interest. BNPPLC’s rights under subparagraph 8(A) are intended to constitute powers coupled with an interest which cannot be revoked.
9       NAI’s Obligation for 97-10/Prepayments. After any 97-10/Meltdown Event NAI must make a 97-10/Prepayment to BNPPLC within three Business Days after receipt from BNPPLC of any demand for such a payment. BNPPLC may demand 97-10/Prepayments pursuant to this Paragraph at any time and from time to time (as 97-10/Project Costs increase) after a 97-10/Meltdown Event. NAI acknowledges that it is undertaking the obligation to make 97-10/Prepayments as provided in this Paragraph in consideration of the rights afforded to it by this Agreement, but that such obligation is not contingent upon any exercise by NAI of such rights or upon its rights under any other Operative Documents. If a 97-10/Meltdown Event does occur, NAI’s obligation to make 97-10/Prepayments as provided in this Paragraph will survive any Termination of NAI’s Work.
Notwithstanding the foregoing provisions of this Paragraph 9, if (as provided in subparagraph 7(B)) NAI effectively makes the election for a Termination of NAI’s Work because of a Pre-lease Force Majeure Event that resulted in Pre-lease Force Majeure Excess Costs or Pre-lease Force Majeure Delays, then NAI will be excused from the obligation to make 97-10/Prepayments until such time (if ever) that BNPPLC itself completes the Construction
 
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Project or causes it to be completed as BNPPLC is authorized to do by subparagraph 8(A).
10       Indemnity for Covered Construction Period Losses.
          (A)     Covenant to Indemnify Against Covered Construction Period Losses. Subject to the qualifications in subparagraph 10(B), as directed by BNPPLC, NAI must indemnify and defend BNPPLC from and against all of the following Losses (“Covered Construction Period Losses”):
          (1)     Losses suffered or incurred by BNPPLC, directly or indirectly, relating to or arising out of, based on or as a result of any of the following which occurs or is alleged to have occurred prior to any Termination of NAI’s Work: (i) any Hazardous Substance Activity; (ii) any violation of any applicable Environmental Laws relating to the Land or 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; or (iv) any claim, demand, cause of action or investigation, or any action or other proceeding, whether meritorious or not, brought or asserted against BNPPLC 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 provision or any allegation of any such matters;
          (2)     Losses incurred or suffered by BNPPLC that BNPPLC 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 prior to any Termination of NAI’s Work (as provided in subparagraphs 7(B) and 7(C)) or during any other period that NAI remains in possession or control of the Construction Project (including any failure by NAI to obtain or maintain insurance as required by this Agreement during such periods; but excluding, however, as described below, certain Losses consisting of claims related to any failure of NAI to complete the Construction Project);
          (3)     Losses incurred or suffered by BNPPLC 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 NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI; and
          (4)     Losses incurred or suffered by BNPPLC that would not have been incurred but for any bankruptcy proceeding involving NAI as the debtor.
NAI’s obligations under this indemnity will apply whether or not BNPPLC is also indemnified as to the applicable Covered Construction Period Loss by any third party (including another
 
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Interested Party) and whether or not the Covered Construction Period Loss arises or accrues prior to the Effective Date. Further, in the event, for income tax purposes, BNPPLC must include in its taxable income any payment or reimbursement from NAI which is required by this indemnity (in this provision, the “Original Indemnity Payment”), and yet BNPPLC is not entitled during the same taxable year to a corresponding and equal deduction from its taxable income for the Covered Construction Period Loss paid or reimbursed by such Original Indemnity Payment (in this provision, the “Corresponding Loss”), then NAI must also pay to BNPPLC on demand the additional amount (in this provision, the “Additional Indemnity Payment”) needed to gross up the Original Indemnity Payment for any and all resulting additional income taxes. That is, NAI must pay an Additional Indemnity Payment as is needed so that the Corresponding Loss (computed net of the reduction, if any, of BNPPLC’s income taxes because of credits or deductions that are attributable to the BNPPLC’s payment or deemed payment of the Corresponding Loss and that are recognized for tax purposes in the same taxable year during which BNPPLC must recognize the Original Indemnity Payment as income) will not exceed the difference computed by subtracting (i) all income taxes (determined for this purpose based on the highest marginal income tax rates charged to corporations by federal, state and local tax authorities, as applicable, for the relevant period or periods) imposed because of the receipt or constructive receipt of the Original Indemnity Payment and the Additional Indemnity Payment, from (ii) the sum of the Original Indemnity Payment and the Additional Indemnity Payment. (With regard to any payment or reimbursement of an Original Indemnity Payment, “After Tax Basis” means that such payment or reimbursement is or will be made together with the additional amount needed to gross up such Original Indemnity Payment as described in this provision.)
          (B)     Certain Losses Included or Excluded.
          (1)     Back to Back Claims by Participants Against BNPPLC. Losses for which BNPPLC is entitled to be indemnified as described in subparagraph 10(A) will include claims made against BNPPLC by any Participant, and amounts (if any) reimbursed by BNPPLC to any Participant, because of the following:
          (a)     Losses suffered or incurred by such Participant, directly or indirectly, relating to or arising out of any of the following which occurs or is alleged to have occurred prior to any Termination of NAI’s Work: (i) any Hazardous Substance Activity; (ii) any violation of any applicable Environmental Laws relating to the Land or 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; or (iv) any claim, demand, cause of action or investigation, or any action or other proceeding, whether meritorious or not, brought or asserted against such Participant which directly or indirectly relates to, arises from, is based on, or results from any of the
 
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matters described in clauses (i), (ii), or (iii) of this provision or any allegation of any such matters;
          (b)     Losses incurred or suffered by such Participant that such Participant 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 prior to any Termination of NAI’s Work (as provided in subparagraphs 7(B) and 7(C)) or during any other period that NAI remains in possession or control of the Construction Project (including any failure by NAI to obtain or maintain insurance as required by this Agreement during such periods; but excluding, however, as described below, certain Losses consisting of claims related to any failure of NAI to complete the Construction Project);
          (c)     Losses incurred or suffered by such Participant 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 NAI or its employees or of any other party acting under NAI’s control or with the approval or authorization of NAI; and
          (d)     Losses incurred or suffered by such Participant that would not have been incurred but for any bankruptcy proceeding involving NAI as the debtor.
          (2)     Environmental. As used in clause (1) of the preceding subparagraph 10(A) and clause (a) of the preceding subparagraph 10(B)(1), “Losses” will not include costs properly incurred in connection with the Work to prevent the occurrence of a violation of Environmental Laws that did not previously exist. (For example, Environmental Losses will not include the increase in costs resulting from NAI’s installation of fire proofing materials other than asbestos because of Environmental Laws that prohibit the use of asbestos.) However, any costs to correct or answer for any violation of Environmental Laws that occurred on or prior to the Effective Date or that NAI causes or permits to occur after the Effective Date in connection with the Work or the Property will constitute Environmental Losses. (Thus, for instance, if NAI releases Hazardous Materials from the Property in a manner that contaminates ground water in violation of Environmental Laws, the costs of correcting the contamination and any applicable fines or penalties will constitute Environmental Losses for which NAI must indemnify and defend BNPPLC pursuant to subparagraph 10(A).)
          (3)     Failure to Maintain a Safe Work Site. If a third party asserts a claim for damages against BNPPLC because of injuries the third party sustained while on the Land as a result of NAI’s breach of its obligations under this Agreement to keep the Land and the Improvements thereon in a reasonably safe condition as Work progresses under NAI’s
 
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direction and control, then any such claim and other Losses resulting from such claim will constitute Covered Construction Period Losses under clause (2) of subparagraph 10(A). Also, if the third party asserts a claim for damages against any Participant because of such injuries, and if the Participant requires BNPPLC to reimburse the Participant’s Losses attributable to such claim, then such reimbursement will constitute Covered Construction Period Losses under clause (2) of subparagraph 10(A), consistent with understanding confirmed by clause (b) of subparagraph 10(B)(1).
          (4)     Failure to Complete Construction. Additional costs of construction may result from NAI’s failure to complete the Construction Project if a Termination of NAI’s Work occurs pursuant to subparagraphs 7(B) and 7(C). Nevertheless, it is understood that a failure of NAI to complete the Construction Project following any such Termination of NAI’s Work will not necessarily constitute a breach of this Agreement, and clause (2) of subparagraph 10(A) will not include any such additional costs of performing the Work or the cost to BNPPLC of completing the Construction Project after the Termination of NAI’s Work. (To the extent, however, that such costs qualify as 97-10/Project Costs, they may increase the 97-10/Maximum Permitted Prepayment.)
          (5)     Fraud. As used in clause (3) of subparagraph 10(A) and clause (c) of subparagraph 10(B)(1), “fraud” or “willful misconduct” will include (i) any deliberate decision by NAI to make a Scope Change without BNPPLC’s prior written approval, (ii) any fraud or intentional misrepresentation by NAI, or its vendors, contractors or subcontractors regarding NAI’s ongoing compliance with the requirements of this Agreement, and (iii) the performance by NAI or its vendors, contractors or subcontractors of Defective Work, with NAI’s knowledge that it constitutes Defective Work, prior to any Termination of NAI’s Work as provided in subparagraphs 7(B) and 7(C).
          (6)     Excluded Taxes and Established Misconduct. Nothing in this Paragraph 10 or other provisions of this Agreement will be construed to require NAI to reimburse or pay Excluded Taxes or Losses incurred or suffered by BNPPLC that are proximately caused by (and attributed by any applicable principles of comparative fault to) the Established Misconduct of BNPPLC.
          (C)     Express Negligence Protection. Every release provided in this Agreement for BNPPLC or any other Interested Party, and the indemnity provided for the benefit of BNPPLC in the preceding subparagraph 10(A), will apply even if and when the subject matters thereof are alleged to be caused by or to arise out of the negligence or strict liability of BNPPLC or another Interested Party. Further, all such releases and the indemnity will apply even if insurance obtained by NAI or required of NAI by this Agreement is not adequate to cover Losses against or for which the releases and the indemnity are provided (although NAI’s liability for any failure to
 
Construction Agreement (Building 9) – Page 46

 

 

obtain insurance required by this Agreement will not be limited to Losses against which indemnity is provided, it being understood that the parties have agreed upon insurance requirements for reasons that extend beyond providing a source of payment for Losses against which BNPPLC may be indemnified by NAI).
          (D)     Survival of Indemnity. NAI’s obligations under this Paragraph 10 will survive the termination or expiration of this Agreement and any Termination of NAI’s Work with respect to Losses suffered by BNPPLC resulting or arising from events or circumstances which existed or occurred or are alleged to have existed or occurred prior to the Termination of NAI’s Work or during any subsequent period in which NAI remains in possession or control of the Construction Project, whether such Losses are asserted, suffered or paid before or after the Termination of NAI’s Work.
          (E)     Due Date for Indemnity Payments. Any amount to be paid by NAI under this Paragraph 10 will be due fifteen days after a notice requesting such payment is received by NAI. Any such amount not paid by NAI when first due will bear interest at the Default Rate in effect from time to time from the date it first became 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.
          (F)     Order of Application of Payments. BNPPLC will be entitled to apply any payments by or on behalf of NAI against NAI’s obligations under this Paragraph 10 or against other amounts owing by NAI and then past due under any of the other Operative Documents in the order the same became due or in such other order as BNPPLC may elect.
          (G)     Defense of BNPPLC.
          (1)     Assumption of Defense. By notice to NAI BNPPLC may direct NAI to assume on behalf of BNPPLC and to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation included in or concerning any Covered Construction Period Loss. NAI must promptly comply with any such direction using counsel selected by NAI and reasonably satisfactory to BNPPLC to represent BNPPLC. In the event NAI fails to promptly comply with any such direction from BNPPLC, BNPPLC may contest or settle the claim, proceeding or investigation using counsel of its own selection at NAI’s expense, subject only to subparagraph 10(I) if that subparagraph is applicable.
          (2)     Indemnity Not Contingent. Also, although subparagraphs 10(I) and 10(J) will apply to tort claims asserted against BNPPLC related to the Property, the right of BNPPLC to be indemnified pursuant to subparagraph 10(A) for payments made to satisfy governmental requirements (“Government Mandated Payments”) (e.g., fines payable
 
Construction Agreement (Building 9) – Page 47

 

 

because of any release of Hazardous Materials from the Property) will not be conditioned in any way upon NAI having consented to or approved of, or having been provided with an opportunity to defend against or contest, such Government Mandated Payments. In all cases, however, including those which may involve Government Mandated Payments, the rights of BNPPLC to be indemnified will be subject to subparagraph 10(K).
          (H)     Notice of Claims. If BNPPLC receives a written notice of a claim for taxes or a claim alleging a tort or other unlawful conduct that BNPPLC believes is covered by the indemnity in subparagraph 10(A), then BNPPLC will be expected to promptly furnish a copy of such notice to NAI. The failure to so provide a copy of the notice will not excuse NAI from its obligations under subparagraph 10(A); except that if such failure continues for more than fifteen days after the notice is received by BNPPLC and NAI is unaware of the matters described in the notice, with the result that NAI is unable to assert defenses or to take other actions which could minimize its obligations, then NAI will be excused from its obligation to indemnify BNPPLC against the Covered Construction Period Losses, if any, which would not have been incurred or suffered but for such failure. For example, if BNPPLC fails to provide NAI with a copy of a notice of an overdue tax obligation covered by the indemnity set out in subparagraph 10(A) and NAI is not otherwise already aware of such obligation, and if as a result of such failure BNPPLC 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 BNPPLC (or any Affiliate of BNPPLC) to pay the excess.
          (I)     Withholding of Consent to Settlements Proposed by NAI. With regard to any tort claim against BNPPLC for which NAI undertakes to defend BNPPLC as provided in subparagraph 10(G)(1), if BNPPLC unreasonably refuses to consent to a settlement of the claim which is proposed by NAI and which will meet the conditions listed in the next sentence, NAI’s liability for the cost of continuing the defense and for any other amounts payable in respect of the claim will be limited to the total cost for which the settlement proposed by NAI would have been accomplished but for the unreasonable refusal to consent. Any such settlement proposed by NAI must meet the following conditions: (A) at the time of the settlement by NAI, NAI must pay all amounts required to release BNPPLC and other affected Interested Parties (if any) and their property interests from any further obligation for or liens securing the applicable claim and from any interest, penalties and other related liabilities, and (B) the settlement or compromise must not involve an admission of fraud or criminal wrongdoing or result in some other material adverse consequence to BNPPLC or any other Interested Party.
          (J)     Settlements Without the Prior Consent of NAI.
          (1)     Election to Pay Reasonable Settlement Costs in Lieu of Actual. Except as otherwise provided in subparagraph 10(J)(2), if BNPPLC settles any tort claim for which
 
Construction Agreement (Building 9) – Page 48

 

 

it is entitled to be indemnified by NAI without NAI’s consent, then NAI may, by notice given to BNPPLC no later than ten days after NAI is notified of the settlement, elect to pay Reasonable Settlement Costs to BNPPLC in lieu of a payment or reimbursement of actual settlement costs. (With respect to any tort claim asserted against BNPPLC, “Reasonable Settlement Costs” means the maximum amount that a prudent Person in the position of BNPPLC, but able to pay any amount, might reasonably agree to pay to settle the tort claim, taking into account the nature and amount of the claim, the relevant facts and circumstances known to BNPPLC at the time of settlement and the additional Attorneys Fees’ and other costs of defending the claim which could be anticipated but for the settlement.) After making an election to pay Reasonable Settlement Costs with regard to a particular tort claim, NAI will have no right to rescind or revoke the election, despite any subsequent determination that Reasonable Settlement Costs exceed actual settlement costs. It is understood that Reasonable Settlement Costs may be more or less than actual settlement costs and that a final determination of Reasonable Settlement Costs may not be possible until after NAI must decide between paying Reasonable Settlement Costs or paying actual settlement costs.
          (2)     Conditions to Election. Notwithstanding the foregoing, NAI will have no right to elect to pay Reasonable Settlement Costs in lieu of actual settlement costs if BNPPLC settles claims without NAI’s consent at any time when an Event of Default has occurred and is continuing or after a failure by NAI to conduct with due diligence and in good faith the defense of and the response to any claim, proceeding or investigation as provided in subparagraph 10(G)(1).
          (3)     Indemnity Survives Settlement. Except as provided in this subparagraph 10(J), no settlement by BNPPLC of any claim made against it will excuse NAI from any obligation to indemnify BNPPLC against the settlement costs or other Covered Construction Period Losses suffered by reason of, in connection with, arising out of, or in any way related to such claim.
          (K)     No Authority to Admit Wrongdoing on the Part of NAI. BNPPLC will not under any circumstances have any authority to bind NAI to an admission of wrongdoing or responsibility to any third party claimant with regard to matters for which BNPPLC claims a right to indemnification from NAI under this Agreement.
Further, nothing herein contained, including the foregoing provisions concerning settlements by BNPPLC of indemnified Losses, will be construed as authorizing BNPPLC to bind NAI to do or refrain from doing anything to satisfy a third party claimant. If, for example, a claim is made by a Governmental Authority that NAI must refrain from some particular conduct on or about the Land in order to comply with Applicable Laws, BNPPLC cannot bind NAI (and will not purport to bind NAI) to any agreement to refrain from such conduct or otherwise prevent NAI from
 
Construction Agreement (Building 9) – Page 49

 

 

continuing to contest the claim by reason of any provision set forth herein.
Moreover, so long as this Agreement or the Lease continues, BNPPLC’s right to settle any claim involving the Property will not include the right to bind NAI to any agreement (including any consent decree proposed by any Governmental Authority) which purports to prohibit, limit or impose conditions upon any use of the Property by NAI without the prior written consent of NAI. In the case of any proposed settlement of a claim asserted by a Governmental Authority against BNPPLC, NAI will not unreasonably withhold such consent. However, for purposes of determining whether it is reasonable for NAI to withhold such consent, any diligent ongoing undertaking by NAI to contest such the claim on behalf of BNPPLC will be relevant.
Subject to the foregoing provisions in this subparagraph 10(K), BNPPLC may agree for itself (and only for itself) to act or refrain from doing anything as demanded or requested by a third party claimant; provided, however, in no event will such an agreement impede NAI from continuing to exercise its rights to operate its business on the Property or elsewhere in any lawful manner deemed appropriate by NAI, nor will any such agreement limit or impede NAI’s right to contest claims raised by any third party claimants (including Governmental Authorities) that NAI is not complying or has not complied with Applicable Laws.
          (L)     Refunds of Covered Construction Period Losses Paid by NAI.
          (1)     Payment by BNPPLC After Refund. If BNPPLC receives a refund of any Covered Construction Period Losses paid, reimbursed or advanced by NAI pursuant to subparagraph 10(A), BNPPLC will promptly pay to NAI the amount of such refund, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of such refund and such payment to NAI; provided, that the amount payable to NAI will not exceed the amount of the indemnity payment in respect of such refunded Covered Construction Period Losses that was made by NAI. If it is subsequently determined that BNPPLC was not entitled to such refund, the portion of such refund that is repaid or recaptured will be treated as a Covered Construction Period Loss for which NAI must indemnify BNPPLC pursuant to subparagraph 10(A) without regard to subparagraph 10(B)(6). If, in connection any such refund, BNPPLC also receives an amount representing interest on such refund, BNPPLC will promptly pay to NAI the amount of such interest, plus or minus any net tax benefits or detriments realized by BNPPLC as a result of the receipt or accrual of such interest and as a result of the such payment to NAI; provided, that BNPPLC will not be required to make any such payment in respect of the interest (if any) that is fairly attributable to a period before NAI paid, reimbursed or advanced the Covered Construction Period Losses refunded to BNPPLC.
          (2)     Meaning of Refund. With respect to Covered Construction Period Losses incurred or suffered by BNPPLC and paid or reimbursed by NAI on an After Tax Basis, if
 
Construction Agreement (Building 9) – Page 50

 

 

taxes of BNPPLC which are not subject to indemnification by NAI are reduced because of such Losses (whether by reason of a deduction, credit or otherwise) and such reduction was not taken into account in the calculation of the required reimbursement or payment by NAI, then for purposes of this subparagraph 10(L) such reduction will be considered a “refund”.
          (3)     Conditions to Payment. Notwithstanding the foregoing, in no event will BNPPLC be required to make any payment to NAI pursuant to this subparagraph 10(L) after any 97-10/Meltdown Event or when any Event of Default has occurred and is continuing.
11     Characterization of Operative Documents; Remedies.
          (A)     Characterization of Operative Documents.
          (1)     Confirmation of Lien and Security Interest Granted in the Lease. Reference is made to subparagraph 4(C) of the Lease, in which NAI and BNPPLC have confirmed their intent that (A) for the purposes of determining the proper accounting for the Lease by NAI, BNPPLC will be treated as the owner and landlord of the Property and NAI will be treated as the tenant of the Property, and (B) for income tax purposes and commercial law (including real estate and bankruptcy law) and regulatory purposes, (1) the Lease and the other Operative Documents (including this Agreement) will be treated as a financing arrangement, (2) BNPPLC will be deemed a lender making loans to NAI in the principal amount equal to the Lease Balance, which loans are secured by the Property, and (3) NAI will be treated as the owner of the Property and will be entitled to all tax benefits available to the owner of the Property. Consistent with such intent, by the provisions set forth in Exhibit B to the Lease, NAI is granting to BNPPLC a lien upon and mortgaging and warranting title to the leasehold estate in the Land created by the Ground Lease and the Improvements and all rights, titles and interests of NAI in and to other Property, WITH POWER OF SALE, to secure all obligations (monetary or otherwise) of NAI arising under or in connection with any of the Operative Documents (including this Agreement). NAI further confirms and agrees that (i) its grant of a lien and security interest as set forth in Exhibit B of the Lease is made as of the Effective Date, even though the Term of the Lease will not commence before the Completion Date, and (ii) the security interest granted in Exhibit B of the Lease will extend to and cover all Third Party Contracts, now existing or made in the future.
          (2)     Foreclosure Remedies. Even before the Completion Date, at any time when an Event of Default has occurred and is continuing, BNPPLC may notify NAI of BNPPLC’s intent to pursue remedies described in Exhibit B to the Lease, and at any time thereafter, regardless of whether the Event of Default is continuing, if NAI has not
 
Construction Agreement (Building 9) – Page 51

 

 

already purchased the Property or caused an Applicable Purchaser to purchase the Property pursuant to the Purchase Agreement, (i) BNPPLC will have the power and authority, to the extent provided by law, after proper notice and lapse of such time as may be required by law, to sell or arrange for a sale to foreclose its lien and security interest granted in Exhibit B to the Lease, and (ii) BNPPLC, in lieu of or in addition to exercising any power of sale granted in Exhibit B to the Lease, may proceed by a suit or suits in equity or at law for a foreclosure or sale of the Property or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure or sale of the Property, or for the enforcement of any other legal or equitable remedy permitted by law.
          (B)     Notice Required So Long As the Purchase Option Continues Under the Purchase Agreement. Prior to the Designated Sale Date, so long as NAI remains in possession of the Property and there has been no termination of the Purchase Option as provided in Paragraph 6(B) of the Purchase Agreement, BNPPLC’s right to complete any foreclosure sale as provided in subparagraph 11(A)(2) will be subject to the condition precedent that BNPPLC has notified NAI, at a time when an Event of Default has occurred and is continuing and no less than thirty days prior to completing such a sale, of BNPPLC’s intent to do so. The condition precedent is intended to provide NAI with an opportunity to exercise the Purchase Option before losing possession of the Property because of a sale authorized by subparagraph 11(A)(2). 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, BNPPLC may proceed immediately to complete a sale authorized by subparagraph 11(A)(2) at any time after the earliest of (i) thirty days after BNPPLC 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.
          (C)     Remedies Cumulative. No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of any other right or remedy, and each and every such right and remedy will be cumulative and in addition to any other right or remedy given to BNPPLC under other Operative Documents (including the right to accelerate the Designated Sale Date, as provided in the definition thereof in the Common Definitions and Provisions Agreement, and the right, when applicable, to exercise the Put Option as provided in subparagraph 3(B) of the Purchase Agreement) or now or hereafter existing in favor of BNPPLC under Applicable Laws. In addition to other remedies provided in this Agreement, BNPPLC will 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 Agreement. Nothing contained in this Agreement will limit or prejudice the right of BNPPLC to prove for and obtain in proceedings for bankruptcy or insolvency of NAI by reason of the termination of this Agreement, 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
 
Construction Agreement (Building 9) – Page 52

 

 

to be proved, whether or not the amount be greater, equal to, or less than the amount BNPPLC might recover under this Agreement. Without limiting the generality of the foregoing, nothing contained herein will modify, limit or impair any of the rights and remedies of BNPPLC under the Purchase Agreement, including its right to exercise the Put Option provided in subparagraph 3(B) of the Purchase Agreement if the conditions listed in subparagraph 3(B) of the Purchase Agreement are satisfied; and BNPPLC will not be required to give the thirty day notice described in subparagraph 11(B) as a condition precedent to any acceleration of the Designated Sale Date or to taking any action to enforce the Purchase Agreement
          (D)     Third Party Estoppels. If requested by BNPPLC with respect to any material 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 BNPPLC an estoppel letter substantially in the form of Exhibit J. Similarly, if requested by BNPPLC 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 BNPPLC an estoppel letter substantially in the form of Exhibit K.
[The signature pages follow.]
 
Construction Agreement (Building 9) – Page 53

 

 

          IN WITNESS WHEREOF, this Construction Agreement (Building 9) is executed to be effective as of February 1, 2008.
         
  BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 		  
  By:  -s- Lloyd G. Cox
Lloyd G. Cox, Managing Director   		  
 
Construction Agreement (Building 9) – Signature Page

 

 

[Continuation of signature pages for Construction Agreement (Building 9) dated as of February 1, 2008.]
         
  NETWORK APPLIANCE, INC., a Delaware
corporation
 		  
 
By: 		 -s- Ingemar Lanevi
Ingemar Lanevi, Vice President and Corporate
Treasurer  		  
 
Construction Agreement (Building 9) – Signature Page

 

 

Exhibit A
Legal Description
Parcel 9 and the Additional Leased Premises, as defined below, (collectively, the “Building 9 Ground Lease Premises”) as shown on that certain Vesting Tentative Parcel Map provided to BNP Paribas Leasing Corporation (“BNPPLC”) by Network Appliance, Inc. (“NAI”) attached hereto and made a part hereof (the “Tentative Map”), which has received preliminary approval from the City of Sunnyvale, California, but not yet been filed for record in the office of the recorder of the County of Santa Clara, State of California. As used herein, “Additional Leased Premises” means the parking lots, driveways and other areas shaded in gray on the Tentative Map attached hereto within the larger area designated as Common Lot A (consisting of 30.46 Acres, more or less) on the Tentative Map. The northern boundary of the Additional Leased Premises is a line that runs along the same line as the northern boundary of Common Lot A, as shown on the Tentative Map, extending from the corner of two streets adjacent to the Additional Leased Premises to the northeast corner of Parcel 12, as shown on the Tentative Map. The western boundary of the Additional Leased Premises runs along the same line as (but extends beyond) the eastern boundary of Parcel 12, as shown on the Tentative Map. The eastern boundary of the Additional Leased Premises runs along the same line as the eastern boundary of Common Lot A, as shown on the Tentative Map. The southern boundary of the Additional Leased Premises runs along the center of an existing or proposed driveway which is situated between Parcel 8 and Parcel 9, as shown on the Tentative Map.
TOGETHER WITH, easements appurtenant to the Building 9 Ground Lease Premises as described in Exhibit A attached to the Ground Lease.

 

 

(PARCEL MAP)
 
Exhibit A to Construction Agreement (Building 9) – Page 2

 

 

Exhibit B
Description of the Construction Project and Construction Budget
Subject to future Scope Changes, the Construction Project will be substantially consistent with the following general description and with the site plan attached as part of Exhibit A and the elevations attached to this Exhibit:
     
Five-story office building, containing approximately 189,697 square feet of gross building area and surrounding site improvements and an estimated net rentable area is 177,537 square feet. Also:
 
    
Number of Stories:
  Five
 
    
Typical Story Height:
  15 feet
 
    
Excavation and Foundation:
  Reinforced concrete slab and pier and beam
 
    
Frame:
  Steel
 
    
Walls:
  Glass fiber reinforced concrete (“GFRC”) and insulated windows
 
    
Doors and Windows:
  Wood, metal, and metal-framed glass
 
    
Roof:
  Built-up asphalt
 
    
Electrical System and Lighting:
 
Typical electricity suitable for normal office use; interior lighting includes fluorescent tube and incandescent lighting
 
    
Heating, Ventilating, and Air-Conditioning (“HVAC”):
 

Zoned heating and air-conditioning supplied by package HVAC system with air ducts
 
    
Plumbing:
  Typical fixtures for kitchen, restroom, water, gas connection, water heater, and waste disposal
 
    
Fire Protection:
  Wet-pipe sprinkler system throughout
 
    
Interior Finish:
  Painted gypsum board and acoustical tile

 

 

     
 
  ceilings; painted sheetrock walls; and carpet, vinyl tile, and ceramic tile flooring
 
    
Miscellaneous Features:
  Handicapped restroom and parking facilities; elevators and exterior design canopies over windows; wall inserts for proposed artwork; bio-cell irrigation ditches around the perimeter of the building
          All of the improvements will be suitable for uses contemplated in the Lease and of a quality, when complete to be considered first class facilities for such uses. The location of improvements, including appurtenant parking areas, driveways and other facilities on the Land (or pursuant to appurtenant easements described in Exhibit A to the Ground Lease) will be as shown in the Tentative Parcel Map attached to and made a part of Exhibit A.
          The budget for the Construction Project is as shown on the attached pages.
 
Exhibit B to Construction Agreement (Building 9) – Page 2

 

 

Construction Budget
         
     
Financing
   $ 3,174,952  
Insurance
     225,739  
Design & Engineering
     1,376,638  
Permits
     2,210,318  
Site & Shell Construction
     20,115,776  
Interior Construction
     21,846,577  
 
      
Total B9
   $ 48,950,000  
 
      
 
Exhibit B to Construction Agreement (Building 9) – Page 3

 

 

(GRAPHIC)
 
Exhibit B to Construction Agreement (Building 9) – Page 4

 

 

(GRAPHIC)
 
Exhibit B to Construction Agreement (Building 9) – Page 5

 

 

Exhibit C
Construction Advance Request Form
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
          Re: Construction Agreement (Building 9) dated as of February 1, 2008 (the “Construction Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”)
Gentlemen:
          Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement. This letter constitutes a Construction Advance Request, requesting a Construction Advance of:
$____________________,
on the Advance Date that will occur on:
_______________, 20___.
          To induce BNPPLC to make such Construction Advance, NAI represents and warrants as follows:
I.       Calculation of limit imposed by Subparagraph 4(C)(2)(b) of the Construction 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
  $____________
 
    
(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
  $____________

 

 

     
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 $_________.]
III.     Construction Advances Covering Pre-lease Force Majeure Losses:
Neither the Construction Advance requested by this letter nor prior Construction Advances (if any) have been used or will be used to cover any costs of repairs that constitute Pre-lease Force Majeure Losses, except as follows: (if there are no exceptions, insert “No Exceptions”)
 

 

 

 
IV.     Absence of Certain Work/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 and with the requirements of the Construction 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”)
 

 

 

 
 
Exhibit C to Construction Agreement (Building 9) – Page 2

 

 

         
  NETWORK APPLIANCE, INC., a Delaware
corporation
 		  
  By:      
    Name:      
    Title:      
 
Exhibit C to Construction Agreement (Building 9) – Page 3

 

 

Exhibit D
Pre-lease Force Majeure Event Notice
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
          Re: Construction Agreement (Building 9) dated as of February 1, 2008 (the “Construction Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
          Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
          IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Agreement and other Operative Documents.
          This letter constitutes a Pre-lease Force Majeure Event Notice, given as provided in subparagraph 6(B) of the Construction Agreement to preserve the right of NAI to assert the occurrence of a Pre-lease Force Majeure Event.
          NAI certifies to BNPPLC that the following Pre-lease Force Majeure Event occurred or commenced on                     , 20     :
[INSERT DESCRIPTION OF EVENT HERE]
          NAI’s preliminary good faith estimate of the Pre-lease Force Majeure Delays, of the Pre-lease Force Majeure Losses and of the Pre-lease Force Majeure Excess Costs likely to result from such event are _________ days, $___________________ and $___________________, respectively. Such amounts, however, are only estimates.
          NAI acknowledges that after NAI gives this notice, BNPPLC may at any time deliver an FOCB Notice to NAI as described in the Construction Agreement.

 

 

         
  NETWORK APPLIANCE, INC., a Delaware
corporation
 		  
  By:      
    Name:      
    Title:      
 
Exhibit D to Construction Agreement (Building 9) – Page 2

 

 

Exhibit E
Notice of Termination of NAI’s Work
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
          Re: Construction Agreement (Building 9) dated as of February 1, 2008 (the “Construction Agreement”), between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
          Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
          IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Agreement and other Operative Documents.
          NAI has determined that the Construction Allowance to be provided to it under the Construction Agreement will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances for the reason or reasons set forth in the Notice of NAI’s Intent to Terminate dated                     , 200     , previously delivered to you as provided in subparagraph 7(B) of the Construction Agreement. That Notice of NAI’s Intent to Terminate has not been rescinded by NAI.
          NAI hereby irrevocably and unconditionally elects to terminate its rights and obligations to continue the Work under Construction Agreement effective as of the date of this letter (which, as required by subparagraph 7(B) of the Construction Agreement, is a date not less than forty-five days after the date the aforementioned Notice of NAI’s Intent to Terminate). This notice constitutes a “Notice of Termination by NAI” as described in subparagraph 7(B) of the Construction Agreement.
          NAI also acknowledges that a 97-10/Meltdown Event has occurred under and as defined in the Construction Agreement, and that BNPPLC is thus entitled to demand and receive 97-10/Prepayments under and as provided in Paragraph 9 of the Construction Agreement, unless the last sentence of Paragraph 9 excuses NAI from paying the same.

 

 

         
  NETWORK APPLIANCE, INC., a Delaware
corporation
 		  
  By:      
    Name:      
    Title:      
 
Exhibit E to Construction Agreement (Building 9) – Page 2

 

 

Exhibit F
Notice of NAI’s Intent to Terminate
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
          Re: Construction Agreement (Building 9) dated as of February 1, 2008 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
          Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
          IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Agreement and other Operative Documents.
 
[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth below as being required after a Complete Taking in any “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event,” this letter must contain the following paragraph and inserts following such paragraph as indicated:
          NAI has determined that the Construction Allowance to be provided to it under the Construction Agreement will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances, because:
[INSERT ANY ONE OR MORE OF THE FOLLOWING REASONS THAT APPLY: (1) THE COST OF THE WORK EXCEEDS BUDGETED EXPECTATIONS (RESULTING IN PROJECTED COST OVERRUNS), (2) A PRE-LEASE FORCE MAJEURE EVENT HAS OCCURRED, OR (3) NAI CAN NO LONGER SATISFY CONDITIONS TO BNPPLC’S OBLIGATION TO PROVIDE CONSTRUCTION ADVANCES IN THE CONSTRUCTION AGREEMENT.]

 

 

 
          The purpose of this letter is to give notice to BNPPLC and Participants of NAI’s intent to terminate NAI’s rights and obligations to perform Work under the Construction Agreement. This letter constitutes a “Notice of NAI’s Intent to Terminate” given pursuant to subparagraph 7(B) of the Construction Agreement. As provided in that subparagraph, as a condition to any effective Termination of NAI’s Work, NAI must deliver a subsequent notice of termination to BNPPLC and Participants, no less than forty-five days after the date BNPPLC receives this letter.
 
[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth below as being required for any “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event,” this letter must contain the following paragraph:
          The period running from the date of BNPPLC’s receipt of this letter to the effective date of any actual Termination of NAI’s Work by NAI or BNPPLC will constitute a Work/Suspension Period under the Construction Agreement. During such period BNPPLC’s funding obligations will be limited and NAI may suspend the Work to the extent so provided in the Construction Agreement. Moreover, NAI acknowledges that the delivery of this Notice of Intent to Terminate is a 97-10/Meltdown Event. Therefore, after receipt of this notice BNPPLC will have the rights to demand and receive 97-10/Prepayments from NAI as provided in Paragraph 9 of the Construction Agreement.]
[DRAFTING NOTE: This letter will qualify as a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” only if NAI includes one of the following alternative sets of provisions, as applicable.]
[ALTERNATIVE #1 (Applies only if there has been a Complete Taking):
          This letter constitutes a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement. A Complete Taking has occurred. Thus, regardless of any Scope Changes BNPPLC may be willing to approve or consider, and regardless of any Increased Commitment BNPPLC may be willing to provide, it would be futile to continue the Construction Project on the Land.
          NAI acknowledges and agrees that BNPPLC is entitled to all proceeds of the taking of the Property and all such proceeds must be paid to BNPPLC. NAI has no right and will not assert any right to share in such proceeds. NAI agrees to cooperate with BNPPLC as BNPPLC may from time to time request in order to maximize BNPPLC’s recovery of such proceeds.]
 
Exhibit F to Construction Agreement (Building 9) – Page 2

 

 

[ALTERNATIVE #2 (applies in the event of a Pre-lease Force Majeure Event other than a Complete Taking): Include the next (single sentence) paragraph, together with one or both (as applicable) of the two paragraphs following the next (single sentence) paragraph, and together with the remaining paragraphs after those two paragraphs, all with blanks filled in appropriately:
          This letter constitutes a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement.
          NAI now believes that the remaining available Construction Allowance will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of one or more Pre-lease Force Majeure Events. BNPPLC has previously been notified of such Pre-lease Force Majeure Event(s) by notice(s) dated                     , which NAI delivered to BNPPLC in accordance with subparagraph 6(B) of the Construction Agreement. NAI’s current good faith estimate of the Pre-lease Force Majeure Excess Costs that are most likely to be incurred because of such Pre-lease Force Majeure Event(s) is $                                        .
          NAI now believes that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays resulting from one or more Pre-lease Force Majeure Events. BNPPLC has previously been notified of such Pre-lease Force Majeure Event(s) by notice(s) dated                     , which NAI delivered to BNPPLC in accordance with subparagraph 6(B) of the Construction Agreement. NAI’s current good faith estimate of the Pre-lease Force Majeure Delays that are most likely to occur because of such Pre-lease Force Majeure Event(s) is                                           days.
          Also be advised that, as provided in subparagraph 7(B) of the Construction Agreement, BNPPLC is entitled to (but not obligated to) respond to this notice with an Increased Commitment. Responding with an Increased Commitment will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of NAI under the Purchase Agreement) that any Termination of NAI’s Work is for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified.
          In the event BNPPLC fails to respond with an Increased Commitment, the failure may excuse NAI from the obligation to make a 97-10/Prepayment under Paragraph 9 of the Construction Agreement notwithstanding any Termination of NAI’s Work, which would constitute a very material adverse consequence to BNPPLC. Moreover, the Construction Agreement grants to NAI a right to cause a Termination of NAI’s Work at any time more than forty-five days after giving this notice, provided that NAI continues to believe that a Timing or Budget Shortfall exists at that time. Thus, if BNPPLC intends to respond with an Increased Commitment, BNPPLC would be well advised to do so before the expiration of such forty-five
 
Exhibit F to Construction Agreement (Building 9) – Page 3

 

 

day period.]
         
  NETWORK APPLIANCE, INC., a Delaware
corporation
 		  
  By:      
    Name:      
    Title:      
 
Exhibit F to Construction Agreement (Building 9) – Page 4

 

 

Exhibit G
Notice of Increased Funding Commitment by BNPPLC
[Date]
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
          Re: Construction Agreement (Building 9) dated as of February 1, 2008 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
          Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
          NAI has delivered a notice to BNPPLC dated                     , 20     , which by its terms expressed NAI’s intent that it constitute a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement. In such notice, NAI advised BNPPLC of NAI’s intent to terminate the Construction Agreement because of NAI’s belief that the Construction Allowance to be provided to it under the Construction Agreement will not be sufficient to cover all Reimbursable Construction Period Costs yet to be paid or reimbursed from Construction Advances. Such notice also suggested NAI’s belief that, but for the cost of repairing damage to the Improvements caused by a Pre-lease Force Majeure Event, the remaining available Construction Allowance would be sufficient. In addition, such notice set forth the amount of $                     as NAI’s estimate of the Pre-lease Force Majeure Excess Costs most likely to be incurred because of such Pre-lease Force Majeure Event.
          This response to such notice constitutes an Increased Funding Commitment. BNPPLC hereby commits to increase the amount of the Construction Allowance by $                     (the estimate given by NAI as described above). Such commitment is made on and subject to all of the same terms and conditions set forth in the Construction Agreement and other Operative Documents as being applicable to the original Construction Allowance and to Construction Advances required thereunder.
          Please note that, according to the Construction Agreement, NAI will have ten days after the date of any Increased Commitment (which may be comprised of this Increased Funding Commitment and any separate Increased Time Commitment given contemporaneously herewith) within which NAI may rescind the aforementioned Notice of NAI’s Intent to Terminate Because

 

 

of a Force Majeure Event by a notice given in the form prescribed by the Construction Agreement. Any failure of NAI to so rescind the notice will constitute a 97-10/Meltdown Event under and as defined in the Construction Agreement and will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of NAI) that any Termination of NAI’s Work occurred for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified.
         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:      
    Name:      
    Title:      
 
Exhibit G to Construction Agreement (Building 9) – Page 2

 

 

Exhibit H
Notice of Increased Time Commitment by BNPPLC
[Date]
Network Appliance, Inc.
7301 Kit Creek Road
Research Triangle Park, NC 27709
Attention: Ingemar Lanevi
Telecopy: (919) 476-5750
          Re: Construction Agreement (Building 9) dated as of February 1, 2008 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
          Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
          NAI has delivered a notice to BNPPLC dated                     , 20     , which by its terms expressed NAI’s intent that it constitute a “Notice of NAI’s Intent to Terminate Because of a Force Majeure Event” as defined in the Construction Agreement. In such notice, NAI advised BNPPLC of NAI’s intent to elect a Termination of NAI’s Work because of NAI’s belief that the Work will not be substantially complete prior to the Target Completion Date only because of Pre-lease Force Majeure Delays. Such notice also expressed NAI’s belief that Pre-lease Force Majeure Delays are likely to be                      days in the aggregate.
          This response to such notice constitutes an Increased Time Commitment. BNPPLC hereby commits to extend the Target Completion Date by                      days (the estimate given by NAI as described above).
          Please note that, according to the Construction Agreement, NAI will have ten days after the date of any Increased Commitment (which may be comprised of this Increased Time Commitment and any separate Increased Funding Commitment given contemporaneously herewith) within which NAI may rescind the aforementioned Notice of NAI’s Intent to Terminate Because of a Force Majeure Event by a notice given in the form prescribed by the Construction Agreement. Any failure of NAI to so rescind the notice will constitute a 97-10/Meltdown Event under and as defined in the Construction Agreement and will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of NAI) that any Termination of NAI’s Work occurred for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified.

 

 

         
  BNP PARIBAS LEASING CORPORATION, a Delaware corporation
 		  
  By:      
    Name:      
    Title:      
 
Exhibit H to Construction Agreement (Building 9) – Page 2

 

 

Exhibit I
Rescission of Notice of NAI’s Intent to Terminate
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
Telecopy: (972) 788-9140
          Re: Construction Agreement (Building 9) dated as of February 1, 2008 (the “Construction Agreement”) between Network Appliance, Inc. (“NAI”), a Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware corporation
Gentlemen:
          Capitalized terms used in this letter are intended to have the meanings assigned to them in the Construction Agreement referenced above or in the Common Definitions and Provisions Agreement referenced in the Construction Agreement.
          NAI has delivered to BNPPLC a Notice of NAI’s Intent to Terminate dated                     , 200     , and BNPPLC has responded with an Increased Commitment as of                     , 200     . NAI hereby accepts the Increased Commitment and, as provided in subparagraph 7(B) of the Construction Agreement, rescinds such Notice of NAI’s Intent to Terminate.
          NAI acknowledges that, because of such rescission, NAI must, as a condition precedent to any exercise of its remaining rights to terminate the Construction Agreement pursuant to subparagraph 7(B) thereof, deliver another Notice of NAI’s Intent to Terminate at least forty five days prior to the effective date of the Termination of NAI’s Work.
         
  NETWORK APPLIANCE, INC., a Delaware
corporation
 		  
  By:      
    Name:      
    Title:      

 

 

Exhibit J
Estoppel From Contractor
                    , 200     
BNP Paribas 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 Paribas Leasing Corporation, a Delaware corporation (“BNPPLC”), and covenants with BNPPLC 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 Building 9 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 (Building 9) and a Construction Agreement (Building 9), both dated as of February 1, 2008 (collectively, the “Building 9 Documents”), BNPPLC is leasing the Project to NAI and has agreed, subject to the terms and conditions of the Building 9 Documents, to provide a construction allowance for the design and construction of the Improvements. The undersigned has also been advised that the Building 9 Documents expressly provide that third parties (including the undersigned) are not intended as beneficiaries of the Building 9 Documents and, thus, will have no standing to enforce any obligations of NAI or BNPPLC under the Building 9 Documents, including any such obligation that BNPPLC may have to provide the construction allowance. The undersigned understands that the Building 9 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 BNPPLC or to otherwise bind BNPPLC 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.

 

 

BNP Paribas 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 BNPPLC, not to NAI. BNPPLC shall not, however, be liable for, and the undersigned shall not assert, any claims, demands or liabilities against BNPPLC 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 BNPPLC under the Construction Contract if BNPPLC 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 BNPPLC 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 BNPPLC 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 Building 9 Documents, including any eviction of NAI resulting from an Event of Default (as defined in the Building 9 Documents), BNPPLC 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 BNPPLC that NAI’s right to possession has been terminated, the undersigned shall send to BNPPLC 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
 
Exhibit J to Construction Agreement (Building 9) – Page 2

 

 

BNP Paribas Leasing Corporation
________________, 200__
Page 3
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 BNPPLC may request to allow it to decide whether to assume the Construction Contract. BNPPLC shall have seven days from receipt of such written certificate containing all such requested information to decide whether to assume the Construction Contract. If BNPPLC fails to assume the Construction Contract within such time, the undersigned agrees that BNPPLC shall not be liable (and the undersigned shall not assert or bring any action against BNPPLC, 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 BNPPLC notifies the undersigned that BNPPLC 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 Building 9 Documents, the undersigned shall immediately discontinue the work under the Construction Contract and remove its personnel from the Project, and BNPPLC shall be entitled to take exclusive possession of the Project. The undersigned shall also, upon request by BNPPLC, deliver and assign to BNPPLC 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 BNPPLC 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 BNPPLC that BNPPLC 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 BNPPLC’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 BNPPLC is given the opportunity to elect whether or not to assume the Construction Contract as provided herein, BNPPLC shall nonetheless have the right hereunder to assume the Construction Contract, as if it
 
Exhibit J to Construction Agreement (Building 9) – Page 3

 

 

BNP Paribas Leasing Corporation
________________, 200__
Page 4
had not been terminated, upon any termination of NAI’s right to possession of the Project under the Building 9 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 BNPPLC, for the additional costs incurred by the undersigned attributable to the disruption; and, provided further, that if BNPPLC does assume the Construction Contract, BNPPLC 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).
          e)     No action taken by BNPPLC or the undersigned with respect to the Construction Contract shall prejudice any other rights or remedies of BNPPLC or the undersigned provided by law, by the Building 9 Documents, by the Construction Contract or otherwise against NAI.
          f)     The undersigned agrees promptly to notify BNPPLC 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 BNPPLC 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 BNPPLC 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 BNPPLC 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 BNPPLC will include the time necessary to terminate NAI’s right to possession of the Project and evict NAI, provided that BNPPLC commences the steps required to exercise such right within sixty days after it is entitled to do so under the terms of the Building 9 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
 
Exhibit J to Construction Agreement (Building 9) – Page 4

 

 

BNP Paribas Leasing Corporation
________________, 200__
Page 5
telecopy, addressed as follows:
             
To the undersigned:
           
 
           
 
            
 
           
 
            
 
           
 
      Telecopy: (     )       - -                
 
            
To BNPPLC:
      BNP Paribas 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:
             
Address of NAI:
      Network Appliance, Inc.    
 
      7301 Kit Creek Road    
 
      Research Triangle Park, NC 27709    
 
      Attention: Ingemar Lanevi    
 
      Telecopy: (919) 476-5750    
 
            
With a copy to:
      Network Appliance, Inc.    
 
      495 East Java Drive    
 
      Sunnyvale, California 94089    
 
      Attention: Mr. Thom Bryant    
 
      Telecopy: (408)-822-4463    
          h)     The undersigned acknowledges that it has all requisite authority to execute this letter. The undersigned further acknowledges that BNPPLC has requested this letter, and is relying on the truth and accuracy of the representations made herein, in connection with BNPPLC’s decision to advance funds for construction under the Building 9 Documents with NAI.
 
Exhibit J to Construction Agreement (Building 9) – Page 5

 

 

BNP Paribas Leasing Corporation
________________, 200__
Page 6
         
  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, BNPPLC to assume the Construction Contract in the event NAI is evicted from the Project.
         
  Network Appliance, Inc.
 		  
  By:      
    Name:      
    Title:      
 
Exhibit J to Construction Agreement (Building 9) – Page 6

 

 

Exhibit K
Estoppel From Design Professionals
_________, 200__
BNP Paribas 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 Paribas Leasing Corporation, a Delaware corporation (“BNPPLC”), and covenants with BNPPLC 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 Building 9 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 (Building 9) and a Construction Agreement (Building 9), both dated as of February 1, 2008 (collectively, the “Building 9 Documents”), BNPPLC is leasing the Project to NAI and has agreed, subject to the terms and conditions of the Building 9 Documents, to provide a construction allowance for the design and construction of the Improvements. The undersigned has also been advised that the Building 9 Documents expressly provide that third parties (including the undersigned) are not intended as beneficiaries of the Building 9 Documents and, thus, will have no standing to enforce any obligations of NAI or BNPPLC under the Building 9 Documents, including any such obligation that BNPPLC may have to provide the construction allowance. The undersigned understands that the Building 9 Documents expressly provide that NAI is not authorized to enter into any Agreement or other agreement with any third party in the name of BNPPLC or to otherwise bind BNPPLC 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.

 

 

BNP Paribas 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 Agreement, 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 Agreement.
          The undersigned acknowledges and agrees that:
          a)     BNPPLC shall not be liable for, and the undersigned shall not assert, any claims, demands or liabilities against BNPPLC 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 BNPPLC under the Agreement if BNPPLC 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 BNPPLC 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 BNPPLC 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 Building 9 Documents, including any eviction of NAI resulting from an Event of Default (as defined in the Building 9 Documents), BNPPLC 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 BNPPLC that NAI’s right to possession has been terminated, the undersigned shall send to BNPPLC 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
 
Exhibit K to Construction Agreement (Building 9) – Page 2

 

 

BNP Paribas Leasing Corporation
________________, 200__
Page 3
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 BNPPLC may request to allow it to decide whether to assume the Agreement. BNPPLC shall have seven days from receipt of such written certificate containing all such requested information to decide whether to assume the Agreement. If BNPPLC fails to assume the Agreement within such time, the undersigned agrees that BNPPLC shall not be liable (and the undersigned shall not assert or bring any action against BNPPLC or, 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 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 BNPPLC notifies the undersigned that BNPPLC shall not assume the Agreement pursuant to the preceding paragraph following the termination of NAI’s right to possession of the Project under the Building 9 Documents, the undersigned shall immediately deliver and assign to BNPPLC 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 BNPPLC that BNPPLC 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 BNPPLC’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 BNPPLC is given the opportunity to elect whether or not to assume the Agreement as provided herein, BNPPLC 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 Building 9 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
 
Exhibit K to Construction Agreement (Building 9) – Page 3

 

 

BNP Paribas Leasing Corporation
________________, 200__
Page 4
BNPPLC, for the additional costs incurred by the undersigned attributable to the disruption; and, provided further, that if BNPPLC does assume the Agreement, BNPPLC 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 BNPPLC or the undersigned with respect to the Agreement shall prejudice any other rights or remedies of BNPPLC or the undersigned provided by law, by the Building 9 Documents, by the Agreement or otherwise against NAI.
          f)     The undersigned agrees promptly to notify BNPPLC 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 BNPPLC prominently marked “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 BNPPLC 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 BNPPLC 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: (___) ___-_________    
 
Exhibit K to Construction Agreement (Building 9) – Page 4

 

 

BNP Paribas Leasing Corporation
________________, 200__
Page 5
     
To BNPPLC:
  BNP Paribas 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:
     
Address of NAI:
  Network Appliance, Inc.
 
  7301 Kit Creek Road
 
  Research Triangle Park, NC 27709
 
  Attention: Ingemar Lanevi
 
  Telecopy: (919) 476-5750
 
    
With a copy to:
  Network Appliance, Inc.
 
  495 East Java Drive
 
  Sunnyvale, California 94089
 
  Attention: Mr. Thom Bryant
 
  Telecopy: (408)-822-4463
          h)     The undersigned acknowledges that it has all requisite authority to execute this letter. The undersigned further acknowledges that BNPPLC has requested this letter, and is relying on the truth and accuracy of the representations made herein, in connection with BNPPLC’s decision to advance funds for design services under the Building 9 Documents with NAI.
         
  Very truly yours,

 		  
     
  By:      
    Name:      
    Title:      
 
Exhibit K to Construction Agreement (Building 9) – Page 5

 

 

BNP Paribas Leasing Corporation
________________, 200__
Page 6
         
          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, BNPPLC to assume the Agreement in the event NAI is evicted from the Project.
         
  Network Appliance, Inc.
 		  
  By:      
    Name:      
    Title:      
 
Exhibit K to Construction Agreement (Building 9) – Page 6

 

exv10w76
Exhibit 10.76
FIRST MODIFICATION AGREEMENT
(BUILDING 9)
     This FIRST MODIFICATION AGREEMENT (BUILDING 9) (this “Amendment”), dated as of April 9, 2008 (the “Amendment Date”), is made by and between BNP PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and NETAPP, INC. (“NAI”), a Delaware corporation which is a successor by merger to Network Appliance, Inc.
RECITALS
     BNPPLC and Network Appliance, Inc. executed a Common Definitions and Provisions Agreement (Building 9) dated as of February 1, 2008 (the “Common Definitions and Provisions Agreement”), which by this reference is incorporated into and made a part of this Amendment for all purposes. As used in this Amendment, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Amendment are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.
     BNPPLC and Network Appliance, Inc. also executed other Operative Documents, including a Closing Certificate and Agreement (Building 9) dated as of February 1, 2008 (the “Closing Certificate”), pursuant to which (among other things) NAI is currently bound by certain financial covenants set forth therein.
     Bank of America, N.A.; Goldman Sachs Credit Partners L.P.; JPMorgan Chase Bank, National Association; Keybank National Association; Morgan Stanley Bank; Sumitomo Mitsui Banking Corporation; and Wells Fargo Bank, N.A., as “Participants” (herein so called), and BNPPLC have all previously become parties to a Participation Agreement (Building 9) dated as of February 1, 2008 (the “Participation Agreement”), in which the Participants have agreed with BNPPLC to participate in the risks and rewards to BNPPLC of the Operative Documents.
     BNPPLC and NAI now desire to amend the Common Definitions and Provisions Agreement and the Closing Certificate as more particularly provided below in this Amendment.
AGREEMENTS
     In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1 Amendments to the Operative Documents.
     (A) Amendments to the Closing Certificate. Effective as of the Amendment Date, but subject to the satisfaction of the condition precedent set forth in Section 9 below, the Closing Certificate is hereby amended as follows:

 

 

     (1) The definition of “Consolidated EBITDA” in Subparagraph 3(A) of the Closing Certificate is hereby amended and restated in its entirety as follows:
“Consolidated EBITDA” means, with reference to any period, the sum of the following: (a) Consolidated Net Income for such period, plus (b) without duplication and to the extent deducted from revenues in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii) expense for taxes paid or accrued during such period, (iii) all amounts attributable to depreciation, (iv) amortization during such period, (v) extraordinary non-cash charges incurred other than in the ordinary course of business during such period, (vi) nonrecurring extraordinary non-cash restructuring charges, (vii) share-based non-cash compensation expense, and (viii) any non-cash charge with respect to the amortization of the value or cost of any derivative instrument that is excluded from the definition of “Swap Agreement” below by reason of clause (b) or clause (c) of the proviso at the end of that definition, minus without duplication and to the extent included in determining such Consolidated Net Income, (c) interest income, (d) extraordinary non-cash gains realized other than in the ordinary course of business and (e) any cash payments made during such period in respect of the item described in clause (vii) above subsequent to the fiscal quarter in which the relevant share-based non-cash compensation expense was incurred, all calculated for NAI and its Subsidiaries in accordance with GAAP on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period NAI or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period NAI or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by NAI and its Subsidiaries in excess of $50,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to NAI or any of its Subsidiaries in excess of $50,000,000.
First Modification Agreement (Building 9) – Page 2

 

 

     (2) The definition of “Swap Agreement” in Subparagraph 3(A) of the Closing Certificate is hereby amended and restated in its entirety as follows:
“Swap Agreement” means any agreement entered into for the primary purpose of hedging or mitigating risk or speculation with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that the following shall be excluded from this definition: (a) any of the foregoing involving, or settled by reference to, Equity Interests of NAI and entered into or issued in connection with compensatory arrangements for directors, officers, employees or consultants of NAI or any of the Subsidiaries, (b) any of the foregoing that is, or at the election of the issuer may be, settled (after payment of any premium for any option or any prepayment under any forward contract) through the issuance of Equity Interests of NAI, and (c) any of the foregoing to the extent it constitutes a derivative embedded in a convertible security issued by NAI that involves, or is settled by reference to, Equity Interests of NAI (including, for avoidance of doubt, “net share settled” convertible securities).
(B) Amendment to the Common Definitions and Provisions Agreement. Effective as of the Amendment Date, but subject to the satisfaction of the condition precedent set forth in Section 9 below, clause (F) of the definition of “Event of Default” in Article 1 of the Common Definitions and Provisions Agreement is hereby amended and restated in its entirety as follows:
(F) NAI or any Subsidiary of NAI fails to pay any principal of or premium or interest on any of its Indebtedness which is outstanding in a principal amount of at least $25,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event occurs or condition exists under any agreement or instrument relating to any such Indebtedness and continues after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate the maturity of such Indebtedness (other than by conversion of any convertible debt instrument pursuant to its terms); or any such Indebtedness is declared by the creditor to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness is required to be made, in each case prior to the stated maturity thereof (other than, in each case, by conversion of any convertible debt instrument pursuant to its terms).
First Modification Agreement (Building 9) – Page 3

 

 

2 Confirmation of Operative Documents by NAI. NAI confirms that it is, as successor by merger to Network Appliance, Inc., a party to and bound by the Operative Documents as was Network Appliance, Inc. Further, NAI ratifies and confirms all terms and conditions of the Operative Documents, as hereby amended, including the representations made by Network Appliance, Inc. concerning the Property in the Ground Lease. NAI also confirms that (a) all such representations which concern the Property would continue to be accurate and complete in all material respects if made as of the Amendment Date, and (b) NAI is not currently aware of any Default or Event of Default which has occurred and is continuing or of any defense, counterclaim, set-off, right of recoupment, abatement or other claim which NAI may now have against BNPPLC under the Operative Documents.
3 Other Representations and Covenants of NAI. NAI also represents and covenants to BNPPLC as follows:
     (A) Concerning NAI and this Amendment.
     (1) Authority. The Constituent Documents of NAI permit the execution, delivery and performance of this Amendment by NAI, and all actions and approvals necessary to bind NAI under this Amendment have been taken and obtained. Without limiting the foregoing, this Amendment will be binding upon NAI when signed on behalf of NAI by Ingemar Lanevi, Vice President and Corporate Treasurer of NAI.
     (2) Truth of Information. Any reports, financial statements or other data furnished by NAI to BNPPLC in connection with the agreements set forth in this Amendment are true and correct in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading. No material adverse change has occurred since the dates of such reports, statements and other data in the financial condition of NAI.
     (3) No Default or Violation. The execution and performance by NAI of this Amendment do not and will not contravene or result in a breach of or default under any other agreement to which NAI is a party or by which NAI is bound or which affects any assets of NAI. Such execution and performance by NAI do not contravene any law, order, decree, rule or regulation to which NAI is subject. Further, such execution 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, any property of NAI pursuant to the provisions of any such other agreement.
     (4) Enforceability. This Amendment constitutes the legal, valid and binding obligations of NAI enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights of creditors generally.
First Modification Agreement (Building 9) – Page 4

 

 

     (B) Further Assurances. NAI will, upon the reasonable request of BNPPLC, (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 Amendment and to subject to this Amendment any property intended to be covered hereby, 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 BNPPLC 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 BNPPLC to enable BNPPLC to comply with the requirements or requests of any agency or authority having jurisdiction over it.
     (C) Reimbursement of Costs. NAI will pay or reimburse BNPPLC, upon demand, for all reasonable out-of-pocket costs and expenses (including the reasonable fees, charges and disbursements of counsel) incurred by BNPPLC in connection with the preparation, negotiation, execution and delivery of this Amendment.
4 Reservation of Rights. The execution and delivery by BNPPLC of this Amendment will not be deemed to create a course of dealing or otherwise obligate BNPPLC to enter into amendments under the same, similar, or any other circumstances in the future. NAI is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon BNPPLC or Participants or any other Person. Except as expressly provided above, this Amendment will not limit, modify or otherwise affect any of NAI’s obligations under any of the Operative Documents, as heretofore amended.
5 No Implied Representations or Promises by BNPPLC. NAI acknowledges and agrees that neither BNPPLC nor its representatives or agents have made any representations or promises with respect to the subject matter of this Amendment except as expressly set forth herein.
6 Provisions Incorporated by Reference from the Common Definitions and Provisions Agreement. All terms and conditions set forth in Article II of the Common Definitions and Provisions Agreement will apply to this Amendment as if this Amendment was one of the Operative Documents referenced therein.
7 References to Operative Documents. From and after the Amendment Date, all references to any of the Operative Documents in the Operative Documents or in other documents related to the transactions contemplated therein are intended to mean the Operative Documents, as modified by this Amendment, unless the context shall otherwise require.
First Modification Agreement (Building 9) – Page 5

 

 

8 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 and successors and, to the extent assignment is permitted under the Operative Documents, their respective assigns.
9 Condition Precedent — Consents of Participants. The Participation Agreement requires that BNPPLC obtain approval of a Majority (as defined in the Participation Agreement) before it becomes bound by one or more amendments set forth in Section 1 above. The Participation Agreement defines “Majority” by reference to the Percentages (as defined therein) of the parties thereto. More specifically, the Participation Agreement defines “Majority” as parties to the Participation Agreement (i.e., Participants or BNPPLC and Participants), the aggregate Percentages of which equal or exceed sixty-seven percent (67%) of the Percentages of BNPPLC and of all the Participants then entitled to vote on certain matters specified in the Participation Agreement. For purposes of such voting, the Percentages of BNPPLC and the Participants under the Participation Agreement are currently as follows:
         
BNP PARIBAS LEASING CORPORATION:
     23.1124807397 %
BANK OF AMERICA, N.A.:
     4.6224961479 %
GOLDMAN SACHS CREDIT PARTNERS L.P.
     3.0816640986 %
JPMORGAN CHASE BANK
     9.2449922958 %
KEYBANK NATIONAL ASSOCIATION
     22.1879815100 %
MORGAN STANLEY BANK
     8.4745762712 %
SUMITOMO MITSUI BANKING CORPORATION
     6.1633281972 %
WELLS FARGO BANK, N.A.
     23.1124807396 %
In order to comply with the requirements of the Participation Agreement, BNPPLC and NAI agree that the amendments set forth in Section 1 above shall not become effective until Participants with aggregate Percentages of at least 43.888% (i.e., 67% less the Percentage of BNPPLC itself) have executed this Amendment in the spaces provided below to evidence their consents. However, so long as Participants with aggregate percentages of at least 43.888% do sign this Amendment to evidence their consents, then the amendments in Section 1 above will become effective even if other Participants fail or refuse to sign this Amendment or give their consents.
[The signature pages follow.]
First Modification Agreement (Building 9) – Page 6

 

 

     IN WITNESS WHEREOF, this First Modification Agreement (Building 9) is executed to be effective as of April 9, 2008.
         
    BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
 
        
 
  By:   /s/ Lloyd G. Cox
 
       
 
      Lloyd G. Cox, Managing Director
First Modification Agreement (Building 9) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 9) dated as of April 9, 2008]
         
    NETAPP, INC., a Delaware corporation, which is the successor by merger to Network Appliance, Inc.
 
        
 
  By:   /s/ Ingemar Lanevi
 
       
 
      Ingemar Lanevi, Vice President and Corporate Treasurer
First Modification Agreement (Building 9) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 9) dated as of April 9, 2008]
Consent of Participant
The undersigned, BANK OF AMERICA, N.A., joins in the execution of this First Modification Agreement (Building 9) as a Participant solely to evidence its consent to this First Modification Agreement (Building 9).
         
  BANK OF AMERICA, N.A.
 		  
  By:   /s/ Fred L. Thorne    
    Name:   Fred L. Thorne   
    Title:   Managing Director   
 
First Modification Agreement (Building 9) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 9) dated as of April 9, 2008]
Consent of Participant
The undersigned, GOLDMAN SACHS CREDIT PARTNERS L.P., joins in the execution of this First Modification Agreement (Building 9) as a Participant solely to evidence its consent to this First Modification Agreement (Building 9).
         
  GOLDMAN SACHS CREDIT PARTNERS L.P.
 		  
  By:   /s/ Andrew Caditz    
    Name:   Andrew Caditz    
    Title:   Authorized Signatory   
 
First Modification Agreement (Building 9) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 9) dated as of April 9, 2008]
Consent of Participant
The undersigned, JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, joins in the execution of this First Modification Agreement (Building 9) as a Participant solely to evidence its consent to this First Modification Agreement (Building 9).
         
  JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
 		  
  By:   /s/ Anthony Galea    
    Name:   Anthony Galea   
    Title:   Vice President   
 
First Modification Agreement (Building 9) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 9) dated as of April 9, 2008]
Consent of Participant
The undersigned, KEYBANK NATIONAL ASSOCIATION, joins in the execution of this First Modification Agreement (Building 9) as a Participant solely to evidence its consent to this First Modification Agreement (Building 9).
         
  KEYBANK NATIONAL ASSOCIATION
 		  
  By:   /s/ Raed Y. Alfayoumi    
    Name:   Raed Y. Alfayoumi   
    Title:   Vice President   
 
First Modification Agreement (Building 9) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 9) dated as of April 9, 2008]
Consent of Participant
The undersigned, MORGAN STANLEY BANK, joins in the execution of this First Modification Agreement (Building 9) as a Participant solely to evidence its consent to this First Modification Agreement (Building 9).
         
  MORGAN STANLEY BANK
 		  
  By:   /s/ Elizabeth Hendricks    
    Name:   Elizabeth Hendricks   
    Title:   Authorized Signatory   
 
First Modification Agreement (Building 9) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 9) dated as of April 9, 2008]
Consent of Participant
The undersigned, SUMITOMO MITSUI BANKING CORPORATION, joins in the execution of this First Modification Agreement (Building 9) as a Participant solely to evidence its consent to this First Modification Agreement (Building 9).
         
  SUMITOMO MITSUI BANKING CORPORATION
 		  
  By:   /s/ Leo E. Pagarigan    
    Name:   Leo E. Pagarigan   
    Title:   General Manager   
 
First Modification Agreement (Building 9) – Signature Page

 

 

[Continuation of signature pages for First Modification Agreement (Building 9) dated as of April 9, 2008]
Consent of Participant
The undersigned, WELLS FARGO BANK, N.A., joins in the execution of this First Modification Agreement (Building 9) as a Participant solely to evidence its consent to this First Modification Agreement (Building 9).
         
  WELLS FARGO BANK, N.A.
 		  
  By:   /s/ Alicia Kachmarik    
    Name:   Alicia Kachmarik   
    Title:   Assistant Vice President   
 
First Modification Agreement (Building 9) – Signature Page

 

exv10w77
Exhibit 10.77
EXECUTION COPY
AMENDMENT NO. 1
Dated as of November 2, 2007
to
SECURED CREDIT AGREEMENT
Dated as of October 5, 2007
          THIS AMENDMENT NO. 1 (“Amendment”) is made as of November 2, 2007 (the “Effective Date”) by and among Network Appliance, Inc., a Delaware corporation (the “Borrower”), the financial institutions listed on the signature pages hereof and JPMorgan Chase Bank, National Association, as Administrative Agent (the “Administrative Agent”), under that certain Secured Credit Agreement dated as of October 5, 2007 by and among the Borrower, the Lenders and the Administrative Agent (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.
          WHEREAS, the Borrower has requested that certain modifications be made to the Credit Agreement;
          WHEREAS, the Borrower, the Lenders party hereto and the Administrative Agent have agreed to amend the Credit Agreement on the terms and conditions set forth herein;
          NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders party hereto and the Administrative Agent hereby agree to the following amendments to the Credit Agreement.
          1. Amendments to Credit Agreement. Effective as of the Effective Date but subject to the satisfaction of the conditions precedent set forth in Section 2 below, the Credit Agreement is hereby amended as follows:
          (a) The definition of “Consolidated Debt for Borrowed Money” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:
     “Consolidated Debt for Borrowed Money” means at any time (1) the sum, without duplication, of (a) items that, in accordance with GAAP, would be classified as indebtedness on the consolidated balance sheet of Borrower and its Subsidiaries and (b) the capitalized portion of any synthetic leases minus (2) the then aggregate outstanding principal amount of Indebtedness under this Agreement and that certain Loan Agreement dated as of March 31, 2006 by and among Network Appliance Global Ltd. and JPMorgan Chase Bank, National Association as initial lender and as administrative agent. For purposes of clause (b) above, “capitalized portion” means, with respect to any synthetic lease, the price for which the lessee can purchase the leased property or could purchase it if the synthetic lease expired on the date of the applicable calculation of the Consolidated Debt for Borrowed Money.

 

 

               (b) The definition of “Consolidated Interest Expense” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:
     “Consolidated Interest Expense” means, with reference to any period, (a) the interest expense (including without limitation interest expense under Capital Lease Obligations that is treated as interest in accordance with GAAP) of the Borrower and its Subsidiaries calculated on a consolidated basis for such period with respect to (i) all outstanding Indebtedness of the Borrower and its Subsidiaries allocable to such period in accordance with GAAP and (ii) Swap Agreements (including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers acceptance financing and net costs under interest rate Swap Agreements to the extent such net costs are allocable to such period in accordance with GAAP), plus (b) the implied interest component of any rents payable for any period pursuant to any so-called “synthetic lease” for such period.
               (c) The definition of “Permitted Encumbrances” in Section 1.01 of the Credit Agreement is hereby amended to (i) delete the “and” at the end of clause (m) thereof, (ii) insert “and” at the end of clause (l) thereof and (iii) delete clause (n) thereof in its entirety.
               (d) Section 6.01 of the Credit Agreement is hereby amended to (i) delete the “and” at the end of clause (i) thereof, (ii) redesignate clause (j) thereof as clause (k) and (iii) insert a new clause (j) therein as follows:
     (j) Indebtedness of any Subsidiary as a guarantor under each of (i) the Credit Agreement dated as of November 2, 2007 by and among the Borrower, the lenders from time to time party thereto and JPMorgan Chase Bank, National Association and as administrative agent and (ii) the Loan Agreement dated as of March 31, 2006 by and among Network Appliance Global Ltd. and JPMorgan Chase Bank, National Association as initial lender and as administrative agent; and
               (e) Section 6.02 of the Credit Agreement is hereby amended to (i) delete the “and” at the end of clause (h) thereof, (ii) amend and restate clause (i) thereof in its entirety and (iii) insert new clauses (j) and (k) as follows:
     (i) Liens created under the Collateral Documents and the “Collateral Documents” under, and as defined in, the Loan Agreement dated as of March 31, 2006, by and among Network Appliance Global Ltd. and JPMorgan Chase Bank, National Association as initial lender and as administrative agent.
     (j) Liens against properties leased or covered under Borrower’s synthetic lease facilities to secure Borrower’s obligations under the documents governing such facilities, or granted against any such property to secure Indebtedness incurred to repay any such facility or purchase any such property and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof; and
     (k) other Liens on assets securing Indebtedness or other obligations not prohibited hereunder in an aggregate amount not to exceed $50,000,000 at any time outstanding.
               2. Conditions of Effectiveness. The effectiveness of this Amendment is subject to the conditions precedent that the Administrative Agent shall have received counterparts of this Amendment duly executed by the Borrower, the Required Lenders and the Administrative Agent.
               3. Representations and Warranties of the Borrower. The Borrower hereby

2

 

represents and warrants as follows:
          (a) This Amendment and the Credit Agreement as amended hereby constitute legal, valid and binding obligations of the Borrower and are enforceable against the Borrower in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
          (b) As of the date hereof and giving effect to the terms of this Amendment, (i) no Default shall have occurred and be continuing and (ii) the representations and warranties of the Borrower set forth in the Credit Agreement, as amended hereby, are true and correct in all material respects as of the date hereof, except to the extent such representation and warranty specifically refers to an earlier date, in which case it was true and correct in all material respects as of such earlier date.
          4. Reference to and Effect on the Credit Agreement.
          (a) Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as amended hereby.
          (b) Except as specifically amended above, the Credit Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.
          (c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith.
          5. Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York.
          6. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
          7. Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
[Signature Pages Follow]

3

 

               IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.
         
    NETWORK APPLIANCE, INC.,
    as the Borrower
 
        
 
  By:   /s/ Ingemar Lanevi
 
       
 
  Name: Ingemar Lanevi
 
  Title: Treasurer
Signature Page to Amendment No. 1 to
Credit Agreement dated as of October 5, 2007
Network Appliance, Inc.

 

 

         
    JPMORGAN CHASE BANK,
    NATIONAL ASSOCIATION,
    individually as a Lender and as Administrative Agent
 
        
 
  By:   /s/ Anthony Galea
 
       
 
  Name: Anthony Galea
 
  Title: Vice President
Signature Page to Amendment No. 1 to
Credit Agreement dated as of Octoberer 5, 2007
Network Appliance, Inc.

 

exv10w78
Exhibit 10.78
EXECUTION COPY
AMENDMENT NO. 1
Dated as of April 10, 2008
to
CREDIT AGREEMENT
Dated as of November 2, 2007
          THIS AMENDMENT NO. 1 (“Amendment”) is made as of April 10, 2008 (the “Effective Date”) by and among NetApp, Inc. (f/k/a Network Appliance, Inc.), a Delaware corporation (the “Borrower”), the financial institutions listed on the signature pages hereof and JPMorgan Chase Bank, National Association, as Administrative Agent (the “Administrative Agent”), under that certain Credit Agreement dated as of November 2, 2007 by and among the Borrower, the Lenders from time to time party thereto, Bank of America, N.A., Citicorp USA, Inc. and Standard Chartered Bank, as Co-Documentation Agents, BNP Paribas, as Syndication Agent and the Administrative Agent (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.
          WHEREAS, the Borrower has requested that certain modifications be made to the Credit Agreement;
          WHEREAS, the Borrower, the Lenders party hereto, constituting the Required Lenders under the Credit Agreement, and the Administrative Agent have agreed to amend the Credit Agreement on the terms and conditions set forth herein;
          NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders party hereto and the Administrative Agent hereby agree to the following amendments to the Credit Agreement.
          1. Amendments to Credit Agreement. Effective as of the Effective Date but subject to the satisfaction of the conditions precedent set forth in Section 2 below, the Credit Agreement is hereby amended as follows:
          (a) The definition of “Consolidated EBITDA” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:
     “Consolidated EBITDA” means, with reference to any period, the sum of the following: (a) Consolidated Net Income for such period, plus (b) without duplication and to the extent deducted from revenues in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii) expense for taxes paid or accrued during such period, (iii) all amounts attributable to depreciation, (iv) amortization during such period, (v) extraordinary non-cash charges incurred other than in the ordinary course of business during such period, (vi) nonrecurring extraordinary non-cash restructuring charges, (vii) share-based non-cash compensation expense, and (viii) any non-cash charge with respect to the amortization of the

 

 

value or cost of any derivative instrument that is excluded from the definition of “Swap Agreement” below by reason of clause (b) or clause (c) of the proviso at the end of that definition, minus without duplication and to the extent included in determining such Consolidated Net Income, (c) interest income, (d) extraordinary non-cash gains realized other than in the ordinary course of business and (e) any cash payments made during such period in respect of the item described in clause (vii) above subsequent to the fiscal quarter in which the relevant share-based non-cash compensation expense was incurred, all calculated for the Borrower and its Subsidiaries in accordance with GAAP on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period the Borrower or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by the Borrower and its Subsidiaries in excess of $50,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to the Borrower or any of its Subsidiaries in excess of $50,000,000.
          (b) The definition of “Swap Agreement” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:
     “Swap Agreement” means any agreement entered into for the primary purpose of hedging or mitigating risk or speculation with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that the following shall be excluded from this definition: (a) any of the foregoing involving, or settled by reference to, Equity Interests of the Borrower and entered into or issued in connection with compensatory arrangements for directors, officers, employees or consultants of the Borrower or any of the Subsidiaries, (b) any of the foregoing that is, or at the election of the issuer may be, settled (after payment of any premium for any option or any prepayment under any forward contract) through the issuance of Equity Interests of the Borrower, and (c) any of the foregoing to the extent it constitutes a derivative embedded in a convertible security issued by the Borrower that involves, or is settled by reference to, Equity Interests of the Borrower (including, for avoidance of doubt, “net share settled” convertible securities).
          2. Conditions of Effectiveness. The effectiveness of this Amendment is subject to the conditions precedent that the Administrative Agent shall have received (i) counterparts of this Amendment duly executed by the Borrower, the Required Lenders and the Administrative Agent and (ii) evidence reasonably satisfactory to it that the certain Secured Credit Agreement dated as of October 5, 2007 by and among the Borrower and JPMorgan Chase Bank, National Association is amended on terms and conditions substantially similar to this Amendment.

2

 

          3. Representations and Warranties of the Borrower. The Borrower hereby represents and warrants as follows:
          (a) This Amendment and the Credit Agreement as amended hereby constitute legal, valid and binding obligations of the Borrower and are enforceable against the Borrower in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
          (b) As of the date hereof and giving effect to the terms of this Amendment, (i) no Default shall have occurred and be continuing and (ii) the representations and warranties of the Borrower set forth in the Credit Agreement, as amended hereby, are true and correct in all material respects as of the date hereof, except to the extent such representation and warranty specifically refers to an earlier date, in which case it was true and correct in all material respects as of such earlier date.
          4. Reference to and Effect on the Credit Agreement.
          (a) Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as amended hereby.
          (b) Except as specifically amended above, the Credit Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.
          (c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith.
          5. Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York.
          6. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
          7. Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
[Signature Pages Follow]

3

 

          IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.
         
    NETAPP, INC. (f/k/a Network Appliance, Inc.),
    as the Borrower
 
        
 
  By:   /s/ Ingemar Lanevi
 
       
 
  Name: Ingemar Lanevi
 
  Title: VP and Corporate Treasurer
Signature Page to Amendment No. 1 to
Credit Agreement dated as of November 2, 2007
NetApp, Inc.

 

 

         
    JPMORGAN CHASE BANK,
    NATIONAL ASSOCIATION,
    individually as a Lender and as Administrative Agent
 
        
 
  By:   /s/ Anthony Galea
 
       
 
  Name: Anthony Galea
 
  Title: Vice President
Signature Page to Amendment No. 1 to
Credit Agreement dated as of November 2, 2007
NetApp, Inc.

 

 

         
    BNP PARIBAS,
    individually as a Lender and as Syndication Agent
 
        
 
  By:   /s/ Mathew Harvey
 
       
 
  Name: Mathew Harvey
 
  Title: Managing Director
 
        
 
  By:   /s/ Stuart Darby
 
       
 
  Name: Stuart Darby
 
  Title: Director
Signature Page to Amendment No. 1 to
Credit Agreement dated as of November 2, 2007
NetApp, Inc.

 

 

         
    BANK OF AMERICA, N.A.,
    individually as a Lender and as a Co-Documentation Agent
 
        
 
  By:    
 
       
 
  Name:
 
  Title:
Signature Page to Amendment No. 1 to
Credit Agreement dated as of November 2, 2007
NetApp, Inc.

 

 

         
    CITICORP USA, INC.,
    individually as a Lender and as a Co-Documentation Agent
 
        
 
  By:    
 
       
 
  Name:
 
  Title:
Signature Page to Amendment No. 1 to
Credit Agreement dated as of November 2, 2007
NetApp, Inc.

 

 

         
    STANDARD CHARTERED BANK,
    individually as a Lender and as a Co-Documentation Agent
 
        
 
  By:   /s/ Alok Gupta
 
       
 
  Name: Alok Gupta
 
  Title: Director
 
        
 
  By:   /s/ Robert K. Reddington
 
       
 
  Name: Robert K. Reddington
 
  Title: AVP/Credit Documentation Credit Risk Control
Signature Page to Amendment No. 1 to
Credit Agreement dated as of November 2, 2007
NetApp, Inc.

 

 

         
    GOLDMAN SACHS BANK USA,
    as a Lender
 
        
 
  By:   /s/ William Yarbenet
 
       
 
  Name: William Yarbenet
 
  Title: Vice President
Signature Page to Amendment No. 1 to
Credit Agreement dated as of November 2, 2007
NetApp, Inc.

 

 

         
    MERRILL LYNCH BANK USA,
    as a Lender
 
        
 
  By:   /s/ Louis Alder
 
       
 
  Name: Louis Alder  
 
  Title: First Vice President
Signature Page to Amendment No. 1 to
Credit Agreement dated as of November 2, 2007
NetApp, Inc.

 

 

         
    DEUTSCHE BANK AG New York Branch,
    as a Lender
 
        
 
  By:   /s/ Andreas Neumeier
 
       
 
  Name: Andreas Neumeier
 
  Title: Managing Director
 
        
 
  By:   /s/ Yvonne Tilden
 
       
 
  Name: Yvonne Tilden
 
  Title: Director
Signature Page to Amendment No. 1 to
Credit Agreement dated as of November 2, 2007
NetApp, Inc.

 

 

         
    WELLS FARGO BANK, N.A.,
    as a Lender
 
        
 
  By:   /s/ Alicia Kachmarik
 
       
 
  Name: Alicia Kachmarik
 
  Title: Assistant Vice President
Signature Page to Amendment No. 1 to
Credit Agreement dated as of November 2, 2007
NetApp, Inc.

 

 

         
    KEYBANK NATIONAL ASSOCIATION,
    as a Lender
 
        
 
  By:   /s/ Raed Y. Alfayoumi
 
       
 
  Name: Raed Y. Alfayoumi
 
  Title: Vice President
Signature Page to Amendment No. 1 to
Credit Agreement dated as of November 2, 2007
NetApp, Inc.

 

exv10w79
Exhibit 10.79
EXECUTION COPY
AMENDMENT NO. 2
Dated as of April 10, 2008
to
SECURED CREDIT AGREEMENT
Dated as of October 5, 2007
          THIS AMENDMENT NO. 2 (“Amendment”) is made as of April 10, 2008 (the “Effective Date”) by and among NetApp, Inc. (f/k/a Network Appliance, Inc.), a Delaware corporation (the “Borrower”), the financial institutions listed on the signature pages hereof and JPMorgan Chase Bank, National Association, as Administrative Agent (the “Administrative Agent”), under that certain Credit Agreement dated as of October 5, 2007 by and among the Borrower, the Lenders from time to time party thereto and the Administrative Agent (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.
          WHEREAS, the Borrower has requested that certain modifications be made to the Credit Agreement;
          WHEREAS, the Borrower, the Lenders party hereto and the Administrative Agent have agreed to amend the Credit Agreement on the terms and conditions set forth herein;
          NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders party hereto and the Administrative Agent hereby agree to the following amendments to the Credit Agreement.
          1. Amendments to Credit Agreement. Effective as of the Effective Date but subject to the satisfaction of the conditions precedent set forth in Section 2 below, the Credit Agreement is hereby amended as follows:
          (a) The definition of “Consolidated EBITDA” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:
     “Consolidated EBITDA” means, with reference to any period, the sum of the following: (a) Consolidated Net Income for such period, plus (b) without duplication and to the extent deducted from revenues in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii) expense for taxes paid or accrued during such period, (iii) all amounts attributable to depreciation, (iv) amortization during such period, (v) extraordinary non-cash charges incurred other than in the ordinary course of business during such period, (vi) nonrecurring extraordinary non-cash restructuring charges, (vii) share-based non-cash compensation expense, and (viii) any non-cash charge with respect to the amortization of the value or cost of any derivative instrument that is excluded from the definition of “Swap Agreement” below by reason of clause (b) or clause (c) of the proviso at the end of that definition, minus without duplication and to the extent included in determining such Consolidated Net

 

 

Income, (c) interest income, (d) extraordinary non-cash gains realized other than in the ordinary course of business and (e) any cash payments made during such period in respect of the item described in clause (vii) above subsequent to the fiscal quarter in which the relevant share-based non-cash compensation expense was incurred, all calculated for the Borrower and its Subsidiaries in accordance with GAAP on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such Reference Period the Borrower or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business or operating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment of consideration by the Borrower and its Subsidiaries in excess of $50,000,000; and “Material Disposition” means any sale, transfer or disposition of property or series of related sales, transfers, or dispositions of property that yields gross proceeds to the Borrower or any of its Subsidiaries in excess of $50,000,000.
          (b) The definition of “Swap Agreement” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:
     “Swap Agreement” means any agreement entered into for the primary purpose of hedging or mitigating risk or speculation with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that the following shall be excluded from this definition: (a) any of the foregoing involving, or settled by reference to, Equity Interests of the Borrower and entered into or issued in connection with compensatory arrangements for directors, officers, employees or consultants of the Borrower or any of the Subsidiaries, (b) any of the foregoing that is, or at the election of the issuer may be, settled (after payment of any premium for any option or any prepayment under any forward contract) through the issuance of Equity Interests of the Borrower, and (c) any of the foregoing to the extent it constitutes a derivative embedded in a convertible security issued by the Borrower that involves, or is settled by reference to, Equity Interests of the Borrower (including, for avoidance of doubt, “net share settled” convertible securities).
          2. Conditions of Effectiveness. The effectiveness of this Amendment is subject to the conditions precedent that the Administrative Agent shall have received (i) counterparts of this Amendment duly executed by the Borrower, the Required Lenders and the Administrative Agent and (ii) evidence reasonably satisfactory to it that the certain Credit Agreement dated as of November 2, 2007 by and among the Borrower, the lenders party thereto from time to time and JPMorgan Chase Bank, National Association is amended on terms and conditions substantially similar to this Amendment.
          3. Representations and Warranties of the Borrower. The Borrower hereby represents and warrants as follows:

2

 

          (a) This Amendment and the Credit Agreement as amended hereby constitute legal, valid and binding obligations of the Borrower and are enforceable against the Borrower in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
          (b) As of the date hereof and giving effect to the terms of this Amendment, (i) no Default shall have occurred and be continuing and (ii) the representations and warranties of the Borrower set forth in the Credit Agreement, as amended hereby, are true and correct in all material respects as of the date hereof, except to the extent such representation and warranty specifically refers to an earlier date, in which case it was true and correct in all material respects as of such earlier date.
          4. Reference to and Effect on the Credit Agreement.
          (a) Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as amended hereby.
          (b) Except as specifically amended above, the Credit Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.
          (c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith.
          5. Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York.
          6. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
          7. Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
[Signature Pages Follow]

3

 

               IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.
         
    NETAPP, INC. (f/k/a Network Appliance, Inc.),
    as the Borrower
 
        
 
  By:   /s/ Ingemar Lanevi
 
       
 
  Name: Ingemar Lanevi
 
  Title: VP and Corporate Treasurer
Signature Page to Amendment No. 2 to
Secured Credit Agreement dated as of October 5, 2007
NetApp, Inc.

 

 

         
    JPMORGAN CHASE BANK,
    NATIONAL ASSOCIATION,
    individually as a Lender and as Administrative Agent
 
        
 
  By:   /s/ Anthony Galea
 
       
 
  Name: Anthony Galea
 
  Title: Vice President
Signature Page to Amendment No. 2 to
Secured Credit Agreement dated as of October 5, 2007
NetApp, Inc.

 

exv10w81
Exhibit 10.81
NETWORK APPLIANCE, INC.
NOTICE OF GRANT OF STOCK OPTION — ISRAEL
     Network Appliance, Inc. (the “Corporation”) hereby grants to you (the “Optionee”) an option (the “Option”) to purchase shares of the Common Stock of the Corporation. Subject to the provisions of the Stock Option Agreement-Israel attached hereto as Exhibit A (the “Agreement”) and of the Corporation’s 1999 Stock Option Plan and the Israeli addendum to such plan called “Appendix A-Israel” (the “Plan”), the principal features of this Option are as follows:
     Optionee:
     «FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»
     «ADDRESS_LINE_1»
     «ADDRESS_LINE_2»
     «ADDRESS_LINE_3»
     «CITY», «State» «Zip_Code»
     Grant Number: «NUM»
     Grant Date: «Option_Date»
     Vesting Commencement Date: «Vest_Base_Date»
     Exercise Price: «Option_Price» per share
     Number of Option Shares: «Shares_Granted» shares
     Expiration Date: «Expiration_Date_Period_1»
     Type of Option: «Long_Type» — Capital Gains Route Options under Section 102(b)(2)
     Exercise Schedule:
«Shares_Period_1» shares become exercisable on «Vest_Date_Period_1»
«Shares_Period_2» shares become exercisable in successive equal monthly installments on the same day of the month as the Vesting Commencement Date (and if there is no corresponding date, the last day of the month), upon Optionee’s completion of each month of Service through «Vest_Date_Period_2»
     Vesting is subject to Optionee’s continuous Service through each applicable vesting date. In no event shall the Option vest or become exercisable for any additional Option Shares after Optionee’s cessation of Service.
     Optionee understands and agrees that the Option is granted subject to and in accordance with all of the terms and conditions contained in this Notice, the Agreement and the Plan. A copy of the Plan is available upon request made to the Corporate Secretary at the Corporation’s principal offices. Optionee hereby acknowledges that the official prospectus for the Plan, which appears as “1999 Plan Summary and Prospectus” is available on the Corporation’s internal web site at http://finance-web.netapp.com/stock/ options.html and that the Agreement and the Plan Summary and Prospectus are made a part of this Notice of Grant of Stock Option.
     Furthermore, Optionee hereby approves and agrees to all the aforesaid in this Notice, in the Agreement and in the Trust Deed, and declares that he/she is familiar with the provisions of Section 102 and the Capital Gains Route as defined in the Agreement). Optionee hereby undertakes not to sell or transfer the Option Shares prior to the lapse of the Minimum Trust Period (as defined in the Agreement), unless Optionee pays all taxes, which may arise in connection with such sale and/or transfer.
     No Employment or Service Contract. Nothing in this Notice, the Agreement or in the Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or without cause.
     Definitions. All capitalized terms in this Notice shall have the meaning assigned to them in this Notice or in the Agreement.
                     
NETWORK APPLIANCE, INC.       OPTIONEE    
 
                    
 
                    
By:
  /s/ Gwen Mcdonald       By:        
                     
 
  Senior Vice President, Human Resources           «FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»    
 
                    
            Date:                                         , 200                    
Attachment: 1999 Stock Option Plan Stock Option Agreement-Israel

 

 

NETWORK APPLIANCE, INC.
1999 STOCK OPTION PLAN
STOCK OPTION AGREEMENT — ISRAEL
RECITALS
     A. The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any Parent or Subsidiary) and consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).
     B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s grant of an option to Optionee.
     C. All capitalized terms in this Agreement shall have the meaning assigned to them in the Appendix attached as Exhibit “A" hereto in the Corporation’s 1999 Stock Option Plan and in the Israeli appendix to such plan.
          NOW, THEREFORE, it is hereby agreed as follows:
               1. Grant of Option.
               (a) The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Grant Notice. The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 4 at the Exercise Price.
               (b) The option will be deposited with the Trustee, who will hold them in trust on Optionee’s behalf, all as set forth in Section 3 below.
               2. Issuance to Trustee.
     The option is subject to the provisions of Section 102 of the Ordinance, as well as the 102 Rules, promulgated thereunder.
     Accordingly, the Corporation and its Israeli subsidiary elected the Capital Gains Route for the purpose of the taxation of Optionee’s income from the option. In general, taxable income that should be attributed to Optionee as a result of the grant of the option will be tax-free on the date of grant, but will be taxed on the sale of Option Shares issued upon exercise of the options or their Transfer. In accordance with the Capital Gains Route, if the option or the Option Shares are held in trust by the Trustee for at least the Minimum Trust Period, gains derived from the sale of Option Shares shall be classified as capital gains and taxed at a rate of only 25%. Except, if applicable, for a benefit derived at the time of grant of the option, equal to the difference between (a) the average closing price of the Corporation’s share of Common Stock on a stock exchange during 30 trading days prior to the date of grant, and (b) the Exercise Price. Such benefit shall be subject to tax at the time of sale of the Option Shares, or a Transfer, as ordinary work income (i.e. at marginal tax rates (currently up to 48%) plus social security and national health insurance payments).
     At the time of sale of the Option Shares or a Transfer, Optionee shall be subject to tax, which will be calculated, in general, according to difference between (a) the market price (or the actual sale price) of the Option Shares at such time, and (b) the Exercise Price1. Such tax shall be withheld at source by the Corporation’s Israeli subsidiary, in accordance with the provisions of the 102 Rules, and the transfer of Option Shares to Optionee is conditioned upon the payment of such tax.
     Optionee shall not be entitled to sell the Option Shares or to execute a Transfer, prior to the lapse of the Minimum Trust Period. Furthermore, any and all Rights, shall be deposited with the Trustee and held thereby until the lapse of the Minimum Trust Period, and such Rights shall be subject to the Capital Gains Route. Notwithstanding the aforesaid, Optionee may sell Option Shares or Rights or execute a Transfer prior to the lapse of the Minimum Trust Period, provided, however, that tax is withheld at source by the Corporation in accordance with the 102 Rules. In such case, Optionee’s gains shall be classified as ordinary income and Optionee shall be subject to tax on such income at marginal tax rates (currently up to 48%) plus social security and national health insurance payments.
 
1   The above tax description is a general summary only and does not refer to expenses involved with the exercise of the option and sale of Option Shares or changes in the Israeli Consumer Price Index, which may impact the final tax calculation.

2

 

OPTIONEE IS ADVISED TO CONSULT WITH OPTIONEE’S OWN TAX ADVISER WITH
RESPECT TO THE TAX CONSEQUENCES OF RECEIVING AND EXERCISNG THE OPTION OR OF
DISPOSING OPTIONEE’S OPTION SHARES.
                    3. Trust:
               To secure performance of tax law requirements, the option awarded to Optionee according to this Agreement will be held in trust by the Trustee, who shall release them to Optionee only upon full compliance with the legal requirements and the terms of the Plan. For this purpose, a Trust Deed was signed between the Corporation’s Israeli subsidiary and the Trustee, a copy of which is attached hereto as Exhibit “B”. The conditions of the Trust Deed apply to the option awarded to Optionee; thus, Optionee is required to carefully read the provisions of the said Trust Deed.
                    4. Option Term. This option shall have a maximum term of seven (7) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 7 or 8.
                    5. Limited Transferability.
               (a) This option shall be neither transferable nor assignable by Optionee other than by will or the laws of inheritance following Optionee’s death and may be exercised, during Optionee’s lifetime, only by Optionee
                    6. Dates of Exercise. This option shall become exercisable for the Option Shares in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term under Paragraph 7 or 8.
                    7. Cessation of Service. The option term specified in Paragraph 4 shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable:
               (a) Should Optionee cease to remain in Service for any reason (other than death, Permanent Disability or Misconduct) while holding this option, then Optionee shall have a period of three (3) months (commencing with the date of such cessation of Service) during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration Date.
               (b) Should Optionee die while holding this option, then the personal representative of Optionee’s estate or the person or persons to whom the option is transferred pursuant to Optionee’s will or the laws of inheritance shall have the right to exercise this option. Any such right to exercise this option shall lapse, and this option shall cease to be outstanding, upon the earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee’s death or (ii) the Expiration Date.
               (c) Should Optionee cease Service by reason of Permanent Disability while holding this option, then Optionee shall have a period of twelve (12) months (commencing with the date of such cessation of Service) during which to exercise this option. In no event shall this option be exercisable at any time after the Expiration Date.
               (d) During the limited period of post-Service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which the option is exercisable at the time of Optionee’s cessation of Service. Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding for any exercisable Option Shares for which the option has not been exercised. However, this option shall, immediately upon Optionee’s cessation of Service for any reason, terminate and cease to be outstanding with respect to any Option Shares for which this option is not otherwise at that time exercisable.
               (e) Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage in any Misconduct while this option is outstanding, then this option shall terminate immediately and cease to remain outstanding.
                    8. Special Acceleration of Option.
               (a) This option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Corporate

3

 

Transaction, become exercisable for all of the Option Shares at the time subject to this option and may be exercised for any or all of those Option Shares as fully vested shares of Common Stock. However, this option shall not become exercisable on such an accelerated basis, if and to the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Corporate Transaction on any Option Shares for which this option is not otherwise at that time exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same option exercise/vesting schedule for those Option Shares set forth in the Grant Notice.
               (b) Immediately following the Corporate Transaction, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.
               (c) If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.
               (d) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
                    9. Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to (i) the total number and/or class of securities subject to this option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.
                    10. Shareholder Rights. The holder of this option shall not have any shareholder rights with respect to the Option Shares until such person shall have exercised the option, paid the Exercise Price and become a holder of record of the purchased shares.
                    11. Manner of Exercising Option.
               (a) In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:
                    (i) Notify the Trustee (through the Corporation’s Stock Administration Department), by delivering a “Notice of Exercise” (in the form attached hereto as Exhibit “C”), that Optionee wishes to exercise the option into a certain number of Option Shares (but not more than the number of Option Shares for which the option is exercisable as of such date).
                    (ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:
                         (A) cash or check made payable to the Corporation;
                         (B) shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date.
                         (C) through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (i) to the Trustee and to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (ii) to the Corporation to deliver the certificates for the purchased shares directly to

4

 

such brokerage firm in order to complete the sale. Option Shares granted pursuant to the Capital Gains Route shall be issued in the name of the Trustee for the benefit of the Optionee.
Except to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Notice of Exercise delivered to the Corporation in connection with the option exercise.
                    (iii) Furnish to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.
               (b) As soon as practical after the Exercise Date, the Corporation shall issue to the Trustee for the benefit of the Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto.
               (c) In no event may this option be exercised for any fractional shares.
                    12. Compliance with Laws and Regulations.
               (a) The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all the terms and conditions of the Plan, this Agreement, the Trust Deed and applicable requirements of law relating thereto, including the Capital Gains Route of Section 102, and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the time of such exercise and issuance.
               (b) The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals.
                    13. Successors and Assigns. Except to the extent otherwise provided in Paragraphs 5 and 8, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated by Optionee.
                    14. Notices. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated on the Grant Notice. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.
                    15. Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.
                    16. Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State’s conflict-of-laws rules, except to the extent that mandatory provisions of the law of the State of Israel apply.
                    17. Excess Shares. If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may without shareholder approval be issued under the Plan, then this option shall be void with respect to those excess shares, unless shareholder approval of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of the Plan.
                    18. Leave of Absence. The following provisions shall apply upon Optionee’s commencement of an authorized leave of absence:

5

 

               (a) If the leave of absence is protected by any statute such that re-employment upon expiration of such protected leave is guaranteed, the Shares awarded by this Agreement that are scheduled to vest shall be modified as follows:
                         (i) The vesting schedule in effect under the Grant Notice shall continue for a period of up to twelve (12) weeks from the first day of the authorized leave. If Optionee does not resume active Employee status within such twelve (12)-week period, then no Service credit shall be given for the balance of the leave of absence, unless applicable laws governing such statutory leave would require a longer vesting continuance period, in which case vesting shall continue as provided in the Grant Notice for such period required by such statute..
               (b) If the leave of absence is not protected by statute such that re-employment upon expiration of such leave is not guaranteed by statute, the Shares awarded by this Agreement that are scheduled to vest shall be modified as follows:
                         (i) The vesting schedule in effect under the Grant Notice shall be frozen as of the first day of the authorized leave.
                         (ii) Should Optionee resume active Employee status within sixty (60) days after the start date of the authorized leave, Optionee shall, for purposes of the vesting schedule set forth in the Grant Notice, receive Service credit for the entire period of such leave. If Optionee does not resume active Employee status within such sixty (60)-day period, then no Service credit shall be given for the period of such leave.
               (c) In no event shall this option become exercisable for any additional options or otherwise remain outstanding if Optionee does not resume Employee status prior to the Expiration Date of the option term.
                    19. Reading the Plan:
     It is hereby clarified that reading this Agreement is not, and cannot be, a substitute for the full and thorough reading of the Plan. The Plan and the Trust Deed include important details that Optionee should know and understand. In any case of contradiction between the aforesaid in this Agreement and the Plan, or in any case of dispute on any of the issues discussed in this Agreement, the provisions of the Plan shall prevail.

6

 

Exhibit A
APPENDIX
          The following definitions shall be in effect under the Agreement:
     A. Agreement shall mean this Stock Option Agreement.
     B. Board shall mean the Corporation’s Board of Directors.
     C. Capital Gains Route means the capital gains route of Section 102(b)(2) of the Ordinance.
     D. Common Stock shall mean shares of the Corporation’s common stock.
     E. Code shall mean the Internal Revenue Code of 1986, as amended.
     F. Corporate Transaction shall mean either of the following shareholder-approved transactions to which the Corporation is a party:
               (i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or
               (ii) the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation.
     G. Corporation shall mean Network Appliance, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Network Appliance, Inc. which shall by appropriate action adopt the Plan.
     H. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.
     I. Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement.
     J. Exercise Price shall mean the exercise price per Option Share as specified in the Grant Notice.
     K. Expiration Date shall mean the date on which the option expires as specified in the Grant Notice.
     L. Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:
               (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be deemed equal to the closing selling price per share of Common Stock on the date in question, as the price is reported by the National Association of Securities Dealers on the Nasdaq National Market and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists, or
               (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be deemed equal to the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
     M. Grant Date shall mean the date of grant of the option as specified in the Grant Notice.
     N. Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

A-1

 

     O. Incentive Option shall mean an option which satisfies the requirements of Code Section 422.
     P. Minimum Trust Period means the applicable period of time, required under Section 102, in order to enable Optionee enjoy favorable tax treatment (currently two years from the date this letter is deposited with the Trustee, according to the Capital Gains Route).
     Q. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of Optionee or any other individual in the Service of the Corporation (or any Parent or Subsidiary).
     R. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.
     S. Notice of Exercise shall mean the notice of exercise in the form attached hereto as Exhibit I.
     T. Option Shares shall mean the number of shares of Common Stock subject to the option as specified in the Grant Notice.
     U. Optionee shall mean the person to whom the option is granted as specified in the Grant Notice.
     V. Ordinance shall mean the Israeli Income Tax Ordinance [New version], 1961.
     W. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
     X. Permanent Disability shall mean the inability of Optionee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more.
     Y. Plan shall mean the Corporation’s 1999 Stock Option Plan and the “Appendix A — Israel” attached thereto.
     Z. Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.
     AA. Rights means right issued in respect of the Option Shares, including bonus shares but excluding cash dividends.
     BB. 102 Rules means the Income Tax Rules (Tax Relief in Issuance of Shares to Employees), 2003, that were promulgated under Section 102.
     CC. Section 102 shall mean Section 102 of the Ordinance.
     DD. Service shall mean Optionee’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor.
     EE. Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange.
     FF. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
     GG. Transfer means a transfer of Option Shares from the Trustee to the Optionee.
     HH. Trustee shall mean a trustee approved by the income tax authorities for the purpose of the Plan.

A-2

 

Exhibit B
Trust Deed
(GRAPHIC)

A-3

 

-2-
(GRAPHIC)

A-4

 

Exhibit C
Notice of Exercise
Date:                                         
     
To
  To
G.L.E 102 Trusts
  Network Appliance, Inc.
2 Weizmann St.
  495 E. Java Drive
Tel Aviv 64239
  Sunnyvale, CA 94089
Dear Sirs,
Re: Network Appliance, Inc. (the “Corporation”)
I am the beneficiary of option (the “Option”) exercisable into                      shares of Common Stock of the Corporation (the “Option Shares”) that were granted to you on my behalf, and are held by you according to Section 102 of the Income Tax Ordinance, pursuant to the Trust Deed that was signed between yourself and the Corporation’s Israeli subsidiary, and according to the Corporation’s “1999 Stock Option Plan” and Israeli Appendix A.
I know that the vesting schedule of the option is as detailed in the “1999 Stock Option Plan - Stock Option Agreement”, which was signed by me on                     .
I would like to exercise the option into                     Option Shares.
I hereby enclose the aggregate Exercise Price of the Option Shares, or, alternatively I choose to utilize the special broker-dealer sale and remittance procedure specified in the Agreement to effect the payment of the Exercise Price.
     
 
  Yours Truly,
 
    
 
  Employee Name:                                                             
 
    
 
  Signature:                                                             
 
Approval of Network Appliance, Inc.
We hereby confirm that                                          is entitled to exercise his option into                      Option Shares (as defined in the Agreement).
We hereby confirm that the aggregate Exercise Price of the option in connection with the Option Shares, in the amount of $                                         ($                     per Option Share) was paid to us directly by Mr./Miss                                                             , or, alternatively, that the Exercise Price is to be paid to us via the sale of Option Shares, through the broker.
         
 
     
    Network Appliance, Inc.
 		  
     
     
     

A-5

exv21w1
Exhibit 21.1
SUBSIDIARIES OF THE COMPANY
SUBSIDIARIES:
Network Appliance Ltd. (U.K.)
NetApp SAS (France)
Network Appliance Srl. (Italy)
NetApp GmbH (Germany)
NetApp KK
NetApp Korea, Ltd.
Network Appliance (Shanghai) Commercial Co., Ltd.
Network Appliance (Sales)Limited (Ireland)
Network Appliance GmbH (Switzerland)
NetApp B.V.
Network Appliance GesmbH (Austria)
Network Appliance SL (Spain)
Network Appliance Global Ltd. (Bermuda)
NetApp Denmark ApS
NetApp Australia Pty. Ltd.
Network Appliance Mexico S. de R.L. de C.V.
Network Appliance Singapore Private Ltd.
Network Appliance (Malaysia) Sdn Bhd
Network Appliance Systems (India) Private Ltd.
Network Appliance Argentina Srl
Network Appliance (Brasil) Ltd.
Network Appliance Canada Ltd.
Network Appliance BVBA (Belgium)
Network Appliance Israel Ltd.
Network Appliance Israel R&D, Ltd.
Network Appliance Poland Sp. z.o.o.
NetApp U.S. Public Sector, Inc.
Network Appliance South Africa (Pty) Limited
Network Appliance Sweden AB
Network Appliance Finland Oy
Network Appliance Financial Solutions, Inc. (Delaware)
Spinnaker Networks, Inc. (Delaware)
Spinnaker Networks, LLC (Delaware)
Network Appliance Luxembourg S.a.r.l.
Alacritus, Inc. (Delaware)
Decru, Inc. (Delaware)
Decru BV (Netherlands)
NetApp Holding Ltd. (Cyprus)
Network Appliance Holding & Manufacturing BV NAHM (Netherlands)
Network Appliance Norway AS
Network Appliance Limited (Thailand)
Network Appliance Saudi Arabia LLFC.
Decru Ltd. (U.K.)
Topio, Inc. (Delaware)
NetCache, Inc. (California)
Onaro, Inc. (Delaware)
Network Appliance (Hong Kong) Limited
Onaro Israel, Ltd.
NetApp Russia Limited
Onaro UK, Ltd.

 

exv23w1
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-25277, 333-40307, 333-32318, 333-41348, 333-53776, 333-57378, 333-73982, 333-100837, 333-109627, 333-113200, 333-119640, 333-125448, 333-128098, 333-133564, 333-138387, 333-139835, 333-149375, and 333-147034 on Form S-8 of our reports dated June 24, 2008, relating to the financial statements and financial statement schedule of NetApp, Inc. (formerly “Network Appliance, Inc.”), and its subsidiaries (collectively, the “Company) (which report expresses an unqualified opinion and includes an explanatory paragraph regarding the adoption of Financial Accounting Standards Board Interpretation No. 48 Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 and Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment) and the effectiveness of the Company’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of the Company for the year ended April 25, 2008.
/s/  DELOITTE & TOUCHE LLP
San Jose, California
June 24, 2008

 

exv31w1
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002
I, Daniel J. Warmenhoven, certify that:
  1)   I have reviewed this Annual Report on Form 10-K of NetApp, Inc.;
 
  2)   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
  3)   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
  4)   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) for the registrant and have:
  a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
  c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
  5)   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
         
 
       /s/ DANIEL J. WARMENHOVEN
 
Daniel J. Warmenhoven 		   
 
  Chief Executive Officer, Chairman of the Board    
Date: June 24, 2008

 

exv31w2
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002
I, Steven J. Gomo, certify that:
  1)   I have reviewed this Annual Report on Form 10-K of NetApp, Inc.;
 
  2)   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
  3)   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
  4)   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) for the registrant and have:
  a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
  c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
  5)   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
         
 
       /s/ STEVEN J. GOMO
 
Steven J. Gomo
Executive Vice President of Finance
and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer) 		   
Date: June 24, 2008

 

exv32w1
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
     I, Daniel J. Warmenhoven, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of NetApp, Inc., on Form 10-K for the fiscal year ended April 27, 2007 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Annual Report on Form 10-K fairly presents in all material respects the financial condition and results of operations of NetApp, Inc.
         
 
       /s/ DANIEL J. WARMENHOVEN
 
Daniel J. Warmenhoven
Chief Executive Officer, Chairman of the Board 		   
Date: June 24, 2008

 

exv32w2
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
     I, Steven J. Gomo, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of NetApp, Inc., on Form 10-K for the fiscal year ended April 27, 2007 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Annual Report on Form 10-K fairly presents in all material respects the financial condition and results of operations of NetApp, Inc.
         
 
       /s/ STEVEN J. GOMO
 
Steven J. Gomo
Executive Vice President of Finance
and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer) 		   
Date: June 24, 2008